Southwest Marketing Strategy Essay -- essays research papers

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, â€Å"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 atte... ...ly buy Southwest’s inexpensive tickets. College students also aren’t concerned about in-flight movies, meals, or other perks. Southwest would crush the competition in that route and make a large profit. Even families going on vacation would fly Southwest Airlines to Mexico. It is cheaper than other major airlines and it is a respected airline, unlike some no name airlines that run flights to Mexico. Advertising would be best done on television because America has become lazy and watches too much TV. They should advertise their great customer service by having customer testimonials and pictures of smiling customers and employees. They should also advertise during family oriented shows, because they are a form of inexpensive travel that a family could take advantage of. In conclusion, I feel that Southwest has taken advantage of its inexpensive flights and family oriented atmosphere to prevail despite the September 11th tragedy. Southwest has been a profitable business for 26 consecutive years and has twice the profits of United Airlines. They have been doing a great job providing customer service and will continue to be successful as long as they continue with their current plan.