Allegiant Airlines: Finding a New Customer Segment SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Allegiant Airlines: Finding a New Customer Segment
Founded in 1997, Allegiant Airlines (Allegiant) was one of the most profitable ultra-low-cost airlines in the United States. Allegiant maintained high profit margins by targeting the uncaptured market segment for leisure travel and using a unique way of managing cost and revenue drivers. Allegiant avoided direct competition with traditional airlines and captured the new market of price-sensitive leisure travelers. After employing extreme cost-reduction and revenue-enhancement strategies, Allegiant achieved one of the highest profit margins in the industry. In 2015, despite inexpensive airfares, Allegiant received low scores on customer satisfaction. The airline also faced labour and safety issues by the end of 2015, but it took several steps to resolve the issues in 2016. With increasing competition, rising costs, and low customer satisfaction, maintaining long-term profitability remained a challenge for Allegiant. How could the airline sustain its position in the market? Arpita Agnihotri is affiliated with Northland College. Saurabh Bhattacharya is affiliated with Newcastle University.
Swot Analysis of "Allegiant Airlines: Finding a New Customer Segment" written by Arpita Agnihotri, Saurabh Bhattacharya includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Allegiant Airlines facing as an external strategic factors. Some of the topics covered in Allegiant Airlines: Finding a New Customer Segment case study are - Strategic Management Strategies, Competitive strategy, Customers and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Allegiant Airlines: Finding a New Customer Segment casestudy better are - – technology disruption, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google,
customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Allegiant Airlines: Finding a New Customer Segment
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Allegiant Airlines: Finding a New Customer Segment case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Allegiant Airlines, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Allegiant Airlines operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Allegiant Airlines: Finding a New Customer Segment can be done for the following purposes –
1. Strategic planning using facts provided in Allegiant Airlines: Finding a New Customer Segment case study
2. Improving business portfolio management of Allegiant Airlines
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Allegiant Airlines
Strengths Allegiant Airlines: Finding a New Customer Segment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Allegiant Airlines in Allegiant Airlines: Finding a New Customer Segment Harvard Business Review case study are -
Training and development
– Allegiant Airlines has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Allegiant Airlines: Finding a New Customer Segment Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High brand equity
– Allegiant Airlines has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Allegiant Airlines to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Allegiant Airlines in the sector have low bargaining power. Allegiant Airlines: Finding a New Customer Segment has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Allegiant Airlines to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Allegiant Airlines has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Allegiant Airlines has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to lead change in Leadership & Managing People field
– Allegiant Airlines is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Allegiant Airlines in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Leadership & Managing People industry
– Allegiant Airlines: Finding a New Customer Segment firm has clearly differentiated products in the market place. This has enabled Allegiant Airlines to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Allegiant Airlines to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Allegiant Airlines is present in almost all the verticals within the industry. This has provided firm in Allegiant Airlines: Finding a New Customer Segment case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Allegiant Airlines in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Allegiant Airlines has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Organizational Resilience of Allegiant Airlines
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Allegiant Airlines does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Allegiant Airlines is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Allegiant Airlines is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Allegiant Airlines: Finding a New Customer Segment Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Allegiant Airlines: Finding a New Customer Segment Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Weaknesses Allegiant Airlines: Finding a New Customer Segment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Allegiant Airlines: Finding a New Customer Segment are -
Slow decision making process
– As mentioned earlier in the report, Allegiant Airlines has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Allegiant Airlines even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Allegiant Airlines: Finding a New Customer Segment, it seems that the employees of Allegiant Airlines don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Capital Spending Reduction
– Even during the low interest decade, Allegiant Airlines has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Allegiant Airlines: Finding a New Customer Segment HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Allegiant Airlines has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Allegiant Airlines: Finding a New Customer Segment that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Allegiant Airlines: Finding a New Customer Segment can leverage the sales team experience to cultivate customer relationships as Allegiant Airlines is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Allegiant Airlines is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Allegiant Airlines: Finding a New Customer Segment can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Allegiant Airlines has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Allegiant Airlines: Finding a New Customer Segment should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Allegiant Airlines, firm in the HBR case study Allegiant Airlines: Finding a New Customer Segment needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Allegiant Airlines supply chain. Even after few cautionary changes mentioned in the HBR case study - Allegiant Airlines: Finding a New Customer Segment, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Allegiant Airlines vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Allegiant Airlines: Finding a New Customer Segment has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Allegiant Airlines 's lucrative customers.
Slow to strategic competitive environment developments
– As Allegiant Airlines: Finding a New Customer Segment HBR case study mentions - Allegiant Airlines takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Allegiant Airlines: Finding a New Customer Segment | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Allegiant Airlines: Finding a New Customer Segment are -
Loyalty marketing
– Allegiant Airlines has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Allegiant Airlines in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Allegiant Airlines to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Manufacturing automation
– Allegiant Airlines can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Buying journey improvements
– Allegiant Airlines can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Allegiant Airlines: Finding a New Customer Segment suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Leveraging digital technologies
– Allegiant Airlines can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Allegiant Airlines can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Allegiant Airlines can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Allegiant Airlines to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Allegiant Airlines to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Allegiant Airlines to increase its market reach. Allegiant Airlines will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Developing new processes and practices
– Allegiant Airlines can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Allegiant Airlines can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Allegiant Airlines can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Allegiant Airlines: Finding a New Customer Segment, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Allegiant Airlines is facing challenges because of the dominance of functional experts in the organization. Allegiant Airlines: Finding a New Customer Segment case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Allegiant Airlines: Finding a New Customer Segment External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Allegiant Airlines: Finding a New Customer Segment are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Allegiant Airlines: Finding a New Customer Segment, Allegiant Airlines may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
High dependence on third party suppliers
– Allegiant Airlines high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Regulatory challenges
– Allegiant Airlines needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Environmental challenges
– Allegiant Airlines needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Allegiant Airlines can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Allegiant Airlines business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Allegiant Airlines has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Allegiant Airlines needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Allegiant Airlines needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Allegiant Airlines can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Allegiant Airlines can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Allegiant Airlines: Finding a New Customer Segment .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Allegiant Airlines with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Allegiant Airlines will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of Allegiant Airlines: Finding a New Customer Segment Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Allegiant Airlines: Finding a New Customer Segment needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Allegiant Airlines: Finding a New Customer Segment is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Allegiant Airlines: Finding a New Customer Segment is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Allegiant Airlines: Finding a New Customer Segment is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Allegiant Airlines needs to make to build a sustainable competitive advantage.
