The Marketing Environment Southwest Airlines

Business Strategy – BAD 4013 – SUMMER 1999 Case Study Southwest Airlines I. Strategic Profile and Case Analysis Purpose The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit. Twenty-seven years ago, Rolling King, owner of floundering commuter airline, and Herb Kelleher, King’s lawyer, got together and decided to start a different kind of airline that would provide a short-haul, low-fair, high-frequency, point-to-point service in the United States. The company began service on June 18, 1971 with flights between Dallas, Houston, and San Antonio (“The Golden Triangle” as Herb called it). Southwest Airlines is the fourth

Currently, Southwest Airlines Company achieved the higher net income in 2013 and widened its field of operations by the integration with AirTran Airways. It seems Southwest’s business is going pretty well. However, there are numerous problems from competitors who will cause negative effect on Southwest’ market leader position and market shares. This marketing plan will make a careful analysis of the current activities of Southwest Airlines Company, and then this marketing plan will create how the company develop Southwest’s market leadership and higher market shares within 5years.

The target demographic for Southwest is very broad. The fact the airline has a brand that appeals to price-conscious travelers who do not mind the airline’s no-frills philosophy means it attracts lots of small business owners, young adults, middle-class families, and those who are traveling a short distance. Southwest operates a simplified airline to keep costs down. It only operates one type of aircraft, and its no-frills plan includes no assigned seats or class seating, no meals, and no onboard movies. The company has a strong emphasis on customer service and a differentiation strategy to keep customers happy and loyal. When hiring for customer service positions within the organization, Southwest focuses on attitudes rather than skills and encourages peer hiring. This strategy helps the company identify those who fit the organizational culture and who are most likely to further the company’s philosophy of

Southwest Airlines is a major US airline established in 1967 that services a multitude of cities in all 50 states and beyond. The company is known for its outstanding quality in providing services and it 's cost effective ticket prices to its many passengers throughout the nation. This airline is based in the southwestern United States, in the city of Dallas Texas, and due to the tremendous number of airplanes that it has and the timely service that it provides to its passengers, this airline services more US passengers than any other airline. This airline also has the largest fleet of planes of any economical or low-cost airline service in the world and employees more than 45,000.

The five universal competitive plans include overall low-cost provider strategy, broad differentiation strategy, focused low-cost strategy, focused differentiation strategy and best cost provider strategy (Bethel, 2017). Southwest Airlines popular competitive strategy is keeping customers happy by being low cost, employee driven, future-minded, and differentiated. The overall low-cost provider strategy that is being used at Southwest is a low-cost airline that focuses on no-frills service (Investopedia, 2015). Southwest Airlines diligently follows the strategy of a differentiated low-cost carrier. [They do this by providing the lowest possible fare in the industry, and do so by focusing on consistent service, reliable operations,

The five universal competitive plans include overall low-cost provider strategy, broad differentiation strategy, focused low-cost strategy, focused differentiation strategy and best cost provider strategy (Bethel, 2017). Southwest Airlines popular competitive strategy is keeping customers happy by being low cost, employee driven, future-minded, and differentiated. The overall low-cost provider strategy that is being used at Southwest is a low-cost airline that focuses on no-frills service (Investopedia, 2015). Southwest prides itself on being a people-oriented airline that operates with warm and helpful employees and team members. The most valuable competitive interest has been being its intense focus on hiring the right people (Investopedia, 2015).

Southwest Airlines is globalizing their company in order to reach a bigger market, and become competition for other companies. Southwest Airlines has already conquered the domestic market beating American Airlines, United, and Delta according to Fortune. Access to a new market is what motivated Southwest to globalize, they are expanding to the south of North America, with their new assets found in their acquired airline AirTran Airways (LeBeau, 4) . Southwest Airlines has brought low rates and a great experience to the domestic market, which was warmly received, they now plan to dip into global market to bring better service to all.

Economic, social-cultural, and technological forces are the external macro-environmental factors Southwest Airlines should be most concerned with. Weak economic growth reduces the purchasing power of an airline’s target market. Southwest, known for being a leader in low cost airline, provides flights at a higher frequency and capacity to attain profit. However, the company experienced increasing overhead through the lapse of long-standing fuel contracts, which previously helped provide a competitive advantage. This factor is also amplified by the growth the company experienced with success. Southwest is the fourth largest airline and has seen fuel cost skyrocket from 29 percent to 35 percent over a seven-year period.

