|Southwest Airlines |
|A Story of a Killer Whale |
|Ariel Frankeny |
|Assessment #1 |
Southwest Airlines is a prime example of a company that took advantage of a strategic window of opportunity and achieved true success. The whole idea of a “no fees, low fares” airline that was marketed towards a previously ignored niche of customers was first conceived in 1967 by founders Herb Kelleher and Rollin King on a napkin; they saw an opening in catering towards customers who valued value, convenience, and practicality over luxury and extra amenities in terms of airfare. Rather than going up against the big names in the airline industry, such as Continental, United, and US Air, and competing with them for a share of the existing market, Southwest sought to compete with other methods of travel (i.e. cars, trains, buses, etc.). Because of the market niche it found to fill, the whole idea behind Southwest airlines caters to a very specific type of customer that was previously ignored within the Regional Airline Industry. In most cases, when small airlines attempt to compete in a market with much larger competitors, it can only lead to disaster, as they are unable to keep up with them in terms of resources and staying power. Knowing that this could very well happen to them, the founders of Southwest sought to keep the company alive by focusing on price and frequent departures, financing everything through internal funds rather than by relying on external means and taking on debt.
Segmentation of the Airline Industry Within the airline industry, customers can be segmented in a number of ways, specifically involving how often they travel (Infrequently, Frequently, etc.), the type of traveling that they are doing (Leisure, Business, etc.), their preferred method of travel (Convenience, High-End, etc.), and the distance that they are traveling (long haul, short haul, etc.). These segmentations are necessary, as it distinguishes customers who are traveling mainly for leisure and to enjoy the traveling experience from those who are all about convenience and speed in getting from one location to another. For example, a businessman or businesswoman who travels from Los Angeles, CA to Phoenix, AZ a few times a week for meetings would likely fall into the category of “convenience and speed,” as they would simply want to get to and from their meetings in the fastest manner possible. On the other hand, a man or woman traveling across the country, say from Los Angeles, CA to New York, NY, to go on a vacation would likely prefer a method of travel more suited for comfort and luxury than of simple convenience and necessity.
How Often a Customer Travels The frequency of which a customer travels is very important in the segmentation of the airline industry, falling under the category of “usage rate.” When a customer travels often, say a several times a month, the trip will not be about the experience so much as simply getting from Point A to Point B. On the other hand, when a customer makes only a few trips a year, they may be drawn moreso into the experience of the flight. The latter type of customer will likely prefer a more luxurious flight than the former, preferring to have the “whole experience” versus only what is absolutely necessary.
Type of Traveling Along with the frequency of which a customer flies, the reasoning for their traveling is a critical