Southwest Airlines and The Low-Price Position

Fasten your seatbelts and prepare for takeoff as Mark and Lorraine fly into recent news from Southwest Airlines. The brand that once owned the low-price position seems to be flying further and further away from its low-cost roots. The positioning duo also discusses long-form video advertising as they dive into the new Apple AirPods 4 ad.

Join Mark and Lorraine for 30-ish as they discuss all things marketing, advertising, and of course … positioning!

Transcript

Mark Vandegrift 
Welcome back to another episode of the Brand Shorthand Podcast. I'm your host, Mark Vandegrift, and with me today is our dazzling differentiator, Lorraine Kessler. Lorraine, welcome back.

Lorraine Kessler 
Yes, thanks. Thank you.

Mark Vandegrift 
We had our guests on last week from our media department and then we took a week off. So it's been a few weeks since we've had you on.

Lorraine Kessler 
Yeah, well that's good. It's in the middle of spring break, so not that that means anything to me, but it does mean my grandkids are available and they're hot to trot in terms of me doing stuff with them.

Mark Vandegrift 
Awesome good. Well Lorraine before we get into today's topic, which is going to be Southwest Airlines one of our favorites We're going to update some folks on some brand news. Apple I think you saw the link we sent you for this... recently released a five minute long ad and it actually a little longer than that to promote their new Apple AirPods 4 and the ad features Pedro Pascal, and it starts gray and gloomy and icy, and we see the actor navigating his way through a recent heartbreak. Walking down the street of the dull-looking city block, Pedro catches a glimpse of another version of himself. Dun dun dun. One where he's happy, dancing his way through vibrant, brightly colored streets as he experiences the magic of listening to the active noise cancellation, AirPods 4. So this very cinematic ad utilizes some pretty compelling storytelling, and it's designed, of course, to captivate viewers and showcase the product's features, all of that. So Lorraine, as a positionist, and what you've seen of this ad, it's getting a lot of really good positive feedback. Do you wanna share your thoughts on the ad and maybe how the use of long form video is being done a lot? We saw that recently with Volvo. Remember, they did a long form ad. So tell us how that can work and benefit a brand.

Lorraine Kessler
Well, first, thank you for sending me the link. I think this spot is called "Someday". And I really do love Pedro. So right away, the spot had me. It was five minutes. 

Mark Vandegrift 
I won't tell John.

Lorraine Kessler
No, no. One can dream. But it was five minutes, I think, 36 seconds, which 36 seconds is longer than a 30 second usual commercial. I think it's important for maybe the viewers to separate long form storytelling exemplified in this commercial, which is really a dramatization, a very brand centric dramatization of a single benefit, the noise canceling what it can do to your attitude and what have you. From what we know in our business as long form copy, or the long copy format that was advocated so wonderfully by the father of advertising, David Ogilvy, years ago. And I think while both are aimed at creating desire for a product or service, they have, so they're very similar in that way. I mean, that's the goal, right? But they're very, quite different in another. In that this approach was very much an indirect branding approach. You're not told a lot about this device. You're not told anything about its features, how much it costs, how to put it in your ear, how many buds come with You're not told any of that, right? You're simply given a drama around feeling. And so that's how you engage an audience, as we call, indirectly with a brand message because...Branding is ultimately about emotions and feelings. So it's very branded and it's supposed to be like enjoyment plus awareness because I got you I'm enjoying it now I'm aware of this product and Hopefully the next time I'm in the market. I'm gonna be looking at apples, you know your your pots or air pods. Whereas if you go back to the history of advertising Ogilvy famed ads, which were long copy were very rational in their approach. Lots of facts, lots of persuasion, right? All to get you to really take a much more direct, and that's a key word, direct approach. So now you're armed with a persuasive argument. And I would have to say that in a way, we almost lost the idea, other than direct, direct mail and direct whatever it means, of strong persuasion as a key. I'm not even sure that young people coming into the market understand the keys or the system of how you build a persuasive argument in advertising. I don't know if you think any differently, but

