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March 28, 2005
Marketing plan outline for Southwest Airlines
In preparation for the creative portion on WVU IMC project, a basic marketing plan outline for Southwest Airlines was created. This is the first rough outline.
Southwest Airlines - Marketing Plan Outline
The following is a marketing plan outline for Southwest Airlines, the US's current dominant low-cost domestic air travel carrier.
SWOT Analysis
Strengths
- Low cost structure relative to large carriers.
- High number of established, high-frequency discount routes.
- Operational efficiencies relative to large and low-cost carriers.
- Modern, cost efficient flight network model.
Weaknesses
- Decreasing differentiation relative to other low-cost-carriers.
- Aircraft type versus long, transcontinental routes.
- Aging company patriarch and visionary - Herb Kelleher.
- Overcoming the automobile for short, consumer trips
Opportunities
- Repeal of the Wright Amendment.
- ATA Domestic Code-Sharing Agreement.
- Pittsburgh Airport Expansion.
Threats
- Long term fuel prices and hedge activities.
- Rising labor costs.
- New low-cost carriers.
- Dallas Fort-Worth Airport/ the Wright Amendment.
- New regional jets
Marketing Objectives
These marketing objectives will serve as targets for Southwest:
1) Increase the number of daily Pittsburgh departures 350% in 18 months.
Pittsburgh is scheduled to go into service in May 2005 and is expected to become a strong city for the company.
2) Increase penetration by 20% within key ATA code-sharing markets,
including New York, Newark, and Boston.
3) Improve overall company Load Factor to: 71%.
Target Market
The target market for Southwest Airlines consists of the following:
- Medium- to high-frequency business travelers. (1-3 roundtrips per month)
- Male/female professionals aged 24-55 years of age.
- Price/cost conscious
- Commuting distances ranging from 750 - 1700 miles
- Internet/technology savvy
- 30-60 day trip planners
For the purpose of this marketing plan, target consumers living within the following key, high-density population centers will receive particular attention:
- Chicago - Las Vegas
- Houston - New York/LaGuardia
- Baltimore/Washington - New Jersey/Newark
- Dallas - Boston
- Pittsburgh/Philadelphia
Competitive Strategies
The following strategies represent starting points:
1) Stress the 'Southwest Experience' that offers travelers cost, convenience and
enjoyment while utilizing the carrier.
2) Differentiate on scheduling convenience and frequency relative to competitors.
3) Differentiate with consumer services connected to revamped Rapid
Rewards Program.
Implementation
To put Southwest's strategy into action, the following components will be implemented:
1) Expansion of Southwest's web-based service architecture that provides
advanced services to Rapid Rewards customers.
2) Modernization/refreshment of long running 'Wanna Get Away' campaign
using regional/local versioning.
3) Revamping of the Rapid Rewards program to entice short-distance, high frequency business travelers.
Evaluation
The evaluation will focus on travelers in key Southwest markets, and measure the following items pre-, during-, and post-program implementation. The plan will measure consumer identification and awareness before the campaign begins, and then measure it after implementation. Factors that the program will outline - such as load factor targets, etc - will be able to be objective measured after the campaign.
Posted by pgraber at 05:46 PM
March 27, 2005
Marketing plan basics
In looking at the creative options one can pursue, understanding how these tackle and address issues outlined in a basic marketing plan are essential. This begs the question - what is a marketing plan and what information does it contain.
Marketing plans and the information they contain are somewhat subjective - you'll essentially get different answers from different people.
What follows is a discussion of the elements proposed within the coursework at WVU.
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Elements of the Marketing Plan
While marketing plans vary from company to company, most plans cover these seven basic areas:
1. Situation Analysis
2. Marketing Objectives
3. Marketing Strategy
4. Target Market
5. Competitive Strategies
6. Implementation (Action Programs)
7. Evaluation
Situation Analysis
The situation analysis is the section of the marketing plan that identifies and evaluates all of the environmental factors affecting the marketing program. The situation analysis is generally comprised of five sections: market situation, product situation, competitive situation, distribution situation and macroenvironment situation.
* Market Situation. The market situation provides descriptive information about the target market(s), as well as an outline of changes and/or anticipated changes (if any) in the target market.
* Product Situation. The product situation offers information on the sales, pricing, market share, and profit margins.
* Competitive Situation. The competitive situation provides descriptive information concerning all major competitors and potential competitors.
* Distribution Situation. The distribution situation describes each channel of distribution to be used along with such factors as market coverage (e.g. inclusive, selective or exclusive), inventory management, order processing, transportation and logistics.
