Southwest Airlines

south-west Airlines southwestward Airlines is live leader among umpteen air passage gondola carriers in todays highly competitive transportation industriousness. In bon ton to maintain such a strong hold on the respiratory tract industry, southwestward Airlines utilizes an intense and highly systematic set of merchandise strategies. most of their strategies atomic number 18 centered on offering its consumers broken- be slatings and free baggage checks to vaporize most anywhere in the join States. Customers throw out be rest assured that Southwest Airlines leave alone continue to do whatsoever it can to provide little-cost returnss. Some of the disclose issues that will be discussed will overwhelm Southwests free baggage policy, its merchandising mixture strategies, its section principles, as well as a SWOT analysis. foodstuffing is a vital part of any logical argument and is an integral component of sell any fruit or service. Whether the business is a smal l milliampere and pop operation or a world industry leader, marketing is a part of the business. Southwest Airlines subscribe tos total use out of its violate resources and abilities to build on its fall upon marketing practices. According to research by Chan, one of Southwests main strategies is that it strives to treat its employees fairly and engages in bread share-out so that their employees collectively own about 10% of the company. Southwest Airlines has a high employee retention rate of at least 92.3% and maintains an enthusiastic all overwork force. Southwests operational strategy is based on six pillars, namely bound passenger service, shit, reli fitting departures, short-haul, pass-to-point routes between mid-sized cities and secondary airports, very disordered ticket prices, lean, heavily productive ground and gate crews, and high aircraft utilization. Some of these key factors, as well as attention to excellence in oversight make outnce receive launched th is company to great conquest.Because there are umpteen ways to fulfill the unavoidably of the client, a straight-forward approach is to make the quartet Ps of the marketing mix. This paper will examine the marketing mix and give examples of the marketing mix as it pertains to Southwest Airlines. The four elements of the marketing mix are product, settle, promotion and price.As in the Product category, variance has defined some of the price points. Price (the amount a customer pays) is determined by market share, competition, operational cost, brand or product identity and the customers perceived value of the product. Pricing may affix or drop-off with frequency and pricing strategies must be planned and worked passing(a). The world(prenominal) recession of the last two old age has clouded some of the traditionalistic differences, as some resort and upscale brands take away discounted heavily to the point where the lower priced properties cannot effectively compete. Hot els should subscribe to chance oned the lessons of the air passages and not just compete based on being the net cost. The anger of flyers today for being charged extra for almost everything has opened the way for certain carriers to widen and differents to enter what were previously lucrative and exclusive markets.The associates of each of those airlines have major differences as well in how and what to communicate to their becomeers. Cash flow is an unmistak suit fitting critical factor and reasonable discounts on a logical tail end are often good business practices. Southwest Airlines in the US has been consistently one of the most profitable carriers in the old 20 years and, at eons, is the net fare provider. A non-technical serve at their pricing strategies from besides a consumers view will show how they track, demand, and coiffure prices accordingly, even in the economic downturn. They are not always the lowest fare in a given market on a given day, but their overall satisfaction ratings demonstrate their ongoing and move succeeder. Consumers will always remain sensitive for fair prices, discount options and excess offers, but competing on price as the major component for success is not viable or logical for pertinacious-term .As a Promotion category, southwest is one of some(prenominal) airlines that are increasely interested in mentioning more(prenominal) contemporary avenues for advertising. Although, they are soundless fall behind behind differentwise airlines, they are discovering the importance of social media in promotion. fond media sites like twitter, Facebook, YouTube, Flickr and even blogging allows Southwest the king to get the online community to learn more about its low-costs prices and services.As a place category, Southwest Airlines is the tooshien braggart(a)st airline in the US. It flies 64 million passengers per year to 64 cities in 34 states. Southwest Airlines operates a fleet of 388 aircraft of the Boeing 737 type, ranging from the 737-200 to the Next times 737-700. Although Southwest Airlines is mainly a point-to-point carrier, there is an increasing amount of impart traffic on their routes. Major hubs in SWAs network include Las Vegas (185 daily departures), Phoenix (183), and Baltimore/Washington (161). In 2009, Southwest partnered with Coastal Vision 3000, a Northwest Florida business group, in an attempt to position Northwest Florida as one of Americas premier marge destinations. This partnership is working hard to feature job growth, economic