Classic Airlines Marketing Solution:
In addition to being the fifth largest airline company across the globe, Classic Airlines has a fleet of over three hundred and fifty jets that operate in approximately 240 cities with over two thousand daily scheduled flights. Since its inception about twenty-five years ago, the airline company has grown into an organization that consists of 32,000 workers. In the year 2006, the company not only made sales worth $8.7 billion but also gained a profit $10 million as a result of the bumper sales. Regardless of these sales, Classic Airlines is not an exception to the challenges that existing airlines have encountered since 2007. Actually, despite making these abundant sales in 2006, the airline experienced a 10% decrease in its share prices because of the growing uncertainty about flying. This growing uncertainty did not only affect Classic Airlines but also affected the general stock prices of the airline industry. Moreover, the airline industry has also been operating under increased investigations because of the worried investment community.
Problem Definition and Identification:
Given that Classic Airlines is not immune to the challenges that has faced the current airline industry, the company has experienced several setbacks. These problems include waning consumer confidence, decreased frequency of flights by its customers, increasing costs in labor and fuel, quick expansion after the 9/11 attacks and a limiting cost outline than younger airlines. In the year 2005, the company experienced a decline in its rewards program following an estimated 19% decline in the number of members of the Classic Rewards Program. The decline was also marked with another decline of approximately twenty-one percent in flights of each remaining member. Additionally, the current faithful members of the airline are jumping ship and consequently restraining the company’s ability to battle for the treasured frequent flier. Following the collapse of the travel downturn that was brought by the 9/11 attacks, Classic Airlines together with its major competitors overrated the turnaround and expanded too quickly (“Situation Analysis,” n.d.). Consequently, the airline is currently facing a compulsory cost reduction of 15% that is scheduled to take place in a period of the next one and a half years.
These challenges are a reflection of the various issues that Classic Airlines is experiencing in this marketing scenario. The issues form the basic things that need to be addressed by the senior leadership team of the company. These primary issues that should be addressed by the leadership team are:
Turning the Classic Rewards Program:
The decline in the number of members of the Classic Rewards Program is due to the low customer satisfaction. While the airline has attempted to discount fares with the aim of remaining competitive and enlisting new customers, the efforts have bore no fruit. According to the Customer Loyalty report that was released recently and Kevin Boyle’s conversation with the airline’s customers, a harsh turn down in customer satisfaction is evident. Examples of the things that customers are unhappy with include the service they get from the airline’s front desk and the incentives they get from the Rewards Program.
Inefficient Utilization of the CRM System:
Despite of being the most influential tool in the airline industry that Classic Airline possesses, the company has inefficiently implemented the Customer Relationship Management (CRM) System. The failure to completely integrate the Customer Relationship Management tool has made the airline to compromise the level of service that customers receive from the airline’s representatives. Moreover, the data being gathered by the CRM System is not the actual reflection of the airline’s customer base. A clear evidence of the inefficient use of this CRM tool is the fact that it’s only the airline’s call center that utilizes the system.
Lack of Alliance Agreement:
This is the third major factor that has affected Classic Airlines since it’s the only airline in the industry that doesn’t have an alliance agreement. Due to this lack, the available flight options to customers have been limited and therefore limiting the ability of customers to receive and redeem reward miles. Additionally, the lack of an alliance agreement has indirectly created extra work for customers when they are shopping for flights since they are required to visit a number of websites while performing multiple searches. This search of multiple websites is a big disadvantage as compared to customers having a solitary point of information when shopping for flights. The airline’s senior leadership team is not only reluctant to endorse a new marketing strategy but also hesitant to enter into any alliance agreements. This reluctance is because of the previous apparent failures in marketing and the belief that no other airline is capable of providing the level of service that the airline can offer.
