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Mkt 571 Week 6 Final Classic Airlines Marketing Solution

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Mkt 571 Week 6 Final Classic Airlines Marketing Solution
MKT/571
Classic Airlines Marketing Solution
Classic Airlines
Classic Airlines (CA) is the 5th largest airline enterprise in the world that
is comprised of more than 375 jets that travel to 240 cities and run in
excess of 2,300 flights daily (University of Phoenix, 2012). 25 years
following its inception, CA has grown to employ 32,000 people. Last
year, CA earned over $10 million profit on $8.7 billion in sales (University
of Phoenix, 2012). However, CA has been noticing some negative
changes recently. In the last year, the Classic Rewards Program saw a
19% decline in the number of members and the existing members
purchased 21% less flights (University of Phoenix, 2012). Increased
expenses, the most important of which are fuel and labor, have had a
negative impact on the corporation and employee morale is at an all time
low due to increased scrutiny on the airline industries from all sectors of
the economy, not simply the airline industry. According to the American
Marketing Association Board of Directors (2012), “Marketing is the
activity, set of institutions, and processes for creating, communicating,
and exchanging offerings that have value for customers, clients, partners
and society at large (Definition of Marketing, para. 2). Economic
conditions have amplified CA’s financial strain. CA can not afford to
decrease the ticket prices past the current price or they will face
bankruptcy. This is unfortunate because the problem is not the price of
the ticket. People would pay more money from a CA ticket than is
currently charged under different circumstances. However, current
circumstances dictate that the value of the ticket is not worth more.
Value is more important to the consumer than price. Due to the fact that
customer satisfaction is relatively non-existent, CA has no choice but to
charge the current price. To add to the stress, CA’s Board of Directors
has mandated a 15% across-the-board cost reduction over the next 18
months due to expenditure miscalculations (University of Phoenix,
2012). CA is dealing with a great deal of financial pressure. The 10%
decrease in stock value over the past year along with the decrease in
number of flights has raised questions as to the viability of CA
(University of Phoenix, 2012).

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The stakeholders in a business are all invested to some degree. The
Shareholders have no control over business decisions, but maintain the
power to elect members. The Shareholder is only concerned with the
return on investment. The Board of Directors makes decisions on capital
expenditures and hand down directives to senior management. Thus,
the Board of Directors is responsible for the highly unfavorable and
restrictive 15% reduction in operating costs. CA’s corporate identity is
diverse and irresolute regarding the marketing problems it faces. Senior
management is Amanda Miller, the Chief Executive Officer (CEO) and
Catherine Simpson the Chief Finance Officer (CFO) do not support a
finalized marketing approach. The success of CA is dependent upon the
resolution of Kevin Boyle, the Chief Marketing Officer (CMO). He is
dedicated to the success of CA and adamantly substantiates the
consequences of a strong Marketing strategy on productivity and
profitability. The CMO is responsible for cultivating a persuasive
business case that validates a lucrative marketing strategy. Due to the
fact that a successful marketing strategy is vital to saving CA, it is
unfortunate that CA’s CEO and CFO are not as progressive as the CMO
and are failing to consider the profitability of marketing and the
importance of consumer satisfaction. Senior management is responsible
for the daily operating procedures of the CA. The following document will
analyze CA’s marketing problems via the comprehensive 9 step
problem-solving model (University of Phoenix, 2012). Thus, CA’s
problems will be identified, analyzed, the preeminent solution will be
selected. The Employees are seeking job security and stability. It is
imperative that employees are listened to by senior management and
that their concerns are met. It is imperative that they comply with all
employees’ labor contracts.
The following paper will identify and define a Marketing Solution using
the 9 step problem-solving model, derived from the University of Phoenix
website (2012). Step 1) Identify the problem, Step 2) Define the problem,
Step 3) Illustrate the end-state-goals, Step 4) Identify alternative
solutions and benchmarking validations, Step 5) Evaluate and select an
alternative, Step 6) Assess the risk, Step 7) Select the best solution,
Step 8) Apply the best solution, Step 9) End state goals and determine
the success of the solution. After the application of the 9 step problem-
solving model, a lucrative marketing solution will have been selected,
defined, and evaluated.

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CA is confronted with pressing issues that must be addressed. CA faces
several critical issues within current operations, customer confidence is
in decline, CA is the only commercial airline lacking an alliance
agreement, the Classic’s Rewards Program is rapidly losing members,
and fewer flights are being purchased every year. CA can not afford to
decrease ticket prices any further. First of all, the Classic Rewards
program requires strategic improvements to attract frequent fliers. Over
the last year the CA’s frequent flier association has suffered the loss of
around 20% of its members (University of Phoenix, 2012). CA’s Board of
Directors has a mixed culture with opposing ideology regarding
marketing strategy and profitability. Some of the members support
marketing and customer service and CA’s CEO and CFO have not
considered the importance of the role of marketing and customer service
departments to CA’s profitability. Instead, CEO and CFO have solely
focused on rapid sales growth through operational cost reduction
strategies. Inefficient administration of the Customer Relationship
Management (CRM) system has resulted in a disconnection between
management and the consumer. Part of CA’s problem can be tracked to
the businesses undercapitalized Customer Relationship Management
(CRM) system. CA’s CRM system is more powerful than that of any
other airline in the market. However, it is not being used efficiently.
Instead it is successfully preventing the collection and analysis of
valuable customer data. Dwindling customer satisfaction is a result of a
plethora of factors, many of which can be modified with negligible effort.
Surveys are not extremely difficult. However, they can offer a great deal
of information. Due to the misappropriation of the CRM and an
assortment of customer service factors customers are neglected and
dissatisfied. CA has the opportunity to understand the needs and wants
of the customers and reaches a high quality of customer service. If
utilized effectively, the CRM can result in gains for CA. Being able to
understand or speculate the demand of the customer can be
exceedingly valuable. However, without the CRM, consumer confidence
would definitely continue to deplete substantially and customers will
travel with another airline. Employee morale is at an all time low and CA
is facing union threats. The company has no incentives to satisfy the
customer’s or work force.
CA’s objective is to implement a lucrative solution that will revitalize the
Classic Rewards Program, by offering exciting incentives and extended
frequent flier miles. One reason that frequent flier miles are a powerful

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