progress, and provide travelers more options for flying into areas with popular beach destinations.Southwest Airlines, along with Jet Blue, Frontier, and Airtran, are currently leading in low-cost air fare pricing and are continuing to profit trance other airlines such as United, US Airways and Delta are agony economic setbacks (Chan, 2007). Based on this research, Southwest Airlines has not been forced to decrease their flyi ngs or lay off many employees even with the ramifications of the events of September eleventh on many airline industries. The airline successfully maintained a $2 billion cash reserve prior to September eleventh and continues to strive and survive during difficult economic times. Part of its enduring success is associated with effective marketing strategies as well as long-term overall strategies. According to further research by Chan, Southwests primary focus is the introduction of a tailored set of best-fit activities. It still carries on much of it philosophies from 30 years ago by offering low cost without the show gimmicks offered by other airlines. Southwest has never participated in an in flight meal service or assigned seats and still maintains those aforementioned(prenominal) practices in order to keep costs low. Also, according to Chan, Southwest has something cognise as a linear route structure. The airline uses this method to fly provided one specific benevolent of airplane so that it can stay in high-density markets unless. This strategy benefits the airline by allowing it to maintain a strong competitive advantage and high pay.Controversy Over Carry-on luggageWithin the last several years, the discussion of legislation regarding industry-wide standardization on limitations for carry-on baggage has been widely debated throughout the US airline industry. While a arrogate of airline industry-based groups have advocated standardization on the list, size, and weight of bags that would be allowed onto an aircraft, the Federal Aviation Administration (FAA) has yet to take any severe action to this point. As a result, the debate over carry-on baggage restrictions still exists and causes unnecessary confusion and difficulty for both the airlines themselves as well as their passengers.As the number of airline passengers has increased in recent years, the number of passengers electing to bring their luggage on board a plane or else of checking their bags has also increased. Some passengers recompensel that checking their bags will lead to loss, damage, or theft. Others picture waiting in sign in lines too time-consuming and opt to report at their gate. As a result overhead bins and storage compartments on flights are often overcrowded. These overcrowded bins lead to approximately 4,500 injuries yearbookly in the United States according to Air Safety Week, an industry overboldsletter. These injuries result from baggage that waterfall on passengers when bins are opened after arrival or when bins out of the blue opening during rough transit.Southwest holds the notable status of being the only country-wide carrier to not charge passengers for second examine bags. Over the past few months, all the Legacy Airlines and most of the low-cost carriers have added a charge for second bags, and American Airlines made an announcement on may 21, 2008 tutelageing a $15 tippytoe for a first study baggage, this created a huge uproar. Southwest chief executive Gary Kelly stated that, Its not what customers want, aught wants to be nickeled and dimed. Other airlines jumped on similar bandwagons by imposing a $25-each-way fee for the second bag checked. (Maxon, 2008) look by Maxon also famous that Southwest is imposing some fees, on January 29, 2008 is began initiating a $25 fee each way for the second bag checked. According to this research other airlines are also charging for transporting pets, travel by unaccompanied minuscules, shipping checked items such as antlers and ski gear or getting better seats. Theres no telling how long Southwest will stick with its passenger-friendly fee policy, but during this tough economy, Southwest managed to be the only profitable airline in the first quarter of 2008 and recently ranked as the crystalize U.S. airline in a major customer satisfaction survey.What does it take to succeed in a business as troubled as the airline business? It takes a unique strategic poi nt of view, a long-term commitment to that strategy, and a personality in the marketplace that customers find interesting, engaging, and compelling.That is why Southwest Airlines continues to fly high relative to the competition. In 2009, it was the only major carrier to turn a profit. In 37 years of operation, it has never lost money. Today, it is in the remarkable position of charging some of the lowest fares, paying relatively high wages (unlike its rivals, it has never used loser court to redo union contracts), and generating the best returns. Unusual, to be sure, but thats what happens when you agree a unique strategy with an engaged and upbeat workforceand you always look for customer-oriented ways to differentiate yourself. Last year, as the other big carriers generated $2 billion in checked-baggage fees, Southwest not only refused to charge for checked bags, but unveiled a hilarious ad campaign to gazump its rivals for doing so.SWOT AnalysisStrengths Most of Southwests st rengths are the same reasons why the airline has captured a comparative advantage in the airline industry. Southwest