Air Transport Marketing and Consumer Behavior Assignment Sample
Introduction - Air Transport Marketing and Consumer Behavior Assignment
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In this report, the suitable use of the marketing tools have been explained for analyzing the marketing environment of the Lufthansa Cargo group. The SWOT analysis will help in analyzing the current market position of the company highlighting the strengths, weaknesses, opportunities and threats.
Company Overview
Lufthansa Freight is a German cargo service that is wholly owned by Lufthansa. Its worldwide air logistics and transportation activities are based at Frankfurt Airport, Lufthansa's regional hub. The airline has the availability of cargo facilities of more than 300 Lufthansa planes, in addition to scheduling specialized trips.Lufthansa Cargo AG also known as Lufthansa Cargo or Lufthansa Cargo is a freight and distribution subsidiary of Deutsche Lufthansa AG (Lufthansa Cargo AG., 2022). The organization's time-based air transportation services include flash, courier choices, and emergency tactics. Specialist commodities for which it provides customized supply chain solutions include perishable items, valuable commodities, sensitive commodities, explosive materials, and live ships.
Lufthansa Cargo offers a straightforward shipping service in both the United States and Europe. Its fleet of McDonnell-Douglas MD-11F and Boeing 777F aircraft provide these services. Comprehensive monitoring, as well as door and banking services, are some of the options available. It has hubs at Frankfurt Airport, Vienna Airport, Munich Airport, and other key hubs (Lufthansa Cargo AG., 2022). The company has a huge brand with a turnover of 3 billion euros and also around 6 billion of profit collection. This estimation is based on 2020.
Lufthansa Cargo Group
(Source: Lufthansa Cargo AG, 2022).
Market analysis
SWOT
Strengths
The brand strengths
Lufthansa Cargo has developed a huge brand image of the company by enhancing its customer base. It is an agency that focuses on "airport to airport" transportation. German engineering has a positive image. Among businessmen, Lufthansa is a big prestige emblem (Lufthansa Cargo AG, 2022).Apart from airline flights, Lufthansa has a considerable freight and logistical footprint. Customers get access to exclusive services such as lounges, and priority boarding schemes.
Better Balance Sheet
Compared to other airline companies, Lufthansa has always taken a more straightforward approach to its balance sheet. The reserve fund is higher than the liabilities. The cost of equity is relatively cheap when comparing the cost of borrowing. it has helped the company to operate a swift and good cargo service all over Europe.
A huge workforce
The company has employed a broad range of employees that has helped it in operating the services with expertise and strong manpower. It has a large workforce of more than 4500 people serving all the hubs (Lufthansa Cargo AG., 2022). Employees are the asset of the company.
A large geographical presence
Lufthansa has a vast dealer and affiliate network that not only assists in providing efficient services to customers but also assists the airline industry in addressing competitive concerns.the company delivers its cargo services in Europe. Many hubs are scattered in Europe. Also, complete logistic services are delivered by the company to the country (Lufthansa Cargo AG., 2022).
Customer base
The company tries to maintain the needs and requirements of the customers. It helps in developing customer’s satisfaction. Lufthansa also focuses on increasing the number of customer by providing them better service.
Weakness
Various issues and challenges are there that the company faces while operating its services throughout the world.
Low loyalty among suppliers
Due to Lufthansa's history of concentrating on lowering total supply chain expenditures, supplier loyalty is low.
Low marketing technique
The marketing techniques need to be developed. These are lower in comparison to the competitors of the company.
Additional costs of establishing a solid supply chain and distribution network
Digital marketing and artificial intelligence have fundamentally altered the transportation industry's economic model. Because the relevance of the dealer network is dwindling, Lufthansa has to develop a more stable and stringent supply chain structure (Lufthansa Cargo AG., 2022). It's possible that this will cost a lot of money. It can thus impact on the marketing cost and expenditure of Lufthansa.
Huge competition level
The cargo industries are rapidly growing in the market. The major competitors of Lufthansa Cargo Company include Emirates SkyCargo which has around 3 billion euros, Cargolux with 1 billion euros, Airbridge Cargo airlines has 45 million euros, and Polar Air Cargo with 101 million euros (Lufthansa Cargo AG., 2022). The competition level in the market is huge that can impact the revenue and customer numbers. As the airline industry becomes more competitive, Lufthansa's per-unit profit is dropping, putting a strain on the company's revenue collection (Baxter, 2019). When dealing with this situation for the brand, objectively examining existing value propositions of random items is a great place to start.
