Market Analysis – Southwest Airlines

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1. I.                    Industry
   1. a.       Identification and Discussion

Define industry within which the company competes.  Indicate the NAICS* code that is used by the U.S. Census Bureau to identify businesses and give census data available on the industry.  Indicate size of industry (no. of participants, total sales), growth (3-5 year period), and profitability. Indicate scope of industry – regional, national, international.

1. b.        Trends

Discuss what is happening in the industry that may impact its long term success.  An example for the nursing home industry might be that demographic trends such as the aging of the population in the U.S. will positively affect growth in that market.

FEEL FREE TO INCLUDE OTHER RELEVANT INFO.

 

• II.                Company Analysis
• 1. a.      Intro paragraph

 

Background info on company, size of the company (revenue/sales, establishments and employees), growth and profitability figures (3-5 years), indicate whether company has an international presence, etc.

b.      Products

Identify products/product categories, discuss depth and breadth of product offerings,  indicate sales by product/product category, indicate % of company revenue each product/product category accounts for, indicate market share for each product/product category, etc.

c.       Positioning Strategy

Beginning here you can focus on one product/product category if you wish.  If you choose to look at all products/product categories, list them separately and indicate the positioning strategy for each.

d.      Key competitive advantage

The company may have a key competitive advantage or each product/product category may have its own competitive advantage – you will have to decide based on your research.

e.      Customer profile

If possible talk in terms of primary, secondary and other customers when discussing each product/product category you are addressing in the paper.  Give specifics re: what the customer looks like:  demographic information is a must, but it would be helpful to include psychographic profiling if available.

f.        Customer buying behavior

This section addresses how and why the customer buys the product.  Does the customer buy for functional reasons or emotional/psychological reasons?  Does the customer purchase at certain times of the year and not others (seasonal effect)?  Is customer loyalty a factor in the purchase?  How often does the consumer purchase the product in a given time frame (ex: most consumers purchase toothpaste 10 times a year while a person purchases a car every five years)?** Is the product an impulse purchase or does the customer carefully plan and research the purchase? Where does the consumer get information re: products/product categories (friends, media, etc. –be specific:  for example, 50% indicate they depend on friends’ recommendations, 20% use TV ads to get information, etc.)?  What is important to the consumer when purchasing this product (for example, 20% indicate price is the most important variable in the purchase, 15% indicate product features, etc.)?  Any other questions/issues you deem appropriate.  Note:  customer buying behavior does not relate to sales figures for certain products/product categories.

g.      Pricing Strategies and Price Points

Addressing the strategy issue may mean responding to a question such as:  Does the company price its products to gain maximum market penetration or does the company charge high prices with the understanding that it will not be the market share leader?  Other strategy issues may be important.  Your research should help you know what those are.  Indicate price ranges for the product/product categories you have chosen to focus on.

h.      Distribution Strategies

Indicate the number of establishments the company has (if it is a retail entity such as Wal-Mart), indicate the number of production facilities the company has (if it is a manufacturer such as Coca-Cola), indicate the number of both establishments and manufacturing facilities if the company does both, talk about growth in number of establishments/facilities over a 3-5 year period, if a company’s products are distributed in a number of venues (for instance Coca-Cola sells soft drinks in supermarkets, convenience stores, restaurants, and vending machines) indicate percentage of sales in each location, talk about international presence and what percentage of sales comes from the U.S. and international markets, etc.

i.        Promotional Efforts

What percentage of overall revenue is spent on marketing activities?  What types of activities does the company engage in and what percentage of the overall marketing budget do those activities account for? For example, the company may use TV ads, radio, billboards, event sponsorship, online marketing, etc. and TV ads may be 30% of the budget, radio 5%, etc.

j.        Financials

Discuss how financially stable the company is.  You can use balance sheet info, cash flow statements and ratios to drive this discussion.  Do not include full financial documents in the paper (unless you put them in an Appendix).  Pull out highlights that give the reader information on how the company is doing.

 

• III.             Competitors
• 1. a.      Identification

Identify top two to three competitors; discuss sales, profitability and growth over 3-5 year period

b.       Strategies

Indicate how competitors differ from your company in terms of the marketplace.  Use the outline above (in Section I) to identify areas you may want to highlight, but you can discuss all of the important points related to pricing, product offerings, distribution differences, etc. in this one section since you will not be covering all of them (only the most important ones) or going into as much depth as you have in the section above.

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