Southwest airlines 4 p report


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Southwest airlines 4 p report

  1. 1. Marketing Management July, 2011
  2. 2. Agenda <ul><li>About the company </li></ul><ul><li>History </li></ul><ul><li>Facts </li></ul><ul><li>Mission </li></ul><ul><li>Products and Services </li></ul><ul><li>Price </li></ul><ul><li>Marketing Strategy </li></ul><ul><li>Distribution Strategy </li></ul><ul><li>Promotions </li></ul><ul><li>Recognitions </li></ul><ul><li>Competitors </li></ul><ul><li>Conclusion </li></ul>
  3. 3. About The Company <ul><li>Gary Kelly is Chairman of the Board, President & CEO </li></ul><ul><li>A publicly traded company (NYSE: LUV) </li></ul><ul><li>Headquartered in Dallas, Texas </li></ul><ul><li>35,000+ Employees, 82% unionized </li></ul><ul><li>The United States’ most successful </li></ul><ul><li>- Low-fare, high frequency </li></ul><ul><li>- point-to-point carrier </li></ul><ul><li>- No Frills airline (no meals, no in-flight movies) </li></ul><ul><li>Business Sectors; </li></ul><ul><li>- Passenger </li></ul><ul><li>- Freight </li></ul><ul><li>- Other </li></ul>
  4. 4. History In 1971 by Rollin King and Herb Kelleher founded the company with one simple notion “ &quot;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.&quot; Southwest Airlines commenced Customer Service on June 18, 1971, with three Boeing 737 aircraft serving three Texas cities-Houston, Dallas, and San Antonio and in 1979 flew to all the major cities in Texas. In 1989 - Exceeded the billion-dollar revenue mark and became major airline
  5. 5. Facts <ul><li>Largest U.S. carrier based on domestic passengers carried in 2010. </li></ul><ul><li>Fly more than 88 million passengers in 2010 </li></ul><ul><li>1 st major airline to offer “ticketless” travel </li></ul><ul><li>1 st major airline to have its own web page 1 st airline to offer online booking. </li></ul><ul><li>1 st airline to offer satellite-enabled WiFi </li></ul><ul><li>As of Sept 2010, is largest airline site in terms of unique visitors </li></ul><ul><li>As of June 2011, Southwest operates 552 Boeing 737 aircraft among 72 cities in 37 states </li></ul>
  6. 6. 2010 Financial Statistics <ul><li>Net income: $459 million </li></ul><ul><li>Net income, excluding special items: $550 million </li></ul><ul><li>Total passengers carried: 88 million </li></ul><ul><li>Total RPMs: 78 billion </li></ul><ul><li>Average passenger load factor: 79.3 percent </li></ul><ul><li>Total operating revenue: $12.1 billion </li></ul><ul><li>Southwest Yearend results for 2010 marked Southwest's 38th consecutive year of profitability </li></ul>
  7. 7. Mission
  8. 8. Customer Service “ We like to think of ourselves as a Customer Service company that happens to fly airplanes”
  9. 9. Customer Service In 2010, Southwest Airlines led the U.S. Department of Transportation Customer Satisfaction ranking. Only 27 customer complaints per 100,000 customer boarded
  10. 10. Products and Services <ul><li>Fly to 72 cities in 37 states </li></ul><ul><li>Fly 3400 flights per day </li></ul><ul><li>Fly more than 88 million passenger in 2010 </li></ul><ul><li>Major airline that provides; </li></ul><ul><ul><li>-low-fare </li></ul></ul><ul><ul><li>-short-haul </li></ul></ul><ul><ul><li>-high-frequency </li></ul></ul><ul><ul><li>-Point to point service </li></ul></ul>
  11. 11. Map - Destinations <ul><li>*Service to Newark, NJ began March 27, 2011. *Service to Greenville-Spartanburg, SC and Charleston, SC began March 13, 2011. </li></ul>
  12. 12. Products & Services Allows members to get direct access to the front of ticket counter and security lanes No fee on changing the flight Low cost option allows customers to obtain better boarding position Get priority lane access and priority boarding Allows to check in one stroller, one car seat free of charge, in addition to two free checked bags. At minimum charge provides satellite based internet service
  13. 13. Products & Services A forum where you share your stories and travel advice, rate hotel, restaurants and more.. Application for desktop and iPhone, delivers exclusive, limited-time-only airfare deals on select flights Small pets are allowed in flight cabin at $ 75.00 fee Weekly email that provides information on all deals including air, hotel, car rental App for Blackberry and iPhone allows to access same feature as Provide customizable leisure vacation packages
