Classic Airlines Marketing Solution
University of Phoenix
MKT 571: Marketing
Instructor: Bryan Spearman
July 22nd, 2010
In the case study of Classic Airline (CA), the paper use problem-solving model to solve CA’s marketing problem. After taking into account of the internal and external pressures contributing the CA’s current crisis, the new objective of implementing strategic market plan to resolve solution is clarified; furthermore, potential issues of implementation is also considered to ensure impact of the plan. The paper will also highlight that implementation of improved CRM which expected to significantly improve the profitability of the organization. Successful implementation requires effective leadership, targeting market group, realizing shared vision among stakeholders and appropriate delivery strategies.
Classic Airlines Marketing Solution
For every successful organization, a question is often brought forward by the management: What philosophy should guide a company’s marketing efforts? Should organization focus its strength first on the interest of stockholder, the customers or the society? Often times, these interests are in conflict with one another. Since the mid-1950s, the marketing philosophy had shift from product centered “make to sell” toward customer centered “sense and respond” philosophy. Thus the questions of marketing are finding the product that fit customer’s need instead of other way around. [ (Philip Kotler, 2006) ] Facing fierce global competition, companies had realized the importance of retaining healthy customer relationship because every companies knows it is far more cost effective to retain a loyal customer than to acquire a new one. According to Plunkett Research Online, the 2009-2010 periods for commercial airlines are expecting some rough ride ahead: consumer budget is tight while companies are cutting down business traveling expenses. To combat with economical hardship, airlines are fighting to cut routes, removing older models of air planes and reduce the fuel cost; at the same time, competing on best price and total service package to the customers. [ (Plunkett Research Ltd., 2009) ] The Problems at Classic Airline
The Classic Airline (CA) is world’s fifth largest airline that operates 375 jets serves 240 cities with over 2300 daily flights. In the last 25 years, the company had grown into an organization of 32000 employees with multi-billion sales. [ (University of Phoenix, 2005) ] Due to the difficulties with increasing global competition, overexpansion within the organization, changes in customers spending, and increased concern with airline security; CA along with its competitors in the industry are dealing with issues of growing stress and reduced financial gain. Increased uncertainty had triggered a drop in stock price; thus CA has seen a 10% decrease in share price. To make the situation worse, the company had also shown 19% decrease in number of reward members and 21% decrease in flights per remaining member. (University of Phoenix, 2005) With rising cost especially in fuel and labor, CA is tight up financially in its ability to compete effectively in the market. Furthermore, the board of director mandated 15% cut in cost or the company will face bankruptcy. A key component of the business model affecting both competiveness and profitability is the structure of the marketing portfolio within the company. In fact, Classic Airlines is struggling with a number of marketing challenges both internally within their corporate culture as well as with their external marketing portfolio. Some senior executives such as newly promoted CEO Amanda Miller believed in focusing organizational resources on operational excellence and financial stability thus gives less attention to marketing. As a result, the shift in priority had caused the firm more vulnerable in this critical time which consumers...