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Southwest Airlines values and goals
Chapter 2 developing marketing strategies and plans
Chapter 2 developing marketing strategies and plans
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Southwest: A Model of Innovation Innovation is an essential ingredient in today’s competitive landscape (Denning, 2011). Unless innovation moves beyond initiative and becomes part of an organization’s DNA, innovation is doomed to fail. Southwest Airlines (NYSE: LUV) has embrace innovation as an essential part of its culture. The innovation and importance of the Southwest culture is demonstrated throughout customer service, business strategy and green initiatives. The Southwest Culture Core Values The culture of an organization can simply be defined by its core values, traditions, and beliefs. For over 45 years Southwest Airlines has been successful. Its success has been attributed to a value system that tasks managers with the responsibility …show more content…
Southwest’s philosophy is that a fun attitude provides a balance in the workplace and it encourages employees not to take themselves too seriously. Additionally, Southwest Airlines’ inculcation of servant leadership into their business philosophy has also been attributed to their success as a company. The Robert E. Greenleaf Center for Servant Leadership describes a servant leader as one who “focuses primarily on the growth and well-being of people and the communities to which they belong”. Colleen Barrett, president emeritus of Southwest Airlines, explained that the difference between the Southwest pyramid structure and that of other companies is that most companies have their shareholders at the top of the pyramid but for Southwest, their employee satisfaction and the needs of their customers are the first priorities. Barrett also stated that Southwest’s philosophy is to follow their golden rule which is to “treat people the way you want to be treated”. By putting their employees first and treating employees as a part of the family, Southwest has been able to lead in the airline industry as a company with satisfied employees. (Barrett, …show more content…
The marketing approach of Southwest Airlines is built upon their strong business model. They have successfully managed to target two specific market segments of the airline industry while remaining profitable. Their strategy is simple, to offer frequent non-stop flights with the lowest costs which appeal to both the business and budget travelers. By segmenting their target audience to specific demographics and ticket pricing, passengers know exactly what they are getting for the price they pay. Pricing. Their pricing strategy is based off their market position as a budget airline. Positioning their company as a budget airline, Southwest can maintain and keep their lower price points compared to their competitors. For Southwest to maintain sustainability as a market leader, they must effectively utilize their resources to reduce their cost of operations. By only operating one type of aircraft, short non-stop flights, point to point routes, and flying into less crowded secondary airports, this has allowed Southwest Airlines to keep their price points down while simultaneously reducing their planes turnaround time. Distribution. Unlike other airlines in the industry, Southwest Airlines does not use third party booking reservation systems. They are unique in such a way that they operate ticket sales directly through their company. By limiting third party booking reservation systems, Southwest can keep their sales distribution in
Unlike most corporations, Southwest has an inverted pyramid structure with employees at the top, a higher priority than any other stakeholder. Customers come second, as Southwest President Colleen Barrett describes it: "If we treat them [employees] right, and give them proactive customer service, they...will in turn assure that our second most important group, [the passengers]...receive the same proactive customer service." (Barrett, Colleen. Interview. Knowledge @ Wharton. Wharton School of Management: 8 Jul 2008. Podcast). Barrett and her colleagues are demonstrating conceptualization, or the ability to distinguish what are their top short and long term goals. They hope to create a continuous wheel of service where employees at the top ensure that passengers below them are always satisfied. To complete the organization pyramid, management is at the bottom. This further embodies the spirit of servant leadership, where the focus is on increased services to others rather then to
Southwest Airlines is one of the biggest United States airlines which prides itself in its low-cost strategy to attract and keep up more clients. On a given day, Southwest Airlines operates over 3,400 flights. It has a more than of 46,000 employees. To reduce maintenance and training costs, Southwest Airlines use only Boeing 737s. As of today the company operates 647 Boeing 737s, which fly to 93 destinations across the US. Southwest Airlines have been able to survive even when faced with stiff competition because of its low cost approach. However, this success has also been attributed to the high level of care and appreciation on its clients and employees.
Current Issues Despite Southwest’s long standing reputation as an employer who makes their employees and customers happy, there have been storms brewing in the company’s labor relations and customer relations sector. As mentioned before, Southwest recently acquired AirTran Airways and revealed plans to take its already successful domestic business international with flights to Mexico and the Caribbean (Martin, 2014). This organizational restructuring is causing Southwest to have what Time Magazine’s Brad Tuttle calls an “identity crisis” for the airline, whose new advertisements have removed the humor they are famous for and the messages of “bags fly free” from commercials. Bob Jordan, a Southwest executive, described the change as a new era for Southwest and a chance for consumers to see them in a brand new light.
Southwest Airlines is one of the top leading airline companies. It is also one of the top 10 fortune 500 admired companies according to Forbes Magazine. (Makovsky, 2014). Southwest which was founded in 1971 by Rollin King and Herb Kelleher. They offered very basic services to their customers and employees. There were no incentives, frills and offered a very basic structure. Their flights only flew out of Love Field in Dallas and to Houston and San Antonio. (Srinivasan, 2014).
