Description
luxury cruise liner ship Carnival and the strategies adopted like CRM cusomer relationships, industry scenario, consumer point of contact, database, personalisation, loyalty program, SWOT, customer acquisition etc
CARNIVAL CRUISE LINES
Management Philosophy
There are various statements in the case that gives an idea about the management philosophy at Carnival Cruise Lines. Some of them are stated below: 1) “We are in the vacation business, not the cruise business; they are our biggest competitors” - the statements indicates that the management of Carnival were clear about what business they are into. They know their vision and ready to align their efforts accordingly. 2) “We are very disciplined while buying new hardware and invest the smallest amount per bed. Most of our competitors buy ships for 25%and 30% more per bed than what we do.” – This points out that the focus of the company was on controlling the cost and also on efficient use of the resources. 3) “We don’t go fishing for the big tuna; we cast the wide nets of fun and attract all kinds of fish.” – This is an evidence of the fact that Carnival is for everyone. 4) “We try to create the minimum level of guest expectation – just as high enough for them to buy our product. We then deliver a product that goes far beyond that level of expectation.” – This is about under promising and over delivery thereby widening the delivery-expectation gap. 5) “No one owns the guest, frankly. Still, we’ve been very careful about marketing to agents’ guests” - It indicates the importance given to channel partners. The management wants complete channel harmony.
Customer Acquisition Process
The customer acquisition process took place in the following manner –
Customer
Travel Agent
Direct Channel
The guests interacted through the two channels to book their tickets as shown above - the travel agent and the direct channel. In the first step, they booked their tickets three to five months prior to sailing in order to get easy availability and cheap tickets. The booking could be done either through the travel agents or through the website directly. The online registration forms as well as data from the travel agent provided information regarding the profile of the guests like whether he’s a first timer or repeat, reason for vacation etc as well the demographic profile. The next step in the acquisition process was the embarkation which occurred when the guests started their journey - right from their boarding the flight to reach the port till being escorted inside the ship. They guests were attended and directed to the ship. Here the various check-in points gave the inputs about the guests. During their stay on the ship, the guests were offered various services. The Cruise experiences also formed a major part of the acquisition process. The sail and sign card was a major source of data which gave information about the preferences and choices of the guests.
The disembarkation process also was a major source of data for customer acquisition. The various bills, checkout forms, voyage reports provided details about the feedback of the guests, their next vacation plan etc.
Should Carnival go for Acquisition or Retention Strategy?
Current Acquisition Strategy:
Carnival Cruise Lines positioned themselves in the mainstream vacation market. They considered themselves to be Fun Ships targeted at Everyman with a capital ‘E’. “They casted the wide net of fun and attracted all kinds of fish”
Why to go for Acquisition?
-84% of the North American market ready for vacationing business has not yet cruised. Thus there is a huge untapped base of potential customers. -Carnival has 50% guests who are first timers with 98% guest satisfaction level. Thus half of the line’s customer base was not repeat customers which support the Acquisition strategy. - Carnival Cruise Lines is the market leader in the low-price cruise market. As a result of industry growth, new companies have entered the business and existing lines have added ships. Currently, Carnival controls 23.2 % of the berth space in the North American market. Carnival Cruise Lines is the dominant player in the entry-level cruise business.
Why not Acquisition?
- Carnival's belief that their largest customer base would come from the first-time user segment negated the company's motivation to collect past-user data and slowed the implementation of more effective data collection methods.
-
Many hospitality products are potential substitutes for a cruise, including hotels,
destination resorts, all-inclusive resorts, timeshares, rental homes, air travel, trains, and casinos. Though none of these products alone supplies the identical experience, several can be combined to provide a package with features similar to a cruise. - Substitute products constitute a strong challenge to the cruise industry due to the perceptions surrounding cruises. ? First, the perceived high cost of cruising makes other travel options seem more reasonably priced, even though the expense of a land-based vacation is comparable to the price of a cruise when all costs are considered. Thus, Affordability poses a threat to the Cruise Lines. ? Second, the perceived cost of a cruise creates a barrier related to switching costs. Given that an extended vacation may be a once-a-year-option, customers want to get the best value. Other products on the market appear to be less risky, whether they are land-based vacations or luxury purchases. - Lack of additional departures from ports within driving distance of the major source markets posed a threat. Thus to get to the ports is itself a barrier especially post terrorist attacks of 9/11. - Moreover, the potential market is not that big and attractive to continue with acquisition.
