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MARKETING MANAGEMENTSouthwest Airlines: In a Different World
Presented by:-Avishek Bhattacharya
Achintya PRDivya Marwah
Mukul AttriNayana Unni
Prasahant PatroSiddharth Modak
Company Profile• Founded in 1967 by Rollin King, Herb Kelleher and
Lamar Muse• Started operations in 1971 with three Boeing 737s
after winning the lawsuits against them• Well known for its Low Fare policy and low cost of
operations• ‘Airline of the Year Award’ – 2003• Presently operating in more than 60 countries with
over 500 Boeing aircrafts• Came up with a famous policy of ‘Employee First,
Customer Second’
“If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure, they have a good time doing it, people will fly your airline.”
Core Strategy
Differentiation Strategy
OTHERS
Focussed on long route travels.
SOUTHWEST
Mainly, short route journeys.
OTHERS
SOUTHWEST
“Fun-LUVing Attitude” for in-flight entertainment.
Focussed luxury, complementary and in-flight services.
OTHERS
Strictly adhered for a disciplinary and sophisticated travel.
SOUTHWEST
Pets Are Welcome on Southwest(P.A.W.S)
OTHER
Only cash payment, for onboard services.
SOUTHWEST
Cashless cabin (Credit Card only for onboard purchases.
Other Differentiation Strategies
• Low cost meals• Less turnaround time• Employees first, Customer second policy• “Bags fly free” policy• Ticketless travel• Early-bird Check-in, unaccompanied minor
service charge
Cost Leadership Strategy
Hedging
A hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment.
SWA used hedging for the following objectives:
• Plan towards profitability.• Plan cash flows.• Lower overall fuel expenses.
OTHER
Multiple types of aircrafts are used
SOUTHWEST
Single type of aircraft is used that is boeing 737
OTHER AIRLINES SOUTHWEST AIRLINES
Followed the point to point Model
Followed hub and spoke model
OTHER
Luxurious travel with lot of in-flight complementary services
SOUTHWEST
Cheap, convenient and in-flight entertainment
OTHER SOUTHWEST
On an average there were six cabin crews.
Maximum three cabin crew
Other Cost Leadership Strategy
• Use secondary airports (Less congested)• Operates in mid-sized cities.• Low cost pricing strategy• No complementary meals• High utilization rate of fleet of aircraft.
Focus Strategy
Targeted two types of traveler: 1) Convenience, time-oriented travelers, 2) Price sensitive leisure travelers.
“Rapid Rewards Programs” for frequent flyers.
Advertising
Other Focus Strategy
• Frequent reliable departures• Try to make air fares comparable to driving
expenses for shorter routes.• Exploring North-East markets• Code-sharing agreements for greater reach.
• Airport La Guardia is used by low cost airlines for domestic, international and transcontinental flights.• One of the smallest airports in United States of America• Southwest paid US$7.5 million to acquire certain assets from bankrupt ATA Airlines in 2008.• Reason: To acquire the operating certificate and New York’s LaGuardia Airport landing slots formerly controlled by ATA.• Southwest got 14 slots, enough to operate seven takeoffs and seven landings per day at LaGuardia.• New York's LaGuardia landing slots are the company’s first entry into the major market.
Bidding and acquiring slots and gates at LaGuardia
SWOT Analysis
Strengths• Strong fleet operations• Dominant market position in North America• Friendly Staff• Best low fare carrier• Largest airlines in the world in terms of highest number of
passengers per year• Recognized as a great value and excellent services• Flexible working hours even though 82% of employees are
unionized• Strong brand image• Highest daily domestic departures than any other commercial
U.S. airline
Weakness
• Declining profits and margins• Heavy dependence on passenger revenues• Heavy dependence on a single producer –
Boeing• Conservative growth strategy• Limited to cities domestically• Operates its own booking service• Does not offer segmentation (business flights,
first class, etc.)
Opportunities
• Recovery of US Airline Industry• Acquisition of Air Tran Holdings• Recovery of US tourism• International Expansion• Longer flights are being introduced• Traveller traffic is expected to grow by 3.5%
through 2019.
Threats
• Intense competition• Regulation restrictions• Price fluctuations in petroleum markets• High unemployment and inflation keeps
travellers from flying• Joint ventures can negatively affect brand
image• Exposure to Shaky American Economy
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