Abstract
In today’s competitive landscape, an organization must employ all possible means within reach to maximize growth and profitability by focusing on strategic marketing. Classic Airlines has the opportunity and resources to alter the landscape of the airline industry in its favor. In order to succeed, Classic Airlines must correctly forecast market potential and future demand, by establishing both short- and long-term marketing objectives.
Classic Airlines
Classic Airlines faces an organizational issue requiring urgent solution. The current internal and external marketing programs have not been able to satisfy the needs and wants of the stakeholders. Classic Airlines customers have resorted to services offered by other airlines to satisfy their needs and wants. According to (), marketing plan of a firm serves the purpose of helping the firm connect with customers. Therefore, Classic Airlines plans to develop an effective plan of action that will not only attract and retain customers, but also boost sales revenue and profits.
The Situation
Issue and Opportunity Identification
Classic Airlines is the fifth largest airline carrier, with 375 airplanes that serve 240 cities with more than 2,300 flights. With an employee base of more than 2,300 people, the company has been in operation for 25 year. The company faces several challenges because of rising costs and lack of innovation. Current customers are not satisfied with the services they receive and management cannot agree on how to handle the issues. One of the managers at Classic Airlines says, “Our challenge is going to be rising above our competition without discounting airfare” (Case Study, 2008). The company must figure devise strategies to overcome the challenges.
Challenges Identification
In order to forge a future, the company must address the challenges faced by the company. To start with, the company is experiencing decline in stock prices. Employee morale is low because of lack of unity and finger pointing. According to the case study, the company’s loyal customers were moving to other airlines, while the remaining customers seemed to fly less (Case Study, 2008). The firm’s senior vice president of customer service explains, “Customers have no voice”, which is a major challenge to the company. In addition, Classic Airlines and its competitors expanded their operations so quickly (Case Study, 2008). The case study mentions that the CFO and CFO focus more on number and less on marketing. The number of people joining classic rewards has dropped by 20 percent and the average number of flights per member has dropped by more than 20 percent. Recently, the company implemented a compulsory cost reduction of 15 percent over the next 18 months, which also presents a major challenge to all departments. Changes in the marketing environment present organization with opportunities and challenges to manage. According to (), continuous collection of information on the external environment helps an organization identify and interpret emerging trends. Classic Airlines must conduct environmental scanning in order to help the company progress.
Stakeholder Perspective/Ethical Dilemmas
The future of Classic Airlines does not look bright because of lack of unity among employees, customers are not satisfied, and completion is increasing rapidly (Case Study, 2008). In order to get back on track, Classic Airlines must consider making crucial strategic decisions. Classic Airlines plans to enhance service quality without discounting airfare, which means that service marketing, will play a significant role in their success.
Framing the “Right” Problem
Classic Airlines must consider all possible alternatives to maximize growth and profitability in the increasingly competitive environment. As observed by (), “competitors tend to keep their prices lower” (p.465). The firm must devise mechanisms to forecast future demand and market potential in order to develop accurate marketing objectives that effectively address the challenges.
The major cause of low customer morale from the case is finger pointing and lack of unity. In response to this, the company must implement internal marketing strategies to enhance employee performance. According to (Kerin et al., 2006) internal marketing builds on the premise that service organizations must focus on their employees, devising successful programs directed at customers. This requires an understanding of the four tenets to services: inconsistency, intangibility, inseparability, and inventory. These elements are referred to as four I’s. Inconsistency refers to developing promotion, pricing, and delivery services, because of the unpredictable nature of quality of services (Kerin et al., 2006). Marketers must try to make services tangible to help consumers assess and compare them. Consumers find it hard to separate services from the deliverer. Lastly, inventory proves important because offerings are perishable and inventory handling cost money (Kerin et al., 2006). The company can stay ahead of competition by understanding the four I’s framework.