Problem-Solving Process:
The senior leadership and marketing teams of Classic Airlines are aware of the marketing problem that the company is facing are determined to find an amicable solution. The key issue that the marketing team must resolve is either marketing a new program or developing the existing program. Classic Airlines needs to improve its customer service through revising their segmentation strategy so as to realign with its customers. An improvement and proper use of the Customer Relationship Management (CRM) System will also develop customer experience. The company has various opportunities to develop itself towards a positive resolution with the senior leadership team concentrating on using the existing funds to circumvent the fuel prices for the forthcoming year (“Problem Solution,” n.d.). In order to evade the current decline in sales and low customer satisfaction, Classic Airlines has adopted a problem-solving process. This problem-solving process that has been implemented by the airline is also due to the apparent lack of trust in the company’s image and brand.
However, the problem-solving process is necessitated by various factors that the company needs to consider to defy further financial crisis. These factors that Classic Airlines needs to consider include the need for a comprehensive CRM system, how to gain back its customers who have jumped ship, form an alliance agreement and strengthen its frequent flier programs. One of the major problem-solving processes that have been adopted by the airline is the recent decision by the Board of Directors to mandate a 15% general cost reduction in the next one and a half years. This mandate has been implemented with two major goals that include counteracting any additional financial crisis. The other goal of the compulsory cost reduction is to help in establishing a way that enhances the airline’s frequent flier program through means that illustrate a quantifiable return on any investment. Nonetheless, this problem-solving process seems to be risky given the fact that there are apparent rumors that the airline may face bankruptcy if it doesn’t meet the reduction.
The other major problem-solving process implemented by Classic Airlines is the establishment of a survey program for departing employees together with the recording and supervision of customer calls. Through the survey program, the airline may be able to address employee concerns, retain a significant number of workers and make these employees happier. While the survey program should also incorporate all employees instead of the exiting ones only, it will reveal the necessary changes that need to be made especially in the corporate philosophy. A periodical review of the surveys after every three or six months determines whether there has been growth in employee satisfaction.
Possible Solutions:
In order to establish the necessary and suitable changes that will enable Classic Airlines to remain successful in the airline industry, the company has five possible solutions that it can pursue (Le, 2007). These five possible solutions for Classic Airlines are & #8230;
Support Stakeholders:
This is one of the major possible solutions for Classic Airlines to implement in order to improve the level of customer service that it currently provides. It’s important for the airline to support and unify the inner leadership team or stakeholders who will align a top-down Customer Relationship Management philosophy. This support should also include the alignment of outer stakeholders to enable them in harmonizing both Business and Needs. This alignment of stakeholders is a critical stage since it’s considered as a highly modified, needs-based and transparent approach that helps in managing the apparent decision makers and secret opinion-makers.
Adopt a Customer Satisfaction Business Strategy:
As a result of top-down Customer Relationship Management philosophy, the other critical solution for Classic Airlines is to implement a customer satisfaction business strategy which will place customers as the main focus of the airline. This kind of strategy not only improves the level or quality of service offered to customers but it also increases customers’ loyalty. When customers receive services that are equivalent to their money and meet their needs, they frequently return to a company. If the current CRM System is implemented fully and properly, the airline’s customer will be able to access flight information quickly and easily. Moreover, an efficient CRM system also enables the airline to combine customer information in a more valuable form and also helps in tracing customer information for marketing.
Improve Employee Self-confidence:
Employee self-confidence and morale is a critical aspect to the success of any business or organization. In order to increase its productivity and efficiency in provision of services in the airline industry, one of the possible options for Classic Airlines is the improvement of employee spirits and morale. The improvement of employee self-confidence will help Classic Airlines in avoiding the negative reputation in the Wall Street, media and the public. By enhancing the communication between managers and employees, Classic Airlines will improve the employees’ morale has a significant impact on the performance of individuals and the organization.
Implement Innovative Program:
The fourth possible solution for Classic Airlines is to design and implement an innovative program through retaining the existing loyal customers and gaining back those who were jumping ship. Having discovered that the Business Elite group of customers is the main source of the airline’s revenue, the company can develop innovative and rewarding system for these customers. Innovative programs for these customers may include the pre-boarding and caretaker service for their belongings.
