Table of Contents 1. 0 Executive Summary2 2. 0 Introduction3 3. 0 Situational Analaysis4 3. 1 Internal Strengths and Weaknesses4 3. 1. 1 Strengths to Build Upon4 3. 1. 2 Weaknesses to Overcome5 3. 2 External Opportunities and threats6 3. 2. 1 Opportunities to Exploit6 3. 2. 2 Threats to Overcome7 4. 0 Mission Statement9 5. 0 Organisational Goals and Objectives10 6. 0 Positioning Strategies11 6. 1 Products11 6. 2 Food11 6. 3 Operation12 7. 0 Marketing Mix Strategies13 7. 1 Product13 7. 2 Price13 7. 3 Place13 7. 4 Promotion13 8. 0 Implemention and Control15 8. Implemention Schedule15 9. 0 Additional Considerations17 9. 0 Conclusion18 10. 0 Reference19 1. 0 Executive Summary The main purpose of this report is to create a tactical marketing plan for KLM Royal Dutch Airlines. The report comprises the marketing initiatives of KLM for years especially recent years, which have been created through identifying and analyzing its own strengths, weaknesses, opportunities and threats.
KLM Royal Dutch Airlines is the world’s oldest airline which is still operating under its original name. It also includes KLM cityhopper, transavia. om and Martinair. KLM has three core businesses: passenger transportation (Passenger Business), cargo transportation (KLM Cargo), and aircraft maintenance (KLM Engineering & Maintenance). It offers customers global access at competitive prices with a good and varied product.
In virtue of its merger with Air France, KLM is now part of the Europe’s leading airline group and one of the World’s most important airlines. However, the position of such renowned leader as the KLM Royal Dutch Airlines is also experiencing some difficulties and obstacles with its operation and management.
Due to the global economic crisis and cut-throat competition, KLM is facing a decline in profits and margins; it’s also under great pressure from the reduced demand in the market; its delayed or cancelled flights rate is high. In order to improve these issues and maintain its leading position in the aviation industry, this report also formulates some appropriate aims and objectives of KLM. Also, it identifies and discusses several marketing strategies for KLM to achieve these goals. According to the strategies, this report has designed an implemention and control aimed at ensuring that the desired results are achieved.
In the end, this report discusses some potential issues and problems that KLM may face in the process of the implementation and control . 2. 0 Introduction KLM Royal Dutch Airlines was founded on 7 October, 1919. KLM’s headquarters are in Amstelveen near its hub at Amsterdam Airport Schiphol. It is today the oldest airline still operating under its initial name. KLM has been part of the Air France since the merger in 2004. It is the core of the KLM Group, which further includes the wholly-owned subsidiaries KLM Cityhopper, transavia. om and Martinair. KLM operates worldwide scheduled passenger and cargo services to more than 90 destinations. With smart partnerships and pioneering new destinations, KLM offers global access through its extensive network. By responding to market opportunities and technological developments, KLM offers customers a contemporary product. Currently, it has about 33,000 employees ( KLM, n. d. ). 3. 0 Situational Analaysis 3. 1 Internal Strengths and Weaknesses 3. 1. 1 Strengths to Build Upon Strong Route Network
KLM is the only carrier on 61 of the routes it operates, standing for 45% of its ASKs from the airport . With its offer of a a total of 119 non-stop scheduled destinations to 58 countries and almost 55% of all scheduled flights at Amsterdam Schiphol (AMS) airport KLM enjoys a dominant position at its home base as well as in the world market (“KLM still growing at Amsterdam; UK and Norwegian markets important; three new routes in 2008”, 2008). Besides, KLM is still expand its network in 2010-2011 by adding new destination Hangzhou, China. Engineering & Maintenance Support
KLM Engineering & Maintenance is the largest aircraft manufacturer in the Netherlands. It offers KLM service in terms of maintenance, repairs and modifications on aircraft, engines, and components for its fleet. Engineering & Maintenance also succeeds to perform other activities in the field of product and operational performance improvement. All these provide KLM with a position to influence its level of interest rates. Alliance with SkyTeam KLM is a member of SkyTeam, one of the global airline alliances and world’s second-largest alliance in terms of market share.
