Classic Airlines current organization culture is a mixture of control and collaboration (Tharp). CEO Miller plays a major role in setting goals and encourages collaboration among subordinates such as heads of customer service, marketing, and human resources etc. to figure out ways to achieve the goals set by the company’s leadership. The company’s leadership’s latest priority is to achieve 15 percent reduction in operating costs in order to improve profitability.
Classic Airlines’ probably greatest marketing challenge is to preserveloyalty among its most valuable clients, especially the members of the company’s reward programs. Not only the reward programs’ membership has been declining but even the remaining members have been flying with the company less frequently. In addition, the company’s average labor costs are among the highest in the industry due to emphasis on ensuring harmonious relationship with the unions that represent many of the company’s employees.
The company’s declining sales are also the result of poor understanding of customers’ preferences and implementation of new business processes without proper homework. The latest findings indicate that the company has done a poor job of both marketing mix (Lake) as well as understanding the preferences of both customer segments which are leisure and business travelers.The company’s current strategy is competing on the basis of lower prices but the overall impression of customers’ feedback is that customers are not necessarily interested in the lowest prices but better value in terms of traveling experience and prices. Business travelers are specifically interested in problem-free travel as well as direct connections instead of lowest prices while leisure travelers are more sensitive to prices.
The company also made a mistake of replacing human customer service representatives with technology without doing proper homework. Even though the new automated processes have yielded savings, they have also deteriorated customer experience because many customers often have unique inquiries that require human interaction. Moreover, the company’s reward programs have also been poorly designed which decreases its attractiveness to customers. This is another mistake Classic Airlines has made because the value of any loyalty program comes from its perceived attractiveness to the clients and poorly designed loyalty programs may yield the opposite effects.
Classic Airlines need more customer-focused approach to its business operations because the current business model is overly focused on achieving operating efficiencies and doesn’t address the needs and preferences of Classic Airlines’ targeted customer segments. In addition, there is also need for greater interaction among CEO, CFO, and other management members. CEO should also become more receptive to ideas from the management team members who may have better understanding of the issues behind the company’s struggles.
Cherry, K. (n.d.). Lewin’s Leadership Styles. Retrieved December 9, 2012, from http://psychology.about.com/od/leadership/a/leadstyles.htm
Lake, L. (n.d.). Developing Your Marketing Mix. Retrieved December 9, 2012, from http://marketing.about.com/od/marketingplanandstrategy/a/marketingmix.htm
Tharp, B. M. (n.d.). Four Organizational Culture Types. Retrieved December 9, 2012, from http://www.haworth.com/en-us/knowledge/workplace-library/Documents/Four-Organizational-Culture-%20Types_6.pdf