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Carnival Cruise LinesCarnival Cruise Lines

Oceanic Consulting[March 13, 2012]

Team 2: Hostetler | Lewis | Panutsos | Yang | Zhao

Agenda:

1.Challenge & Key

Considerations

6.Risks &

Mitigations

2. Setup &

Framework

5.Strategy for

Implementation

3.Market Analysis

& Strategy

4.Options &

Suggested Action

1.Objective & Key

Considerations

6.Risks &

Mitigations

2. Setup &

Framework

5.Strategy for

Implementation

3.Market Analysis

& Strategy

4.Options &

Suggested Action

Synopsis:

Carnival Corporation is having its best year ever and

currently leads the cruise industry.

Carnival has long practiced a successful market

expansion strategy with growth fueled by selling the

mass-market cruise category to first-time cruisers.

A large past-cruiser database has been amassed, but

has not been utilized.

One driver of carnival’s success was a clear vision

about the industry it operated in and unwavering

commitment to the brand essence.

Objective:

• Identifying and utilizing the most effective

methods for improving customer

experience and information management

to ensure another successful year for

Carnival Cruise Lines

Key Considerations:

• Identifying and utilizing the most effective methods for improving customer

experience and information management to ensure another successful year for

Carnival Cruise Lines

• Market Growth & Customer Relations

• Distribution Channel Friction

• Information Management

Key Considerations:• Market Growth & Customer Relations

• Effective methods to increase the

percentage of repeat customers

• Keep up with increasing demand

• Capacity, age of ships, amenities

• Market strategies for expansion

• Identify and capitalize on trends

Carnival

Cruise

Lines

51.6%

Royal

Caribbean

31.9%

Star

9.7%

6.9%

Key Considerations:• Distribution Channel Friction

• Effectively manage &

leverage evolving product

distribution channels

•Handle issues with direct

marketing vs. travel agents

• Determine best way to

market to clients

Key Considerations:• Information Management

• Leverage customer data to better

understand, serve & profit from guests

•Past Cruiser Database now owned

•Customer Relationship Management

(CRM) needs addressed

• Determine best use and practices for

current compiled data

1.Objective & Key

Considerations

6.Risks &

Mitigations

2. Setup &

Framework

5.Strategy for

Implementation

3.Market Analysis

& Strategy

4.Options &

Suggested Action

Cruise Distinctions:

Royal Caribbean

Carnival Fun Ships

Ima

ge

Co

mp

ari

son

Info Systems & CRM:

Major On-Board Systems

POS “Fun Sales System”

-Tracks sales throughout

shipboard outlet

Property Management System

-Aggregates transactions for each

guest & produces invoices

No data warehouse

Varying sophistication of affiliate IT

systems

No real CRM implementation in place

Framework:

Strengths

Increasing debt and

borrowings

Limited market cover

Incomplete and inefficient

database

No concerted program for

attracting repeated guests

1/3 market share of North

America and consistent and

stable growth

All kinds of brands covering

market and high brand

reputation

Guest Folio advantage

A wide range of activities and

service

Weaknesses

Framework:

Opportunities

Cruise industry

transformation

Competitors’ growth

Distributing conflicts between

travel agencies and company

direct channels

New markets to develop

Customers’ demand for

cruising booms consistently

New technologies

Potential value of customer

data.

Threats

1.Objective & Key

Considerations

6.Risks &

Mitigations

2. Setup &

Framework

5.Strategy for

Implementation

3.Market Analysis

& Strategy

4.Options &

Suggested Action

Cost Comparison:

$1

,79

6

$1

,65

1

Trad'l Vacation Carnival Cruise

Duration 7 days 7 days

Hotel $700 [Included]

Rental Car/ Gas $340 [Included]

Breakfasts $126 [Included]

Lunches $140 [Included]

Dinners $280 [Included]

Entertainment $210 [Included]

Total $1,796 $1,651

A Carnival cruise is slightly cheaper than traditional travel, and all of

the planning, cooking, cleaning, & etc. is done for the customer.

