感恩節特集--之二(Thanksgiving Part II)

其實在Boston, 感恩節聚餐並不一定是在晚上. 也有很多家庭習慣在中午舉辦. 因為這樣, 第二年(2005)的感恩節我們一共吃了兩次感恩大餐. 中午在同學卡洛琳(Caroline)家, 晚上參加台灣同學舉辦的感恩party.


這位卡洛琳同學是早上在麻州州政府上班, 晚上到我們學校修MBA (據她老公說她是Harvard法律系畢業的). 那學期正好與她一起修會計並和她期末報告同一組. 所以她便邀請我們共度感恩節. 她說這是她第一次親手烹飪火雞大餐, 因此開始有點擔心要是不好吃, 又不好意思說....就尷尬了...But, it turned out to be very good!
Caroline家位於Boston市中心, 她住的是一間單臥房的公寓. 所以空間並不是很大, 應該跟台北市區的公寓大小差不多吧. 所以這次我們只有六個人與一隻貓共同渡過了一個下午的感恩節.





晚上與大約二十個台灣來的留學生(來自各校)一起歡慶感恩. 當然我們也有中式的火雞--火雞內塞油飯. It turned out to very good too! 而且有機會讓我們過切火雞的乾癮...既然是乾癮那當然是沒切了.只是裝裝樣子而已. 其實依據習俗, 切火雞的重任是落在每個家庭中最權威的成員身上. 並不是每個人都可以擔任的哦. 所以千萬牢記, 如果感恩節到朋友家作客, 請不要"好意"幫忙切火雞. 這可是會造成誤會的.

因為我們是unofficial的Thanksgiving party, 所以我才會說難得有機會能拿刀指著火雞. 此外, 我們還有許多的餘興節目, 當然是由我們自己同學所提供. 正好我有錄影存證....口合口合!! Caffiny & Michael 就別怪我了..因為實在太精采了!!

• 南非國歌篇

• 模仿陳小雲篇

• 英文補充站

本篇單句: It turned out to be very good.

本篇片語: turned out to be (ph.) 結果竟然.....(常用於非預期的結果, 出乎意料)

感恩節特集--之一(Thanksgiving Part I)

寒假終於來臨了...有機會喘息一下. 就來跟大家說說感恩節吧... 在Boston的第一個感恩節(2004)是在一個ESL老師(Amy: a Harvard)的家渡過的. 習慣上,美國人會邀請一些出門在外, 無法與家人相聚的朋友到他們家一起過Thanksgiving. 這位老師的家人是從韓國移民到美,但入境隨俗也有過感恩的習慣. Thanksgiving是美國的第二大節日,maybe.., 火雞是少不了的主食. 雞肉淋上魯肉汁還有小紅莓(cranberry)醬, 再搭配馬鈴薯泥就是最平常的感恩餐了.

Amy老師家的菜色比起一般美國家庭豐富多了(下篇再介紹), 除了火雞外, 還有許多韓式的料理. 更可體會到美韓文化交流下, 產生出不同的過節方式. 而且, 他們的親戚與家人真是多才多藝, 餐後還有現場的音樂饗宴. 鋼琴, 小提琴, 合唱....What a Holiday!!

• 英文補充站

本篇單句: When you eat turkey, it always goes with the gravy.

本篇單字: gravy (n) 滷汁, 肉汁.

美式的烹調常常使用烘烤法(bake), 因為如此, 食物嘗起來比較原味. 所以有時必須另外準備gravy淋在肉或馬鈴薯泥上一起食用來增加風味. 就如同吃牛排要加黑胡椒醬是一樣的道理啦!!!

The effect of China’s entry of the WTO

by Chung-Hsien Yu ,Dec 2006.
Exclusive Summary
China, one of the fastest growing economies in the world, had joined the World Trade Organization (WTO) for five years. To meet the accession agreement of the WTO and catch up the trend of globalization, Chinese government knew that the modification of its economic policies and trade policies was urgently needed. Then, Chinese government started to implement the idea of free economy and trade at early 2000s.
Due to the transformation of joining a more open market through the WTO, the economy of China had kept steady growth every year from 2000 to 2005. According to states, during this period, the total trade amount of China had increased almost three times. At the same time, the trade balance of China also increased from $24 billion in 2000 to $101 billion in 2005; the trade balance between China and the US increased from $83 billion in 2000 to $201 billion in 2005. According to the balance of payments theory, the Chinese currency, “Renminbi” (RMB) or “Yuan,” should have been appreciated to a certain higher value if there was no other significant intervention. Actually, the annual average exchange rate between the RMB and USD, however, remained at 8.277 Yuan per US Dollar between year 2000 and year 2004.
The Chinese government has adopted Managed Floating exchange rate system for more than a decade. Under the control of China’s central bank, the Yuan was tied with the US Dollar at a fixed rate that announced by the Chinese government. As a result, the value of the Yuan would not reflect the real purchasing power of China and had been undervalued. Therefore, the US government, on May 2005, was attempting to accuse China which manipulated its currency to gain its economic advantage. Under the pressure from many counties in the world, not only the US, Chinese government reformed its exchange rate regime to a currency-basket model and revalued the RMB against the US Dollar by 2.1 percent. As a result, the annual average exchange rate between the RMB and USD was shifted to 8.07 Yuan per US Dollar.
Therefore, China’s accession to WTO did bring about a challenge to the currency policy of China. This challenge is not only in the short-run but also in the long-run. And, the Chinese government is still trying to conquer the challenge which is to float the Chinese Yuan.