  14. 14. Services for business travelers <ul><li>Priority Boarding </li></ul><ul><li>Premium Drink </li></ul><ul><li>Extra Rapid Rewards Points </li></ul><ul><li>Fly By Priority Lane Access </li></ul>Online tool that allows business travelers to plan, book, and purchase a Travel on Southwest Airlines
  15. 15. 2012 Services… <ul><ul><li>Acquisition of AirTran Airways, which closed May 2, 2011 for about 3.2 billions </li></ul></ul><ul><ul><li>After complete integration mid-2012, Southwest will expand service to 38 additional destinations </li></ul></ul><ul><li>Will offer direct international service to Mexico and Caribbean and a lso Atlanta, largest US city not served by Southwest prior to the acquisition </li></ul><ul><li>Southwest fleet </li></ul><ul><li>Southwest Airlines will add AirTran Airways's 88 Boeing 717 aircraft to their fleet totaling 640 fleet </li></ul>
  16. 16. Southwest Effect <ul><li>This term was coined to describe the boost in air travel by DOT in 1993. </li></ul><ul><li>The Southwest Effect - When Southwest starts flying into the new city; </li></ul><ul><li>-Air fare drops </li></ul><ul><li>-Increase in air travel </li></ul><ul><li>-It’s Business Model is major inspiration to other low cost carriers </li></ul>
  17. 17. Southwest Effect
  18. 18. Brand Loyalty - Low-priced fair - “Southwest Spirit” of Employees - Employees committed to “doing the right thing” - Customer-friendly policies on handling complaints &quot;Our people are our single greatest strength and most enduring long term competitive advantage.&quot; Gary Kelly, CEO Southwest Airlines
  19. 19. Pricing Strategy <ul><li>Branded themselves as low fare-airline </li></ul><ul><li>Charge the lowest possible fare </li></ul><ul><li>Operates on Point to point not hub-spoke model </li></ul><ul><li>Flies only one type of fleet Boeing 737 so saves money </li></ul><ul><li>20-minute turnaround time so high aircraft utilization </li></ul><ul><li>No seat assignments </li></ul><ul><li>No meals – no frills, snacks only </li></ul><ul><li>No electronic entertainment </li></ul><ul><li>Small airports, back gates </li></ul><ul><li>No seat assignments </li></ul><ul><li>No baggage transfers to other airline </li></ul><ul><li>No connection with other airlines </li></ul><ul><li>Paperless tickets (e tickets) </li></ul><ul><li>Single-class of service so more seats are used </li></ul>
  20. 20. Marketing Strategy <ul><li>First-time Fliers </li></ul><ul><li>Business Travelers (Point – to – Point) </li></ul><ul><li>Dissatisfied customers from full-service airlines </li></ul><ul><li>People who travel by Road, Rail </li></ul><ul><li>Cost and value conscious consumers </li></ul><ul><li>Small business executives </li></ul><ul><li>Travel short distances </li></ul><ul><li>Prefer low cost fares </li></ul>Target Market
  21. 21. Distribution Strategy <ul><li>Direct marketing – </li></ul><ul><li>- Via Internet – 84% of tickets in 2010 sold thru </li></ul><ul><li>- Phone </li></ul><ul><li>- No travel agents </li></ul><ul><li>- Do not use any other reservation system websites </li></ul><ul><li>- Does not offer joint fares with other airlines </li></ul><ul><li>Online booking tool for business travelers </li></ul><ul><li>- – allows business travelers to plan, purchase, and track business travel thru their companies web page. </li></ul>
  22. 22. Social Media and Internet Marketing
  23. 23. Promotions Rapid Reward program to earn free air ticket Discount on air fare for 10 or more people traveling together Provide customizable leisure vacation packages
  24. 24. Ad-Campaigns
  25. 25. Online Advertisement DING - Application for Desktop, iPhone and Blackberry that notifies the customer of hot limited-time-only airfare deals on flights Click N Save - Weekly email to Inbox that provides travel deals on Southwest flights, car rentals, hotel offers, cruises and Southwest Vacations
  26. 26. Advertising Slogans <ul><li>“ Just Plane Smart” </li></ul><ul><li>“ THE Low Fare Airline” </li></ul><ul><li>“ Symbol of Freedom” </li></ul><ul><li>“ Wanna get away?” </li></ul><ul><li>&quot;The Somebody Else Up There Who Loves You&quot; </li></ul><ul><li>&quot;Grab your bag, It's On!“ </li></ul><ul><li>“ fees don’t fly with us” </li></ul>
  27. 27. Sponsorships &quot;Official Airline&quot; Sports Team Sponsorships
  28. 28. Sponsorships
  29. 29. &quot;Official Airline&quot; Sports Team Sponsorships <ul><li> </li></ul>
  30. 30. Partnerships <ul><li>Southwest Airlines to Increase Service To Mexico With Volaris Partnership </li></ul> Southwest Airlines is teaming with the Student Conservation Association (SCA) for the Conservation In Action Tour Partner with Sea World in their 40th Anniversary celebration. This sweepstakes gives 40 families the chance to enjoy a VIP experience
