Lufthansa Term Paper

Susana Perez Dr. Predmore MKTG 303

November 13, 2014

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Table of Contents List of Exhibits…………………………………………………………………….…page3 Executive Summary…………………………………………………………………page 4 Problem Definition a. Background to the problem……………………………………………….page 6 b. Statement of the problem…………………………………………………page 7 Approach to the problem…………………………………………………………….page 7 Research Design a. Type of research design…………………………………………….……..page 8 b. Data collection from primary sources…………………………………….page 8 c. Data collection from secondary sources…………………………………..page 9 d. Sampling techniques……………………………………………………..page 10 Data Analysis………………………………………………………………………page 10 Limitations and Caveats……………………………………………………………page 12 Recommendations………………………………………………………………….page 13 Results and Conclusion…………………………………………………………….page 14 Exhibits……………………………………………………………………………..page 16 References………………………………………………………………………….page 23

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List of Exhibits Exhibit 1: Airline Survey Exhibit 2: Correlation Tables a. Have you ever Traveled with Lufthansa*Been on Lufthansa

b. How did you hear about Lufthansa*Been on Lufthansa c. How did you hear about Lufthansa*Have you ever traveled with Lufthansa Airlines d. Do you like the fact that most of Lufthansa flights have layover in Germany*Been on Delta

e. Do you like the fact that most of Lufthansa flights have layover in

Germany*Been on United

f. Would you recommend someone to fly with Lufthansa*Been on America

g. Would you recommend someone to fly with Lufthansa*Have you ever traveled with Lufthansa

h. Would you recommend someone to fly with Lufthansa*How did you hear about Lufthansa

i. Would you recommend someone to fly with Lufthansa* Do you like the fact

that most of Lufthansa flights have layover in Germany

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Executive Summary A. Major findings When conducting the surveys to see how Lufthansa was doing among the ages of

18-29, we were in shock to see what we had found. As a result of the survey, we found

out that 40% of the students at Manhattan College had never heard of Lufthansa prior to

receiving the survey. The ones that did were either through a family or friend (32%), the

Lufthansa website (20%), through social media (4%) or because of their own interest

(4%).

Another major finding that left us in a little bit of a shock was the amount of

people that do not like layovers. Our hubs and headquarters are all located in Germany,

which is why most of Lufthansa’s flights have a layover in there. From the survey, we

found out that 72% of those that took it do not like that Lufthansa does that. Only 24%

didn’t mind the stop that the airline makes.

B. Conclusions After seeing what we can suggest to make the company better, Lufthansa would

have an increase in many of their areas. First, brand awareness will increase. We can’t

have 40% of students at Manhattan College not knowing who we are, especially since we

are a recognized worldwide airline. Second, Lufthansa would have reached a new target

audience, the students. With what we have plan for them, they’ll be interested in what we

have to offer. Lastly, profit and revenue will increase.

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C. Recommendations The recommendations we have come up with to better the company are very

simple. First and for most, advertise. We have to learn how to market the company in

ways that will attract people and remember us. The student market is one of our main

targets. Lufthansa has the GenerationFly program that is made specifically for them. As

for the layover, create different hubs in different countries. We will give people the

chance of choosing where it is that they want to make a stop. Lastly, we will have to start

offering non-stop flights for those that don’t want to have layovers but still fly with

Lufthansa.

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Problem Definition a. Background to the Problem In the beginning of the 1920s, a small number of aviation companies had sprung

up in Germany. The only problem was that pilots had no way to communicate with the

ground to see if any planes were flying, landing or if there was any room on the ground

for them. After an all-out competitive battle with the aviation companies, only two

survived: Deutscher Aero Lloyd and Junkers Luftvserkehr. However, on January 6, 1926,

these two joined forces and found “Deutsche LuftHansa AG” and “the flight path started

to point upward” (“Lufthansa Group,” n.d.).

Since the journey began, Lufthansa has gained much popularity and achievements

among many other international airlines. According to the World Airlines Awards

website, Lufthansa is ranked among the top 10 of the World’s Top Airlines of 2014, is

the #1 World’s Safest Airlines (“Travel and Leisure,” n.d.) and is known to be the largest

airline in Europe (“Nations Online,” n.d.). Other than having an impressive award

history, Lufthansa is also a member of Star Alliance, which is the leading global airline

network that offers customers convenient worldwide reach (“Star Alliance,” n.d.). Star

Alliance was founded in 1997 with the cooperation of Lufthansa Airlines, United

Airlines, Air Canada, Thai Airways International, and Scandinavian Airlines; therefore

making Lufthansa a founding member (“Star Alliance,” n.d.).

