Classic Airlines Marketing Solution 1

Classic Airlines Marketing Solution

University of Phoenix

MKT/571

June 15, 2010

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Classic airlines have been one of the largest airlines serving over 240 cities and have a

fleet of 375 jets with over 2,300 daily flights. Last year the company has grown with 32,0000

employee’s and last year the company yielded over 8.7 billion and out of the 8.7 billion in sales

and earned 10 million (University of Phoenix Material, 2010). Classic airlines have seemed to

be very profitable but with the raising overhead cost and the decrease in consumer traveling the

company was hit with a 10% decrease in share prices. As the economy is continually to go down

Classic Airlines needs to identify what problem they are having internally and externally in order

to get themselves ahead. It would be in the best interest if Classic Airlines comes up with some

basic problem solving solutions.

Classic Airlines has seen the decline of customer that have been frequently fling with

them the Classic rewards program is down by 19%, Classic can not compete with the

competitive prices of the other airlines and fuel cost continues to rise. Loyal customer are no

longer choosing them for their regular flights the customer have complained and feel the there is

a big disconnect between them and the airlines. Classic shareholder have taken note of this and

Classic Airlines recognize this in many ways but the biggest impact on the company has been the

drop of sales and share prices. Classic Airlines needs to reconnect with their loyal customers

and meet their needs. Not only does Classic Airlines needs to reconnect with their customers

they need to pay close attention to customer service and ensure the customer that they are valued.

If Classic Airlines takes the step to problem solve and work at the problem then they

should be successful. The first step would be to define the problem. As already mention Classic

airlines is face with a few problems: loss of sales, decline in market shares, loss of rewards

customers and higher overhead cost. Another issue that Classic Airlines is face with would be

the low employee morale. Employees feel that their job is in jeopardy and this is reflecting the
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productivity of the work. The Board of directors has issued a mandatory across the board 15%

pay cut for all departments.

The second step would be to measure the problem. Classic Airline knows that there is a

10% decrease in the share prices. They need to get the 10% back and try to go over the 10% as

much as they can. The Classic Reward program had a 19% decrease many of the loyal

customers are not longer flying or going to with competitors. Classic Airlines needs to make

sure that customers that buy a ticket go fourth and get on the flight 21% of the customers that

purchase tickets were not on the descending flights. Once classic airlines have all of the data

then they can measure the problem and they can focus on what they need to work on. It would

be in the best interest of Classic Airlines to focus on the loss they need to make up first then

focus on going beyond and over the loss.

The third step would be to establish the goals. The goals set need to be reasonable goals

and can be measure monthly, quarterly or semi-annually. The goals will lead Classic in the right

direction give them a benchmark to reach that can be measure. In order for Classic airlines to be

competitive in the market they need to measure the profits they have made with the profits of the

other airlines. They need to get customer satisfaction up have the customer feel that they are the

reason Classic Airlines is in business make the customer feel like they are the only person flying

the airlines. Classic Airlines needs to put the Classic Rewards full speed make necessary

changes to the program to get existing customers back and gain new customers to the program.

Classic Airlines needs to set goals in the Classic Rewards program get the percentage back that

they loss and get the “refer” a friend program up. Set goals in profits and compare these goals to

last years profits the goals should be set higher this year and the goals can be stretched out

throughout the year in order for them to have higher profits. In order for Classic Airlines to
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know if these goals are met they can check the monthly Classic Rewards reports and compare the

reports to last year and analyze where they stand. The Classic Rewards program must show

some type of profit in order for this goal to be met.

The fourth step would be to determine the root of the cause. How did Classic Airlines get

in this position in the first place? After September 11th many customers felt unsafe to fly which

hurt the airline industry. Many of the airlines felt that the downfall would take a quick turn

which was not the case (University of Phoenix Material 2010). High labor cost and high fuel

cost were the cause of Classic Airlines to be unable to compete with other airlines and with the

customer that were frequent fliers. The negative reports from wall streets cause employee’s to be

worried about their job which reflected on how they worked. Customer satisfaction dropped and

customers were no longer happy with the way Classic Airlines were handling their concerns and

issues. The 15% across the board pay cut caused the marketing and other departments to spend

less which made it difficult to market the reward program. The locked in fuel prices for the year

save the company 12% but if they want to revamp the rewards program the need to do this

without the department needs to figure out a way to do it without spending more money and keep

production up.

