LUFTHANSA'S CUSTOM MARKETPLACE ASSESMENT
EVOLUTION CHALLENGE HEC BUSINESS GAME - By Danielle Gratsch, Jennifer Wei, Roy Kamami, Laure Marchessaux, Carl Rosseel, Ruben Hemelings
2 Lufthansa is looking for innovative ideas to increase their revenue streams Context ▪Lufthansa, one of the biggest airline carriers, is looking for a new way to increase their profitability –Operational efficiency is required to keep up with low-cost carriers –Innovation is key to steer away from the intense competition ▪Recently, Amazon launched a marketplace, which opens up the large customer base to business partners Come up with a creative idea to implement a similar marketplace within Lufthansa’s existing business plan OUR PROPOSITION AirDiscover, a destinations marketplace, could be a potential source of new revenue streams for Lufthansa“ The challenge
3 The Current Lufthansa Inflight Experience…. “I’ll be in Rome for two nights –what should I do after work hours?” -The Executive “What are we going to do at our destination? How can we take advantage of family discounts?” -The Family “I have a 4-hour layover in Paris, how should I make the most of my time?” -The Backpacker Client Entertainment Options Client Needs ▪Movies ▪Magazines ▪Books ▪Your neighbour…? But most of the time, Clients are probably thinking about their destination.
4 Introducing AirDiscover-“a destinations marketplace” A revolutionary marketplace for an extraordinary inflight experience
5 Connecting businesses with customers by leveraging our client base and supplier panel B2B B2C In-Flight Air Discover Supplier Market Place Platform Suppliers upload offers to the platform for relevant flights Suppliers include: Restaurants, Hotels, Excursion Trips, Museums… Customers search and book for destinations' activities and offers Are able to tailor offers to clients on specific flights Will be recognized as premium places Access to consumer base Plan trip in flight Receive premium selection of activities at a discount Make good use of flight time
Advantages for Lufthansa 6 Our platform will offer revolutionizing benefits to all parties involved ▪This marketplace would yield a win-win situation –The partner can efficiently target the customer –The customer receives personalized advertising –Better brand image for Lufthansa ▪Lufthansa would play an intermediary role, benefiting from a commission –An automated platform shouldn’t require much operational costs –A gradual phase-in with a strong base would allow further expansion in the future ▪Lufthansa benefits from strong bargaining power with a large client base –Competitive platform lowers prices for consumers –Lufthansa able to negotiate large commissions REVOLUTIONIZE THE INDUSTRY
7 Commission based model will maximize revenues ▪Customers will get an access code that offers them a reduction ▪Targeted advertising about destination –Example: Customer purchases a scuba diving excursion, Lufthansa gets a 20% commission Basic model How does it work? Subscription is free for suppliers Customers get access to the platform through purchasing their flight with Lufthansa Lufthansa takes a commission on services purchased through the platform Extra features ▪Premium account for suppliers will boost revenues –Be able to target special flights and differentiate offers –Giving suppliers information about incoming flights
8 AirDiscoveroffers multiple opportunities for expansion 2016201720182015 Createplatform Expand platform Exploreonline options Platform serves allairlinesin the Lufthansa group ‒Offer onlyin flight reductions ‒Offer targetedandconvenience advertising 123 Otherairlinecompanies are interested ‒Franchise Fee ‒Commissionon numberof transactions Explandplatform: ‒Offer out-flight reductions ‒Personalizedcode willoffer reductions Multiple step approach decreases risk and optimizes reward “
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