Classic Airlines Marketing Solution - Essay Example

? ic Airlines Marketing Solution Introduction The improvement of a firm’s market position is highly depended on the firm’s ability to evaluate its environment, internal and external, and identify the resources that would be required for supporting a relevant project. Marketing serves a critical organizational need: the need for securing market position. For certain theorists, marketing sets the criteria for the expansion of organizational activities, either in the short or the long term (Sandhusen 2000). Still, there is another organizational need that is critical for the survival of each organization: the need for high cash availability so that no delays are caused in regard to important projects. In practice, it has been doubted whether marketing can address both these needs. Current paper focuses on the marketing needs of a well – known organization, in the context of the airline industry, Classic Airlines. It should be noted that the above firm has, traditionally, focused on the limitation of its costs, so that its potentials for high profitability are increased. The practices of the firm in regard to the revival of its customer base and the increase of its profitability have been reviewed in this article. It is made clear that the organization’s potentials to develop an effective marketing plan are many; still, the effectiveness of such plans cannot be guaranteed. The use of a marketing project that it is carefully designed would enhance the performance of the firm in the global market. The marketing project suggested in this paper serves the firm’s key needs: expansion of customer base and increase on profits, even in the long term. It should be noted that this project is quite flexible allowing the potential for changes in case of unexpected changes in regard to the local or the global market trends as related to the specific industry. 2. Classic Airlines – Analysis and evaluation of marketing problem 2.1 Current forms and priorities of the firm’s marketing plans The firm’s marketing plans are currently based on the Classic Rewards Program; however, the performance of this scheme has been significantly declined in 2005, compared to 2004; the relevant decrease has reached a percentage of 20% within just one year. The firm has set the return of its loyal customers, meaning especially the frequent fliers, as one of its priorities related to its marketing plans. Emphasis is also given to the enhancement of membership in the Classics Reward scheme; since last year, the membership in the above scheme has been reduced at least by 20%. Another priority of the firm’s marketing plans is the following one: the above plans should address customer needs and they cannot be aligned only with organizational culture, as until now. At this point, reference should be made to the following fact: the firm’s marketing plans have to be within a specific budget; in fact, for this year, the cost of these plans needs to be reduced by 15% so that the firm’s targets in terms of its profitability are achieved. 2.2 Obstacles of the marketing department – internal and external pressures The development of effective marketing plans in Classic Airlines has been delayed due to a series of factors, related both to the firm’s internal and external environment. More specifically, internally the firm’s marketing department has to face the following pressures: a) the costs of the organization are still at high level; the efforts made in the past for limiting these costs have not been particularly successful. As a result, the marketing department has been asked to keep its budget at low levels, as possible, so that no turbulences are caused in the firm’s daily operations; in fact, the firm’s chief of marketing has been notified that a reduction of at least 15% should be made in regard all the firm’s marketing plans from now on; b) the views of the firm’s Chief Marketing officer in regard to the strategic priorities of the firm in terms of marketing seem to be opposed with the relevant perceptions of CEO. In this context, delays are likely to appear in the development of critical decisions on the firm’s marketing plans. Moreover, the role of the firm’s marketing department in promoting organizational performance is underestimated. Externally also the firm has to face important challenges: a) the events of September the 11th have highly affected the performance of the airline industry; in fact, since the above events, the profits of airline firms worldwide have been significantly reduced , b) before the above events the firm had already started its expansion globally, an initiative that was significantly delayed after the above events, c) competition in this industry is kept at high levels. In order for the firm to secure its market position it should proceed to radical changes in regard to key strategic plans, especially those related to marketing, d) prices in fuel are kept at high levels; the firm cannot adopt an economic scheme for frequent fliers and e) the relationship between the firm and the unions is not satisfactory. For this reason, Ben has notified Kevin, the firm’s chief of marketing that any change in regard to the firm’s marketing plans would be made known to the employees’ unions so that conflicts within the organization are avoided. 2.3 Resources available for resolving the crisis Before addressing the firm’s marketing needs it is necessary to check the resources available for the realization of the relevant project. The term resources, as used above, indicates not only the firm’s staff but also the technology available for the development of critical plans (Blankenship, Breen & Dutka 1998). The review of the case of Classic Airlines has revealed that the firm’s resources can support the development of effective marketing plans. These resources could be described as follows: a) highly experienced strategic management team. Reference is made in particular to the firm’s CEO, its chief financial officer and its marketing chief officer; the above members of the organization have a critical role in the establishment and promotion of vital organizational plans (Lamb, Hair & McDaniel 2008), b) the CRM system; this system allows the organization to monitor the responses of employees to customers. Also, this system allows the categorization of customer data so that critical information related to customers is easily retrieved. No other resources seem to be available for the realization of the firm’s marketing plan, as indicatively explained below. 2.4 Marketing problem The marketing problem could be identified by checking and evaluating the firm’s performance, in regard to one or more of its aspects (Wild & Diggines 2010). In the previous year, the firm’s loyal customers were significantly decreased. This problem has another implication: existing customers of the organization make fewer flights that they used to. Under these terms, the marketing problem could be defined as follows: The relationship between the firm and its customers need to be revived and developed at the highest possible level and within a short period of time. At the same time, the firm’s profitability should be enhanced, securing the firm’s position towards its competitors. Any delay in the promotion of such project would result to the further deterioration of the firm’s position in the market. 