Classic Airlines is the world??™s fifth largest airline, Classic Airlines, commands a fleet of more than 375 jets that serve 240 cities with over 2,300 daily flights. In the 25 years since its inception, Classic has grown to an organization of 32,000 employees, and last year, it earned $10 million on $8.7 billion in sales (Classic Airlines Scenario, 2011).
The airline industry faces an unprecedented weakness in revenue and air travel because of the rising oil prices, falling consumer demand, especially after September 11, and the global recession. Though profitable, Classic Airlines is no stranger to the challenges that plague today???s airlines.
Few internal and external pressures are contributing to Classic Airline??™s crisis, by using the nine-step problem-solving model, Classic can address its problems, identify the objectives and obstacles of the marketing department, and the marketing resources available to resolve this crisis.
???Problems are opportunities to make things better and should be viewed as such??? (BPI Consulting, LLC). Classic must use the problem-solving model to solve its problem; this model is effective with most of the problems that may occur.
Step 1: Define the Problem.
Classic must define the problem as concretely and specifically as possible, some helpful tools in defining the problem are brainstorming, creating an initial process flow diagram of the current process, and control chart data. These tools can help identify how the current process works start to finish, and can dramatically help define the problem.
Classic has experienced decline; 10% decrease in share prices in the past year because uncertainty about flying, weakness of consumer confidence, and negativity from Wall Street, the media, and the public affecting employee morale (W1 paper, 2011).
Classic??™s board of directors mandated a 15% across-the-board cost reduction over the next 18 months, the leadership team must reduce the marketing budget, if Classic cannot meet the reduction; the company faces bankruptcy (Classic Airlines, 2011).
Membership in Classic customer loyalty program is down nearly 20%, which means more than 160,000 customers are flying with another carrier. The average number of flights per member is down more than 20% (W1 paper, 2011). After defining the problems Classic can move to the next step
Step 2: Measure the Problem.
Measuring of the present level of performance through collecting data, so future gains can be measured, measurable evidence that the problem exists is required too. Data collected from customer surveys shows that 15% of customers are not satisfied with Classic customer service, 56% of customers are not satisfied with the reward redemption options available through Classic Rewards, 68% of customers will not recommend the Classic Rewards program to a friend or colleague, 46% of customers switched to classic competitors (Classic Airlines, 2011). Other measurements of the problems are 15% across-the-board cost reduction, and 10% decrease in share prices affecting the morale of employees. After measuring the problems, Classic knows which areas to focus on.
Step 3: Set the Goal.
Goals are ???objectives that are specific with respect to magnitude and time??? (Kotler & Keller, 2006, P 54). Setting goals will give Classic vision and direction, and will help in making decision and knowing the right path, goals must be measurable so as employees can evaluate progress to goal.
Classic goals are increase profitability, improvement of market share, sales growth, customer loyalty, and employee morale. To measure profitability Classic can compare its profit to competitors??™ profit, Classic can also compare its market share to last year share.
Step 4: Determine Root Causes.
Classic needs to determine the root cause of their problems, to determine what is working and what is not, the present process must be examined. To increase profit, increase customer satisfaction and gain loyal customers, Classic must make major changes, and correct the management behavior; management team must focus more on marketing strategies and customer satisfaction and stop worrying about cutting cost.
Classic could reduce the fuel costs by 12% through implementing the Fuel-hedging program (locking in the fuel prices). Continuing to contribute to it will enable Classic to reach the 15% cost reduction (Classic Airlines, 2011).
Classic must make quick changes to the frequent flyer miles because it has so many restrictions that driving customers away in addition, competitors are offering lower prices and frequent flier miles redeemable anywhere. However, if Classics could not match their program to the competitors, Classic will lose its customers, which will lower profit and employees morale.
Step 5: Select Best Strategy.
