Classic Airlines and Marketing

Classic Airlines and Marketing

MKT571

November 12, 2012

Classic Airlines and Marketing

As the world’s fifth largest airline, Classic Air has grown over its 25 years in the industry to a multi-billion organization. Although profitable, rising fuel cost and economic downturns have caused the organization to see a 10% decrease in share prices, and increasing scrutiny from the public, shareholders, and the media. This close examination of Classic Airline practices has shrunk employee morale, and loyal customers of the airline rewards program to decrease in flights per member. To balance the crisis, the board has made the decision to cut labor costs and create an effective marketing plan that will demonstrate a measurable rate of return in its Classic Rewards Program.

Membership in the Classic Rewards program is down 20% from the preceding year, which translates to 160,000 loyal customers choosing other carriers, and the leadership team must discover ways to lure back its customers without discounting prices. Classic Airlines marketing team must begin the process of developing a marketing intelligence system; a “marketing intelligence system is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment” (Kotter & Keller, 2007, P. 42). The marketing division has already started this process by meeting with the leadership staff, collecting customer responses, and profiling competitors. By listening to the many matters customers are concerned with such as on-time arrivals, and a more diverse frequent flier program, the company has the opportunity to cater new marketing strategies to lure new and retain existing members.

Chief Financial Officer (CFO) has ordered a company-wide cost reduction of 15 % over the next 18 months, including cuts in its labor costs. In the past the company was praised by its unions for paying above standard wages to its employees even with rising fuel costs....