Mark Vandegrift 
No, I completely agree. And I think AI is taking that away from them. If you look at any AI copy, what I've said number one above everything is it sounds like a book report and it has no persuasive nature to it at all. one of my very first questions I ask it because we're in this industry and we have to test things out. I said, why would you hire an advertising agency? And it was. It was literally a book report that you would have probably found on a lot of websites, but it didn't have the compelling persuasive argument that someone might use if they were in an advertising agency like us, when we're selling to clients to say, you need us for these various reasons. It didn't say that it was like bullet point, bullet point, bullet point without, yeah, very. Very book reporters. That's the only way I can really phrase it. It was reporting on something rather than persuading me with a compelling argument. Like you lack this and you need this. You lack this, you need this. know, problem, solution.

Lorraine Kessler 
Yeah, and I mean, both what we're talking about this commercial being a dramatization, creative dramatization of a brand appeal versus a direct long form copy. They both start with emotion. I mean, I remember once we were working with the flower factory and they only sold wholesale, right? Do you remember that? And I remember the great Herschell Gordon Lewis consulted with us. What a great man. This book the art of copywriting is fantastic. And he said, he came back with, never buy retail again. I mean, that's emotional. But then he built the case from there, right? And the case always goes back to why would you be a fool to buy, pay retail, right? So there's a beautiful kind of way or system of writing that I think it's an art and it might be a lost art to some degree. but we're more in this brand centric world and that's it. I guess part of my problem is back to the commercial in question. The creative team, when they're given a position, and Apple certainly has a position, right? And its position is based on aesthetics and beauty and the emotion that people have about using its devices and how I self-identify with Apple. Like it says something about me more than it even does about the products. And certainly it does that. So, and we also know, so the point of the creative is they have to take that idea, which might be aesthetics or beauty, and they have to make it really emotional. And I think the spot does a great job dramatizing that because as we've said many, many times, you know, branding is boring business. When you have the positioning, let's be specific, the strategic idea of how you're going to differentiate is boring. We're going to stand for safety. We're going to stand for reliability. We sell more than anybody worldwide. That's a great position, but it doesn't have any juice behind it until it's dramatized in a way that really connects. And that's where the creative team serves the most vital role. I've said this before, that's where the magic is made. Not in coming up with the strategy, but in how to communicate it in a way that really engages the audience. But you also can't bore people to death, you know, in how you execute. So I think the one downside to this particular spot for me is you seem to know that this guy broke up or had a breakup. I didn't know that. I'm just watching the spot cold. I didn't know what was going on with these people rumbling around in the gloomy doom. That supposedly had some meaning. I he was like knocking him out of way. I don't know. I can't remember why. And you have to actually watch an explanatory video of the production company, creative agency, making the spot to understand the whole storyline. Well, for me, I don't have that much time. People aren't paying attention anyway. I begged out of the spot if I didn't have to watch the whole thing, even with, you know, our dear friend. I would have been out of this long, because I already know what AirPods do. It's like, okay, cancels noise. All right, I don't quite get this. It's really beautiful. It's really cinematic. It's all this, but I'm moving on. So give me the meat, know, where's the beef kind of thing. So I don't know if other people have that relationship to it, but I thought it was a little overindulgent if I could use that word. Is that a word or is that a hyphenated word? Two words. Yeah, it was over-indulgent. Right. And to me it was more style over substance. So it'd be interesting to see what it does in terms of sales or what the real measure is that they want from this.

Mark Vandegrift 
Well, it's interesting. I'm seeing more and more where these videos are released and the whole goal is to get dialogue going about them. And it's, it's the bait, right? We call click bait. Okay. The content itself is the bait around which the conversation happens. Does that make sense? Yeah.

Lorraine Kessler
Yeah. Yeah. That's an interesting point. Yeah, it does. But it also tells me that we're not thinking about important things in life if we have time. And this probably goes to a bigger story about why people are protesting the way they are and they need that. They're trying to fill some hole in their life. I don't know. But if you are really that involved in this, God bless the advertisers, but I don't know. think there's other things that are being ignored in your life.

