Classic_Airlines

Abstract In the case study of Classic Airlines (CA), this paper will attempt to use a problem-solving model to solve CA marketing problem. After taking into account the internal and external pressures contributing to CA current crisis, the new objective to implement a strategic market plan to resolve its current conflict is brought to light. Furthermore, potential issues of implementation are also considered to ensure a flawless implementation of the new strategic plan. The paper will also highlight that implementation of an improved Customer Relationship Management (CRM) plan is expected to significantly improve the profitability of the organization. Successful implementation requires effective leadership, targeting market group, realizing shared vision among stakeholders and appropriate delivery strategies. By implementing the 9-Step problem Solving Model, Classic Airlines may uncover numerous opportunities. It serves as a valuable tool for major corporations; it identifies the problem, plans the solutions, displays ethical dilemmas, and the measures it may need to correct ensuing issues. The Nine Step Process is as follows: Step 1) Identify the problem- know what the problem is. Step 2) Define the problem- characterize its capacity. Step 3) Illustrate the end-state goals- avenues used to measuring success. Step 4) Identify alternative solutions. Step 5) Evaluate alternatives- select the most feasible alternative. Step 6) assess the risk-determine the chosen solution. Step 7) makes decision- ultimately select the best solution. Step 8) implement plan- apply the best solution. Step 9) evaluate the results- determine the success of the solution, and the end-state goals. According to the text Classic Airlines is one of the worlds largest, and most prestigious airlines. Since Classics inception 25 years ago, the company has blossomed into an international force earning the title of the fifth largest amongst all active Airlines in the world. Classic houses 32,000 employees “commands a fleet of more than 375 jets that serve 240 cities with over 2,300 daily flights,” (Classic Airlines, 2010). Upon completing last years final quarter Classic reported earnings of $10 million on $8.7 billion in sales. However, similar to other major airlines Classic has recently witnessed a decline in profits due to the economic instability, lack luster marketing, and consumer confidence. Their recent 10% decrease proved that Classic was not exempt from the share price shortcomings that are wreaking havoc on an industry that has been under enormous pressure from the public, the media, and Wall Street. The cynical press has proved to be a hindrance to Classic’s staff hindering their moral. In the wake of September 11, 2001 every airline in the US has suffered through the worse consumer’s crisis the country has ever seen. The fact that suicide bombers highjack planes, and committed one of the most heinous acts known to man, gave consumers an unpleasant feeling about air traffic control. Shortly thereafter the country entered its worse economic crunch since the Great Depression, which severely crippled consumer moral. This unfortunate turn of events placed the airline industry under a lot of scrutiny, and caused lucrative stocks to fall at a rapid pace. Problem Identification: Classic Airlines means to contend for the valued frequent flier has been crippled due to these alarming issues. With cost on the rise, and consumer confidence on a decline, Classic cannot afford to lose any more customers, especially their loyal consumers. Since 2005 Classic rewards program has lost 19% of its members, 21% of flights with existing members, and faithful flyers began choosing other airlines, or just flying less. Classic and its shareholders are caught in the raptures of cost, trying to avoid a dismal consequence. “Rising costs, particularly of fuel and labor, have limited Classic‘s ability to compete for the valued frequent flier. Although the travel downturn that followed September 11, 2001 has subsided, Classic and many of its rivals overestimated the reversal and expanded too quickly. Now, these companies face a restrictive cost structure that younger airlines do not.” (Classic Airlines, 2010) One of Classics most prized possessions is their customer relationship management (CRM), which has altered their progress, because it was designed without the needed flexibility to handle the current situation. To make matters worse the moral of its employees is not where it should be on all levels. Classic needs to counter quickly to retain customers. Problem Definition: Classic Airlines is approaching a huge financial disaster if their current situation is not alleviated. If their executive board cannot conduct a thorough analysis that demonstrates computable reform, the companies’ bottom line is in jeopardy, cementing their fate in the controversial world of Chapter 11. Once Classic has identified the exact hitch, they can explore all attainable solutions and set new precedents for the future. Enhancing their end-state goals is a must. Illustrate End-State Goals: “Effectively designing and implementing pricing strategies requires a thorough understanding of consumer pricing psychology and systematic approach to setting, adapting, and changing process,” (Kotler, Keller). Classic Airlines executives are searching for ways to improve their frequent flier program in hopes of increasing their investment return. Enticing the lost frequent fliers back into Classics program is very important considering the market, and stock prices. With rising cost, and declining confidence the need to stop the bleeding is extreme. Classics must call upon its creative genius to developing tactics, and solutions that satisfy consumer demands, and permit cost reduction strategies. Sufficient planning is a priority when increasing the worth of the company. In an effort to defy the odds, Classic has permitted a cost reduction over the next 18 months valued at 15%. The board feels that the restructuring plan is the best way to compete with opposing airlines for customer patronage. It is imperative that the end-state goal process follows the “SMART” (specific, measurable, attainable, realistic, and time-bound) objectives, ultimately aiding the long-term effects of change on the airline, their valued consumers, and its employees. Identify Alternative Solutions: “In an effort to make the airline more attractive, Classic Airlines decided to restructure the “Frequent Flier Program” to compete with other airlines for customer patronage. The program is offering flyers a new rewards program that features a host of reward redemption options,” (Classic Airlines, 2010). One alternative solution is mimicking a used program that was previously implemented by their CFO Catherine Simpson, which reduces the cost of fuel by 12% for their fuel program. Reforming the Classic Rewards program will not be an easy feat, but it is very feasible. Offering frequent fliers and loyal customers new rewards that feature various redemption options can improve consumer moral. By identifying multiple alternatives to associate with, the preeminent measure of the end-goal can be analyzed and