Source: www.cruisemates.com

Market Segments:

Contemporary

Premium

Destination

Luxury

Pri

ce

Quality

Demographics:

More diverse

Average cruiser� 46 years old

� Household income $65k

High ratio of 1st time cruisers

Repeat Cruisers:� Typically within 12-25 mos.

� Less than 20% cruise more than 2x

� Spend 15% more on-board on subsequent cruises

Frequency:50%: First Time

17%: Repeat Cruiser

23%: Repeat w/ CCL

Age:24%: 55 and up

40%: 35-55

36%: Under 35

Status:Carnival:

54%: Married

45%: Single

Industry:

78%: Married

22%: Single

Distribution:

Travel agents occupy

majority of the customers

PVP efficient and grow fast

Still try to appease travel

agents

85% of sales through travel

agents

Customer Sources by Channel:

Agents earn 10% commission on ticket price

Direct sales through Carnival.com & 1-800-Carnival

200 telemarketer “Personal Vacation Planners”

Passengers (in thousands)

Market Share:

Cost Analysis:

1.Objective & Key

Considerations

6.Risks &

Mitigations

2. Setup &

Framework

5.Strategy for

Implementation

3.Market Analysis

& Strategy

4.Options &

Suggested Action

Pro Forma Analysis:

Feasible Alternatives:

Use CRM to develop a rewards program linked to the

Sail & Sign card and targeted at repeat-customers

Increase focus on direct-to-consumer sales using CRM

to eliminate or reduce 10% of revenue cost structure

Target new first-time customers through streamlined

marketing strategy with focus on “fun ship” image

Criteria (Weightedby Importance) Opt 1 Opt 2 Opt 3

Revenue Growth (30%)

Cost Reductions (30%)

Customer Perception (20%)

Distributor Relationships (20%)

-

1

1

0

1 -

1

2

1

2

-

2

1

1

2

Totals 1 2 4

Weighted Totals 0.2 0.7 0.9

Option Analysis:

Recommendation:

Merging Options 2 and 3:

Use CRM to develop a rewards program linked to the Sail &

Sign card and targeted at repeat-customers

• Can also use this to improve customer experience

• Program will increase number of repeat-customers,

who may be more interested in direct- to-consumer sales

& typically spend more on-board

Projected Pro Forma:

1.Objective & Key

Considerations

6.Risks &

Mitigations

2. Setup &

Framework

5.Strategy for

Implementation

3.Market Analysis

& Strategy

4.Options &

Suggested Action

Implementation:

0-6

Months

6-9

Months

• Develop process for on-going data collection & format past data to match new strategy• Design CRM strategy for capitalizing on repeat-customers through sail & sign spending• Develop sales data utilization plan for agents and customer rewards plan for cruisers

• Train Personal Vacation Planners [PVPs] to utilize new CRM system• Develop incentive system for on-board staff to encourage full CRM implementation• Launch internet campaign directed at streamlining repeater cruise packages

0-6 Months

6-9Months

9-12Months

12-24Months

Implementation:

9-12

Months

12-24

Months

• Soft launch of new web interface for online sales• Official launch of rewards program, internet campaign, and incentive scheme• Inform travel agents of the new launch & address any potential concerns

• Assess effectiveness of newly implemented strategies• Check in with travel agents to assess their response to the newchanges• Mitigate any concerns effectively to prevent disharmony betweenchannels

0-6 Months

6-9Months

9-12Months

12-24Months

1.Objective & Key

Considerations

6.Risks &

Mitigations

2. Setup &

Framework

5.Strategy for

Implementation

3.Market Analysis

& Strategy

4.Options &

Suggested Action

Risks & Contingencies:

Direct Sales Push

alienates travel agents

Rising petroleum prices

and/or shortages

Financial crisis/decrease

in vacation spending

Implement incentive

system to encourage

travel agents to push

repeat cruisers back to

Carnival. Extra 15% in

spending from repeat

cruisers offsets extra

cost.

Begin investing in

renewables like solar

and wind. Look into

energy efficiency on Fun

Ships and reduce

consumption where

possible.

Expand coverage of

short range budget

cruises and target

departure points that

will reduce cruisers

need to fly to

debarkation.

Questions?