Southwest Airlines case analysis
1.In what ways might airline customers be segmented? Airline customers might be segmented when groups with varying needs and wants are recognized. They can be segmented on a number of different types of things; such as age, gender, location, buying behavior, and demographics. a.Which segments or niches would you consider Southwest’s prime targets? Southwest’s prime targets would be that of business and leisure travelers. Business travelers are less price sensitive than leisure travelers. They often travel on much shorter notice than leisure travelers. With the price of fuel rising companies have been urging their employees to reduce air fares and this factor attracted a lot of them to Southwest. Leisure travelers have always shopped around for reasonable prices. The fact that discount rates were offered and the whole family could go on a well planned trip was a plus to the leisure traveler. b.Which segments probably would not be? Long-hauls with high-fares. They don’t provide additional amenities such as ordering special meals and drinks. 2.Discuss the pros and cons for expansion of Southwest beyond short hauls. Which arguments do you see as most compelling? PROS include:
•Southwest may want to embark upon flying international.
• They can eliminate nonproductive flights to focus on long haul flights. •They can instill a Rapid Rewards frequent flyer program for out of the country flights. •With the price of fuel rapidly rising, passengers want to be carried wherever they need to go. •Newer planes that are fuel efficient might need to be purchased. CONS include:
•The purchase of newer planes can be costly
•Small shift in the population or consumer tastes can greatly affect business. •May have trouble expanding into new markets (especially up-market). •Air fares may have to go up.
3.Evaluate the effectiveness of Southwest’s unions. Due to Kelleher’s hard work and...