Marketing_Solution

Classic Airlines Marketing solution 1-4 1. Describe the situation - The airline industry is experiencing a major loss in business after 911 and the subsequent economic downturn. To compensate for loss in revenue, and the increasing costs, the industry is as a whole doing whatever they can to stay in business. From heavily discounting flights, laying-off workers, and eliminating positions all together, the competition is as fierce as ever. - 10% decrease in share prices with negativity from the financial sector has brought employee morale to an all time low. - The corporate culture is such that the CEO and CFO are more interested in the bottom line right now which includes a 15% cost reduction, as opposed to the bottom line in the future and the future state of the company. The divisional vice presidents mostly agree with each other and Kevin about what needs to be done for the overall health of the organization, which is to find a way to beef up its frequent flier program the cheapest and most effective way possible. 2. Frame the right problem - Classic Airlines is experiencing a loss of revenue while budgets are being cut and expenses are constantly on the rise. - Classic must find a way to rise above the competition without discounting airfare. - Classic rewards is down 20% from the previous year - Marketing budget is cut down by 15% - Out of touch with customers - Employee morale at all time low - 3. Describe the end state and goals - The end state for this situation is that Classic Airlines draws in customers and retains current customers without cutting the price of airline tickets or laying-off union workers, while operating below the set budget cuts of 15%. By keeping plane tickets at the same price, keeping workers working and happy, and drawing in a devoted customer base, Classic Airlines will experience great returns when the economy picks up again. By not getting rid of employees, Classic will not have to pay the price of re-hiring them later, and by not lowering prices of tickets now, there won’t have to be a price hike later to cover costs. Additionally, by operating within the budget cuts Classic will not have to worry about borrowing additional capital that will require repaying. 4. Identify Alternatives - The least expensive option is to utilize the marketing department to create a solution to retain current customers, draw in new customers, and charm old customers into coming back to Classic. - Revamping the CRM system is a good start for recapturing the picture of the Classic customer. - Save costs by reducing reservation operation centers, eliminate travel agent commissions, and develop an employee buyout or attrition program.