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Enlarging Your Market

With the low cost strategy of Herb Kelleher and Southwest Airlines (LUV), it would have never been enough to rely upon taking customers from competitors as the means of creating a healthy business.

While Southwest was able to take customers away from their competitors, they had an even greater impact upon enlarging the airline market itself. People that would have used other forms of transportation, or not traveled at all, now would board Southwest Airlines for an affordable flight.

They created such a large demand that sometimes they would have 60 to 70 flights a day leave some of the terminals.

I think it's important to have that be part of the strategy in our businesses. If we don't have some type of strategy to enlarge a market, we'll be battling it out in an existing market that isn't producing any new business. Everybody will be fighting for the same, limited crumbs.

In the case of Southwest, they offered the low cost fare, which at the time in the industry had no real competitors, thereby creating their own market, and giving them the ability to tap into a whole new type of customer that the airline industry wasn't serving at the time.

But they also created their unique, fun culture that added to their low cost service, which eventually could be commoditized if it was the only difference between them and their competitors. That's why they've been able to hold on to their core customer, while they enlared their market without losing the soul of the company.

Other Herb Kelleher Sources:

A Culture of Commitment

HERB KELLEHER

The wild turkey

Herb Kelleher on the Record, Part 1

Herb Kelleher Talks about How Southwest Airlines Grew from Entrepreneurial Startup to Industry Leadership

Belief Model for The Leadership of Herb Kelleher (Southwest Airlines)

Herb Kelleher, Chairman, CEO and President, Southwest Airlines

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