January 28, 2013
Colleen M. McGrath
Classic Airlines Marketing Concept Even though Classic Airlines continues a profitable business enterprise, decreasing stock prices, and loss of customer confidence, the airlines faces bankruptcy. Classic Airlines withstands longevity doing business for 25 years. This airline demonstrates a presence ranking number five in the world. The company is looking to increase profitability by changing their current marketing strategy. Definite reductions are necessary to the bottom line, which necessitates future budget cuts. A complete analysis of the company’s internal and external conditions can identify new opportunities and risks that could impede the organization’s future successes. Increasing profit, and giving Classic Airlines a competitive advantage working with the new marketing strategy is the foundation for this paper. Decreasing profits arise from a few economic hardships over the last decade, including a decrease in stock prices, customer loyalty program, increasing labor costs, and increasing fuel prices. In addition to the financial crisis, Classic Airlines Board of Director’s is mandating a 15% across-the-board reduction over the next 18 months (University of Phoenix, 2013).
Marketing Challenges and Concepts
Today’s airlines industries share an assortment of problems, which do have an effect on the company’s bottom line. Classic airline is no exception. Challenges occur on every level. The economic state is forcing the global market to be more cost conscious, which produces a harmful effect on travel. Classic Airlines is taking a new approach to market the organization. Classic must assess their current position in the market by recognizing market demands and change their current disposition to bring customers back and attract new ones. Decreasing industry stock prices are affecting the airline industry. Because of the uncertain economic state, sacrificing jobs is more common than not. This weakens the financial sovereignty of air passengers. The global market and Corporate America together are paving the way to reduce spending. Consumers are following this model and are more mindful of costs and find ways to be cost-effective. The International Air Transport Association or IATA (which represents 230 airlines or 93% of scheduled air traffic) estimated losses among global airlines for 2008 of about $16.8 billion, and another $11 billion in losses for 2009 (Plunkett, Research 2009). Winning companies will be those that can meet customer needs economically, conveniently, and with effective communication (Kotler& Keller, 2006). The Classic Rewards Member Program, although changed after 9/11, also show cutbacks negatively effect current traveling consumers. Customer feedback to Classic from their loyal customers falls on deaf ears. Because issues are not addressed, the customers look to other airlines to secure their travel. The key administration people agree that reconnecting with customers using a platform already in place will enhance the customer service program using the existing loyalty program. Integrating this system with the current customer retention efforts, including the loyalty program, reservations, and customer service functions Classic Airlines could succeed. The customer becomes the hub of the business. Mounting fuel prices are also a challenge the airline is looking at. Increasing fuel prices directly impacts the number of flights Classic can offer. Many of the reductions in the airline industry include reduction routes, seating availability, and retiring of aging aircrafts. In an effort to reduce costs by 15% over the next 18 months, Classic Airlines is looking for alternative ways to reduce fuel costs. An option to reduce fuel costs is a program known as fuel hedging. Many airlines hedge fuel supplies. Fuel hedging is the process of fixing the