Southwest Airlines' brand loyalty strategy and fun-centered promotional approach

Southwest Airlines has been a model of success for the past forty years. It is a success based on company values, on low prices, on business innovation, and on the quality of the service, among other elements. The company built on these values and used an adequate promotional campaign and strategy to build brand loyalty. Today, many of the company's clients use its services because of what is known as brand loyalty: customers buying the same services because of an attachment to the company that often goes beyond simple decision making factors such as price or quality.

The paper concludes that Southwest Airlines has been successful for many different reasons, but primarily through a successful combination of good promotion, relaxed and fun marketing and advertising and a solid set of values and competitive advantages, which it continuously emphasized in its integrated communication strategy. Its promotional mix was adapted to the characteristics of the airlines industry, focusing on traditional marketing and advertising instruments rather than the online technology. Fundamentally, the idea of fun was incorporated in the mix, resulting in an informal approach that appealed to people and that strengthened brand loyalty. Brand loyalty is perhaps Southwest's strongest asset, many of its customers preferring the low cost, efficient model that the company has promoted.

Introduction

This paper will aim to look at some of these aspects from both a theoretical and practical perspective. First of all, it will examine the theoretical framework, with a focus on brand loyalty and promotion. Second, it will transpose these into practice by examining how Southwest Airlines translates the theory into its own planning and approach, including through its fun-centered advertising. The third section will aim to look at how some of the things discussed throughout can be replicated in other areas, such as business to business. The paper will also look at how information technology improves the opportunities for companies such as Southwest Airlines and how it could potentially create a competitive advantage, particularly as a more efficient instrument of communication.

Section A

This section looks at the existing literature on two primary topics that will be the object of this paper. The first refers to promotion, as part of the marketing mix, aiming in particular to understand the theoretical contributions to the promotional mix. The second looks at brand loyalty, particularly at studies that analyze the factors that influence brand loyalty, in particular ways that an organization can maximize brand loyalty.

Kurtz (2010) proposes three distinct objectives for promotion, as part of the marketing mix that a company employs. These include to present information, to differentiate (a product or a company) on the market and to increase demand. As Dunn (1995) mentioned, even if a company has developed the best products and commercializes them at the best prices on the market, it is all useless unless the public knows, in detail, about all these. Promotion is the instrument to make people know about what one has to offer.

One of the important components of promotion is the promotional mix. Since one of the objectives of the promotion element in the marketing mix is to inform the customers and, thus, to communicate efficiently, the promotional mix identifies the best instruments that can be employed in that sense, as well as the degree to which (and the ways in which) these instruments can be used (Chartered Institute of Marketing, 2009). The instruments include advertising, public relations, sales promotion, direct marketing and personal selling. It is thus obvious that the promotional mix is a complex undertaking that needs to follow the company's strategic objectives and the managerial vision.

Harrell (2008) also points out that the company image can be considered a sixth element in the promotional mix. This is probably something that gains more ground and substance in the informational society of today, when information (including bad information) about a company can be accessed by the consumers much quicker.

The corporate image is all about reputation or how a client perceives an organization. If the company's reputation is bad, it is possible for a client to refuse buying from that particular company, to the degree to which this could become a trend with other consumers. The corporate image influences, sometimes in a tacit way, the way the consumer decision is formed. The fact that a company produces, at low cost, in countries where labor legislation is more loose is, for example, a way in which the company's image can be affected. Otherwise, a company that has a strong corporate social responsibility strategy could be perceived as a "good" company and positively influence the purchasing decision.

Probably one of the key aspects about the promotional mix is that it needs to be balanced. All the promotional mix instruments should be included in the overall marketing strategy in a balanced way and applied to the particular situation. This will be further expanded in Section C, when particular types of relationships, such as B2B, will be discussed.

With the current technology, some of the components of the promotional mix gain a new perspective. For example, direct marketing required a database of names and a platform to communicate the advertising message. In the past, this used to be represented by fliers, cell phone text messaging or even phone calls. However, today, with technology, it is more about the email and, more and more, about social platforms like Facebook or Twitter, to enumerate just a few.

Some of the components of the promotional mix, such as advertising, go back at least 150 years. As discussed in the previous paragraph with direct marketing, the new technologies offer enormous opportunities. Advertising has complemented traditional advertising with online advertising. Online advertising has the advantage of being targeted advertising: quite often, Google or Facebook offer the opportunity for businesses to monitor online client activity and, thus, tailor their advertising accordingly. A good example in that sense is the way Google advertises in the Gmail account, on the sides of the email content.

