Classic Airline's Marketing Essay Example | Topics and Well Written Essays - 2000 words

Classic Airline's Marketing - Essay Example Those who maintain the rewards program are largely dissatisfied with the program concept and redemption opportunities (68 percent of those surveyed), which contributes to diminishing brand loyalty and word-of-mouth advertising potential. Further, the operating expenses associated with carrying out the services are very high compared to revenues. The highest is fuel, unfortunately the management team has already developed a hedging program and these cannot be reduced. Operations-based expenditures for Classic Airlines require reduction which may mean streamlining operations to adopt either a lean philosophy or change methodology of key operational characteristics at the firm. Based on the knowledge that the CEO does not appreciate or value strategic alliances and thus the marketing division will get no support with this option as a means of improving resources, the business must work with its fundamental strengths to improve operational systems for cost reduction. Having identified th e problems, they must be framed effectively. The brand operates in an oligopoly where there are few competitors who dominate the market due to the high costs of entry into the market by competitors. In this market, competitive branding and promotion are some of the most fundamental methods to achieve competitive edge. However, in the conversations between management players, there is a generic recognition that the business has been unable to come up with satisfactory competitive strategies that differentiate the business from other airlines. The business requires differentiation through promotion and also a redevelopment of the current positioning strategy. 2. Solutions In terms of operating costs, the business should look at other models of operations by successful domestic and international airline companies to determine how best to reduce costs in key operational areas. According to the income statement, aircraft rent and aircraft maintenance have some of the highest costs, other than fuel, that contribute to the lower profit margin. This must be adjusted, which involves less reliance on marketing and more on technical and systems-based expertise to develop a new operational system. According to Aruan (2005), making the strategic decision to utilize only one particular type of aircraft gives the airline competitive advantage. In the oligopoly, switching costs for the aircraft manufacturer are significantly low as the manufacturer is able to provide its expert and unique services as they operate in markets with much less competition. Therefore, there are not opportunities for Classic Airlines to negotiate or bargain in the supply chain since the manufacturer is in a dominant position. By changing the procurement model, Classic Airlines can gain much more opportunities to bargain pricing and also take away the supplier advantage by providing more effective training to maintenance crews. Air Asia, a low cost, no frills airline, adopted this same procurement st rategy and experienced considerable cost savings and buying power in the supply chain. Rather than being forced to rely on manufacturer expertise in maintenance, Air Asia was able to train its own staff to perform these functions. Having framed the problem, it is now time to decide on strategic action and plan for ensuring this is successful. Further, as it relates to the diminishing brand loyalty, Classic Airlines needs to change its positioning on the competitive market from quality to