The WTO
“The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.”[1] WTO was established in 1995, but it is the inheritor of the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War, about 50 years ago. Now, there are 149 members which include all the major countries in the world.
In order to maintain the orderliness, fairness and freeness of trade, the WTO has several important functionalities which are “administering trade agreements, acting as a forum for trade negotiations, settling trade disputes, and reviewing national trade policies.”[2] Therefore, a WTO member can trade fairly with other members under the supervision of the WTO. If there is an argument between two members while doing the trade, the WTO will be acting a result for them. Base on these reasons, a WTO member is more willing to trade with another country which is a WTO member than not a WTO member. In other words, accession to the WTO will give a country more opportunities to trade with other countries allover the world. As a result, it will stimulate economic growth of the country and raise national incomes and personal incomes of the country by trading with more countries.
On November 1999, the United States and China signed an agreement on the terms of China’s WTO accession since the United States is one of the Quad which are the four largest WTO members and have the significant effect on the WTO’s decision making processes. Therefore, this agreement made China almost half way through its accession when China had decided to speed up the whole process of accession to the WTO at late 1990s.

China’s Accession to The WTO
On December 11, 2001, China formally became the 143rd member of the WTO. The China Business Review said, “In the five years since China joined the WTO, the country has changed in many positive ways. The ideas of market economy and trade and investment liberalizations have been integrated into popular thinking. More important, the Chinese public now widely accepts core WTO concepts such as transparency, accountable governance, and national treatment.”[3]
There are several benchmarks among those changes. First, Ministry of Foreign Trade and Economic Cooperation of China began to liberalize trading rights for foreign-invested enterprises, and State Economic and Trade Commission of China approved first foreign-invested wholesale enterprise in July 2001. At the same time, State Council of China brought China’s Equity Joint Venture (JV) Law into compliance with WTO rules. “These Regulations (JV) are formulated for the purpose of encouraging foreign joint venturers to establish in China Sino-foreign joint equity ventures involving Chinese and foreign investment and of promoting the balancing of their foreign exchange income and expenditure, to the advantage both of production management and the repatriation of legally earned profits by foreign joint venturers.”[4] As a result, China has brought in a lot capital from other counties and contributed to its economy.
Second, China removed 75 percent cap on foreign investment in many categories and reduced import tariffs on more than 4,800 tariff classifications to an average final duty bound rate of 8.8 percent.[5] By doing so, China lost a certain amount of tax income as well as the protection to its several domestic industries. The good thing is that China became a more open market for imports and the imports could stabilize the consumer price index to prevent the inflation of its rapidly growing economy.
Last but not least, China Banking Regulatory Commission allowed foreign banks to conduct the RMB operations for businesses in several major cities of China. The more institutions at which businesses can access the RMB, the more liquidity in the money market of the RMB, therefore, the interest rate will be maintained at a certain low level, which can encourage the investment in the domestic economy.
Due to these reforms, the country has grown rapidly after China’s WTO entry. China has become not only the fourth-largest economy in the world but also the world’s third-largest trading country after US and Germany. The total trade amount hit the record high at about $1,422 billion in 2005.
Despite China’s trade amount, the average amount of foreign direct investment (FDI) in China from 2002 to 2005 was about $42 billion which nearly twice the FDI amount at 2000. Owing to the open market principle of the WTO and the low labor cost in China, the country has become the most popular country which attracts huge international capital from foreign countries. With these international investments, China became the world’s manufacturing center. As a result, the exports of goods increased rapidly and there was $101 billion surplus in trade balance in 2005.
Since the United States is the largest trade country in the world, the trade balance between the US and China exceeded $200 billion at the end of 2005. Besides, because the US Dollar is the major currency and the US is the strongest economy in the world, the Chinese government held about $310 billion US Treasury bills [6] by using China’s exchange reserve which hit $819 billion at the end of 2005. Another reason for China holding a huge amount of US Treasury bills is related to China’s currency policy.

China’s Currency Policy
On December 18, 1993, the People Bank of China (PBOC), the central bank of China, formally announced that there was a new system for China’s foreign exchange system. This change is based on a “Managed Floating System” which means that the PBOC announced a daily exchange rate according to the demand and supply of the market. Then, the market exchange was allowed to float within certain limits, a range of plus or minus 0.25 percent.[7]
Here is how this system works: “The PBOC published an average RMB-to-US$ exchange rate every morning based on the prices quoted on the inter-bank foreign exchange markets on the previous day and listed the exchange rates for other major currencies based on exchange rate fluctuations in international foreign exchange markets. Designated foreign exchange banks could quote prices within a narrow range fixed by PBOC.”[8]
According to the RMB-USD exchange rate history, the exchange rate was fixed at 8.277 Yuan per US Dollar from 2000 to 2004 even though the trade balance grown more than 20 percent at China side per year since 2001. This means that the exchange rate was not really floating. Instead, the exchange rate of the RMB seemed to be “managed” by the Chinese government. In order to balance the demand and supply of the exchange market between the RMB and the US Dollar, the Chinese government invested a lot of assets in the United States and purchased about $50 billion, on average, US Treasury bills per year since 2001.[9] Therefore, the RMB can be pegged during this period.

