1. Describe the marketing exchange relationship that exists between Southwest Airlines and its customers.
2. Describe the 5Cs of the marketing framework as they pertain to Southwest Airlines.
3. How does Southwest Airlines’ approach to providing a total product experience capture the marketing framework elements of STP (i.e., segmentation, targeting, and positioning) and the 4Ps (i.e., product, price, place, and promotion)?
SOLUTION
1. Marketing can be described as an exchange relationship between a company and its customers. Ideally, this is an exchange from which both the company and its customers will benefit. Southwest Airlines provides low fare air travel among selected locations in the United States. This air travel is intended to be fun, and different packages of air travel experiences are provided to the customers according to their needs and desires. In exchange, the customers provide Southwest with a revenue stream, especially strengthened when there is repeat business. The more satisfied the customers are and the more often they patronize Southwest, the stronger the exchange relationship from which both are obviously benefitting.
BUSPROG: Analytic
Tier II: DISC: Strategy
Tier III: MBA: Knowledge of general business functions
Bloom’s: Application
Topic: Marketing is an Exchange Relationship
Difficulty: Easy
2. The 5Cs of the marketing framework refer to customers, company, context, collaborators, and competitors. Customers are individuals flying to specific locations in the United States and who seek to do so at a low cost. The company is a low-fare airline that seeks to provide the highest level of customer service and an enjoyable flying experience. The context includes the general economic conditions that impact the demand for air travel, the requirements regarding transportation safety and security, and variations in fuel costs, among others. Key collaborators for Southwest Airlines would be vendors that sell tickets as well as airfare/hotel packages, airport catering services, and airport fuel suppliers, among others. Competitors for Southwest would be those airlines that fly the same domestic routes as Southwest flies.
BUSPROG: Analytic
Tier II: DISC: Strategy
Tier III: MBA: Strategic and systems skills
Bloom’s: Analysis
Topic: The “Marketing Framework”: 5Cs, STP, and the 4Ps
Difficulty: Moderate
3. Segmentation reflects the variations that exist in customers’ preferences, needs, and resources. Airline passengers run the gamut from those seeking very cheap, no frills flights, with limited services to those willing to pay high fares for the comforts and amenities of first-class travel. In addition, passengers vary in needs for domestic versus international travel, and commuter flights versus longer distance travel. Other differentiating dimensions could be identified as well.
Targeting means that the attraction of certain market segments makes more sense for the company to pursue than does attempting to attract other market segments. Southwest Airlines targets domestic fliers on specific city-to-city routes. Within this geographic segment, Southwest targets fliers who seek low fares along with high-quality services provided in a fun manner; Southwest also targets fliers who seek particular experience packages.
Positioning involves communicating to the targeted market segment(s) the benefits that the company provides. Southwest Airlines strives to provide its customers with a total product experience that includes, among other aspects, check-in, boarding, flying, and baggage claim experiences. While maintaining its commitment to low fares, excellent customer service, and fun, Southwest seeks to provide different packages of product experiences that its different market segments would like to have.
Product, price, place, and promotion address four questions about marketing tactics that execute the company’s intended positioning. The product question seeks to ascertain whether customers actually want what the company produces. Obviously, given that Southwest Airlines is an ongoing, profitable business, and consistently one of the most successful airlines in America, customers do want this product. The price question concerns whether customers will pay what the company charges. There is a plentiful supply of people who prefer low cost air fares. The place question addresses where and how customers will purchase the product. Purchases of Southwest Airlines tickets are made through the company’s website and authorized travel agents. The promotion question involves what can be done to entice the customer to purchase the product. Southwest touts its total product experience with different packages of experiences being built into the ticket price structure rather than nickel-and-diming fliers with numerous add-ons. Southwest also emphasizes the fun experience that all fliers can have.
BUSPROG: Analytic
Tier II: DISC: Strategy
Tier III: MBA: Strategic and systems skills
Bloom’s: Analysis
Topic: The “Marketing Framework”: 5Cs, STP, and the 4Ps
Difficulty: Challenging