Classic Airlines is facing financial challenges, including a decrease in passengers and profits. To address this, they will implement a 9-step problem-solving model to improve their marketing strategy and customer loyalty. This includes identifying issues like high costs and poor customer service, considering alternatives like partnering with other airlines and improving rewards programs, and developing a solution involving cost reductions, customer satisfaction improvements, and partnerships. The goal is for Classic Airlines to regain its position as a top airline.
2. Classic Airlines Marketing Solution
Introduction
Since being started 25 years ago, Classic Airlines has grown to become one of the
tops 5-airline carriers in the world. Classic Airlines currently has 2,300 flights daily in
240 cities. To make all of this happen Classic owns and operates about 375 airplanes and
employs 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 that
being said, the company is going through tough times. Now, and in the past there has
been many things that has threatened Classic’s Airlines stability, including bad press
from the media, and a lot of negativity and scrutiny Wall Street. These while small but
power things have not only affected Classic performance financially, but they have also
greatly affected the employee morale. With all this going on, Classic Airlines needs to
find 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 to
their problem, of improving their marketing strategies, and looking for an alternative
methods 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, setting
objectives and goals that will serve as the Classic’s guideline, determining what was the
cause of the problem; this includes looking for the flaws in the current processes that
stops it from operating properly, next Classic must choose the best solution that can
address the problem, then implement the strategy and ensure that tasks are assigned
properly, look over the results of the strategy, and determine whether it improved the
current process, next Classic will have to incorporate the desired changes in the process,
3. and create a plan that will sustain the plan, lastly the airline will have to consistently
monitor of the process to avoid failures.
Describe the Current Situation
Along with the challenges, Classic Airlines need to look out for hidden
opportunities. One of the biggest issues effecting Classic Airlines is the decreased in the
number of passengers still trusting to fly with them. Recently, the company has recorded
a 19% decrease in the number of their reward members, and just about a 21% decrease on
regular passengers. Because of this the company has tried to offer discounted prices in an
attempt to attract both old and new customers. However, this did not change the negative
perception of the public with regards to the customer service quality of the company and
their reward system for the loyal members. Because of this to Classic it is clear that the
problem is not with the pricing of the air fares, but with their flyer program. The
program is highly necessary in retaining and trust of the old customers, attracting
potential customers, and improving their redemption and rewards system for airline
members. Classic also plans to implement an increase their annual membership rewards.
Classic Airlines board members also agreed to reduce their operation costs up to
18% 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 each
department. The specific reduction in each department is as follows: 11.5% for general
operations, 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 will
be no tuition reimbursement program, as well. Classic Airlines is also being greatly
4. 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 on
fuel costs. With the problems Identified Classic will now need to look into the casues of
these problems.
Classic Airlines is standing firm on remaining competitive in their market despite
the challenges. To make this happen Classic first needs to do is to regain their customer’s
loyalty, as well as increase their profits. The directors should also address the concerns of
the employees and employee morale, the employees are the face of the company to the
customers. If this is accomplished, then Classic Airlines can easily get back to being one
of the premier airlines. Also, with a strong and innovative marketing strategy, they can
increase their net profits in shorter period of time.
Being on the top of the airline companies, Classic Airlines will strive to remain in
their 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 also
make sense for a huge airline company like Classic to partner with smaller airline
companies for strong networks. Classic Airlines should also come up with a sustainable
plan in order to maximize their profits, and survive the Wall Street analysis the
company’s share and stock performance. Stock value is expected to increase by 10% in
duration of 3 months. Since the flyer program is also part of the improvement that Classic
has to make, it is expected to increase by 20% for at least six months. But, they also have
to adjust with a big decrease in their operational costs for the first year. Also, as Classic
starts to recover and employees have a sense of job security, employee morale will begin
5. 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 other
top airlines line American Airlines and Delta. The customers will be the large
determining factor of the Classics image, success and profit. More specifically, Classic
can improve its flyer program, and strengthen partnership with other companies. Another
alternative that Classic Airlines can explore is to add more creativity and reliability to
their rewards program, this will motivated customers to participate in them.
