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Case Study Analysis: Southwest Airlines

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Introduction

There are some basic concepts of marketing which are key for any organization to succeed in the business world or environment and those basic concepts can be classified into the 4 marketing P’s, which are Product, Price, Place and Promotion. Southwest Airline is a great business example who utilizes the 4 marketing P’s to great effect in growing the company’s customer base, profit, and business while facing intense competitions from other Airline carriers. Furthermore, in a highly competitive service industry like the Airline industry, companies with innovative marketing strategy with reference to price, place, promotions, product/services are the firms that will stand out and be successful. This paper objective is to outline the growth, challenges, and strategies that sets Southwest Airlines from the competition and how the airline keeps been profitable in the face of stiff competition.

Southwest History and Background

Southwest began operating in 1971 out of Dallas’ Love Field airport after a legal battle that lasted for 4 years with its local competitors (Braniff and Texas International Airlines). Arguing before a Texas court that that there was not enough demand for airline travel to sustain having 3 intrastate airlines, the now defunct Braniff Airline and Texas International Airlines slowed Southwest’s entry into the industry but also strengthened its resolve. Battling them in court and later in a price-bruising competition, forced Southwest Airline to build an operating model that could survive the challenges and competition of the industry, and it did survive with aggressive marketing strategies implemented from the low fares to playful advertising built around a “Luv” theme, Southwest developed a reputation for fun and value. Furthermore, Southwest Airline was envisioned as a commuter air service between Dallas, Houston and San Antonio, however it was unable to begin commercial flights until 1971 due to several legal battles brought by other Texas based airlines like Braniff, Continental and Trans Texas. The airline had 3 aircraft and 25 employees when Southwest began flying to three Texas cities, initial flights were out of Dallas older love field airport and Houston’s Hobby airport both of which were closer to downtown compared to the major international airports. Furthermore, the airline began to expand slowly following the federal deregulation of the airline industry in 1978, expanding its services into neighboring southern western states and expanding its services into California, Midwest, the East and Southeast. Furthermore in 1993 Southwest Airline acquired Morris Air, which led to the increase in number of operating stations. The company’s strategy was to limit it’s served market and provide high frequency departures each day to a given destination. Southwest Airline created an intense schedule for its flights routes which helped reduced the consequences of a missed flight and enabled the company to retain tardy passengers. Southwest’s strategy, “fly eight flights, get one free” was the simplest in the industry. However, the primary Business issue facing Southwest Airline today is the growing stiff competition from other airlines like Jet Blue which has a lower cost than Southwest Airline and are pressuring Southwest cost advantage and low fare focus, Delta/Northwest and Continental/United who are becoming more efficient in operations. Industry competition

Southwest Airline been one of the original low fare carriers has numerous competition in the industry and has competed successfully with major rivals like American Airline, Delta, and United Airlines, however with the growth of a new set of Airline discounters like Spirit Airways, Frontier and JetBlue airline, Southwest has a new front of competition to face for its low fares routes and services.

Strenghts of Southwest Airlines

Southwest Airline has many positive strengths that sets it apart from its competitors in their Airline industry, However, there are two major strengths the company has that are productive and essential for any business to succeed and standout namely: a) Human resource/Staffing and b) Marketing Management/strategy. Human Resource/ Staffing: Southwest Airline takes great stride in recruiting staffs/employees who emboldens the Southwest Spirit, The South west spirit is all about the ways the company offers customer service to its customers which is one of the best in the airline industry and in offering great customer service the company and its staffs help market themselves to customers as a company that cares about them which in turn increases the customer base of the company’s products. Also, the company encourages Employee initiative at all levels, and the company placed great emphasis on maintaining cooperative labor relations, all this initiative taking by the company to improve their staffs helps Southwest to offer a good customer service to their customers. Marketing Management/Strategy: Southwest Airline built a marketing strategy or management that is unique to his business and the airline industry and one of their most important marketing strategies is the low fare prices that the company offers to all its travelers. Southwest management discovered that there were two types of travelers, the convenience, time-oriented business travelers and the price-sensitive leisure travelers. The company developed a two-tiered pricing structure to cater for both group of travelers. However, in as much as the company has some tremendous internal strength that sets them apart from their competitors, Southwest Airlines still has some internal marketing challenges that the company needs to address. Furthermore, the most important internal marketing challenge facing Southwest Airline is incorporating AirTran Airways lower cost structure, operations and culture because this could cause some difficulty in the company’s marketing strategy. In terms of the marketing challenge faced by southwest in the acquisition of Air Tran Airways, Southwest Airline has no or limited experience in international routes which Air Trans Airline had and First-class seats, thereby posing a challenge to southwest airline on how to incorporate those new features into the companies marketing strategy without losing its appeal to its customers. Growth opportunities

Southwest Airline has ben growing steadily over the years prior to 2011 but the growth was highly controlled by the company. However, there are still opportunities for growth that the company can take. Southwest Airlines currently serve 98 destinations and 87 of the destinations are in the United States, there are more opportunities for the company to open more route’s destination in the United States and North America. The company launched its International routes in 2014 and currently serves about 11 foreign markets, with the focus mainly on Mexico, Caribbean and Central America, the company has a lot of opportunities to grow its International routes to some other part of the world like South America, Europe, Asia. Furthermore, the opportunities for growth and expansion for Southwest airlines are there is left for the company to decide if doing away with the strategy of highly controlled expansion is the right decision to make in order to expand its reach and fight off more competition. However more growth opportunities for the company also means more challenges that the company will have to face in terms of its strategy and competition from other Airline carriers.

Challenges

Southwest Airline has been profitable and been in a strong final position for a while but there are challenges that the company needs to prepare and plan for. There will be stiff competitions from the newly merged carriers (Delta/Northwest and Continental/United) which will lead this Airline companies to be more efficient in their operations and services thereby posing a challenge to Southwest Airline. Furthermore, with the emergence of new low fare Airlines like JetBlue, Allegiant and Spirit Airlines and are operating at a lower cost than Southwest Airline, this will be a challenge for Southwest Airline to keep its competitive edge without increasing is prices for routes. Also, another challenge Southwest Airlines could face is consumers/customers having more options of flying at a cheaper price and more luxurious style that other Airlines are offering.

Recommended Strategies and Tactics

Market Penetration Strategies: This strategy will help Southwest Airline increase its sale for its services to its present customers by offering low fare prices and free entertainment on each flight, providing free snacks for flights routes that takes more than hour etc. Market Development Strategy: This strategy will enable Southwest Airlines to pursue growth and opportunities through market development by reaching out to new customers and tailoring your services to their needs and establishing new routes market that will attract new customers to the services of Southwest Airline. In conclusion I believe implementing this strategy will help Southwest Airline retain its customers and also attract new customers to their services, Also I believe Southwest should incorporate short international vacation flights to their operations because it will help attract new customers that fly internationally for vacations, while keeping the operating cost down and making profit.

References

Jansen, B. (Ed.). (2016, October 26). James L. Heskett, 2002 Southwest Airlines: An Industry Under Siege. James H. Donnelly, & J. Paul Peter, Marketing management: Knowledge and Skills, 11th ed.

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