(按姓氏首字母排序) 黄昕 靳子仪 刘静 刘天娇 王小茜
CASE REPORT #7：
Southwest Airlines: Waging War in Philly Case Briefing：
In May 2004, Southwest Airlines’ new line in Philadelphia began to operate, which triggered enormous commotion in the existing airline industry—especially US Airways. Southwest Airlines is famous for its low cost strategy, which goes against the industry’s conventional wisdom (See Form 1 below). Having persisted in its strategy, Southwest expended quickly, becoming the most popular airlines which boarded more domestic customers than any other airlines in US. While Southwest Airlines kept growing continuously, indicated as one of the nation’s best-performing stocks, the major airlines of US has stuck with the problems as their high cost structures make them difficult to change while many other small airlines begin to adopted Southwest-like strategies and began to capturing more and more market shares. Form 1 Southwest Airlines’ Strategy vs. Conventional Strategy Southwest Airlines—low cost strategy Fly Pattern Meal Change Fee Point-to-point No meal, only snacks No charge for changing same-fare tickets Seats No assigned seats Choose seat beforehand Electronic entertainment Retirement plan, including pension and health benefits Hub-and-spoke Formal meals Extra fee for ticket-changing Industry’s conventional strategy
Entertainment Comic flight attendants Employees’ Benefits Profit-sharing, but no retirement plan
In order to emulate the success in US, Southwest Airlines made new promotion plan particular for Philly to deal with the factors that work against Southwest’s strategy of 20-minute turnarounds for its planes. Southwest assigned 50% more employees to the airport than it would in a customary launch and developed a more 1 / 10
CASE REPORT #7： intense ad campaign aiming at intensify Southwest’s unique low-cost image in the public eye. Although Southwest has done a lot in Philly, it still faces furious competition. US Air firmly entrenched in Philly and started to make changes to begin some new promotion tactics. Moreover, there are already other low-fare options airlines and they offer free TV or satellite radio in addition to low fares. Southwest Airlines needs to do something else to distinguish itself from its competitors. 1. How Southwest Airlines’ marketing objectives and its marketing mix strategy affect its pricing decisions? Southwest Airlines is known for its highly efficient low cost strategy. The mission of Southwest Airlines is the highest customer service delivery with a sense of warmth, friendliness, individual pride and their company spirit. Southwest Airlines’ main market objectives are to offer low fare but high frequency flights flying “point to point” to target customers who are willing to pay less money for value-added proposition and extend its business by joining the dots and adding frequency. Southwest attempts to differentiate itself from competitors by integrating unique dimensions into its service and products. The first element in the marketing mix of Southwest Airlines is LOW PRICE. With recognition to provide efficient, low-cost flights, it tries to maintain the quality of its service as high as possible. Southwest Airline sets an image to its customers as the best way to travel with a low budget but efficient and economical. Therefore, the marketing mix is based on keeping costs to the minimum, which allows the company to offer the possible lowest fares. PRODUCT Strategy is the second element in Southwest’s marketing mix. Southwest Airlines primarily provides short haul, high-frequency, point-to-point, low-fare air transportation service. However, it offers the highest quality of customer service which capitalizes on a sense of warmth, friendliness, individual pride, and company spirit. "Our people are our single greatest strength and most enduring long-term competitive advantage." as is mentioned by Gary Kelly, CEO of Southwest...