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Team: Faded Flame, Lufthansa Case Challenge 2012, IIM Kozhikode
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Team: Faded Flame, Lufthansa Case Challenge 2012, IIM Kozhikode

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Team: Faded Flame, Lufthansa Case Challenge 2012, IIM Kozhikode Team: Faded Flame, Lufthansa Case Challenge 2012, IIM Kozhikode Presentation Transcript

  • 3rd LUFTHANSA CASE CHALLENGE Team Name: FADED FLAME Campus: Indian Institute of Management, Kozhikode Members: Arnab Guha Mallik (8943994677)| a.g.m.xaverian@gmail.com Anshul Kumar (8086087963) | anshulk15@iimk.ac.in Abhisek Paul (8943707444) | abhisekp15@iimk.ac.in
  • Advertising, PR and online chat The actual journey; service, information communication, check-in process, in flight experience What it is? Using ENGAGEMENTS to Stand Out from rest of the Consideration Set  The Active Evaluation could be the point where if a brand fails to make a connection with the consumer at a touch point, they will turn to a competitor instead.  We can take into account the important post-purchase experience and identify the role of touch points at each stage  Each touch points has a potential and hence serves as a point of engagement for us. Adapted from McKinsey Traditionally, the consumer journey was mapped as a linear series of stages. With the new loop model, we can take into account the important post-purchase experience and identify the role of touch-points at each stage modified as Brand engagements for Lufthansa. Create magic moments from touch points/ Engagements at every stage in the loop journey in order to earn customer’s loyalty and advocacy, building a successful brand. Earn customer loyalty by providing a reliable and valued service, something different to competitors based on proper communication and proper loyalty incentives THE CONSUMER JOURNEY LOOP
  • Revamped Loyalty: Miles & MoreSocial Media Strategy “Network Miles” Program Platform: Facebook and Twitter This initiative will be a social loyalty program that will enable customers and fans to get rewards for promotional actions such as sharing a review of the airline or tweeting a deal. Socially Others “Invite only “Network Miles” Program” New topics will be introduced each week, with members receiving an email inviting them to take part in the specified discussion and/or survey “Win a Plane Contest” Capturing the football frenzy in Germany to generate awareness and reach out to the masses “Child’s Delight” A perfect communication strategy aimed towards both parents and children which captures the emotional attachment to one’s offspring Pumping more miles “Additional Miles” Receiving more miles on a pre specified route “Gifting Miles” Gifting miles; to be redeemed by the receiver to choose any gift of his choice “e-Tributes” Targeting the e-space to enter with e- gift cards including electronic discount and gift coupons “Virtual Cash” Redeeming mile points for virtual cash on zynga or facebook
  • Lufthansa Airlines needs to modify its business models to exploit the growth of mobility, and mobility-enabled personalized services. Move towards Mobile Advance Offering smart, mobility-enabled, personalized services and products can generate new revenues Our suggested “Mobility Advance” promises to transform how Lufthansa interact with passengers using a range of services and smart solutions at various touch points along their journey, delivering real-time, relevant, and value-added information. Airline Mobility Evolution New Process Innovations are possible from Mobility Advance Using Mobility advance, Lufthansa can benefit in the following ways Shared ramp management—Real-time information such as gate changes, leading to a reduction in aircraft turnaround times. Innovative asset management—Smartphone solutions can provide ramp workers with up-to-date information required for their specific task. Workforce management- The dispersed Lufthansa crew can access real-time information from flight crews to handle passenger requests (such as flight delays) more efficiently. Airport footprint—Smartphone capabilities will also allow Lufthansa to reduce its airport footprints (personnel, counters, kiosks, real estate, and more) thereby saving on money
  • Print-Ads made by Faded Flame
  • Complaint redressal through FB, twitter and Google hangout: Invite only network miles program Gifting miles Flexi miles A significant portion of the consumer journey is made up of post-purchases experiences, so it is vital to build these experiences around what matters to the consumer; MOBILITY ADVANCE enhances the customer engagements. Also leads to process innovations and more revenues as discussed in the doc Consumer Loop Journey The main factors driving us when we thought about the innovations/ changes in the services for the existing customer base and for new ones were • Engagement • Customer Service • Loyalty Which ultimately leads to revenues and hence can be monetized The slide shows how the ideas suggested by us fall within the consumer loop journey Social Media Strategies, Win A Plane Competition, Sponsorship help in Brand engagement and generates PR The suggestions for the miles and more program only enhance the flexibility of the loyalty program and makes it more customer intimate . Focus mainly on premium customers as they drive major revenue