Data Capture Points
The various data capture points are – 1. Call Centers
2. Travel Agents 3. Direct channel – 1-800-Carnival & Carnival.com 4. Personal Vacation Planner 5. Emails – direct marketing 6. Online & written form – Fun Pass data 7. E-commerce application 8. Sail & Sign Cards 9. On board interaction with crew members
CRM Activities and Gap:
There were various initiatives that Carnival had undertaken in the line of implementing CRM but there were some major gaps that existed. Some these are • • • • Although there were many programs for the guests but Carnival didn’t had a single program primarily focussed to repeat customers (guests). The initiatives undertaken never targeted the preferences of the repeat customers, the on-board buying pattern and the travel pattern. The customers were not being segmented on the basis of profitability but on some other basis. There was a customer response system for handling and resolving complaints on the spot wherever possible. But the data from such system was not archived earlier which on analysis could have been helpful. • There was a revenue management system which was in place to generate better margins. But the customer information was inadequate as the travel agent didn’t transform all the information correctly.
Is Personalization a good strategy?
Personalization is one of the strategies which can be used but it is not the best strategy. Personalization requires various kinds of initiatives to be taken for successful implementation. The basic requirement for personalization is the data
about the repeat customers over a period of time. Also there should be option for customization. Here Carnival has wide variety of option but the problem is the customer data. In cruise industry the frequency of repeat purchase is very low. For better understanding of the customer requires much frequent data and her it was not available so frequently. There were only 2-3 times of maximum repeat purchases over 1-2 years and also the repeat purchase rate dropped significantly after that. Thus in this case personalization will not be a good strategy.
doc_978163153.doc
luxury cruise liner ship Carnival and the strategies adopted like CRM cusomer relationships, industry scenario, consumer point of contact, database, personalisation, loyalty program, SWOT, customer acquisition etc
CARNIVAL CRUISE LINES
Management Philosophy
There are various statements in the case that gives an idea about the management philosophy at Carnival Cruise Lines. Some of them are stated below: 1) “We are in the vacation business, not the cruise business; they are our biggest competitors” - the statements indicates that the management of Carnival were clear about what business they are into. They know their vision and ready to align their efforts accordingly. 2) “We are very disciplined while buying new hardware and invest the smallest amount per bed. Most of our competitors buy ships for 25%and 30% more per bed than what we do.” – This points out that the focus of the company was on controlling the cost and also on efficient use of the resources. 3) “We don’t go fishing for the big tuna; we cast the wide nets of fun and attract all kinds of fish.” – This is an evidence of the fact that Carnival is for everyone. 4) “We try to create the minimum level of guest expectation – just as high enough for them to buy our product. We then deliver a product that goes far beyond that level of expectation.” – This is about under promising and over delivery thereby widening the delivery-expectation gap. 5) “No one owns the guest, frankly. Still, we’ve been very careful about marketing to agents’ guests” - It indicates the importance given to channel partners. The management wants complete channel harmony.
Customer Acquisition Process
The customer acquisition process took place in the following manner –
Customer
Travel Agent
Direct Channel
The guests interacted through the two channels to book their tickets as shown above - the travel agent and the direct channel. In the first step, they booked their tickets three to five months prior to sailing in order to get easy availability and cheap tickets. The booking could be done either through the travel agents or through the website directly. The online registration forms as well as data from the travel agent provided information regarding the profile of the guests like whether he’s a first timer or repeat, reason for vacation etc as well the demographic profile. The next step in the acquisition process was the embarkation which occurred when the guests started their journey - right from their boarding the flight to reach the port till being escorted inside the ship. They guests were attended and directed to the ship. Here the various check-in points gave the inputs about the guests. During their stay on the ship, the guests were offered various services. The Cruise experiences also formed a major part of the acquisition process. The sail and sign card was a major source of data which gave information about the preferences and choices of the guests.
