Classic Airlines Marketing Solution
As the world??™s fifth largest airline, Classic Airlines serves over 240 cities with more than 2300 daily flights. Facing high fuel cost, tight competition, and low customer satisfaction, Classic airlines currently experiences difficulties to maintain its effective operation. The September 11 terrorist attack in the United States has also affected travelers, as they prefer other transportation means and use air travel less. As the global economy becomes weaken, the airline industry has been under pressure to control costs by cutting down customers??™ services program. The paper will examine Classic Airlines current situation and focus on challenges, opportunities, external and internal pressures on marketing. By providing a clear problem statement, using SMART end-state goals and benchmark, recommendations will be made to solve the marketing problem at Classic Airlines.
To improve the customer??™s services, the airline must utilize its Customer Relationship Management (CRM) system to learn about its customers and their needs. Although Amanda Miller, Classic Airline??™s CEO, tends to focus on the overall cost cutting process, other management team members believe the airlines can improve by applying more marketing concepts (University of Phoenix, 2007). There is not much room left for reducing ticket prices. The main focus for the airlines still involve with its customers and the frequent flyer program. Currently, the airlines share price has been reduced by 10%, while the Classic??™s Rewards program decreases 19% in memberships. Using relationship marketing, the airline can recover by rebuilding its customer relationship. In essence, customer satisfaction can be expected to increase customer loyalty, reduce price elasticity, lower transaction costs, and improve the company??™s image (Andersen et al., 1994). The airline travel industry has been attempting to keep costs down while trying to improve services. In the environment where customers are extremely price sensitive, there are not many options to maneuver with thin margin of profit (Hsieh, Y, 2007). However, as a services industry, Classic Airlines can constantly evaluate its customers, their needs and wants to improve the services and kept their loyalty. The frequent flyers program is critical to measure its customer satisfaction and loyalty. By implementing the nine-step problem solving model, Classic Airlines can identify the issues, plans for solutions, recognize ethical dilemmas, and assess risk before making result evaluation to meet the end state goal.
Issue and Opportunity Identification
There are important issues that the management at Classic Airlines must address in order to rescue the airline from bankruptcy. The declining of membership in its Reward Program can be identified by using the CRM. The company should study about its current program benefit, to make them compatible with their counterparts. Many airlines have changed their frequent flyers to make them more accessible and useful for their customers. With rising cost of fuel, and the declining of consumer??™s confidence in air travel, Classic Airlines needs to revamp its frequent flyers to attract more new members and provide them with flexible and useful benefits. Using discount fare to attract new customers may not be a long term strategy, as the airline does not have a sufficient working capital. Lacking alliance is another issue which the airline has to fix immediately. It is necessary to provide more flexibility and choices to its reward members to earn points and exchange flights. By providing customers with their alliances of other airlines partners, it will make the frequent flyers program become more attractive. Secondly, the customer services at Classic Airline needs to improve in all service levels to provide better and suitable services to all customers. Using the CRM correctly will help Classic Airlines to identify their customers and their demography. By differentiating different levels of membership among flyers, may help the airlines to better serve these most loyalty flyers and attract new members.
Classic Airlines have many opportunities to revamp its marketing strategies. By restructuring the frequent flyers program, and getting feedback from its customers, the airlines can easily modify the program to suit their customers??™ needs. Using the CRM tool more effectively, the airline can gain competitive advantage by identifying its target market. Using this tool, the airline can focus on customers??™ needs and carryout certain targeting marketing to improve capacity utilization and gaining profit. Sharing codes, capacity by forming market alliance with other airlines partners will provide new market advantages and enhance its own frequent flyer programs read this.
