Southwest Airlines Presentation final

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Southwest Airlines:

Southwest Airlines Just Plane Smart 12/7/15 Emeka Mordi 1


Agenda Introduction Value Proposition Market & Industry Overview External Environment Segmentation and Target Markets Product Offering Distribution Strategy Pricing Strategy Positioning & Differentiation Reference 12/7/15 Emeka Mordi 2


Introduction Incorporated on March 15, 1967. Founded by Rollin King & Herb Kelleher. Flies to 97 destinations across the U.S. and 7 additional countries. Largest U.S. carrier by 2010. About 48,000 employees. Mission Statement: “Dedication to the highest quality of c ustomer service delivered with a sense of warmth, friendliness, individual pride and company spirit”. 12/7/15 Emeka Mordi 3

Value Proposition:

Value Proposition Great value. Lowest possible fares. Excellent Service Friendly Employees No hidden fees ( Transfarency ) Click the link below to see the rapping flight attendant The Rapping Flight Attendant 12/7/15 Emeka Mordi 4

Market & Industry Overview:

Market & Industry Overview US Market size in revenue is $746 billion as of 2014. 6 major airlines account for 78% of the US market share Low-cost carries (LCC) account for 25% of the global market. Industry average margin is less than 3%. Southwest’s Margin is about 7%. Southwest Airlines accounts for 16.9% of the total US market share. Major competitors include: Delta Airlines JetBlue Airways United Continental American Airlines 12/7/15 Emeka Mordi 5

External Environment:

External Environment Opportunities Technological advancement Decreasing fuel prices Economic growth Growing market Social & Demographic factors Threats Regulation Tax Anti-trust & anti-monopoly laws Safety National security Emissions Competition and substitutes Terrorism War Disease (Ebola) 12/7/15 Emeka Mordi 6

Segmentation & Target Markets:

Segmentation & Target Markets Ethnographic Segmentation Cost conscious Value seeking Business men and women Frequent flyers Leisure flyers First time flyers Full service airline castaways Road and rail travelers 12/7/15 Emeka Mordi 7

Marketing Mix: Product Offering:

Marketing Mix: Product Offering Flights: Domestic flights to 97 cities in the US. International flights to 7 countries outside the US. Amenities: Early bird check-in Business select Fly By (Priority lane access) Southwest Airlines Cargo Southwest Charters Business Travel & Groups On-board WiFi 12/7/15 Emeka Mordi 8

Marketing Mix: Distribution Strategy:

Marketing Mix: Distribution Strategy Direct Marketing ( ) 80% of passenger revenues booked on , SWABiz & in 2014. 2 0 million people subscribed to Southwest’s click ‘N save emails in 2014. for business travelers 61% of fortune 1000 companies are enrolled in SWABiz . Phone sales No middle-man (travel agents) No joint fares with other airlines 12/7/15 Emeka Mordi 9

Market Mix: Pricing Strategy:

Market Mix: Pricing Strategy Offers lowest possible fares by reducing operating costs: Flying one type of fleet airplane reduces maintenance costs. No seat assignment reduces labor overhead costs. No meals offered reduces operating costs. Paperless tickets reduces operating costs. Point to point vs hub-spoke model. Bags fly free. Simplicity (no hidden fees) . 12/7/15 Emeka Mordi 10

Positioning and Differentiation:

Positioning and Differentiation “Just plane smart” Positioning as the “value” airline. “THE low f are airline” Positioning as the “cheapest fare” airline. “Symbol of freedom” Positioning as the “freedom to seat” airline. “ Wanna get a way?” Positioning as the “fully refundable low fare” airline. “There’s somebody else up there who loves you.” Positioning as the “friendly” and “great customer service” airline. “Grab your bag, it’s on!” Positioning as the “bags fly free” airline. “Fees don’t fly with us” Positioning as the “no hidden fees” airline. 12/7/15 Emeka Mordi 11


Reference Cederholm , T. (2014, September 3). Overview: External factors that influence the airline industry. Market realist (4 ). Clayton, E., & Hilz , A. (2015). Industrial Perspectives: 2015 Aviation Trends . Retrieved December 7, 2015, from PWC Website : http :// aviation-trends Korostoff , K. (2010, November 9). Market Segmentation, Southwest Airlines Style . Retrieved December 7, 2015, from Research Rokstar : http:// segmentation-southwest-airlines-style/ Prezi. (2014, January 31). Southwest Airlines Customer Segmentation . Retrieved December 7, 2015, from Prezi Website: https :// / Schmidt, A. (2015, My). US Airline Industry Overview foe May 2015. Market realist . Southwest Airlines. (2015). About Southwest . Retrieved December 7, 2015, from Southwest Airlines Website: https :// / Southwest One report. (2011, February). U.S. Department of Transportation Air Traveler Consumer Report . Retrieved December 7, 2015 , from Southwest One Website: http:// /2010/ people_cu.php 12/7/15 Emeka Mordi 12

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