Mkt571 wk 3 classic airlines marketing solution
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Mkt571 wk 3 classic airlines marketing solution Mkt571 wk 3 classic airlines marketing solution Document Transcript

  • Classic Airlines Marketing Solution University of Phoenix 08/13/2012
  • Classic Airlines Marketing Solution Introduction Since being started 25 years ago, Classic Airlines has grown to become one of thetops 5-airline carriers in the world. Classic Airlines currently has 2,300 flights daily in240 cities. To make all of this happen Classic owns and operates about 375 airplanes andemploys 32,000 people. This past year shows that the company has only earned a net of$ 10 million from their 8.7 billion in sales (Classic Airline Scenario, 2012). With thatbeing said, the company is going through tough times. Now, and in the past there hasbeen many things that has threatened Classic’s Airlines stability, including bad pressfrom the media, and a lot of negativity and scrutiny Wall Street. These while small butpower things have not only affected Classic performance financially, but they have alsogreatly affected the employee morale. With all this going on, Classic Airlines needs tofind strategies that will address the challenges that they are facing. More specifically,Classic has to come up with steps that are geared towards finding the best solution totheir problem, of improving their marketing strategies, and looking for an alternativemethods in case the first plan fails. The steps that will be employed in this model are:identify what the problem is, define and redefine the problem identified, settingobjectives and goals that will serve as the Classic’s guideline, determining what was thecause of the problem; this includes looking for the flaws in the current processes thatstops it from operating properly, next Classic must choose the best solution that canaddress the problem, then implement the strategy and ensure that tasks are assignedproperly, look over the results of the strategy, and determine whether it improved thecurrent process, next Classic will have to incorporate the desired changes in the process,
  • and create a plan that will sustain the plan, lastly the airline will have to consistentlymonitor of the process to avoid failures. Describe the Current Situation Along with the challenges, Classic Airlines need to look out for hiddenopportunities. One of the biggest issues effecting Classic Airlines is the decreased in thenumber of passengers still trusting to fly with them. Recently, the company has recordeda 19% decrease in the number of their reward members, and just about a 21% decrease onregular passengers. Because of this the company has tried to offer discounted prices in anattempt to attract both old and new customers. However, this did not change the negativeperception of the public with regards to the customer service quality of the company andtheir reward system for the loyal members. Because of this to Classic it is clear that theproblem is not with the pricing of the air fares, but with their flyer program. Theprogram is highly necessary in retaining and trust of the old customers, attractingpotential customers, and improving their redemption and rewards system for airlinemembers. Classic also plans to implement an increase their annual membership rewards. Classic Airlines board members also agreed to reduce their operation costs up to18% in the next 18 months, which will affect all of the five departments of the airlines(Classic Airline Scenario, 2012). The board is hoping for the cooperation of eachdepartment. The specific reduction in each department is as follows: 11.5% for generaloperations, 18.5 for administrative, 21.5 for sales and marketing, and 14.10% for IT.Also, the salaries of the level two management will also be reduced by 0.5%. There willbe no tuition reimbursement program, as well. Classic Airlines is also being greatly
  • affected by the increasing price for fuel and labor, which makes them less competitive.With that being said, Classic will need to find a plan that will help them save money onfuel costs. With the problems Identified Classic will now need to look into the casues ofthese problems. Classic Airlines is standing firm on remaining competitive in their market despitethe challenges. To make this happen Classic first needs to do is to regain their customer’sloyalty, as well as increase their profits. The directors should also address the concerns ofthe employees and employee morale, the employees are the face of the company to thecustomers. If this is accomplished, then Classic Airlines can easily get back to being oneof the premier airlines. Also, with a strong and innovative marketing strategy, they canincrease their net profits in shorter period of time. Being on the top of the airline companies, Classic Airlines will strive to remain intheir top spot. The aim for Classic here is to increase the customer satisfaction by 20%,by collaborating with consumers and small businesses. At the same time, it would alsomake sense for a huge airline company like Classic to partner with smaller airlinecompanies for strong networks. Classic Airlines should also come up with a sustainableplan in order to maximize their profits, and survive the Wall Street analysis thecompany’s share and stock performance. Stock value is expected to increase by 10% induration of 3 months. Since the flyer program is also part of the improvement that Classichas to make, it is expected to increase by 20% for at least six months. But, they also haveto adjust with a big decrease in their operational costs for the first year. Also, as Classicstarts to recover and employees have a sense of job security, employee morale will begin