Public relations is the essential mechanism through which information is passed from the organization to the public. The aim is to gain exposure for the company's products, to persuade the public (whereby the public is represented by potential and existing customers) and to promote a certain company image (Rubel, 2007).

Public relations, in the current technological environment, similarly to the other instruments that are part of the promotional mix, have new opportunities. The new channels of communication available for an organization offer new ways in which to provide information to shareholders and more effective ways in which to interact with clients and others on the market.

A particularly interesting expect, especially given the particularities of the industry, is the governmental relations component of public relations. The idea in this case is to properly interact with the government in order to influence it to produce appropriate policy that can drive business for a company.

A lot of the marketing theory has discussed loyalty, namely brand loyalty, as a way in which a company can evaluate its success. According to Paul et. al (2010), as much as 69% of senior marketing managers that were interviewed mentioned that loyalty is a very useful metric and one that they consider when making decisions and evaluating their performance.

The idea of brand loyalty is quite straightforward. Loyalty, in general, shows consistency in one's options. In the case of brand loyalty, it shows the degree to which an individual is likely to continue using a certain brand and under what conditions. This translates in a process that involves repetitive purchases and commitment towards repeatedly buying the same product or service from the same company (Dick, Basu, 1994).

Punniyamoorthy and Raj (2007), following empirical research, have considered that brand loyalty includes, among the most important elements and characteristics, commitment and repeated purchase. Other factors that impact brand loyalty are perceived value and brand trust. All of these contribute to creating brand loyalty over time.

It is important, even given the case in discussion here (brand loyalty in the case of Southwest Airlines) to differentiate between occasional loyalty and true brand loyalty. Occasional loyalty is usually determined by some marginal factor that has an impact on the purchasing decision at a certain moment of time. As Jones,. Mothersbaugh, and Beatty (2002) pointed out, such loyalty can be determined by a lack of viable alternatives or simple convenience. It does not show the adherence to a product or service from a company because of a set of intrinsic qualities that the respective product/service or the company itself has.

What is truly of interest when referring to brand loyalty is to correlate the perception that customers have about a certain brand with a mechanism of continuous repurchasing. Reichheld (1990, 1993) looks at some of the advantages of brand loyalty for an organization. These advantages include constant revenues, the capacity to adopt a pricing strategy with higher price levels etc. This is something that Dawes (2009) supported in his research, where he argued that the price sensitiveness decreases as brand loyalty increase.

It is also important to point out that brand loyalty could even potentially mean that a customer will prefer a company's products or services because of loyalty even if there are others on the market with better prices and better quality. The loyalty thus implies a complete commitment to a particular brand, something that was formed over time and is likely to withstand potential changes on the market or to the product or service that is being commercialized.

Kotler (1991) has done a lot of research in the area of brand loyalty. First, he supports the Pareto 80-20 rule, whereby heavy users are the 20% that provide 80% of the entire profit of an organization. Starting from this idea, he defines four types of brand loyalists, depending on the level of brand loyalty.

The four type of brand loyalists are hard-core loyalists, split loyalists, shifting loyalists and switchers. The hard-core loyalists are those who are entirely loyal to one brand and who will purchase that brand under any conditions. The split loyalists are those who are generally loyal to two or three brand, switching between these depending on different factors and constraints.

The shifting loyalists have no particular preference for a brand and will move from brand to brand, according to different external influences. The switchers have absolutely no loyalty towards brands and are generally influenced in their purchasing patterns by factors such as price or the social impact of their purchase.

Other studies, such as Rowley's (2005) classify brand loyalty differently. She proposes the following categories: captive, convenience-seekers, contented and committed. The captive loyalists have no other choice or alternatives; convenience-seekers look to the convenience of the brand rather than any other qualities; contended customers will keep consumption levels at the same amount; and the committed ones are the actual brand loyalists.

An important category of studies looks at the different factors that impact brand loyalty. Some of these have been previously briefly discussed in other contexts. It is obviously a difficult and complex process that eventually results in an individual preferring one brand over any other for an unlimited period of time.

Since most of the studies analyzed here have concentrated on building brand loyalty, it is also interesting to have a look at how brand loyalty is deconstructed. Surowiecki (2014) mentions the case of Lululemon Athletica, an athletic and sports apparel producer, who quickly turned from being a cult and a lifestyle to quickly decelerating sales. Apparently, what led to this was the customers realizing that the quality of the products were quite low (bad materials and bad dyes), something supported by unfortunate statements from the CEO and founder.

