As a fledgling operation, how does a startup company compete within an established market in terms of price, performance and promotion
On February 1, 1973 Braniff airlines announced a half-price “Get Acquainted Sale” on all flights between Dallas and Houston. This was Southwest Airlines most profitable route. Southwest had to decide how to respond to Braniff Airlines move.
Southwest Airlines is a startup business
* They faced barriers to entry; lack of capital, equipment, manpower, airplane berthing spaces, no consumer identity
There are would be 3 players in a competitive and price sensitive market; Southwest Airlines, Braniff Airlines, and Texas International Airlines (TI)
Airlines are competing to serve customers who fly in and out of airports in three cities; Dallas/Fort Worth, Houston, and San Antonio.
* The focus of the marketing efforts would defining, prospecting, and targeting customers who are traveling intra-sate and not inter-state
* The three routes involved are Dallas-Houston, Dallas – San Antonio, and San Antonio – Houston
Southwest was facing legal challenges regarding it’s right to exist.
* Braniff and Texas international alleged that they already served these routes and that their was insufficient demand to support another carrier
Prior to Southwest launch, these cities were serviced, intra-state, by Braniff and TI. These airlines’ service represented legs of longer interstate flights.
* Braniff operated a fleet of 69 planes serving the US, Mexico, and South America. Had revenue of $256mm and carried $5.6mm passengers
* TI was a regional carrier serving southwest states and Mexico. They had revenue of $32mm and served 1.5mm passengers. Their fleet consisted of 45 planes.
* Local travel between Dallas and Houston averaged 483 passengers/daily. This was the most important route
* Braniff serviced 86% of these customers... [continues]
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