problem-solving model in suggesting ways towards solving marketing problem of Classic Airline. It takes into account the internal and external pressures that contribute to the current crisis at Classic Airline, the current objective of implementing strategic marketing plan of solving solution. In addition, potential issues in implementation potential issues are as well considered in insuring impact of the plan. The analysis also touches on the fact that implementation of improved Customer Relationship Management (CRM) improves the profitability of the organization.
Classic Airlines is the fifth largest airline in the world with a command of up to above 375 jets that are serving cities with flights of over 2,300 daily. Since its inception, from 25 years ago, it has changed to become an organization having about 32,000 employees and even recently it managed to earn $10 million on sale of $8.7 billion in sales. Classic is among the airlines that faces challenges.
Ability of Classic to compete for the valued frequent flier has been limited by rising costs majorly on labor and fuel. Nevertheless, the travel downturn that followed September 11, 2001 subsided but Classic with his rivals expanded too fast after overestimating the reversal. Thereafter, the companies now encounter a restrictive cost structure not experienced by younger airlines. For this financial crisis to be countered, a 15% across-the-board cost reduction has been mandated over the next 18 months. Still on this mandate, Classic has to come up with a way of beefing up its frequent flier program using methods that are capable of demonstrating a measureable return on investment. When this issue is being resolved, there is rumor around that in any case Classic was not going to attain the reduction, then the company would most likely face bankruptcy.
Philosophy that guides marketing efforts of a company tends to be a question of the management whether the organization is supposed to focus its strength first in the interest of the customers, stockholders or the society. In many instances, such interests come in conflict with each other with the marketing philosophy changing from product centered to customer centered. Therefore, this question of marketing finds the product that fits the needs of the customers over the others. During the fierce global competition, companies came to realize the significance of maintaining healthy customer relationship (Bull C., 2003), since the companies are aware that it is far most cost effective working with a loyal customer as compared to acquiring new ones.
Like any other airlines, Classic Airline faces challenges that are driven by environmental factors within the industry. Some of these are customer loyalty going down, fuel process skyrocketed, morale of the employees getting low and the prices of the stock market have significantly fallen. Therefore, Classic Airline has no option but to come up with a quick solution to make profit shoot up, establish a stronger customer relationship with its current reward program and come up with marketing strategies to target a market segment.
The industry stock prices have been affected by the rise of uncertainty about flying and this has made Classic to decrease in shares prices by 10% in the past years. The operation of this airline industry tends to be under microscope, having investment community who are concerned, hence subjecting it to scrutiny from every sector. The experienced negativity from the media, the public as well as Wall Street has affected morale of the employee, which indicates the lowest state it has ever been.
There had been waning of consumer confidence Noted in January 2005 when the measure of Classic's declining Classic Rewards program was 19% decrease in terms of the number of Classic Rewards members, as well as a decrease of 21% in flights per remaining member. Customers who were loyal were now jumping ship and the ones who were still aboard turned to scarcely fly using Classic Airlines.
The primary solution to all these challenges that the Classic Airline faces is to focus on customer value as well as listening to consumers so that they stay a head of the trend. When they turn to focus on customer value, it will raise the loyalty rewards program and increase profit long-term. For it to still remain competitive within the industry, there are several issues and opportunities it can take advantage of. Looking at the documents of Classic Airline, it is indicated that there is poor customer relationship management. Moreover, from the customer interview that was conducted by Renee Epson with 500 Gold and Platinum level Classic Rewards members, there was more negativity detected than the positive. It indicated that the percentage that were dissatisfied with the number of miles earn for Classic flights were 56%, the percentage of those who were dissatisfied with the upgrades were 70%, the percentage who were dissatisfied with the reward redemption were 70% and the percentage who would not refer a friend or a colleague to Classic Airline were 68%. From this finding the Classic Airline had an opportunity to analyze the need of the customers through tailoring its marketing strategies towards the customer service experience as well as rewards program.
The external environment changes had effect on the revenue resulting to the loss of money by the company. The external environment changes affected the company and made it to lose money hence the stock prices of the company dropped by 10% as well as the salary of employees to be reduced by 15%. In order for the company to counter this, it should develop marketing strategies that will dominate its competitors and provide the highest quality service experience for its customers. Through establishing objectives that are to meet the goals of Classic Airline, there could be a chance for the company to survive in its business. Within the strategic plan, the company has to make sure that it has a strong marketing strategy and utilize resources carefully because of the budget constraints.
The ethical dilemma that exists between Kevin Boyle (CMO) and Amanda Miller which has a connection to failure to cooperate with both parties proves to be a challenge within the organization. The focus of Amanda Miller is on customer value through taking care of their needs so that the business relationship is improved. On the other hand Kevin Boyle is in need of participating with Skyway airline so that they have a cost effective marketing budget. Both perspective seems to be reasonable, but still the company has to come up with the best decision in order for the company to move forward.
The decision which seems to be the most suitable is to focus on the customer relationship management through providing them with services and experiences which are quality (Hill Patrissans, A., 2000). Marketing money should be spent efficiently through return investment maximization as well as making sure that there is correct targeted market segment. The dilemma that exists between customers and executives of Class Airline is supposed to be addressed carefully. Class Airline must take into serious consideration that dilemma that exists. The analysis of data presented by customer feedback as well as tailor marketing strategies should be done by the airline in order for the end goals to be achieved. The need of the customer tends to be better services, on time arrival of flights and reward programs. Cutting of 15% of the employee salary across the board by the company just worsens the existing situation as the morale of the employees is bound to be lowered and this disgruntles customers. When Classic Airline is able provide strong business relation, high value services as well as quality experience that meet demands of the customers then it will be a number one consumer choice in the air.
CRM Implementation issues
Usually, CRM entails changes in business process with the introduction of new technology. Based on this role of effective leadership in the top executives proves to be an important part of the implementation process. Since the leaders not just oversee the internal running of operation but as well monitor the changes in external environment, and are at the right place of setting the vision and strategic direction for CRM project. Moreover, the executives at the top most tend to be more cost aware as compared to the middle management, therefore they have stronger control over the expenditure of project as indicated by Newell, F. (2000). Even though Classic Airline earned $8.7 billion in sales, the yield was reduced from consumers by ineffective CRM system and did not retained loyal customers. It is suffering from CRM integration problem because of unclear direction in handling customer relationship. This means that a set of priorities are supposed to be set in shaping the CRM system to a focus which identifies the need of the consumers, discover value and cost drive, assist market segmentation, leverage stakeholder feedback and improve customer retention.
Delivery of CRM system
For Classic Airline to revise and establish an effective and stronger CRM system, the executive who are at the top are suppose to give clarification on the…