Please read Market Excellent case about Southwest Airlines,

Us to deliver orders in about an hour for a minimum Questions charge. Today, people can buy and sell virtually any product 1 Why has eBay succeeded as an online auction mar- or service on the world's largest online marketplace. From ketplace while so many others have failed? appliances and computers to cars and real estate, sellers 2 Evaluate eBay's fee structure. Is it optimal, or could it can list anything as long as it is not illegal and does not be improved? Why? How? violate eBay's rules and policies. 3 Discuss Donahoe's vision for eBay. Is moving away The impact of eBay's global reach is significant. In from online auctions sustainable for the company? 2014, the online marketplace had almost 150 million active users and more than 500 million items listed. A pair of Sources: Douglas MacMillan, "Can eBay Get Its Tech Savvy Back?," BusinessWeek, June 22. 2009, pp. 48-49; Catherine Holahan, "eBay's New Tough Love CEO," BusinessWeek, February shoes is sold there every two seconds, a man's necktie 4, 2008, pp. 58-59; Adam Lashinsky, "Building eBay 2.0," Fortune, October 16, 2006, pp. every 23 seconds, a major appliance every 26 seconds, 161-64; Matthew Creamer, "A Million Marketers," Advertising Age, June 26, 2006, pp. 1. 71; and an LCD television every six minutes. With its high Clive Thompson, "eBay Heads East," Fast Company, July-August 2006, pp. 87-89; Glen L. Urban, "The Emerging Era of Customer Advocacy." MIT Sloan Management Review (Winter 2004): 77-82 volume, its acquisitions, and consumers' increased use Greg Bensinger, "EBay's New Goal: Double Its Users, " Wall Street Journal, March 29, 2013, p. B.5; of mobile devices, Donahoe hopes to double eBay's Elizabeth Harris, "After Carriers Falter, Questions for Web Shopping." New York Times, December active-user count to more than 200 million by 2015 and 27. 2013, p. B.1; Jeff Himmelman, "eBay's Strategy for Taking on Amazon." New York Times. December 19, 2013; www.ebay.com. increase revenue from $14 billion to $23 billion. Marketing Excellence management substitute aircraft, reschedule flight crews, and transfer mechanics quickly and effortlessly. > > Southwest Airlines One of Southwest's biggest cost savings techniques is its strategy of purchasing fuel options years in advance. Southwest Airlines debuted in 1971 with little money but Jet fuel is an airline's largest expense and now accounts lots of personality. Marketing itself as the LUV airline, the for 35 percent of operating costs versus 13 percent just a company featured a bright red heart logo and relied on little more than a decade ago. Many of Southwest's long- outrageous antics to generate word of mouth and new term contracts allowed the airline to purchase fuel at $51 business. Flight attendants in red-orange hot pants served per barrel, a significant savings especially during the 1990s Love Bites (peanuts) and Love Potions (drinks). Today, it and 2000s when oil spiked past $100 per barrel. Analysts is Fortune's seventh-most admired company in the world. estimate it has saved more than $2 billion this way. How did a small-budget airline accomplish so much? Southwest also improves its fuel efficiency by mak- Southwest's business model is based on streamlining its ing its planes lighter. Crew members power-wash the jet operations, which results in low fares and satisfied, loyal engines each night to remove dirt, planes carry less water consumers. The company uses a point-to-point routing in bathrooms, and seats have been replaced with lighter system, flying thousands of shuttle trips between different models. Because the airline consumes approximately 1.5 pairs of airports or "points" and carrying more passengers billion gallons of jet fuel each year, every minor change per plane than any other airline. Each aircraft averages adds up. 6.25 flights a day, flying for almost 12 hours. Southwest Southwest has expanded by entering new markets can accomplish such a feat because it avoids the tra- other airlines overprice and underserve. These usually ditional hub-and-spoke system and has extremely fast include secondary cities with smaller airports, whose turnaround. In its early years, it turned planes around in lower gate fees and reduced congestion promote faster ess than 10 minutes. Today it averages 30 minutes-half turnaround and lower fares. The