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Problem Solution: Classic Airlines

Essay by   •  December 6, 2011  •  Case Study  •  2,933 Words (12 Pages)  •  1,544 Views

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Running head: PROBLEM SOLUTION: CLASSIC AIRLINES

Problem Solution: Classic Airlines

Businesses that are successful put a great emphasis in its marketing plan on defining the market essentials, desires and also the requirements of clients. They always focus on satisfying customers to the best of their ability as they look to maintain them. This paper will concentrate in providing an in-depth and conditional breakdown of Classic Airlines. This paper will illustrate the challenges Classic faces with both consumer loyalty and the slow economy. But upon recognition of these issues, Classic Airlines finds opportunities that are apparent, so an assessment of the developing substitutions and related risks will be used to decide the issues and find the solution. I have developed a problem statement which will be used to construct solutions. I will also discuss how the challenges and opportunities will be different at different levels in the organization, the ethical dilemmas and will create a smart end-state goal that will evaluate sales for the end results in 18 months.

Problem Solution: Classic Airlines

How can companies work on identifying customer needs and wants effectively and efficiently? Why is marketing critical to a company as it tries to identify these needs and wants? What is the function of the market, the technology, the customer and the organization as a whole, in the process of providing and supporting these needs? This is a major issue Classic Airlines faces after failing to address these questions appropriately. Classic Airlines is facing a 10% decrease in its share prices, a 19% decline on Classic's rewards members, and a 21% decrease in flights for its current members. Classic Airlines needs to address the situation and find out what caused its current situation and identify the best solutions to implement a better process and new philosophy. A new customer focus strategy must be implemented in order to acquire a measurable ROI.

Issue and Opportunity Identification

Among the issues identified are the decrease of reward members and the # of flights on existing customers. It is believed that the big drop is influenced by the dissatisfaction displayed by customers who have lost their loyalty for the service and product Classic Airlines provides. There is a need to understand the main reasons for the decrease in order to start working on a resolution. One way to start resolving the problem for Classic Airlines is to start understanding what the customers wants, it is very important for Classic stakeholders to identify these needs to be able to have the opportunity to address them.

According to Erdener Kaynak and Orsay Kucukemiroglu (1993), the essence of the marketing concept incorporates three basic elements: customer-orientation: integrated marketing efforts; and the resultant company profitability. Some of the factors which have triggered action in industry and its actors are:

1. The advent of deregulation with the passage of the Staggers Act in 1981 in the USA. Other countries such as Canada and the UK soon followed.

2. The emergence and creation of a new competitive environment (price wars, frequent flyer programmers, and a host of innovative marketing programmers).

3. The worldwide economic slump has created bankruptcies, mergers, co-marketing agreements, and downsizing, particularly in the 1990s.

4. The need for greater market access, force expansion and merging of airline route systems as market entry strategy.

5. Development of "mega carriers" to streamline cost and create economies of scale(Erdener Kaynak and Orsay Kucukemiroglu 1993).

This new competitive environment, coupled with a worldwide economic slump, has caused drastic changes in the industry. Bankruptcies, mergers, co-marketing agreements and downsizing have affected virtually every airline around the world (Erdener Kaynak and Orsay Kucukemiroglu 1993).

Another factor that must be taken in consideration is the lack of cooperation among all the stakeholders. A critical element in any team is good communication, which is needed in order in Classics for a marketing strategy to be in place and work properly. Everyone needs to be in the same page so Classic Airlines' stakeholders must clear the air and fix any differences in order to determine the company goals for the customers and what is best for the company as a whole. This represents an opportunity for the stakeholders to provide a good business assessment and arrive at a conclusion on how to proceed with the problem. It might be possible that the decline in customers is associated with the strict policy on frequent flier redemption program as it is identified on the call monitoring transcripts. Therefore, instead of focusing on cutting call time, the plan should be to pay more attention to providing value to the customers.

It has been identified that Classic Airlines has failed to reach out the customers' needs since it avoided the due diligence of taking in consideration customers' calls and employees exit interviews. This is a critical point which should be addressed and be corrected as management reviews what was done in prior years that worked for Classic, so it needs to find out what that customers is looking for today?. What is the competition doing and what is working for them? To help establish an effective retention plan Classic Airlines has to address the issue with the CRM system and work on taking advantage of the many ways it can be used to achieve the marketing goals.

Stakeholder Ethical Dilemmas

Communication across departments is imperative to reach the company's goals. Upper management must work diligently with its marketing plan and emphasize how critical communicating is to accomplish the business goals. The marketing team and executives must communicate and access the possible solutions to the situation. Both Amanda and Catherine share the same views regarding the marketing expenses and the value it brings to the company. And their interests are to turn around the reward program without any type of discounts and with a 15% cut in marketing expenses. On the other hand, Kevin will like to have a better understanding about the customer value and how much it will be willing to pay. However, not having full support from Amanda and Catherine can really endanger this goal since he will need their approval in order to seek the data needed to make the necessary adjustments.

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