Analysis of the Marketing Function of Southwest Airlines Essay Example

Analysis of the Marketing Function of Southwest Airlines

Introduction

This is an analysis of the marketing function of Southwest Airlines. The analysis includes details on the way the company manages its brand identity, its product portfolio and the characteristics of the customers who form its target market. The analysis also includes details of the competitive environment of the company as well as how the company intends to grow in the short-term.

Brand Analysis

Southwest Airlines has developed a brand image as a leading low-cost airline that offers affordable services in exciting ways. The airline is one of the pioneers of the low-cost carrier (LCC) model. The essence of the LCC model is that airlines seek to be leaders in the industry in terms of costs. The airlines that use the LCC model drastically reduce their costs of operations and focus on providing clients with only the essential services that the clients need (Holloway 2012, p. 48). Southwest Airlines is one of the most successful airlines that use this model so far. Therefore, the company identifies itself as a leading airline that provides fast airline travel services at affordable rates (Southwest Airlines Co 2016, p. 1). The values of the company are meant to help it achieve its long-term vision. The vision of the company is to be the most profitable, loved and flown airline in the world (Southwest Airlines 2017). Thus, the company focuses on the mass market by presenting itself as an airline that understands and meets the needs of the common traveller. Furthermore, the values of the company include the following: safety, friendly customer service and low costs (Southwest Airlines 2017). Thus, the company emphasises the way it cares about the needs of its customers.

Product Analysis

Southwest Airlines offers two main categories of services: short distance domestic flights and long distance international flights. The company first started as a provider of short distance domestic flights between cities in the United States. The company focused on the model of using direct flights between cities as opposed to the other model that many other airlines use in which customers can be routed through various cities during a single journey (Southwest Airlines Co 2016, p. 3). Under the international category of services, the company offers flights to Liberia, Costa Rica, Mexico and other international destinations (Southwest Airlines Co 2016, p. 2). The two services of the company are at different stages of the product life cycle. It is observed that airlines, like all other companies, are faced with changes in the price elasticity of their products as the products progress to the decline stage after the first stages of growth and maturity (Hanlon 2007, p. 31). Along this line, the direct local flights service of Southwest Airlines is at the maturity level. However, the international service is at the growth level, given that its revenue contribution has been growing steadily since it was first introduced in 2014 (Southwest Airlines Co 2016, p. 3). Table 1 and Figure 1 below show Southwest Airlines’ revenue from international and domestic operations between 2014 and 2016

Table 1: Southwest Airlines’ revenue from domestic and international operations, 2014-2016.

Source: Data obtained from Southwest Airlines Co (2016, p. 3).

Figure 1: Southwest Airlines’ revenue from domestic and international operations, 2014-2016.

Source: Southwest Airlines Co (2016, p. 3).

Customer Analysis

One of the characteristics of the individuals who make up the target market for Southwest Airlines is that they are regular travellers. As well, the customers of Southwest Airlines are looking for an airline that offers low fares for trips. Additionally, the customers of the company are looking for a carrier that offers fast trips. Another point is that the customers are looking for an airline that provides very reliable services. Also, the individuals who form the target market of Southwest Airlines are looking for a carrier that cares for and respects them. Furthermore, the target market of Southwest Airlines is defined by individuals who would like to have fun when travelling. The customer value proposition of Southwest Airlines is based on the need to provide services that are affordable, dependable and reliable to the target market (Ramaswamy & Namakumari 2013, p. 382). The company says that it can deliver these services because it does not provide unnecessary amenities for its travellers (Ramaswamy & Namakumari 2013, p. 382). Thus, the company seeks to meet the needs of the individuals who form its target market. To manage its customers, the company uses a relatively easy cost structure and provides important ancillary services such as free Wi-Fi connectivity (Southwest Airlines Co 2016, p. 5).

Competition

The two most important competitors of Southwest Airlines are JetBlue Airways and United Airlines. These two companies share several aspects with Southwest Airlines. For example, all the three companies use the LCC model. All of them focus on providing affordable and reliable services to their customers by ignoring non-essential add-ons to their service offering. Moreover, all the three companies offer their clients affordable and reliable services. For example, JetBlue Airways targets customers who are looking for deals in air fares (Dunne & Lusch 2007, p. 54). Similarly, Southwest Airlines emphasises affordability in the way it markets its services (Southwest Airlines Co 2016, p. 2). However, there are slight differences in the way the companies have been performing in the recent past. For example, JetBlue Airlines has consistently been voted as one of the best companies regarding customer satisfaction (Dunne & Lusch 2007, p. 54). However, Southwest Airlines has been struggling to improve its arrival and departure times, regardless of being very profitable.

Growth Strategy

Southwest Airlines focuses on several things to grow in the short-term. First, the company seeks to expand its international services by increasing direct flights to specific destinations (Southwest Airlines Co 2016, p. 7). By increasing the number of international flights, the company will take advantage of the new markets for long-haul services to offset growing competition in the market segment for short-haul services. Secondly, Southwest Airlines intends to leverage on its reputation as a low-cost carrier to protect its market share (Southwest Airlines Co 2016, p. 5). Although the company does not plan to introduce new flights to cities within the US in the short-term, it plans to maintain its value offering to attract new customers (Southwest Airlines Co 2016, p. 5). Thus, the growth strategy of the company is two-pronged: to grow its international flights service and maintain the value that it offers its customers in the domestic service.

Conclusion

In conclusion, Southwest Airlines relies on its identity as a pioneer low-cost carrier to appeal to the typical travellers who need cheap, reliable and efficient services from airlines. The company faces competition from several other airlines that use the LCC such as JetBlue Airways and United Airlines. Lastly, the company intends to achieve growth by attracting more customers for its domestic services and increasing the number of destinations for its international service.

References

Dunne, P & Lusch, R 2007, Retailing, Cengage, Mason.

Hanlon, JP 2007, Global airlines: competition in a transnational industry, Routledge, London.

Holloway, S 2012, Straight and level: Practical airline economics, Ashgate, London.

Ramaswamy, VS & Namakumari, S 2013, Marketing management: global perspective, Indian context, IGI Global, New Delhi.

Southwest Airlines 2017, Investor relations, viewed 23 June 2017, <http://www.southwestairlinesinvestorrelations.com/our-company/purpose-vision-values-and-mission>.

Southwest Airlines Co 2016, 2016 annual report to shareholders, viewed 23 June 2017, <http://investors.southwest.com/~/media/Files/S/Southwest-IR/Annual%20Reports/2016_AnnualReport_LUV.PDF>.