Classic_Airline_Marketing_Solution

Running header: CLASSIC AIRLINE’S MARKETING SOLUTION Classic Airline’s Marketing Solution Karen Anderson University of Phoenix Abstract This presentation sets out to explore a 7-step problem solving model used to analyze and resolve an underlying problem within the Classic Airline scenario. The goal of this process is to effectively determine the internal and external pressures contributing to Classic’s current crisis, the objectives and obstacles of the marketing department, and the marketing resources available to resolve this crisis. The following problem solving model used for the Classic Airline scenario is based on a method from “Problem Solving in Engineering” (2010). The first step of the model describes the situation; Step 2, Identifies the problem; Step 3, Sets goals; Step 4, Identifies alternatives and risks; Step 5, Make a decision; Step 6, Develops and implements the solution; and Step 7, will evaluate the results to determine if the set goals were actually achieved. Classic Airlines’ Marketing Solution Describe the Situation Classic Airlines is presented to be one of the world’s largest airlines with more than 375 jets and over 2,300 daily flights. It is considered to be a very profitable organization that employs about 32,000 employees. Since the events of September 11, 2001, the travel industry as a whole has sustained great financial losses. Worldwide economic conditions also contributed to organizations being hit with budget challenges and companywide cutbacks, which also explains consumer spending habits. Many vacationers are planning trips on reduced budgets. Most are saving money by staying closer to home. Classic’s Customer Loyalty Report shows that membership in the rewards program is down 20 percent from the previous year. This percentage breaks down to a loss of 160,000 loyal customers who are now flying airlines other than Classic. With the average number of flights per member being down by more than 20 percent, the airline struggles to keep its existing frequent flyer customers from choosing the competition over Classic. One of the major marketing challenges that Classic Airlines faces is the limited amount of resources available for launching an explosive campaign geared towards bringing back loyal patrons to the Classic Rewards Frequent Flyer program without further lowering ticket sale prices or reallocating funds from the union’s contract. The marketing team at Classic Airlines has been challenged to find a way to beef up its frequent flyer program with methods that will demonstrate a measurable return on any investment to avoid bankruptcy. To add to the matter, employee morale is now at an all time low. The current corporate structure within Classic Airlines seems to be strict and nonflexible. Amanda Miller, the company’s CEO is not easily persuaded by known marketing tactics used to appeal to customer interests; especially when it comes to pricing wars. The toughest marketing drivers the team will need to consider in their efforts to launch a successful promotions strategy will be to win over Classic’s internal customers, the Board of Directors. One way the marketing team can accomplish the task ahead is to appeal the CEO’s interest in bottom line numbers provided by research teams. All of the facts mentioned above are clear indications that the calamity that plagues Classic Airline is not solely a result of an unstable industry that was crippled by the events of September 11th. The real problem, however, stems from internal behaviors and decisions that were made during that time. Identify the Problem The underlying problem within the Classic Airlines scenario is the fact that the organization has lost focus of their customer needs and concerns. As a result, the airline’s Classic Rewards Program has seen a significant decline in their customer confidence and loyalty during the past year. The scenario notes that, with a concerned investment community on the watch, the airline industry operates under a microscope, subject to scrutiny from all sectors. The negativity from Wall Street, the media, and the public has affected employee morale, which is the lowest it has ever been. The opinions from outside influences seem to carry more weight regarding the decisions and actions that the company should take to level off and recover from its current predicament. Instead of using the times to their advantage, their interests have become centralized on the organizations numbers and bottom line. In the midst of a worldwide economic crisis, Classic Airlines must first consider a plan to regain customer loyalty and confidence. Consumers need to feel that Classic has a grasp of what they really need from an airline. In situations where customers become dissatisfied with the service received, patrons want to feel assured that their concerns will be addressed and handled in a timely manner. Set Goals The first step in resolving the Classic Airlines dilemma is to set new goals for the organization. Classic will need to consider how they want to look in the eyes of their patrons and stockholders once the issues have been resolved. As the customer service surveys revealed, the Airline needs to refocus their attention on the needs and demands of