...Week Three: Classic Airlines University of Phoenix MKT/571 The economy, increasing fuel costs, and strict security measures lead to intense competition in the airline industry. In attempts to remain profitable and successful, airline company management is challenged to reinvent continually company strategies to remain competitive. Classic Airlines is currently the fifth largest airline company with a fleet of more than 375 jets, serving 240 cities, and more than 2,300 flights daily. To maintain and potentially grow profits and market share, Classic Airlines, and its more than 32,000 employees, will make complex and risky decisions in an attempt to implement problem-solving strategies. The terrorist attack on September 11, 2001 immediately affected the profitability of the airline industry. Leisure travel has been significantly affected because of initial fear of flying and continued increase in security measures. To date, Classic Airlines, although subject to a 10% decrease in market share price, remains profitable. However with low employee morale and decreasing customer loyalty, evident in a 19% decrease in the number of reward members and a 21% decrease in flights of current members, the executive leaders of Classic Airlines elect to reduce costs over an 18-month period. Challenges of reducing expenditures, increasing employee morale...
Words: 2939 - Pages: 12
...Classic Airlines: The Situation University of Phoenix MKT/571, Marketing Classic Airlines: The Situation Problem Solution: Classic Airlines In order for Class Airlines to overcome its current conditions, the company must undergo a very structured problem solving process. The nine-step problem solving process is just the process that Classic Airlines need. The nine step process consists of the following: • Step 1: Describe the Situation, o Involves identifying key concepts, issues, and opportunities in order to determine the overall focus of the project (McNeese, 2004). • Step 2: Measure the Problem, o Requires that baseline data be collected on the present processes and that the problem be observed and analyzed from a broad perspective so that many problem solving possibilities may be examined (McNeese, 2004). • Step 3. Set End-Goals, o This step will help provide vision and direction and help make choices as to which path Classis Airlines should take (McNeese, 2004). • Step 4: Identify Alternative Solutions, o Allows Classic Airlines the opportunity to look at other companies as benchmarks in order to develop techniques that will help the company conquer disadvantages (McNeese, 2004). • Step 5: Evaluate Alternatives/Strategies, o Allows Classic Airlines to examine the best strategy that will solves the company’s current problems and avoid future occurrences (McNeese, 2004). • Step 6: Identify and Assess Risks, o Allows Classic Airlines to develop...
Words: 1367 - Pages: 6
...Classic Airlines Marketing MKT/571 March 17, 2012 Classic Airlines Classic Airlines is facing a tough situation. The cost of labor and fuel has been increasing over the years and the top executives are having a hard time trying to figure out how to cut costs to afford these increases as well as keeping up with providing the best services for their customers without having to cut costs in that area. One of the services that Classic Airlines has for their customers is their Frequent Flier Program. This reward program is a product that Classic provides their customers which serves them benefits when flying their airline. This is a service that is offered by Classic to try and persuade new customers to using their airlines. So what Classic is marketing is a combination of a product and a service. (Kotler & Keller, 2006) The challenges that the airline is facing is trying to keep the cost of fuel and labor down whilst trying to restructure and improve their rewards programs for their customers. One of the recommendations that was given to the airline was to set up a fuel hedge which would cut costs by 12%. The executives are looking for a 15% cut which now unfortunately does not allow any room to improve their rewards programs because they have no money to spare. Classic is also facing tough competition from their competitors that are doing better financially and are able to spare some costs to fix up their customer oriented services. In the Marketing...
Words: 562 - Pages: 3
...Classic Airlines is up against not just one challenge but several challenges they need to deal with. Unfortunately travel has decreased as a result of uncertainty with regards to flying; this has forced the stock prices to be reduce decreasing the price of a share of Classic Airlines stock by 10% over the previous year. The negative messages being conveyed by Wall Street and the media is bringing employee morale down to an all time low. Consumer confidence in the airline has resulted in a 19% decrease in Classic flight reward members which in turn has decreased flights by loyal members by 21%. The rising cost of fuel and labor as a result of economic times is preventing Classic from competing to regain its lost customers. In an attempt to balance out their financial loses and cut down on any further financial crunches, the board of directors is mandating a 15% cost reduction but expects the marketing strategies to be beefed up to bring in more profitable return on investments of the frequent flyer program. This plan is being put into action to prevent bankruptcies of the airlines. Classic Airlines needs a begin with their business mission then move on to a strategic plan. The strategic plan will layout, based on analysis, what areas of the airline market has the most promising opportunities. The next step is a tactical marketing plan that will help to point out promotions that could be featured and services they could offer to bring lost customers back as well as to draw new...