Surowiecki argues that people today are more informed and this includes accessing reviews across the Internet, reviews that could negatively impact brand loyalty. People have become much more attached to information that circulates freely across the Internet, from other people's opinion, to information about the products or how they are manufactured and to company practices.

Section C

This section will aim to wrap up and conclude the analysis of brand loyalty and the promotional strategy at Southwest Airlines, based on the previous two sections. It will include personal opinions and an evaluation of how successful Southwest was in implementing the appropriate policies to reach its goals.

In my literature review, I explored the notions of promotion and brand loyalty, looking particularly at some of the objectives of promotion, as part of the marketing mix, and some of the characteristics of brand loyalty, including in terms of how brand loyalty divides the consumer according to different categories, what are some of the factors that stimulate brand loyalty and how this is threatened in an informational society.

The first thing that I want to point out is that, obviously, since it is about a market context, the application of the theory in Section A to the particular situation in Section B, namely the Southwest Airlines case, is contextual. However, contextual does not, in any way, mean limited by the case of Southwest Airlines. I believe that Section A proposes some theories that have a general applicability, to a reasonable degree.

For example, splitting brand loyalists into four different categories seems a reasonable choice. Of course, one could argue that seven or nine categories could be used, identifying different other degrees to which a customer is likely to remain loyal to a brand, but we are referring here to a reasonable situation. If one thinks of things, a customer is likely to use only one brand, two or three, switch between several or switch between the entire available portfolios according to different criteria.

The notions described in the brand loyalty part of Section A can be applied to any organization and any particular industry, even if the airline industry has distinct and complicated characteristics. It is obvious that brand loyalty implies repeated purchases over a period of time, as well as the fact that good quality and prices helps build such as customer loyalty.

This term can likely be applied an even extended when it comes to the B2B market. I would, in fact, assume that companies prefer to purchase from the same businesses they have over a long period of time, because a relationship of trust and convenience is essential and more difficult to create between larger companies than between the company and the consumer.

One of the things that I found most interesting, although this has not been amply discussed in Section A, is the reverse of something discussed there: the information society we live in today is a threat to brand loyalty. I think that this is an overextension to the truth. Information society is a threat, on one hand, because it allows people to be more informed and to better understand products and services, from a wider context.

However, the new technological instruments with which we operate today also create unlimited opportunities for organizations. One example in this sense are the social networking tools, such as Facebook and Twitter, and the fact that these represent an easily accessible channel of communication for commercial entities and their customers. Customers may link to these channels and remain connected to them, something that amplifies brand loyalty in a very subconscious manner, without necessarily improving things such as quality or prices.

I think that this is true in all industries, including the airline industry, where companies now have the capacity to advertise their offers in new ways. So, I think that the information technology also complements the promotional component of the marketing mix, which was discussed in Section A. All three of the objectives that were analyzed in the literature review can be translated to the business-to-business segment and information technology could definitely be an important component to all of these segments.

I don't believe, however, that the "fun" component could be applicable in B2B or in other industries, even enough arguments could also support the contrary. The problem with a promotion campaign focused on the idea of fun is that, other than its obvious advantage (previously mentioned, in brief that it gives an idea of a company that has confidence and strength), it has one potential disadvantage: it could lead to a perceived lack of seriousness. For a B2C company or business, this risk is less obvious and less dangerous, but in the case of a B2B situation, this is a potential problem and it is not necessarily a component that is worthwhile: partners in the B2B field are not interested in a fun approach, they are more focused on the contractual conditions and on what the partner can offer.

It is thus likely that Southwest Airlines would adapt its promotion strategy in a B2B environment and this shows that a particular approach is not always valid and that it needs to be customized depending on the recipient or on the market. This seems to be the case with the new campaign that Southwest has produced and that has a more "serious" message, moving away from the traditional funny lines.

Public relations, on the other hand, will likely be similar in both B2C and B2B in the case of Southwest. The company will use the same instruments in order to ensure that the public (whether governmental or not) receives the appropriate signals and information, perhaps with small adaptations, depending on the nature of the recipients. For a B2B environment, an extensive focus could be on partnerships and seminars, where ideas can be exchanged about ways to influence and improve the partnerships.

An important note should be made about reputation, as an essential component of the promotional mix, whether in a B2C or a B2B environment. The primary reason why brand loyalty is such a competitive advantage for Southwest is reputation. Southwest's reputation is that of a company that gives to its clients exactly what it promises in its advertisements. This counts as an essential factor in consolidating trust in the company and its promises.