Mba 570 Week 5

Running head: PROBLEM SOLUTION: CLASSIC AIRLINES

Problem Solution: Classic Airlines

Problem Solution: Classic Airlines

Classic Airlines has established themselves as the fifth largest airline within their 25 years of existence. Recently they have experienced a 10% decrease in share prices and are faced with a challenge of expanding their frequent flier program using methods that will demonstrate a return on the investment. Classic Airlines will first take a dive into the environmental factors of social, economic, technological, competitive and regulatory forces in order to determine the right problem. (Kerin 2005) “These five forces may sometimes serve as accelerators or brakes on marketing, sometimes expanding an organization’s marketing opportunities and other times restrict them.” Ultimately Classic Airlines will reach the point where they value their customer’s needs. Airlines will always be in demand; therefore it is imperative Classic Airlines develop a marketing plan that will ultimately keep the airlines ahead of the competition.

Describe the Situation

Issue and Opportunity Identification

Classic Airlines has experienced a 10% decrease in share prices over the past year, along with a 19% decrease in Classic Rewards members, and 21% decrease in flights amongst remaining members. Classic Airlines Employees are experiencing low morale issues from the media input of the state of Classic Airlines. Although the Customer Relationship Management (CRM) system was inputted at Classic Airlines, Renee Epson does not feel the system is being utilized to its fullest potential. The Executive Team has different views of business practices when related to marketing. The CEO and CFO are driven by numbers therefore they do no not view the importance of the CRM system as a method of market research. (The 100 Times 2008) “Market research and analysis helps firms to plan ahead rather than to guess ahead.” Whereas, Chief Marketing Officer Kevin Boyle, VP of Human Resources, John Hartman and Vice President of Customer Service, Renee Epson feel that marketing and customers are the core of their business. Classic Airlines has an opportunity to increase their share prices by expanding product offerings. (Stoller 2008) For airlines, sales mean "incremental revenue and a cheap way to market their product." Classic Airlines employee morale has decreased to its lowest level through the course of Classic Airlines has the opportunity to increase employee morale by involving team members in the new campaign. (MRC 2008) “Supervisors can motivate staff by asking them to set their own job goals and suggest better ways to do things.” Classic Airlines frequent flier program has decreased. This is an opportunity to combine the frequent flier and rewards programs with by the “We Miss You” campaign. Reach out to customers by using research methods to find out why their former customers have not flown Classic Airlines and also what they value in airlines.

Stakeholder Perspectives/Ethical Dilemmas

Classic Airlines is experiencing a division amongst stakeholder perspectives. The key stakeholders in this scenario are Classic Airlines Executive Management, the board of directors and the Classic Airlines consumers. Amanda Miller, Chief Executive Officer is more concerned with operational excellence and does not feel marketing is important in reaching her goals. Catherine Simpson, Chief Financial Officer, is “driven by numbers” and her business practices align with Amanda Millers. (Zmuda 2008) "What the holiday season taught us is most retailers realize they are competing on price, but that doesn't mean you're going to ignore other strategies," said Scott Krugman, a VP with the National Retail Federation. "It would be foolish to advertise on price alone." It is their ultimate responsibility to produce a measureable return on their investment. The Board of Directors has mandated a 15% company wide reduction over the next 18 months. Amanda and Catherine have both made it clear that this should not affect the marketing campaign resources on any level. They are to adhere to the same budget as previously given to them. Kevin Boyle, Chief Marketing Officer believes opposite of Amanda and Catherine. His beliefs are that marketing is critical to the company in order to increase profits. The challenge is proving to Amanda and Catherine this statement. Although his help will be that Renee Epson is convinced that the Customer Relations Management system can help increase the marketing efforts.

The Board of Directors is concerned with the 160,000 loyal customers who are now flying airlines other than Classic Airlines. It is within their best interest to mandate a 15% cost reduction across each department of Classic Airlines.

The consumers and loyal customers of Classic Airlines are the most important in this scenario. The Classic Airlines Executive Team must tap into the consumer’s interest by marketing research methods in order to discover the areas they value most. By discovering what is most important to the customer, Classic Airlines maybe able to increase market share by the consumers returning to fly Classic Airlines.

Frame the “Right” Problem

Classic Airlines will demonstrate a measureable return on their investment by utilizing their Customer Relations Management Program through market research methods. As well as revamping the frequent flier and rewards programs.

Describe the “End-State” Vision

Classic Airlines has reintroduced their “We Miss You” Rewards/Frequent Flier campaign. The company has developed new levels of the Customer Relationship Management program in order to meet the needs of their loyal and new customers. The employee morale of Classic Airlines will increase due to company wide involvement of “We Miss You” Customer Relation Campaign. The differences in business disciplines will be smoothed out by Catherine Simpson and Amanda Miller developing further understanding of Customer Relationship Management Programs.

Alternative Solutions

Issue: Classic Airlines has experienced a 10% decrease in share prices.

Opportunity: