Lufthansa Airlines Market Research: Competitors and Strategies

This report presents a market research analysis of Lufthansa Airlines, delving into its operational strategies, competitive environment, and future objectives. The report examines Lufthansa's strengths, such as its strategic alliances and pricing strategies, while also acknowledging its weaknesses, including competition from other airlines and the impact of fuel costs. It assesses Lufthansa's major competitors, including British Airways and Emirates, and discusses the company's efforts to maintain its market position through cost leadership and innovation. The analysis includes an overview of Lufthansa's strategic alliances, pricing strategies, and its position in the market. The report also incorporates Porter's Five Forces model to evaluate the competitive intensity within the airline industry and discusses Lufthansa's future goals, which include cost reduction and network expansion. The overall goal is to provide a comprehensive understanding of Lufthansa's market position and strategic direction.

MARKET RESEARCH
OF
LUFTHANSA AIRLINES

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Business research is the process through which all the relevant topics related to the
subject matter can be identified. It is an effective tool to take various decisions and analyse the
factors that has direct or indirect impact on the operations of own business. Lufthansa is a big
group of airlines which work on giving best services to its costumers (Figueiredo, 2016). The
following report will discuss the strength and weakness of the given company also with the
major competitors of same. Thereafter it will be discussed how this company overcome its
threats and make its position in the market. Facts which make this company distinct from other
will also be highlighted in the below text which will enhance more knowledge of the user.
TASK
Lufthansa is a German based airlines which has given a tough competition to all the other
companies working in same industry is the largest star member in the alliance and provides great
IT services to the industry of transport. This organisation has a number of destinations which
exceeds to number 80 over 200 end points. Due to increase in airline facilities more and more
new entries are taking place in this business type which is increasing rivalry in this sector. This
has increased the limitation of restricted area where the cited company can raise its share
(McWilliams and Siegel, 2011). Apart from the increase in the number of airlines this company
face major drawback of continuous hike in the price of fuels as this cost can not be eliminated.
Therefore it develops pressure on each firm to give best services to its customers at the most
effective price so that profitability can be marinated (Jarach, 2017).
It faces major competition from the British airways which is also an international brand
and is part of UK premium airlines. Due to its price efficiency and good connectivity it increases
burden over the cited company to work continuously on raising the availability of flights so that
it can serve to more people who wish to travel. Gulf carriers like Emirates airline is another
brand which has hindered the progress of Lufthansa (Harrison, Bosse and Phillips, 2010). It is
because of addition in the routes that are brought buy new companies. Thai Airways is another
competitor of this enterprise which increases pressure on Lufthansa to keep the controlled price
which effects the ratio of profitability for the company. Due to the availability of various options
company needs to ensure that its standards do not fall as customers easily to switch to other
brand if are not provided with maximum and required level of satisfaction (Jarach, 2017).
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In order to overcome or face the present competition Lufthansa take great initiative
towards positioning itself in the market with great efficiency so that its output does not get
affected and maximum marketplace can be covered. It is important that the given company
works on building the comparative advantage as through this a different image can be established
which will be able to give more profitable results in an organisation (Wong and Karia, 2010). To
achieve higher competitive advantages this company is working continuously on its services so
that it can attract a good number of customers. Innovative techniques are used which can give
more appropriate results to the company.
For this the management of cited company formulates specific strategies which starts
with understanding the market profile in which the size and competitors that are present is
identified so that accordingly change in the existing services can be made. By analysing the
macro environment the given company makes arrangements regarding the threats which are easy
to predict in advance. This way the degree of loss can be minimise. After this the strategy of
segmentation is also adopted which further works on dividing the whole market into different
sections who holds same desires. It helps in providing the customers with what actually is
demand by them (Miletic, Miletic and Milavic, 2015).
Cost leadership is one more tool which is taken in practice by Lufthansa to be superior in
the airline industry. It keeps its prices very much effective so that costumers do not find them
high very much if compared with other brand. It is due to this reason that buyers are so much
price sensitive and switch to different products and hence to give the most effective services at
reduced price is vital in this industry. It also works on reducing the total cost of company by
using the provided resources to their full capacity as much amount is invested in it and if the
same are not utilised properly than it can add to the organisation total cost which is ultimately
charged to the clients. Due to the close price competition in this sector cost strategy helps the
cited company in proving itself better from that of other brand which are operating in this
industry (Stanton-Tiffin and Shaw, 2012).
Company is a very big brand at present in the market. The reason behind it is the effort
and hard work that has been introduced by company's executives, employees and all the
stakeholders. A very great contribution are there by all these people for making the firm grow in
such manner and making it places in top 10 airline company in the world. There are some aspect
and elements through which the company has a unique identity, which make it very different
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from others and which will assist the firm to survive in competitive market (de Wit, 2014). The
strategies and the factors which make company the best airline service providers in the market is
as follows -
Strategic alliances
Lufthansa is very actively carrying out the operations and function in the different
nations. The brand image of firm is influencing the customers to use its services. The services
that is offered by the company is very satisfactory and is very appropriately serving its clients.
