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Classic Airlines Problem

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Classic Airlines Problem & Solution


Classic Airlines Problem & Solution Angela W. Daniels MKT 571 May 17, 2012 Dr. Harry Caldwell

Classic Airlines Problem & Solution


Classic Airlines

Classic Airlines is one of the largest airlines in the country. Classic Airlines has a total of 32,000 employees and has earned $10 million dollar in profits with a total of $8.7 billion dollars in sales. However, Classic Airlines is going through a tough time because of reduce in customers as well as profits. During these tough times there are various factors involved and promising directs to choose between. Classic Airlines marketing team must be successful to ensure continual operations. These concepts can assist Classic Airlines to determine the best route of action to taking going forward. In the midst of other things, Classic Airlines must discover a cost- efficient method to distinguish their trademark from opponents. By doing accordingly, Classic Airlines desire is to move towards meeting the organization’s objectives of enhancing shareholder assets and international development. The rationale of this paper is to smooth the progress of management’s evaluation on how to put into practice the demand changes to keep Classic Airlines on the leading edge in the airline industry. By addressing Classic’s situation, shareholder perspectives, end-state vision, and accurately defining the problem, the paper will provide a reasonable foundation for making the necessary decisions.

Challenges for Classic Airlines

Classic Airlines Problem & Solution


Countless of these challenges are both internally and externally connected to the procedures of marketing that Classic Airlines applies to establish its differences in the market arena. Case in point, the amplify uncertainty about flying as an enormous influence on the stock prices. This will make a huge agreement on the investments markets by drawing unnecessary attention to the outcome of Classic Airlines challenges. Another obstacle developed from the high prices in the oil market that has a direct effect in the prices of airline tickets. However, the bigger the increase, less frequent flyers will be on the market. This is a consequence of how pricing affects the supply and demand of the airline market. Classic Airlines must deal with the failure to obtain sufficient proportions of the small frequent flyers left behind as this problem with their competitors become so severe. These factors add to another obstacle concerning with the fading customer assurance in Classic Airlines. Classic Airlines declining numbers of Classic Rewards program members measured a 19% decrease and a 21% decrease in flights per remaining member (Classic Airlines, 2012). With a considerable reduce in frequent flyer members, and smaller members per flight, this will develop the need to increase cost to cover for fuel, salaries, advertising, food, and other services provided.

Nine Steps for Problem-Solving

Classic Airlines Problem & Solution


For Classic Airlines to avoid such problems, there must be a marketing strategy to identify the needs of society and provides for those needs in a humane manner (Kotler, 2007). The first step is to define the problem. Step one is a vital step in the problemsolving process; that decides the focus of the project. Classic Airline is a valuable company; they have seen a reduction in their market shares. Classic Airlines has also seen the bad press from the media and an assessment from the board of directors who have affirm a decrease in shares. These evaluations transform employee confidence that can have an effect on productivity. Classic Airlines is facing an increase of expenses, which includes gas prices and operation expenses (University of Phoenix, 2012) The second step is the solving method. Evaluating the problems will give Classic Airlines to collect information on the size of their dilemmas. After evaluating a customer satisfaction survey it determines that at least 56% of consumers were not happy with the existing rewards program redemption options (University of Phoenix, 2012). This evaluation also determined that at least 46% of consumers are using other airlines and at least 68% are not advising family and friends to use Classic Airlines. By solving the problem, Classic Airlines know what must be completed to make the organization successful again. The third step is to establish goals. Goals offer visualization and direction that will help Classic Airline to build choice and know which route to take. Classic Airlines want to increase market share and their profits. This can be deliberated

Classic Airlines Problem & Solution


by evaluating last year’s data to the current data. Classic Airlines want to develop a marking plan to introduce a program that will gain back their customer and employ new customers. The rewards program must demonstrate a measurable return on investment (University of Phoenix, 2012). The rewards program will establish profit and market share information. Classic Airlines aspiration is to create these objectives and to decrease expenses at the same time. The fourth step is to establish the cause. In this step, Classic Airline will examine their current processes and decide on what is working and what is not working. An internal pressure that administers to the base cause of the crisis is the corporate culture (University of Phoenix, 2012) the corporate culture of Classic Airlines relies on the reducing back production and current expenses. The executive management team of Classic Airlines is seeking ideas supporting a decrease in budget and savings. Classic Airlines do not see the importance of contributing funds on an imaginative idea that will stimulate a profit. Customer satisfaction and marketing is not as vital to the Chief Executive Officer and upper management of Classic Airlines. The 15% department budgets cuts are because of the increasing overhead costs, which puts pressure on all departments to decrease funds without reducing the quality of production. The marketing team of Classic Airlines must be willing to work together on how to resolve this obstacle if their goal is to re-vamp the frequent flyer miles program. Within Classic Airlines there are some external issues that must be addressed. Classic Airline stock prices have decrease due to the public’s hesitation about flying. This hesitation has made the shareholders a little concerned about their investment in Classic

