Classic Airlines Marketing Solution

by gabby1560 (student)

University Degree Business and Administrative studies

CLASSIC AIRLINES MARKETING SOLUTION

Gabrielle Cavani

University of Phoenix

Marketing

MKT/571

Dr. Malone

April 01, 2012

Classic Airlines Marketing Solution

Classic Airlines is considered the 5th largest airline in the country commanding a fleet of more than 375 jets that serve over 240 countries with 2300 daily flights coming in and out. In the 25 years Classic Airlines has been in business, it now employs over 32,000 employees and has earned $10 million on $8.7 billion in sales. (University of Phoenix, 2007) Ever since September 11th 2001 and the fall of the economy, airlines have seen a major decrease in sales and flying activity. As time has progressed it has picked up a bit but the cost of fuel and labor costs have been on the rise which has been difficult for some airlines, one such being Classic Airlines.

Classic Airlines has always been one of the top airlines known for their exceptional customer service and frequent flier program. However, since the rise of fuel and labor costs, the board of directors has mandated a 15% cost reduction over the next 18 months. This cut is strictly meant for having the funds to keep up with the fuel costs as well as labor costs and cutting down some of the funds for any other programs or activities being run by Classic. One of those programs that are being cut is the revisions of the Frequent Flier Program that their customers have grown to use and love.

Even though Classic is still standing their ground, due to the uncertainty of flying and the rise in air prices, Classic has seen a 19% decrease in their number of Classic Rewards members and a 21% decrease in their flights. They have also noticed that a lot of their customers have been jumping ship and running over to their competitors who have better prices and services.

The board is not taking into consideration that their customers are the reason for their success and is not budging on trying to work the cuts out to where it doesn’t affect the new revisions of their flying rewards program to bring back their loyal customers as well as trying to gain new members. The Classic Team is trying to devise a plan that will show the board that they can still make their budget costs without going over and that in the end it will still provide a measurable return on the ROI. (University of Phoenix, 2007)

Issue and Opportunity Identification

Classic Airlines is facing a few serious issues and even though they are still maintaining a profit, they are slowly starting to lose their customers to competitors due to better services and cheaper prices. Classic needs to find a way to create a better rewards program without dipping into the budget that the board of directors wants to keep. One of the major problems for Classic is when Amanda Miller took over as CEO when the former CEO Jack Broadway retired. Amanda’s attention is more focused on the Operational Side of the company and not so much for the marketing side. She is determined that their budget is going to be solely for the fuel and the labor and feels that the Marketing and the customers should come in second place. Catherine Simpson who is the CFO of Classic is Amanda’s right hand man and agrees with Amanda on the operational side of things. The rest of Classic’s Executive team deals mainly with customer service and employee satisfaction. Kevin Boyle who is the Chief Marketing Officer for Classic has been assigned the task to revise and restructure the rewards program so that Classic can not only maintain the customers they still have and offer them a better service but they can also persuade new customers to come on board and fly their airline. Kevin also has to create a plan when working on this program that shows that they can still make a measurable Return on their Investment. Classic also needs to work on their employee morale and maybe offer their employees a chance to get involved with the Rewards Plan restructuring. Since the uncertainty of Classic’s Future, the employees have not been living up to their full potential and this is not only starting to hurt the employees but Classic as well.

Stakeholder Perspectives/Ethical Dilemmas

There are many stakeholders involved with Classic Airlines that all have concerns and issues over the future of Classic. Some of these shareholders are, Classic Airlines, the shareholders, the executive team, the consumers and the employees.

This is a preview of the whole essay

Stakeholder Perspectives/Ethical Dilemmas

Due to the drop in profits, the shareholders have been very concerned over the lack of new investors. The executives, especially Amanda and Catherine believe that they know the customers best and even though revisions to the Rewards program can be made, they should be made without having to spend a single penny so that they can still meet their budget. The consumers feel that since Classic had to drop due to budget cuts some of their customer service help, they no longer care about the wants and needs of their customers and this has been causing a lot of their loyal customers to jump ship and go over to their competitors who do offer the services they need.

Classic has been approached by Latin Airlines to form an alliance with them and help them with their decision making and restructuring of the new program since their airline is known best for their customer service. If Classic decided to join forces, this could help tremendously with the budget cuts but on the downside, Classic would now have to make decisions that could not only affect them but Latin Airlines as well and they would not be able to freely decide what is best for their company without running it by Latin Airlines as well. So, even though working with this highly reputable airline could really help make things better for Classic, consumer and financial wise, they would be giving up their right to solely make decisions on what is best not only for their consumers but for their company as well.

Problem Definition

By recreating customer satisfaction, Classic will be able to continue its success in the airline industry and bring forward more profits for their shareholders. This will also help with bringing back the loyalty of their customers as well as possibly gaining new ones.

