Klm Marketing

SERVICE MANAGEMENT 02 - SECOND SEMESTER MARKETING THESIS
SUPERVISOR: Helle Bro Groth
PROJECT MEMBERS:
Dennis Hally
Niina Lumisalmi
Silvia Menéndez
Omar Salman Anjun
Olga Kanapelka

Table of Contents

Introduction 2
Interpretation 3
Scope 3
Methodology 4
Criticism of Methodology 5
Porter’s 5 Forces 6
Industry Competitors 6
Threat of Substitutes 7
Bargaining Power ofSuppliers 8
Bargaining Power of Customers 8
The Threat of New Entry 10
Conclusion to Porter’s 5 Forces 11
PEST 12
Political 12
Economical 13
Social 14
Technological 15
Conclusion of PEST 16
Competitor Analysis 17
Lufthansa 18
Ryanair 19
Eurolines 21
Issue Analysis – SWOT 22
Opportunities 22
Threats 23
Conclusion of Competitor and Issue Analysis 24Criticism 25
Conclusion 26
Bibliography 28

Introduction

KLM is a member of The Association of European Airlines[1] and belongs to the SkyTeam, the second largest airline alliance. In this alliance KLM gets benefits such as more and easier connections which help in competition with other airlines.[2] In 2004 KLM merged with Air- France combining so the strength of the brands and the hub and thenetworks of both airlines.[3]

Although KLM, after the merger with Air-France is belonging to leading airlines in the Europe and according to World Magazine one of the most successful ones worldwide[4] there is a continuous and hard competition in the industry. To possess a dominant place in this unstable, changing market demands a lot of work. Ideally the Company has the power over its providersand consumers.

Before the LCC’s came to the market KLM and British Airways used to have the majority of the passenger traffic.[5]Now in addition to the rivalry from the larger airlines KLM has to be able to compete with the marketing strategies of the LCC’s. As the competition with prices has gotten harder it has become hard to fill enough seats to cover the fixed costs and the earlier usedtactics such as yield management and frequent flier incentives have lost their effectiveness.[6] Our research question is therefore:

Is there a need for KLM in association with Air France to improve its position in the airline market against other competitors in the future?

Sub questions:

– What is the position of the nearest competitors?
– Which factors hold the power in theairline market?
– What is the impact of external factors in the airline industry?
– How do the future aspects look for KLM?


Interpretation

‘In association’ is meant that KLM-Air France have a common interest for their respective companies and they aim to work together to achieve the aims and objective that are laid out to them. Air France is one of the world's largest airlines. AirFrance is based in Paris, France, and is a subsidiary of Air France-KLM Group. It operates worldwide scheduled passenger and cargo services to 185 destinations in 83 countries.

When stated ‘improve its Position’ is meant by whether the two merging companies would improve their marketing position and be able to compete with the other large strong competitors such as Lufthansa or the LCC (Low costcarriers)such as Ryanair.

‘Competitors’ are any airline or transportation company that is fighting for the same customers and fulfills the same needs. These can vary from larger airlines to bus travel companies.

When considering ‘position’ of a firm, we regard the strength or weakness of a firm in a competitive market. This includes the ability for a firm to withstand other competitors’action and whether they can control their competitors

The ‘power’ of the firm over its competitors, substitute, suppliers and buyers can be estimated as to whether they are high or low. This power reflects the firm’s ability to control its selling and purchasing prices in the market.


Scope

This project will consist of sound identification and analysis of essential marketing aspect, which...