has been able to maintain a low cost approach to flights that has appealed to the budget minded(p) consumer. It is the first airline to offer reasonably priced travel packages with low frills and polished customer service. (Broughton, 2010) integrity strategy that Southwest uses to keep their costs low is to purchase only Boeing airplanes. This approach reduces repair costs and provides bulk discounts on purchases. Southwest has made itself very attractive to consumers by offering many customer oriented programs. It is the first airline that offered discounts on flights to senior citizens. In addition, it made the check-in process more efficient by initiating ticketless travel. With the no seat assignment policy, the process of boarding flights is not only time effective but also more cost effective then(prenominal) their competitors. Southwest Airlines is also th e only airline that offers credit on frequent flyer miles based on the number of trips taken with the airline or else of miles traveled. Another customer oriented program that Southwest has adopted is the Bags tent-fly Free Campaign and a new early bird check-in program that they are hopeful will have a taxation potential generating approximately $18 million dollars. The carrier also generated approximately $10 million in revenues from its new pet fare, unaccompanied minor service charges, and excess/heavy baggage fees. (Gittel, 2009) With more than 3,200 daily flights and 35,000 employees nationwide, SouthwestWeaknesses Although Southwest Airlines has consistently turned a profit that does not blotto that they are exempt from weaknesses. Weaknesses refer to the organizational impediments that Southwest must consider when making operational finiss. Southwest does not offer inter interior(a) flights. This decision limits Southwest flight locations to within the continental Unite d States. This weakness over time may become a barrier to increasing sales, as it is shutting out consumers that need to fly internationally. Southwests in dexterity to utilize online mental reservation agents is another weakness that the airline should reconsider. Companies such as Priceline.com and Expedia.com would be able to increase the airlines ticket sales and thus be better able to meet their load capacity. Load capacity is a serious concern to Southwest Airlines, as it represents the total number of passengers required to meet their breakeven point. Southwest Airlines does not use chat communications such as telecommunicate in its operations. Electronic forms of communication would provide the airline with a more direct and quicker way to interact with employees and customers.Opportunities Southwest Airlines has many opportunities which will help them to grow and stay productive. In the past, new technology developments have been one of the many driving forces which enabl ed growth for Southwest. Applying new technology to make the travel experience more enticing is an opportunity that Southwest continues to pursue. investigate and development to advance procedures and services within the industry would help the airline maintain its competitive edge by allowing the airline to introduce new products or services. Southwest should also focus on increasing their ability to advertise on the internet in order to reach a broader range of consumers. Currently, Southwest is planning on extending flights to further destinations. A long term amity for Southwest Airlines is to expand their flights internationally and to other national markets. The airline is also planning to increase the frequency of 65 flights while decreasing the frequency of 10 flights for a total net elaboration of 52. In addition, they are considering expanding services to include leisure or business classes.Finally, Southwest has initiated a labor reduction by launching a voluntary earl y-out program to better align staffing with the carriers capacity levels. The company expects yearbook savings in subsequent years from the program to exceed the cost of the program (Unknown, 2010) and with these savings Southwest can invest in other opportunities to maintain its success.Threats The threats that Southwest Airlines are faced with are situations, events or conditions that are faced by all airlines within the entire airline industry. One of the biggest threats that Southwest has had to face since 9/11 is the decline in the number of travelers for leisure. Many travelers since the terrorist attacks of 9/11 have opted to travel by car instead of flying out of fear. Since 9/11 there have been numerous terrorist attempts on airplanes. The most recent one was Christmas day 2009. In order for Southwest to continue to grow and survive in the airline market they must continue to communicate to their customers their dedication to the security of their passengers. In addition, Southwest must stand by their commitment by increasing airport security, which has and will continue to increase their costs on an annual basis.Another threat that the airline industry must contend with is the governments ability to create and execute new dominions that will affect airlines such as Southwest. Many of these regulations can increase operating costs. One such regulation includes restrictions on the types of aircraft used and limits on the number of operations. The biggest threat to the airline industry is the fluctuation in gas and oil prices. Southwest has managed to establish send away hedging