Classic Airlines Dilemma
University of Phoenix
Classic Airlines has been in business for twenty five years and is the world??™s fifth largest airline. Classic Airline is facing some challenges in the decline of industry stock prices and share prices over the past year. Consumers??™ ambiguity about flying in addition to the recent public squabbles of Wall Street has contributed to these said declines. Moreover, employee morale is at an all time low. The once successful rewards program offered by Classic is diminishing in consumer support as rewards program members are down 19% and for the remaining rewards members there is a 21% decrease in their flight purchase. Some customers are no longer doing business with Classic Airlines and remaining customers seemed to be doing business a lot less frequently. Due to these issues at hand, Classic Airline have been forced to adopt a 15% cost reduction across the board for eighteen months. Nonetheless, Classic must find a way to increase membership within its rewards program.
The organizational culture appears to be one of division at the present moment. Employees are not motivated to perform at their best because of all the public scrutiny. Even among the management team there is obvious tension. The CEO and the CFO are consumed with the bottom line in regards to profits, sales, and cutting cost; whereas, amongst the other team players the customer, marketing, or employees are the main focus. Corporate culture can be defined as a way of living within an organization. Management styles (are the managers open or do they adhere to a traditional bureaucratic style), dress, shared experiences, atmosphere, norms all make up corporate culture (Kotler & Keller, 2006).
Classic must find a way to promote their rewards program. ???T he process of obtaining a desired product from someone by offering something in return??? is known as exchange ( Kotler & Keller, 2006, p.6). Furthermore, for exchange to be successful both parties must feel like the exchange will leave them better off. Once both parties agree to the exchange terms the transaction will take place. The following core concepts of consumers wants, needs and demands need to be taken into consideration to connect with consumers and gain new customers. The marketing team must find and incorporate the concept of value creation and value delivery in their framework. Value creation is when marketers identify the needs, wants, thoughts and what they worry about and based on these findings provide the customer with new benefits (Kotler & Keller, 2006). Another concept that appears to be lacking is value delivery. Customer relations are the center of this concept as well as business partnership management (Kotler & Keller, 2006). Customers look at value in several ways not just price. The CEO at Classic Airline is strongly against business alliances but a business partnership may strengthen the value of their rewards program and offer more benefits to the customer at little to no cost.
Direct Marketing may also be of benefit to Classic airline. This marketing technique utilizes the 80/20 rule where 80% of business comes from 20% of customers. Creative approaches such as free trials, sweepstakes, guarantee is all useful in grabbing the attention of consumers. (Marketing Profs, 2010).
In short, Classic Airlines is in the position where they need to increase customer loyalty in their rewards program while at the same time being sure to not increase spending. What can be even more difficult will be to change the company??™s current culture. The employees are the face of the company and are a very important piece in restoring customer satisfaction. The marketing team must strategize their marketing plan so that it directly connects to and impact shareholder value.
Kotler, P., & Keller, K.L. (2006). Marketing Management (12th ed.). New Jersey: Pearson Prentice Hall.
Marketing Profs. (2010). Direct marketing concepts. Retrieved July 4th, 2010 from,