According to the Facts and Figure of Lufthansa on the Star Alliance website,

Lufthansa has 76.30 million of annual passengers, its daily departures exceed 2,000 and

the airline serves 78 countries. Lufthansa’s frequent flyer program is called Miles &

More. This program is shared among several European Airlines and members don’t

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only earn miles by just traveling with Lufthansa but also with any other Star Alliance

partner flights (“Miles & More,” n.d.). In total, Lufthansa has a total of five hubs

(airports) in five different German cities: Frankfurt, Munich, Düsseldorf, Vienna and

Zurich. Frankfurt is Lufthansa’s main hub and even though Vienna and Zurich are

counted as hubs, they are counted more as the home for Lufthansa’s subsidiaries,

Austrian Airlines and Swiss International Airlines (“Lufthansa,” n.d.).

b. Statement of the Problem As a group representative of Lufthansa, our objective is to make sure Lufthansa is

doing well in all aspects of the company. Although Lufthansa has been successful in

many things, we have discovered a few problems that the company can fix. One of the

problems is that Lufthansa does not have a big demographic market that consists of the

young people. We have noticed this as a result of the lack of advertising and marketing

that specifically targets them.

Another problem that we have noticed is the decline of flight bookings. The main

reason why people aren’t flying with Lufthansa is because of the layovers. Almost all of

Lufthansa’s flights have a layover in Germany. This is a huge problem for us because all

our hubs and our headquarters are both based in Germany. Our aim here now is to solve

these two problems so Lufthansa won’t suffer anything too damaging in the future.

Approach to the Problem Wanting to get to the bottom of the problem, we chose the age range of 18-29 and

handed out surveys (Exhibit 1) to them to see what information we can find. As a result,

we found out that most of them included Manhattan College students and more than

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half of them are also employed. We chose this age range because other than having them

as our missing market, they are the future generation. Very soon, they will be the ones

who will purchase airplane tickets and travel abroad whether it is for business, vacation

or going to study in another country. Regardless of the reason, this group will be

searching for international airlines, like Lufthansa, that will provide them with great

service, have entertainment on board, be comfortable, and serve good food and all other

factors that will not make a 7 hour flight boring.

Research Design a. Type of research design We decided to hand out surveys because we were aiming more for a descriptive

study research design where we will be able to interact with our participants and collect

the necessary information from them. We wanted to see the relationship this specific

target market had with Lufthansa or if one even existed.

B. Data collection from primary sources After conducting the surveys and going over them, we have found that our

problems are slightly larger than we thought. In the bar graph shown below are the

percentages of whether a Manhattan College student, ages 18-29, has heard of Lufthansa.

32%20%

4% 4%

40%

0%10%20%30%40%50%

HowdidyouhearaboutLufthansa

HowdidyouhearaboutLufthansa

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As you can see, 40% of the number of people we surveyed have never heard of

Lufthansa. Although it’s less than half, 40% is still a big percentage for us because we are

a big, worldwide company. Moreover, it is not benefitting us that the majority of the

student population doesn’t know who we are because then, the name Lufthansa won’t be

mentioned at all.

The other problem that we had found was the layover in Germany. As you can see

in this pie chart, 72% really dislike having to make a stop in Germany. All our

participants answered this question even if they haven’t traveled with Lufthansa. This is

our main problem because it just leaves us with only a quarter of students that are

actually satisfied with our service.

C. Data collected from secondary research Aligned with our second problem, we found out that it’s just not students that

don’t like layovers or connecting flights, a lot of people prefer to arrive directly to their

destination. A company called Fare Compare polled their Facebook fans by asking which

they prefer, non-stop or connecting flights. The number that chose non-stop flights was

“overwhelming” in comparison with connecting flights. People rather go on non-stop

25%

75%

LikelayoverinGermany

Yes No

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flights for many reasons. A very common one is the less time you spend in airports,

running around making sure you don’t miss the other flight. Some flights offer more than

one connection and maybe at a lesser price but the more connections a flight has, the

greater the risk of people losing or not receiving their luggage on time, flights get delayed

or cancelled depending on the weather and other uncontrollable factors (Williams, 2012).