The four P’s comes in handy when considering marketing mix for services. Marketing mix, which comprise of product, price, place, and promotional strategies helps organizations achieve marketing objectives in the target market. An organization can adjust these components in response to market conditions to achieve organizational goals (Kerin et al., 2006). In line with this, Classic Airlines should improve quality of their products, offer competitive prices, invest more on promotional activities, improve CRM system, and implement innovative marketing strategies. These strategies would come in handy to the company’s development of a marketing mix to support customer relationship initiatives.
The “End-State” Vision
Classic Airline’s ideal end-state is to become the leading airline provider. For this to happen, the company must use the information gathered by the CRM system in order to accomplish positive changes to the company. According to the case, a possible end-state goal for the company is forming a marketing alliance with Skyway to help in market aspect of the business. With the current issues, the company must secure a large target market and consider offering incentives to customers using their services. Forming cross-functional teams within the organization could help employees unite. Cross-functional teams comprise of personnel from different departments within an organization. In order to achieve profitability, efficiency, and profitability, the firm should implement new strategies.
Identifying the Alternatives and Benchmarking Validation
The primary purpose of any firm, including Classic Airline, is to meet the needs and aspirations of the target customers. A business will not exist without customers for a firm’s products and services. The company has experienced a decline in the number of customers, which has resulted into reduced the company’s revenue and profitability. A key success factor to Classic Airline will depend on its ability to link organizational goals and customer expectations. In order to gain a competitive edge, the company must link each phase of its strategic marketing with the goal of creating value and excellence for the customers.
Classic Airline needs to focus on coordinating all programs, functions, and processes to meet the goal of making customers the primary focus of all company’s efforts. This process begins with a company-wide commitment to make the needs of customers the number one priority of the organization. This will enhance the success of business and marketing strategies pursued by the firm.
Evaluation of the Alternatives
The success of Classic Airline depends on its ability to make significant investment in marketing to predict consumer behaviors. The company must evaluate all the challenges and risks associated with each alternative. When conducting the evaluation process, the company must put into consideration the main challenges hindering the company from becoming the leading airline provider. The company can improve their CRM system, join an alliance, train managers to become more effective leaders who focus on internal marketing, focus on their strategic management process, and utilize guerilla marketing strategies.
Identifying and Assessing Risks
The company need to forecast market potential and future demand, analyze consumer purchasing behavior and competitive landscape, and identify current and future customer needs. In conducting market forecast, the company must use marketing research as a medium for analysis. Market research helps in identification and definition of marketing problems and opportunities, and improving marketing actions (Kerinet al., 2006).
The ultimate objective of the company is to become the largest airline provider. A SWOT analysis conducted on the company identified several opportunities. In order to compete successfully in the market without discounting airfares, Classic Airlines must focus on innovation and creativity. Guerilla marketing is a strategy used by companies with limited resources. Classic Airlines should use guerilla marketing as it enables a firm to use limited resources efficiently and wisely (Levinson et al., 2008). An example would include using batter system to get some services. Alternatively, the company can also save radically if they continue to hedge effectively by purchasing additional fuel at sound prices. A manager states, “By locking in our fuel prices for the next year, we’ve been able to reduce our fuel costs by 12 percent” (Case Study, 2008).
The company must devise means of reconnecting with their customers by offering incentives for flying with Classic Airlines and more importantly, providing proof to customers that they understand their needs and wants. Meeting the needs and wants of customers can prove a daunting task. Segmenting the market according to needs and wants is also an opportunity. Market segmentation is the process of aggregating prospective customers in distinct groups that share common needs and respond similarly to marketing action (Kerin et al., 2006).
Another strategy for Classic Airlines is to update the current CRM system to enhance effective use of information produced from the system. The company is a service provider, which makes customer service very crucial, because quality customer service will result into satisfied customers who in turn pay for the value of the customer service. Successful companies have long-term customer relationship that provides a unique value that they alone can deliver to target market (Kerin et al., 2006).
A different opportunity is to form alliance with Skyway and a top Latin American airline. A manager at the company put it that “the plan is to take it to a code-sharing level and integrate all customer-facing elements and deliver a seamless program” (Case Study, 2008). The company has many opportunities to consider and must make customer the focus of each decision.