Despite its growing domestic network, the company didn’t offer international flights until July 2014, and even then, it only offered limited destinations (“Southwest Corporate Fact Sheet,” n.d.). Furthermore, the company’s reliance on a single aircraft is cause for concern. Southwest Airlines was also weak with technology utilization initially but has since turned this into an asset, as described later. Finally, the company has a limitation with providing customer perks due to its low-cost operations (Ross & Beath,
Also, Southwest is renowned in the airline industry for its short turnaround time on arrivals and departures. And since people's biggest concern nowadays is money and time, having low price airline tickets to cater their traveling needs in a shorter period of time will surely satisfy them. Moreover, aside from the low prices offered, what attracts customers is Southwest’s way of dealing with them. The employees of the airline treat their customers well and really listen to their needs. Southwest Airlines is also well-known for having a very productive and loyal workforce.
Since 1987, when the Department of Transportation began tracking Customer Satisfaction statistics, Southwest has consistently led the entire airline industry with the lowest ratio of complaints per passengers boarded. Many airlines have tried to copy Southwest’s business model, and the Culture of Southwest is admired and emulated by corporations and organizations in all walks of life. Always the innovator, Southwest pioneered Senior Fares, a same-day air freight delivery service, and Ticketless Travel. Southwest led the way with the first airline web page—southwest.com, DING, the first-ever direct link to Customer’s computer desktops that delivers live updates on the hottest deals, and the first airline corporate blog, Nuts About Southwest. Our Share the Spirit community programs make Southwest the hometown airline of every city we serve.
Advertising: As one of the largest domestic airlines, Southwest Airlines has an enormous advertising budget to sustain its presence and increase its market share through focusing on the benefits of flying Southwest over its competitors. Southwest recognizes that flying is no longer a pleasurable experience for many customers, even on Southwest, historically a budget airline. Even though Southwest is often regarded as a no-frills airline, it still attempts to build goodwill from its customers based on its advertising. Of the $249 million it spent on advertising in 2011, Southwest Airlines is unique in that it does not sell additional ad space on the exterior of its aircraft. Many domestic airlines have begun selling aircraft exterior space as a way to increase revenue, but Southwest Airlines insists that it wants to keep its product and advertisi...
For Southwest Airlines, values are not just about what the company believes, it’s about how it sets the culture. Newly hired employees are tested in the company’s three core values and in reward Southwest Airlines provides a recognition program for all employees who are complimented by customers. These values are mentioned in newsletters, staff meetings by the CEO and at special events. Southwest’s values are what sets their culture. For this reason, Southwest Airlines continues to successfully strive utilizing the time tested values that are set forth for all their employees.
Southwest Airlines is one of the most successful airlines in the United States. There has never been layoffs or strikes in the history of the company, although there were several times when layoffs could have been justified, including the months following the September 11, 2001 terrorist attacks. However, Southwest's Mission statement says “Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.” (Southwest, 1988). The Airline has always believed that their corporate culture is one of the keys to their success. The culture recognizes that employees have emotional intelligence and that their attitudes and morale are key to the teamwork and creative environment.
Southwest Airlines faced many barriers to entry from the fierce competition of other airlines in the industry. Though competition was fierce, Southwest Airlines managed to succeed by doing things differently. Their mission was to provide affordable air travel to those who would not normally fly. Contradictory to the rest of the airline industry, Southwest maintained a profit while keeping its fares low. Southwest was unique to the industry in two ways. They focused on the short haul traveler and used a point-to-point method of flight connections.
The mission of Southwest Airlines is a dedication to the highest quality of service delivered with warmth, friendliness, individual pride, and company spirit (Mission…, 2007). The company also provides opportunities for learning and personal growth to each employee. Creativity and innovation is very important and highly encouraged, for the purposes of improving effectiveness. Employees are to be provided the same concern, respect, and caring attitude within the organization that the employees are expected to share with the customer. Southwest Airlines was initially created to be a low-cost alternative to high price of intra-Texas air carriers (Freiberg, 1996). Southwest’s fares were originally supposed to compete with car and bus transportation. It was a little airline, and it would withstand the test of time. As a discount, no-frills airline, it would provide stiff competition for larger airlines. Their strategy was to operate at low cost, offering no food, no movies, no first class, and no reserved seats. They created their own market and provided increased turnaround times at the gate, by avoiding hub-and-spoke airports and opting for short-haul, direct flights. Through this market approach, Southwest has a majority of market share in the markets they serve.
The low cost and no frills strategy is make travel affordable at low cost. The company only operates one type of aircraft which is Boeing 737 to help maintenance cost low. Southwest was the first airline to use E-ticketing in this way customer can reserve spot and buy ticket on their web and allow less expense in printing tickets. Medium measured airports which allowed them to produce better time performance and less fuel costs so plane do not have to wait in the line at the runway. The core value of the company of “LUV and fun” makes the company great place to work that gives customer with a great experience.
Another internal challenge for Southwest Airlines is the conflicting management style and business operation with AirTran. On top of that, the external challenges such as the increase of competitions and gas prices are some of issues f...
It all started in 1971, when Rolling King and Herb Kelleher decided to challenge the existing rut of charging high prices for air travels. They considered the railways and roadways their competitors and decided to offer cheaper travel for smaller routes. The company was incorporated in 1967, apart from initial entry troubles, Southwest has been the only US airline to have earned profits since 1973. The eccentric company’s outlandish way of conducting themselves has been the sole reason for Southwest Airlines to succeed in a highly competitive and packed industry.