Harvard Business Review’s Case of Southwest

Harvard Business Review’s case of Southwest is a particularly interesting one. The case encompasses many different issues, yet I only want to focus on two. The issues of undercutting prices past the breakeven point and the advertising tactic of selling sex. Before diving in head first let us dip our toes in and understand how Southwest was even a contender to begin with. Southwest was created to serve an unmet demand within the state of Texas. San Antonio, Houston, and Dallas were all growing cities that had a demand of interstate business commuting between the three of them. The current competitors, Texas International and Braniff, failed to capitalize on this overflow of consumers so Southwest was created.

Now the issues arose from Southwest’s risque marketing campaign. Southwest decided to target the specific audience of business commuters. They used advertisements and commercials that sold ‘Luv’ and beautiful stewardesses in ‘hot pants’. Southwest took on a persona of being the fun and flirty airline, while their competition was known for being conservative. Southwest also became the trend setter with pricing. Southwest was known for their $20 fares and cutting fares in half for less in demand flights, such as weekend and evening flights. This caused a huge price war with Braniff. In the end of the case study Braniff cut their prices to match Southwest. The other issue arises, “Does Southwest continue to cut prices even if it below their breakeven?”

My recommendations for Southwest, in response to Braniff, is to not further cut prices. At this point it would just be a race to the bottom and as we learned in previous marketing courses no one ever wins that race. Southwest should continue at current prices but create added value to their price by including free checked bags and mass advertising quick turnaround flights that are on schedule. Creating more value for the current price will end the price war and race to the bottom but also creates a differentiating factor for Southwest in comparison to Texas International and Braniff. My other recommendation to Southwest would be to increase capacity by broadening your identity to include families. Currently Southwest has 104 total seats in to fill and on average have 48 seats filled, while 89% of those seats are business executives. Southwest needs to create a more family friendly environment to attract families to be able to reach at the very least 50% capacity. Southwest can achieve this by changing the stewardess uniforms to still encompass flirty and fun, but be conservative enough where families wouldn’t be uncomfortable bringing their children around them. Also advertising more room on the plane to families would be a huge benefit, especially those traveling with children. By following these recommendations Southwest can have meaningful and attainable changes for continued success, while also keeping their brand image they worked so hard to obtain.