Classic Airlines Marketing Solution
Classic Airlines is one of the largest airlines in the world. Their routes include more than 240 cities and more than 2,300 flights a day. In 2004, they had a net operating income of $10 million dollars (Classic Airlines Scenario, 2011). Despite this achievement, Classic Airlines has been experiencing many challenges in operations that are threatening their profitability. These challenges include increased competition, higher overhead costs, decreased employee morale, dwindling stock prices, shrinking consumer confidence, market uncertainty, and customer dissatisfaction. Classic Airlines could use the nine-step problem-solving model to find the ...view middle of the document...
These are the situations that exist because of the problem or problems. Next, we must use these issues to define the problem.
Step two is framing the right problem. This step includes deciding if there is a definitive problem and whether it is worth solving. If so, we must create an open and flexible problem statement (Problem Solving-Based Scenarios, 2011). Let us first start by asking why.
Why is Classic Airlines experiencing a 10% decrease in share prices? Market uncertainty has been cited as a reason that the stock market has been on the decline (Classic Airlines Scenario, 2011). Negotiating and locking in fuel prices could be a solution. However, this issue has affected the airline industry and therefore is not likely an issue that could be solved by Classic Airlines alone.
Why are customers and employees dissatisfied? Employees have been affected by negative press and public disdain for the airline industry (Classic Airlines Scenario, 2011). Customer dissatisfaction was caused by rising ticket prices, stringent Classic Rewards policies, and poor customer service. Customers were defecting to airlines that offered lower ticket prices, better perks, or better customer service. There also has been lower demand for airline travel. They also think that there is little opportunity for growth within the company. Customer service representatives complain about the restrictions he or she has when interacting with customers. They also believe that the computer system is not adequate to handle call logs and customer tracking. The marketing employees did not believe that upper management valued their expertise.
Why are operating costs increasing? Prices for fuel and employee wages have been increasing. Classic Airlines may be able to negotiate lower fuel costs from vendors. They may also cut wages, but at what cost? Employees are already dissatisfied and customers are complaining about the quality of customer service he or she receives. Cutting employee wages may not be an effective solution. Lowering overhead costs may not be an issue Classic Airlines could tackle at this point. Figure 1 is a diagram we used to decipher which circumstances can be solved by Classic Airlines.
Figure 1 Problem-Solving Diagram
Based on Figure 1, we have employee and customer dissatisfaction at the forefront of Classic Airline’s concerns. The causes are poor customer service, lack of promotion opportunities for employees, lack of incentives for customers, and poor public perception. Classic Airlines’ problem is that they need a more effective marketing plan, a new Classic Rewards program, a competitive pricing plan, more customer service training and incentives, and employee development. These issues will be used in the next step to help provide a solution.
Step three helps us to evaluate a solution (Problem Solving-Based Scenarios, 2011). We must decide on a scenario that would occur if the aforementioned problems did not...