their customers. One approach will be to redevelop the company’s mission statement. The new declaration will need to include intent to raise the level of both the internal and external customer awareness and satisfaction. Authors Kotler and Keller point out that establishing image dimensions is key. They state that it is vital for consumers to see, company credibility and perceived expertise, trustworthiness, and likability. Service firms must therefore design marketing communication and information programs so that consumers learn more about the brand than the information they get from service encounters alone. These programs may involve marketing and communications that help the firm to develop the proper brand personality (pg. 207). Another target point would be to address employee morale by implementing employee training programs. Effective training programs would educate employees on the services that Classic offers as well as educate them on the importance of exemplary customer service. During the trainings employees would develop a real understanding of the Classic Airline mission statement. Employees need to develop a sense of ownership in how they provide service to customers. When staff members are happy and enjoy what they do, it will generally reflect in how they handle each customer. The ultimate goal is to regain customer loyalty and confidence by focusing on the results from customer surveys and make adjustments according to their responses. As Renee, the Senior VP of Customer Service pointed out in the scenario, customers will tell you what they want, but in order to achieve the desired results organizations must have the service elements, operations procedures, or marketing programs in place to deliver. Setting new goals will give Classic Airlines a sense of direction in recapturing the essence of their customer base. Changing the way Classic approaches everyday business from this point forward will determine the likelihood of surviving this crisis. Each objective focuses on some aspect of building employee and consumer relationships. Identify Alternatives and Risks Identifying alternatives and risks involves the information gathering phase of a problem solving model. Its purpose is to come up with an outcome that would yield the least unfavorable outcome. Per the Board of Directors, consideration of possible alternatives must be done with 15 percent less in marketing expenses. With that challenge, Classic Airlines has three alternatives to explore. The first option is Alliance marketing which gives consumers the concept of a one stop shopping opportunity. In the case of Classic Airlines, the option of developing a strategic alliance would include joining forces with other industries such as hotels, car rental agencies and credit card companies to give travelers the feeling of planning an entire trip with one company. Although the concept of alliance marketing is designed to be customer oriented, the risks of introducing this strategy could do more harm than good. Classic would introduce a lot of changes at one time to its customers which could send out the wrong message to stockholders. As was seen in the GlobalAir situation, too many changes too fast may not be the best approach towards mending relationships with already dissatisfied customers. Another alternative would be to consider a segmentation strategy. Segmentation marketing consists of a group of customers who share a similar set of wants, such as car buyers who want low-cost transportation and car buyers who want a luxurious driving experience (Kotler & Keller, 2007). This objective could target specifically the Classic Rewards members and would satisfy the goal retaining its current loyal customers; however, this approach is very limited in its scope. Segmentation can bring about difficulties when it comes to efforts of luring back old customers. While consumer needs are always changing, the segment strategy would have to remain flexible in its approach to change with consumer needs. Kotler and Keller add that, Marketers do not create the segments; their task is to identify the segments and decide which to target (2007). This approach brings about concerns as to how this would general focus would affect service offered to patrons who are not a part of the Classic rewards Program. The final choice is to upgrade the Customer Relationship Management (CRM) software. The overall goals of this software are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Customer relationship management denotes a company-wide business strategy embracing all client-facing departments and even beyond. When an implementation is effective, people, processes, and technology work in synergy to increase profitability, and reduce operational costs (Wikipedia, 2010). The risks for implementing the software upgrades should be very minimal if any. The system is already in place and is currently meeting Classic Airlines needs. Make a Decision The best approach to resolving the Classic Airline crisis within the restricted guidelines mandated by the Board of directors is to implement improvements on the existing Customer Relationship Management (CRM) and execute a holistic marketing approach to insure that the most important issues of the airlines