One of the best strategy that company uses to survive and sustain in competitive market is the
strategic alliance (Figueiredo, 2016). The alliance has also brought with it huge market
expanding opportunities. The partnership has additionally carried with it tremendous market
growing open doors. Lufthansa additionally can benefit its own particular planes and make its
own IT through its auxiliaries LH Technik AG and Lufthansa GmbH Systems. The organization
together individuals work in 720 goals in 120 nations. The Internal Financing Ratio is 91.2
percent, which implies that Lufthansa could secure its own ventures without securing an advance
by and large. This has become one of its USP as because this is helping the firm to address large
number of population all around the world and along with that it is able to attain the competitive
benefits as well. Making strategic alliance will assist Lufthansa to capture the market shares of
those places which it haven't tapped yet. This will help it in increasing the company's
productivity along with this the profit shares will also get enhanced through this (Lufthansa Is
Creating In-Flight Networking Opportunities, 2017. ).
The firm is earning in very high amount of money just because of its services and the
image that it has created in minds of general public. The strategies that the firm is adapting is
concerning upon the customers needs and wants (Jarach, 2017). With the assistance of market
research the company has identified what actually is needed by clients in the society and what
are those aspect following which may lead firm to attain competitive benefits. Knowing this the
firm has made many initiatives to sustain in competitive market (Figueiredo, 2016).
Pricing strategy
Company uses the pricing strategies which is most suitable for all the people of different
classes. As the company is offering major four types of products hence according to that the
pricing has been set by it so that all can utilise the services. This will lead in creating a very
effective image of company in market and will help in growing and developing itself in rivalry
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market (vom Brocke and Schmiedel, 2011). The pricing strategy that firm adapts is- Competitive
strategies of pricing is the one which is used for the premium economy and economy class which
emphasis on the middle class people. For people of business class where the upper class people
lies, here the strategy that company uses is mid premium pricing method and at last for first class
the premium pricing strategy is been adapted by company so that each and every person from all
the category can be able to get the services of Lufthansa airlines and will not feel that it is
expensive to use its benefits.
These two are the major perspectives which is helping the organisation to make a unique
presence in market (López-Bonilla and López-Bonilla, 2013). These are making the firm more
strong and through this competitors are getting more threats to sustain in same industry. It has
become very difficult for others to carry out their activities and functions in market as because
the services and the strategies that is been used by Lufthansa is very effective and appropriate
which is satisfying the needs of customers and is also supporting the employees to grow in
several areas (Somssich, 2017).
Porter five force model:
 Substitutes – It faces competition from its close competitors which provide services at
reduced price.
 Buyers – It has mostly the first or business class customers.
 Threats of entry – Biggest danger is of licensing process which is tough to receive.
Other barriers are provided by the present government. Suppliers – Dependency on supplier of oil, entertainment sources etc. is high.
Position of company in last 10 years
Lufthansa has changes a lot in past few years in its activities and functions.
 The position that it holds in market is the second largest airlines.
 In the 2014, company's shares was in the hand of institutional investors and the rate was
approximately 60%.
 Earlier the company had only focused on serving people of upper class with very high
premium ranges of prices.
 Later then company started making strategies upon the pricing so that it can be able to
attract more customers towards the use of firm's services (Malaval, Bénaroya and Aflalo,
2014).
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It was earlier dealing in the native country only than later expansion was done which
resulted into covering those areas too which were not earlier part of their market. The developed
countries are the main target of it as because, Lufthansa aim to earn high rates and in developed
countries each and every person is very well settled and is able to afford the prices that it has set.
But in recent years it has segmented its market in untapped areas so that it can be now able to
capture the shares of marketplaces. This will enhance its productivity and profitability. This has
positively helped the company to grow in market and assisted the firm to attain its aims and
objectives that it has been set (Wong and Karia, 2010).
Future goals of Lufthansa
Lufthansa is a well recognised organisation in the services industry (Prasad, 2011). There
are some of the drawbacks that lies in part of it. Company's main focus is to overcome those
factors in upcoming years. It has been analysed that the cost factor is the major issues that is
been faced by the company. So its future plan and focus is to remove the aspect that is leading to
the state where cost is incurred in very high rates. The strategies are made on the basis of
reducing the cost (Somssich, 2017). It is also planning in doing expanding the network airlines
to the premium pricing positioning. Availing the profitable growth, trying to lead in the aviation
services so that company can be able to increase the profits shares and can grow effectively in
future competitive market.
