Southwest Airlines

Presented By:
Section C
Group 1
Shantanu Dikshit (17PGP192)
Chaitanya Dwivedi (17PGP174)
Himanshu Kumar (17PGP177)
Yugam Bansal (17PGP202)
Rahul Uikey (17PGP188)
IIM Raipur 1
 Overview

• Southwest Airlines Co, a Texas corporation was organized in

March 1967
• Founded by Rolling. W King , graduated from HBS in 1962, was previously
an investment counsellor with a San Antonio firm
• Major competitors were Braniff International Airways and Texas
International Airways (TI)
• During mid -1960’s , King and his associates felt to improve the air service
between Houston , Dallas , Fort-worth and San Antonio (4 cities)

IIM Raipur 2
 Overview

• In 1967 , local travelers between Dallas and Houston averaged

483 passengers daily in each direction , with Braniff holding
86% of this traffic
• King realized the factors due to which he got notion of developing new
airline
• Firstly , the more he talked to people , more he realized how big the
market was and the degree of customer dissatisfaction with the services of
existing carriers
• It was apparent that King had an opportunity in this scenario
• King was aware of PSA’s (Pacific Southwest Airlines) strategy in California ,
which was under similar circumstances

IIM Raipur 3
 Overview

• Introduction of M Lamar Muse , an independent financial

consultant who approached King
• Muse had read the legal battles of Southwest airlines and assured King that he
with the help of his fellow directors would help him to transform the company
from a piece of paper to an operating airline
• Muse was wealthy in his experience and was aware of the fact that Braniff’s
reputation wasn’t good
• Many travelers quoted Braniff Airlines as “World’s largest Unscheduled Airline”
due to its lack of punctuality
• 4 executives with many years of airlines experience filled the management
vacancies in Southwest
• They were ex-employees of Braniff and TI and were fired from their
organizations
IIM Raipur 4
 Question 1

Whether Southwest Airlines is marketing

Goods, Services, Events , Experiences , Places,
Properties , Organizations , Information and Ideas?

IIM Raipur 5
 Marketing Strategy

• Southwest Airlines had employed a public relations agency to

handle publicity
• Muse and Dick Elliot (VP marketing) selected an advertising agency ,
namely Bloom Agency headquartered in Dallas
• The assignment was to come up with a complete communication
program , other than publicity
• Muse told the agency that they got no airplanes, no design , no uniforms
but they were going to have an airline flying in 120 days
• Southwest analyzed that TI’s advertisement was very dull and boring

IIM Raipur 6
Marketing Strategy

IIM Raipur 7
 Marketing Strategy

• Braniff’s advertising strategy on the other hand was quite

interesting
• The aircraft’s were painted in various brilliant colors , hostesses wore
costumes designed by Italian designers
• Advertising of Braniff sought to make flying with Braniff seem “glamorous
and exciting”
• But by 1971 , Braniff’s image was changing from a fun image to a subtler ,
more conservative style with an advertisement budget reduced to only 4
million dollars
• This left a vacuum to be filled by Southwest , so the agency decided to
position Southwest beyond the fun-obvious side of old Braniff image

IIM Raipur 8
Marketing Strategy

IIM Raipur 9
 Marketing Strategy

• Accordingly , the account group developed “an entirely

personality description model” for the airlines
• The personality statement had the guideline of recruiting staff which was
“young and vital …. Exciting …..friendly … efficient …dynamic”
• 1200 young women responded to advertisement for air hostesses
• Legal battles of airlines with Braniff and TI received extensive publicity
from mass media

IIM Raipur 10
 Marketing Strategy

• June 10th onwards , the advertising campaign for Southwest

began modestly with small teaser ads in newspaper
• They contained proactive headlines like “The 48 minute love affair” , “At
last a $20 ticket you wont mind getting , A fare to remember”
• The unsigned ads contained a telephone number for reader to call , which
had a taped message about airlines
• About 25000 telephone calls resulted from these ads
• TV ads were also heavy and included 30 second spots featuring the Boeing
737 , the hostesses and what was referred to as “Love machine”
• Nearly half the year’s promotional budget was spent in the first month of
operation

IIM Raipur 11
 Marketing Strategy

• Braniff and TI revised the fare to $20 and included strategies

like free newspaper , free beer etc
• Southwest countered with the advertising headline “ The other airlines may
have met our price but you can’t buy love”
• A direct-mail campaign targeted 36000 influential business executives , each
received a personalized letter from Muse describing airlines service and a
voucher worth half the cost of a round trip
• Around 1700 vouchers were redeemed
• In Feb 1972 , Southwest initiated a second phase of advertising campaign ,
hired a new VP of marketing and scrapped its public relations agency
• Sales representatives also promoted Southwest’s air freight business , which
featured a special rush delivery service for packages