Words: 612 - Pages: 3
...Classic Airlines and Marketing When a company facing a global downturn, it will try its best to survive and still make a profit. Classic Airlines has been struggling with many problems from both internal and external factors (University of Phoenix, 2011.) Gathering information from internal record and utilizing the marketing intelligence system should reveal the challenges that the Classic Airlines’ management team is facing. By conducting environmental scanning, the marketing managers should identify the areas for improvement. Collecting Information Collecting information is a challenging task that the decision-maker should understand that it is imperative to obtain all crucial info that have the most impact to the company’s operation. Two main categories are the internal records and the marketing intelligence system. Internal Records The manager can collect this internal data from the company’s database. Each department should have records of its past operations such sales, revenues, debt, costs, and product life cycle (Kotler & Keller, 2006.) Conducting general interviewing with employees is another way to gathering some informal information. The management of Classic Airlines should examine the data neutrality to determine appropriate course of actions. Employees’ morale. Many employees complained that they have read the negative reports from public media about declining sales and industrial uncertainty. Consumer confidence. The Classic Airlines...
Words: 662 - Pages: 3
...Introduction ________________________________________ Classic Airlines is the fifth largest airline in the world and it commands a fleet of 375 and above jets that serve approximately 240 cities on daily flights that are around 2, 300. Classic Airlines was incepted 25 years ago and since then, it has grown into a large organization of almost 32,000 employees. Despite the high rate of profitability of Classic Airlines, challenges that affect today’s Airlines are inevitable. Some of the challenges include uncertainty about flying which has greatly affected stock prices. ________________________________________ The other challenge is consumer confidence that has greatly decreased probably due to increased negativity from the public, media and even Wall Street. Classic Airlines desire is to boost employee and consumer confidence and this is through increasing employee and customer satisfaction and keeping down costs. This research paper will use Classic Airline scenario to present the current issues and opportunities, identify a marketing problem, describe the end state vision and finally identify solutions to the problem. ________________________________________ Discussion Identification of issues and Opportunities The marketing activities of Classic Airlines are influenced by several factors and some of these factors are uncontrolled. It is evident that the company is faced with rising costs of labor and fuel which has led to cutting of costs through better efficiency...
Words: 2966 - Pages: 12
...The purpose of this paper is to use a problem solving model to analyze the current situation with Classic Airlines. Initially, we will focus on the challenges, opportunities, external and internal pressures of marketing. Next, a clear problem statement will be constructed that is open to multiple solutions. It will conclude with SMART en-state goals that are specific, measurable, attainable, realistic and timely. Classic Airlines has seen a 10% decrease in share prices within the last year as uncertainty about flying has affected industry stock prices. Rising costs, specifically of labor and fuel, have crippled them and negativity from Wall Street, the media and the public has affected employee morale reducing it to an all time low. Although Classic’s Board of Director’s recently mandated a 15% across the board cost reduction over the next 18 months, it’s still mandated they create a way increase the frequent flier program reflecting a measurable return on any investment. The 9 step problem solving model includes the following steps: 1) Describe the situation. Provide an initial description of the issue or opportunity, which will become the basis for defining the “right” problem. 2) Frame the right problem. This is done based on the situation or scenario. 3) Describe end state goals. This is done based on that problem definition from the previous step. 4) Identify alternatives. Possible alternative solutions are created. 5) Evaluate alternatives. The alternatives from the...
Words: 2246 - Pages: 9
..., Classic Airlines and Marketing MKT/571 MARKETING Melodi Guilbault December 20, 2009 Introduction Classic Airlines’ has shown its longevity by remaining in business for 25 years and has become the world’s fifth largest airline. The Airline serves 240 cities with 2,300 daily flights. Through solid growth Classic has increased, as an organization to 3,200 employees since the company’s beginning. Last year, the airline earned $ 10 million dollars resulting from 8.7 billion in sales. The airline industry has been hit hard with the downturn in the economy; thus opening the door for cuts to the bottom line that in turn leads to cuts to the budget. Challenges As with the airline industry, Classic is involved in a variety of issues affecting its bottom line. The challenges exist on many levels. Major challenges being faced include: the frequent flyer program, rising fuel cost, and high labor cost. The overall global market has had to tighten its’ belt which has had a negative impact on travel. There have been many jobs sacrificed within the economy, thereby weakening the financial strength of air travelers. Both Corporate America and the global market have led the way to a reduction in spending. Consumers have followed suit becoming more cost conscious. Airline travel has seen a negative effect from 9/11 and other turmoil around the world, thereby contributing too many of the recent financial losses seen within the airline industry. The...