company believes it can the industry average. reduce fares by one-third to one-half whenever it enters Southwest's unique boarding process also helps a new market, and it expands every market it serves by expedite departure. Instead of getting assigned seating, making flying affordable for more people. Southwest ac- passengers are put in one of three groups (A, B, C) and quired Air Tran in 2011 for $1.4 billion, expanding its con- given a number when they check in. Group A boards first sumer base and adding new destinations like Richmond, and in numerical order (for example, A1-A30). Once on Memphis, and cities in Mexico and Puerto Rico, its first board, passengers may sit anywhere they like. international locations. Southwest also saves by flying only Boeing 737- Southwest has pioneered unique services and pricing 700s and 737-800s. This simplifies the training process programs such as same-day freight service, senior dis- for pilots, flight attendants, and mechanics and lets counts, Fun Fares, and Ticketless Travel. The airline wasthe first with a Web site, the first to deliver live updates on across the company, embodying the idea of employees ticket deals, and the first to post a blog. In recent years, "caring about themselves, each other, and Southwest's it has added revenue through premium ticketing features customers." "Our fares can be matched; our airplanes like premium boarding positions at the gate and early and routes can be copied. But we pride ourselves on our bird check-in, which automatically assigns the best seat customer service," said Sherry Phelps, director of corpo- possible. rate employment. In fact, having a sense of humor is a Throughout Southwest's history, its advertising has fo- selection criterion for hiring. As one employee explained, cused on low fares, frequent flights, on-time arrivals, and a "We can train you to do any job, but we can't give you the top safety record. The company uses humor to convey its right spirit." warm, friendly personality. Its tagline, "Ding! You are now free to move around the country," was a parody of in-flight announcements. The lighthearted attitude carries over to Questions entertaining on-board messages, crews who burst into 1 Southwest has mastered the low-price model and song in the terminal, and several personalized aircrafts, has the financial results to prove it. Why don't other including three painted like flying orca whales. airlines copy Southwest's model? Despite its no-frills service, Southwest wins the 2 What risks does Southwest face? Can it continue hearts of customers. The company consistently ranks at to thrive as a low-cost airline when tough economic the top in customer service for airlines and has the lowest times hit or other airlines mimic its business model? ratio of complaints per passenger. It has been Fortune magazine's most admired U.S. airline since 1994 and Sources: Barney Gimbel, "Southwest's New Flight Plan," Fortune, May 16, 2005, pp. 93-98; one of its five best places to work. Southwest's financial Melanie Trottman, "Destination: Philadelphia," Wall Street Journal, May 4, 2004; Andy Serwer, results also shine; the company has been profitable for 41 "Southwest Airlines: The Hottest Thing in the Sky." Fortune, March 8, 2004; Colleen Barrett, "Fasten Your Seat Belts," Adweek, January 26, 2004, p. 17; Jeff Bailey, "Southwest Airlines straight years, with no layoffs despite a travel slump cre- Gains Advantage by Hedging on Long-Term Oil Contracts. " New York Times, November 28, 2007: ated by the slow economy and fears of terrorism. When Michelle Maynard, "To Save Fuel, Airlines Find No Speck Too Small," New York Times, June 11, other airlines started charging for baggage, drinks, and 2008: Daniel B. Honigan, "Fred Taylor Leads Southwest Airlines' Customers to New Heights of Customer Satisfaction," Marketing News, May 1, 2008, pp. 24-26: Matthew Malone, "In for a snacks, Southwest went against the tide with a "bags fly Landing," Conde Nast Portfolio, August 2008, pp. 91-93; Hugo Martin, "Is Southwest Airlines free" policy. Losing the Luv?," Los Angeles Times, February 9, 2013; Danielle Schlanger, "How Southwest Although the hot pants are long gone, Southwest's Keeps Making Money in a Brutal Airline Industry," Businessinsider, June 13, 2012; Southwest Annual Report 2012; www.southwest.com. NYSE stock symbol is LUV, and red hearts are found