The membership in the airline alliance enables KLM to optimize its performance and minimize costs for the reason that members of the alliance have their own routes and schedules which do not intersect to avoid the competition. Competitive Joint Venture and Subsidiaries KLM has transavia. com and Martinair subsidiaries. It also has merged with Air France in 2004. They supplement and strengthen each other in important areas. In addition, the joint venture between Air France, KLM and Delta Air Lines also provides KLM with a strong position in the North Atlantic market. Taking the Lead in Sustainability
KLM has played a leading role in energy-efficient flight by fleet renewal and fleet adjustment which selects cleaner and quieter aircraft. KLM flies 25% more fuel efficiently than comparable European airlines. Almost all KLM’s ground vehicles run on red diesel, which is low in sulfur and is blended with biodiesel. These will therefore places KLM in an advantageous position to achieve sustainable growth which is so important for a company (KLM, n. d. ). 3. 1. 2 Weaknesses to Overcome Weak Management Effectiveness The growing organizational hierarchy brings about the problem of the effective control over the performance of all units of KLM.
Top executives of KLM cannot totally control the functioning of the entire company since they may focus on the development of the company. And it also raise the difficulty to control over its subsidiaries and units for they are located in different parts of the world. The Problem of Restructure The merger with Air France also generates a problem of the restructuring of the company and integration of new units into the organizational structure. At the same time, it can cause serious internal problems due to the difference in the managerial style and operations. Declining Profits and Margins
KLM recorded a weak in Passenger Business performance in fiscal year 2009/10 . The yield during the first and second quarters of the fiscal year was 14% lower than the same period of the previous fiscal year. In terms of Cargo Business, full year revenues per available freight kilometer experienced a 15% drop compared with the previous fiscal year ( KLM, n. d. ). Delayed or Cancelled Flights A statistics of KLM’s on-time performing rates showed that there were only 71% on-time flights during Nov 01, 2010 and Dec 31, 2010 which means 29% flights were delayed or cancelled ( “KLM On-time Performance Rating”, n. . ). It may has a bad impact on the company due to the increased possibility of passengers’ cash compensation and customer lose. 3. 2 External Opportunities and threats 3. 2. 1 Opportunities to Exploit Recent Acquisitions KLM has made significant acquisitions in recent years. For instance in 2007, it introduced the Engine Water Wash as a means of aircraft engines self-clean using water. This cleaning method contributes to lower fuel consumption and lower CO2 emissions. Besides, KLM renewed part of Boeing 737 fleet and the last Fokker 50s were phased out during 2009-2010.
On November 23, 2009, KLM operated the world’s first demonstration flight which was partly powered by biofuel with a number of passengers. It also initiated a fuel awareness program designed for cockpit crew and ground handling staff , and an outstanding approach towards the careful use of fuel has been adopted. All these initiatives will have a profound impact on making KLM more sustainable in general terms. Furthermore, on March 29, 2010, KLM made a important and visible step forward by introducing new ladies’ uniform for all cabin and cockpit crew, and uniformed ground staff.
This new ladies’s uniform enhances KLM’s modern and professional image to a large degree. Moreover, KLM has successfully introduced Economy Comfort, a dedicated front section of Economy Class in 2009. In Economy Class, the pitch has been extended to 35 inches (instead of 30 or 31 inches) which gives important extra legroom at a slight increase in price. Another innovative action is the seat replacement program including audio video on demand. These improvement in service will contribute to the advance in customer appreciation rating.
It is believable that these acquisitions which the company made in these years will help KLM to upgrade its brand awareness and generate incremental revenues ( KLM, n. d. ). Global Expansion It is worth mentioning the merger of KLM with Air France in 2004 helps the company to accelerate its international market expansion. This merger provides KLM with a golden opportunity to improve its competitive position because of the increasing fleet, number of routes and, in turn, a number of passengers. KLM will also have access to new markets where the position of Air France was traditionally strong.
