This paper will use a problem solving model to solve Classic Airline’s marketing problem. The company is suffering within the airline industry due to several factors, a couple being the massive increase of costs for fuel and labor. The resolution in conquering the airlines dilemma will be addressed in a comprehensive nine-step problem solving model. This model will include Defining the Problem, Gathering Facts, Feelings, and Opinion, Identifying the Real Problem, Generate Possible Solutions, Generate Possible Solutions, Evaluate Alternatives, Select Best Alternatives, Gain Approval and Support, Implement Decision and Evaluate Results.
The factors of this difficulty in the marketing of this company will be identified, analyzed, followed by a robust decision on the strategy to resolve Classic Airlines’ crisis. Step One: The Problem There has been a reduction in employee morale (which is at an all time low), the increase in fuel and labor has contributed to the increase in expenses these factors have the airline in a tailspin within the industry. This is not all due to marketing the company can not be held accountable for the price of fuel nor can it take responsibility for the scrutiny on the airlines from the sectors of the economy outside of the airline industry.
According to the American Marketing Association Board of Directors (2012), Marketing research is the function that links the consumer, customer, and public to the marketer through information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process (Definition of Marketing Research, sec. 2).
The research in marketing is vital to Classic Airline’s ability to correct most of its problems it will not only bring loyal customers back but provide other opportunities for the airline to further stabilize itself within the airline industry. The key to the research required for the airline is to be as in depth as possible with the opinion of the public, it will also require the company to find the most cost effective resources for fuel and labor. The research shows that economic conditions have contributed to a reduction of ticket purchases however it is not the price of the ticket that has caused the decline.
Step Two: Gathering the Facts, Feelings and Opinions The position in the airline industry of Classic Airlines is that it is the 5th largest airline in the world. The leader with the airlines comprises more than 375 jets that travel to 240 cities and run in excess of 2,300 flights a day (University of Phoenix, 2012). The company employs about 32,000 professionals to maintain its massive operation. This industry colossal earned over $10 million in profit on $8. 7 billion in ticket sales. In spite of the leader position in the business Classic Airlines is experiencing some negative changes recently.
In the last year, the Classic Reward Program saw a 19% decline in the number of members and the current members purchased 21% less flights (University of Phoenix, 2012). The feelings of the employees are based on the public’s opinion of the airline industry which has caused them to have doubts about their line of work and the stability of the business. The Labor Union is the focal point in gathering the feelings of the employees, which are the airline greatest assets. Classic Airlines can increase moral by addressing the employees’ labor contracts to show their staff that they are appreciated.
During the Shareholders meeting the company officials can hear the opinions of the group of people that do not control the everyday operation of the company but provide vital capital to the airline. In many ways the opinion of the Shareholders are a direct reflection of the publics’ view of the industry and the company. Shareholders are the owners of a business and are the ultimate decision-makers on the direction of a company. While the management of a company has the day-to-day decision-making power, shareholders guide the strategy, financing and selection of management of the firm.
In many cases, shareholders are the management of the firm (Azcentral. com 2013). The opinion of the upper management via the CEO, Amanda Miller, and CFO, Catherine Simpson, are strictly addressing the problem through looking at the numbers and trying to make adjustments accordingly. This is of the opposite opinion on the CMO, Kevin Boyle, who feels that marketing will regain the trust of the general public, the employees and the shareholders to increase confidence in the airline. The conflict for Classic Airlines lies in whether or not the vastly different opinions on how to provide a olution to the company can be merged or selectively decided upon. Step Three: Identify the Real Problem The facts have been gathered and it has previously been stated that the confidence in the industry has not been the same across the board. This is due to events that have nothing to do directly with the 5th largest airline in the world, Classic Airlines, or any other company in the business. The other side effect of the catastrophe of September 11th caused the economy to shift in a downward motion which triggered prices to rise.
The effects of the economy and the disaster have caused a serious predicament in the increase in expenses for materials, fuel, labor, costs of goods and services, and labor which also reduced customer confidence. The Classic Rewards Program is suffering losses every year and the frequent flier association has suffered a loss of around 20% of its members (University of Phoenix, 2012). The feelings of the employees are likewise a reflection of the lack of confidence the general public feels towards the industry and Classic Airlines is not developing confidence by refusing to address its labor issues to stabilize their employees.
The Shareholders are also not confident in the company not because it was not preserving its market share or position in the industry however the external factors caused them to be a bit more cautious in investing their money. The final real problem is the polarization in upper management which has to be resolved immediately to not only reflect a positive direction for shareholders but that will result in a solution that sets Classic Airlines apart from its competition.
Another real problem for example, is the data system the company uses which is the Customer Relationship Management system (CRM) that has not been utilized properly and in doing so has allowed the company to not actualize what is causing their customer’s dissatisfaction. In correlation to the opinion of the CMO, Kevin Boyle, in addressing the needs of the customer could provide profitability and the ability to give their customers what they are lacking. The upper management should not look at this time as a number crunching session nor should it drift away in contentment.
Conversely Classic Airline should take this opportunity to explore new ideas and options that will solidify the fact that they are one of the industry leaders for a reason. If all these real problems are address correctly the company will maintain or even increase its place in the airline industry. Step Four: Generate Possible Solutions There are several possibilities that will affect the profitability of the airline. They can merge with another airline or downsize the company by separating the domestic and international businesses with the possibility of selling off the lower producing divisions.