Increased supply chain congestion
Due to the Covid-19 pandemic crisis, the demands for various products and goods all over th4e world have increased tremendously which has increased congestion in the logistic chain of the cargo airlines. Lufthansa is also facing the same issue. Congestion of supply chain takes a delay in delivering the products to the clients. It has thus impacted the satisfaction and loyalty of the customers. Also, the customer satisfaction level can decrease (?im?ek, & Demirba?, 2017). The bottleneck condition in the supply chain can hamper the economy and revenue collection of the company if not tackled at the right time. It can also impact the competitive advantage and customer retention of Lufthansa impacting the brand image and value. .
Poor employee alliances
It is also another challenge that the company faces. The company's human resource operations have a long-troubled history. Many pilot interruptions occurred in 2014 and continued through 2015 (Lufthansa Cargo AG., 2022). There have also been disagreements about pay discrepancies and pension plans. Poor employee relations can decrease the satisfaction level of the employees. It can also hamper the company's performance level. The employees can get dissatisfied and their productivity level can also decrease. Employee retention and management can also be impacted due to poor management in employee conflicts. This can hinder the brand value and reputation of the company.
Opportunities
As the Star Alliance's largest member, Lufthansa has the financial means to support smaller airlines.
Customers will benefit from the increased experience and superior services as the company expands into new areas. Also, the company has the advantage to attract high-end customers (?im?ek, & Demirba?, 2017).
As the company has a high-end brand image and value, it can attract a large number of customers. By doing this, the company can also improve its brand awareness.
Many businesses have expanded their services to many parts of the world. As a result, global business travel has increased dramatically, resulting in a surge in the number of business travelers.
Due to increase in the international trade, many countries need to supply various products to other countries which will need cargo flights.
Threats
Rising costs
Rising costs are one of the major threats that the company is facing in the market. Increasing fuel costs, expenditures of maintenance are hampering the cost savings. The costs of fuel are increasing rapidly which has also impacted the expenditure of Lufthansa. The rising costs are also increasing the fares in the company resulting in dissatisfaction among the customers (Lufthansa Cargo AG., 2022). Moreover, labor cost is also increasing for which an additional expenditure has impacted the company’s economic area.
High-level competition
The company has to face a high level of competition in the marketplace. Due to the emergence of various competitors in the airlines market, the company also faces competitive pressure. It can hamper the market share of the company (Hu et al., 2018). The company needs innovative product development for increasing customer’s attraction and this will help in bringing new customers and retaining existing customers.
4V analysis
Volume
The company is large. Lufthansa flies to approximately 80 countries and services over 200 destinations internationally (Lufthansa Cargo AG., 2022). Moreover, to be very specific, the cargo services of Lufthansa are delivered to more than 58 cities in the entire world as per the data of 2021. As per the huge volume, the company has a high potential to expand its market share and increase brand value at the international level.
Variety
Lufthansa is known for its excellent in-flight service. Among the features are in-flight cuisine, free check-in, loyalty club incentives, and other perks.Lufthansa has operations that cater to almost every segment of the market, allowing it to service all divisions and areas (Lufthansa Cargo AG., 2022).
The company has also developed various products and enlarged its services which has increased its brand value at the market.
Variation
Lufthansa provides a wide range of services, including luxury and economy cabins, as well as short and long trips. The cargo services can be improved by developing more new features in the products and services to increase its variation. It helps in attracting many customers.
Visibility
Lufthansa makes every effort to make its services as accessible to the general public as possible. Clients will be able to observe flight operations and customer service activities in real time. The company also creates films that show how they keep their aircraft safe and clean.
QSFDC analysis
Quality
Lufthansa is a pioneer member of Star Alliance and one of its major airlines. Lufthansa Cargo is one of the world's largest organizations in the transport of air transportation. The quality of the services are as per the needs and requirements of the company. Providing the customers with the best quality products and services is the main agenda of the company which has created a huge brand value of Lufthansa at the market.
Speed
Due to heavy supply congestion, the cargo airlines sometimes reach to the clients in a delay.
Flexibility
The company needs to increase flexibility. The fare charges need to be lowered for increasing flexibility for the customers. Also, the supply chain management needs to be improved.