“End-State” Vision

In order to regain their customers trust and loyalty, Classic will have to take advantage of their Customer Relationship Management System they have in place. This should help Classic be able to bring back their past customers as well as gain some new ones. If the system is used correctly, this should also work within the budget they have been given and the shareholders should once again start seeing the ROI. Classic’s employees would have to be motivated as well to bring forth the best customer service attitudes they have in order to keep Classic’s customers happy.

Identifying/Assessing the Alternative Solutions

The goal right now for Classic is to gain back their customer’s “Total Customer Satisfaction” through the services they have to offer. According to Kotler & Keller, 2007, “Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations. If the performance falls short of expectations, the customer is dissatisfied. If performance matches expectations, the customer is satisfied; if it exceeds expectations, the customer is highly satisfied or delighted.” Classic has been known in the past as one of the best in customer satisfaction but since the downfall of the economy and the most recent budget cuts that has hurt their customer service department as well as services; they are falling behind in that area. They need to now step up and create a program that will bring back their past customers as well as bringing in new customers.

Some of the ways they could do this is by offering double rewards for new customers up to 6 months or offering more perks for their existing customers like free baggage check ins or double or triple points on their birthdays. Free companion tickets after reaching so many points or upgrades to first class. These types of incentives will help Classic reel in and persuade more customers to come on board.

The second thing Classic needs to do is work with their employees. They need to offer the employees some incentives and reassurance that they are restructuring the company to where it will regain its popularity status and once again maintain its title as the 5th best airline in the world. They need to get their employees more involved with the restructuring process as well as offer more incentives and promotions. The employees are the ones who keep the customers coming back, without them, Classic might as well close their doors.

Identifying and Assessing Risks

Classic Airlines needs to decide what options work best for them and the risks involved with those options. Their rewards program although not carrying too high of a risk could still potentially hurt them if they can not find a way to restructure it enough to gain back not only their past customers but bringing in new ones as well. Classic has in the past been built on their customer satisfaction and since the fall of that, they have been running the risk of failing miserably. This restructuring of the rewards program is what Classic needs in order to pull back ahead of the competition and regain all the customers that they have lost to their competitors. Another risk they are taking is the possible formation of an alliance with another airline. Although the Chief Marketing Officer is very good friends with one of the execs that help run this airline, he is still taking a risk by trusting in his friend enough to join forces in hopes that with their help they can bring back the customer satisfaction that they have always been known for without going back budget. A large risk in doing this is if the other company fails in anyway, Classic could fall prey as well. Not only that but they could lose a lot more customers which in turn could be the doom for Classic. This business venture needs to be treaded on very lightly and all pros and cons need to be weighed by both partners.

Make the Decision

The best solution for Classic is for them to take all of their alternative solutions and combining them with their end state goals and working off of that. Classic can use their CRM system to help with the restructuring of the Rewards Program and use the possible partnership with Latin Airways to help gain back their customer’s loyalty and trust.

Develop and Implement the Solution

Classic needs to use their CRM system and gather all the data to understand their customer wants and needs. With the usage of this data, they can start to develop the new rewards program and when everything is finished, with the help of the team, Kevin Boyle can start to create a campaign to reintroduce the program.

Classic can also start implementing and developing a plan to join Latin Airways and test to see if this joint partnership will be in the best interest of both Classic Airlines and their customers.

Evaluate the Results

If Classic Airlines sticks by their motto of providing the best customer service they can and the new restructuring of both the Rewards Program and partnership goes over well, they should see excellent results. Shareholders should remain happy, Investors should start trusting in the company again, a major improvement in employee satisfaction should be seen, the board of directors will still keep within their budgets and most importantly the customers will start to trust and come back to the company they always held a high belief in but just had few hesitations in due to the economy and lack of customer service.

Conclusion

Classic has a lot going for them. Even though they may be facing budget cuts and have Executives that don’t truly believe in the power of customer service, they still are one of the best airlines in the country. With the strong team of marketers, customer relationship reps and employees, Classic still has a strong chance of being able to live back up to their reputation of being one of the best customer service organizations in the country. Budget cuts affect all types of businesses and Classic Airlines is no exception. A strong team of dedicated employees and management is all it takes to take a once thriving organization and bring it back to life. The team at Classic Airlines is doing just that. They may be facing problems, but they stand by their strong customer service motto. As long as they continue to live up to that motto, Classic Airlines will be seen and heard about for many years to come.

References

University of Phoenix. (n.d). Classic Airlines. Retrieved from University of Phoenix, Marketing website.

Kotler, P., & Keller, K. (2007). Creating Customer Value, Satisfaction and Loyalty (3rd ed.). Retrieved from The University of Phoenix eBook Collection.