The Concern of The US
The purchases of US Treasury bills made by China had maintained the US long-term interest rate low although Federal Reserve raised the short-term interest rate and expected to raise the long-term interest rate. According to a U.S. economist, “With long term interest rates capped, the Federal Reserve was in danger of inverting the US yield curve. An inverted yield curve is the best single economic indicator of a recession, something the Federal Reserve clearly wants to avoid.”[10]
From US consumers’ view, This pegging exchange rate strategy made the value of goods manufactured in China cheaper than in other countries. Therefore, it’s a benefit for the people who are importing goods from China. On the other hand, the US domestic manufacturers lost their competition to China’s manufacturers. As a result, a huge number of outsourcing or purchasing parts from China had let US Manufacturing suffer. The US has lost over 3.3 million manufacturing jobs from late 1990’s. To address this problem, the US government had set the higher tariffs on Chinese imports into the US to against the advantage of undervalued Yuan at 2004.
In order to prevent the further potential damage to US economy from China’s currency policy, the Bush administration responded to the public on May 2005. Although, the US government declined to accuse China of manipulating its currency for economic advantage, but said that it is likely to do so if China does not change its policy.

The Response of China
Finally, the exchange rate regime of China was changed to a currency-basket model which is to set the value of the Yuan according to a group of other currencies, and devaluated the RMB against the US dollar by 2.1 percent in mid-2005. But, it seems can not satisfy the expectation from all China’s trading partners since the RMB was thought undervalued about 30 to 40 percent against the US Dollar by them. A more flexible and free currency policy is actually needed to release the pressures from the world.
In fact, China is putting its all effort on moving its currency toward a fully market-determined exchange rate and trying to commit WTO agreements. For example, China has introduced several mechanisms and instruments to float the RMB, such as currency swaps and forwards, a market-making system, and over-the-counter trading of the RMB.

Conclusion
China’s accession to the WTO is just like the first step of an infant when china facing the world economy. For China, there are still a lot work has to be done and so many new things needed to learn. The floating exchange rate is also a new topic the Chinese government needs to study. Accordingly, the real purchasing power and the strength of Chinese economy will really surprise the world by floating the Yuan. Moreover, China would have the chance to take place the global economic leadership. However, a free floating Yuan will require the free movement of capital, people as well as goods in China. This revolution will become China’s biggest challenge in the near future.

[1] World Trade Organization. “THE WTO IN BRIEF Part 1”. http://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr01_e.htm. Oct 2006.
[2] World Trade Organization. “THE WTO IN BRIEF Part 2”. http://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr01_e.htm. Oct 2006.
[3] Yong, Wang. “China in the WTO: A Chinese View.” chinabusinessreview.com. Oct 2006. Page 43
[4] State Council of China. REGULATIONS OF JOINT VENTURES' BALANCE OF FOREIGN EXCHANGE REVENUE AND EXPENDITURE. January 1986. Article .
[5] Yong, Wang. “China in the WTO: A Chinese View.” chinabusinessreview.com. Oct 2006. Page 43
[6] Department of The Treasury of the U.S.http://www.treas.gov/tic/mfhhis01.txt. Oct 2006.
[7] Zhang, Peter G. Chinese Yuan (Renminbi): Derivative Products. River Edge, NJ, USA: World Scientific Publishing Company, Incorporated, 2004. p 86.
[8] Zhang, Peter G. Chinese Yuan (Renminbi): Derivative Products. River Edge, NJ, USA: World Scientific Publishing Company, Incorporated, 2004. p 86.
[9] Department of The Treasury of the U.S.http://www.treas.gov/tic/mfhhis01.txt. Oct 2006.
[10] Steidtmann, Carl. "Economist's Corner: Yuan Small Step for the Global Economy, Yuan Giant Leap for China." Consumer Business, Deloitte Research. July 2005.

Internet Marketing Analysis of Southwest Airlines

By Chung-Hsien Yu Nov 2006
The Introduction of Southwest Airlines Corporation
Southwest Airlines corporation (SWA, Southwest or the “company”), founded by Rollin King and Herb Kelleher thirty five years ago at Texas, is a low-fare domestic airline company which has grown to become one of the largest airlines in America. According to Bureau of Transportation’s statistics from U.S. Deportment of transportations, Southwest has enplaned about 80 million passengers in year 2005 and taken the first place of top 10 U.S. Airlines with the most domestic scheduled enplanements passenger numbers during the period between January 2006 and July 2006.[1]
In 1996, Southwest launched its website, Southwest.com. This website also connected to its existing ticketless system, first introduced by Southwest Airlines in 1994, through which the passengers can book their schedule online and check in at the airport without a printed ticket. In 2005, passenger revenue generated by online bookings equaled 65 percent compared to approximately 59 percent in 2004. In first quarter 2006, approximately 68 percent of passenger revenue was generated by online bookings via southwest.com.[2] Therefore, Southwest.com is playing an extremely vital role in Southwest Airlines’ business strategies and reaching the company’s objectives by providing a more convenient and faster way of customer service.

