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Problem Solution: Classic Airlines Kenneth Barney Marketing: MKT 571 July 29th, 2011 Professor Krista Borders The airline industry is one of the richest and most important industries in the world. The industry generated $774 billion in revenues in the United States and $1986 billion global revenues in 2010 (Plunkett Research, 2010)…
Classic Airlines has enjoyed the benefits of participating in an oligopoly marketplace. In an oligopoly there are few companies that control the entire market. The purpose of this paper is to find a solution to solve the problems at Classic Airline using a nine step problem solving process. Step 1) Describe the Situation Classic Airlines is operating in an industry that has seen a long term reduction in business as a consequence of the catastrophic events of 9/11. Since that terrorist attack the industry has seen a steep rise in operating costs associated with security measures. The volatile petroleum marketplace has made fuel cost the highest cost factor in the airline closely followed by employee costs. As a consequence of external and internal factors Classic Airlines had seen its profitability declined tremendously. Last year the net profit margin of the company was a diminutive 0.11%. The net margin of the company is 2.29% below the industry standard (Dun & Bradsteet, 2011). The marketing department at Classic Airlines is in a complete disaster. One of the largest indicators of failure in the department is reflected in the results of its customer rewards program. ...
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