* Macroenvironment Situation. The macroenvironment section of the situation analysis provides information about broad macroenviromental trends (i.e., demographic, economic, technological, political, legal, sociocultural) that might affect the company and its products or services.
Marketers often outline these variables in the form of a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats). You can find out more about the SWOT analysis and how it relates to creative strategy in the Emmerling article for this week.
Marketing Objectives
Determining a company's specific marketing objectives is typically done in two steps. First, the company outlines its financial objectives regarding such areas as profitability, return on investment (ROI), and cash flow. The second step of the process explains how the company will achieve these goals. A marketing objective for Coca-Cola, for example, might read something like this: "Coca-Cola Classic would like to see a five percent growth in sales in the next year."
Marketing Strategy
Marketing strategies are the steps a company plans to take to achieve its marketing goals. There are several strategies Coca-Cola might use in meeting the above marketing objective including: reducing price, offering coupons, increasing mass media advertising, or increasing distribution outlets. It's important to remember that every marketing objective must have at least one marketing strategy to go with it and, often, there will be more than one.
Target Market
A target market is the group of people most likely to purchase or use a company's products or services. For those of us in communications, determining the target market is often the most important step; after all, if we don't know who the target market is, we can't effectively reach them with any kind of advertisement or promotion.
The target market is carefully determined by considering both demographic (e.g., age, gender, race, income) and psychographic (e.g., lifestyle, interests, attitudes) variables. Geographic segmentation (e.g., local, regional, national, north, south) can also be a factor; it certainly will be important for Southwest Airlines. Target markets can also be segmented by usage factors (e.g., new category users, other-brand loyal, and other-brand switchers). One of the primary values of choosing a target market is that it reduces the waste associated with trying to reach an entire market; the other value is that specific information on a market can be used to tailor the content of a company's communications to its target consumers.
Here are some questions you might consider when trying to determine your target market(s) for Southwest*:
* Is the potential market segment the right size and does it have the necessary growth characteristics?
* Does the segment have sufficient long-term profitability? Considerations include: the threat that the segment has too many competitors, the threat of a new competitor, the threat of substitute products, the threat that the power of buyers becomes oppressive, or the threat that the power of suppliers becomes oppressive.
* Does the segment correspond with the company’s objectives and resources? If selecting more than one segment as target markets, are these segments complementary in respect to cost, performance, and technology?
*Source: Kotler, P. (1994). Marketing Management: Analysis, Planning, Implementation, and Control, 8th ed., Englewood Cliffs, N.J.: Prentice-Hall, 281–283.
Incidentally, in terms of target market, America truly is one big Melting Pot, and it's becoming more so all the time. As Jewler and Drewniany point out in Chapter 2 of Creative Strategy in Advertising, the purchasing power of groups like African-Americans, Hispanics, Asians, and Native Americans is growing. The buying power of older Americans (age 50+), women, handicapped individuals, and gay couples also continues to rise. Your text offers a fabulous look at these different target groups and information on how to reach them, as well as some sample advertisements. This week's Forehand and Deshpande article from the Journal of Marketing Research offers further information on the ethnic segment and how they interpret and respond to brand messages.
Competitive Strategies
This is the section of the marketing plan where a company must differentiate its product/service from that of the competition. This task can be accomplished through either product differentiation, product positioning, or branding. Lets look at each of these strategies in more detail:
* Product Differentiation. Product differentiation is the process of making a product different in the mind of the consumer, even when differences across the product category are minimal or non-existent. Product differences can be tangible (e.g. size, color, quality, fragrance) or intangible (upscale, trendy, professional). To illustrate this point, see the Cardona article from this week for the inside scoop on the recent differentiation efforts of Banana Republic.
* Product Positioning. The position is the image a product projects relative to images presented by both competitive products and other products marketed by the same company. Positioning is also about how marketers want consumers to view their product as compared to the competition. The product positioning process involves identifying the most important beliefs, attitudes, and product usage habits of the customer, assessing how the marketer’s product is perceived relative to these factors, then placing the product in its most advantageous light.
* Branding Strategies. Branding strategies attempt to establish a strong position through the power of the brand. Powerful brands (think McDonald's, FedEx, or Walt Disney) create long-lasting images in the minds of consumers by identifying the product, anchoring its position, and establishing an image or personality for the product that makes it distinctive, liked, and valued. Brands are extremely important because once they're established in consumers' minds, the brand serves as cognitive shortcut which might connote positive qualities such as convenience, solid values, or great customer service. In fact, you should strongly consider using a branding strategy for Southwest.
