Classic Airlines Marketing Solution

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Date Submitted: 09/23/2011 03:09 PM

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Classic Airlines marketing Solution

Classic Airlines is the world’s fifth largest airlines and commands a fleet of more than 375 jets that serve 240 cities with more than 2,300 daily flights. In the 25 years since its inception, Classic has grown to an organization of 32,000 employees, and last year, it earned $10,000 million on $8.7 billion in sales (University of Phoenix, 2011). Classic Airlines, like many other airlines, is dealing with the harsh realities of rising costs and declining demand.

Several factors have placed a strain on Classic’s profitability. The company has deployed a 15% company-wide cost reduction program to hedge fuel costs and address inflation. Participation in the airlines rewards program has declined in recent years. Declining participation in the program means a decline in loyal customers using Classic all together or at least all of the time. The high cost of fuel and labor has resulted in the organizations inability to compete for new customers and to regain lost customers. Confidence in Classic’s has decreased by 19%, resulting in a 21% decrease in flights by loyal customer Rewards members.

The Chief Executive Officer, Amanda Miller, advised her leadership team there is no room to cut margins any further. She wants Kevin Boyle, Chief Marketing Officer, to focus on the goal of retaining current rewards members and attracting new ones. The former head of marketing ensured Amanda, a year ago, to cut prices in an effort to lure customers back from the competition. The strategy did not work and now Classic finds itself in a price war with their competitors. Kevin is now charged with rising above the competition without discounting airfare. The marketing team must be creative and promote the Rewards program by selling perks and future savings to their members.

The core concept of marketing is exchange, which is defined as the process of obtaining a desired product from someone by offering something in return (Kotler & Keller,...