SMART End-state Goal
The end-state goal of Classic Airlines is to be a leading airliner in the industry by improving its customer service and market share through the frequently flyers program. The end state goal can be described as a specific, measurable and attainable by the company. The goal for the company will be:
(a) Increase new customer base by 10% within 15 months
(b) Increase and retain the loyalty customers in their frequent flyer program by 20% in 12 months
(c) Reducing the cost by 15% over the next 18 months
(d) Provide a better quality customer services by 20% in the next 15 months
(e) Making alliance with two other airlines and perform code share to serve more customers in the next 15 months
Identify the alternative and benchmarking
To meet the end state goal, the airlines can use different approaches and alternatives to reach the ultimate objectives. By applying their capital into the new CRM program, the company can invest for the future, using the current advanced technology. Together, with call centers and web-based solutions, the airline can be in touch with customers and solve their problems while flying with Classic Airlines. The improving customer service may help the airlines to recapture its lost members and maintain competition. With great marketing efforts, customer representatives can be trained to retain and satisfy customers over the phone. Front line customer services representative are also important, as they interact with customers frequently. Developing great training programs to help these front-line services staff, from managers to reservation clerks, to serve the customers effectively while to build a higher quality image for the company.
One of the greatest known companies for customer services is Nordstrom??™s. Customers prefer to shop at Nordstrom??™s because its culture and excellent services. Unlike other department stores, each customer of Nordstrom is very unique. Nordstrom??™s CRM system is very sophisticate to provide customers with pleasure shopping experience. Employees are very friendly and motivated in assist customers. Nordstrom??™s sales associates will do almost everything they can to make sure a shopper leaves the store happy. The company??™s long-lasting philosophy is to ???use your best judgment in all situations???. With humble attitude comes from the Nordstrom founding members, the company??™s culture has been a pleasant working environment and shopping experience for all. Nordstrom is known for its excellent customer service. By introducing new web site, together with 24-hour customer service hotline, Nordstrom??™s always commit to customer service 100%. This is not company strategy for success, but rather ???a way of life??? (Beasty, 2005).
Restructuring the Classic Reward Program can be measurable and attainable by offering frequent flyers more options to collect and redeem points for other goods and services. By entering market alliance with Asiana Airlines and European Airlines, Classic Airlines can improve its profit in their frequent flyers program. Customers prefer more flexible and choices in select their flights and time of travel. The newly frequent flyer program will need to accomplish all customers??™ demand. Together with other incentives, such as online shopping and repeated travel in hubs, there are bonus points that can be earned more easily. Free upgrade and convenient priority checking may entice new members to sign up and become loyal to the airlines. To benchmark this program, Citibank is very successful in its Thank You Network. Any Citibank customers receive points by opening and using Citibank??™s checking and solving needs. Thank You Network accumulates points which then later used to redeem for different products and services. By having agreement with many airlines and retail stores, Citibank can deliver what the consumers??™ want at the different level of achievement (Thank you Network, 2010). The program is always free of charge for new customers. By performing any shopping and spending money, using ATM machines or credit cards, the program will accumulate points which many satisfied customers can redeem for gifts. By giving points for any purchases to customers, the banks helps to retain customers while they can leverage the customers??™ deposits for other lending purposes.
Through benchmarking of these two companies, the following solutions have been identified for the Classic Airlines.
(a) Forming alliance agreement with other airlines
(b) Implementing the CRM program
(c) Restructuring the Frequent Flyer program with more options
After Classic Airlines has assessed and analyzed its market structure and industry competitiveness, Classic Airlines has to complete the risk assessment, consequences and mitigation for the alternative solution. For the CRM tool, there are some risk such as system failures, data loss, and identify theft violation. The company should backup and run diagnostic to prevent these unfortunate events happened. Internal audits and system control tools can be used to minimize the loss, while other backup devices in place in case of system malfunction. For the restructuring of new frequent flyer program, loss of memberships can be foreseen and the company should implement all necessary changes to reflect new program. Making programs with more options and choices will eliminate some issues. Classic Airlines needs to gather and analyze feedback from members to make the program better. By comparing this program with other airlines??™ program, Classic Airlines can gain competitive advantages by making the achieved goal fasters for most members.
After taking the risk assessment, the company should make a decision to implement the recommend solution to meet the end state goal. The optimal solution for Classic Airlines will be a combination for all three recommendations. Without any of the three recommendations, the end goal objective cannot be met. The company needs to improve its uses of CRM program and revamp its frequent flyers program. By joining alliance with other airlines partners will help to improve the company??™s service and image. With improving customer service, the airline will be able to increase its profit. Getting new members and retaining loyalty customers will build the company image and reputation to select the airlines among others.