From the causes generated in Step 4, Classic should strategically plan solution strategies. Fishbone diagrams and benchmarking can be helpful; consensus on the best strategy to solve the problem must be reached. This strategy should have the highest likelihood of success (BPI Consulting, LLC).
Classic main problem is management behavior, Leadership team needs to come up with a new marketing plan focusing on customer satisfaction rather than profits so as to keep existing customers and attract new ones. If the customers are satisfied and happy employees will be happy too enjoying their job and not worrying about layoffs, and Classic will sure guarantee profits.
Removing some of the restrictions from the frequent flyers miles and providing discount prices to its members are good ways to attract customers, other ways Classic can implement are providing special offers to customers who came from competitors and to customers who give referrals.
Working with Skyway Airlines to create a marketing strategy and rewards program could give Classic more options to offer its customers, expand the market, and reduce cost.
Classic can offer employees discounted flights, bonuses, and enrollment in the frequent flyers miles to increase morale because if the employees are satisfied and happy, they would provide excellent customer service, which will attract more customers
Step 6: Implement Strategy.
???An Action Plan is developed by team. This includes who will do what by when to implement??? (BPI Consulting, LLC).
To implement the best strategy and to know what customers want from the reward program, Classic needs to perform surveys. Current customers, old customers and Skyway customers will be asked to give their opinions and suggestions, and changes to the program will begin and continue based on the data collected. Additionally, implement the strategies regarding employees as soon as possible to increase morale.
Step 7: Evaluate Results.
Classic will evaluate effectiveness of the solution. Reviewing the data collected to determine if the chosen strategy did solve the problem. Questions must be asked to evaluate results like ???What are the “customer” reactions (internal customer feedback) What has produced measurable results What hard data are available Do people perceive an improvement How have results matched customer needs??? (BPI Consulting, LLC)
Customer satisfaction and employee morale will be evaluated by performing surveys; Profits will be evaluated by comparing current financial records to last year??™s records to determine if the profits improved.
Step 8: Implement Appropriate Changes in the Process
An ongoing process to make sure that the benefits and gains will stay for a long time. Classic must make sure that the resolved problem is not going to arise again, by adopting a process that will keep the problem solved and implementing permanent changes. The new process must be examined frequently to maintain improvement.
Step 9: Continuous Improvement.
???This step is staying committed to continuous improvement in terms of this model – to remain actively alert to the ways the improved process can be made even better??? (BPI Consulting, LLC). To ensure effectiveness, customers, and employees should be urged to provide feedback and suggestions.
Classic will place suggestion boxes at different areas to encourage customers and employees to give their feedbacks and comments. In addition to that, Classic will send surveys to random customers monthly to measure the satisfaction level and to see what areas need more attention or improvements, furthermore customers will realize that Classic is committed to improving services, which will increase customers??™ loyalty and then profits.
Finally it is time for Classic to celebrate. ???People have achieved an important goal. They have earned this moment of recognition and closure??? (BPI Consulting, LLC). Employees have worked very hard to implement the new process so they deserve celebration and recognition for their efforts. This step is important to boost employee`s morale.
Classic Airlines has been affected by the economy slowdown as a result of September 11, and faced external and internal challenges, to stay competitive and profitable Classic followed the 9-step problem-solving model to identify and solve its problems.
Classic will focus more on customer satisfaction rather than the profits maximizing, Classic will implement a new reward program in partner with Skyway Airlines to expand the market will celebrate and recognize hard-working employees to keep the morale up, and perform surveys to improve services. As classic continues to implement and maintain the new process it will see significant success.
Classic Airlines Scenario, 2011. Retrieved on March 21, 2011 from https://portal.phoenix.edu/classroom/coursematerials/mkt_571/20110301/
Kotler & Keller. (2006). Marketing Management (12th ed.). New Jersey: Pearson-Prentice Hall. Retrieved on March 21, 2011 from
BPI Consulting, LLC. Problem Solving Model, Retrieved on March 21, 2011 from http://www.spcforexcel.com/problem-solving-model