Case Study: Southwest Airlines
Case study: Southwest Airlines
1. Southwest Airlines has been a highly successful undertaking. This is due in part to the marketing objectives it has set for itself. Its main objective was to create brand awareness/preference, customer value and be a market share leader. The next step was to come up with a marketing mix strategy of price, place, product and promotion to achieve its objective. Southwest cut out many amenities in order to differentiate itself from its competitors. Its main objectives were to become a market share leader, have the lowest airfare with a high frequency of flights to make profit. In order to cut costs for instance, they would use entertaining flight attendants opposed to electronic entertainment. The idea was that if cost structure can be streamlined and airfare lowered, more people would fly, this was a unique selling position at the time.
By the 1980’s Southwest’s cost structure made it a force for other airlines to reckon with because it could charge much lower airfare than the rest. The lower cost structure derived itself from Southwest’s strategy of taking the concept of an airline and reducing it to the minimum bare bones, “it gets me from point A to B cheaply and efficiently” service. This pricing strategy allowed it to be aggressive and take large portions of market share away from its competitors. It was so successful there is a term called “The Southwest Effect”, whenever Southwest would come to a new port other firms had to lower airfare, tourist traffic would increase and an economic mini boom would ensue. Southwest has not only succeeded in being the market leader of airline transportation, their prices are such that they compete with land transportation as well.
2. The 21st century has given the airline industry a lot of new challenges. Not necessarily new but still a growing concern was heightened environmental awareness. This affected airlines cost structure through environmental taxes and requiring cleaner and
1. Southwest Airlines has been a highly successful undertaking. This is due in part to the marketing objectives it has set for itself. Its main objective was to create brand awareness/preference, customer value and be a market share leader. The next step was to come up with a marketing mix strategy of price, place, product and promotion to achieve its objective. Southwest cut out many amenities in order to differentiate itself from its competitors. Its main objectives were to become a market share leader, have the lowest airfare with a high frequency of flights to make profit. In order to cut costs for instance, they would use entertaining flight attendants opposed to electronic entertainment. The idea was that if cost structure can be streamlined and airfare lowered, more people would fly, this was a unique selling position at the time.
By the 1980’s Southwest’s cost structure made it a force for other airlines to reckon with because it could charge much lower airfare than the rest. The lower cost structure derived itself from Southwest’s strategy of taking the concept of an airline and reducing it to the minimum bare bones, “it gets me from point A to B cheaply and efficiently” service. This pricing strategy allowed it to be aggressive and take large portions of market share away from its competitors. It was so successful there is a term called “The Southwest Effect”, whenever Southwest would come to a new port other firms had to lower airfare, tourist traffic would increase and an economic mini boom would ensue. Southwest has not only succeeded in being the market leader of airline transportation, their prices are such that they compete with land transportation as well.
2. The 21st century has given the airline industry a lot of new challenges. Not necessarily new but still a growing concern was heightened environmental awareness. This affected airlines cost structure through environmental taxes and requiring cleaner and