Forming Alliances:
The final possible solution for Classic Airlines is increasing the airlines market share through the formation of alliances or an alliance system. One such available example of an alliance system is the alliance with Skyway Airlines’ Marketing Executive, Josef Wymann and other global services. Classic Airlines can form alliances with other airlines that can provide flights which will compliment the company’s schedules and destinations. Furthermore, alliances with car hiring companies, hotels and travel related companies will enable Classic Airlines to improve miles redemption.
Recommended Marketing Solution:
Marketing is one of the most significant aspects of an organization since it is a process of making, communicating and offering value to clients and for controlling the relationships with customers in means that profits the organization and its stakeholders. This organizational function involves identifying customers’ wants, needs and desires and gratifying these needs as much as possible. Classic Airlines needs to develop a productive marketing plan which will be helpful in addressing the waning sales without escalating the budgeting costs. In order to be effective, the productive marketing plan must embrace the needs of stakeholders and the best practices from a number of various industries (Chase, 2009).
The recommended marketing solution for Classic Airlines would be to develop is a strategic marketing plan which consists of development, execution and management. The strategic marketing plan should however be a careful temporary plan that is fixed in a long-term plan which will incorporate ongoing research of the existing market while examining the changing markets. The development of a short-term plan that is fixed in a long-standing plan is basically due to the fact that the airline cannot budget in excessive costs of too much research or establishment of innovative marketing strategies.
The temporary plan is well-matched by evaluating the existing Rewards Program and developing communication strategies that will boost the value of the program to customers who are potential beneficiaries. While research on the Rewards Program would be ready within three months, the full Rewards Program should be ready for testing within six months. Furthermore, this plan would be effective if changes to the call center are made in order to increase the ability of representatives to effectively help customers. Changes to the call center should take approximately four weeks and would really be important given that errors have occurred.
An important aspect of the short-term strategic marketing plan that is embedded in a long-term plan is training. The airline should not only focus on retaining exiting employees but also concentrate on training these employees to recognize that service and product are inseparable and that quality service is constantly good. This is because quality service that accompanies a branded product is one of the major factors that draw customers to the brand. The company should develop innovative ways to provide quality services that are reasonable in terms of costs (Richard, 2008).
Implementation of the strategic marketing plan is the establishment of a communication channel through the airline’s website that allows customers to do several things including online evaluation of policies and rewards, schedule use and chat with representatives. The management of the strategic marketing plan is the process with which the results of the plan are evaluated to determine whether it has met the established goals. Some of the established goals to be determined in the control phase of the plan include customer satisfaction, quality, employee welfare and growth in sales, profits and market share.
Conclusion:
In an industry that is challenging to maintain customer loyalty because of price wars, safety changes and required value, Classic Airlines has experienced several problems that include customer dissatisfaction, inefficient CRM System, low employee morale, increasing costs and decline in flights frequency. However, these problems also present several opportunities for the airline to maintain its status at the fifth largest airline across the globe such as increasing the level of service to customers. By implementing a strategic marketing plan, Classic Airlines will be ale to redeem its image and experience growth in sales, market share and profit margin while boosting employee morale and customer satisfaction.
References:
Chase, J. (2009, October 13). Developing Problem Solutions for Organizations. Retrieved November 10, 2010, from http://www.associatedcontent.com/article/2213827/developing_problem_solutions_for_organizations.html?cat=35
Le, T. (2007, January 30). Problem Solution: Classic Airlines. Retrieved November 10, 2010,
from http://letanthanh.com/link_MBA/link_570/wk%206_ProblemSolutionClassicAirlines.htm
“Problem Solution Paper for Classic Airlines (2).” (n.d.). DocShare.com. Retrieved November
10, 2010, from http://www.docshare.com/doc/143240/Problem-Solution-Paper-for-Classic-Airlines2
Richard. (2008, April 1). Marketing Recommendations. Retrieved November 10, 2010, from http://richards-ramblings.blogspot.com/2008/04/marketing-recomendations.html
“Situation Analysis and Problem Statement.” (n.d.). Business and Computer Science. Retrieved from Solano Community College website: http://bcs.solano.edu/workarea/dpatters/MGMT050/ClassicAirlines.pdf
In addition to being the fifth largest airline company across the globe, Classic Airlines has a fleet of over three hundred and fifty jets that operate in approximately 240 cities with over two thousand daily scheduled flights. Since its inception about twenty-five years ago, the airline company has grown into an organization that consists of 32,000 workers. In the year 2006, the company not only made sales worth $8.7 billion but also gained a profit $10 million as a result of the bumper sales. Regardless of these sales, Classic Airlines is not an exception to the challenges that existing airlines have encountered since 2007. Actually, despite making these abundant sales in 2006, the airline experienced a 10% decrease in its share prices because of the growing uncertainty about flying. This growing uncertainty did not only affect Classic Airlines but also affected the general stock prices of the airline industry. Moreover, the airline industry has also been operating under increased investigations because of the worried investment community.