Words: 845 - Pages: 4
...Classic Airlines Classic Airlines is one of the world’s largest airline companies that functions with 375 jets and continues to serve 240 cities with 2300 flights a day. Classic Airlines Company grew over the 25 years in business to 32,000 employees and with 10 billion dollars in sales. Even though Classic Airlines has had a positive success, the company also faces the challenges that other airline company’s face in today’s market. Classic Airlines needs to come up with ways to market the company’s product so the customers will want to choose Classic Airlines instead of the other airlines. In addition, Classic Airlines worries about the increase of the global market, competition for the company, the changes in customers spending habits, and the increase of concerns with the airlines security. Classic Airlines needs to take into consideration the amounting stressors and the reduced profits for the company. Classic Airlines has an increase of uncertainty because of the decrease in the stock prices. Classic Airlines stock prices decreased 10% per share. “Classic Airlines experienced a 19% decrease in the members in the affinity program and with a 21% decrease in flights for other members” (University of Phoenix, 2012). Classic Airlines has come across some issues with the rising costs for airline fuel and labor. Financially Classic Airlines is suffering and hampering the company’s abilities to compete with other airlines. To make matters worse Classic Airlines has to increase amount...
Words: 1521 - Pages: 7
...Running Head: Classic Airlines Solution Classic Airlines Solution Classic Airlines Solution Classic Airlines (CA) is the fifth largest airline in the world. CA currently has a fleet of over 375 jets and serves 240 cities worldwide. CA also currently has over 32,000 employees and last year earned $10 million on $8.7 billion in sales. However, CA saw a 10% decrease in share prices last year and the frequent flyer program, Classic Rewards, has experienced a 19% decrease in membership and a 21% decrease in flights per member. These downturns are coupled with an overall industry decline due to 9/11 and rising costs on both fuel and labor and are threatening the potential survival of CA. To help combat all these factors, CA's Board of Directors has called for a 15% reduction of all costs across the company over the next 18 months. These budget cuts are in addition to a directive to increase membership in the Classic Rewards program (University of Phoenix, 2010). CA needs to develop a marketing strategy that will grow the customer base and limit expenditures. To accomplish CA's goal, leadership will employ the SMART method of setting business goals and benchmarking other successful organizations, both in CA's industry and out. The SMART method of setting business goals focuses on goals that are specific, measurable, attainable, relevant, and timely. Using the SMART method, CA will be able to set goals that are realistic and can be met. Benchmarking other companies, will...
Words: 2305 - Pages: 10
...Classic Airlines Marketing Solution Classic Airlines is the sphere's fifth leading airline by way of a fleet of more than 375 jets, serving 240 cities (Keller & Kotler, 2007), using additional 2300 flights daily. The airline has developed into an organization of 32,000 employees from exemption of 25 years ago. The corporation has earned $10 million on $8.7 billion in transactions from the preceding year (University of Phoenix, 2010). The commercial airline industry has continuously been vulnerable to the economic and political fluctuations, typically in times of an economic calamity for that reason; Classic Airline’s tests as an airliner are not unforeseen. The corporation is a significant contender within the airline business; nevertheless, like countless airlines; Classic faces several challenges because of the increasing customer worries about flying and the current market ups and downs. Classic Airlines recognizes changes that are necessary for the business; conversely, the managing team needs to recognize the present-day marketing difficulties that are troubling the business and determine choices for solving these complications. The paper will benefit Classic Airlines by means of the nine-step problem-solving model in the direction of identifying issues and prospects that will support the airline within the current marketing problems, pinpoint the internal and external pressures contributing to the corporation's crisis. By using the nine step-problems solving model...