Dependability
This technique has a significant flaw: the pilot and lead techs are overworked. Managers, on the other hand, can split the work and save money by not hiring more people. It can impact the operations of the company. This situation needs to be improved to enhance its brand value.
Cost
The company has an image of the most expensive services. High-cost service can also hamper the brand image as well as customer base (?im?ek, &Demirba?, 2017). As compared to the services of its many competitors providing the cargo services at cheap prices, the services are quite high. From 2012 to 2014, the airline attempted many cost-cutting measures, resulting in a net savings of more than 2 billion euros. The airline continues to be one of Europe's most costly services. It is also a great issue for the growth and development of the company.
Justification of the tools
The tool analysis has a great opportunity to identify the strengths, weaknesses, opportunities, and threats of a company, which can be used for making strategic marketing decisions. It assists the company in increasing insight into its current structure, allowing them to appreciate and assess the organization's overall success (Benzaghta et al., 2021). The tools allow the company to better understand and recognize components, as well as their harmful impacts on their market position. The SWOT analysis of Lufthansa looks at the brand's benefits, weaknesses, strengths, and difficulties. Weaknesses and strengths are the internal variables of a Lufthansa SWOT Analysis, while opportunities and threats are the external factors. Incorporating strategic marketing into this analysis helps Lufthansa leverage its strengths and opportunities while addressing weaknesses and mitigating threats, thereby improving its market position.
QSFDC and 4V analysis are tried-and-true operational paradigms that allow Lufthansa to compare their business and accomplishments against those of their competitors. Lufthansa is one of the most well-known airline brands in the world. This tool has the predominant benefit of proving immense information about the strong and weak points of the company (Benzaghta et al., 2021). With the help of the analysis, it has become easy to find the weak areas that Lufthansa Cargo faces, as well as the future threats that have been identified. It will thereby help in reducing the issues with the help of appropriate strategies and solutions. For this, the decision-making has been greatly benefited.
Market objectives
SMART
The SMART goals have a huge significance for achieving the market objectives. The market objectives mainly focus on the development of customer satisfaction. Setting some objectives can help in acquiring a good position in the market. In this section, the main goals are to increase competitive advantage, reduce fares, meet supplier satisfaction and develop supply chain
Specific
Measurable
Attainable
Realistic
Timely
Increasing competitive advantage
It can be measured by analyzing the previous and a current number of customers using Lufthansa Cargo group for logistics and supply chain.
It can be attained by developing innovative product and service solutions in the company. Bringing innovation can help in enhancing the satisfaction of the customers. It will generate the number of customers. Innovation needs to be implemented in the cargo product services. Thus, the company will increase its competitive advantage.
It is realistic as, without a robust competitive advantage, no company can exist. Moreover, a competitive advantage can increase brand value.
6 months
Maintaining the rising fare
It can be measured when the expenditures can be reduced. Increasing cost savings can also be used for measuring. When the number of customers will increase, it can be measured.
It can be attainable by making appropriate strategies to reduce unnecessary expenditures. Using high-quality based fuels can also help in reducing excessive fuel consumption which in return can minimize the fuel costs.
It is realistic that the rising fare can reduce customer satisfaction. It can impact the company’s brand image.
6 months
Developing innovative products
It can be measured by identifying the customer base and competitive edge.
It can be attained by developing some innovative and new services in the product features.
It is realistic as in the cargo airlines sector, innovative product development is the only way to increase competitive advantage.
3 months
Increasing social media and digital media marketing
When the customers can be communicated effectively, it can be measured.
It is attainable by sharing product information, regular updates of the products and services of Lufthansa in the social and digital media platform.
It has a realistic approach as the social media can reach out to the maximum number of customers at the same time. So it can help in increasing brand image of the company.
3 months
(Source: Alshurideh et al., 2019; El Arifi, 2021; Hu et al., 2018; Tolga, & Durak, 2019; Moore, 2017).
Recommendation
Throughout the entire analysis, it can be stated that Lufthansa needs to develop some strategies which can help the company meet all the requirements.
Reduction of costs
Rising fares are the main reason for decreasing sales and revenue collection of the company. For delivering heavy and necessary products and materials to different areas and countries using the cargo group of Lufthansa, it is important that the costs for shipping the products are not much expensive. It reduces the customer's satisfaction. The expenditures of the airplanes of the Lufthansa are high. It needs to be reduced by making necessary strategies and plans. Using high-quality fuels, advanced technology-based airplanes can help in reducing fuel consumption (Seymour et al., 2020). It can reduce unnecessary costs for fuel. Thus, cost savings can be possible. It thus also meets customer satisfaction enabling customer retention.
