Classic Airlines Overview

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Describe the Situation

Classic Airlines (Classic) is known as the fifth largest airline in the world. They command a fleet of more than 375 jets that serve 240 cities. They are composed of 32,000 employees and earned $10 million on $8.7 billion in sales last year. Though profitable, they have been facing some challenges recently. In the past year, they experienced a 10 percent decrease in share prices. They are also having trouble keeping consumer confidence and loyalty. Their rewards program in the last year shows a declination of 19 percent in the number of classic rewards members and a 21 percent decrease in remaining members. They have been unable to compete for the valued frequent flier due to rising costs, particularly of fuel and labor. Recently, their Board of Directors (BOD) mandated a 15 percent across-the-board cost reduction over the next 18 months. Classic must now find a way to beef up its frequent flier program in a way that will yield a good return on investment, while meeting the cost reduction requirements. Classic faces a chance of bankruptcy if they are unable to meet the reduction.

Issues

Employee morale at Classic is at the lowest it has ever been due to the negativity from Wall Street and the public.

Share prices decreased by 10 percent in the past year

Classic is losing alleged loyal customers to their competition

The Classic rewards program measured a 19 percent decrease in Classic rewards members and 21 percent decrease in flights per remaining members.

Rising costs, particularly those of fuel and labor, are limiting Classic’s ability to compete for the valued frequent flier

Classic’s BOD recently mandated a 15 percent across-the-board cost reduction for the next 18 months.

Classic is having problems meeting customer needs and they are not leveraging customer feedback.

Classic’s CRM system is not catering to customer needs like it should, but rather, focused on helping the company reduce costs. The CRM system also does not integrate the phone channel with the web channel. The segmentation strategy is also outdated.

Classic’s CEO and CFO do not believe in strategic marketing as the solution to their current problems.

Classic’s CEO and CFO have created their own personal alliance and are not being cooperative or open to other ideas. They also have personal issues with Kevin Boyle and do not believe he can help the company reach its goals.

Most of the senior management is only concerned about what not to do when it comes to marketing. None of them puts a focus on how to assist Kevin Boyle in meeting the company goal. Ben Sutcliffe is only concerned with his relationship with the union, while Amanda Miller is only concerned with the amount of money spent and public image.

Opportunities

Classic has the opportunity to understand the needs and wants of their customers and provide for those needs. This can be done by understanding specific marketing concepts that apply to their situation, using exchanges to satisfy needs, and understanding the diverse factors that might influence their marketing activities. “The solution to preventing such product failures seems embarrassingly obvious. First, find out what consumers need and want. Second, produce what they need and want, and don't produce what they don't need and want” (Kerin et al, 2006).

Classic has the opportunity to create and increase a loyal customer base

Classic has the opportunity to remain at the forefront of their global competition,