Sell the less used planes and equipment to generate immediate income for the company to use in other areas. The shareholders can deem the Upper Management as underachieving and begin to replace them with what they would consider more qualified candidates, in hopes of getting into the correct position within the airline industry. Classic Airlines can concentrate its focus on the employees and customers to increase their confidence. The company could look at the financial picture of the company and make adjustments to make the streamline the firm.
Selling off the plane and equipment may be risky because of the lack of customer confidence. Classic could also look to expand globally to gain a larger market share in the foreign market. The shareholder removing the Upper Management would be too time consuming and too much of a chance if in fact the replacement can not improve the missteps of the original managers. Concentrating on the employees and costumers may be the cornerstone of success for the company because the employees are already familiar with their duties and the customers were loyal in the past.
This simply means that the pieces are already in place to stabilize the company but the strategies must be implemented. Step Five: Evaluate Alternatives Downsizing is almost like throwing in the towel for the 5th largest airline in the world and it probably would not be cost effective with the climate in the airline industry. Merging with another company within reason may help to increase the overall scope of the company if the opportunity to maintain market share was present.
The company could streamline its resources and utilize every tool that is accessible to them in order to run a more efficient organization. Global expansion could bring in more revenue with a slight transference in the amount of flights from low producing locations. Step Six: Best Alternatives The solution to this vast problem within Classic Airlines starts with Upper Management. The management team needs to get on the same page, committed to gearing the company in a positive direction and being open minded then good things will follow for the company.
The first problem to be addressed begins with the most valuable asset of any company, the employees. The CEO and CFO need to hold a meeting with the CMO to get an idea of why the employee moral is so low and what issues they have with the Labor Union. In doing so, they can form a strategy to allow the opinions of the employees to be heard but having themselves prepared to meet their employees’ demands and needs within reason. The next step in providing a possible solution is to gather as much data on the customers as possible to get them back to flying with Classic.
The Customer Relationship Management system (CRM) needs to have a direct Administrator that is specifically in charge of gathering data about the customers. This information plays a major role in exploring the customer’s needs and wants. The administrator will provide the information to Upper Management so they will be informed of why they are loosing business yearly. Once the information is collected and documented management can strategize on meeting the customer’s needs.
The airline may have to give away a few trips, coupons, provide better seating or more beer on longer flights, nonetheless if the company provides what the customer demands it will surely gain the business that it has lost and probably more than anticipated. Classic Airlines would not exist without its customers or its employees, therefore these problems should be address immediately. According to new research from the University of Missouri (MU), CEOs who pay attention to employees’ job satisfaction are able to boost both customer satisfaction and increase the number of customers who intend to do repeat business with the company (www. usinessnewsdaily. com 2013). The next problem can be solved by executing the previous solutions which will gain confidence in the marketplace and peak the interest of potential investors to start looking into Classic Airlines once again.
Upper Management needs to hold a Shareholders meeting to address the changes that were identified in the two previous solutions and what that has provided for the company’s revenue potential. Hold the meeting will show the investors that they are up for the task as Upper Management and provide the investors with the confidence that hey desperately needed in the airline. The CMO, Keith Boyle has a former colleague, Osef Wymann, Marketing Executive of Skyway Airlines in Switzerland that can expand the business globally (University of Phoenix 2012). This opportunity can increase the European scope of the company and allow for growth in that arena. Implementing these solutions could increase the total profitability of Classic Airlines and curtail the financial difficulties that the company is currently confronting. Step Seven: Gain Approval and Support
The solutions provided in the previous section would be presented to Upper Management, Employees and Shareholders alike. The company as a whole would be an open book and all opinions are addressed and heard throughout the process. It is the job of Upper Management to research and know the concerns of all contributors to the operation of the company. In any given situation everyone will not agree, however if the collect issues are addressed and met then the ideals, goals and expectations are set and should be fairly easy to implement.
Step Eight: Implement Decision After Upper Management has gained the support of all of its contributors it is now time to implement the solutions. Weekly meetings will be held by all departments of the airline with all employees to reiterate what the goals of the company are moving forward. There will be monthly meetings with mid and upper management to discuss the results of the meetings and gather data on the success and the short comings. The CRM administrator should provide a daily report to the executives of Classic Airlines to insure customer satisfaction.
The international venture with Skyway Airlines will be supervised by the CMO selecting a staff and monitoring the successes or failures. Eventually this will be removed as a responsibility of the CMO but because of the relationship he has with the executive of Skyway it would make sense for him to begin the business model. It is imperative that Upper Management address the labor Union and the shareholders to make sure their needs are being met on a quarterly basis. Step Nine: Evaluate Results
In every facet of Classic Airlines there will be surveys, customer service inquiries, polling, advertisement offering a toll free customer service number, internet contact information for opinions on the customer’s experience. In every meeting room from the local employees’ weekly meeting to the quarterly shareholder gala there will be comment cards and surveys. This data will be collected and put into document form so that Upper Management will remain aware of there level of success. With all of these provisions in place Classic Airline is sure to overcome its current problems and fly above the competition.