Classic_Airlines

Classic Airlines 2 Introduction to Classic Airlines Classic Airlines faces many challenges in today’s competitive airline industry. As the fifth largest airlines, Classic Airlines has suffered a decline in sales and market shares due to customer dissatisfaction and intense competition. Membership in the rewards program started to decline and employee morale was at it lowest. Classic’s Board of Directors mandated a 15 percent cost reduction across the board to eliminate any further financial crisis. With the cost reduction, increasing the frequent flier mileage program is still Classic Airlines’ focus in repairing the airlines. It is essential for Classic Airlines to boost the morale within its employees so customers are provided with the up most customer satisfaction. Expanding the Customer Relationship Management Program will increase bound between customers and the airlines. Current Situation at Classic Airlines Classic Airlines is facing several factors that calls for some major restructuring and teamwork that will hold the industry together. Classic Airlines has lost a sense of the importance of customer service and is dealing with a 19% drop in rewards members and a 21% decrease in travel for current members. Classic Airlines is facing declining customer confidence and they must find a way to reconnect with their customers. Along with poor customer relations and weak marketing strategies, Classic Airlines is faced with several other factors that may be out of their control. The airlines, Classic Airlines 3 like many others, try to pull themselves out of the negative effects of 9/11. Rising fuel and labor cost are contributing to the downturn the airlines is experiencing. The CEO, Amanda Miller realizes the challenges Classic Airlines is faced with, she and other team leaders strategize ways to rebuild Classic Airlines. Effective marketing strategies will increase profitability and customer relations. Chief Marketing Officer Kevin Boyle recognizes the importance of marketing and the effects it can have on the company’s profitability. With proper usage of the Customer Consumer Relations (CCR) System that Classic Airlines currently has implemented, customers will feel a sense of connection with the airlines. The system can extract more information from their customers to provide more effective services. Classic Airlines has the opportunity of joining an alliance that has already taken off with automated service features. This partnership can guide Classic Airlines to provide impeccable customer service. CMO Kevin Boyle will have to convince the CEO who is not a fan of alliances. She believes Classic Airlines can stand alone and no one can satisfy their customers better than they can (University of Phoenix, Classic Airlines Scenario). A Mix of Services Types The ‘category of service mix’ consists of five different services a company can offer its consumers. Pure tangible good is a product, not including any form of service. Tangible goods with accompanying services include a good that also provides a service. Hybrid offers equal amounts of goods and services. Major service with accompanying minor goods and services offers mainly a service supported by goods. An airline such as Classic Airlines 4 Classic Airlines can offer ‘major service with accompanying minor goods and services”, which means passengers are purchasing transportation services but they will also have the option of purchasing drinks as well. (University of Phoenix, Designing & Managing Services) If Classic Airlines decides to change their prices to help increase their profitably, one possible method maybe to select differential pricing by shifting demand from peak to off-peak times. Prices can be lowered during off peak travel times and rewards points can double during these times. There are many factors leading to customer switching; (University of Phoenix, Designing & Managing Services) pricing inconvenience, core service failure, service encounter & failures, response to service failure, competition, ethical problems, and involuntary switching. Classic Airlines is considered to have a perishability characteristic because airlines are unable to store their services. Unsold seats can’t be held for future sales, and if demand isn’t steady, this can affect profitability for the airline company. With Classic Airlines decline in airline ticket purchases, perishability can possibly be limited by ticket specials emailed to customers when flights are undersold. This marketing strategy can help with the airlines reconnecting with Classic Airlines customers. With team effort, a cost-effective marketing strategy will aid in developing a strong airline business. Classic Airlines can survive in the competitive airlines industry. The new-product development decision process can be a helpful tool for company’s to assess the target market (A Framework for Marketing Management, Ch 10). Classic Airlines 5 Internal and External Pressures There are internal and external pressures that have caused Classic Airlines some challenges in remaining the fifth leading airlines industry. Classic Airlines is receiving