MKT/571 - Marketing
Classic Airlines 9 step problem solving model
There are many internal and external factors contributing to Classic Airline’s current crisis. Falling Stock prices, Low employee morale, rising fuel costs and declining consumer confidence are some of the challenges Classic is facing. Internal dissent among upper management and restrictive cost structures are posing a direct problem to the Marketing team. I will sort through all of the symptoms, opinions, feelings and facts to determine the real problems plaguing the company. Considering the marketing departments goals, obstacles and resources, I will use a problem- solving model to define the problem, then build solutions, implement and evaluate solutions to the problem,
Define the Problem
Classics’ Customer Satisfaction, Loyalty and membership in the Classic Rewards program have substantially decreased. Classic is dealing with a loss of customer base and a decrease in activity from their most frequent flyers. Increased fuel costs and high employee salaries have driven operating expenses up, resulting in a 61 million decrease in net income from prior year. Stock prices have fallen 10% within the last year and employee morale is the lowest it’s ever been. Following September 11th Classic along with the entire airline industry, experienced a major decline in business. Classic overestimated the turnaround of the slump and expanded operations prematurely resulting in a restrictive cost structure and a competitive disadvantage against younger airlines. This allows younger airlines to break into the market taking bigger risks to offer customers what they want. Competitors can offer lower prices that Classic would not be able to match without taking a loss. In addition Amada Miller, CEO has stated that there is no room for Classic to lower its flight prices. At the suggestion of the former Chief marketing Officer Amanda Miller agreed to lower prices on flights and feels that it was a major mistake. The results have not been beneficial for Classic or its shareholders. She believes that it has forced Classic into a potential price war that can’t be won. The Board of directors have imposed a 15% cost reduction companywide to be implemented over the next 18 months. Amanda and CFO, Catherine Simpson seems to place all the blame for Classics’ crisis on marketing which is resulting in their lack of support for marketing efforts and ideas. The current CMO, Kevin Boyle is experiencing residual effects from the decisions of his predecessor. Added pressure from Ben Sutcliffe, SVP & General Counsel, is directed at marketing to steer clear of any actions that would jeopardize the current relationship and agreements with the Unions. Kevin Boyle and the marketing team must come up with a marketing strategy to bring the Classic Rewards program back to and exceed its former status while contending with all of these factors.
Gather Facts, Feelings, and Opinions
A Customer Interview performed by Renee Epson, SVP Customer Service, on 500 Gold and Platinum Classic reward members revealed that members are unsatisfied with the features of the Classic Rewards program. Fifty percent are unhappy with the amount of miles earned per flight and 70% of members are unsatisfied with the service upgrades and the reward redemption options. The most disparaging result is that 68% of the Classic rewards members would not recommend it to a friend or colleague (University of Phoenix, 2012). This is very damaging to Classic’s image and program success since one of the best marketing tools in the service industry is Word of mouth. Service industries depend on satisfied customers referring their service to other potential customers. Customer expectations have been disappointed and have resulted in a loss of customer base. The Customer loyalty report shows that new enrollments in the program have dropped from...