1. INTRODUCTION
1.1 Purpose –
The purpose of this paper is to discuss and analyze the marketing mix a service company. The company chosen is Southwest Airlines; hence the company is analyzed in terms of its 5 P’s of Marketing comparing the present company’s actual practice and what the theories say.
1.2 Scope
The paper limits its self to study the 5 Ps of Southwest Airlines marketing mix. Any discussion of the companies other areas of operation are only as those relevant and material to the topic of the paper.
1.3 Methodology
The methodology basically involves comparing company’s actual strategies and theories and evaluate whether or not adoption of strategies are attaining corporate objectives
1.4 Limitations
This assumes that the sources of information are reliable and could be relied upon. Authors’ waiver of any liability in using their resources must therefore be taken also with caution as to the use the result of conclusion of this paper.
1.5 Assumptions
Authors have necessary qualification as to their representations and information carries with them an acceptable degree of reliability
1.6 Background
This paper is being prepared to comply with the requirement that
Company to be used should only be a service organization. An airline was therefore chosen since such would satisfy the requirement.
2. MARKETING MIX
Definitions:
Churchill, Jr, and Peter (1995) citing Bennett (1998) defined marketing mix as the “mix of the controllable marketing variables that the firm uses to pursue the desired level of sales in the target market.”
On the other hand, Capcomarketing.com () defined the same terms saying, “Marketing Mix is the combination of product offerings used to reach a target market for the organization. The marketing mix comprises the Product (what the actual offering comprises), Price (the value exchanged for that offering), Promotion (the means of communicating that offering to the target audience, promotional mix) and distribution (also known as Place, the means of having the product offering available to the target audience). The marketing mix is also known as the four Ps.”
Comparing the two definitions would give one a clear distinction where the first call the referring to the controllable variable while the second one would refer to the mix as product offerings. How if one goes deeper because their distinction is only as to use the of the terms but as to their purposes it could be inferred that each is a means to and end. Both are therefore are made to accomplish a purpose. Both of them will reach a goal or a target or objective and that is to reach the customer. To reach the customer then would simply means accomplish a selling, satisfying and delighting the customer to buy again.
3. MARKETING MIX OF SOUTHWEST AIRLINES
3.1 PRODUCT-
A product is what a company provide to customer to satisfy the latter’s needs and wants. A product may be tangible or intangible hence it may be a good or a service. There is a difference between a physical good and a service and this could be understood further as the levels of product are described below. Kotler, Philip, and Armstrong, Gary (1993) gave three levels of product as applied and discussed blow:
Level 1: Core Product. What the customer really buys? When these concepts area applied in the case of Southwest Airlines, one could say that airline passengers are not only buying a comfortable use of sear in a passenger aircraft of an airline, they are purchase customer service like security and warmth of the airline employees.
Level 2 Actual Product: This consists of the brand name, features, packaging, parts, and styling. The aim is to have the customers purchase and serve them with a differential advantage over competitors.
When applied to southwest airlines, this means that although passenger airlines do provide seats and carry people from one place to another, the strategy of the company is to convince the passenger why would the companies be purchase over those of competitors. This involves packing their service so that it could meet its customers, needs and wants. As compared to competitors how will it define value in relation of other components of the product mix?
Level 3: Augmented product: What are the additional non-tangible benefits that one can give like the technical service and after sales service, warranties and others? How will the Southwest do this could in the form of more chances for travel by really serving a bigger part of the part of the families of the passengers by trying to bring down price with out really losing profitability?
Southwest Airline has a unique way of delivering its products. Wikipedia (2006) said, mentioned Southwest Experience that customers are not assigned seats; rather, they are assigned to a “boarding group” depending on their check-in time (earlier check-ins get to board earlier), and are left to find their own seats on the plane. In May 2006, it was announced in a shareholders meeting that they were weighing the costs of adopting an assigned-seating system in 2008, as part of a reservations-technology overhaul now under way. Meal service is less than on historically full service airlines, with shorter flights receiving just a single small snack and soft drink, and longer flights meriting a “Snack Pack” of pre-packaged goods. In the post-9/11 era these meals in a bag typically exceed the food served on full-service airlines like United or American. Although there is no video entertainment, Southwest is known for colourful boarding announcements and crews that burst out in song. … For all the leanness in comforts, which helped it pass through the post-9/11 travel slump as one of the few profitable major American airlines, Southwest manages to maintain excellent customer satisfaction ratings.”
3.2 PRICE-
It is being low-price is where the company is well known in the domestic airline industry. It there goes to adopt the strategy with the intention of bigger volume hence still aiming fro profitability by economies of scale.
Wikipedia (2006) confirmed the uniqueness of ones’ experience with the company by saying, “The experience of flying on Southwest is quite different from that of most other U.S. airlines. Tickets must be bought from the airline itself, and can’t be purchased through a travel agent or through common online venues like Orbitz or Travelocity. The airline’s tickets can be bought over the phone or online at the company’s website which features Web only fare discounts. Unlike other major airlines, Southwest reservations can be changed at will, without penalty (save the potentially additional cost of the new reservation). This makes Southwest a very flexible service for customers.”
