Classic Airlines is facing a number of serious marketing challenges, and its current corporate culture is impeding efforts to achieve a turnaround. The culture is characterized by a disconnect between upper management decision makers and the employees that actually work with and talk to the customers. For example, the head of marketing insisted on a series of price cuts, but this was not a productive strategy. It did little to appeal to customers, which the line workers are aware are not that interested in price but in how they are treated, and at the same time it caused problems-razor-thin margins and a price war. The disconnect between upper management and employees means that upper management is making decisions in their ivory tower, so to speak, insulated from what is really going on and informed only by reports and not by customer preferences and desires or employee insights. This situation demands resolution, or upper management will continue to press for ill-advised strategies that do not help the bottom line.
The marketing challenges are numerous. Marketing has to work within a mandated 15% corporate-wide cost reduction, even though it is already operating with thin margins. Moreover, the department has been instructed not to revise any of the current union agreements as a means of getting more funds allocated to marketing programs. One of the biggest liabilities for marketing is its CRM system, which was set up with the idea of reducing call time with customers and driving them to the Internet where possible so that the reps would not have to talk to them at all. Even worse, a customer that contacts the company both by Internet and over the phone is not identified in the system as the same customer. Although the system could be integrated seamlessly to eliminate that problem, no one wants to invest the time to achieve that solution. Thus, the CRM system actually mitigates against building customer<...