D. Sampling Techniques With the first few surveys that we handed out, we went into the field wanting to

do a stratified sample. Our focus was on getting the surveys out to only the international

student body of Manhattan College. It didn’t matter where they were from we just

assumed that they would more likely have heard of us from traveling around. After some

surveys, we decided to go for a random sampling approach giving it to all the students

that we were able to find. If we would have kept on giving the survey only to the

international students, then our results would have been a bit unbiased. We changed our

technique because we wanted to know how the real market was with non-international,

American students.

Data Analysis Once we gathered all our data, we wanted to know what it meant and if there were

any other relations that we were missing. For the data analysis, we used the SPSS

software to help us gain this information. Given the problems that Lufthansa has, we

narrowed down to 9 pairs of variables.

According to the correlation table (Exhibit 2), there are 5 Pearson Correlations

that are close to 1. This means that changes in one variable strongly correlate with

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changes in the second variable. These variable pairs are the following: have you ever

traveled with Lufthansa with have you been on Lufthansa, how did you hear about

Lufthansa with have you ever traveled with Lufthansa, would you recommend someone

to fly with Lufthansa with have you been on America Airlines, would you recommend

someone to fly with Lufthansa with how did you hear about Lufthansa and would you

recommend someone to fly with Lufthansa with do you like the fact that most of

Lufthansa flights have a layover in Germany. From this, we can conclude that a strong

relationship exists with these variables.

Out of the 9 pairs of variables, only 4 had Pearson’s Correlations that were close

to 0. With this, we were able to tell that changes in one variable are not correlated with

the changes in the second variable. An example will be with how did you hear about

Lufthansa and have you been on Lufthansa.

Correlations

Been on Lufthansa How did you hear about Lufthansa

Been on Lufthansa Pearson Correlation 1 .433* Sig. (2-tailed) .039 N 23 23

How did you hear about Lufthansa Pearson Correlation .433* 1 Sig. (2-tailed) .039 N 23 25

*. Correlation is significant at the 0.05 level (2-tailed).

As you can see, this pair has a Pearson’s Correlation of 0.433. Having one close to 0, a

weak relationship exists between the two and the variables are not strongly correlated.

An important feature that we saw in the Correlation Table was that all of the

Pearson’s Correlations are positive. When they are positive, that means that as one

variable increases, the second variable also increases. Also on the table, there is a Sig.

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(2-tailed) row for all the variables. When the Sig. (2-tailed) is greater than .05, then we

can conclude that there is no significant correlation between the variables. If it’s less than

or equal to .05, our conclusion will be that the variables are significant. Lucky for us, all

the same variables that have a Pearson’s Correlation close to 1 are also significant

because they each have a Sig. (2-tailed) that’s less than .05. For instance, the variables

would you recommend someone to fly with Lufthansa and do you like the fact that most

of

Lufthansa flights have a layover in Germany are significant at .002.

This means that when an increase or decrease occurs, it significantly relates to the same

movement in the other variable.

Limitations and Caveats Going into this research for Lufthansa by handing out surveys we knew that we

will have many limitations. Reliability and accuracy of the data is a big one. We aren’t

sure if what the students filled out is true or false. On some of questions are open ended

questions and sometimes they either fill it out or not and if they do, they’ll leave an

Correlations

Would you recommend someone to fly with

Lufthansa

Do you like the fact that most of Lufthansa

flights have a layover in Germany

Would you recommend someone to fly with Lufthansa

Pearson Correlation 1 .585** Sig. (2-tailed) .002

N 25 25 Do you like the fact that most of Lufthansa flights have a layover in Germany

Pearson Correlation .585** 1 Sig. (2-tailed) .002 N 25 25

**. Correlation is significant at the 0.01 level (2-tailed).

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answer that’s irrelevant to the question. Then from the information that we get from the

survey can be completely different than from what we expected.

Although most of our information came from the Lufthansa website, other

information might not be as accurate as we expect it to be. There is always a chance that

the information we get can be from the past and not up to date. Making sure everything is

up to date is also very time consuming and can take a while.