  • to improve. Identify Alternatives The major alternative identified for Classic is to partner with smaller airlines.This will give them a strong networking system. This is a tool that has been used by othertop airlines line American Airlines and Delta. The customers will be the largedetermining factor of the Classics image, success and profit. More specifically, Classiccan improve its flyer program, and strengthen partnership with other companies. Anotheralternative that Classic Airlines can explore is to add more creativity and reliability totheir rewards program, this will motivated customers to participate in them. The best alternative that can address multiple problems would be the partnershipwith other airlines. By doing so Classic will build good business relationship with variousairlines, also their problems with having a limited budget for operational cost can beaddressed . Classic Airlines also has both domestic and international flights. But,compared to some of their competitors, Classic Airlines has a rather limited internationalaccess especially when it comes to European countries. This calls for another partnershipwith international airlines, for them to offer more international flights to their customersand make a bigger international presence. With all the new alliances, Classic Airlineswould be able to offer their customers more flights and flexibility. Most of the successful company’s strategy is to benchmarking, or to evaluatingevery plan and only using the best ones to improve their performances. Classic Airlinescan also utilize this by looking all the alternatives they have chosen and choosing whichof those will best address the challenges they are faced with. Evaluate the Alternatives
  • After putting out of all the alternatives, Classis can move to assessing therelevance of each alternative to the current issues. The customers should always be thetop priority, so the alternatives geared towards improving customer service will be the toppriority. The alternatives listed below will make it possible for Classic to succeed in theiractions: • Make sure that the 25% reduction costs is done, to implement the improved reward program • Retrain customer service staff in building good customer relations, • Retain customers by improving their experience with the company. • Get new customers to try the airline, and make sure they have a positive experience. • Lastly, building partnerships with other airlines, this will allow Classic to more easily meet the needs of their customer while at the same time help them to cut some operational cost.. Classic Airlines has four major alternatives to pick from, it’s important that theytake the time needed and choose the right one. While evaluating to should the correctalternative Classic should be able to find the risks within each option, and can take aproactive approach toward that issue. Identify and Assess Risks As discussed earlier, looking at the alternatives will allow Classis to find riskswithin in each solutions. The fading employee morale will have a big effect on theretention rate within the company, also hiring new employees would lead to more cost for
  • Classic. Furthermore, there is a possibility that the number of airline customers willcontinue to decrease. If Classic Airlines does not partner with other airline companies,their company shares can drop, and they will also continue would have higher operationaland fuel cost. This would also make it harder for them to improve their rewards program.Finally, if Classic’s customer relations system continues to be poor they will push theircustomers towards their competitors, which create a negative impact on the company’ssales. Make the Decision Being as though Classic Airlines is coping with a lot of challenges, the decisionsof upper management is very crucial. The directors should be the ones to look all thealternatives presented, and address the big issues. Then they should ensure that the goalsthey have set can and will be met. First thing is to obtain the 25% operational costreduction, then fix the customer service system, next Classic should look to improve thecustomer retention rate. For the most part the customer’s traveling experience has to beimproved to gain their loyalty. Providing customers with the supreme care andfriendliness will keep them coming back and not going to the competitors. By partneringup with smaller airlines Classic can save money and enhance their rewards program Develop and Employ the Solution The nine-step model utilized by Classic Airlines will be all for nothing if theirdirectors are unable to implement them correctly. Classics Chief Executive Officer,Amanda Miller should lead in the implementation of all strategic solutions resulting from
  • the nine-step model. Many companies have already use and can attest to the effectivenessof this problem-solving model. Evaluate Results In regards to the customer relations, Classic Airlines has many options on how toassess their strategies. Financial reports become more essential at this stage, there for itis a good idea to review them quarterly, instead of annually. Stocks and financial reportswill make up the quantitative results. While Classic’s qualitative information will comefor the customers in the form of surveys. If all of the strategies listed are implementedcorrectly then Classic Airlines will have no problem maintain their position as one of theelite organization within the airline industry. Conclusion To improve upon opportunities like those of Classic Airlines, a detailed strategicplan is needed. Sharp decision making will play an important role in addressing eachopportunity. The end goals of the company will be achieved through an establishedcustomer management system. While the customer management system will play a bigrole in the end goals of the company, motivated employees and satisfied customers willbe the key to Classic’s company’s success. This paper presented a lot of alternatives forClassic Airlines, and all of which seem to be within Classic’s proposed budget. Classicexpanding their international markets and partnering with smaller airlines, while they gohand and hand, they will also enhance Classic’s business performance.
  • ReferencesClassic Airline Scenario: Classic Airlines (2012). Retrieved August 13, 2012 from the University of Phoenix MKT/571 Management Web site https://myresource.phoenix.edusecure/resourceKotler, P. & Keller, K. (2006). A Framework for Marketing Management (3th edition). Pearson Prentice Hall, Upper Saddle River, New JerseyHaughey, D. (2012). Smart Goals. Projectsmart. Retrieved August 13, 2012, from