Assume you are to give a lecture to your class on the desirability of a niche strategy, and you cite southwest as a classic example. But suppose a classmate asks: “If a niche strategy is so great, why didn’t the other airlines practice it?” How will you respond?

In deciding what specific niches to seek, these criteria should be considered:
l. Identifiability. Is the particular niche identifiable so that those persons who constitute it can be isolated and recognized? It was not difficult to identify the short-route travelers, and while their numbers may not have been readily estimated, this was soon to change as demand burgeoned for Southwest’s short-haul services.
2. Size. The segment must be of sufficient size to be worth the efforts to tap. And again, the size factor proved to be significant: Southwest soon offered 83 flights daily between Dallas and Houston.
3. Accessibility. For a niche strategy to be practical, promotional media must be able to reach the segments without much wasted coverage. Southwest had little difficulty in reaching its target market through billboards, newspapers, etc.
4. Growth potential. A niche is more attractive if it shows some growth characteristics. The growth potential of short-haul flyers proved to be considerably greater than for airline customers in general. Partly the growth reflected customers won from other higher-cost airlines and airlines with less frequent flights. And some of the emerging growth reflected customers’ willingness to give up their cars to take a flight that was almost as economical and certainly more comfortable.
5. Absence of vulnerability to competition. Competition, both present and potential, should be considered in making specific niche decisions. By quickly becoming the low-cost operator in its early routes, and gradually expanding without diluting its cost advantage, Southwest became virtually unassailable in its niche. The bigger airlines with their greater overhead and less flexible operations could not match Southwest prices without going deeply into the red. And the more Southwest became entrenched in its markets, the more difficult it was to pry it loose.
But nothing remains forever. Today Southwest’s position is less unassailable.