Finance support
With the help of the company's financing as well as marketing activities, Lufthansa has a prominent brand influence. The marketing activities are very prominent in Lufthansa which has created a brand image of the company. Moreover, the huge financial support of the company has also helped in tackling the logistics and cargo services effectively. For increasing it marketing techniques, more financial support s required for the company.
Social media marketing
Using social media and digital media platforms, broadcast, and other means the company can improve the marketing techniques for its brand value creation. Using social media marketing, at a time the company can share its brand information to a large number of customers (Felix, Rauschnabel, and Hinsch, 2017). The company can regularly update it websites for attracting the clients. Also, it is required that the company share s all information regarding its products and services in the marketing activities. It is also helpful for enhancing competitive edge.
Decreasing supply congestion
In case of heavy congestion, the cargo can ship the products to the customers in delay. It can reduce customer satisfaction. The company can create some new routes for avoiding heavy congestion. Discovering new routes can also help in increasing the number of flights. It will increase revenue collection (Alshurideh et al., 2019). Moreover, new routes discovery will also help in delivering the products at the right time enhancing customer satisfaction and brand image. Competitive advantage will also be benefitted as per the customer satisfaction.
Increasing supplier satisfaction
The company can develop a good relationship with the suppliers that can help in meeting the satisfaction level of the suppliers. Providing the suppliers with fair and timely payments can also meet the supplier's satisfaction. It also helps the company develop the brand image of the company. A robust technically advanced supply chain can help in improving the competitive advantage of the company (Di Vaio, & Varriale, 2020).
Increasing competitive advantage
The company has to face high-level competition in the market. To overcome this high competition, Lufthansa needs to enhance the service quality. Using innovative approaches, lowering shipping charges, and delivering timely services to the clients, the company can increase its competitive edge. It can thereby meet the market demands (Ayasanond, 2019). It is very crucial for developing a good brand image of the company. Competitive advantage also helps in attracting customers towards the service of the company.
Conclusion
It can be stated that the market analysis using the appropriate tool can help in identifying all the strong and weak areas of the organizational operations. In this section, the issues and challenges of Lufthansa Group have been identified. With the help of that, it has become easy to offer some strategic recommendations to overcome the problems. The company has a huge potential to increase its brand value and image which can be used further to improve the customer base. The development of new routes is necessary to increase product innovation. Innovation in the product and service delivery system is also crucial. These are the approaches that can help in developing the brand image of the company. Moreover, it is also important to state that technical advancements in the services are important for the company.
References
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Ayasanond, C. (2019, November). Business Strategies for Enhancing the Competitiveness of Thai Air Cargo Supply Chain Management. In INTERNATIONAL ACADEMIC MULTIDISCIPLINARY RESEARCH CONFERENCE IN JAPAN 2019 (pp. 365-373).
Baxter, G. (2019). Capturing and Delivering Competitive Advantage in the Japan to Europe and Europe to Japan Air Cargo Markets: The Case of the ANA Cargo and Lufthansa Cargo AG Strategic Joint Venture. MAD-Magazine of Aviation Development, 7(2), 6-21.
Benzaghta, M. A., Elwalda, A., Mousa, M. M., Erkan, I., & Rahman, M. (2021). SWOT analysis applications: An integrative literature review. Journal of Global Business Insights, 6(1), 55-73.
Di Vaio, A., & Varriale, L. (2020). Blockchain technology in supply chain management for sustainable performance: Evidence from the airport industry. International Journal of Information Management, 52, 102014.
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Lufthansa Cargo AG. (2022). Lufthansa Cargo Group - Lufthansa Cargo. Lufthansa-cargo.com. Retrieved 11 March 2022, from https://lufthansa-cargo.com/meta/meta/company/lufthansa-cargo-group.
Moore, J. (2017). Setting SMART objectives. Headteacher Update, 2017(6), 14-14.
Seymour, K., Held, M., Georges, G., & Boulouchos, K. (2020). Fuel Estimation in Air Transportation: Modeling global fuel consumption for commercial aviation. Transportation Research Part D: Transport and Environment, 88, 102528.
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