Southwest Marketing Strategy Essay

This essay has a total of 1262 words and 5 pages.

Southwest Marketing Strategy

Southwest Airlines is the industry leader in low cost airfare. They began its operation in
1971 with three Texas based routes and began interstate routes in 1978. When Southwest
entered the market in 1971 they employed a market penetration pricing approach. They
wanted to provide the best service for the lowest possible price. They saw that if they
cut out certain unnecessary benefits they could lower their ticket price to a level far
below that of the competition. They do not have in flight movies, meals, or first class
sections. This strategy has been very cost effective and Southwest passes the savings on
to the customer. They chose to focus on pleasure travelers and low-income travelers
opposed to business travelers. This allowed them to take advantage of a market, which was
often ignored by other airlines.

Southwest is not concerned with the prices of other airlines. They do not engage in
pricing to meet competition, or pricing below competition. CEO Herb Kelleher stated,
"We're not competing with other airlines. We're competing with ground transportation."
This philosophy has led them to be very successful because they are priced below the
competition, but don't raise their prices when the competition does.

Cost controlling is very important in the airline industry. Southwest is very good at
controlling their costs. They offer a no frills service for people who want to get to
their destination for as little as possible, and are not concerned about the bells and
whistles like in-flight movies. Southwest also realized that when their planes are on the
ground, they aren't making money. They decided to keep their planes in the air as much as
possible and have worked hard to keep a low turnaround time. They manage to unload
passengers and load new passengers for the next flight within twenty minutes, which is
shorter than the industry average. Southwest also uses only one kind of plane, the Boeing
737, in order to reduce costs of parts and training employees to use different types of
planes. All of these methods have lowered the cost of operations for Southwest and allowed
them to have a profit of $4.7 billion, which is twice that of United Airlines. And because
they are so efficient they can pass the savings on to customers.

There is no first class at Southwest and therefore all the customers are treated the same.
They all receive the same level of attention and care. All customers feel special because
they all receive the same high level of attention.

Southwest has segmented the market and decided that their target market would be pleasure
travelers who are looking for low cost flights. Their positioning is a low cost airline
with great customer service. This sets them apart from the competition because airlines
that are low cost usually lack good service, where as, Southwest prides itself in good
customer service. Colleen Barret, executive vice president of customers, says, "We are not
an airline with great customer service. We are a great customer service organization that
just happens to be in the airline business." This clearly shows Southwest's feelings
towards their customers and is a big reason for their continued success.

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