The Business Objectives of Southwest Airlines
Southwest Airlines put its overall business objectives on its website and it says “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” [3] In addition, Southwest Airlines also realized that to perform such high quality of service the company must depend on its all employees. Therefore, Southwest also has the other mission which is to create a most comfortable working environment for its employees. Those two missions have been followed by the company since 1988.
Based on the initiative idea of Southwest Airlines’ two founders, “If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline.”[4], there are three major objectives, on-time schedule, low cost and high customer satisfaction, on which the company keep focusing.


The Marketing Strategies of Southwest Airlines
To achieve these objectives, the core marketing strategy which Southwest has been doing for several years is to drive as many customers as possible to “interact” with the company through the internet on Southwest.com since the online population is rapidly growing. At the same time, the company can lower the cost by doing business or marketing online. The company’s overall strategy is to use the technology to create a self-service environment for its customers in the near future. Gary C. Kelly, Vice Chairman and CEO of Southwest Airlines, said on PBS’s television program called “CEO Exchange,” “We are in a self service revolution now in the airline industry. And customers like that. It’s faster. And it’s more efficient for us. So we’re able to finally leverage technology and that’s been a primary focus of ours and will continue to be.”[5]

Internet Business Model of Southwest Airlines
The internet business model of Southwest Airlines is, general speaking; just a B2C model which is to directly sell the tickets to the customers through Southwest.com, the company needs not to heavily rely on the travel agency for intermediating any more. In addition, Southwest.com provides a membership program for the loyal customers and increases the “future” sale by selling “SouthwestGiftCard” which can be redeemed when purchasing a ticket. Other revenue through Southwest.com comes from the business partners in traveling related industry, like hotels or car rental companies. By using Southwest.com’s booking system, a customer can book a hotel and a rental car at the same time and is charged in only one payment. Therefore, the commissions can be earned from programs of the company sponsors with certain partners. This revenue increased approximately 35 percent from 2004 to 2005.[6] And, more than 70 percent of the company’s total revenue was generated through Southwest.com in 2005.
In the following, an analysis will be given to understand what Southwest Airline is capable of and how the company used its strengths together with the emerged opportunities to achieve its business goals successfully in the recent years.

