Southwest Airlines Marketing Strategies - Example

Southwest Airlines Marketing Plan Name Tutor Code Date Table of Contents Introduction 2 The Industry 3 Company profile 3 Market Analysis 4 Competitor Analysis 4 Situational Analysis 5 SWOT Analysis 5 Environmental Analysis (PESTLE) 7 Political environment 7 Economic environment 7 Cultural environment 8 Technical environment 8 Marketing Strategies 9 Target Market 9 Marketing Mix 10 Conclusion 13 References 13 Introduction Marketing is important for the survival of any organization. Even though marketing can at times inflict high cost on the organization, it establishes a major role to the long term success of the business. Southwest airlines seek to expand its market and is considering Australia as a potential destination. This report analyses the company’s profile, the industry, market analysis, competitor analysis, situation analysis, marketing strategies, and the marketing mix. The Industry The Australian airline industry is estimated to account for over $1.5 trillion in the country’s economy, and is therefore regarded as a critical component of the economy. It creates many job opportunities and helps to connect communities. Thus, it is one of the most dynamic, diverse and baffling in the world despite it being capital intensive, labor intensive and very competitive (Parliament of Australia, 2016). Company profile Southwest Airlines Company offers air transport services. The company has been in operation for 45 years with its headquarters based in Dallas, USA. The company employs over 46000 people and is renowned for great customer service. That’s why Southwest Airlines serves over 100 million travelers every year across 96 destinations, both locally and internationally. The company is set to launch its 98th destination on June 5th 2016. Today, Southwest Airlines is the largest low-cost carrier in the world and is the leading domestic carrier. Southwest manages just about 3,900 flights every day during the peak season. At present Southwest Airlines operates the largest fleet of Boeing airplanes, as at 2013 it had a fleet of 683 737-Boeing jets. The company has always reported a year-on-year growth in profitability. In 2015, Southwest Airlines posted $19 billion in total operating revenue and a net income of about 4 billion (Southwest, 2015). Market Analysis The Australian airline industry is characterized by stiff competition as airlines struggle to attract the rising demand driven by Asian travelers. In 2011 – 2016, the industry grew by an average of 4.2 per cent and generates an annual revenue of over $22 billion. The industry employs close to 49000 people. Some foreign airlines have been incorporated in Australia, including Singapore Airlines and Emirates. Traditional service passenger transport accounts for the large chunk of revenues. Besides, Australia is a favored tourism destination. The tourism sector in Australia contributes considerably to the country’s overall economy, mainly through creation of employment opportunities. The industry also supports other sectors of the economy such as education and training, retail sector, transport (by air, water, road and other means), hotel industry through accommodation, cafes, restaurants, and other takeaway food operators, travel agencies and tour operator services. The industry has two key divisions; the domestic tourism through local spending on tourist activities and the foreign tourism through visitors from other parts of the world, also regarded as tourism export. Australian tourism industry has been growing steadily over the past ten years (TRA 2013). Competitor Analysis Southwest is likely to face stiff competition from four other major low-cost airlines operating in Australia. While Qantas is working hard to defend its domestic market share, Virgin is working hard to capture a larger domestic corporate market. This has predisposed to capacity flooding in the market which, along with dwindling economic conditions, will further lower fares (Parliament of Australia, 2015). All parties as a group have a firm understanding of the business model, consumer demands, regulatory environment as well as capital avenues. Southwest has got to offer competitive low-cost services and top up its value proposition with supplementing services such as Wi-Fi, welcoming crews, sips and snacks, and messaging. Situational Analysis In order for a company to realize its objectives, it has got to assess its current situation. This involves scanning both the external and internal environments through a process called situational analysis. The situation analysis informs both the market and non-market capabilities a company has in promoting its product. Situational analysis captures both the SWOT analysis and environmental factors (political, economic, socio-cultural, technological, ecological and legal) that may well have an effect on the operations of Southwest Airlines. The SWOT (strengths, weaknesses, opportunities, and threats) analysis scrutinizes the internal strengths and weaknesses as well as the external opportunities and threats affecting the company. On the other hand PESTLE analysis captures the industry wide factors likely to impinge on the activities of the company (Arens 2004). SWOT Analysis The SWOT analysis analyses the organisation’s strengths (competitive advantages/core competencies) in meeting the customer needs. Weaknesses outline the organisation’s shortcomings in establishing or executing a marketing strategy. Opportunities indicate the favourable circumstances, which may produce rewards for the organisation. Threats are hindrances obstructing