scrutiny from the media, this is causing the lowest morale in history of the company. Loyal customers are jumping ship and switching to other competitive airlines. The customers that decided to stick with Classic Airlines are flying less and the rewards programs is declining with membership. Frame the Right Problem Classic Airlines wants to revamp its’ rewards program due to customer dissatisfaction. This is determined because many of Classic Airlines flyers have decided to switch airlines. Classic Airlines must reconnect with their existing customers and recruit new customers. End-State Goal Classic Airlines needs to bring their company together and formulate teamwork efforts to improve employee satisfaction. Employees need to be rewarded when job performance meets the company’s expectations. Incentives along with measurable results will boost morale. The airlines will address the rising fuel cost by a developing a system that will save on cost but provide a quality service to its’ valued customers. Classic Airlines goals include increasing profitability, without losing site of the importance of customer Classic Airlines 6 satisfaction. Forming new alliances with other airlines is also in the works. Classic Airlines will strive to remain the fifth largest airlines. Increasing the percentage of new customers and increasing the rewards members’ loyalty, will restore confidence back into the airlines. Classic Airlines will put focus on their customers needs. It is important for Classic Airlines to build good customer relationships to gain new customers and keep existing customers. In following the SMART process, Classic Airlines must create specific, measurable, attainable, realistic, and timely goals. Problem-Solving Method Classic Airlines can measure the results of the changes they’ve made in several different ways. Financial reports can be monitored to measure revenue that has been generated by the airlines. Surveys can be conducted and results can be derived from the CRM system. Employee surveys can be administrated to determine if morale has been increased. Customer reports can be monitored to Identify the Alternatives The CRM System was originally created to decrease the time reps spent talking to customers. The system was also mistakenly configured in a way that didn’t integrate the phone channel with the web channel. Therefore, Classic Airlines was unable to identify what customers were using both the web and phone channel. The system is not being put to its potential usage; therefore Classic Airlines should consider seeking out individuals or companies that are well experienced with the system for training. There are a few risk Classic Airlines 7 that should be considered when choosing this alternative. The restructuring of the CRM System can be costly and require employee training. Entering into an alliance can be a risking step for Classic Airlines. There is no way of determining whether carriers involved will stick to the agreement being set. \ Identify and Assess Risks There are many risk involved when making major choices and decisions for Classic Airlines. A major risk for Classic Airlines might be entering into alliances, this risk could cause conflict among partnership. Before entering into alliances, Classic Airlines must have clear communication with all parties involved in the partnership. Benchmarking Southwest Airlines has remained a productive airline that gives customers the satisfaction they deserve. In Southwest Airlines market research, it was determined that customers desire low prices and frequent schedules. Southwest took a look at their target market. The majority of their market consisted of value-conscious travelers who are looking for deals and special packages. Classic Airlines can look into Southwest Airlines research they’re productive strategies. Classic Airlines 9 Nordstrom Department Store is a productive retail that strongly values customer service. Classic Airlines can obtain some ideas on how superb customer service makes for a successful business. Nordstrom Department Store, is known for its immeasurable customer service and high quality merchandise, Nordstrom is about pleasing their customers. Conclusion Classic Airlines will continue its efforts to maintain a profitable airlines business that values its customers and shareholders. Classic Airlines will restructure the CRM system and provide excellent customer service. The CRM system will be used to evaluate customer needs. Classic Airlines realizes they’ve failed to provide and understand the needs of its customers and has lost the importance of providing customer satisfaction. Classic Airlines will reach its potential growth through creating an industry with loyal satisfied customers. Classic Airlines’ customers will gain confidence and feel proud of being a part of the Classic Airline’s family. References Ch.10 Framework of Marketing Management, University of Phoenix Ch.11 Framework for Marketing Management, University of Phoenix Ch.12 Framework for Marketing Management, University of Phoenix www.southwestairlinesmarketing.com Classic Airlines Scenario, University of Phoenix