Case Study: Southwest Airlines: Operations Strategy

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Register to read the introduction… They have been able to penetrate various markets through strategic planning and careful marketing on their part. The airline carefully plans where they are going to open new locations, for instance by opening in Chicago’s Midway Airport instead of Chicago’s O’Hare Airport which is much larger and has higher competition. From there they are able to set a pricing strategy that will bring in the customers. By offering low introductory rates in these new cities they are able to bring customers over to try them out. Since they can play to their high level of flights that are on time, low cost, friendly and fun they do not have a hard time gaining customers and then keeping them.

Southwest was also able to capitalize on internet sales by being one of the first airlines to offer on-line ticket purchasing. By setting themselves up early, in 1995, in this on-line market they were able to show customers their commitment to low prices. As of 2008 online ticket sales accounted for 78% of their business. Southwest has been able to use their online ticket sales as a way to target different markets with the various flight prices. Since the different pricing levels appeal to different travelers it continues to work for the
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Many airlines currently partner with one another to offer customers benefits across parties to redeem frequent flyer points and/or rewards. However, since Southwest does not offer any of these benefits customers are limited to only user their frequent flyer points with Southwest. While some customers are perfectly happy doing this others find this to be problem. Customers want the option to use their points on other carriers that may fly to a location that Southwest does not fly to.

Southwest embarked on what could be their biggest marketing problem in recent years as well as they hit consumers with what they are calling “ancillary fees” (Schaal, 2012). These fees were fees designed for those consumers who were no shows to flights, charged for pets, and charges for unaccompanied minors. Southwest estimated these fees would bring the company an additional $100 million in revenue per year. With these fees this ranks Southwest as the fifth leading airline with ancillary fees.

Opportunities: Spreading The

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