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June 22, 2013

Essay on Classic Airlines Marketing Solutions

After the crushing 9/11 incident among the many other industries the airline industry also faced significant decrease in its profits which gave rise to an economic recession. Therefore Classic Airlines was not impervious to the recession which followed it. The statistics are that Classic Airlines Classic Rewards program currently suffers. Classics customer rewards program saw a 19% decrease in the number of members and a decrease of 21% of flights between its members existing reward members. Classic Airlines marketing department must make an effort to increase the volume of customers and sales.
As it is said that “Every company knows that it costs far less to hold on to a customer than to acquire a new one” (Gokey, 2002), therefore with the need for commercial airline industry to undergo a speedy change, Classic Airlines (CA) is challenged with the task of providing increased worth within leaner customer budgets. With the advent of technology Plunkett Research Online has reported a decrease in travel industry expenditures with e-commerce increasingly substituting the jobs. Keeping this information in mind, CA needs to use this turning point as an opening to use the established methods to improve the current CRM system, and introduce a clear planning course to amplify customer reliability.
Classic Airlines is the fifth largest airline which uses a fleet of 375 jets that serve 240 cities with more than 2,300 scheduled flights. There is about 32,000 airline staff that is to be managed. In the past the airline has been able to extract profit from its services. It has made $10 million on $8.7 billion in sales; but with increasing fixed costs Classic Airlines is undergoing retardation. Furthermore the airlines share prices have undergone a decrease of 10% in the past year. Additionally because of the negative publicity from Wall Street, the media, and the public, the airline has faced a persistent decrease in employee confidence. Due to the continual financial strain throughout the industry, 15% cost reduction has been suggested by the Classic Airlines Board of Directors over the next 18 months (University of Phoenix, 2005).
This over increase and rising costs has been challenging for the airline which has made the introduction of some major changes inevitable (UOP Portal, Classic Airlines). Plus the suggestion of 15% cost reduction mandate has increased the pressure twofold. These problems have amalgamated the crisis and have resulted in a 10% decrease in stock price. Furthermore the replacement of Jack Broadway (former CEO) with a new CEO Amanda Miller in 2000 at a very critical time proved to have augmented the airlines loss. As Amanda Miller gave preference to operational excellence, this priority setting has left the firm susceptible as it is a time when it is the consumers who need to be prioritized and contestants are learning more of incessant perfection.
Therefore Classic Airlines is faced with the task of increasing consumer and employee loyalty by trying to keep the costs down at the same time increasing customer and employee contentment in the company. To achieve this, Classic Airlines will need to thoroughly examine customer reaction to comprehend the long-term forecasting and marketing objectives. The main aim of this paper is to present Classic Airlines’ problems and opportunities, stakeholder viewpoints, moral dilemmas, explanation of the problem, and recommend the best possible solution.

This problem of Classic Airlines can be turned into new prospects by vigilantly examining the situation and work out how to solve these problems with the best solutions. On way to do that would be to observe regular travelers who look forward to better service than they do receive on contending airlines and concentrate more directly on these customers. This would assist in increasing customer reliance and productivity. Moreover this strategy can be implemented without sustaining additional cost, keeping in order with cost decrease and the challenge to do more with less (Kerin, 2006).