Problem Definition and Identification:
Given that Classic Airlines is not immune to the challenges that has faced the current airline industry, the company has experienced several setbacks. These problems include waning consumer confidence, decreased frequency of flights by its customers, increasing costs in labor and fuel, quick expansion after the 9/11 attacks and a limiting cost outline than younger airlines. In the year 2005, the company experienced a decline in its rewards program following an estimated 19% decline in the number of members of the Classic Rewards Program. The decline was also marked with another decline of approximately twenty-one percent in flights of each remaining member. Additionally, the current faithful members of the airline are jumping ship and consequently restraining the company’s ability to battle for the treasured frequent flier. Following the collapse of the travel downturn that was brought by the 9/11 attacks, Classic Airlines together with its major competitors overrated the turnaround and expanded too quickly (“Situation Analysis,” n.d.). Consequently, the airline is currently facing a compulsory cost reduction of 15% that is scheduled to take place in a period of the next one and a half years.
These challenges are a reflection of the various issues that Classic Airlines is experiencing in this marketing scenario. The issues form the basic things that need to be addressed by the senior leadership team of the company. These primary issues that should be addressed by the leadership team are:
Turning the Classic Rewards Program:
The decline in the number of members of the Classic Rewards Program is due to the low customer satisfaction. While the airline has attempted to discount fares with the aim of remaining competitive and enlisting new customers, the efforts have bore no fruit. According to the Customer Loyalty report that was released recently and Kevin Boyle’s conversation with the airline’s customers, a harsh turn down in customer satisfaction is evident. Examples of the things that customers are unhappy with include the service they get from the airline’s front desk and the incentives they get from the Rewards Program.
Inefficient Utilization of the CRM System:
Despite of being the most influential tool in the airline industry that Classic Airline possesses, the company has inefficiently implemented the Customer Relationship Management (CRM) System. The failure to completely integrate the Customer Relationship Management tool has made the airline to compromise the level of service that customers receive from the airline’s representatives. Moreover, the data being gathered by the CRM System is not the actual reflection of the airline’s customer base. A clear evidence of the inefficient use of this CRM tool is the fact that it’s only the airline’s call center that utilizes the system.
Lack of Alliance Agreement:
This is the third major factor that has affected Classic Airlines since it’s the only airline in the industry that doesn’t have an alliance agreement. Due to this lack, the available flight options to customers have been limited and therefore limiting the ability of customers to receive and redeem reward miles. Additionally, the lack of an alliance agreement has indirectly created extra work for customers when they are shopping for flights since they are required to visit a number of websites while performing multiple searches. This search of multiple websites is a big disadvantage as compared to customers having a solitary point of information when shopping for flights. The airline’s senior leadership team is not only reluctant to endorse a new marketing strategy but also hesitant to enter into any alliance agreements. This reluctance is because of the previous apparent failures in marketing and the belief that no other airline is capable of providing the level of service that the airline can offer.