Implementation Tactics
The implementation section of the marketing plan has traditionally outlined elements such as product, price, distribution, and promotion -- commonly known as the 4 P's. If you’ve taken a basic marketing course, you’re probably already familiar with the "4 P’s" of the marketing mix. But IMC practitioners are bucking tradition and moving away from the traditional 4 P’s to a more customer-focused way of thinking known as the 4 C’s -- customer, cost, convenience and communication.
The first two elements, customer and cost, are pretty self-explanatory. Let’s look at the second two a little closer.
* Convenience. In IMC, convenience refers to how easy it is for customers to obtain a product/service, rather than how easy it is for the company to distribute is.
* Communication. In IMC, communication means listening to the customer and learning what they want and need rather than simply telling them about a product and attempting to sell it to them.
Evaluation
Evaluation involves looking at the effectiveness of your marketing plan before, during, and after its implementation. Evaluation will be important to organizations and the marketers who serve them over the next several years because as management demands more accountability, marketing expenditures will come under increasing scrutiny. What aspects of the marketing plan can we test? Can we translate the results to the real world? How many variables can we control? All of these questions and more will continue to be debated in the years ahead.
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What is interesting is that even small businesses can utlize this template to improve how they market, allowing them more bang for the buck and greater returns.
Posted by pgraber at 09:50 AM
March 21, 2005
Southwest Airlines Background Info
Class started on Monday for Creative Strategy's, an IMC course at West Virginia University.
Here is the text of my first week's paper. It provides some backgrond information on Southwest Airlines, a company we are studying for nine weeks.
Southwest Airlines - Background Information
Southwest Airlines is one of our nations largest domestic low-cost airlines and flies some 2900 flights a day, connecting fifty-nine cities in 31 states . The company began in Texas in 1971 with only four planes, and today operates over 415 Boeing 737s, employs over 32,000 people, is considered one of the most admired airline companies in the world. The company is publicly traded under the symbol "LUV" on the New York Stock Exchange. According to the Southwest website, the company carried 70.9 million customers in 2004 and generated operating revenue of approx. $6.5 billion
Central to how Southwest operates and executes its services is the company's Mission Statement. The statement is short and focused, but touches upon the company's commitment to customer service:
The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit
This statement defines the company and helps to shape how it services it customers and operates its business. According to its Customer Service Commitment - a document that essentially maps this mission to its services to customers - states that its mission 'highlights our desire to serve our Customers and gives us direction when we have to make service-related decisions . Southwest's customer-centric philosophy remains intertwined with everything they do.
Southwest currently serves 59 cities, 59 airports, and 31 states. The map below (courtesy of Southwest.com) highlights the areas of the United States where they maintain service. A quick glance at the map shows how the company focuses on high-air traffic areas.
As far as routes go, a majority of the company's routes are less than 1,250 miles, although they do provide coast-to-coast service between select cites. According to company information, "Southwest's average passenger airfare is $88.57, and the average passenger trip length is about 753 miles . This suggests that the company's most common routes fall between cities relatively close to one another, such as those within the US southwest, south and northeast.
The magic of Southwest has been the company's ability to innovate, serve customers, and still make a profit. They've done this by uniquely empowering their employees, serving airline customers with the safest, most on-time service, all while communicating the value of great service in an inviting, fun-loving fashion.
Target Audience and Customers
Southwest target customers are frequent air travelers who travel within the domestic United States and are looking for value-priced fares. Southwest customers are young- to middle-aged consumers who live in any of the fifty-nine cities the company currently services. They travel among the country's most densely populated areas, mostly short distances that average less than 1,000 miles. Beyond these basic travel characteristics, a Southwest customer is also savvy with technology, likes to plan trips well in advance, and will forego certain luxuries to save money on the price of fares. These types of customers also demand excellent service. These customer also travel frequently and as a result, are aware of 'what makes a good deal' as far as pricing is concerned. They are also loyal, and value incentives that this provides them. Once they learn a system that is working, they stick with it.
Southwest's Competitors
The success Southwest has had with its low-cost, full-service strategy has not gone unnoticed in the airline industry. As a result, many of Southwest's competitors are aggressively ramping up their efforts to duplicate their success. A number of established low-cost competitors are currently pressuring Southwest, as well as new low-cost spin-offs by major airline companies. Currently low cost competitors include AirTran, JetBlue, ValueJet, and ATA. As the major carriers introduce their low-cost options, these will also be direct competitors with Southwest. In addition to these airline companies, the automobile is also a direct competitor. Because Southwest's average consumer trip is relatively short, communicating the value that air-flight provides relative to ground travel is always a challenge.
