Describe the Situation
Classic Airlines consists of 375 aircraft that travel to 240 cities more than 2300 times per day with a workforce of 32,000 personnel. Classic Airlines’ revenue was in excess of $8.7 billion last year bringing in a $10 million dollar profit and establishing the airline as the fifth largest air travel company in the world. Despite good sales and profits, Classic Airlines has been receiving harsh criticism from their customers resulting in a 10% decrease in profit shares, reduction in customer loyalty, 19% drop in rewards customers, 21% reduction in flights and the lowest morale seen in recent years. Classic Airlines remains optimistic about customer flight travel but must find new, innovative ways to market the airline better because the Classic Airlines Board of Directors is mandating a 15% cost reduction from all departments for the next 18 months. Classics Airlines needs to market their airlines better to obtain and maintain customers. The airline has already made adjustments to their pricing strategy so that it may align with other airlines to allow them to be more competitive. The airline must also enhance their capability to analyze, and predict market trends with the use of customer data so the airline may change or offset the budgets, marketing, and resources so the company can align to such changes. Classic Airlines will need to obtain as much data about the company as well as feedback from the customers to make appropriate changes that will benefit the company. Frame the Right Problem
Current business operations for Classic Airlines showcase various factors that are affecting their business model. The first item that appears would be the company’s current Customer Relationship Management (CRM) tool. Data mining and collection has taken place but with the failure of system integration with the web portal, the CRM tool has not been used to its complete capability. By realigning this tool, the company can obtain more detailed customer information to use for marketing and other campaigns, and provide representatives with critical customer information that can better serve the customer. Classic Airlines is also the only airline that does not have an alliance with other entities. Possessing this form of agreement would increase customer flight options, increase customer earning and using of reward points, and give customers a more centralized point-of-access for flight shopping. By not possessing an alliance, senior management clearly showcases their drive for revenues rather than focusing on customers’ needs. Labor and fuel costs have also been plaguing Classic Airlines with business issues. As the cost of fuel and labor increases, the company is finding it ever increasingly difficult to maintain their costs, possibly reducing costs, and maintaining/obtaining frequent flier customers. With management thinking optimistically about the flight frequency increase after the tragedy of September 11th, Classic Airlines has found them in a cost restructure that makes reducing in labor and fuel costs very difficult. Upon analysis of the Four “Ps” (Product, Place, Promotion, and Price), Classic Airlines has a problem with Promotion the most. Classic Airlines product would be the flights and the reaching destinations would be the place. Their flights are price competitive in regard to other airlines and they provide quality flights. They would look to improve their flight experience through the use of promotion. By promoting how their flights are better than the company’s rivals (through the use of CRM Tool data), the company can provide services that their customers are searching for in a flight. Better marketing, promotion, rewards programs, CRM Tool use (metrics), and alliances will enable Classic Airlines to increase their revenues to become one of the top airlines without needing to worry about the 15% cost reduction....
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