  • PREMIUM TRAFFIC GROWTH BY ROUTE Routes Traffic Share of Total Premium: Premium Traffic Growth Economy Traffic Growth Revenues May 12 vs.May 11 YTD ‘12 vs.YTD ‘11 May 12 vsMay 11. YTD ‘12 vs. YTD ‘011 Africa - Middle East 1.40% 0.90% 17.00% 24.80% 24.40% 28.70% Africa - SW Pacific 0.00% 0.00% -33.30% 2.90% -31.6% -4.80% c- America- s.america 0.30% 0.20% 24.90% 23.80% 35.90% 40.40% Europe - Far East 9.30% 14.70% 2.40% 6.30% 7.60% 8.50% Europe - Middle East 5.10% 5.50% 5.20% 9.30% 10.20% 11.80% Europe - SW Pacific 0.10% 0.20% -12.00% -17.3% 11.50% -10.00% Within N- America 1.10% 0.30% 18.40% 11.40% 6.80% 3.60% Within SW Pacific 0.20% 0.10% -10.10% -8.60% 3.60% 1.50% North Atlantic 17.70% 27.70% -3.80% 0.60% -0.80% 1.40% N America-C America 5.30% 1.80% 1.50% 0.20% -1.40% -1.30% N America - S America 2.80% 3.50% 4.80% 6.80% 8.50% 8.10% Far east –SW pacific 1.70% 2.30% 1.00% 3.80% 2.00% 6.80% North and Mid Pacific 6.30% 13.20% 8.60% 9.50% 7.40% 7.60% Within Europe 21.90% 6.00% -4.60% -0.40% 2.90% 5.80% Total International 100.00% 100.00% 1.70% 4.90% 5.40% 7.10% Region Rout e/Ma rket level Mark et Natio nal level Nation al Supra- nation al level Supra- national Short -haul Long- haul Short -haul Long- haul Short- haul Long- haul Intra N America -1.5 -1.4 -0.9 -0.8 -0.7 -0.6 Intra Europe -2.0 -2.0 -1.2 -1.1 -0.9 -0.8 Intra- Asia -1.5 -1.3 -0.8 -0.8 -0.6 -0.6 Intra Sub- Saharan Africa -0.9 -0.8 -0.5 -0.5 -0.4 -0.4 Intra S America -1.9 -1.8 -1.1 -1.0 -0.8 -0.8 Trans- Atlantic -1.9 -1.7 -1.1 -1.0 -0.8 -0.7 Trans- Pacific -0.9 -0.8 -0.5 -0.5 -0.4 -0.4 Europe- Asia -1.4 -1.3 -0.8 -0.7 -0.6 -0.5 Strategy to identify in order to increase airlines frequency in certain routes
  • It is clear that the majority of the premium customers of Lufthansa Airlines are from North America, Asia/Pacific and Europe. The routes highlighted in Table 1 should be targeted for increasing the number of flights because of 2 reasons: 1) The premium traffic growth rate is the highest on those routes as compared to the other routes. 2) The price elasticity of demand is also less than or equal to 0.6 as shown in Table 2. So, they are less sensitive to ticket prices Phase 1 : In phase 1 of roll-out of the introduction of more number of flights, the targeted routes should be the routes (obtained from Table 1) and the corresponding levels (obtained from Table 2) where the price elasticity is low (less than 0.6). Phase 2 : In phase 2, the targeted routes with price elasticity levels between 0.6 and 0.9 should be considered for roll-out. Routes like intra-Asia, intra-Europe and intra-Africa should not be considered for the first 2 phases of roll out because they form only a small chunk of the premium customers (although in Africa, the price sensitivity is quite low).
  • Estimating favourable market revenue potential europe 46.1% north america 20.5% asia/pacific 19.8% total percentage share of targeted routes 86.4% Normal revenue projections total traffic revenues for year 2011 (EUR millions) 20534 conservative estimate of growth in revenues (includes growth of volume, price mix currency effects) 10% estimated revenues for year 2012 (EUR millions) 22587.4 considering availability/suitability of these routes for our implementation 75.0% Revenue share of favorable route for implementation (as a % of total revenues) 64.8% increasing the number of airlines on this targeted route 10% total estimated revenues for year 2012 (EUR millions) 24051.06 Destination % of revenue Freuencies Ratio Europe 46.1 9819 0.00469 North Atlantic 20.5 3442 0.00596 South America 4.8 359 0.01337 Asia/Pacific 19.8 786 0.02519 Africa 4.3 253 0.01700 Middle East 4.5 165 0.02727 estimated revenue generated by premium segment Premium share of intercontinental traffic revenue for Lufthansa 50.40% Estimated Revenue generated by premium segment customers plying favourable route for implementation (EUR million) 12121.74 FINANCIAL CALCULATIONS: Revenues to be generated from increased air transport and how premium customers are the most important segment
  • • The three most important routes for Lufthansa are Europe, North America and Asia/Pacific, which together constitute 86.4% of the total revenue. • Here we have taken a conservative estimate of growth in revenues (includes growth of volume, price mix currency effects) of 10%. • Then we have analysed the impact of increasing the number of flights plying on these routes by 10%. • Again taking a further conservative estimate of 75% availability/suitability of these routes for our implementation, we get total estimated revenues of 12.122 EUR billions, considering the premium share of 50.4% of the total intercontinental traffic. In these financial analysis, we are trying to analyse the relative importance of different routes in terms of revenues earned and also tried to map it with the price elasticity of the premium customers in different parts of the world, so as to give an idea of the most profitable target routes for Lufthansa for introduction of more number of flights.
  • THANK YOU