Words: 2140 - Pages: 9
...Running Head: Issues and solutions for Classic Airlines. Investing for the future: Issues and Solutions for Classic Airlines. The purpose of this paper is to explore the current situation at Classic Airlines, define issues hindering performance, and suggest solutions. The initial step in the process is identifying key challenges and their roots within the company. Current State of affairs Classic Airlines and industry The world’s fifth largest airline, Classic Airlines holds a fleet of more 375 jets that serve 240 cities, with more than 2300 daily flights. Since its inception, 25 years ago, Classic has grown to an organization of 32,000 employees, last year; it earned the low profit of $10 million on $8.7 billion in sales. Key Challenges Although Classic Airline has been profitable, profit margins have been small and continue to show signs of weakness. After a thorough examination of the company’s standings, we found a few critical issues which must be dealt with immediately to save the company from further deterioration. Classic has been effected by the challenges that plague today‘s airline industry, the travel downturn that resulted following the events of September 11, and the rising cost of fuel. However, Classic Air is suffering more losses due to the internal problems that plague the company, specifically the guest relations division; here are the key problems that plague Classic Air: • Experienced a 19% decrease...
Words: 1500 - Pages: 6
...Classic Airlines Marketing Solution October 14, 2012 MKT/571 Introduction Classic Airlines is facing both and internal and external marketing crisis. The CEO, Amanda Miller and CFO, Catherine Simpson are basically asking the team led by CMO, Kevin Boyle to revitalize the frequent flyer program without making further discounts to fares while also cutting the marketing budget by an 15% over the next 18 months. Utilizing the nine step problem solving model we will analyze possible solutions and choose the one that will best meet the needs of Classic Airlines and its customers. Defining the problem One of the basic and core concepts of marketing is identifying and meeting the needs, wants and demands of the customer. Needs are basic human requirements like air, food and shelter. Needs can also extend to education, recreation and entertainment and become wants when directed to specific objects that satisfy the need and demands are simply wants backed up by the ability to pay (Kotler & Keller, 2006). When needs, wants and demands are met, customers are more likely to be loyal to the airline. This in turn creates the potential for free word of mouth advertising as the loyal customer shares his or her experience with everyone around them (Anuwichanont, 2010). Classic Airlines seems to be lacking in meeting the needs, wants and demands of their loyalty customers and their loyalty program has seen a decline of 19 percent by January 2006 (University of Phoenix, n.d.)....
Words: 1830 - Pages: 8
...Classic Airlines MKT 571 Classic Airlines Classic Airlines is facing many monumental challenges. The key word is monumental as immediate future decisions will determine the fate of Classic Airlines in terms of surviving in the airline industry, filing for bankruptcy, or bought out by the competition. Classic Airlines is at a fork in the road. As the airline industry shares the pain with rising costs, particularly in fuel and labor, Classic Airlines is struggling internally. They are bleeding in regard to customer retention, which is decreasing by approximately 20%. Classic has one of the highest labor costs per seat-mile as they pay top salaries to pilots and other employees, even while competitors are cutting in those professions. To counter any further financial crisis, the board of directors recently mandated a 15% across-the-board cost reduction over the next 18 months. The deepest wound to keep from hemorrhaging is the internal strife between Senior Management. The entire management group needs to work cohesively and fast before the company flat lines. How will Classic Airlines find a way to survive these pressures? First and foremost, Senior Management at Classic Airlines needs to embrace the marketing concept. According to Kotler and Keller (2006), the marketing function needs to be seen as one of several equally important functions in a check-and-balance relationship (p. 16). As seen with Amanda Miller, CEO of Classic Airlines is described as...
Words: 702 - Pages: 3
...Classic Airlines Marketing Solution Classic Airlines is one of the largest airlines in the world. Their routes include more than 240 cities and more than 2,300 flights a day. In 2004, they had a net operating income of $10 million dollars (Classic Airlines Scenario, 2011). Despite this achievement, Classic Airlines has been experiencing many challenges in operations that are threatening their profitability. These challenges include increased competition, higher overhead costs, decreased employee morale, dwindling stock prices, shrinking consumer confidence, market uncertainty, and customer dissatisfaction. Classic Airlines could use the nine-step problem-solving model to find the true cause of these symptoms and rectify the problem. Profitability will increase once the true problem is solved effectively. According to the Critical Thinking textbook, “Problem solving is applying critical thinking to achieve the goals and personal harmony that are important in our personal and professional lives” (Kirby & Goodpaster, 1999, p. 251). There are many approaches to problem solving. We will use the nine-step model described in Problem Solving-Based Scenarios (Problem Solving-Based Scenarios, 2011). The first step is to describe the situation. Classic Airlines has experienced a 10% decline in share prices. Customer surveys show that they are becoming dissatisfied with the airline’s customer service and frequent flier program, Classic Rewards. Rewards membership has decreased...
Words: 2340 - Pages: 10
