MARKETING

Classic Airlines Marketing Solution



Classic Airlines Marketing Solution

Problem Solution: Classic Airlines

The airline industry has reached a crossroads. The effects of the worldwide economic slump and the aftermath of September 11th attacks have severely impacted airline economics and viability. While the U.S. markets were most severely impacted? airlines worldwide are striving to both regain and improve profitability. In spite of that? the airline industry remains extremely competitive. Competitive pressures and increased lower-fare travel have combined to cause a long-term downward trend in passenger revenue. Classic Airlines? the world's fifth largest airline? with 25 years of profitable industry experience? is not immune to this pressure.

Many have focused on operational improvements to reduce costs? but the customer cannot be ignored. “Environmental scanning is the process of acquiring information to allow marketers to identify and interpret trends. There are five environmental forces businesses must monitor: social? economic? technological? competitive and regulatory. By identifying trends related to each of these forces businesses can develop and maintain successful marketing programs” (Kerin? Hartley? Berkowitz & Rudelius? 2005). Scanning the environment has proved that success in today's business environment requires a standardized process supported by timely? accurate data and analytical insight into customer and market requirements. Operational efficiency has become the top priority across an industry struggling to maintain profitability. Although the development of more cost-effective operations is an essential short-term tactic for airlines to pursue? competitive advantage in the long term will be based in large part on solid? differentiated customer relationships.

Describe the Situation

Issue and Opportunity Identification

Several of the issues relating to the existing state of Classic Airlines are shown in Table 1 of the Appendix. Classic Airlines faces several critical issues with its current operation. First there is the ineffectively implemented Customer Relationship Management tool (CRM). While the existing CRM system is powerful? in fact? one of the most substantial systems in the industry? it was deployed as an operations tool and not customer-centric. The failure to integrate the phone system and the web portal with the CRM tool has rendered Classic's customer service efforts useless. They are not taking full advantage of every customer touch point. As a result the data collected is both incomplete and inaccurate.

Further hindering Classic's ability to meet the customer's needs is the fact that they are the only airline without an alliance agreement. This is limiting the available flight options to customers. Resultantly? this limits the customer's ability to earn and redeem award miles. Another consequence realized is that the customer has to move away from Classic for more flight options. If the processes and systems were more customer-focused? Classic might see better results? across the board. Classic also has to deal with the rising cost of fuel and labor. These two inputs have limited Classic's ability to compete for the values frequent flier. It can not compete on price due narrowing margins brought on by price-cuts that were supposed to help classic gain market share.

Issue and Opportunity Identification

Classic Airlines has grown and become a successful company in the ...