IIM Raipur 12
Marketing Strategy

IIM Raipur 13
 Marketing Strategy

• On Thursday , Feb 1 , Braniff employed a full – page newspaper

ad to announce a half-priced “Get acquainted sale” between Dallas and
Hobby on all flights (in next slide)
• Muse called an urgent meeting of the management team , including King ,
the marketing VP , the public relations director , the company’s attorney
and the accounts people from Bloom Agency to decide how to respond to
Braniff’s move

IIM Raipur 14
Marketing Strategy

IIM Raipur 15
 Target Market

• Dallas

• Fort Worth

• Houston

• San Antonio

IIM Raipur 16
 Target Market
Continued…

• Flights completely full

• Difficult to get reservations

• Unpunctual

• Too much interline traffic

IIM Raipur 17
 Target Market
Continued…

• Too much interline traffic

• Regional passengers
were left with lesser
number of seats because
of interstate connectivity

• Dallas - Braniff’s base

• Houston- Texas
International’s base

IIM Raipur 18
 Target Market
Continued…

Need existed for a regional

carrier to cater to demands of
these 4 fastest growing cities in
the nation

IIM Raipur 19
 Positioning

• Young & Vital

• New Aircrafts

• Attractive Hostesses

• Low Fares

• Fast Ticketing

• Inexpensive exotically named

drinks

IIM Raipur 20
 Marketing Mix P’s for Southwest
• Product
– Flight service in Dallas-Houston, Dallas-San Antonio
– Boeing 737
– Love Machine
– Machine to print out ticket
– Pedal Operated tape recorder

• Place
– Houston, Dallas-Fort Worth and San Antonio
– Relief from longer interstate flights
– Local travel averaged 483 passengers daily in each direction

IIM Raipur 21
 Marketing Mix P’s for Southwest
Continued….
• Promotion
– Continuing legal battle with Braniff and Texas International
– Small teaser ads and provocative headlines
– TV ads on “Love Machine”
– Newspaper ads mocking price cut by competitors

• Price
– $20 for both sides i.e, 35-40 % less than others
– $10 for daily late night flights
– $225 commuter club card -> free flights -> 30 days
– All weekend flights @ half rate

IIM Raipur 22
 Modern Marketing Mix P’s
• People
– Staff represented the ideologies of organization
i.e, young, friendly, dynamic etc.
– Attractive hostesses having maximum avg. FAA score
– Pilots having avg. 15,200 hours in-air experience
– Only one face for the organization

• Process
– Boeing 737 -> less TAT -> less crew
– Direct services where it was not present
– Marketed the experience instead of product

IIM Raipur 23
 Modern Marketing Mix P’s
Continued…
• Programs
– Low fares than competitors
– Moving to Hobbly Airport which was preferred to Houston
International Airport
– “Sweetheart stamp” for secretaries for each reservation by their
bosses
– Corporate account -> private supply of ticket and single monthly billing
– Commuter club card -> Unlimited transportation for 30 days

IIM Raipur 24
 Modern Marketing Mix P’s
Continued…
• Performance
– Nearly half the year’s promotional budget spent on first month of
operations
– Accumulated deficit in 1971 end was $3.75 million

Understandable for making brand equity and promotion

– First two quarters of 1972 loss fell from $804,000 to $131,000

– Average passenger occupancy rate increased to 48

Net Income increased and would have made profit in next 2 quarters

IIM Raipur 25
Core Competency

IIM Raipur 26
 Core Competency
Continued…

• Low Cost : Charged $20 when competitors charged $27 - $28

• Service : Round the clock service at 75 and 150 min intervals

which were always on time

IIM Raipur 27
 Core Competency
Continued…

• Differentiation : Branding itself as the “Love Machine” and

frequent flyer discounts

• Aggressive Promotion : Vibrant coloured planes, Full

Newspaper Ads , Catchy Nicknames , Ambush Marketing

IIM Raipur 28
 SWOT Analysis – Southwest Airlines

STRENGTHS (+) WEAKNESSES (-)

•Leadership •Financial Crunch
•Punctuality
•Marketing Strategy and Advertisement

OPPERTUNITIES (+) THREATS (-)

•Current Market •Legal Battles
•Interstate Business •Strong Competition
•Festivals

IIM Raipur 29
 SWOT Analysis – Braniff International
Airways

STRENGTHS (+) WEAKNESSES (-)

•Experience •Lack of Punctuality
•Market Share •Market Size
•Collaboration •Market Location

OPPERTUNITIES (+) THREATS (-)

•San Antonio – Houston Route •Southwest Airways
•Degrading Public image

IIM Raipur 30
 SWOT Analysis – Texas International
Airlines

STRENGTHS (+) WEAKNESSES (-)

•Well Established Business •Dull Advertisement
•Collaboration

OPPERTUNITIES (+) THREATS (-)

•International Flights •Southwest Airways

IIM Raipur 31
Thank You !

Questions ?

IIM Raipur 32