The SWOT Analysis of Southwest Airlines
A low-fare airline does not mean that a company can not generate much profit. Hoovers, a famous business researching online company, described “Now a leading US airline, Southwest nevertheless stands as an inspiration for scrappy low-fare upstarts the world over. The carrier has enjoyed 33 straight profitable years amid the airline industry's ups and downs.”[7] To reach this incredible achievement, Southwest Airline initiated and adopted many successful low-cost and high-customer-satisfaction strategies and policies.
Internal Situations
First of all, Southwest Airline purchased only one single type of aircraft, Boeing 737 jet, which is more fuel-efficient than other types.[8] This aircraft united policy lowered not only the cost of maintenance and purchasing the parts but also shortened the learning curve of training the employees to operate or maintain the airplanes. The best the employees get trained the less chance that might have a problem with an airplane; therefore, the more on-time flight schedules can be easily delivered by Southwest.
Next, the point-to-point strategy was adopted by Southwest Airlines for certain years. The company focuses on local, not connecting, traffic. By the point-to-point system, about 80 percent of the company’s customers fly nonstop, direct flights between two cities. As a result, it minimized stops, connections, delays and total trip time.[9]
Southwest Airlines flies to 62 cities in 32 states by its 468 Boeing 737 jet.[10] It means that, by average, 7.5 airplanes can be assigned to each city. Accordingly, the company can provide more frequent flight schedules to its customers. Besides, the company can easily adjust its flight schedules depend on the seasonal traffic or special occasions to match the needs of the market.
As a pioneer in the airline industry, Southwest airlines had introduced the Ticketless system and some other new ideas into its business and other companies followed. The innovation and foresight within the company always brought the new opportunities to its business. The force of pushing the company evolved since 1988 when the company’s missions were defined has become one of the company spirits. This spirit originated from the company’s mission to its all employees, which says “Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines.”[11]
From financial point of view, Southwest has a strong financial structure with lot of cash on hand and low debt. The Dallas Morning News said “Simply put, Southwest is on top of the domestic aviation world. It’s flush with cash and low on debt. It’s shielded from record high jet fuel prices, and where it treads, other airlines quiver.”[12] The company’s hedge strategy saved nearly $900 million in 2005.[13]
Nielsen/Netratings reports that Southwest.com is the largest airline site in terms of unique visitors. There are more than 5.2 million people subscribing to Southwest’s weekly newsletters.[14] With such huge number of potential online customers, there are more than 93 percent of its customers choose online booking with Ticketless travel option. Therefore, Southwest had decided not to pay commissions to travel agents for sales since December 15, 2003.[15]
According to Southwest’s situations that were described above, Southwest’s strengths and weaknesses are identified and will be described in the following section.
The Strengths and Weaknesses of Southwest
First, one single type of aircraft is a strength for Southwest, because it brings much operating efficiency to the company. Second, the point-to-point, nonstop flights strategy can also be recognized as strength since it shortens the trip time and increases Southwest’s competitiveness. Next, the company’s spirits of encouraging the innovation and treading well not only to its customers but also its employees carry out the most value of the company and bring about the continuing progresses of the company.
One more of Southwest’s strength is that the company is not only quite well-off with operating cash but also has low debit. This advantage allows Southwest to quickly address unexpected situation which might damage the company, like hedging the rapidly raising of fuel price in 2005.
Last but not the least, the brand of Southwest can be recognized as its strength. Bearing more than 30 years reputation, Southwest has been acknowledged as the first brand of low-fare domestic airline in America. Accordingly, the company has accumulated a very high recognition in its industry and amount the public. It means that Southwest has won an enormous number of loyal customers and they could keep increasing if the company still attracts more and more customers by the reputation of its brand.
One of the weaknesses of Southwest Airlines is that the company does not operate its flights at some large metropolises, Boston for example, due to the cost concern. Consequently, there is a limit for its customer to schedule a trip with Southwest’s flight and the company might lose a large number of potential customers even give a chance of losing some of its loyal customers to other airline companies.
The other weakness of Southwest is its customer on-plane experience. Owing to the cost concern, Southwest put as many seats as possible in the planes and only single class seat, economic. It means that the size of a seat in Southwest’s airplanes is smaller than a seat in other airlines’ aircrafts. Thus, there are some customers could feel uncomfortable with the smaller seats because those customers’ physical issues, like the football players. Therefore, the Southwest might loses the business of those customers with special issues.
The Competitors of Southwest Airlines
In the same market segment of low-fare, point-to-point domestic airlines, JetBlue Airways (JetBlue), founded in 1998, is one of the major competitors of Southwest Airlines. JetBlue is originated from the same idea of Southwest, but with some differences. JetBlue Airways not only has the ability to offer about the same low fare as Southwest’s fare but can provide a more comfortable trip to passengers by reducing seats and enlarging the size of the seats. Furthermore, JetBlue offers individual TV and radio system for entertaining its passengers when traveling. In addition, JetBlue is a younger company with newer equipment and adopting more fashion technologies compare to Southwest. This is also an advantage for JetBlue over Southwest.
Another difference between JutBlue and Southwest is their flight destinations strategy. JetBue Airways is focusing on serving markets that previously were underserved and/or large metropolitan areas that have had high average fares. However, Southwest prefers the airports at which the company can operate its flights at lower cost. The trade-off of operating at low-cost airport is sometimes fewer customers than other airports. For example, Southwest does not provide any service from or to Boston, but JetBlue does, because Southwest might think that it is too costly for operating its flights in Boston. This does not fit to the company’s low-cost strategy. Conclusively, Southwest decided not to add Boston as a stop even though there is certain number of potential customers traveling by there. Overall, Southwest is still more competitive than JetBlue recently since Southwest serves more cities and more frequent flights than JetBlue, together with Southwest’s other strengths.
There are still other competitors in different market segment from Southwest. They are those airlines which provide not only domestic flights but also international fights, such as United Airlines or America Airlines (AA). AA had the most scheduled enplanements, including not only domestic, out of all U.S. carriers from Jan 2006 to July 2006 while Southwest was at second place during the same period.[16]
External Situations
The airline industry is extremely competitive since the terrorist attacks on September 11, 2001. The whole airline industry is suffering a tremendous loss in recent years due to the government’s passing of the more restrict laws, the Aviation Security Act, for home land security. This law brings a significant impact on the airport experience for passengers. Also, it impacted all airlines’ businesses. At the mean time, the war in Iraq and significant increases in the fuel price has forced several carriers to seek relief from financial obligations in bankruptcy. On the other hand, the low cost airlines such as JetBlue and AirTran started growing due to the growing customer demand for lower fares.
The Opportunities and Threats of Southwest
Obviously, the first threat is the new regulation set after September 11, 2001 by government for home land security. As a result, passengers would rather chose another transportation instead of flying if it takes a large amount of time to pass the security check and the passengers might have a chance of taking the same flight with terrorists. At the same time, the domestic air transportation has lost its advantage of saving time and high safety.
The other threat comes from the competitors. Many of the airlines in America not only operate domestic flights but also international flights. The globalization of U.S. businesses keep growing hence there are more and more demands of international flights from domestic customers. Therefore, those carriers who can provide both kinds of flights would have the advantage of doing business with these customers by connecting the schedules of domestic to international flights. For customers, it is more convenient for them to book their domestic and connecting international flights just in one stop. As a result, it is very difficult for Southwest to convince this kind of customer to take Southwest’s flights.
In the recent years, the global warming problem is getting worse and the airline industry has been accused by the environmental protection groups of being responsible for this global problem. The people who stand for those groups believe that the rapid growth of the aviation transportation has become one of the major sources of air pollutions. Therefore, the airline businesses are threatened by the pressure of being marked as the murderer who is killing the mother earth.
On the other hand, by using the strong financial strength of Southwest Airlines, the company can expand its scope to some other major cities in order to provide more routes and would result in an opportunity of increasing its customers as well as its revenue. Furthermore, base on the existing loyal customers and its brand, Southwest would have an opportunity to expand its business from domestic to international by aligning with other international carriers or operating international flights by itself. In the mean time, Southwest still need to keep its low-fare, low-cost strategy. This will be a new challenge for Southwest Airlines to globalize its business.

