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Southwest Airlines Marketing Strategy

Extracts from this document...

Introduction

MARKETING 500 May 24, 2012 MARKETING PLAN Submitted by Team 1 Badritdinova, Roza Baisetova, Elmira Barnett, Kelli Wang, Yi TABLE OF CONTENTS: 1. EXECUTIVE SUMMARY 2 2. U.S. AIRLINE INDUSTRY ANALYSIS 3 2.1. Industry Definition 3 2.2. Industry Size and Growth 3 2.3. Industry SWOT Analysis 4 2.4. Current Trends in U.S. Airline Industry 5 3. SOUTHWEST AIRLINE 6 3.1. SWA Brief History 6 3.2. SWA Today's Facts 6 3.3. SWA Marketing Mix 7 3.4. SWOT Analysis 8 4. ENVIRONMENTAL ANALYSIS 11 5. COMPETITOR ANALYSIS 12 5.1. AirTran Airways 12 5.2. JetBlue Airways 13 5.3. Continental Airlines 14 5.4. SWA's Competitive Advantages and Disadvantages 15 5.5. Egg Diagram 16 6. CONSUMER ANALYSIS 17 6.1. Who Flies SWA? 17 6.2. Why Do They Choose to Fly SWA? 17 6.3. Perceptual Maps 18 7. STRATEGIC VALUES 19 8. CONCLUSION 20 1. EXECUTIVE SUMMARY Fortune magazine calls Southwest Airlines "the most successful airline... It provides great examples and keys elements to running a successful company." Southwest Airlines (SWA) recorded its 34th year of profitability in 2006, a feat unmatched in the airline industry. Annual profits were up 40% that year despite high fuel costs, terrorist threats in London, and more restrictive carry-on regulations. How has SWA differed from other major airlines in its ability to remain profitable in this notoriously unprofitable industry? This paper is an analysis of the company and its marketing strategy. It examines the airline industry, Southwest's place in this industry, the influences of environmental forces, the four elements of the marketing mix, and the SWOT analysis of the company. It also looks at Southwest's biggest competitors and its consumers. The paper will examine why SWA is the most successful airline in the industry today. 2. U.S. AIRLINE INDUSTRY ANALYSIS 2.1. Industry Definition An airline provides air transport services for passengers or freight, generally with a recognized operating certificate or license. Airlines lease or own their aircrafts with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit. ...read more.

Middle

background * Technological advancements * Regions not yet covered Threats * High level of competition both direct and indirect (automobiles, buses) * Availability and price of aircraft fuel * Weather and natural disasters * Changes in consumer perceptions and preferences, spending pattern and demographic trends * Economic conditions * Failure of automated system and technology * Political situation * Tax regulation changes * Increases in airport rates and charges * Limitation on airport gate capacity 4. ENVIRONMENTAL ANALYSIS Economic: The economic stability of the country greatly influences the viability of the airline industry through discretionary income levels and production costs. After the 9/11 attacks, the airline industry suffered on two levels: renewing trust of customers and battling high costs of fuel. Fortunately, the incomes of the US have steadily increased and air travel has become less of a luxury. The labor talks currently in progress with pilots will have a profound impact on the future business of SWA. Regulatory: In 1978, deregulation opened the door for many new airlines but had little effect on already-profitable SWA. Currently the FAA regulates and oversees all aspects of civil aviation. Its roles include regulation of commercial space transportation, development of new aviation technology, programs to control noise pollution and environmental effects, and with the dept of homeland security, development of programs that address safety and security issues. Social: In the 21st century, lifestyle and values (i.e. time and price sensitivity, family) influence how people choose to travel. SWA offers less expensive options than leading competitors and have the best on-time statistics. They were the first airline to offer families with young children the option of boarding first. The recent elimination of "family first" boarding and "cattle call" boarding may affect customers perceptions of the company. Experts predict that given their value and convenience, there will be little fall-out from the first and little gain from the latter. ...read more.

Conclusion

Southwest's model business plan is preserved by its employees and the company emphasizes putting employees first. The airline's chairman states, "You put your employees first and if you take care of them, then they will take good care of you. Then your customers will come back, and your shareholders will like that." Because of this commitment, there is trust and respect that is not found in the competitors hallways. The pilots earn the highest salaries in the industry and there has never been a salary cut or layoff. In return, the employees exhibit a dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit, which is the company's mission statement. The company's symbol of freedom is not just an advertising phrase. It symbolizes the company's effort to provide customers with friendly, frequent, convenient, point-to-point, punctual, and low cost flights. As a result, the company has the lowest customer complaint rating and the highest profit margin, making it the most successful airline in the industry. 8. CONCLUSION Southwest Airline's low-priced fares are a brand equity, which it "owns" in the mathematical sense of being the only major airline with a strong score on this attribute based on consumer research. However, it cannot survive on the basis of price competition alone, especially with the competition from airlines like JetBlue and AirTran. Fortunately, while focusing on competitive prices, it also emphasizes other factors, such as frequency and convenience of scheduling, facilities, transportation safety and security procedures, customer service, and cost controlling. This gives the company a strong competitive advantage. The future is unpredictable. Even with forecasting and hedging, it is difficult to predict which airline will continue to be successful. Continuous environment scanning and adaptation will be a key factor for future success. With the current success of Southwest Airline's business plan and marketing strategy, their future success is certain and will make them a company worth watching and emulating. ...read more.

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