  31. 31. Charitable Giving's & Volunteerism <ul><li>SWA serve the community through a program titled “Share the Spirit”. </li></ul><ul><li>In 2010 Southwest Airlines received 16,678 donation requests and distributed more than 29,664 tickets and $1,266,950 in cash in response, for a combined value of more than $11.6 million in total contributions </li></ul><ul><li>Relationships with nonprofit organizations on both a local and national level. Support by committing resources of time, tickets and monetary donations. </li></ul><ul><li>Support “The Ronald McDonald House program” by sponsoring golf tournament </li></ul><ul><li>Support families Facing Serious Illnesses thru Medical Transportation Grant Program </li></ul>
  32. 32. Recognitions <ul><li>1984 - #1 in customer satisfaction (4 th year in a row) </li></ul><ul><li>May 1988 - First airline to win the Triple Crown award </li></ul><ul><li>2009 - Ranked # 2 in Top 20 Best Companies for Leadership list (Business Week) </li></ul><ul><li>April 2010, Ranked as the top-rated brand among the nation's small-and midsized-business owners and top executives, for a second year in a row </li></ul><ul><li>In November 2010, ranked # 1 in the Zagat Airline Survey, in the following categories:  Top Website; Best Customer On-Time Estimate, Best Luggage Policy, Best Value, and Best Checkin Experience for Domestic Airlines. </li></ul><ul><li>In December 2010, Southwest Airlines was named “Best Low Cost Airline in North America” by Business Traveler Magazine. </li></ul><ul><li>In 2010 - Rank second in customer satisfaction survey conducted by J.D. Power </li></ul><ul><li>  In March 2011, Ranked fourth in World's Most Admired Company list ( Fortune magazine) </li></ul>
  33. 33. Competitors
  34. 34. Environmental Initiatives <ul><li>Paperless tickets </li></ul><ul><li>Part of our environmental policy is striving to meet our annual goal of zero recorded environmental violations in our operations. </li></ul><ul><li>Fuel savings and reduction in greenhouse gas (GHG) emissions – thru use of efficient planes with winglets </li></ul><ul><li>In the air, to reduce emission, initiated programs such as efficient flight profile speeds, aircraft specific performance monitoring, </li></ul><ul><li>“ Green Planes” – made with environmental friendly material , light weight to save fuel and reduce GHG emission, use of recyclable materials </li></ul><ul><li>Comprehensive engine wash program, along with gate services and an industry-leading Ground Support Equipment (GSE) electrification program. </li></ul><ul><li>Recycling and Waste Reduction – aim to increase the quantity of materials recycled on board by 10 percent over our 2010 levels </li></ul>
  35. 35. Safety Measures <ul><li>For Southwest, Safety of Customers and Employees is number one priority. </li></ul><ul><li>Southwest supports the culture that identifies risks to the operation and workplace </li></ul><ul><li>Southwest proactively deals with these issues before they become injuries or accidents </li></ul><ul><li>To accomplish this goal the following Company policies are established: </li></ul><ul><ul><li>All employees are responsible to comply with all governmental safety regulations and guidelines </li></ul></ul><ul><ul><li>Employees are responsible to follow Company policies and procedures </li></ul></ul><ul><ul><li>Encourages proactive reporting Culture, no disciplinary action against any Employee for reporting a Safety occurrence </li></ul></ul>
  36. 36. Conclusion <ul><li>In its 40th year of service, Southwest Airlines continues to differentiate itself from other low-fare carriers by offering a reliable product with exemplary Customer Service. </li></ul><ul><li>Since its initiation, Southwest has managed to grow in a controlled fashion by adding only a few new cities each year. </li></ul><ul><li>Southwest has proven itself to be successful and analysts believe that it will continue to be profitable as long as it never ceases to offer customers efficient and low cost air transportation, with continuous aggressive promotion and strong commitment </li></ul><ul><li>Southwest will remain the preferred airline for providing low fares. </li></ul><ul><li>After Mexico, future target market would be Canada or Hawaii </li></ul>
  37. 37. Resource Citation Book – Southwest Airlines by Chris Lauer