Mark Vandegrift 
Well, I think it goes back to the fact that what social media has done for us is everyone gets an opinion, whether they're involved in the process, whether they know all the factors, whatever it may be. You know, there's a lot of people that want to give their opinion about something, regardless of how little they know about it. Right. So this is simply here you go. Here's some content about a brand. I'm going to seed my brand in. It's almost like a video that has product placement in it.

Lorraine Kessler
Yeah. Yeah. You know you're right.

Mark Vandegrift 
rather than an actual ad and go ahead and comment on it. That's all we want you to do. We don't care if it's good or bad because everyone's going to take sides. That's what we do these days. And it's going to get it spinning. Guess what? Apple, apple, apple, apple, Everyone's talking about apple. And sometimes it's positive. Sometimes it's negative. I forget now, you know, I remember the Volvo ad, but I'm forget. Oh, it was spurned by the Jaguar ad member, the Jaguar ad. That was so horrendous. You know that at the end of the day, here's the content. Who cares if 90 % of the people hate it. And then Volvo comes out and goes, here's a three and a half minute spot. Comment, comment, comment. And now we have Apple doing it. So I think the format is something we have to keep our eye on to see given the prevalence of video, the consumption of video, and we are in an entertainment culture now. You know, we've talked about the phases of an empire, right? And you get to the one of the final ones, which is, do you remember? Pleasure, right? There's another word for it. I'm not gonna remember it right now, shoot. It's a word for pleasure. But that's what they call it as far as the things that keep us occupied near some of the final phases of an empire. I'm not doom and glooming the United States, but you know what I'm saying.

Lorraine Kessler 
No, no, but I mean, Huxley did a better job than Orwell talking about the real kind of blight of civilization is its pleasure that keeps us from doing the important things and the important issues and from morality. And it might be Epicurean, maybe that was the word.

Mark Vandegrift 
That's the word. Thank you. Epicurean. Yep.

Lorraine Kessler 
Yeah, and Will Durant pointed that out in the history of the world that you know, we become Epicurean versus more Spartan, right? That's kind of what happens, yeah.

Mark Vandegrift 
Yep. So interesting. Well, that's a lot of chat about an ad that is a long ad and.

Lorraine Kessler 
Well, I'd be real interested to see how, if other people watch this, if they get bored. I got kind of bored. I mean, there's a...

Mark Vandegrift 
Yeah. I even did with the Volvo ad. I liked the Volvo ad and I thought it did good storytelling and the cinematography of it was great. But I was even ready to beg out. But that might be our generation. We have to think about.

Lorraine Kessler
That's what I'd be interested in because I think you make a really excellent point about it's more about starting the conversation. mean, as much as you can say about the Jaguar ad and the negative reaction that it had, right, for whatever it was, we all know there's a new Jaguar and a new look and a new logo. So did they accomplish what they wanted? Yeah. And so, you know, this is one thing is that what we do for a living and advertising is always about the culture and culture eats strategy for breakfast. So you've got to be on tempo and in time and understand where people have changed, how they consume things and what they think of it.

Mark Vandegrift 
Well, and there's a formula to it too. When you are a big brand, you have the resources to go do these things and try them and stick them out there and see what happens. If you're a smaller brand, you're not going to go do some high level production like Apple did and see if it works, right? You don't have that luxury. So I think that's also something that our listeners will have to keep in mind because most of our listeners come from smaller companies, small and medium size enterprises and they have to limit what resources they have. So, from a utilitarian or practical side of things, is this the next thing we would tell you to do? Absolutely not. But it's certainly keep it in mind as something that's on the table as possibility. Good. Well, we want to get over to Southwest back in season one. Do you remember that many years ago, Lorraine? I can't remember yesterday.

Lorraine Kessler 
Hey, I was, I remember when Southwest was new, a newbie, because I lived in Dallas and they flew out of Love Field. And I had a good friend who worked for Southwest. He loved wearing the uniform.