the realisation of the set objectives. Strengths Vast experience having been in operation since 1971 Unique low-cost carrier High passenger load Good customer care and employee relations Weaknesses No international presence Depend on a single airline producer Does not offer segmented seating Opportunities Easily accessed by national and international markets Improved leisure and business travel Enhanced online booking services Was the first to offer attractive discounts and ticketless travelling Threats Operating costs introduced through government regulation Economic uncertainty Increased costs of airline security Environmental Analysis (PESTLE) Political environment Politics forms every part of our daily existence. Australia has a federal administrative structure comprising eight state and territory governments along with the national government. The government and parliament is elected through elections. Australia has enjoyed a relatively smooth transition of power from one administration to another granting the country a much priced political stability. Economic environment Australia is one of the leading economies in the world. It has enjoyed steady and continuous economic growth that has shown strong resilience the global distractions. Australia was reasonably unaffected by the 2008/09 global financial crisis. The economy is dotted by low unemployment, inflation, public debt, and has a well-built and secure financial system. The country’s economic growth ranges around 3.5 percent a year; no other developed economy in the world has posted a similar growth in history. Low inflation levels allow the Reserve Bank of Australia to flexibly regulate interest rates. It enjoys a high GDP per capita that matches that of Western Europe of around $65000. It also has a promising real GDP growth. Source: Australia Government: Department of Foreign Affairs and Trade (2016) Cultural environment Australia has a predominant multicultural population that practices more or less every religion and way of life. Australia has a well-established tourism industry, indeed tourism is one of the leading industries in Australia. Besides providing employment, tourism contributes $73 billion to the country’s economy each one year, in addition tourism accounts for no less than 11 percent of Australia’s total exports. Tourism cannot exist successfully if people have no taste to move from their homes to visiting tourist destinations. This has cultivated a transport culture in the country with a lot of visitors visiting Australia every year to enjoy the country’s innate scenery (IMMI, 2013). Technical environment Australia has strong institutions that support openness to global trade and investment. Australia scored 82.6 points in the 2013 economic freedom index where it was ranked 3rd freest globally. The country was ranked 10th in the ease of doing business in 2013 (Global Finance, 2013). According to the report, Australia offers easy access to information either online or using brochures which include fast registration of companies and property online. Australia’s regulatory system is one of the world’s most transparent and well-organized that is very much contributing to attracting investors. Tariffs are low owing to discussed trade agreements along with unilateral tariff cuts. Overseas and domestic investors are treated equally, although foreign investments exceeding a particular threshold may well be screened. Australia has an educated population that offers a skilled labor force. Its educational standards have attracted large numbers of international students. Marketing Strategies Target Market Australia is favored for its attractive tourist coastal destinations. The country granted a total of close to 3.29 million tourist visitors as of 30-June-2012 to 30-June-2013. This offers a ready market that can be tapped by the airline domestically as the tourists need to visit several tourist destinations in the country, especially the coastal regions. Moreover, paid Australian workers enjoy four weeks of leave every year. Moreover, school going kids in key population centers have their long-break in January. January too wraps up as a strong month in domestic tourism. Summer is Australia’s travel max out season in the south whereas in the tropics, travel peaks in winter. Students who have just completed high school flock up most cities and towns they decide to visit at the close of October and early November. International students also offer a ready market despite the various challenges connected to Australia’s shifting discernment of the Australian education, migration policy, appreciation of the Australian dollar, and the rise of Australia’s foreign competitors. Marketing Mix Companies spend a lot of money promoting their products and services because they want to send a consistent message to the existing customers as well as the potential consumers. The marketing mix comprises a set of manageable, strategic marketing tools that can help the company in marketing planning and execution. They are used as tools to effectively communicate the benefits of its products or services to the target market and produce organizational sales goals and profits. It consists of all that a company can do to influence demand for its products and, hence influence sales (Ambler 2000). Price Southwest’s has a strong global position in providing low-cost operations. Therefore, as the company expands to new markets, this will help it penetrate new markets. Therefore, this is expected to offer the airline a great competitive advantage in Australia against established rivals like Virgin, and