«A Case Study on Classic Airlines: Practical Marketing Solutions Milaly Tokhi, San Jose State University Abstract In today’s competitive arena, ...»
Customer service is extremely important for Classic Airlines and must be taken very serious, because if customer service is high, customers will be satisfied, and will pay for the value of the customer service. A company must find ways to establish “long-term customer relationships to provide unique value that they alone can deliver to targeted markets. Many successful firms have chosen to deliver outstanding customer value with one of three value strategies: best price, best product, or best service” (Kerin et al., 2006).
There is also an opportunity to form a marketing alliance with Skyway and a top Latin American airline. According to a manager, “the plan is to take it to a code-sharing level, integrate all customer-facing elements and deliver a seamless program” (Case Study, 2008).
Classic Airlines has many opportunities to take into consideration and must make customers the focus of each decision.
A different opportunity for Classic Airlines would be to use horizontal diversification strategies or conglomerative strategies to enhance sales. According to Sanhusen (2008), Horizontal diversification strategies entail adding new products to a firm’s product line that are unrelated to the firm’s existing products but designed to appeal to members of the firm’s target market. For example, Starbucks sells Paul McCartney CDs unrelated to their main product line. (p. 53) Conglomerative diversification strategies entail marketing new products unrelated to the existing product line. Unlike horizontal diversification, these strategies are designed to attract new categories of customers. Illustrative of this was the purchase of Universal Film Studios by the Seagram Corporation, a large distillery. (p. 53) The alternatives mentioned above can help the company rise above competition without discounting airfare, which is what the CEO expects. Classic Airlines can become the leader by making strategic decisions. The company must be able to unite and work toward a final goal, which will give the company the credibility and the number one spot in the competitive market.
Making the Decision
When deciding the optimum solution, Classic Airlines must understand what their goals are, what their end-state vision is, and also what challenges they have faced with product development. These factors will help the company decide how to move forward and become the leading airline provider. Classic Airlines is currently unengaged with its customers. Some of the senior leaders do not believe that the best use of their resources is by reconnecting with clients, which has hurt the company significantly. Classic Airlines leadership is divided on the strategic vision for the airline’s future. Furthermore, the investment that Classic Airlines has made into a customer relationship management (CRM) system was not sufficient, which has affected the customer service department ability to work with the clients (Case Study, 2008). The best solution for Classic Airlines is to focus on their strategic marketing process.
A company’s strategic marketing process is the approach used “whereby an organization allocates its marketing mix resources to reach its target markets” (Kerin et al., 2006). The result of the strategic marketing process is the development of the company’s overall marketing plan “which is the roadmap for the marketing activities of an organization for a specified future period of time” (Kerin et al., 2006). The marketing plan of a company serves to direct primary functions within an organization including supply chain management, demand forecasting, sales initiatives, and finance strategy as well as customer service programs. A primary challenge for the company is the need to coordinate all programs, processes, and functions to meet the goal of making the customer the primary focus of all company efforts.
Classic Airlines needs to create a unified company-wide effort, to develop marketing programs that link customer relationship initiatives to its overall organizational goals. The beginning of this process will need to include the company-wide commitment to make the needs of the customer the number one priority. The company will then need to create business and marketing strategies that increase synergies. The company will be able to prosper by having organizational synergy and a united team working towards the same vision. The company must be able to make strategic decisions and capitalize on their competitive advantages.
Journal of Business Studies Quarterly 2009, Vol. 1, No. 1, pp. 16-25 Trends in society easily influence many factors which make it difficult for companies to predict which product will be successful. “The process of continually acquiring information on events occurring outside the organization to identify and interpret potential trends is called environmental scanning” (Kerin et al., 2006). Timing is also important when introducing a new product or service to the market. A product can be introduced too soon or too late which will have an impact on the success of the product. “IBM, for example, killed several laptop computer prototypes because competitors introduced better, more advanced machines to the marketplace before IBM could get there” (Kerin et al., 2006). Lack of marketing research can also hinder the success of a product because marketing research seeks to reduce risk and uncertainty. Without sufficient resources, Classic Airlines may not be able to invest in marketing research.
For Classic Airlines, being able to adapt to different trends and markets is crucial for success. Insufficient market attractiveness is also a challenge with new products. The idea of market attractiveness is “a large target market with high growth and real buyer need” (Kerin et al., 2006). The company needs a large target market with high growth in order to succeed.
Classic Airlines must apply a top down approach and use strategies to engage their internal stakeholders in their decision making process. The executive management team must be unified in their approach and tactics in order for middle management to be effective when managing subordinates. All employees must be confident in order for the company to become profitable and successful.
Customers are an integral part of a marketing plan. “An effective marketing plan efficiently identifies and delivers the needs and wants of customers” (Kotler, 1998, 42).
Customer-oriented thinking is therefore, essential for winning as well as retaining customers.
Customer-oriented “thinking requires companies to see things from the customer point of view, not from its own point of view” (Kotler, 1998, p. 44).