Classic Airlines has a number of assorted causes influencing their marketing activities which are largely unmanageable. The company currently faces mounting fuel and labor costs. These huge boosts have compelled saving through high passenger load ratios and better competence, yet, these costs are still an obstruction to high productivity. Consumers of lower discretionary income are also less willing to travel taking into consideration the recent increase in fuel prices. More or less similar issues are being faced by other airlines, however competition has increased and Classic Airlines must decide where to cut costs at the same time keep on providing an encouraging profit on ventures for stakeholders.
Stakeholder alliance is a significant part of marketing planning and execution. Trade-offs should be compensated according to the consumer needs and wants as they are present at every level. “Organizations must connect not just with their consumers but with all the stakeholders, for the people affected by what the company does and how well it performs” (Kerin et al., 2006). The focus should be how CA can generate sustainable value for stakeholders.
Furthermore as the Airlines has the opportunity of making a new coalition with Skyway Airlines this would make many stakeholders to see the venture as a strength-builder in the view of the industry. The coalition would meet the expense of the customer supplementary value by presenting a more far-reaching set of rewards. There have been innumerable benefits stated by Weber (2005) to airline alliance allies, clearly from the airlines’ point of view, “increased revenue and passenger numbers, greater reach, access to slots/gates and greater frequency of services, more comprehensive route networks, economies of scale in marketing, service costs, and the eradication of duplication of operational efforts” (p. 257). The marketing of this new coalition will help Classic Airlines to retain and catch the attention of new customers over other airlines.
Relations contain conflicting interests that must be mediated and, possibly, optimized for further improvement philosophy. Management has been careful to maintain a high level of efficiency and the approach resulted in a worse market response. Employees should be encouraged to know the consumer, helping to shape a clear picture of how the target market is reached. Developing a framework for cross-functional communication will become an important part of improving the CRM system, and should help bridge the stakeholders communication gap.
Furthermore, Classic Airlines has a firm foundation to start from to restructure customer relations. The customer ought to be the central part of the business to assist determining consumer requirements. The company
already has an advanced Customer Relationship Management (CRM) system and they have the chance to reshape a more incorporated and worthy system using the accessible tool to its full potential. The phone and web portals can be integrated with the system so that more information can be extracted from the customers to help improve the customer experience. “CRM systems are tailored mainly for interactive marketing rather than large-scale batch operations, and to work well as outbound channels they need real-time methods to - as the saying goes - reach out and touch someone: e-mail and telemarketing” (Fowler, 2003)
Classic Airlines can perform better by analyzing the segmentation of customers making the position of the product for more than business travelers. The Airlines must concentrate on the positioning head-to-head in direct competition with other major airlines. Classic Airlines should also seek to differentiate themselves through service and quality (Kerin, Hartley, Berkowitz, & Rudelius, 2006). Classic Airlines must understand why each of the consumer book and why they are traveling. Classic Airlines has indicated that the segmentation strategy is obsolete
and does not match what the clients value. The CRM system can help create and automate personalized marketing to communicate with and retain customers. The software needs to profile its customers to better serve each client. This, in turn, will increase website visits and ticket sales.
Classic Airlines' frequent flyer program must be reviewed and once the program has been restructured, it must be properly marketed to target customers. The company was too concerned about price and not as concerned with the loyalty program so it did not grow up with clients and society. The loyalty program should be fully integrated with the CRM system to produce better results. Customer feedback has showed that most of business travelers do not see price as the top of their priority when choosing an airline. What they are looking for are specific benefits and services.
Recognizing market divisions necessitates information of the most significant groups requiring the product and should also be specific strategies to satisfy this consumer group.  According to Plunkett Research, revenue from next year the airline industry are declining. That said, commercial airlines must prepare by offering products that can accommodate / services to meet budget constraints, and e-commerce capabilities. Due to the success of online registration systems, all airlines are bracing for a possible transition in mostly e-ticketing services. These pressures are causing conflict within companies, which can be best solved through  may peaceful cross-functional applications. This type of solution is the only way to fight against the decreased yield and fluctuating morale. Breakthrough of finding primary consumer needs should be the top priority.  The fast changing industry climates in the current global market can be best geared up by setting up links to supply instant data.  And the best way to know the customer is by asking them.  This strategy is far more successful than uneconomical Research and Development spending. “Firms spend billions of dollars annually on marketing and technical research that significantly reduces, but doesn't eliminate, new product failure” (Kerin et al., 2006).  The firm is planning to upgrade its CRM system to keep up with the advancements in the industry as some aspects play a vital part in keeping up the demand for any commercial airline product or service.
            “It is marketing’s job to make these departments understand that without happy, satisfied customers who buy the organization's product, there is no company and there are no jobs” (Kerin et al., 2006).  Therefore programs to ascertain consumer happiness should be viewed as the top main concern of organizational decisions.  Despite the fact that the previous CRM system paid attention to greater competence, stock prices decreased by 10% and rewards members came down by 19%.  Apart from of the company's capability to save 12% on fuel costs, it is getting difficult for CA to increase value in other areas.  The intended consumer must become the focus point, and effectiveness should amplify but not at the cost of stakeholder satisfaction.
Now in this state of affairs the Airlines has four main stakeholders the employees, company management, shareholders and the customers. Employees in this case have several interests that do not seem to be treated by society. The Vice President of Human Resources has worked to educate employees on their importance to the organization. Employees want better pay, job security, benefits, growth and advancement opportunities. Sometimes the interests of management of enterprise productivity may interfere with the need to provide incentives and motivation of employees. If customer service employees are satisfied with their jobs, they will be able to foster relationships actually tend consumer goods that, in turn, stimulate growth and shareholder value.
Now one of the ways to improve and build up a new CRM system will be to announce an encompassing idea to CA employees.  Remarkable prospects are present within the industry if administration is willing to be in charge of leadership responsibility at the same time initiating visible governing practices.  The transformation will be easier if employees feel more a part of the team. Worth in the end depends on the enhanced relational terms encouraged between business components.  The main difficulty affecting the efficiency of CA is that currently it is working as a collection of divided units rather than working as a unified entity. An all encompassing incessant upgrading plan will be helpful in revitalizing all stakeholders right from the consumers up to the Board of Directors.
            “As power shifts with suppliers and consumers, innovative companies are altering the competitive balance in their respective industries to revolutionary business models built on relationships and innovative uses of technology” (DeLoach, pg 2).  Although the new transition is not risk free in this shifting airline industry, CA must develop practical methods to deal with the challenges/developments that consumer investigation disclose.  Catherine Simpson, CFO, will have to revise her thoughts that have been chiefly focused on augmented competence.  Rather it should be understood that planning and competence should always substantiate each other.
It will be important for Classic Airlines to measure the outcome of the resolutions it
makes concerning its customer relationship management. But when the results are assessed, both qualitative and quantitative results will have to be given import. The initial evaluation will
be quantitative while the success will come from improved revenues as discussed in the monthly and quarterly financial reports and stock prices daily. A second measure will be quality to be derived from questioning the passengers and employees through investigations and the results provided by the reports produced by the use of the CRM system.
By building planned coalitions with other companies, Classic Airlines will be successful to offer its customers with destinations that are not currently offered. Within the planned
coalitions, it will be possible for Classic Airlines to be able to effectively use it resources, like
aircrafts, during winter months. Nevertheless, senior administration and the employees need to
be aware that the loyalty program is an accurate expression of Classic Airlines and not just points and gifts.
Classic Airlines is facing the need for a certain, strategic change in its operational structure. The objective is to evaluate all available options regarding the update of Classic Airlines' reward programs, packaging and value-added solutions an CRM optimizations are the key plans of the company's global business. For Classic Airlines to achieve its end state, it needs to effectively manage customer relationships. This includes effective Prospective analysis of the forecasting environment, and improving the organization of courses and future CRM initiatives. To manage its recovery and future growth, Classic Airlines must ensure that it maintain customer level and have adequate plans in place to manage the fluctuations in the purchase patterns by consumers. In full awareness of the benefits of expanding into new market areas through strategic alliances together with a better customer service,  Classic Airlines can again be a successful enterprise.


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