Recommendations After going over all our data and making sure everything is correct, we as a group

have come up with solutions that will benefit the company in the long run. For the first

problem about not a lot of the people hearing of Lufthansa, we believe that the company

should advertise more. Lufthansa has to get its name out there especially to the younger

crowd, people around 18-29 because, as mentioned before, they are the ones that will

soon be buying airplane tickets and we want Lufthansa Airlines to be one of their choices.

This year for the FIFA World Cup in Brazil, Germany won; they came in on

1st place

, and are known everywhere that they are the champions of football as of now.

Lufthansa is one of the sponsors of the team, and even if someone doesn’t watch soccer,

the photo of the German National team will be everywhere because this event is

international so just by taking a picture of the German team in front of a Lufthansa

airplane will increase the company’s brand awareness.

Another recommendation we have is to target more the students. On their website,

Lufthansa has a link called GenerationFly. The reason why we created this website is for

you, the student traveler on a budget who is interested in exploring the world. Therefore,

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Lufthansa created GenerationFly to give students traveling a place to go to find

affordable travel on a world class airline. It has many great benefits but one of the great

things about GenerationFly is that you don’t have to be a U.S Citizen or a German

Citizen. All it requires is that the travel must originate from the USA, you must be a full-

time student enrolled in a college or university, have a valid school ID and an email

address that ends in .edu, which we know all the students have here at Manhattan College

(“GenerationFly,” n.d.).

For the last problem, about the layover, we came up with Lufthansa having to

create more hubs. A great way to start is by placing some in the popular destinations like

Tokyo, Mumbai, London, Paris, Madrid and Rome. These are only a few of the popular

destinations that Lufthansa flies to and if hubs are open in these cities, people are more

likely to fly with Lufthansa. They’ll have the option to choose which hub they want to

land for the layover and also it can be more convenient because their destination can be

close to one of these places.

In addition to creating more hubs, the company will also have to start offering

non-stop flights. As mentioned before, layovers or connecting flights are time consuming

and have an overall greater risk.

Results and Conclusion

In conclusion, three results will come from all the suggestions and

recommendations we gave to the company. First, brand awareness will increase. With the

advertising ideas, people will hear more about Lufthansa. Second, Lufthansa would have

reached a new target audience, the students. The students will be interested with the

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GenerationFly program that Lufthansa offers them. Lastly, profit and revenue will

increase. These two will come mainly by offering nonstop flights, people are willing to

pay the extra cash in order to get to their destination sooner and it’s an overall

convenience to them due to some of the examples mentioned already.

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Exhibit 1

Airline Survey

1. Which of the following airlines have you been on: a. Virgin b. Delta c. America d. United e. Lufthansa f. Qatar g. Emirates h. Singapore 2. Which of the following do you prefer when traveling internationally: a. Virgin b. Delta c. America d. United e. Lufthansa f. Qatar g. Emirates j. Singapore 3. Other than the U.S, what are other countries that you traveled to? a. South America b. Mexico c. Spain d. Portugal e. France f. Germany g. Italy h. Turkey i. U.K j. Asia 4. How many people do you travel with for vacation: a. 1 b. 2 c. 3 d. 4 e. 5 f. 6+ 5. When traveling for vacation, do you travel in: a. First Class b. Business Class c. Economy Class 6. How many times do you travel for vacation: a. once a year b. twice a year c. 3 times a year d. more than 4 times a year 7. Are you enrolled in a flyer mileage program: Yes No 8. Is ticket price a determining factor in choosing airline: Yes No 9. Do you prefer an airline that has an entertainment system like a TV or internet? Yes No 10. Is leg room an important factor to you? Yes No 11. Do you order food from the menu provided? Yes No 12. Have you every traveled with Lufthansa Airlines? Yes No 13. How did you hear about Lufthansa? a. friend/family b.website c.social media d.other _______ e. never 14. Do you like the fact that most of Lufthansa’s flights have a layover in Germany? Yes No

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How would you rate the following for Lufthansa: (1=Least Satisfied/5=Very Satisfied) 15. Comfort 1 2 3 4 5 N/A 16. Punctuality 1 2 3 4 5 N/A 17. Staff Service 1 2 3 4 5 N/A 18. Would you recommend Lufthansa to others? Yes No 19.Gender? Male Female 20. Age Group: a. 20 and younger b. 21-25 c. 26-33 d. 33-40 e. 41-47 f. 48-57 g. 58-67 h. 68+ 21. Which best describes you: a. Student b. Employed c. Student & Employed d. Homemaker d. Retired 22. Where are you from: City_______________ State__________________ 23. Income: a. 0-$20,000 b. $20,001-$40,000 c. $40,001-$60,000 d. $60,001-$80,000 e. $80,001-$100,00 f. $100,001+ 24. Marital Status: ________________________ 25.Do you have children: Yes No 26. How many children ? a. 0 b. 1 c. 2 d. 3 e. 4 f. 5+

