Segmentation And Target Market For Southwest Airlines

2035 words - 9 pages

Segmentation and Target Market for Southwest Airlines
Steven Garnes
August 10, 2015
Denise A. Rueb

Segmentation and Target Market for Southwest Airlines
Southwest Airlines was formed in 1967 by Rollin King and Herb Kelleher and started service in June of 1971. The airline is headquartered in Dallas, Texas and originally operated flights within the state of Texas. The company has since expanded and now operates flights from Dallas to almost all major cities in the United States and is considered the largest low-cost carrier in the country. “Southwest seeks to offer a travel product that is built around flights targeted to specific demographics and ticket pricing ...view middle of the document...

This practice fits the company’s business model of offering frequent and conveniently timed flights at a low cost. This business model has helped the company identify its target market and market segmentation. Operating as a low-cost carrier means the company is seeking to serve cost and value-conscious consumers, small business executives, and customers who are traveling short distances and prefer a low-cost fare. This is the first segment of its target market. The second segment includes families who are value-conscious, and senior citizens.
Demographic Segmentation
The target demographic for Southwest is very broad. The fact the airline has a brand that appeals to price-conscious travelers who do not mind the airline’s no-frills philosophy means it attracts lots of small business owners, young adults, middle-class families, and those who are traveling a short distance. Southwest operates a simplified airline to keep costs down. It only operates one type of aircraft, and its no-frills plan includes no assigned seats or class seating, no meals, and no onboard movies. The company has a strong emphasis on customer service and a differentiation strategy to keep customers happy and loyal. When hiring for customer service positions within the organization, Southwest focuses on attitudes rather than skills and encourages peer hiring. This strategy helps the company identify those who fit the organizational culture and who are most likely to further the company’s philosophy of treating customers and employees as family and having fun on the job. Southwest’s employees are a key part of the airline’s overall strategy and are extremely loyal. “Having happy employees means a company is more likely to have happy customers. Southwest knows this and uses it to its advantage. Workers at Southwest enjoy their jobs and see them as a natural part of their lives. This attitude is reflected in Southwest’s employee retention rate which is just over ninety-two percent” (Manuri, 2012).
One of Southwest’s key differentiation strategies is its frequent flyer program called “Rapid Rewards.” Its competitors have frequent flyer programs, but their customers are not able to redeem miles for any seat at any time. Most airline frequent flyer programs have blackout dates, usually during high travel periods, where customers are not able to book flights using their miles. Southwest does not have this restriction, and its customers can redeem their miles for any seat, on any flight, at any time with no blackout dates. “Southwest’s other key differentiation strategy is what they call aggressive promotion. They take their key messages, put them into easy-to-understand commercials, and let the strategies themselves do the talking. Southwest sets up all of its strategies in its commercials. It shows its low costs, emphasis on employees, and its differentiation. This sort of campaign sets the company apart from competitors and makes potential customers aware of Southwest’s...

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