Analysis of Southwest Airline's Product, Services and Pricing Strategy

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Southwest Airline was started in 1971 without enough resources and marketing itself through the LUV line (Southwest Airline, n.d.). The company embarked fully on flying its customers from different airports through their shuttle trips. The airline has progressed through streamlining its operations, thus, resulting in low fare prices and maintaining the loyalty of their customers (Blaha, 2016).

The Product, Services and the Primary Target of Southwest Airline

The airline has developed several tools and products designed to modify its products to business travelers. First, Southwest Airline has embarked on a unique boarding procedure to advance in departure (Southwest Airline, n.d.).  It encompasses grouping passengers into three groups and allowing them to choose their sitting locations (Blaha, 2016). Secondly, the airline has also introduced unique services and price programs such fun fare, senior discounts, same-day freight service, and ticketless travel (Southwest Airline, n.d.). On the other hand, the airline has its primary target market as the middle-class families, small business owners, and young adults traveling short distances (Bhaskara, 2014). The airline positions with the group by focusing on low fares, numerous flights, arrivals being on time, and maintaining a top safety record (Blaha, 2016). Lastly, the airline introduced the "bags fly free" policy to attract its customers in comparison to other airlines that used to charge baggage.

The Pricing Strategy of the Southwest Airlines

The airline has embarked on low pricing strategy. Despite some of the seasons when there is a fluctuating demand for luxury services and high prices of fuel, the company maintains its policy, thus, attracting more customers (Bhaskara, 2014). The approach has been a differentiating factor from other airlines as they are struggling in their operation, hence, hiking their prices. The tactic has impacted immensely on the competitive advantage of the company.

The Risks that the Southwest Airline Face from Macro and Microenvironments

Southwest Airline has been one of the most successful airlines in the United States. The airline is struggling to make some profit; thus, the slow economic growth and high fuel prices lower its earning (Mathur, 2015). The macro factors affecting the airline include unemployment, economic growth of the United States and inflation (Mathur, 2015). Low economic growth makes it difficult for customers to purchase luxury items such as airline tickets (Mathur, 2015). Unemployment leads to lack of vacation travelers since they do not have enough to pay for the expenses. Lastly, inflation causes the operating cost of the airline to be high, hence, cutting on profits (Mathur, 2015). On the other hand, the micro factors affecting the company involved, competition from its rival companies (Mathur, 2015).

Can Southwest Continue to Thrive as a Low-Cost Airline?

Notably, when tough economic times hit or other rival airline mimicking its business model; the airline will still thrive as a low-cost airline for the following reasons: first, the airline has embarked on cost-saving techniques through purchasing of its fuel through its long-term contracts with other companies, thus, cutting on fuel costs (Blaha, 2016). Secondly, the airline has improved on fuel efficiency by making its plane lighter through the power- wash of its jet engine and equipping the aircraft with seats that are lighter (Blaha, 2016). Thirdly, the company has embarked on entering new markets such as secondary cities having small airports that other airlines overprice and sway away (Blaha, 2016). As a result, the airline lowers its prices, since the gate fee are low, and congestion is reduced (Blaha, 2016).

References

Bhaskara, V. (2014). Southwest Airlines Opens for Business - Customers. Retrieved 10 14, 2018, from Forbes: https://www.forbes.com/sites/airchive/2014/04/22/southwest-airlines-opens-for-business-customers/#4a793b86329b

Blaha, P. (2016, 3 10). The Marketing Excellence of Southwest Airlines. Retrieved 10 14, 2018, from LinkedIn: https://www.linkedin.com/pulse/marketing-excellence-southwest-airlines-peter-l-blaha-peter-l-blaha/

Mathur, S. (2015, 6 19). Risks taken by Southwest Airlines. Retrieved 10 14, 2018, from Slideshare: https://www.slideshare.net/111iiminternship/risks-taken-by-southwest-airlines

Southwest Airline. (n.d.). Marketing Excellence Southwest Airlines. Southwest Airline, 490-491.

January 19, 2024
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Business Economics

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