Southwest Airlines Co. began its operations in 1971 and has been serving the industry for the past 43 years now (Southwest Airlines, n.d.). It is the major domestic airline, and ranked number one in 2014 by the Bureau of Transportation Statistics (United States Department of Transportation, 2014). Back in 1971 the airline began its services in Texas in the cities of Houston, San Antonio, and Dallas. The company has been ranked as the nation's largest low cost carrier (Mergent, 2012). It offers the lowest fares, and has the lowest cost structure in the industry.

To formulate a strategy that will help Southwest Airlines maintain its competitive edge in the US airline industry.

When on vacation, the first people you deal with are the airline companies, yes this is the dreaded trip to the airport. Way to often people have their happy vacations ruined by inconsistent and unreliable customer service, making them late for flights because of long lines, slow service, and unreliable technology that is difficult to use. However, Southwest airlines is one company that is standing out above all others. Known for their outstanding customer service and “Bags Fly Free” campaign, Southwest has held their ground against rising prices in airline travel and continued to expand its reaches while at the same time attracting many satisfied customers. Southwest Airlines was founded on June 18, 1971 by Rollen King and Herb Kellener. The very same year, Southwest began its flights servicing Dallas, Houston, and San Antonio. Southwest quickly climbed the ranks within airline the industry and became the fifth largest US air carrier by 1998, carrying an average of 50 million passengers a year across the United States. From then on, Southwest soared above the rest of the mid-range air carriers, and continues to do so to this day. Southwest quickly became known for its innovation when it comes to customer service and satisfaction, and it is still well known today for its simple and convenient customer service. Southwest has also been deeply involved when it comes to their social responsibilities, taking action to be ecofriendly whenever, and wherever possible. (Avstop)

Technology is growing rapidly since the early 90’s and a lot has changed in the marketing sector on how businesses operate. The internet has made it possible for businesses to market their products and services through digital channels. According to Smallwood, (2016). “The way people connect, communicate, and share information online has evolved in ways unimaginable just a generation ago, yet from a marketer 's perspective the biggest change may be in the amount of information suddenly available.” Through digital media consumers are able to associate themselves with the products and services that are rendered. The three organizations I have seen advertised; that have specifically focused on digital media to market its products and or services are, Southwest Airline, John Foy & Associates, and the Coca-Cola Company.

This proposal addresses the needed steps to be taken in order for Southwest Airlines to see continued growth in the airline industry. Southwest Airlines has been able to remain one of the most profitable airlines in the industry for an extended period of time. Even with the hindrance of the 2001 terrorist attacks involving airplanes and the U.S recession of 2008, Southwest has continued to see strong revenue growth. Meanwhile, other companies were experiencing major losses and in some cases folding. Southwest Airlines has capitalized on the company’s strength of being the top low cost

Southwest Airlines: Culture, Values and Operating Practices (in Thompson, A. A., Strickland. A. J. and Gamble, J. (2005) Crafting and Executing Strategy (Fourteenth Edition), McGraw-Hill, New York, pages C-636– C-664).

There have been few inventions to change how people live and experience the world considerably as the creation of the airplane. Today, traveling by air has become the norm and it would be difficult to imagine life without it. Air travel has improved the way people are able to conduct business by shortening travel time and changing their thought of distance. The companies within the airline industry exist in a very competitive market. One of those companies, Southwest Airlines, features low-fare, no-frills air service with frequent flights of mostly short routes. Costs are kept down by the exclusive use of Boeing 737 aircraft, which allows for low maintenance costs and quicker turnaround times for flights, and by an emphasis on ticketless travel (Encyclopedia Britannica). This paper will address two segments of the general environment and how they affect Southwest and the airline industry; evaluate how Southwest has addressed two forces of competition; predict what Southwest might do to improve its ability to addresses these forces; assess the external threats affecting Southwest; discuss Southwest’s greatest strengths and most significant weaknesses; determine Southwest’s resources, capabilities, and core competencies; and analyze their value chain.