Target Customers Segment
According to the initiative of Southwest, the target customers can be identified as the people who are willing to pay affordable costs for time-saving transportation from one location to another. The customers belonging to this segment prefer to use airplanes as their transportation since airplanes are the fastest and save much traveling time. In addition, they are also asking for the lowest ticket price to save money and the customer service will be their minor concerns.
Even Southwest only operates its flights domestically, the customers who have needs for international flight might still qualify for Southwest’s target as long as they have the needs for domestic flights. The people who might not be included in Southwest’s target customer are the people who prefer high quality flight because Southwest adopted single-class seats policy since the company started operating. Therefore, Southwest is targeting a wide range of customers. In fact, from different point of view, there are two main reasons for people taking the airplane, which are for traveling and business purposes.
After the target customers have been recognized, the next step of the company is to find a way of how the messages can be send to these customers then draw their attentions of Southwest Airlines.

Customer Acquisition Strategies
Southwest’s main customer acquisition strategy is using television as its core advertising channel. Southwest not only bought the commercials time but also sponsored the television show by providing the flight tickets as the awards for the shows. Since Southwest has been a well-known airline for its low-fare, the company needs not to emphasize on its low-fare flight by commercials. Southwest’s strategy is to use fewer commercials and more sponsorship with the television programs, because the company can save the cost on advertising by giving out the tickets as price. Besides, the people who get these tickets have been considered as Southwest’s additional customers.
Southwest is doing very well on its pubic relations. Since the company is considering every people as its potential customer, Southwest has the responsibility of taking care of the society. The company is very willing to join or initiate the activities of contributing to the society. For instance, Southwest operated as many flights as possible to provide supplies and transport the emergency personnel to New Orleans after the city was hit by Hurricane Katrina.
The company is expecting that those off-line advertisings and its public relations can drive the people who are interested in Southwest to its website, Southwest.com. Then, this website provides the further information needed by its perspective or existing customers. The information includes the schedules and fares of Southwest’s flights, the financial data for its shareholders, and the news or events related to Southwest. Through the company’s website, Southwest.com, people can register in Southwest’s newsletters and receive any news from Southwest weekly by email.
Moreover, Southwest has a very unique client application called “DING” for sending out the “real time” messages to the company’s potential customers. This application can be downloaded from its website then installed in individuals’ personal computers. This means that Southwest has earned the trust from the people who are willing to install this application on their computer, because there are so many “malwares” on the internet recently. What this application does is to notify its user immediately by making a “Ding” sound and showing a small icon at right-bottom corner on the computer every time when there is a new time-limited promotion came up from Southwest. Then, a short message of the promotion shows in the central box of the application’s window. By clicking on the message box, the application leads the users who are interested in this promotion to a landing page which is different from the regular booking page on Southwest.com.
One advantage of the “DING” program is that this application’s users can customize what messages they are willing to receive. For example, a person who lives in New Your City might only need to know the promotional flights departure from New Your City. Therefore, they will not be annoyed by the messages they do not need. Another advantage is that the fares and schedules of flights are different when booked through “DING” program and the regular booking web page on Southwest.com even these flights have same departure and destination. And, the fares are lower when booked through “DING” program than through regular booking web page.
Also, the company is selling Southwest gift cards. Like other gift cards, the customers can store a certain amount of money into the cards. Then, the customers will give the cards to their relatives and friends. In other words, those people who purchase Southwest gift cards prefer Southwest’s flights and are willing to introduce the company to their relatives and friends by sending then Southwest’s gift cards. Therefore, the gift card will not only be a free advertisement for Southwest but also brings more potential customers to Southwest.
May be due to the cost concern, the company does not pay for on-line advertisings on other websites than its website. After searching on those broadly used web searching engines, such as Google, with related key words, Southwest had never shown up at the advertising sections. Furthermore, Southwest’s flight schedules can not be found at those on-line flight tickets searching systems, such as Expedia.com or ORBITZ.com. Another interpretation of why Southwest does not do on-line advertisings through other on-line sources is that the company believes that its website is more popular than others’. And, the company’s strategy is to make Southwest.com the only on-line distributor for its “e-tickets” and the only source of providing Southwest’s flight information.
Besides Southest.com for its business purpose, Southwest also established its own blog, blogsouthwest.com, titled “Nuts about Southwest” for creating Southwest’s on-line community on April 2006. This community is used to build the relationship between the company and its employees, airports, and its customers. People can obtain different information which not for business purpose from this blog. Also the company can get feedback from divers perspectives.