The disembarkation process also was a major source of data for customer acquisition. The various bills, checkout forms, voyage reports provided details about the feedback of the guests, their next vacation plan etc.
Should Carnival go for Acquisition or Retention Strategy?
Current Acquisition Strategy:
Carnival Cruise Lines positioned themselves in the mainstream vacation market. They considered themselves to be Fun Ships targeted at Everyman with a capital ‘E’. “They casted the wide net of fun and attracted all kinds of fish”
Why to go for Acquisition?
-84% of the North American market ready for vacationing business has not yet cruised. Thus there is a huge untapped base of potential customers. -Carnival has 50% guests who are first timers with 98% guest satisfaction level. Thus half of the line’s customer base was not repeat customers which support the Acquisition strategy. - Carnival Cruise Lines is the market leader in the low-price cruise market. As a result of industry growth, new companies have entered the business and existing lines have added ships. Currently, Carnival controls 23.2 % of the berth space in the North American market. Carnival Cruise Lines is the dominant player in the entry-level cruise business.
Why not Acquisition?
- Carnival's belief that their largest customer base would come from the first-time user segment negated the company's motivation to collect past-user data and slowed the implementation of more effective data collection methods.
-
Many hospitality products are potential substitutes for a cruise, including hotels,
destination resorts, all-inclusive resorts, timeshares, rental homes, air travel, trains, and casinos. Though none of these products alone supplies the identical experience, several can be combined to provide a package with features similar to a cruise. - Substitute products constitute a strong challenge to the cruise industry due to the perceptions surrounding cruises. ? First, the perceived high cost of cruising makes other travel options seem more reasonably priced, even though the expense of a land-based vacation is comparable to the price of a cruise when all costs are considered. Thus, Affordability poses a threat to the Cruise Lines. ? Second, the perceived cost of a cruise creates a barrier related to switching costs. Given that an extended vacation may be a once-a-year-option, customers want to get the best value. Other products on the market appear to be less risky, whether they are land-based vacations or luxury purchases. - Lack of additional departures from ports within driving distance of the major source markets posed a threat. Thus to get to the ports is itself a barrier especially post terrorist attacks of 9/11. - Moreover, the potential market is not that big and attractive to continue with acquisition.
Data Capture Points
The various data capture points are – 1. Call Centers
2. Travel Agents 3. Direct channel – 1-800-Carnival & Carnival.com 4. Personal Vacation Planner 5. Emails – direct marketing 6. Online & written form – Fun Pass data 7. E-commerce application 8. Sail & Sign Cards 9. On board interaction with crew members
CRM Activities and Gap:
There were various initiatives that Carnival had undertaken in the line of implementing CRM but there were some major gaps that existed. Some these are • • • • Although there were many programs for the guests but Carnival didn’t had a single program primarily focussed to repeat customers (guests). The initiatives undertaken never targeted the preferences of the repeat customers, the on-board buying pattern and the travel pattern. The customers were not being segmented on the basis of profitability but on some other basis. There was a customer response system for handling and resolving complaints on the spot wherever possible. But the data from such system was not archived earlier which on analysis could have been helpful. • There was a revenue management system which was in place to generate better margins. But the customer information was inadequate as the travel agent didn’t transform all the information correctly.
Is Personalization a good strategy?
Personalization is one of the strategies which can be used but it is not the best strategy. Personalization requires various kinds of initiatives to be taken for successful implementation. The basic requirement for personalization is the data
about the repeat customers over a period of time. Also there should be option for customization. Here Carnival has wide variety of option but the problem is the customer data. In cruise industry the frequency of repeat purchase is very low. For better understanding of the customer requires much frequent data and her it was not available so frequently. There were only 2-3 times of maximum repeat purchases over 1-2 years and also the repeat purchase rate dropped significantly after that. Thus in this case personalization will not be a good strategy.
doc_978163153.doc