In addition, as a member of the Sky Team alliance, KLM will stand a good chance of the penetration of other markets. 3. 2. 2 Threats to Overcome • The problem of safety of flights is always brought into focus especially after September 11which leads to a decrease in the number of passengers and cargo flights. In this context, KLM faces a threat of the increase of costs on the improvement of safety of flights which will have an impact on its revenues. • The global economic crisis which results in the unstable economic environment has made a negativee impact on many industries including KLM.
It may be difficult for the company to retain its existing customers due to the reduced demand. • KLM may also under extreme pressure by the growing fuel price and exchange rate fluctuations, which forces the company to take more effective measures to improve fuel efficiency and respond to changes. • The volcanic ash crisis in April 2010 has made a distinct bad impact on KLM. The changeable weather will aslo add uncertainty to the company and influence its normal functioning. • With the growing competition , KLM will have to update its marketing strategies more frequently to maintain competitive advantage. . 0 Mission Statement KLM takes the lead in European airline industry. It also connects the world by offering service and products to the international customers. KLM works to provide customers with innovative, contemporary and service-oriented products. KLM strives to operate in a safe and efficient way focusing on sustainability. KLM aims to achieve a sustainable growth and meet its needs of corporate social reponsibilty in the meantime. 5. 0 Organisational Goals and Objectives These following goals are suggested based on the analysis shown in SWOT analysis. To improve brand awareness and name recognition. • To improve operational safety and quality by training employees by the end of this year.. • To improve customer service thus retaining and attracting more customers. • To commence more effective advertising activities and finish them by the end of this year. 6. 0 Positioning Strategies Rise and Trout (1981) point out that positioning is an importnt strategy that helps to create a distinct image of the company’s offering in a customer’s mind. To this context, it is necessary for KLM to use this kind of strategy to improve its brand awareness.
These following positioning strategies required for target audience are suggested in the form of positioning statements. 6. 1 Products • World Business Class is a smart choice for the customers who are on longhaul aircrafts and wish to obtain high-quality service because it offers a comfortable and excellent 176 degree angled lie-flat seat which is well equipped ( e. g. TV monitor with AVOD , email/text messaging, a privacy canopy, a massage function). It also includes a fully flexible reservation, lounge access, priority boarding and three course meal, beverages and snacks on board. For the customers who are pursuing cheap price and good service, KLM offers Economy Class that is more competitive than other airlines because it provides passengers with not only cheapest price but also higher quality, fresh food and free drink ( including alcohol ). • Economy Comfort Class, a dedicated front section of Economy Class is a best choice for the customers who wish to acheive a relatively low price but higher quality service because it offers a more comfortable seats and a quick disembarkation advantage compared to other competitors with a low price. 6. Food The food KLM offers is of superior quality for the use of sustainably sourced fish in its cuisine. KLM ensures that the fish it offers is from the green list of WWF or MSC (Marine Stewardship Council) certified and KLM also guarantees the fish purchased is not on the red list of WWF in case the fish of the green list is not available. 6. 3 Operation KLM’s operation is at the highest level of safety and at the peak of effciency. The reasons why are that KLM never compromises on safety and continuous and effortless attention is being paid to the training of its pilots.
In addition, KLM’s aircraft maintenance is fully ISO 14001 certified. 7. 0 Marketing Mix Strategies 7. 1 Product • Train the employees especially those working in operational and technical functions about the importance of safety and increase their awareness. It is because that passengers are paying more and more attention to safety in today’s world. Consumers will pursue lower price, but not at the cost of a notion of a safety risk. Safety is also very important for the company to maintain its good image and retain customers. Design an effective program to improve on-time arrival and departure rates. • Complete the refurbishment of all the C pier at Schiphol Airport . • Fix seating arrangements in all of the piers to improve the boarding process, which will make it easier to distinguish between premium and non-premium passengers and will in turn save a lot of time for passengers. • Continuously work with Air France on a new computer system that will deal with a lot of service such as bookings, reservations and check in. 7. 2 Price • Compare and analysis prices against other strong competitors every six months. Design a key strategy for competitive pricing. 7. 3 Place Improve the process of selling via ecommerce through the company website. 7. 4 Promotion Public Relations • Closely monitor numerous media channels such as websites for public comment about a company , service and its products. • Design a scheme to improve and respond to those comments made by customers. • Design and change KLM AirCares program every three months , and generate publicity for these projects by using inflight promotional films, articles in KLM’s magazines and providing information on the corporate website.