assessed. However, reforming Classics executive team, and staff can be the overwhelming factor in bettering Classics position. Classic may enter a marketing alliance with Skyway Airlines, and a top Latin American Airline. The opportunity to create an alliance with another airline in the industry can be very beneficial. Classic can possibly decrease its operating cost by lessening its debt, and benefit from its much improved size. Aligning with airline/airlines that compliment their beliefs, programs, and services can possibly diminish their liabilities through its synergy. Each alternative is analyzed independently to formulate the best alternative to reach the desired goal. Each alternative is associated with another that future assesses the objective. By, identifying alternatives, Classic can better measure their end-goal. Analysis of Alternative Solutions The most important alternative in this situation involves reforming the Classics Rewards Program, and presenting their frequent fliers with better service. Their objectives are retaining and winning back customers, providing exceptional customer service, and offering innovative alternatives to redeeming their frequent flier miles. Serving their frequent fliers and meeting the needs of each patron is Classic obligation. Secondly, Classic Airlines may need to convince its executive team to get and stay on the same accord, and buy into a team-orientated business model. The members of the executive staff, managers, and lower level employees that do not adhere to Classics new plans must be terminated. Risk Assessment Discovering the qualitative and quantitative value of risk connected to tangible matters and known threats. When assessing risk Classic needs to account for all known and unknown liabilities. For instance: losing valuable personnel, which of who are knowledgeable of Classic customer base, and industry. Determining the level of loyalty amongst executives and lower employees, especially those that have an alliance to dismissed employees. In retro-specs to Classics remaining staff, progress with change, or seek further employment. Honestly, Classic may witness more loss due to employee turnover, and plan implementation. Conversely reform and the implementation plan will cause a long-term effect on Classic, constructing an airline dedicated to its customers, and its business model. Optimal Solution: “With this approach, Classic Airlines will propose to enhance the Product, the Price of services provided, and lastly the promotion. Classic Airlines will strategically communicate to the customer the value they can expect from on of the world’s largest airlines,” (Classic Airlines, 2010). Effective and comprehensive brainstorming on the executive level has allowed the decision makers of Classic to recognize the pros and cons related to the most advantageous alternative solutions. Through the reward program frequent fliers will have the ability to combine Coach, First Class/Business Elite into one ticket to save thousand of miles. Ensuring customers that their frequent flyers miles are eligible to be redeemed for any awards their current merits qualify for. Improving travel telecommunications to allows the customers to help you save time and money. Increase the total number of miles the Basic, Silver, and Gold members can use in a calendar year by 10%. • Basic member 50,000 miles in one calendar year • Silver member 50,001 to 100,000 miles in one calendar year • Gold member over 110,000 miles in one calendar year This process will also include the development of a strategic implementation plan, improved communication on the executive level, and training for all employees to make the transition to the new processes. The timeline for the turnaround process covers an 18-month span. However, the long-term effects will create a staff that is dedicated to its customers, and airlines processes. Implementation Plan (Step 8) “A key goal of marketing is to develop deep, enduring relationships with all people or organizations that could directly or indirectly affect the success of the firm’s marketing activities, (Kotler and Keller 2006). Classic has undoubtedly displayed a lack of stakeholder engagement that has hindered their knack to constrain customer retention and shareholder value. By taking the necessary steps to implement a justly consumer approach to relationship management, and developing valued employees. Classic will have positioned itself to obtain, develop and retain valued, and loyal customers. Thus, the implementation of this reform program will take honesty, patient, and loyalty. With devising a board of executive to regulate Classic Rewards, and their Frequent Flier program. The regulation board will govern the airlines control over mileage redemption, and adhere to a customer-focused program. In hopes of revising the innovation for its Classic Rewards, and Frequent flier program, Classic must determine the value, or worth of its programs toward their ultimate goal of decision making. Classic Airlines success at implementing their plan will be measured by the decline in cost, increase in market share, customer questionnaire/satisfaction survey results, the increase in employee moral, and the percentage increase of the corporate stock. By charting the company's market share, corporate stock, customer and employee satisfaction surveys over the last fiscal year, along with considerable profit margin and the percentage of new customers Classic is well on its way. By comparing and contrasting the figures of the current industry, to those of the implementation plan. Classic would be able to measure the success of the new programs, measuring its ability to meet, and/or exceed the industries standards. Conclusion It will behoove Classics executives and staff to learn from Global Air’s mishaps. The most recent questionnaire administered to the airlines customers, will provide a vast amount of information. The satisfaction of customers can result in loyalty and betrayal; this qualitative look into the spending habits of its customers will display, and reflect the information classic needs to better its situation. In an effort to save the airline Classic has to increase customer moral and enrollment in their in their frequent flyer program, spotlight product-market analysis, and improve customer satisfaction as a whole. These challenges can, and will be achieved by creating customer value and loyalty through a tailored customer relationship management (CRM) program, which has been transformed to provide flexibility to its consumers. However, Classic moves to rejuvenate consumer relations will be null and void, unless all of its employees take ownership, and be held accountable for doing his or her part in meeting the end-state goals. I hope this paper has cover Classics unique problem, and provided the reader with a robust solution for them. References Classic Airline Scenario: Classic Airlines (2010). Retrieved November 29, 2010 from the University of Phoenix MKT/571 Management Web site: https://myresource.phoenix.edusecure/resource Kotler, P. & Keller, K. ((2007). A Framework for Marketing Management (3th edition). Pearson Prentice Hall, Upper Saddle River, New Jersey