Mkt/571 - Classic Airlines Marketing Solution

Classic Airlines Marketing Solution

Classic Airline is currently the fifth largest airline with a fleet of over 375 and serving over 240 cities. Due to their success they have more than 32,000 employees and 2,300 flights per day. However, in the last year they have experienced a 10% decrease in share prices, 19% decrease in customer loyalty and a 21% decrease in flights (Classic, 2007). Due to fierce competition, Classic Airlines has currently been struggling to meet their sales goals while decreasing costs. As a result, stocks are down, customer loyalty has decreased and employee morale is at an all time low. In order to remain competitive they must re-evaluate and implement an effective marketing solution.

One of the main problems Classic Airlines if facing is their decrease in customer loyalty. Customer loyalty is at a decline evident by a 19% decrease in the number of their reward members and a 21% decrease in flights per remaining member (Classic Airlines, 2007). Shareholder investments have begun to dwindle which has caught the attention of the media. The negative publicity has decreased employee morale and it is has reached an all time low. Classic Airlines is relying on their marketing department to aid them in identifying the reasons for the decrease in productivity and develop a solution to correct these problems. This is a great opportunity for the marketing department to identify internal and external pressures and formulate a marketing plan that will alleviate the pressures and align company goals and processes.

To begin to examine the internal and external pressures the marketing team must return to the basics and analyze the marketing mix and focus their attention back to the target market.

The marketing mix will consist of the four P's of marketing with the target market being the main focus. The internal factors are defined as the product, place, price, promotion. The internal factors are things that can be controlled by the marketing team. The external factors are defined as outside occurrences that can influence the product, place, price, promotion. However, the marketing team does not have control over the external influences. The external factors are defined as economy, political, legal, demographics and technology.

Marketing mix:

Target market is defined as both business and pleasure travelers that are not specifically looking to pay a lower fare but are in the market for quality service. The target market are people with medium income between the ages of 25 to 55 both casual and business professionals.

Internal Factors: (Controlled by marketing team)

The product - is defined as fairs for the airline for both business and casual travelers.

Place - is defined as both local and international flights.

Price - is defined as the cost plus fifty five percent in ROI. The price is not to stay compete but to be able to provide the world class service the target market is looking for.

Promotion - The promotion will be with the use of TV and radio spots that will reach the target market. Promotions will also be specifically catered towards the specific market segmentation that the target market belongs to.

External Factors: (outside influences that are not controlled by the marketing team)

Economic: The time period is post nine eleven. People are less willing to travel and they are not willing to spend as much as they used to in vacations or traveling cost. Higher prices in gas have also been a determining external factor that has influenced the total marketing mix. High gas prices have made it difficult for the airlines to continue to do business at a low cost with a high ROI.

Political: Post nine eleven people are not willing to travel to countries that are not allies of the United States. Venezuelan president Hugo Chaves has numerously publically attacked the United States and people are less willing to travel to Venezuela. The current dug war that is going on in Mexico has made both business and pleasure travelers worried about taking flights to Mexico.

Legal: The government has placed various legal restraints on the airlines in order to ensure that the there are no terrorist flying on the airplanes.

An effective marketing plan is essential to the success of a business. "Marketing involves satisfying consumers' needs and wants" (Kotler & Keller, 2006). In order to formulate an effective marketing solution, Classic Airlines can use the nine step problem solving model. The nine step problem solving model consists of the following steps:

1. Describe the Situation

2. Frame the Right Problem

3. Establish Goals

4. Identify the Alternatives and Benchmarking Validation

5. Evaluate the Alternatives

6. Identify and Assess Risks

7. Make the Decision

8. Develop and Implement the Solution

9. Evaluate the Results

Classic Airlines currently finds themselves in a situation where costs are high while

revenue is low. Customer loyalty has declined, partially due to high ticket prices. Rising fuel and labor costs are preventing them from being able to compete for lower fares against other airlines. Poor planning led Classic Airlines to expand to quickly after September 11, 2001. Though the number of flights has slowly increased since then, Classic Airlines faces a restrictive cost structure that younger airlines

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