Classic Airline Product Development and Price Strategies

According to the scenario Classic Airlines is one of the worlds’ largest airlines that is facing losing sales, customers, and market shares. Classic Airlines management has to decide how to change the future outlook of the company.

They are faced with several issues low employee morale, customer relationship management (CRM) program not working, decline in the rewards program, and the rising price of fuel and labor. There are several tools management will need to take to identify the problems, plan solutions, and the measures it may take to resolve the issues.

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They will also need to convince the CEO and CFO that the customer is where the money is. Classic Airline will look at the challenges that currently face and formulate a market plan. In this paper are proposals that include probable options for improving satisfaction and loyalty to the airline.

1)Identify the problems Classic Airlines has to recognize that their Classic Rewards program has experienced a 20% decline in customer loyalty. The CRM system that was implemented to deal with customer service issues is not effectively working. With the company facing bankruptcy employee morale is low, and they are unsure of the jobs.

In the face of the rising cost of fuel and the 911 attacks the company has managed to stay one of the top leaders in airline industry. Classic Airlines has experienced its share of highs and lows, but they must recapture lost customers, market shares, and sales. The most important issue is the continuing decline in the Classic Rewards program.

2)Define the problems There is a 19% decrease in membership in the Classic Rewards programs as customers continue show a lack of confidence with current system, and 21% less members are flying.

Due to the rising cost of fuel it has hampered the airline capability of compete for frequent flier miles. The airline is facing a 15% across the board cut. Since the 911 attacks Classic has experienced some cost structure restrictions unlike the newer airline company. The airline must find ways to offer customers a significant program while enduring price wars and reduction to their budgets. Sustaining faithful customers has become exceeding difficult, with the competition having such robust loyalty programs.

The biggest problem is the customer thinks that no one at Classic cares about the problems they are having.

Classic knows they have to reassure the customers that not only do they care but they are willing do what it takes to win their trust. Knowing what the customer values and delivering on customer satisfaction is essential to retaining long-termed customers. If the airline does not focus on the customer needs they will lose business to their competitors. They must listen to the customers’ needs and then make every attempt to deal with them.

Classic management has the opportunity to come up with a strategy to give both the business and the leisure travelers what they want and turn around the program. )End-State Goals While the CEO and CFO focal point is cutting cost, management will need a strategy that focuses more on the customer needs to turn the company around. Based on the frequent flier program overview management should do away with having an expiration period allow the traveler redeem their point when they want to. Also allow them to earn points starting with all miles they travel. In the future, when the company is in a better financial position, allow the traveler to earn points on all flights.

Allow the top-level members have perks like boarding early privileges, no charge for carry-on bags, and no restrictions to the number of seats they can redeem on a flight.

Let travelers know ahead of time when there are delays if possible, and accommodate them however necessary. Provide excellent customer service to all travelers from beginning to end. The customer is always right, and the customer service personnel should listen, be apologetic, tell the customer they will resolve the problem, and get back with customer to let them know what was done.

One of management goals should be to increase membership and sale which can be tracked through the CRM program. This could deliver a true return of investment and can be measured in substantial savings.

4)Identify Alternatives Classic Airline must have an opportunity to develop a system that will help them prevail over their weak points and put into operation a Rewards program that will please both the business and leisure traveler by benchmarking their practices.

As stated on American Productivity and Quality Center website benchmarking is the process of comparing and measuring your organization against others, to gain insights into measures, performance, and practices in a way that can rapidly improve the journey to world-class performance. They know there is a 19% decrease of the Classic Rewards members, and decrease in numbers that are flying with them. Classic has to improve the productivity of the customer service with travelers, and lowering labor cost. They could implement a four day work week to help lower labor cost.

To improve on the customer service Classic could offer free accommodations when travelers are delayed.

Give them appreciation knick-knacks with company logo on them. Change how they response to customer complaints with quicker reaction. When comparing themselves with the competitors with frequent flier program the company must study how well the competitors perform, and make change with the CRM program. Take the success of British Airways Airlines, they are large airline that has brand is widely recognized, and network globally. They have successful frequent flier programs.