Problem-Solving Process:
The senior leadership and marketing teams of Classic Airlines are aware of the marketing problem that the company is facing are determined to find an amicable solution. The key issue that the marketing team must resolve is either marketing a new program or developing the existing program. Classic Airlines needs to improve its customer service through revising their segmentation strategy so as to realign with its customers. An improvement and proper use of the Customer Relationship Management (CRM) System will also develop customer experience. The company has various opportunities to develop itself towards a positive resolution with the senior leadership team concentrating on using the existing funds to circumvent the fuel prices for the forthcoming year (“Problem Solution,” n.d.). In order to evade the current decline in sales and low customer satisfaction, Classic Airlines has adopted a problem-solving process. This problem-solving process that has been implemented by the airline is also due to the apparent lack of trust in the company’s image and brand.
However, the problem-solving process is necessitated by various factors that the company needs to consider to defy further financial crisis. These factors that Classic Airlines needs to consider include the need for a comprehensive CRM system, how to gain back its customers who have jumped ship, form an alliance agreement and strengthen its frequent flier programs. One of the major problem-solving processes that have been adopted by the airline is the recent decision by the Board of Directors to mandate a 15% general cost reduction in the next one and a half years. This mandate has been implemented with two major goals that include counteracting any additional financial crisis. The other goal of the compulsory cost reduction is to help in establishing a way that enhances the airline’s frequent flier program through means that illustrate a quantifiable return on any investment. Nonetheless, this problem-solving process seems to be risky given the fact that there are apparent rumors that the airline may face bankruptcy if it doesn’t meet the reduction.
The other major problem-solving process implemented by Classic Airlines is the establishment of a survey program for departing employees together with the recording and supervision of customer calls. Through the survey program, the airline may be able to address employee concerns, retain a significant number of workers and make these employees happier. While the survey program should also incorporate all employees instead of the exiting ones only, it will reveal the necessary changes that need to be made especially in the corporate philosophy. A periodical review of the surveys after every three or six months determines whether there has been growth in employee satisfaction.
Possible Solutions:
In order to establish the necessary and suitable changes that will enable Classic Airlines to remain successful in the airline industry, the company has five possible solutions that it can pursue (Le, 2007). These five possible solutions for Classic Airlines are & #8230;
Support Stakeholders:
This is one of the major possible solutions for Classic Airlines to implement in order to improve the level of customer service that it currently provides. It’s important for the airline to support and unify the inner leadership team or stakeholders who will align a top-down Customer Relationship Management philosophy. This support should also include the alignment of outer stakeholders to enable them in harmonizing both Business and Needs. This alignment of stakeholders is a critical stage since it’s considered as a highly modified, needs-based and transparent approach that helps in managing the apparent decision makers and secret opinion-makers.
Adopt a Customer Satisfaction Business Strategy:
As a result of top-down Customer Relationship Management philosophy, the other critical solution for Classic Airlines is to implement a customer satisfaction business strategy which will place customers as the main focus of the airline. This kind of strategy not only improves the level or quality of service offered to customers but it also increases customers’ loyalty. When customers receive services that are equivalent to their money and meet their needs, they frequently return to a company. If the current CRM System is implemented fully and properly, the airline’s customer will be able to access flight information quickly and easily. Moreover, an efficient CRM system also enables the airline to combine customer information in a more valuable form and also helps in tracing customer information for marketing.
Improve Employee Self-confidence:
Employee self-confidence and morale is a critical aspect to the success of any business or organization. In order to increase its productivity and efficiency in provision of services in the airline industry, one of the possible options for Classic Airlines is the improvement of employee spirits and morale. The improvement of employee self-confidence will help Classic Airlines in avoiding the negative reputation in the Wall Street, media and the public. By enhancing the communication between managers and employees, Classic Airlines will improve the employees’ morale has a significant impact on the performance of individuals and the organization.
Implement Innovative Program:
The fourth possible solution for Classic Airlines is to design and implement an innovative program through retaining the existing loyal customers and gaining back those who were jumping ship. Having discovered that the Business Elite group of customers is the main source of the airline’s revenue, the company can develop innovative and rewarding system for these customers. Innovative programs for these customers may include the pre-boarding and caretaker service for their belongings.