Developing and Implementing the Solution
In order for the plan to succeed, it must be implemented correctly. The implementation part of a plan is difficult because of negotiations, internal resistance to change, and meeting difficult timelines. Communication between management and employees must become the norm during the implementation process. “In successful projects, preparation for implementation is done in advance. It is addressed in the initial plan and throughout the project. There is a strong liaison between the project team and the user about implementation details” (Nicholas, 2001, p.
The strategic marketing process has three phases that include planning, implementation, and control. All phases are equally crucial to the ultimate success of a company’s marketing campaigns. “Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders” (Kerin et al., 2006). The first phase in the process of developing marketing strategy is the planning phase. The planning phase should start immediately. The primary purpose of the planning phase is to create product and market focus, set goals, and develop a marketing program after intense research, analysis, and assessment of all competitive, environmental, market and situational factors. At the center of the planning phase is a SWOT analysis which is “an acronym describing the organization’s appraisal of its internal Strengths and Weaknesses and its external Opportunities and Threats” (Kerin et al., 2006). The
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key goal of market research is to “understand how customers perceive value…the unique combination of benefits received by targeted buyers” (Kerin et al., 2006).
Once the marketing program has been developed, the company can begin the second phase in the strategic marketing process that is the implementation phase. The implementation phase should begin within three months. The primary focus of the second phase is to turn the developed plan in phase one into a reality. The primary steps to the implementation phase include securing resources, developing a marketing department, establishing an action plan and schedule, and putting the marketing program into action. The marketing program of a firm enables the firm to connect with its customers (Kerin et al., 2006). Key contributors to the success of the second phase include clear communication of the marketing goals; the development of a detailed action list with specific tasks, expected results, and deadlines; the development of an appropriate, effective, and qualified marketing department; and the execution of specific and aligned marketing strategies and tactics.
The final phase in the strategic marketing process is the control phase that “seeks to keep the marketing program moving in the direction set for it” (Kerin et al., 2006). The control process involves evaluating the progress and measuring the results of specific marketing programs. The final phase is ongoing and will help with continuous improvement efforts. A critical function of the third phase is to identify any critical variances from the original plan and enact contingency plans if necessary to keep the programs in line with the overall organizational goals. In addition, performance results can be tracked to identify important consumer, environmental or market trends that may indicate the need for a revised marketing plan. The control phase will reveal company successes or failures that can be used to develop future marketing strategies, plans, and programs.
Classic Airlines will most likely experience derailers during the implementation process which can cause a delay in the partnering process. The two main derailers for leaders to control during implementation are changing behaviors and employees who resist organizational change.
“Since leaders have the most to lose [during implementation] and may be steeped in the traditional ways, it is sometimes hardest for them to change behaviors” (Larson, 2007, p. 26).
Most employees fear change because of job security reasons. “Employees may be uncertain about the impact on their own job and careers and thus resist implementation” (Daft, 1986, p.
289). The company must be focused on becoming the leading airlines provider by investing in internal and external marketing to provide the best customer service possible.
Evaluating the Results
One end-state vision after implementing the strategic marketing process is for employees to unite and work collectively on all projects. Cross-functional teams should become the norm of the company. The case study explains that employee morale is low because of finger pointing, lack of communication, and lack of unity. Classic Airlines must implement internal marketing strategies to assist the employees. The end-state goal is for job satisfaction to be high. A metric that can be used would be a bi-annually job appraisal and a convenient suggestion box. The target would be for 100% of the employees to be satisfied with job duties and requirements. This would help retain employees and would attract new employees to the company. By using a suggestion box or other anonymous option, the company may be able to get more honest or direct feedback. “Employees may be encouraged to suggest new-product ideas through suggestion boxes or contests” (Kerin et al., 2006). Management could also attempt to contact Journal of Business Studies Quarterly 2009, Vol. 1, No. 1, pp. 16-25 their employees for feedback, which would allow management to ask follow up questions to better understand the challenges.
A different end-state vision for Classic Airlines is to meet all financial goals. The endstate goal is for marketing to be able to implement the required changes to the frequent-flyer program without exceeding their program budget. A metric that can be used is for the actual marketing expenses to be less than 100% of projected expenses. A major strength of this vision is that the company will spend less and will have more resources for other projects.
An end-state vision for Classic Airlines is to develop a more effective system regarding customer focus. The end-state goal is for employees in all departments to place the interests of the customer at the forefront of their decision-making process. A metric that can be used is for 70% of Classic Airlines major operating departments to implement a customer-focused objective as one of their top three annual goals. A major strength of this vision is that customers will become the main focus of all decisions.
A last end-state vision for Classic Airlines is to have a competitive advantage by offering the best frequent-flyer program. The end-state goal would be for Classic Airlines to offer a frequent-flyer program that cannot be easily copied or improved upon by their competitors. A metric that can be used by Classic Airlines would be to make sure that 20% of the rewards options could not be duplicated. A major strength of this vision is that Classic Airlines will be a more powerful company with strong competitive advantages.