predicament get resolved. In support of enhancing the CRM software, Plunkett’s Online Market Research and Trends states that, airlines and hotel chains are offering their own powerful online reservation systems, with rich features, multiple levels of photos and descriptions, and the ability to earn and manage frequent flyer awards (2009). Develop and Implement the Solution Classic Airlines should implement the Holistic Marketing approach which will address both the internal issues with employee morale and the external influences that present a strain on the overall interactive flow of things within the organization. External marketing describes the normal work of preparing, pricing, distributing, and promoting the service to customers (Kotler & Keller, 2007). Basically, this part of the solution will address matters outside the organization that influence its internal decision making. The external marketing will be the regulatory system that handles pricing, customer service matters, stock market concerns and the stockholders interests in the company. The Internal Marketing depicts training and motivating employees to serve customers well. Berry has argued that the most important contribution the marketing department can make is to be “exceptionally clever in getting everyone else in the organization to practice marketing (Kotler & Keller, 2007). Interactive marketing will govern the employees’ skill in serving the client. Clients judge service not only by its technical quality, but also by its functional quality. Technology can make service workers much more productive (Kotler & Keller, 2007). This portion of the solution will aid in the employee training aspect of the marketing solution. Evaluate the Results The expected outcome of making the necessary enhancements to the CRM software is an inexpensive tweak that will pay for itself over a short period of time. As was discussed in the research phase, the CRM was partially designed for the purpose of luring former clients back to service providers, and reduce the costs of marketing expenses. The research team has already provided numbers to Amanda showing a positive impact of the CRM system. By enhancing the systems capabilities, Classic Airlines is sure to see an increase in profitability, reduced operational costs and improvements in the customer service experience. The team will ultimately be able to provide the CEO and the rest of the Board of Directors with the bottom line numbers they have requested, while operating within the limited options available for them to have a successful campaign. Conclusion Throughout the Classic Airline Scenario it has been determined that there are many issues that lead to the root of the real problem. In order to address the primary concern, Classic has to institute a plan to get back on track and recover their loyal customer base that has moved on to other competitor services. The process will implement a 7-step problem solving model to analyze and resolve the identified problem. The airlines will need to redirect its focus from the concerns of its financial issues to the concerns of their customer base, which will ultimately determine their ability to survive the threat of bankruptcy. The decision to upgrade the existing CRM software presents the most cost effective solution for addressing consumer concerns and complaints. The system enhancements are expected to work together with staff, internal processes and technology to increase profitability, and reduce operational costs. This plan of action will fall in line with companywide mandates brought down by the company’s CEO and Board of Directors. The regulatory system for managing the upgrades, when put into operation, is the holistic marketing concept which will control three aspects of the organizations structure; external marketing, internal marketing and interactive marketing. All three concepts work together to insure that Classic Airlines reaches its set goals while following their new mission statement that focuses on providing exemplary customer service with each customer contact. Classic Airline will be able to track its results and improvements with the help of the CRM system that currently offers reports that monitors such things as sales, pricing and activities of its frequent flyer patrons. Should the changes and processes work as expected, Classic Airlines will be on the path to restoring customer confidence and loyalty. References About.com. Marketing. Retrieved August 15, 2010. http://marketing.about.com/od/marketingglossary/g/mrktsegdef.htm Grade 9 Integrating Engineering. Problem Solving in Engineering. Retrieved August 10, 2010. http://www.g9toengineering.com/resources/probemsolving.jpg Kotler & Keller (2007). Marketing Management. Available from University of Phoenix eBook Collection database. Plunkett Research Online. Market Research and Trends 2009. Retrieved July 27, 2010. http://www.plunkettresearchonline.com/ResearchCenter/Trends/display.aspx'Industry=17 University of Phoenix (2010). Classic Airlines Scenario. Retrieved July 27, 2010. From University of Phoenix, Week 1 MKT571Marketing Web site. Wikipedia. Customer Relationship Management. Retrieved August 14, 2010. http://en.wikipedia.org/wiki/Customer_relationship_management