Customer Value Funnel Approach The Reference Appends Term Paper

Excerpt from Term Paper :

Customer Value Funnel Approach. The reference appends four sources in APA format.


The "customer value funnel approach" (p. 153) is a highly significant implement for clearly comprehending and evaluating business mechanisms and other marketing-related critical situations. Besides a priceless strategic marketing framework, this approach focuses on the satisfaction of customers, the main marketing target of various giants in the business industry to reap the benefits of high productivity and massive volume due to broad clientele. As Stanley Slater states "As marketers, we should be committed to the proposition that the creation of customer value must be the reason for the firm's existence and certainly for its success" (p. 153).

Hence for effective business practices and performance, customer values play a vital role and therefore all focal organizations must take into consideration all the four levels of the Customer Value Funnel approach just like Southwest Airline did when it began functioning with only three Boeing 737 airplanes in 1971. Soon the emerging company became the most progressive name in the service industry. The reason being the belief in providing value services to their customers and focusing on the funnel approach. The macroenvironmental factors considerably assisted Southwest's management to run a profitable business gulping down 50% of the market share by the year 1998. Providing customer-oriented services in pair cities where the socio-culture demands people to travel often and where people appreciate cheap, simple yet efficient service, Southwest offers frequent scheduling using simple technology, with single type of aircraft but making frequent trips pleasantly affordable (economical) with "low fares and high customer satisfaction" services. Hence by exploring and pragmatically as well as sensibly manipulating the macroenvironmental factors making up the global business community, Southwest Airlines managed to reap benefits of effective business productivity and performance. Thus closely analyzing the marketing strategy of Southwest Airline based on the customer value funnel approach; we can safely culminate that positively utilizing the macroenvironmental factors can have an emphatic impact on the focal organization.

Moreover, market factors including collaborations, suppliers, competition and regulators also play a cardinal role in determining the future of a focal organization. What gives Southwest a competitive edge over other airlines is its hospitable and warming attitude towards its customers that compliments the culture of the pair cities it serves. Moreover, being hilarious by demonstrating "best imitation of the pet monkey of Aladdin in Disney's recent smash cartoon" (p. 307) in order to keep the passengers at ease and by constantly remaining enthusiastic, are not common marketing strategies. Such brilliant and absolutely unique marketing strategy needs profound understanding of the significance of market factors that considerably affect the business of a focal organization. Apart from Southwest's never-ending "spirit," the rapidly flourishing airline organization is blessed with a highly efficient team of suppliers that further facilitates Southwest Airline's marketing strategy of increasing productivity with the help of customer value funnel approach while remaining on the top. For instance, with the help of competent suppliers, Southwest Airlines "served 87.4 million bags of peanuts" (p. 306) to its customers in the year 1997 because of it's supplier's reasonable prices, improved quality supply (that made Southwest top the list of "airline quality rating" (p. 307) and right timing to turn in the eatables. In addition to the above, the top management deals with the most pressing legal issues and critical regulations in the most light-hearted but wise manner. For instance, the sensible and experienced Herb Kelleher, Chief Executive Officer at Southwest Airline won an arm-wrestling competition against another president of a small, local company. Nonetheless, not by winning the challenge but by losing it thereby convincing the opponent company to permit them using the duplicated advertising campaign instead of taking the matter to the court of law. Hence with the collaborative that is combined efforts of the entire team working for Southwest Airline, the company has earned handsome profits by fully utilizing the market factors positively.

The diligent and extremely loyal and helpful employees at Southwest Airlines form the most integral part of and the biggest reason for the organization's success with value added services for its huge clientele. These "value providers" at Southwest have managed to provide convenience that most customers value a great deal while traveling and various other value-added "delivered" services that have largely exceeded "the expectations of the customers (perceived values)" (p. 156) thereby resulting in long lasting customer satisfaction paving way for augmented customer fidelity to Southwest Airline. For instance, apart from the entire crew warmly welcoming and efficiently attending all the passengers on the plane, the pilots further put their valued customers at ease by making funny sounds and passing motivating statements while the plane makes a smooth landing (p.307). This is because, Southwest Airline, "a structure through which individuals cooperate systematically to conduct business" (The American Heritage Dictionary: Fourth Edition) has a business culture that is rich in moral and social values. These values are embedded in the business culture of Southwest and are reflected in the organizational behavior that is the "individual behavior collectivized" (American Heritage Dictionary). The culture of Southwest encourages employee participation and motivates them to be generous, hospitable and nice towards their passengers. Moreover, the top management including the executives has drafted strategic plans and procedures that further compel their workforce to value their customers' satisfaction. These carefully formulated rules and policies determine "the actions or reactions of a person in response to external or internal stimuli" thereby energizing behavior of the employees and motivating them to perform accordingly (American Heritage Dictionary). Hence, the owners' as well as the employees' values together have made Southwest Airlines satisfy their customers to a great extent. Nevertheless, Southwest needs to make some major strategic changes in order to deliver outstanding value to its customers. First of all, Southwest must promote its innumerable customer's value-added services through well-defined and organized marketing strategies in order to meet the rising competitive threat and other related competition issues. Marketing their value-added services will serve two interests. For one, it will attract more customers from the targeted market. Secondly, it will help the old clients know that airline treasures their satisfaction and is willing to invest in them by ameliorating the quality of their services. Moreover, the "single-class" formula might be too outdated for the current market scenario. Therefore, Southwest must try to categorize and further classify its services by developing the concept of first class, business class, and executive class and economy class services like other competitive firms. Moreover, introducing "assigned seating" facility will be a good strategic change keeping in mind Delta Airlines, United as well as U.S. Airways (p. 308).

The most important change that the airline organization needs to make is in its technical service. Southwest Airline must meet its customer's expectations by ameliorating and upgrading its technological integration, the weakness in which compelled several of its customers to opt for other better technologically equipped airlines. Hence in order to compete better in the service industry, it is highly significant that the company considers making some amendments in its strategic planning.

From its inception until, the Annual Report of Southwest for the year 1997, the customers of the flourishing airline displayed maximum satisfaction, both in terms of facilities that is the quality of service and money. Hence from 1971 to 1997, the customers of Southwest perceived value as superior. This is because the airline served them good quality refreshments, the staff was highly motivated thereby radiating happiness and hospitality and with simple but frequent scheduling crafts and "comedic comments and gestures" of the entire crew, Southwest soon became the sign of high quality and low-fare service provider (p. 307). Nevertheless, in 1998 with growing competition and certain weaknesses in the system pertaining to efficiency and facility issues, Southwest lost its ten-percent clientele to United Shuttle (p. 308). This is because, Southwest failed to meet its customer's some of the expectations particularly related to technology. Many customers valued efficient reservation system with no loopholes and with Southwest lacking therein, they were left with little choice than to opt for better alternatives.

Thus from the above discussion, it is evident that Southwest Airlines started with the vision of observing them with an image of "nation's low far, high customer satisfaction airline, saving "customers' time and money" by keeping "productivity high and fares low." The organization's positive business performance can further be measured by taking into consideration its market share and net profit margins. Southwest continued doing big business since its inception until 1998. Its annual report of 1994 demonstrated a net profit margin of 6.9% (p. 305) "while the rest of the industry broke even" and a market share of 50% in pair cities. In 1997, Southwest Airline made reservations for eighty-three million passengers and "utilized approximately 65.6 million gallons of jet fuel" and by 1998 it owned "72 Boeing 737 airplanes serving 52 cities all over the U.S." (p. 305). Thus, it is evident that Southwest business performance based on the traditional criteria remained consistently progressive. However,…

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