Customer Retention Strategies
Several years ago, the tickets were purchased through travel agents. Therefore, Southwest had the difficulty of managing its all customers since the company only had a little information of them, maybe just names. Now, because almost all people purchase Southwest’s fight tickets through Southwest.com, Southwest can obtain its customers’ basic information, like email addresses, by the company itself, and store the data in its own database. The company encourages the frequent customers to join its membership program called “Rapid Rewards.” Then, the company can gather more personal information from these loyal customers and give every member their own member identification numbers (member IDs). This ID will represent an individual customer instead of using names since two different people can have the same name.
The advantage of being Southwest’s “Rapid Rewards” members is that a member can earn one “point” every time the member purchases a ticket with his/her own member ID and does not refund this ticket. If it is a round trip, the member earns two points. After a member accumulated 16 points, Southwest give the member a “reward”, a free Southwest’s flight from any location to any location, no block out days. This frequent flyer program is different from other airline companies which use the mileages of flights to count the points and have some limits for using the mileages to redeem the free flights. From psychological view, to accumulate 16 points seems easier than to accumulate 80,000 mileages.
Actually, the “Rapid Rewards” program of Southwest allows all people to join it even they are not Southwest’s customers. To encourage a person to become a member, the company gives out two points after a person joined the reward program. As a result, the company can gather as much potential customers’ data as possible although they have never flown Southwest’s flights yet. On the other hand, those customers who are not Southwest’s member but have taken Southwest’s flights will receive the regular mails or emails from the company. In these mails, the company is trying to encourage the customers to register in the reward program by telling them the advantages of being its member.
Besides earning points, as Southwest’s “Rapid Rewards” members, the customers can manage their flights easily by logging in Southwest’s on-line management tools called “MySouthwest.” The logged in members can see their next scheduled flights which show on the first webpage of “MySouthwest.” By clicking on the listed scheduled flights, the members can manage their flights on-line by themselves. The difference from the non-member customers’ interfaces is that the non-member customers have to type in their names and the confirmation numbers when managing their flights. The confirmation number is a unique number dispatched to the customer who booked flights through Southwest’s ticketless system. These numbers are used to confirm the on-line purchases and have the same meaning as the tickets. Instead of mailing out printed tickets, the confirmation numbers are sent to the customers by email or can be printed out at Southwest.com by the customers. Therefore, the confirmation numbers are connected to Southwest’s website. Moreover, a confirmation number will automatically show up on “MySouthwest” page if this purchase is made by a Southwest’s member.

Customer Service Strategies
Southwest’s website, Southwest.com, acts as not only a distributor of selling the flight tickets of Southwest but also as an information provider. Through the website, customers can find the most suitable flight schedules and prices for their future trips. After a customer booked a flight, the system sends out an email to this customer to confirm this purchase and assigned this transaction a confirmation number. The customers do no need the printed tickets for checking in at the airports anymore.
In addition, the customers might need to book rental cars and/or hotels for their trips. Therefore, the booking interface on its website provides the selections of booking cars and hotels at one single page. Naturally, Southwest puts all the purchases of one transaction of a customer into one bill. This saves a lot of time or even cost for the customer who purchased a whole package through Southwest.com.
Besides, customers can set reminders for their flights through “Flight Status Messaging” which is a flight schedule reminding system on Southwest.com. An hour or two hour, depends on customers’ setting, before the flight departures, the system sends emails or text messages to the customers who had set reminders for their flights through Southwest.com. Moreover, the families or friends of the customers can set reminders for picking up since the system is also capable of sending out notice before the flight arrivals.
By entering the confirmation numbers and customers’ names, the customers can check in on-line through Southwest.com then print out their boarding passes during 24 hours prior to their scheduled departures and one hour prior to their scheduled departures. But, there are several conditions for customers to qualify for on-line check in. Therefore, at the airports, the company also set up the self-check-in system called “E-ticked check-in kiosk” for those customers who do not qualify for on-line check in.
For the customers who do not have e-tickets, the website provides a function for printing out the customers’ security documents which are required for passing the security checkpoints at the airports. A ticketless customer will obtain this document when check in at the E-ticked check-in kiosk of Southwest.
Before the customers board the planes, they still have the chances to cancel check-in or their reservations of flights, rentals and hotels. Through Southwest.com, the customers are able to manage their reservations on-line. Moreover, the customers are able to check-in or cancel boarding passes through their mobile devices, like cell phones. This gives much convenience to Southwest’s customers.
Since a customer can do so many things on Southwest.com, the only issue that the company has always been questioned by its customers is that Southwest does not provide an email address for customer service. According to Southwest’s saying on its website, the company is trying to design an email response system that will meet the expectations of its customers. By then, Southwest prefers that the customers contact the company by phone at any time and any day because the company hopes that the customers’ problems can be solved immediately. In addition, the company added a new feedback form to receive any compliment, suggestion and complaint from its customers on its website.
Of course, if a customer joined Southwest’s reward program as a member, the easier way of managing the customer’s scheduled flights and account, and more functions would be provided. As a member, the customer does not need to remember the confirmation number, which has been described in previous paragraphs. The additional functions are that the members can manage their flight points and receive award through Southwest’s website.

