Identifying Opportunities and Issues of Classic Airlines - Essay Example

ic airline and marketing solution One of the fifth largest airlines, ic Airlines is experiencing challenges due to larger service costs andfuel costs and issues related to service and marketing. Due to this there has been a steep decline in the consumer traffic. The marketing department of this airline has to develop and implement a strategic marketing plan so that this airline is able to meet up with competition and provide excellent service delivery. Current situation – identifying and opportunities and issues Currently, Classic Airlines, a 25 year old company is facing several issues related to lack of innovation and increased costs. The service delivered by this airline is poor and results in more dissatisfied customers. Moreover the management is not able to come to a consensus to resolve the problems. In order to overcome the hazards, this company needs to figure out strategies and plans. Identifying challenges The first step in order to resolve issues is to identify the challenges. One of the main problems faced by this airline is reduction in airline stocks. There is lack of unity among the employees and this has lead to low morale. One of the main problems is that the Chief Financial Officer and Chief Executive Officer of this airline focuses less on marketing and at the same time wants more consumers to use this airlines. Around 20% of the members have stopped using the Classic Reward Frequent Flyer Program. This program is one such programme which recognises the efforts of frequent flyers by allowing them to redeem free tickets on miles. However one of the alarming statistics is that the average number of flights per member has declined to more than 20%. This translates to the fact that Classic Airlines is slowing losing its loyal customers. One of the major challenges which is being faced by all departments is that this company is 15% reduction in costs over the next 18 months. Perspectives of stakeholders and ethical dilemmas The major problems which Classic Airlines is facing are dissatisfied customers, low moral and unity among workers and competition from rival airlines. In order to get this organization back to track urgent strategic decisions need to be formulated with special attention to efficiency, innovation, efficacy and customer service. Classic Airlines expects to provide better quality services at the same airfare and this means that the marketing department needs to extensively and aggressively market the product to attract more customers. Framing the problem Classic airlines must focus on all aspects to ensure that they have better growth and profitability. To achieve this, the organization must be able to forecast market potential and future demand. This can be attained by focusing on long – term marketing goals which can help to reduce challenges. Classic airline must employ internal marketing strategies so that the internal customers are satisfied and work together as a team. Internal marketing suggests that in order to be successful an organization must also emphasise on its internal customers or employees. Service organisations must ensure that the employees have the skill, attitude and commitment needed to meet up with growing customer demands and also sustain loyal customers. In internal marketing employee development is done through training, communication, recruitment, management, coaching and leadership. The company must understand the four elements of services; namely inconsistency, intangibility, inseparability and inventory. These are also known as the four I’s of the services. When discussing the marketing mix of the services the four P’s are important. In order to pursue major marketing goals in the target market, the marketing mix which consists of product, price, promotion and place must be used. The Classic Airlines should offer its customers, competitive prices, invest more on promoting products, improve the quality of the products, enhance the CRM system, and implement new and innovating marketing plans and strategies. The above mentioned strategies will help this airline to develop a marketing mix which will help in supporting customer relationship initiatives. The mission statement or goal of Classic Airlines The ideal goal of Classic Airlines will be to become one of the leading airline provider. This will be possible only when the information given by the Customer Relationship Management system is used to implement positive changes to the organization. Classic Airlines must establish mergers with potential airlines so that it can target more and more customers. The company must attract a large target market and this can be attained by offering incentives to fly with this airlines. In order to help unify the employees of Classic Airlines, cross – functional teams can be set up. Identifying the alternatives and benchmarking validation One of the primary goals of any organization is to provide optimum customer satisfaction. Classic airline has recently experienced a decline in the customers especially the one who frequently used this airline as a means of travel to different destinations. A key factor which will ensure organizational success is to link its corporate goals with customer initiatives. Classic Airlines can also join the Star Alliance group which will help in attracting more and more customers. The Star Alliance is an alliance of several airlines wherein a loyal customer of one airline can get lounge facilities and redeem frequent flier points to travel on member airlines. This will help to increase the frequent flier members of the airlines. Turkish Airlines does not have a reputation of excellent service delivery. However they do earn potential revenues as the fares are lower and their target market is student groups. Also joining the Star Alliance, this airline has witnessed an increase in customers. Evaluating alternatives The organizations must invest heavily on marketing strategies and promotions. Joining an alliance, upgrading current CRM system, train managers to be effective leaders and focussing on strategic marketing process and utilizing guerrilla marketing strategies can help this organization to gain optimum benefits. Identifying and assessing risks In order to develop a strategic marketing plan, Classic