Classic Airlines Marketing Solution
The world economy is increasingly been fuel by Service businesses, with stiff competitions, most companies are finding it difficult to differentiate their physical products. To have that competitive edge over competitors, it is critical for service businesses to understand the special nature of services (Kotler, & Keller). One such company that is finding it difficult to understand the nature of services is Classic Airlines. The company is the world’s fifth largest airlines, they operates in 240 cities with an impressive 2,300 daily flights (University of Phoenix, 2012). The company’s financial report shows it earned $10 million on $8.7 billion in sales last year. Regardless of the profits, Classic has been on a downward trend, factors influencing this trend are; the rising cost of fuel and labor, negative media reports, and a constant decline of its stock prices. The Board of Directors are requiring a 15% cost reduction over the next 18 months, employees morale is low, and there is a lot of negative feedback from its customers in regards to the service provided by the company. I will implement a nine-step problem solving method that I will use to identify the problems at Classic Airlines, what opportunities the market has and create effective marketing solutions with a desirable end results to restore customer loyalty, employee morale, and entice investors’ to increase the company’s market value. Step 1: Define/identify the Problem
The company is faced with so many problems; some of these problems need immediate attention so that Classic Airlines will start generating much needed revenue from sales. Classic’s biggest problem is losing its customer base and a decrease in activity from their most frequent flyers; this is why they are losing sales. Because of the global financial crisis, there is a steady increase in the cost of fuel and employee wages are also high, these two factors are the major cause for the increase in operating expenses, resulting in a 61 million decrease in net income from previous year. Classic has seen the price of its Stocks prices fallen by 10% within the last year and employee morale is the lowest it’s ever been (University of Phoenix, 2012). By prioritize these problems with the most important one at the top, customer satisfaction and loyalty can be classified as the main factor. Finding what causing the dissatisfaction among customer and fixing it will help the company start realizing an increase in sales, this will in turn improve employee morale, it will also generate more returns on investment, this will keep the shareholders happy and Board of Directors approval for future programs. On the other hand, if effective market strategies are not implanted to increase sales at Classic and decisive actions not implemented reduce costs; the company will be forced into bankruptcy. Step 2: Measure/analyze the problem
The number of Classic rewards members are declining at a rate measured to be around 19 percent, and reports also stated that the remaining members that do actually pay for flights has decrease by 21 percent (UOPM, 2012). Compared to its competitors, the rewards program offered by Classic is much more restrictive. The company only allocated 10 seats per flights for its frequent fliers and some direct international flights are prohibited entirely (UOPM, 2012). The decrease in the company’s market share is measured to be 10%, this was cause by some external pressures like the negative report by the media, Wall Street and the public (UOPM, 2012). More miles are required for reward eligibility, during holidays, blackout date are imposed. This is what causing the rapid decrease in ticket sales, because customers are not satisfied with the services provided by the company, and are shifting to Classic’s competitors that provide better services that satisfy their needs. The Customer Relationship Management (CRM) system is not being used to...
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