Mark Vandegrift 
Yeah. Well, I wonder if that pride's there anymore because I think they've basically gotten rid of every last ounce of their position, which was the low price position. And we've written and talked about it extensively, which is operationally, they did everything they needed to do, just similar to, to Walmart, where everything was about keeping that price down. So the competition couldn't come in and squeeze them out of that. they've I mean, if you compare their prices, they're not lower. And now the big announcement is they got they got rid of their free check bags. So now they have bag fees on top of it. And they were known for the bags fly free. That was their whole policy. And they even had the phrase trademarked. But starting May 28th, folks. You can't fly on Southwest Airlines anymore with bags fly free. So they've decided to uproot one of their most recognizable policies. And I think that's the last bastion of what might've set them apart from competitors. Although I think you and I agree, they've been losing that for quite some time. So what are your thoughts on this Lorraine?

Lorraine Kessler 
Well, they've joined the herd and they're headed toward the destination called commoditization. I mean, if you could commoditize a brand, they've done it. They are now matching the big air carriers who they went flanked, right, and went opposite of many years ago when they started because they stayed narrow to grow big. And then they got bigger and bigger and bigger and bigger. And now they're joining the herd. I really mourn the loss of such a great poster child for positioning and marketing warfare and all that. Will this help them? I don't know. They at one time flew more passengers than any airline flying. And they did it their way, to be quite honest. And many people don't know that the original founder of this herd, Kelleher, and this story has been told many times. His vision was to become a substitute for the Greyhound bus. And I think listeners might be, or viewers might be a little surprised by that. He thought that he could offer a more convenient way to get from point to point at a price slightly higher, but comparable to taking a Greyhound bus, and certainly in less hours. And I think that was the brilliance because we don't even think about Greyhound bus. I don't know who takes buses now. They're in the most dangerous places. But it was brilliant. 

Mark Vandegrift 
It's like Amtrak.

Lorraine Kessler 
Yeah. But I think that perspective was great because he saw himself as kind of an Airbus to begin, you know, we have that British term, and that they could offer more affordable air travel from the large carriers if they did something very different than what the carriers were doing, and what the carriers were doing was this hub and spoke method. And so Herb came in and said, look, let's fly point to point, you know, and we're going to eliminate that hub, that downtime that keeps planes on the ground that costs money because they're just going to fly from one point to another point to another point. So short distances, that was great.And as we've said many times, I want people to know that while Southwest offered this low price, that was a byproduct or a benefit, a consumer benefit that comes from low cost operations. You have to create a way. You can't just cut your price, right? That's like cutting your nose off or cutting your own throat. You have, and it's short lived because you can only be low to the degree that your competitors can't match you. So you have to do things structurally to make it sustainable. And if you don't do things structurally different, then good luck, it's gonna be a short one. So, you know, the other thing that Kelleher did is he did things different to make this difference stick, right? They only have one airplane, the 737. As I said, they didn't have any less downtime, not hub and spoke point to point, so planes are in the air all the time. They were the only one, because they only had one aircraft, they only had to have one training system, one type of simulator, one type of repair and products and tires that fit the 737. They didn't have to worry about all different planes. So they specialized. They really special, they narrowed the focus where they had superiority. And that's a key principle of marketing warfare. As a flanker, you want to narrow the playing field where you have advantage and they specialized. didn't try to do it all. And now after all that and they've gotten bigger, bigger, that strategy was a strategy that I think anyone would applause playing to win, right? We put everything to our advantage and to the disadvantage of the air carriers, but now they're just playing to play is they're side by side, they're equal to, and why should I fly southwest? Well, are they going where I want to go when I want to go there? And what's the price differential? We don't know. So I don't know why you choose them other than your personal agenda or needs.

Mark Vandegrift 
Well, it's interesting as we were looking at this topic, we saw just recently in September of 24, so what is that? Six months ago, Southwest unveiled its Southwest Even Better Transformational Plan. And highlighted in the plan was how bags would continue to fly free. Let me read this statement for you. Bags continue to fly free. Extensive research reinforces Southwest's bags fly free policy, remains the most important feature by far in setting Southwest apart from other airlines. Based on Southwest's research, the company believes that any change in their current policy that provides every customer two free checked bags would drive down demand and far outweigh any revenue gains created by imposing and collecting bag fees.

Lorraine Kessler 
So are they going back to?

