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Marketing
Presentation
• Introduction
 Part 1:      about SW
  Case        airlines
            • Situations of
 study        SW airlines



  Part 2:
Question
& Answer.
Company’s slogan
          “A Symbol of Freedom’’
      The most successful US airlines



     • The company set up by
1967   Herb Kelleher


            • Southwest airlines was the
              nation’s best performing
1972-2002
              stock
• The company earned $442
2003     million



       • Gary Kelly took over CEO
2004     role from Mr. Kelleher


       NO.3 among America’s Top
       Ten most admired
2005   corporations
Listed by Business Ethics
       magazine "100 Best
2007
       Corporate Citizens"




       35,000 employees
2008   $9.1 billion revenue
-SW airlines
known as A
low-price
               It began to
                             Made
airport
                  service    SW’s
                   other
- Fuel-price
               higher-cost   work
was
increasing
                 airports    worse
rapidly
Changing
                strategy
                 Deciding target
                  customer is
Disadvantage       business
                   travelers
 in Changing
   Strategy
                Most of bargain
                customers were
                    -hunting
                business people


                    Lack of
                  professional
                    services
Build                                                   Expand their
                          Convenient                    networks & Earn
customer                                                   additional
                           services
 loyalty                                                    revenue

   Provide frequent        - Preferential boarding         Make an agreement
flights to 63 cities in    - Bonus frequent-flier             with discount
      32 states            credits                         carrier ATA Airlines
                           - Free cocktail flight

  More nonstop &                                              Develop new
More frequent flights      - Renovate boarding areas        software to shift
   => suitable for         - Install roomier seats,          planes to more
 business travelers’       power outlets, workstation       profitable routes
                           counters
     schedules
                           - Flat-screen TVs
                           broadcasting CNN

- Change website
- Discounted                 Charge extra fees for
contracts with                     things
business
Serve second tier destinations
                       where cost were lower




    NO assigned seats                     Serve SNACKS instead of
                                                  MEALS




NO electronic entertainment                NO FEE to change same-
                                                 fare ticket



                      Offered employees profit-
                            sharing plan
„‟A Symbol of Freedom‟‟




Part 2 : answer
the questions.
1. What has been Southwest‟s
traditional pricing strategy?
     Why has this pricing strategy
been so successful throughout the
airline‟s first three decades?
Low Price
2. What values do airline customers-
both business and leisure travelers-
seek when they buy air travel
tickets ?
Each class has different request:


       Leisure
      travelers
                        Buiness

   - Low pricing      -Don’t care much
   - On time          about price
   arrivals, no       -The assurance
   additional fees.   of on time
   - High profit      arrivals
   cities             -Safe, convenient
   - Using smaller    flights with high -
   less crowded       qualified
   airports           services
Has SW done a better job the
competitors of meeting the needs of
these air travelers? In what ways?

It has done a better job
+ knew clearly who were its
customers(leisure travelers ), what
values, needs of travelers and get
customers to their destination as quickly
as possible
3. What internal and external factors
affect airline pricing decisions?

    Internal factors:
- Airline's marketing objectives ….>make profit
  by filling the seat at the lowest possible cost to the
customer.


    External factors:
- Rapidly escalating fuel prices. => fuel-price hedging
strategy. “they try to pass to the customer through
increased baggage fees”
- Determination of prices => linked to what the
competitor is doing.”
Pricing : Raise
 aggressively 6
     times in
   2006, 11.4
    percents
  average fare
   increasing.




                    successfully
                     marketed.




  Profit: $100
million of the $1
 billion (2010).
4. What is Southwest Airline is
current pricing strategy?
- Low-cost.
- Flight frequency high use & limit the use of travel agents.
- Light standardization,
- Working crew of high capacity
- Lower-cost services in short -haul markets
- Increasing fares in longer-haul markets
- The Pricing Model
Does this strategy differentiate
Southwest from its competitors?

- Other airlines cannot compete with
Southwest in the same manner as they do
each other

- Much lower operating costs
Is the strategy sustainable?
-The industry's inability to continue to charge
relatively high fares in short-haul markets will

-Creates an even greater need for the government to
encourage low-cost, new entry, as a discipline for
Southwest's pricing behavior in the future.