Another opportunity for the company would be to undertake horizontal diversification strategies or conglomeration strategies to boost sales. The alternatives mentioned above can help Classic Airlines achieve a competitive edge without discounting airfare, as expected by the CEO. The company can achieve the desired position by making strategic decisions.
Making the Decision
In order to come up with the optimum solution, Classic Airlines must understand their goals, end-of state vision, and the challenges they have experienced with product development. Consideration of these factors will help the company develop a solution to move forward and become the market leader. Currently, the company does not have a good relationship with its customers. The senior leadership of the company holds different thoughts on the strategic vision for the airline’s future. Some of the leaders do not believe in directing resources toward connecting with customers. Additionally, the investment made by Classic Airlines into CRM system was not sufficient and this has affected the ability of customer service department to work with customers (Case Study, 2008). The best solution for the company is to focus on their strategic marketing process.
The company should create a unified company-wide effort to develop marketing initiatives that link customer relationship to its overall organizational goals. The process will start by company-wide commitment to make consumer needs the company’s first priority. The company will then need to marketing and business strategies that enhance synergies. This will enable the company prosper by having organizational synergies and a united team working towards the same vision.
The ability of the firm to adapt to market trends is crucial for success. This will require Classic Airlines to invest in marketing research. The market dynamics is also a challenge that requires the company to have a large target market with high growth in order to succeed.
The company should also adopt top-down management and devise strategies to enhance engagement of internal stakeholders in decision-making process. Unity in the executive management would prove useful in ensuring confidence among all employees in order for the company to become successful and profitable.
Developing and Implementing the Solution
The success of any plan depends on correct implantation and requires effective communication between management and employees. The implementation process will not be successful without some obstacles. The main obstacles include changing behaviors and employees who resist organizational change. Some employees are more accustomed to traditional ways, that it sometimes becomes hard for them to accept behavioral change (Larson, 2007). Classic Airlines must focus on becoming the airline provider by investing in internal and external marketing to provide the best customer service available.
Evaluating the Results
One end-state vision after the implementation process is for employees to unite and work collectively. The end-state goal is for high job satisfaction level. A quarterly job appraisal and convenient suggestion box would help monitor the success of the program. The target would be for 100% of employees to show satisfaction with their job requirements and duties. This would help to retain existing employees and attract new employees to the company. Using suggestion box would help the company receive feedback that is more honest. Management can also try to contact employees for feedback.
Another end-state vision for the company is to develop a more effective CRM system regarding customer focus. The end-state goal is for employees to put customer’s interest at the forefront of their decision making process. A measurement suitable for this is for 80% of the company’s major operation departments to implement a customer-focused strategy.
The last end-state vision for the company is to have a competitive edge by offering the best frequent flier program. The end-state goal for Classic Airline would to be introducing a unique frequent-flier program that competitors cannot imitate. A metric for measuring this would be to ensure that 30% of reward options competitors are not imitate. This vision would give the company a strong competitive edge.
Conclusion
Previous research has proved that CRM has a direct impact on the overall performance of an organization. As such, organizations must focus on efficient identification and effective delivery of the wants of customers (Kotler, 1998, p. 57). Changing internal and external marketing plans could enable Classic Airlines enhance their capability in identifying and delivering what customers want. With a focus on customer retention and acquisition, Classic Airlines will be in a better position to develop an efficient marketing plan that will foster positive customer relationship, adapt to the changing needs of the industry, and develop programs and policies that will benefit the entire organization.
References:
Kerin, R., Hartley, S., Berkowitz, E, & Rudelius, W. (2006). Marketing (8th ed). NY: McGraw-Hill.
Kotler, P. (1998). Marketing management (7th ed.). New Delhi, India. Prentice-Hall.
Larson, J. (2007). Using conceptual learning maps and structured dialogue to facilitate change at a large health system. Organization Development Journal, 25 (3), 23-30.
Levinson, J., Meyerson, M., & Scarborough, M. (2008). Guerilla marketing. Canada: Entrepreneur Press.