Forming Alliances:
The final possible solution for Classic Airlines is increasing the airlines market share through the formation of alliances or an alliance system. One such available example of an alliance system is the alliance with Skyway Airlines’ Marketing Executive, Josef Wymann and other global services. Classic Airlines can form alliances with other airlines that can provide flights which will compliment the company’s schedules and destinations. Furthermore, alliances with car hiring companies, hotels and travel related companies will enable Classic Airlines to improve miles redemption.
Recommended Marketing Solution:
Marketing is one of the most significant aspects of an organization since it is a process of making, communicating and offering value to clients and for controlling the relationships with customers in means that profits the organization and its stakeholders. This organizational function involves identifying customers’ wants, needs and desires and gratifying these needs as much as possible. Classic Airlines needs to develop a productive marketing plan which will be helpful in addressing the waning sales without escalating the budgeting costs. In order to be effective, the productive marketing plan must embrace the needs of stakeholders and the best practices from a number of various industries (Chase, 2009).
The recommended marketing solution for Classic Airlines would be to develop is a strategic marketing plan which consists of development, execution and management. The strategic marketing plan should however be a careful temporary plan that is fixed in a long-term plan which will incorporate ongoing research of the existing market while examining the changing markets. The development of a short-term plan that is fixed in a long-standing plan is basically due to the fact that the airline cannot budget in excessive costs of too much research or establishment of innovative marketing strategies.
The temporary plan is well-matched by evaluating the existing Rewards Program and developing communication strategies that will boost the value of the program to customers who are potential beneficiaries. While research on the Rewards Program would be ready within three months, the full Rewards Program should be ready for testing within six months. Furthermore, this plan would be effective if changes to the call center are made in order to increase the ability of representatives to effectively help customers. Changes to the call center should take approximately four weeks and would really be important given that errors have occurred.
An important aspect of the short-term strategic marketing plan that is embedded in a long-term plan is training. The airline should not only focus on retaining exiting employees but also concentrate on training these employees to recognize that service and product are inseparable and that quality service is constantly good. This is because quality service that accompanies a branded product is one of the major factors that draw customers to the brand. The company should develop innovative ways to provide quality services that are reasonable in terms of costs (Richard, 2008).
Implementation of the strategic marketing plan is the establishment of a communication channel through the airline’s website that allows customers to do several things including online evaluation of policies and rewards, schedule use and chat with representatives. The management of the strategic marketing plan is the process with which the results of the plan are evaluated to determine whether it has met the established goals. Some of the established goals to be determined in the control phase of the plan include customer satisfaction, quality, employee welfare and growth in sales, profits and market share.
Conclusion:
In an industry that is challenging to maintain customer loyalty because of price wars, safety changes and required value, Classic Airlines has experienced several problems that include customer dissatisfaction, inefficient CRM System, low employee morale, increasing costs and decline in flights frequency. However, these problems also present several opportunities for the airline to maintain its status at the fifth largest airline across the globe such as increasing the level of service to customers. By implementing a strategic marketing plan, Classic Airlines will be ale to redeem its image and experience growth in sales, market share and profit margin while boosting employee morale and customer satisfaction.
References:
Chase, J. (2009, October 13). Developing Problem Solutions for Organizations. Retrieved November 10, 2010, from http://www.associatedcontent.com/article/2213827/developing_problem_solutions_for_organizations.html?cat=35
Le, T. (2007, January 30). Problem Solution: Classic Airlines. Retrieved November 10, 2010,
from http://letanthanh.com/link_MBA/link_570/wk%206_ProblemSolutionClassicAirlines.htm
“Problem Solution Paper for Classic Airlines (2).” (n.d.). DocShare.com. Retrieved November
10, 2010, from http://www.docshare.com/doc/143240/Problem-Solution-Paper-for-Classic-Airlines2
Richard. (2008, April 1). Marketing Recommendations. Retrieved November 10, 2010, from http://richards-ramblings.blogspot.com/2008/04/marketing-recomendations.html
“Situation Analysis and Problem Statement.” (n.d.). Business and Computer Science. Retrieved from Solano Community College website: http://bcs.solano.edu/workarea/dpatters/MGMT050/ClassicAirlines.pdf
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