Classic Airlines Problem & Solution


Airlines. Shareholders are looking at their investment very closely, and Classic Airlines must function under a microscope. The upper management must consider that this will raise profits so that the investors will be happy. The fifth step is to choose the best strategy. By assessing the causes in Step 4, Classic Airlines must examine and plan the solution strategies. On thought is to acquire an option to speak with a customer service representative rather than the automated system. Another thought is to allow Classic Airlines customers to purchase frequent flyer trip six months ahead of time (University of Phoenix, 2012). After developing this plan, the marketing team will lead the program with a specific group of customers. The marketing team will deal with any problems or concern that the plan may have. After dealing with the problems or concern, the marketing team will initiate the program. The sixth step is to evaluate the results. Within this step, Classic Airline will examine if the goals and objectives are met. Classic Airlines will create reports to assess the goals. The current market share prices compares to last year prices. Customer surveys are performed at the end of the year. Classic Airlines will have focus groups to meet throughout the year to receive and discuss feedback on the program. An end of the year report will reflect the program that will have an impact on ticket sales. The seventh and eighth step is to implement the necessary changes and to set up a system for improvements. In this step Classic Airline will establish an ongoing process to make sure certain that the profits stay in place for the long term. As Classic Airlines conduct these surveys and getting feedback, the

Classic Airlines Problem & Solution


marketing team will be able to execute any changes needed to improve the program. In corporate America, improvement is important to keep up with the changes in the industry and the society trend. Executing a process for improvement will develop a program that will change with the consumer needs and strives to continue to be customer-focused. The final step is to set up a measure for solution. In this last and final step, Classic Airlines must be willing to identify any measures which are set up and the best ways to identify if a problem has been solved or not is to resume normal operations in the organization. Classic Airlines should consider: Any necessary changes should be done preventing these types of problems from occurring in long run. Classic Airlines may need to change their policies, procedure, and training, etc. Each employee of Classic Airlines should consider writing down ideas to the success of each problem- solving effort and what he or she learned as a result of the problem. Classic Airline should share this information with upper management so if any problems or concerns arise will be handling in a professional manner.

Marketing Strategies

Classic Airlines cost have increased because of rising fuel cost and labor. Classic Airlines need to think of better ways to make customers happy if they want to keep their customers. Marketing involves satisfying consumers’ needs and wants. The task of any business is to deliver customer value at a profit

Classic Airlines Problem & Solution


(Kotler & Keller 2006). Some marketing strategies are to compare over all company’s goals with competitors goals. Discover who the target customers are and use wise marketing skills to increase revenue and gain loyal customers by doing it.

Evaluate the Results Classic Airlines will assess and monitor the results of the surveys once every quarter to accomplish its goal of sustaining customer satisfaction. A score of 90 shows that Classic Airlines is meeting their goals and objectives; the results of the Frequent Flyer program surveys should range from 95-100 and will be checked once a month. Also Classic Airlines financial records will be reviewed twice a year by the Chief Financial Office and will reveal the increase of the market share by 30% and the raise of Classic Airlines revenues by 20% at the end of the financial year. Last, there will be a decrease by 25% in fuel cost that will be revealed in Classic Airlines financial statement for the next quarter. Consumers are the beat of an organization, and the company should be reminded of this on a daily basis. Maintain employees and customers involve an enlightened perspective focused on continued ability and high value. Upper management will have to make rational shifts to understand the significance of an integrated CRM to align the company. The future of Classic Airlines relies upon a concerted attempt instill with efficiency.

Classic Airlines Problem & Solution



The saying ‘the customer is always right’ has never been correct in the airlines industry. As a result of the intense struggle within the airline industry consumers are given various choices and the cost of toggling from one airline to another is comparatively small .Therefore, Classic Airlines must restore their marketing strategies and programs around this theory. A review of marketing strategies indicates that objectives and goals were also modified. Thus, performance assessment metrics have to be revamped to support the performance assessment tool with what is being evaluated. Therefore, recommendation is that Classic Airlines put into practice all the above alternative courses of action with one purpose in mind - to create, develop, and maintain emotional ties between Classic Airlines and its customers. Once Classic Airlines redefines its marketing strategies to concentrate on the needs and demands of its customers, its loyal customer base will significantly progress. In the airline industry, the number of loyal customers an airline has an effect to its profitability.


Much of what an organization is to do is to solve problems and make decisions. Classic Airlines is under fire, stressed, and very short for time. A solution for Classic Airlines is to develop a marketing concept. In this process of

Classic Airlines Problem & Solution


developing this marketing concept, it will give insight into the process of getting customer satisfaction. The importance of customer satisfaction cannot be overstressed and must be included in the testing, implementation, and the monitoring process. The importance of Classic Airlines is to keep the consumer as a main propriety to enhance their customer service and increase their employee’s morale. Classic Airlines will be able to develop more effective products. Classic Airlines must be willing to improve its internal and external organization that will focus on leadership so that the customers and management relationship will grow stronger. Management has to be careful to maintain a high level of efficiency and keep a clear picture of satisfying the customers. In the future Classic Airlines will regain their customer loyalty, increased in growth and profits, sustaining customer relationship, and remain the top leader in the airline industry.

Classic Airlines Problem & Solution

References: Kotler, P., and Keller, K.L. (2007) A framework for marketing management (3rd ed.). Upper Saddle River, New Jersey: Pearson Prentice Hall. Kotler, P., and Keller, K.L. (2006) Marketing Management (12th ed.). Upper Saddle River, New Jersey: Pearson Prentice Hall. Newsom, D., Turk, J.V. and Kruckeberg, D. (2004). This is PR: The realities of public relations (8th ed.). Belmont, California: Thomson-Wadsworth University of Phoenix, (2012). Classic Airlines Scenario. Retrieved from University of Phoenix, Marketing 571. www.managementhelp.org


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