Mark Vandegrift 
So here we are in March and we see Southwest has had a change of heart. So, you know, I'm all about adaptivity, right? If something in the market tells me a data point that says change, I think it's okay. But rumor on the street has it that when they had that software meltdown, not only did it cost them a gazillion dollars, but it cost them almost a billion dollars to get new software installed. And the Wall Street, you know, types are pressuring Southwest to get their revenues up. So I think what we're seeing here is some response to that issue. So Lorraine, explain the rules going on here and what the challenge is.

Lorraine Kessler 
Well, this is the problem when investors have such a big stick to rule your company and you listen to it because short-term revenues may hurt long-term profits and margin and certainly customer satisfaction. So, you know, the purpose of a business is to produce a customer and to innovate. Those are the two purposes of business according to Peter Drucker. So if you are now taking away something that really differentiated you from the competition in a way that's meaningful in the mind of the customer. Now you have nothing different. What they're counting on is that you're going to have enough revenue, these investors, that you're going to make up for some really bad decisions that happened past with really old and outdated software. My question about bags fly free, I thought it was maybe old bags like me. The old bags fly free because I'm all over that. you know, we like to travel at this age. We're retired. But no, so I think that this is the pressure Wall Street has and it's unfortunate because I think they're on the road, as I said, to undifferentiation, which is the road to commoditization.

Mark Vandegrift 
Yeah. Yup. So we've always said that brand positioning is more than a marketing philosophy. It's a business philosophy or a business strategy. So talk about the importance, just to remind our listeners, about aligning business strategy to brand positioning.

Lorraine Kessler 
Sure, I mean, they're really the ying and yang, right? I mean, it's hard to say which comes first, the brand strategy or your competencies, capabilities, and your view of what you do well, and then how do you make that competitive. They have to work together. If you take Southwest, for example, the business strategy was short trip, slightly more expensive than bus, convenient travel from point to point. Filling a hole in the airline industry. You know, was virgin territory. Nobody was doing this. So was a niche that was big enough for a startup to make hay with and literally grow into such an airline that it flew more passenger miles than any other airline. So, you know, I think that, you know, certainly to have this strategy, your systems and this is really good in playing to win from A.G. Lafley and Roger Martin's book, if anybody wants to read that book, is your systems and your management systems have to support that idea. If you find a hole, if you find a situation like that, whatever it is, you have to then make sure you have the resources, financial and human, you have the talent, you have the right measurement, and that you do things differently to optimize that idea. So yeah, in a way, it's hard for me to tell what comes first, the business strategy or the brand strategy. They kind of, as I said, are ying and yang in so many ways. Certainly I would say that the business strategy informs the brand strategy, what you communicate about your difference. But you have to be thinking about what makes us different from the beginning when you're planning the business strategy. There are no virgin markets. So you can't really go in and say, we have this great idea. We can do this really well. We're really passionate about this beyond making money. everything aligns internally. But if you fail to look at the external, who's in this space? Who could be a competitor? And how do we differentiate? Then you've missed a really critical piece. And that's what brand positioning is. And that's the beginning of branding. Positioning is upstream from brand.

Mark Vandegrift
Well, now I'm gonna add a layer of complexity to you and this is out of left field. Okay, because I just heard about it on Sunday. So we're just talking yesterday and here's the interesting thing. Elon Musk, everybody's got Elon Musk in their crosshairs today, good or bad, but on X, Grok AI, that's his AI tool. On there, someone asked the question, is Elon Musk a distributor of misinformation? And Grok came back and said, yes. And Elon Musk did not censor that. And he says, we all have to come to grips with the fact that the arbiter of truth, small t, is going to be AI based on the majority opinion that it finds online. Okay? So in the context of that, what I thought was really interesting is someone made the comment, great, now we have to market to the AI to help them form the opinion that we want them to hold. So what did I do? I went to Perplexity AI, which is a search engine. Okay. It's one of the platforms. And I said, which airline typically has the cheapest flights?

Lorraine Kessler 
Southwest.

