Running Head: PROBLEM SOLUTION: CLASSIC AIRLINES
Problem Solution: Classic Airlines
University of Phoenix
MBA 570/Sustainable Customer Relationships
December 8, 2008
Instructor Sandra Payne, MBA
Problem Solution: Classic Airlines
Classic Airlines (CA) is the world’s fifth largest airlines that must balance its marketing program while coping with a mandated across-the board cost reduction by the board of directors. This calls for a of 15% cost reduction over the next 18 months while negotiating labor costs through the airline’s union employees and improving customer service. Facing low employee morale, decreasing customer satisfaction, rising fuel costs, high union wages, a nonfunctional CRM system, negotiations with union officials and future airline alliances and partners, CA has elected to implement a new analytical Customer Service Management (aCRM) product development (University of Phoenix,2008,Classic Airlines,p.1). The core problems stem around CA losing customer confidence in its Classic Rewards Program (CRP) and losing Wall Street and media confidence. CA must focus on a marketing program to connect it the customer’s needs and sustain and attract loyal customers. The current executive team values are divided, with CEO Amanda Miller and CFO Catherine Simpson valuing the financial numbers which is in sharp contrast to the values of the customer, employees and shareholders held by CMO Keith Bolye and VP Renee Epson over customer service. The union senior VP Doug Sheflin knows that without a compromise between union and airlines the status quo will not be able to meet the current and future wage costs. Senior VP John Hartman over human resources has trained the employees with the necessary skills and sees the employees as valuable assets in the customer and marketing effectiveness. Marketing in the form of environmental scanning can identify the factors of social, economic, technological and competitors that CA faces. Until CEO and the board establish a mission which will guide its organization, there may be organization resistance and delay in reaching its overall business strategies. Customer relationship management (CRM) is a broad term that involves people, processes, and technology to improve relationships and existing customers who will result in improved customer retention and profitability (Kerin, 2006, p.8). Using environmental scanning, identifying the marketing strategy and establishing a marketing relationship will direct and guide CA in meeting customer needs , identify the resources needed, the competitors they face and future trends in the Customer Relationship Management system. Incorporating Enterprise Risk Management, profitability index with interactive marketing will allow the marketing program to address customer needs and sustain customer relationships to reflect the changing trends in customer purchasing behavior. Describe the Situation
Issue and Opportunity Identification
Classic Airlines is the fifth largest airlines in the world. In the business for 25 years, CA has 375 jets that service 240 cities with more than 2300 daily flights. Classic Airlines earned $8.7 billion in sales. CA made $10 billion profit which means that most of the revenue went to operating the company. With 32,000 union employees CA retains their top salary that is above industry’s average. In addition the board has voted for a 15% reduction over the next 18 months. The company is threatening bankruptcy, decreasing value on Wall Street, unfavorable media, decreasing customer satisfaction and low employee morale. The current CRM system is not fully functional and the Classic Reward frequent flier program has been losing loyal customers. Other challenges include continual high fuel costs and high wages paid to the union employees. CA’s challenge is to find a way to improve customer satisfaction within their Classic Rewards Loyalty Program by identifying and meeting...
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