2.4.1 Marketing objectives The identification of marketing objectives is the phase following the description of the research problem. In this case, marketing objectives would be aligned with the marketing problem but also the conditions in the organization’s environment, both internal and external. The marketing objectives involved in the marketing plan of Classic Airlines would be related to the marketing problem, as described earlier. The failure of an organization to establish marketing objectives that reflect the organizational culture and can effectively respond to the firm’s marketing needs. Under these terms, the marketing objectives of the firm’s marketing plan would be described as follows: a) a percentage of 6% of the firm’s loyal customers should return in the organization during the first year of the marketing project’s use, b) the firm’s profits should be increased by 5% on annual basis for at least 3 years since the marketing plan is introduced. 2.5 Problem Solving process As noted above, the marketing problem that Classic Airlines currently faces has to be addressed with no delay. The Nine-Step model is considered as the most important method for developing such task. According to Graham, Shiba & Walden (2001) the Nine-Step model is appropriate for developing marketing projects that will be viable under difficult market conditions. The steps of the above Model could be described as follows: a) Description of the project; the description need not to be analytical but it should clearly highlight the key goals of the project (Wild & Diggines 2010); b) Checking the key elements of the project and setting limits to its objectives. In this phase of the Plan the objectives of the project have to be defined; the objectives of the firm’s marketing project have been already described above; c) introduce the metrics on which marketing plan should focus; in the case of Classic Airlines these metrics should be the following: Quality and Cost; d) the fourth step of the specific problem solving process involves in the identification of potential alternatives (Graham, Shiba & Walden 2001, p.190); at the same time the most appropriate alternative needs to be chosen; in Classic Airlines, the use of strategic alliance, in regard to the firm’s marketing plan, would be an effective alternative in case that the performance of CRM system does not reach the required level; e) the ‘development of an optimistic plan’ (Graham, Shiba & Walden 2001, p.191) is the key part of the fifth step of the specific process; for Classic Airlines this plan should be based on the following initiative: the use of the firm’s CRM system should be promoted in regard to various organizational activities; f) in the context of the sixth step, managers in Classic Airlines would proceed to the implementation of the plan and its monitoring (Graham, Shiba & Walden 2001, p.193), g) in the seventh step, the achievement of the firm’s objective is evaluated; the evaluation is based on the metrics that were introduced in the third step of this process, h) in the eighth step the standardization of the process is secured (Graham, Shiba & Walden 2001, p.194) while i) in the last step, the group of people working on the plan evaluate their performance and decide on their next initiatives (Graham, Shiba & Walden 2001, p.195). 3. Conclusion and Recommendations The identification of a firm’s marketing problem can be a challenging task. Usually, organizations that operate in highly competitive markets tend to adopt marketing strategies that have similarities to those of the competitors. In this way, the chances for failures are minimized (Lamb, Hair & McDaniel 2008). However, in Classic Airlines such approach would not help the firm’s image in the market to be improved. In fact, it has been proved that the key problem that the firm currently faces is the continuous limitation of its customer base. The need for the introduction of an appropriately customized marketing plan is emergent. This plan should include specific steps, in the context of the Nine – Step model described above. Additional initiatives cannot be rejected, at the level that they could help the firm to revive its relationship with its customers. Moreover, there are certain measures that, if they would be promoted, they could help the firm to expand its customer base and increase its profitability: a) the communication among employees at high level of the organizational hierarchy should be improved (Hunt 2002); trust would be increased while cooperation should be enhanced. Reference is made especially to the firm’s CEO, Amanda, and the Chief Marketing Officer, Kevin. The latter should abandon his practice to take critical initiatives without the consent of the former, at least during this period that is critical for the re-positioning of the firm in the market (Cant et al. 2009), b) the firm’s investment in marketing should be increased, at least in the near future; the continuous reduction of marketing costs would threaten the quality of marketing plans setting barriers to the increase of the firm’s profitability, c) the organization should become customer-focus instead of profits-focused (Cant et al. 2009). In this way, its market image would be highly benefited, and d) changes should be made on the firm’s culture. Instead of focusing on traditional strategies, the firm’s strategic management team should attempt to promote innovation. In this way, the firm’s competitiveness would be increased. As a result, the firm would be able to attract new customers and improve its performance. It should be noted though that the change of the firm’s traditional practices would require the consent of employees, otherwise the chances for failures are many. This fact should be also taken into consideration when developing the marketing project that will improve the firm’s image in the local and the global market. References Blankenship, A., Breen, G., & Dutka, A. (1998). State of The Art Marketing Research. Chicago: McGraw-Hill Professional. Cant, M., Strydom, J., Jooste, C., & du Plessis, P. (2009). Marketing Management. Cape Town: Juta and Company Ltd. Graham, A., Shiba, S., & Walden, D. (2001). Four Practical Revolutions in Management: Systems for Creating Unique Organizational Capability. Portland: Productivity Press. Hunt, S. (2002). Foundations of Marketing Theory: Toward a General Theory of Marketing. New York: M.E. Sharpe. Lamb, C., Hair, J., & McDaniel, C. (2008). Marketing. Belmont: Cengage Learning. Pride, W., & Ferrell, O. (2011). Marketing. Belmont: Cengage Learning. Sandhusen, R. (2000). Marketing. Hauppauge: Barron's Educational Series. Wild, J., & Diggines, C. (2010). Marketing Research. Cape Town: Juta and Company Ltd. Read More