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Exhibit 2

Correlation Tables

a. Have you ever Traveled with Lufthansa*Been on Lufthansa

Correlations

Have you ever

traveled with

Lufthansa Airlines Been on Lufthansa

Have you ever traveled with

Lufthansa Airlines

Pearson Correlation 1 .795**

Sig. (2-tailed) .000

N 25 23

Been on Lufthansa Pearson Correlation .795** 1

Sig. (2-tailed) .000 N 23 23

**. Correlation is significant at the 0.01 level (2-tailed). b. How did you hear about Lufthansa*Been on Lufthansa

Correlations

Been on Lufthansa

How did you hear

about Lufthansa

Been on Lufthansa Pearson Correlation 1 .433*


N 23 23

How did you hear about Lufthansa Pearson Correlation .433* 1

Sig. (2-tailed) .039 N 23 25


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c. How did you hear about Lufthansa*Have you ever traveled with Lufthansa Airlines Correlations

How did you hear

about Lufthansa

Have you ever

traveled with

Lufthansa Airlines

How did you hear about Lufthansa Pearson Correlation 1 .555**


N 25 25


Lufthansa Airlines

Pearson Correlation .555** 1


N 25 25


d. Do you like the fact that most of Lufthansa flights have layover in Germany*Been on

Delta Correlations

Do you like the fact

that most of Lufthansa

flights have a layover

in Germany Been on Delta

Do you like the fact that most of

Lufthansa flights have a layover in

Germany

Pearson Correlation 1 .434*


N 25 23

Been on Delta Pearson Correlation .434* 1


N 23 23


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e. Do you like the fact that most of Lufthansa flights have layover in Germany*Been on

United Correlations


that most of

Lufthansa flights

have a layover in

Germany Been on United



Germany



N 25 23

Been on United Pearson Correlation .476* 1

Sig. (2-tailed) .022 N 23 23


f. Would you recommend someone to fly with Lufthansa*Been on America Correlations

Would you

recommend

someone to fly with

Lufthansa Been on America

Would you recommend someone to

fly with Lufthansa



N 25 23

Been on America Pearson Correlation .580** 1

Sig. (2-tailed) .004 N 23 23


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g. Would you recommend someone to fly with Lufthansa*Have you ever traveled with Lufthansa

Correlations

Would you

recommend

someone to fly with

Lufthansa

Have you ever

traveled with

Lufthansa Airlines

Would you recommend someone

to fly with Lufthansa



N 25 25


Lufthansa Airlines

Pearson Correlation .471* 1

Sig. (2-tailed) .018 N 25 25


h. Would you recommend someone to fly with Lufthansa*How did you hear about Lufthansa

Correlations

Would you

recommend

someone to fly with

Lufthansa

How did you hear

about Lufthansa





N 25 25

How did you hear about Lufthansa Pearson Correlation .589** 1

Sig. (2-tailed) .002 N 25 25


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i. Would you recommend someone to fly with Lufthansa* Do you like the fact that most

of Lufthansa flights have layover in Germany

Correlations

Would you

recommend

someone to fly with

Lufthansa


that most of

Lufthansa flights

have a layover in

Germany





N 25 25



Germany

Pearson Correlation .585** 1


N 25 25


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References

GenerationFly . Retrieved from http://www.generationfly.com/ Lufthansa . Retrieved from http://www.lufthansa.com/ Lufthansa Group . Retrieved from http://www.lufthansagroup.com/ Miles & More . Retrieved from http://www.miles-and-more.com/ Nations Online . Retrieved from http://www.nationsonline.org/ Star Alliance . Retrieved from http://www.staralliance.com/ Travel and Leisure . Retrieved from http://www.travelandleisure.com/ Williams, A. (2012, June 14) . Connecting Flights vs. Non-Stops . Retrieved from

http://www.farecompare.com World Airline Awards . Retrieved from http://www.worldairlineawards.com/

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Lufthansa Term Paper