Mark Vandegrift 
and it did not come back Southwest. Because if you know, they go and they have all the airline costs. Like you can do it in Google too. You can just say like, you know, CLE, Cleveland to MCO, which is Orlando. And it will return all the rates for a bunch of different airlines. Well, perplexity returned Allegiant Air as number one, Spirit Airlines as number two,

Lorraine Kessler 
Okay, and that makes sense.

Mark Vandegrift 
Breeze Airlines is number three and Frontier Airlines is number four. Isn't that interesting?

Lorraine Kessler 
It is interesting and I would have guessed secondly, Spirit, but that is interesting. And in part, it's because we said Southwest vacated the space a long time ago. So they haven't been talking about price for a while. And these other airlines have, but you know, there is a cost. I mean I think which one of them that has the really bad frontiers, like has a terrible reputation.

Mark Vandegrift 
All three except Breeze has a net negative promoter score. Breeze Airlines is the only one with a net positive score. Consumable score, yeah.

Lorraine Kessler 
Yeah, that's scary. That's scary. Now where does breeze fly? Where are they?

Mark Vandegrift 
Well, out of our Akron Canton Airport, there's 10 locations. And I would say four or five of them are down to Florida, but they go to Raleigh Durham. They go to Hilton Head, think, Myrtle Beach. They might go to New Orleans. They go to Nashville. I mean, there's 10 or 11. We're now considered a spoke for Breeze Airlines or a hub.

Lorraine Kessler 
Okay, yeah, all kind of short-hub sun destinations for the snowbirds of Ohio. So, yeah, so pretty smooth.

Mark Vandegrift 
Yes, exactly. But isn't that interesting? And then if you look at some comments on social media that Lindsey, our producer, looked up, this is in regard to Southwest Airlines. OK, I am a senior and have never, all caps, flown another airline. I guess I won't be flying Southwest any longer. It is a big mistake. All caps. charging for baggage and assigning seats. I also canceled my Southwest credit card. I used to tell all of my friends that there was no better airline, not anymore. Another one said the open seating and check bags were the reason I used to exclusively fly you. Now you are just another airline, not a compliment. And then last one I'll read, nice, but now Southwest is just another airline and that seems to be frequent, right? Just another airline is the worst thing you can have in branding. I was a dedicated traveler with Southwest for 20 plus years. Now I will shop around for prices. Nothing special here anymore. So what, what do you think? What's the end of all this Lorraine?

Lorraine Kessler 
I think nothing special anymore says it all. I mean, why do you exist? That reason is gone, taking it away. You're just another part of the herd as we started out and you've done it to yourself. Success can be lethal. And that's what happened to Southwest.

Mark Vandegrift
Well, and you know, trolling is a big thing now where you jump on someone else's bad news. So Frontier wasted no time and they are doing a free bag day, which I think it's May 28th or 26th when this all ends. And if you go to their website on the front website, you're greeted with a beautiful message. Frontier Airlines is ready to be your new love, low fares, free bags and more. Breaking up with your old airline? We're here for you. Your new love, and you know love comes from the Southwest thing, your new love includes free carry-on, free check bag with promo code, free seat selection, and free flight changes. So Lorraine, is that a good move?

Lorraine Kessler 
Yeah. It's a good move. It could be very short term, right? Because it's a promotion. If they were to really camp out on this, that would be great. But we don't know if they're going to sustain it. We'll see. you know, hey, they're being opportunistic. They're going to get some trial and maybe they'll have some real customer switching. The problem, I think, is that Frontier, if I'm not wrong, has one of the worst customer satisfaction indexes in the market. I mean, they're in the bottom of US airlines. And then next, I think they have twice the complaints at Like Spirit. you know, they're going to have to do some other things to sustain those new customers or they're going to have to constantly be promoting this particular gig to keep those numbers up. But it's, you know, hey, if I were marketing for them, I'd do this, but I wouldn't do this and not try and fix some of the deeper problems they have with customer satisfaction.

Mark Vandegrift
Good. Well, this is a good place to end today's discussion. Thank you to Lorraine for joining us and for our listeners for joining us again this week. Don't forget to like, share and subscribe, subscribe, subscribe. And until next time, have an amazing day.