- Replace service of other major airlines that are
scaling back service or exiting markets dominated by
Southwest.
5. What marketing recommendations,
including pricing recommendations, would
you make to Southwest as it moves into the
next decade?

   - Continue to advertise.
   - Build the cost.
   - Capitalize on the business class seats
available in many of AirTran's planes.

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Marketing presentation- Southwest airline

  • 2.
  • 3. • Introduction Part 1: about SW Case airlines • Situations of study SW airlines Part 2: Question & Answer.
  • 4. Company’s slogan “A Symbol of Freedom’’ The most successful US airlines • The company set up by 1967 Herb Kelleher • Southwest airlines was the nation’s best performing 1972-2002 stock
  • 5. • The company earned $442 2003 million • Gary Kelly took over CEO 2004 role from Mr. Kelleher NO.3 among America’s Top Ten most admired 2005 corporations
  • 6. Listed by Business Ethics magazine "100 Best 2007 Corporate Citizens" 35,000 employees 2008 $9.1 billion revenue
  • 7. -SW airlines known as A low-price It began to Made airport service SW’s other - Fuel-price higher-cost work was increasing airports worse rapidly
  • 8. Changing strategy Deciding target customer is Disadvantage business travelers in Changing Strategy Most of bargain customers were -hunting business people Lack of professional services
  • 9. Build Expand their Convenient networks & Earn customer additional services loyalty revenue Provide frequent - Preferential boarding Make an agreement flights to 63 cities in - Bonus frequent-flier with discount 32 states credits carrier ATA Airlines - Free cocktail flight More nonstop & Develop new More frequent flights - Renovate boarding areas software to shift => suitable for - Install roomier seats, planes to more business travelers’ power outlets, workstation profitable routes counters schedules - Flat-screen TVs broadcasting CNN - Change website - Discounted Charge extra fees for contracts with things business
  • 10. Serve second tier destinations where cost were lower NO assigned seats Serve SNACKS instead of MEALS NO electronic entertainment NO FEE to change same- fare ticket Offered employees profit- sharing plan
  • 11. „‟A Symbol of Freedom‟‟ Part 2 : answer the questions.
  • 12. 1. What has been Southwest‟s traditional pricing strategy? Why has this pricing strategy been so successful throughout the airline‟s first three decades?
  • 14. 2. What values do airline customers- both business and leisure travelers- seek when they buy air travel tickets ?
  • 15. Each class has different request: Leisure travelers Buiness - Low pricing -Don’t care much - On time about price arrivals, no -The assurance additional fees. of on time - High profit arrivals cities -Safe, convenient - Using smaller flights with high - less crowded qualified airports services
  • 16. Has SW done a better job the competitors of meeting the needs of these air travelers? In what ways? It has done a better job + knew clearly who were its customers(leisure travelers ), what values, needs of travelers and get customers to their destination as quickly as possible
  • 17. 3. What internal and external factors affect airline pricing decisions? Internal factors: - Airline's marketing objectives ….>make profit  by filling the seat at the lowest possible cost to the customer. External factors: - Rapidly escalating fuel prices. => fuel-price hedging strategy. “they try to pass to the customer through increased baggage fees” - Determination of prices => linked to what the competitor is doing.”
  • 18. Pricing : Raise aggressively 6 times in 2006, 11.4 percents average fare increasing. successfully marketed. Profit: $100 million of the $1 billion (2010).
  • 19. 4. What is Southwest Airline is current pricing strategy? - Low-cost. - Flight frequency high use & limit the use of travel agents. - Light standardization, - Working crew of high capacity - Lower-cost services in short -haul markets - Increasing fares in longer-haul markets - The Pricing Model
  • 20. Does this strategy differentiate Southwest from its competitors? - Other airlines cannot compete with Southwest in the same manner as they do each other - Much lower operating costs
  • 21. Is the strategy sustainable? -The industry's inability to continue to charge relatively high fares in short-haul markets will -Creates an even greater need for the government to encourage low-cost, new entry, as a discipline for Southwest's pricing behavior in the future. - Replace service of other major airlines that are scaling back service or exiting markets dominated by Southwest.
  • 22. 5. What marketing recommendations, including pricing recommendations, would you make to Southwest as it moves into the next decade? - Continue to advertise. - Build the cost. - Capitalize on the business class seats available in many of AirTran's planes.