Classic Airlines and Marketing

Classic Airlines and Marketing MKT/571 – Marketing September 17, 2012 Classic Airlines and Marketing Classic Airlines, the fifth largest airline carrier, currently serves 240 cities with more than 2,300 daily flights. However, Classic Airlines has experienced over the past three years a decline in their frequent flier program Classic Rewards along with customer confidence declining as well and stock prices has decreased by 10% according to University of Phoenix, 2012. Marketing is assigned the task of revamping the customer loyalty program and increasing membership while operating under a 15% reduction in expenses across the company.
The challenges that the marketing management is faced with include a downward turn of morale among the employees; retaining and recruiting of new members for Classic Rewards, and the lack of support from upper management. Marketing management is the process of “creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders” (Kotler & Keller, 2006, p. 6). Identifying Marketing Challenges
The marketing management team has identified that the majority (60%) of its Reward membership are at the basic tier, 25% are on the Silver Rewards level, and only 15% are Gold Rewards members. Of these members 80% are business travelers with the remaining 20% leisure travelers. With this information, marketing instituted surveys to determine what the needs of the members are. The replies from the business traveler ranged from the dislike for connections and delays, the desire for quality service, and the idea that the frequent flier points are the result of the airline’s investment in the customer.

Whereas, the leisure traveler is more interested in lower air fare and is more willing to have more connections if it will save the traveler money. Strength, weakness, opportunities, and threats (SWOT) analysis of Classic Airlines top three competitors—British Airlines, Northwest Airlines, and United Airlines—were completed by John Hartman, Senior Vice President of Human Resources. Based on the SWOT analysis, all three competitors have a strong and successful loyalty program. A common weakness between the three companies is the union at each airline.
An opportunity recognized by the three companies is the customers’ needs are constantly changing and the airline industry is rebounding. Fuel and equipment along with competition are considered weaknesses by the three organizations. Gathering input from the Classic Rewards members was the responsibility of Renee Epson, Senior Vice President of Customer Service. Interviews of 500 Gold and Platinum Classic Rewards members revealed that advertising campaigns are failing in conveying an accurate and meaningful picture of the airline.
In regard to the Classic reward program only 30% were either satisfied or very satisfied with the program and upgrades available. When asked if the members flew on other airlines, all categories excluding those who fly seven to 12 times a year responded that they flew other airlines more often than Classic Airlines. Only 8% have been Classic Rewards members for more than five years with the majority been members for one to three years. Strategic Planning The marketing management team has been performing strategic planning to implement a value chain.
A value chain states Kotler and Keller, (2006), “identifies nine strategically relevant activities that create value and cost in a specific business” (p. 38). The team has identified opportunities, weaknesses, strengths, and threats for Classic Airlines’ competitors and through surveys and interviews for Classic Airlines. The identification of the concerns of the Rewards program members enables the marketing team to address these concerns and implement recommendations for improving the Classic Rewards program.
This is part of the new offering realization program that enables Classic Airlines to develop and implement new high-quality products while remaining within the budget. Another part of the value chain is the identification of new markets to attract new customers. Classic Airlines needs to rebuild its customer relationship management process this in turn will improve relationships and understanding with both internal and external customers. Conclusion
Classic Airlines marketing management is working on improving the organization’s rewards program while remaining within the budget that has a 15% decrease with the result of increasing the profits. A major challenge for the marketing management team is the lack of support from upper management. However, the team has begun the strategic planning of implementing a value chain method. The use of a SWOT analysis, surveys, and interviews of current customers has provided the team with an insight of the issues that must be addressed.
Marketing is a process of delivering value to its customers while managing customers’ relationships and producing revenue and profit for the company and its stakeholders. References Kotler, P. , & Keller, K. (2006). Marketing Management (12th ed. ). Upper Saddle River, NJ: Pearson-Prentice Hall. University of Phoenix. (2012). Scenario: Classic Airlines. Retrieved from University of Phoenix, MKT571-Marketing website