contracts in the past which has given them the advantage over their competitors. However, these contracts are expiring and if Southwest cannot successfully renegotiate these contracts, they run the risk of subjecting themselves to higher fuel costs. This could have a negative impact on not only their future customer fares but also their profits as well. To date, they have re vised their fuel hedge portfolio to include derivative contracts in place for approximately 50% of their estimated 2010 fuel consumption. This revision has lowered their first quarter 2010 expected hedging premium costs by $30 million, which is $15 million lower than the fourth quarter 2009 costs.Market SegmentationMarket segmentation is among the most powerful weapons in the marketing arsenal. Joyce Rogge the vice chairwoman of marketing for Southwest states that, Our goal is to become the preferred airline in each city that we serve.. Southwest is consciously focusing on targeting mingled customer bases. The companys campaign has concentrated on attracting the African American demographic that remains prevalent in as many as 24 of 59 regions that Southwest Airlines serves. (Churchill, 2001)Southwest decided to partner with BETs ( foul Entertainment Television) Black College Football Classic Coverage, ESPN, and National Football League games to target the potent 25-54 demographic . The airline has used these avenues as well as partnerships with Pizza hut and Disney as part of their increasing advertising budget to target key demographic markets.With respect to the psychographic category, Southwest is meeting the cost conscious needs of flyers. Airline carriers like Delta, United, and American have battled for higher margins by indulge the price-insensitive business traveler, thereby effectively leaving behind a large number of consumers who hunt for bargains. As competing airlines have continued to increase costs to cater to customers who require plush seats, better wines, and airport lounges, Southwest rear the need to appeal to the comparatively undemanding flyer who absolutely had to travel but was not willing to pay the high fees charged by other carriers.Southwest has entered into a variety of intended geographic markets to include openings in Florida, Baltimore, and even Long Island where there is a shuttle service to Boston. In other words, Southwe st arrives where customers are, rather than spending time and causal agency to build traffic. This and other tactics have attributed to 23 years of profits for Southwest. (Haas, 2010) Although, segmentation is a great way to uncover growth markets, current segmentation practices often blind companies to market disruption-the most valuable kind of innovation.CONCLUSIONSouthwest has long been regarded as a benchmark in its industry for operational excellence. Southwest Airlines is a fine example of a company that is committed to its core competencies and efficient operations to drive its low cost structure, outstanding delivery of customer service, and innovative HR worry practices. It has the lowest costs and strongest balance sheet in its industry. This airline baron face many challenges in the future such as an increase in labor costs, fuel costs and competition from other low cost carriers. However, it still has the comparative advantage within the airline industry. Southwests competitors will not be able to grow as quickly as Southwest. In order for the competition to grow at a meteoric rate they would have to operate at a cost extend to or lower than Southwest. Southwest Airlines has taken all of the above factors into consideration in an effort to maintain itself as one of the top contenders in an ever changing industry. ReferencesChan, B. (2007, August). Why is Southwest Airlines one of the Best lowly Cost Airlines? Retrieved from http//fishtrain.com/2007/08/21Maxon, T. (2008, June). New Southwest Airlines ad campaign targets other airline fees. The Dallas Moring News. Retrieved from http//www.dallasnews.com/sharedcontent/dws/bus/stories/053108dnbusairnickel.3633d88Southwest Airlines Announces Service from Northwest Floridas New global Airport Near Panama City Beach, Florida. Southwest News Release. Retrieved from http//www.southwest.com/swamedia/pfnPressRelease.html?int=HOMEWNEW03CTYPFNChurchill, R. (2001, April). Southwest Airlines Powering a Sa les Liftoff-Southwest Airlines Co. advertising targets African-Americans-Brief Article-Statistical Data Included. Brandweek. Retrieved from http//findarticles.com/p/articles/mi_m0BDW/is_14_42/ai_72981547Gittell, Jody. The Southwest Airlines bureau Using the Power of Relationships to Achieve High Performance. McGraw-Hill Trade. December 19, 2009.Harvey, G., Turnbull, P. (2010). On the Go walking the high road at a low cost airline. The International Journal of Human Resource Management, 21(2), 230. Retrieved March 11, 2010, from ABI/INFORM worldwideJackson, W., Jackson, M. (1 July). Southwest Airlines The Next Fight Begins. Journal of the International Academy for miscue Studies,65-81. Retrieved March 11, 2010, from ABI/INFORM Global.Russell, Matthew, Southwest Airlines An Industry Leader, February 2010, http//www.associatedcontent.com.Smooth Landing Research Associates, Southwest Airlines, Cornell Universitys Johnson Graduate School of Management, 1997.Southwest Airlines Press Release, Southwest Airlines Reports quarter Quarter Profit and 37th Consecutive Year of Profitability, January 2010, http//phx.corporate-