Qantas. A price of just about A$140 one way will be a good starting point. Product Southwest Airlines has established low-cost standardized travel options, it has got to carry on the same strategy. Its highly efficient operation should be maintained to boost the airline’s value proposition. Southwest should stick to its reputation as a one-stop, low-fare and point-to-point carrier. Time is of essence, and southwest knows how to deal with it by moving travelers in above average times which is obligatory in the airline industry. The company could as well bring other services like online bookings, EarlyBird Check-In, magazines, Wi-Fi, welcoming crews, comfy cabin, sips and snacks, online bookings, and messaging. Place Australia’s domestic market mainly comprises high density links of a small set of large cities, plus few other routes. The company should target the coastal urban cities which offer great marketing opportunities as it seeks to establish itself in Australia. An important aspect to note is that Australian’s like to hold their major celebrations on the coastal beaches. For instance, Australian’s party in the sand and stare at fireworks on New Year’s Eve at Manly along with Bondi beaches in Sydney also Glenegl in Adelaide. Australia Day celebrations are hosted on beaches. On Christmas Day around 40,000 international tourists congregate on Bondi Beach (Tourism Australia, 2013). Other prominent beaches include St Kilda (Melbourne city), Surfers Paradise (Queensland Gold Coast), and Cottesloe (Perth). Although Australia is ranked among the top least densely populated countries globally, it is for the most part an urban country, with the majority of the residents residing in these coastal cities (Tourism Australia, 2013). Promotion There are challenges in entering a new market. Southwest Airlines is likely to find it difficult particularly because most travel agents are allied to serving airlines. However, it is known all over the world that Australians love sports, especially in rugby. The country has over 120 sports organizations that operate nationwide, locally, and regionally. Also, approximately six-and-a-half million Australians are registered sport members. This is not a bad figure weighed against a population of slightly over 23 million, hence offering a good marketing stage. Besides, considering that Australia offers an ample online connection, Southwest will find it invaluable to use online marketing to reach potential clients. People People define a service and, therefore, form an important element of service marketing mix. Southwest Airlines will be defined mostly by its cabin crew and pilots. These people can either make or break the company. Thus, southwest airlines should be involved into specially getting their staff trained in interpersonal skills and customer service with a focus towards customer satisfaction. Besides, the company should accredit their staff to show that their staff is better than the rest. Process This is the way in which a service is delivered to the end customer. Southwest Airlines should strive to improve the lead time in serving the customers and the reason they can do that is their self-confidence on their processes. Besides, the demand for these services is such that they have to deliver optimally without a loss in quality. As such, the process of a service company in delivering its product is very important. It is also an acute part in the service plan, wherein before instituting the service, the company outlines precisely what ought to be the process of the service product reaching the end customer. Physical Evidence Lastly, in the service marketing mix physical evidence is a very important element. Services are intangible in nature, but, in order to create a better customer experience tangible elements are also delivered with the service. In a number of times, physical evidence is used as a differentiator in service marketing. Conclusion Australian has numerous market attributes likely to favor entry of low cost carriers. It has a reasonable count of dense routes, on which a number of competitors may well, co-exist. Southwest Airlines can be able to gain a share of the market if it maintains its competitive low-cost strategy. However, it has to mull over the seven Ps as pertains the marketing mix so as to attract customers. References Ambler T. 2000. Marketing and the Bottom Line. Harlow: Pearson Education Ltd. Arens, W.F. 2004. Contemporary Advertising, 9th edn, Boston: McGraw-Hill. Dwyer, F.R. and Tanner, J.F. 2006. Business Marketing: Connecting Strategy, Relationship, and Learning, 3rd edn, Boston: McGraw-Hill. Futrell, C.M. 2004. Fundamentals of Selling: Customers for Life through Service, 8th edn, Boston: McGraw-Hill. Global Finance, 2016, Best Countries for Doing Business Report, 2013, retrieved 25 May 2016, IMMI, 2013, National Agenda for a Multicultural Australia, retrieved 25 May 2016, Kerin, R.A., Hartley, S.W., and Rudelius, W. 2009. Marketing. 9th ed. Boston: McGraw-Hill Irwin. Kotler, P. and Armstrong, G. 2008. Principles of Marketing. 12th ed. Upper Saddle River, NJ: Prentice Hall. McDaniel, C. and Gates, R. 2005. Marketing Research, 6th edn, New York: John Wiley & Sons. Parliament of Australia, 2016, retrieved 25 May 2016, RBA, 2016, Australia GDP and Inflation, retrieved 25 May 2016, SWAMEDIA, 2013, Southwest Corporate Fact Sheet, retrieved 25 May 2016, Tourism Australia, 2013, information about Australia travel and guide, retrieved 25 May 2016, TRA (Tourism Research Australia), 2016. Tourism Industry Facts and Figures at a Glance, Tourism Research Australia, Canberra. Read More