The fifth step would be to select the best strategy. Now that Classic Airlines have listed

the root causes of the problem they can figure out the best solution plan accordingly to solve the

problem. One of the problems Classic Airlines is facing is low employee morale this corporate

culture is having a big impact on the company. The company needs to work in boosting the

employee’s morale ensure them that they are working on getting the share prices up. Make it a

point to let them know that in order for this to happen it needs to start with each employee. Offer

rewards to the employee’s who go over and beyond with the customers. Acknowledge each
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employee who receives a customer satisfaction card back with high marks. In order for the share

to go back up in price the market department will need to figure out a way to get existing

customers and new customer to fly. This can be accomplish in many ways the first way would

be to get the Classic Rewards program up. Offer special discounts different times of the year for

example offer something extra during the month of the rewards customer birthday. Offer the

customers that have canceled flights on their competitor’s airlines to purchase full price tickets

with them and offer them double rewards for making the purchase.

The sixth step would be to implement the best strategy. It is in this step where Classic

Airlines would create an action plan. This action plan will show the company board members

what is taking place, how it will happen, and the time it will take to see results. This is the time

for the marketing department to shine show how the new customer based Classic Rewards

program will get the company ahead and get them back on track to making the profits and

getting the cost of the shareholders price back up. This is where the board of directors will see

the competitor’s similar programs and Classic Rewards programs. They will see how Classic

Rewards programs is better then the competitors program and why Classic Reward program will

succeed. Not only will this show the board of directors how Classic Rewards is different but also

show them what the other airlines are offering their customers. Not only does Classic need to

offer a similar program but the benefits need to be better. This is the time where the board of

directors can view the customer surveys and read what the customers do not like and what they

want from the company. It is the goal of Classic Airline to make sure the customer is satisfied

when they fly Classic Airlines.

The seventh step would be to evaluate the results. When Classic gets to this step they

will evaluate how effective the solution is and if the goal from the solution has been met. In
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order for this to work Classic Airlines will have to create reports along with current reports and

measure the results. During this step they will be able to recognize if the changes they make

actually work and if the customers are satisfy. Compare the current customer survey with the

previous customer survey. The shareholders price of the current year needs to be compared to

last year price. New customer surveys cards will be reviewed and compared to last year surveys.

Monthly meeting can be held to ensure that the employees are happy and any questions or

concerns are address.

The eighth step would be to make any changes. During this step Classic Airlines will

review the previous steps figure out what is working and what needs to be changed. This step

can be done on the early stages or in the late stages. Changes can be made in the early stages if

they see that certain changes are not working or if other changes made can benefit them. During

this stage Classic Airlines can determine if they are on target with meeting their goals if they are

not on target then they would need to follow steps 4 through 7. It would be in the best interest of

Classic to make big changes early on this way they have enough time to see if these stages work

for them. This is a really important stage if something that is not working for Classic Airlines is

caught early enough then it can be changed and the company can benefit. If they do not catch it

early on then not making the change can cause them not to meet the goals. This is where you

can also show the employee’s what areas are working and what areas need improvement.

The ninth stage would be continuous improvement. During this stage Classic will set up

an ongoing system to continue the work and ensure that the company is having success. This is

the step where the departments can get feedback from the customer and make small changes in

order to keep the customers pleased. An example of this could be internet access during the

flights. This feature is new so many customers may have only thought about having it but never
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thought it would be possible. Now that other airlines have the technology Classic Airlines can

add certain flight with internet access. Little improvements such as this could keep the Classic

Rewards customer satisfied and keep them fling with the airline. Make sure the employee’s

morale is up make sure the employee’s are happy with their job and offer them extra benefits for

excellence service. This is where you can keep the employee’s in the loop of things showing

them the progress and how close they are to getting their 15% back.

Classic Airlines has been face with many challenges. They have been face with not only

internal and external challenges but also with economic challenges. If they use the 9-Step

problem method they recognized all of the core problems to being where they are now. Classic

airlines now have come up with solutions to fix these problems and figure out if the solutions are

working. I am certain if Classic follows the programs and makes all of the necessary changes

they will come out on top again. Once they have the satisfaction from the customers and the

surveys come back with high marks they will no longer need to have the 15% across the board

pay cut. Once the revamp of the rewards goes into full effect more customers will come back to

Classic Airlines. One of the main forms of marketing is word of mouth so once a loyal customer

tells another person about their experience then it will have a domino effect. The success of the

company can not happen without the customers but the customers first impression is with the

employee so behind the success of the company is their employees.

Reference:

Kotler, P., & Keller, K. (2006) Marketing Management 12th Edition

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BPI Consulting, LLC (2004) Problem Solving Model

http://www.spcforexcel.com/problem-solving-model