Classic airlines and marketing - Essay Example

ic Airlines and Marketing Paper of Phoenix Connie Johnson April 30, The Airline industry has changed a lot in the past decade.The cost of doing business in this industry went up after 9/11 as security and insurance cost increased. The biggest cost driver in the airline industry is fuel. The current price of crude oil is $112.77 a barrel (Oil-net, 2011). Classic Airlines is facing problems as the firm has not been effective at retaining customers. In the last year the firm has lost 20% of the member of its customer loyalty program.

The firm has lost approximately 160,000 recurrent clients. Another issue is that the remaining members of the loyalty program have reduced their travel consumption by 20%. The firm attempted to gain market share by lowering their prices, but the strategy backfired and started a price war. Classic Airline cannot afford to lower their prices any more. The firm currently seeks a 15% cost reduction across the board. The effect of this strategy is that the marketing budget would be reduced by 15%.

The price variable for Classic Airline is currently a constraint. The company needs to lure back customers without offering a price reduction. The organization has internal problems within its executive management team. There is a lack of respect for the importance marketing has towards the success of the company. The CEO of the company views marketing as a soft discipline. The other executives feel that money spend on marketing could be spent on better uses such as investing in the fuel hedging program.

The chief marketing offer has the tough task of getting the cooperation of the other executives. Teamwork is a critical success factor in the 21st century. The company has an excellent CRM system, but the firm is currently not using the system for marketing purposes. A marketing module for the CRM system is needed. Since the implementation of the CRM the company has depended on the system too much and as a consequence the firm has lost touch with the customer. Classic was relying too much on artificial intelligence to serve the customer than human customer service representatives.

Due to this strategy the company was not collecting adequate data to evaluate the customer’s needs. The organizational culture of the company is another area of concerns that negatively impacts the marketing department. The CEO is a stubborn person that believes her company can serve the needs of the customer better than the competition. Sometimes in the business industry companies have to cooperate with each other to better serve the goals of both enterprises. The company has been presented with a marketing alliance opportunity, but due to the resistance to change in the company Boyle is afraid of presenting the idea to top management.

There is a lack of synergy among the managerial staff of the company. Classic Airlines is at a point in its life cycle when the firm has matured in an oligopoly market structure. The actions of one competitor in this market structure affect the other competitors. When the company went down in prices the competition follow followed suit and the profitability of all players was damaged. One of the most important aspects of marketing is providing customers with value (Kotler & Keller, 2006). Classic has to find a way to improve the value of their product offering.

The firm needs a better customer service strategic approach. During flights the flight attendants must attend the needs of the customers better. The firm can train its employees better so that they are more prepared to serve the customers. The company needs to hire an IT specialist to incorporate marketing applications into the CRM system. While the specialist works on that project the company must start retrieved raw data from the CRM to perform marketing analysis. In order to improve the image of the company the firm should redesign its corporate website to make the site more interactive.

The addition of a customer service forum and a live chat mechanism are two communication tools that could help the firm improve its relations with its customer base. Classic Airline has to start the process of changing its corporate culture so that the focus of all employees is to serve the needs of its customers. References Kotler, P., Keller, L. (2006). Developing Marketing Strategies and Plans (12th ed.). Prentice Hall. Oil-prices.net (2011). Crude Oil and Commodity Prices. Retrieved April 28, 2011 from http://www.oil-price.net/