Integrated Marketing Program
By reviewing all strategies of Southwest, Southwest’s overall integrated marketing program can be exposed. The program starts with public relations and off-line advertisements which use only single medium channel, television advertising. In the off-line advertisements, the company tries to drive the potential customers to its website, Southwest.com. Through Southwest’s website, except providing more information about Southwest, the company hopes that the potential customers are willing to leave their data and contact information, like email address. By using the acquired data, Southwest can implement its promotional strategies to make the potential customers become the company’s customers. To gain satisfactions from its customers and retain them, Southwest is putting its effort in providing easy reward program and high quality customer services for customers which is the main objective of Southwest.

The Databases
Behind the scene, there are three major databases were used by the company to support the operation of Southwest.com, customer database, flights database, and ticketless database. The customer database stores the customers’ information which was gathered through Southwest.com. There are two kinds of customers were separated in the customer database. One kind of customers is those customers who are Southwest’s members and are assigned member IDs. By using these IDs, the company can distinguish each member. The other kind of customers in the database is those customers who are not its members. This kind of customers will receive mails from Southwest and be encouraged to register as the company’s members. With member IDs, Southwest is able to track and manage its customs easily. As a result, Southwest will know who should be targeted and how to retain the valuable customers.
The flights database includes not only the information of all flight schedules of Southwest but also the various fares of the flights for different promotional purposes. According to this database, the company can provide detail information and statuses of its flights through Southwest.com. By using a subsystem attached to this database, the company can send a notice to the customer who needs a flight reminder. Furthermore, Southwest also “push” the company’s flight promotion information to the customers who had installed the “DING” application almost at the same time when the activation of the promotion.
When the customers purchasing through Southwest.com, the tecketless system would match the customers with the flights and assign the confirmation numbers to identify the transaction records if the customers are its member. Then, these records are stored in the teckless database which uses confirmation number as its unique index key. In other words, the customers with member IDs are connected with the flights they booked by linking through confirmation numbers. Therefore, the customers can manage their flights on-line either by typing in confirmation numbers or by logging in with their members IDs.

Conclusion
Now, through Southwest.com, the customers can perform a lot self services. As a result, the customers can easily manage their flights and save time on boarding processes. For the company, it can save the operating cost. This is a win-win situation for the company and its customers. Yet, there are still a lot of things can be improved in Southwest, like providing a more efficient way of luggage check-in process. As the innovation on the technologies, although the company owns a valuable brand name with millions of customers, the new competitors are chasing after Southwest very closely through implementing the more sophisticate technologies to improve their efficiency as well as services. Southwest needs to catch up its steps and adopts more technologies to increase the company’s competitively. The company should not just put its focus on the cost. For example, Southwest’s customers had asked the company providing an email account for customer service. But, the company has not granted this wish of its customers yet. Therefore, the company should refine its on-line marketing strategies, such as putting more advertising on other on-line resources, or cooperate with them, since the on-line population is still growing speedily. If the company falls behind the on-line competition, Southwest would become a history in the near future.


[1] “Bureau of Transportation Statistics, T-100 Domestic Market.” http://www.dot.gov/affairs/bts4806.htm. Oct 13, 2006.
[2] “Southwest Airlines Fact Sheet.” http://www.southwest.com/about_swa/press/factsheet.html. August 28, 2006.
[3] “The Mission of Southwest Airlines.” http://www.southwest.com/about_swa/mission.html. January 1988.
[4] “History of Southwest Airlines.” http://www.southwest.com/about_swa/airborne.html. Oct 2006.
[5] WTTW National Productions. “CEO Exchange.” http://www.pbs.org/wttw/ceoexchange/episodes/405_episode.html. Nov 2006. Episode 405
[6] “Southwest Airlines 2005 Form 10-K” Jan 2006, P 13.
[7] http://www.hoovers.com/southwest-airlines/--ID__11377--/free-co-factsheet.xhtml
[8] “Southwest Airlines 2005 Form 10-K.” Jan 2006. P 1
[9] “Southwest Airlines 2005 Annual report.” Jan 2006. P 7
[10] “Southwest Airlines Fact Sheet.” http://www.southwest.com/about_swa/press/factsheet.html. August 28, 2006.
[11] “The Mission of Southwest Airlines.” http://www.southwest.com/about_swa/mission.html. January 1988.
[12] “Southwest Airlines 2005 Annual report.” Jan 2006; P 9.
[13] “Southwest Airlines 2005 Annual report.” Jan 2006; P 2.
[14] “Southwest Airlines Fact Sheet.” http://www.southwest.com/about_swa/press/factsheet.html. August 28, 2006.
[15] “Southwest Airlines 2005 Form 10-K.” Jan 2006, P 4.
[16] “Bureau of Transportation Statistics, T-100 Domestic Market.” http://www.dot.gov/affairs/bts4806.htm. Oct 13, 2006

The colorful New England

Hi,
this is the my first post. Just want to show a few pics that I took this Oct. Hope you can enjoy them.



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