Strengths and Weaknesses
Southwest Airlines has been known over the last two decades as a growing airline company operating at its highest at the time when most of the other American airlines are struggling. Southwest Airlines provides a range of benefits to the employees and its customers that the competitors fail to offer. For example, the company encourages the freedom to travel around the United States by providing free flights to its employees and discounted travel prices to its customers. As a result, the company provides free air tickets to family members and eligible ones for dependent children while connecting its customers with discounted hotel, rental car companies, and theme parks to boost the company-customer relationship. Thus, the company saves the customers time and money while looking for essential services.
Southwest Airlines is unique in some ways. For instance, the company does not serve meal to its customers thereby operating as a low-cost carrier. Besides, the company does not offer advance seat booking services, hence reducing conflicts and flights delays. Most importantly, the company operates only Boeing aircrafts which have low maintenance and good air safety record. As a result, Southwest Airlines is growing as compared to its competitors. The advance follows the company’s low-cost model, low fare model, and the ability to increase the load factor mainly from increased demand of the airline services in comparison with other carriers. However, the JetBlue and Spirit Airlines are growing at a faster rate than the company due to advanced marketing strategies.
In summary, Southwest Airlines has the best rewards and pricing strategy as compared to other companies. The firm offers purchasing points to the customers for future travels. Moreover, the company is constantly improving, with the recent acquisition of AirTran helping it gain a significant market share leading to flexible flight policies that allow consumers cancel their reservations up to thirty minutes before the flight.
Opportunities and Threats
Changes in the family structure are likely to have positive impacts on the airline. The airline does not discriminate on the kind of people traveling. Consequently, the company offers tailored services to meet the specifications of the family structures. Therefore, consumers can move to any destination with their family members including children and the elderly citizens. In order to attract more customers, the company can offer discounts to customers traveling with their families to boost sales and revenue.
The demographic factors such as generation X, millennials, and the baby boomers present opportunities for the growth of the company. The low fare strategy is effective, especially to the lowly paid and the future entrepreneurs. The low-cost approach is particularly useful for the generation X that is characterized by soft spot for pleasure and adventure. Thus, the company can give special offers to the youth below 25 years to enhance sales and promote revenues. However, the independent business travelers may present adverse impacts on the airline as they may choose the rival companies that offer better flight services such as meal and drinks. Therefore, the company can introduce special packages to suit the needs of corporate executives.
On the other hand, political uncertainty is likely to pose threats to the expansion of the company. The recent election of Donald Trump as the American president is likely to change the way of business, especially with the fears of the crackdown on illegal immigrants. The advance may contribute to fears of arrest and subsequent deportation, hence reducing the number of air travelers. Furthermore, political uncertainty may decrease the number of people traveling for international business that would negatively impact the company’s revenues. On this note, the company can do little to rectify the situation because trying to handle these obstacles would add to operational costs.
Finally, changes in ease of getting loans and interest rates are likely to affect the company finances. The increase in the interest rates may limit borrowing capability of consumers, hence leading to reduced entrepreneurship development thereby reducing the mobility of people. Consequently, the number of air travelers may decrease contributing to flat revenues for the company. Despite the negative impacts of interest rates, the company can do little to facilitate the situation because the problem lies with the government agencies.
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Segmenting the Market
Geographical segmentation makes the most sense for the Southwest Airlines. The choice follows the fact that the airline serves many people across the United States. The consumers occur in all states of the United States with similar needs and wants. That is, all people are require travel services to move from one state to another in pursuit of pleasure and business. Therefore, the Southwest airlines can be segmented into the major groups such as the region of the country and the market size. The choice of the area of the country would be critical in deciding which of the states that make up the US has the highest and the lowest number of customers.
Consequently, determining the state with the lowest number of clients would be essential in increasing the number of the customers through promotional marketing strategies such as discounts to attract new customers and travel points to maintain existing customers. On the contrary, the choice of the market size would be critical in deciding the number of flights. Thus, the company can increase the amount of flights per day in areas with greater market size and decrease the number of flights in areas with lower market size to create a balance, ensure customers satisfaction, and generate more revenues at the same time.