CONCLUSION
From the above report it has been analysed that the company is very well settled and
recognised in market and the reason behind this is the strategies that it is using for its growth and
development in market. It has been determined the two very major strategies that Lufthansa is
adapting and by which it can be said to be as the unique company in market is the pricing
strategy and the strategic alliances which is assisting the firm in serving the clients in most
effective and appropriate manner as the way customers are wishing to have. It is very necessary
for company to plan more ideas so that it can be able to overcome the issues and problems that is
been faced by it as cost, one of the biggest issue. After going through the facts of the cited
company it is suggested to Lufthansa that it should work on its cost efficiency so that final price
for flights remain controlled. It should be ensured that it gives a good competition to other
companies in same field for which good management and monitoring of each practice is done in
a manner that companies cost can be reduced to minimum.
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REFERENCES
Books and journals
De Wit, J. G., 2014. Unlevel playing field? Ah yes, you mean protectionism. Journal of Air
Transport Management. 41. pp. 22-29.
Figueiredo, L. M. R. S. P., 2016. Equity research-Deutsche Lufthansa AG (Doctoral dissertation,
Instituto Superior de Economia e Gestão).
Harrison, J. S., Bosse, D. A. and Phillips, R. A., 2010. Managing for stakeholders, stakeholder
utility functions, and competitive advantage. Strategic Management Journal. 31(1).
pp.58-74.
Jarach, D., 2017. Airport marketing: Strategies to cope with the new millennium environment.
Routledge.
López-Bonilla, J. M. and López-Bonilla, L. M., 2013. Research note: positioning strategies of
global airline alliances from the consumer's perspective. Tourism Economics. 19(1).
pp.203-208.
Malaval, P., Bénaroya, C. and Aflalo, J., 2014. Market Segmentation and Positioning. In
Aerospace Marketing Management (pp. 123-156). Springer International Publishing.
McWilliams, A. and Siegel, D.S., 2011. Creating and capturing value: Strategic corporate social
responsibility, resource-based theory, and sustainable competitive advantage. Journal of
Management. 37(5). pp.1480-1495.
Miletic, D., Miletic, A. and Milavic, B., 2015. Age-related progressive increase of lower back
pain among male dance sport competitors. Journal of back and musculoskeletal
rehabilitation. 28(3). pp.551-560.
Prasad, A., 2011. The impact of non-market forces on competitive positioning: Understanding
global industry attractiveness through the eyes of ME Porter. Journal of Management
Research. 11(3). p.131.
Somssich, E., 2017. Strategic assessment of the Lufthansa Group's introduction of Eurowings
and its associated new strategy.
Stanton-Geddes, J., Tiffin, P. and Shaw, R. G., 2012. Role of climate and competitors in limiting
fitness across range edges of an annual plant. Ecology. 93(7). pp.1604-1613.
vom Brocke, J. and Schmiedel, T., 2011, July. Towards A Conceptualisation Of BPM-Culture:
Results From A Literature Review. In PACIS (p. 203).
Wong, C. Y. and Karia, N., 2010. Explaining the competitive advantage of logistics service
providers: a resource-based view approach. International Journal of Production
Economics. 128(1). pp.51-67.
Online
Lufthansa warning over ‘competitive disadvantage’ to Gulf airlines. 2017. Available through
<https://www.thenational.ae/business/lufthansa-warning-over-competitive-
disadvantage-to-gulf-airlines-1.327173>. [Accessed on 6th September 2017].
Lufthansa Is Creating In-Flight Networking Opportunities. 2017. [Online]. Available through
<http://www.adweek.com/digital/lufthansa-is-creating-in-flight-networking-
opportunities-for-events-like-sxsw-and-dmexco/>. [Accessed on 6th September 2017]
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APPENDIX
Below are schedule of work that has been performed in 6 weeks.
WEEK1
 The best suitable company for the project has been identified among all the companies
which is operating its activities in market.
 Discussion were made regarding the chosen organisation.
 Relevancy of the company for the project has been determined.
WEEK2
 Market research has been done so as to understand the current market state of the
company.
 The entire study of firm has been performed in this week.
WEEK3
 The methods has been identified so that company can be able to compete in competitive
market has been identified.
 The products and services that company is dealing with and the customer's satisfaction
level has also been identified here.
WEEK4
 With the environmental study the competitors of Lufthansa airlines has been analysed
and the services and benefits that firm is availing to customers has also been evaluated
in week 4.
WEEK5
 The company's unique selling proposition has been identified so that to understand why
Lufthansa is leading in market and why it is giving tough competition to its customers.
WEEK6
 In the last week the changes that company has faced in past few years has been analysed
with various sources like books, journals, websites, magazines etc.
 The future plans that company can go for has also been identified with the help of these
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