Airlines Case - the Marketing Challenges of Classic Airline

Classic airline generates $8.7 billion in revenues per year. The company is the world's fifth largest airline serving 240 cities with more than 2,300 daily flights. It has been in the business for last 25 years. Classic airline operates in the United States and internationally with more than 375 jets to meet the customer needs.

Classic Airlines is marketing a service entity. According to Kotler and Keller "the services include the work of airlines, hotels, car rental firms, accountants and programmers."

The marketing challenges it faces

Classic Airlines has been providing classic rewards frequent flier program to their customers since 2002. The firm did an excellent job attracting new members and keeping current members loyal until the last quarter of 2004. New membership in classic rewards decreased to nearly 20% by the end of 2004. It means that more than 160,000 loyal customers are flying with Classic's competitors. In addition, the current members in classic rewards frequent flier program are choosing to fly with airlines other than Classic. "The average number of flights per member is down more than 20%"

The Chief Executive Officer (CEO) had cut prices on airfares last year in order to bring customers back from the competitors upon former CMO's recommendations. The CEO is eager to bring the customers back without cutting any further margins. This project has been assigned to the marketing department. The marketing challenge will be rising above their competitors without discounting airfare.

Classic's board of directors has also declared a 15% cost reduction across the departments over the period of 18 months. That means that marketing department has to find creative alternatives to revitalize the classic rewards program with 15% less in marketing expenses.

The corporate culture

This organization seems to be practicing role culture. Power derives from the person's position in the role culture. Everything is controlled by Authority definitions and role descriptions. Classic airline has seven key players in the board of directors. The chief executive officer (CEO) and chief financial officer (CFO) are the final decision makers. Both of them are in sync with each other in terms of their business philosophies. In addition, there is a chief marketing officer (CMO) who is known as the leading mind in the airline marketing. There is also a vice president of customer service, general counsel, senior vice president and union representative, and vice president of human resources. Each person participates in any given project collectively and reports to the project leader. The project leader does not have the authority to make the final decision. The CEO is the final decision maker.

Marketing concepts

Each company has unique concepts that