Case: Aerosphere Airlines
Scott Schneider is the Chief Marketing Officer for Aerosphere Airlines, a Flemish company that hires private jets. He worries about how to maintain a marketing edge against his main competitors, Dynasty Airlines, Shark Airlines, and Ultra Airlines. Aerosphere, Dynasty and Ultra have similar business models, reflecting a higher concern for service, and Shark positions itself more as a low-price, low-cost carrier. The four companies operate from airports in Belgium and offer flights within Europe. The total size of the market for flights in private jets in Belgium is estimated at 20.000 customers. Mainly companies who choose to hire a private jet, rather than ...view middle of the document...
For input to the software, Schneider assumed that each airline had a contribution margin of about 15% (his best guess, based on industry data). At the moment, a discount rate of 5% is a reasonable choice.
You are very strongly advised to use excel for the calculations!
Given that the average customer spends € 250.000 a year at Aerosphere
a. How much should Aerosphere spend to retain a customer, if otherwise the customer would leave the airline permanently?
b. What does this imply about policies with respect to complaint resolution? (no separate calculation is needed here)
a. Where is Aerosphere strong, relative to its competitors? Where is it weak?
b. Which drivers are the most important in the industry? Which are least important?
c. Based on the performance and importance parameters provided in exhibit 2, name three drivers that according to you are top candidates for improvement for Aerosphere’s management? Explain your answer. Please note that you do not have to take any costs into account for this part.
Calculate the switching matrix for the situation at hand. Needed information on the inertia coefficient and the company the customers chose the last time they hired a private jet are listed below in exhibit 3.
a. Determine the amount of customer equity for all four industries players for the given situation (assume a planning horizon of 1 year)