By doing so, KLM will set a good image and build goodwill to its target market through community. Advertise • Advertise more good service that KLM offers on the corporate website. • Arrange for links with the key internet search engine sites which can help to maximise the discoverability of the KLM website. Sales Promotion Hand out free little things such as coffee cup labelled with the company’s name to the customers. Try to make it impressive and unique. Personal Selling
Explore controlled word-of-mouth marketing such as by hiring individuals to spread positive information about KLM’s product and service. It is proved that this technique is especially useful for a company to build a high level of awareness for its brand. 8. 0 Implemention and Control 8. 1 Implemention Schedule |ACTIVITIES |DATE / FREQUENCY | |Complete the refurbishment of all the C pier at Schiphol Airport |By mid March 011 | |Train the employees about the importance of safety |By mid March,2011 | |Fix seating arrangements in all of the piers |By March 31,2011 | | Work with Air France on a new computer system that will deal with a lot of service |By mid April,2011 | |Improve the process of selling via ecommerce through the company website. By mid April 2011 | |Arrange for links with the key internet search engine sites |By mid April 2011 | |Design an effective program to improve on-time arrival and departure rates |By mid May, 2011 | | Advertise more good service that KLM offers on the corporate website |Daily beginning April 2011 | |Hand out free little things such as coffee cup labelled with the company’s name to the |Daily beginning April 2011 | |customers | | |Closely monitor numerous media channels |Daily beginning April 2011 | |Design a scheme to improve and respond to those comments made by customers |Weekly beginning April 2011 | |Explore controlled word-of-mouth marketing |Daily during April 2011, and as | | |necessary thereafter within budget| |Design and change KLM AirCares program |Every three months | |Compare and analysis prices against other strong competitors |Every six months | |Design a key strategy for competitive pricing |Every six months | 8. 2 Control • Produce a checklist with all marketing activities, due-by dates and spread them to the related staff. • Find situable staff or volunteers for all the above. 9. 0 Additional Considerations Below are some potential issues or problems within the suggested implemention and contol. • KLM may lack funding sources to support its KLM AirCares program which can be very costly. • The controlled word-of-mouth marketing may be difficult for KLM to scrutinize. • The changeable weather may greatly influence the achievement of KLM’s aim to improve on-time arrival and departure rates. The global economic crisis that leads to a downturn in economy may continue to block its goal to retain and attract new customers. 9. 0 Conclusion This report has considered the situation faced by KLM and its objectives. It has taken a critical look at both KLM’s external and internal environments by he “SWOT” analysis. Also, this report has identified and discussed various detailed marketing strategies for KLM to achieve the goals. With growing competition and some potential issues and threat that KLM may face for now and near future, it is suggested that KLM should update its strategies as necessary and work to implement successfully to hold a strong position in the airline market. 0. 0 Reference KLM, n. d. 2009-2010 Public Report http://corporate. klm. com/assets/files/publications/Publieksverslag_2009-2010_EN. pdf (Accessed January 9, 2010) KLM On-time Performance Rating n. d. http://www. flightstats. com/go/FlightRating/flightRatingByCarrier. do? airline=(KL)+KLM (Accessed January 11, 2010) KLM still growing at Amsterdam; UK and Norwegian markets important; three new routes in 2008 , 2008 http://www. anna. aero/2008/09/12/klm-still-growing-at-amsterdam/ (Accessed January 12, 2010) Ries, A. and Trout,J. (1981) Positioning, The battle for your mind, Warner Books – McGraw-Hill Inc. , New York, 1981, ISBN 0-446-34794-9
Cite this Marketing Report on Klm Royal Dutch Airline
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