Current Marketing Challenges
Like other airlines, Southwest is facing many challenges today. This include the terrorism, overall air traffic volume, the rise in fuel costs, and the labor environment. Of these, however, terrorism and its impact on airport security is of critical importance and effects how Southwest carries out it overall mission - to serve its customers. In this context, the company has begun to champion several initiatives that are enabling the company to continue to carry out its mission. Other factors also present challenges, like fuel costs - an emerging issue now - as well as increased travel volume . Since other carriers have to deal with these issues as well, how the company deals with them is critical.
But these factors aside, a major marketing challenge could be reacting to the changes in the airline industry that may occur in the coming months. According to the Business Travel Coalition (BTC), failing airline firms today "represent seventy-five percent of U.S. airline capacity . Although low-cost carriers like Southwest are profitable and growing, major carriers represent more than just consumer service; they are critical pieces of the U.S. transportation infrastructure which other industries depend upon. Their plight effects the entire industry.
Marketing Communications
Southwest utilizes many different types of media to communicate its low cost air travel fares and services. Throughout their history, Southwest has relied on a creative and leading edge messaging strategy to promote itself. While all airlines do this to a point, what makes Southwest unique is that they almost make a mockery of traditional, over-blown advertising. They present an image of a fun-loving, campy airline that customers will enjoy while they travel. It is not just about flying with Southwest - it's about making friends with them and enjoying the experience.
Beyond the overriding themes and non-traditional messages Southwest uses in its marketing, the company also is very effective in utilizing different forms of media to reinforce its brand. The company the first airline to establish a home page on the Internet, and today continues to lead the industry online - both in innovation and sales volume. Just recently, the company introduced 'Ding', a direct-to-desktop that delivers live fare updates. Southwest.com provides users a host of different tools that help them book their flights, as well as plan their trips.
Southwest airlines has traditionally been innovative, customer-centric and a creative thinker in the air travel industry. They have excelled at servicing their customers, providing on-time and safe travel, and continue to be committed to offering tools and services that US domestic travelers value.
Southwest Airlines - Fact sheet, Southwest.com, http://www.southwest.com/about_swa/press/factsheet.html
Southwest Airlines - Fact Sheet, Southwest.com, http://www.southwest.com/about_swa/press/factsheet.html#Stock
The Mission of Southwest Airlines, Southwest.com, http://www.southwest.com/about_swa/mission.html
Southwest Airlines Customer Service Commitment, Southwest.com, http://www.southwest.com/about_swa/customer_service_commitment/customer_service_commitment.html
Ibid
January 2005 Airline Crisis Statement, The Business Travel Coalition, BTC Urges Congress To Craft A National Air Transportation Policy, http://btcweb.biz/01-05crisisstatement.htm
Posted by pgraber at 05:40 PM
March 03, 2005
Survey Questionnaire Design
In my marketing research course, I uncovered a great article on improving your web surveys. More survey design oriented than web stuf..
Here's the post I sent to my classmates:
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I do write a fair amount of short survey questionaires in my current position. The website that interests me was Principles of Questionnaire Design, located at http://www.analytictech.com/mb313/principl.htm. It outlined a number of key areas. I especially like how the actual page was constructed.
The headings allowed me quickly grasp key concepts. What we excellent is that this page detailed three key areas: how to ask it, where to place key questions and how questions can generate certain types of 'data'. These principles, combined with a quality tool for production, should help my efforts to obtain better reseearch data.
For instance, here's a survey I did in January. How could I have improved it? I have many ideas already... http://www.ncafp.com/members/surveys/surveyTemplate.html
Posted by pgraber at 07:46 PM
Quick Back Link Power
A simple run of Nichebot reveals an interesting discovery relative to search engines and web niches.
Take a small keyword nich, for instance. Backlinks help tremendously in helping search engines to determine relevance. This is common knowledge in SEO.
Ironically, however, some niches I'm experimenting with are currently showing very low- to non-existent back link counts. This directly effects initial positioning.
In another niche I've identifed, the 'leader' had 10 backlinks. One had 0 with a pagerank of 6. What?
Regardless of how pagerank is currently used or not, its data.
In any case back links help.
Posted by pgraber at 07:31 PM