Airlines need to analyze competition, customer preferences and identify current and future market needs. This can be done by extensive marketing research wherein one may follow the below mentioned five steps: 1. defining the problem 2. develop the research plan 3. correct relevant information 4. develop findings 5. table marketing actions A SWOT analysis needs to be conducted which will identify the strengths, weaknesses, opportunities and threats and will help to formulate a marketing plan. Since Classic Airlines is currently experiencing a resource crunch due to high costs guerrilla marketing can help as it encourages an organization to use resources wisely and efficiently. Classic Airline can implement a barter system for various services. One way is to establish tie ups with airlines so that a code share is possible wherein a certain quota of the seats can be reserved for Classic Airlines on certain destinations and vice versa. (Fareena & Simpson, 2000). Classic Airline should also start purchasing additional fuel and keep it in the reserves as this fuel costs are consistently increasing. Another way to increase sales would be to develop conglomerative or horizontal strategies to enhance sales. Conglomerative diversification entails marketing new products which are unrelated to the existing product line. For example, Seagrams Corporation, a large distillery firm, purchased Universal Studios. Horizontal strategies entail adding new products that are not related to the firm’s existing products but designed to appeal to members of the firm’s target market. For example, Starbucks sells Paul McCartney’s CDs. (Tokhi, 2009). Making the decision Before deciding the optimum solution, Classic Airlines must understand their short term and long term goals and the challenges they face with the development of the product. The marketing plan of an organization serves to direct primary functions of a company including demand forecasting, supply chain management, finance strategy, customer service programs and sales initiatives. The company must coordinate all programs, processes and functions to meet the mission of making the customer as the primary focus of all company efforts. Classic airlines needs to adjust to different trends and changes happening in the market. It needs to engage internal stakeholders in the decision making process. The executive management must share the same goals and missions so that the middle management can control subordinates and junior executives in getting the goals attained. Developing and implementing the solution Planning, implementation and control are the three crucial phases of a strategic marketing process. The planning phase entails creation of product and market focussing, conducting a SWOT analysis and setting goals. After this, a market plan myst be developed after careful analysis, research and assessment of environmental, competitive, situational and market factors. After the marketing plan is developed the second phase of implementing the plan should be executed. This can be done by developing a marketing department, securing resources, establishing an action plan and schedule and putting the marketing program into action. The marketing goals must be clearly communicated, an action and task list should be developed with expected results and deadlines, and accordingly aligned and specific marketing strategies and tactics should be executed. The final stage which is the control stage entails evaluating progress and monitoring results of specific marketing programs. One of the critical functions in this stage is to identify any critical variances from original plan and enact contingency plans to keep the programs in line with organizational goals. Classic Airlines is most likely to face hurdles during the implementation stage which may cause delay in partnering process. Two main problems will be to tackle employees’ resistance to change and changing behaviour. Evaluating the results Classic airlines must see to it that their end visions are met. They are the following: a) Unity among the employees b) Meeting financial objectives. The company should spend less and have more resources for other projects. c) Develop and implement effective CRM system which should be customer centric. d) Offer the best frequent flyer program and have a competitive advantage. To conclude, Classic Airlines must develop an overall marketing strategy which has the final four aims in mind. The marketing strategy should focus on every aspect of development including internal and external customer satisfaction. Moreover the management should whole heartedly support and finance marketing promotion tactics which can help in achieving the final goal of becoming one of the premier airlines of the world. Materials and resources, advertisements and other promotion activities should be planned and implemented. Advance purchase fares and other techniques of market promotions like special holiday packages wherein partnering with associated services like hotels to provide a flight and hotel package to customers will also help. Also Classic airlines should encourage more and more passengers to purchase air tickets online. This will help the airline to gain entire revenue of the ticket price instead of parting some part to a travel agent. Fare promotions, special deals and discounts should be announced from time to time. Apart from this, the in – flight services should be excellent. The airline can also start a lottery to passengers on board a flight. Upon winning, the passenger can get heavy discount on the next flight purchased on Classic Airlines. Apart from this, marketing strategies can entail giving customers’ additional discount if they book the onward and the return leg of the destination on the same airlines. This is however applicable for only domestic destinations. All these strategies will help in uplifting the revenues and enhance profitability of Classic Airlines. References: Tokhi, Milaly, 2009, A case study on Classic Airlines: Practical marketing solutions, Journal of Business Studies Quarterly, vol.1, no.1, pp. 16 – 25 Sultan, Fareena & Simpson, Merlin, C. Jr., 2000, International service variants: airline passenger expectations and perceptions of service quality, Journal of Services Marketing, vol. 14, no. 3, pp. 188 – 216. Read More