3.3 PLACE
Churchill, Jr. and Peter (1995) defined place of or channels of distribution to include a variety of activities such as transportation, warehousing and inventory control. Sometimes the producer works with other organizations called resellers, intermediaries or middlemen. The authors said, that distribution is critical to a successful marketing strategy and no matter how good a product is, how far its price, or how effectively it is promoted, members of the target market may not buy it if is not readily available to them. As applied to Southwest it simply means the availability of Southwest products to customers anytime. This the company has done by allowing them to buy tickets when the board the aircraft and through their website. They are unlike other airlines where there are only limited distribution outlets of tickets.
3.4 PROMOTION
Churchill and Peter (1995) that promotion is telling how a product meets their needs and how they can buy it. It informing the target market about the organization and its products. Wikipedia (2006) showed how the company does these activities. It said that the company employed playful, effective advertising. It further said, “The Company, from inception, employed humor in its advertising. Examples include “Just Plane Smart,” “The Somebody Else up There Who Loves You” and “THE Low Fare Airline.” The airline’s current slogan is “A Symbol of Freedom”….Since the 1990s, Southwest has been running a television ad campaign based on the phrase “Wanna get away?” The commercials present comical, embarrassing situations in which people find themselves wanting to “get away.” Most ads are accompanied by the sound clip “[ding] You are now free to move about the country.” Wikipedia (2006) also mentioned the company’s strategy of making know the airline by involving colorful personality when it said, “Southwest employees are generally well-known for friendliness, which is often attributed to a unique “love-based” corporate atmosphere that made chairman and founder Herb Kelleher a celebrity in the business world. The President of Southwest is former corporate secretary Colleen Barrett, who has been with the company since day one. Southwest’s CFO is Laura Wright…Southwest is the basis of the American version of the reality show Airline.”
3.5 PEOPLE
Many management gurus agree that it is the use of people that will allow creation of competitive advantage. The way the company manage its business is best seen in the way it treat its employees. Part of the company’s mission and vision found its website manifested how it values it employees by including the following statement, “To Our Employees: We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. 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.com, 2006)
4. RECOMMENDATION
4.1 Product –
It product appear to satisfy the needs to its target customers. With increased routes in 2006, the company has proven to have stayed with it generic strategy of positioning (Ballou, et. al.,2004) it self as low-price but with high value (Adler, 1999) airline.
4.2 Price –
Its pricing strategy is one its most important strategy which has sustained is stellar performance for the past years. It should maintain its pricing (Leszinski, 1992) strategy but its should coincide with volume because the essence of strategy demands the combination of the two.
4.3 Place-
By making it affordable to a more passenger and by having the sale of its tickets as well as increasing its routes to different airports are pieces of evidence of a good channel of distribution (Pache, 1996) by Southwest Airlines
4.4 Promotion-
= It advertising is also found to be effective. By making the company a reality show airline, the company is commonly know to almost every air travelling American passenger
4.5 People – It has clear that a competitive advantage () through its people hence it must therefore continue the same.
The very critical part of the company’s strategy is the in its tendency to bring its prices down for according to some quarters, it may find difficulty of recovering in case of recession and therefore meeting its profit target. But the company has managed to survived in the 9/11 attack even when it decrease its prices by ¼ of the original price because of the big volume it got.
5. CONCLUSION
Based on the evaluation of companies performance (Weitman, 1999) as against theories, the company has become resilient in its adoption of low-cost positioning a corporate strategy, It was able to define value by really bring down the price but for more volume. It is not to say that the strategy (Mccracken, 1990) is perfectly safe. There are also down side but the assurance that it had more customers than other would make the company in the heart and moving of passengers. Cement that with the competitive advantage from its peoples and could see how well more the company will perform in the coming years.
6. REFERENCES
Jay, Ros (1998), Profitable Direct Marketing, International Thomson Publishing Europe, New York, USA
Churchill, Jr. (Churchill, Jr. and Peter, 1995, Marketing, Creating Value for Customers)
Benett, Peter, ed. (1988), Dictionary of Marketing Terms, Chicago: American Marketing Association, p. 117
4. Kotler, Philip, and Armstrong, Gary (1993). Marketing: An Introduction, 3d ed. Englewood Cliffs, NJ: Prentice-Hall., 2006
5. Capco Marketing (n.d.) Marketing Glossary, {www document} URL capcomarketing.com/mediakit/Marketing_Glossary/, Accessed August 27, 2006
Southwest.com (2006) The Marketing of LUV {www document} URL http://www.southwest.com/about_swa/, Accessed August 3,2006
Wikipedia (2006), Southwest Airlines, {www document} URL http://en.wikipedia.org/wiki/Southwest_Airlines, Accessed August 3,2006
Mccracken J. (1990) An Attention-Getting Marketing Strategy; Journal of Accountancy, Vol. 170
Weitman, C. (1999), Performance-Based Terminology, Childhood Education, Vol. 72
Pache G. (1996)The Small Producer in the French Food Distribution Channel, Journal of Small Business Management, Vol. 34, 1996
Leszinski, R. (1992) Pricing for a Single Market, ; The McKinsey Quarterly,
Ballou, et. al. (2004), The Impact of Strategic-Positioning Information on Auditor Judgments about Business-Process Performance, Auditing: A Journal of Practice & Theory, Vol. 23,
Adler, B (1999), The Questionable Ascent of Hadley V. Baxendale, Stanford Law Review, Vol. 51