The best alternative that can address multiple problems would be the partnership
with other airlines. By doing so Classic will build good business relationship with various
airlines, also their problems with having a limited budget for operational cost can be
addressed . Classic Airlines also has both domestic and international flights. But,
compared to some of their competitors, Classic Airlines has a rather limited international
access especially when it comes to European countries. This calls for another partnership
with international airlines, for them to offer more international flights to their customers
and make a bigger international presence. With all the new alliances, Classic Airlines
would be able to offer their customers more flights and flexibility.
Most of the successful company’s strategy is to benchmarking, or to evaluating
every plan and only using the best ones to improve their performances. Classic Airlines
can also utilize this by looking all the alternatives they have chosen and choosing which
of those will best address the challenges they are faced with.
Evaluate the Alternatives
6. After putting out of all the alternatives, Classis can move to assessing the
relevance of each alternative to the current issues. The customers should always be the
top priority, so the alternatives geared towards improving customer service will be the top
priority. The alternatives listed below will make it possible for Classic to succeed in their
actions:
• 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 they
take the time needed and choose the right one. While evaluating to should the correct
alternative Classic should be able to find the risks within each option, and can take a
proactive approach toward that issue.
Identify and Assess Risks
As discussed earlier, looking at the alternatives will allow Classis to find risks
within in each solutions. The fading employee morale will have a big effect on the
retention rate within the company, also hiring new employees would lead to more cost for
7. Classic. Furthermore, there is a possibility that the number of airline customers will
continue 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 operational
and 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 their
customers towards their competitors, which create a negative impact on the company’s
sales.
Make the Decision
Being as though Classic Airlines is coping with a lot of challenges, the decisions
of upper management is very crucial. The directors should be the ones to look all the
alternatives presented, and address the big issues. Then they should ensure that the goals
they have set can and will be met. First thing is to obtain the 25% operational cost
reduction, then fix the customer service system, next Classic should look to improve the
customer retention rate. For the most part the customer’s traveling experience has to be
improved to gain their loyalty. Providing customers with the supreme care and
friendliness will keep them coming back and not going to the competitors. By partnering
up 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 their
directors are unable to implement them correctly. Classics Chief Executive Officer,
Amanda Miller should lead in the implementation of all strategic solutions resulting from
8. the nine-step model. Many companies have already use and can attest to the effectiveness
of this problem-solving model.
Evaluate Results
In regards to the customer relations, Classic Airlines has many options on how to
assess their strategies. Financial reports become more essential at this stage, there for it
is a good idea to review them quarterly, instead of annually. Stocks and financial reports
will make up the quantitative results. While Classic’s qualitative information will come
for the customers in the form of surveys. If all of the strategies listed are implemented
correctly then Classic Airlines will have no problem maintain their position as one of the
elite organization within the airline industry.
Conclusion
To improve upon opportunities like those of Classic Airlines, a detailed strategic
plan is needed. Sharp decision making will play an important role in addressing each
opportunity. The end goals of the company will be achieved through an established
customer management system. While the customer management system will play a big
role in the end goals of the company, motivated employees and satisfied customers will
be the key to Classic’s company’s success. This paper presented a lot of alternatives for
Classic Airlines, and all of which seem to be within Classic’s proposed budget. Classic
expanding their international markets and partnering with smaller airlines, while they go
hand and hand, they will also enhance Classic’s business performance.
9. References
Classic Airline Scenario: Classic Airlines (2012). Retrieved August 13, 2012 from the
University of Phoenix MKT/571 Management Web site
https://myresource.phoenix.edusecure/resource
Kotler, P. & Keller, K. (2006). A Framework for Marketing Management (3th edition).
Pearson Prentice Hall, Upper Saddle River, New Jersey
Haughey, D. (2012). Smart Goals. Projectsmart. Retrieved August 13, 2012, from
http://www.projectsmart.co.uk/smart-goals.html
