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Cruise ShipsA case study for Market Opportunity AnalysisGroup 5

Presented by:Mauricio Gonzales-quint

Chantharas Kanchanakool Nina Krapf

Vincent G. TenchavezBui Thi Thuy

Julia Vassiljeva

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members

Thuy

Mauricio

NinaJulia

Vince

Mod

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I. Introduction of Case study

II. Savvy Marketing helped fuel industry growth        a.) Factors that helped change consumer perceptions        b.) Ability of major competitors to understand market

III. Types of Cruises, Benefits & Major competitors      IV. Future Challenges

V. Conclusion/Discussion Points

outline

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Introduction

Vince

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introduction Before the

1980’sSea cruise was viewed as:

• dull and sedate• vacation alternative• for rich old people

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introduction During the

1980’sSea cruise perception changed:

• 8.5% annual growth• most profitable• 2005: 6M customers

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introduction2005, Carnival Corp. was the market share leader and parent of several lines:• $2.3B net income• $11.1 sales revenue• 2009 forecast of 8% growth

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introduction Problems2002 – Cruise Industry slowed down:• Terrorism• Energy costs• Harbor pollution

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introduction Growth2005 – Cruise Industry’s growth continued:• 6M+ customers• UK, Europe, Australia• 2009 – forecast of 8% growth

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Savvy Marketing

Julia/Nina

How?

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Characteristics of the Cruise Vacation

Industry• Exceptional Value Proposition– Including transportation, accommodation,

catering and entertainment for one all-inclusive competitive price

• Relatively Low Market Penetration Levels– About 20% of the U.S. population has ever

taken a cruise, 9 to 10% in the UK and 4 to 5% in Europe.

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• Wide Appeal– 127 million potential cruise guests in North

America. More than half of these individuals have expressed an interest in taking a cruise as a vacation alternative

• Positive Guest Demographics– Between 2005 and 2015, the number of people in

the cruise industry's primary age group of 45 years and older are expected to grow by 24 million, or 20%, in the U.S. and Canada, and 20 million, or 15%, in the major Western European countries

savvy marketingCharacteristics of the

Cruise Vacation Industry

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• High Guest Satisfaction Rates–North American cruise guests have a total

satisfaction rate of 95%, including nearly 45% of cruise guests stating that they are extremely satisfied with the experience, which is defined in the surveys as the highest satisfaction rating of any vacation alternative they have experienced.

• Significant Growth Potential– The number of new cruise ships currently on order

from shipyards indicates that cruise capacity is set to grow by 23% through 2012

savvy marketingCharacteristics of the

Cruise Vacation Industry

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Carnival’s Income

Merged with P&O Princess

Cruises

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Ships and passengers carried (Carnival)

Passengers thous.

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Building demand• Building demand through

strengthening all aspects of marketing programs

• Goal: to appeal wider variety of customer segments

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Marketing steps• Investments into physical

facilities: casinos, shopping arcades, theatres, health spas, Internet, skating ring etc.

• Shorter and cheaper cruises • More ports around the world • More money spent on advertising

and promotion programs

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Understand the market:• Understand, that wants and

needs of customers are different in various age or social groups• Focus on special interests,

ideals and hobbies to fulfill their desires gain new customers

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How can you adapt ships for target groups:

• Create new ship designs – modern, comfortable and cozy • Offer special comforts, bigger

suites,…• Serve special food and beverages –

create new tastes and be creative to offer customers unknown things

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• Offer special activities related to the target group: sports, music, relaxing, SPA, ……• tailor all these things to the

target group (demographic, social, lifestyle, age,….)

savvy marketingHow can you adapt ships

for target groups:

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Examples of special arrangements:• P&O Princess – cruise in

the Mediterranean: younger couples Sports and educational

activities like: scuba diving, gourmet cooking, wine tasting

• “Romantic cruises”: honeymooners

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• Cruises for single crowd• Cruises for families with young

children:multiroom suitessupervised activities children are not bored and parents can enjoy holidays ….

• Traditional target group cruises: couples in the 50s and 60s

savvy marketingExamples of special

arrangements:

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CruisesTypes, Benefits, Competitors

Thuy/Mod

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Carnival Cruise line• Carnival Cruise Lines is the largest and most popular cruise line in the world

• Each Carnival vessel features at least three swimming pools, a full gambling casino, on-board duty free shopping, as well as a "Nautica Spa" health and fitness facility, and "Camp Carnival"

cruises

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Royal Caribbean• Royal Caribbean cruise ship is

like a recreation center, a grand hotel, an art gallery, several restaurants a seaside resort... all rolled into one

• Where else can you experience gourmet dining, enjoy first class entertainment, be pampered in spacious accommodations - all under one-roof

cruises

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Norwegian Cruise Line• With Norwegian Cruise Line, Freestyle

Cruising is all about flexibility and freedom. Freedom from stress. Freedom from schedules. Freedom to create your own vacation. On an NCL cruise, you can eat where you want, when you want, with whom you want. And with up to 13 different restaurants and dining rooms on board.

• On NCL, you're always free to whatever:

+ Freestyle Accommodations + Freestyle Dining + Freestyle Fun

cruises

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Holland America Holland America Cruise Line

offers a diverse range of activities that are consistent across their ships: fitness workouts, art tours and wine tastings, for example. In addition, tea is served each afternoon. Evening entertainment includes many options, such as dancing, movies and Las Vegas-style revues.

cruises

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P&O Princess• Princess has raised cruising

to a whole new level, with spacious and accommodating ships packed with amenities. With two to three main dining rooms, warm and intimate in scale, and two to three spectacular theatres for a choice of entertainment nightly

cruises

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Types of Cruises Rates Amenities/ Benefits

Major Competitors

Contemporary/Resort class

150-$300

Value-oriented cruise of 3-7 days; casual

environment, deck, pool space; activities, sports;  sit-down and buffet-style

meals.

Carnival. Royal

Caribbean, Norwegian Cruise Line

Premium $250-$600

Semiformal, premium-

quality Cruises of 7 days cruises;  more space and service; theme lounges,

theaters, cigar bars; activities, games, fitness facilities; premium food and beverage offerings.

Holland America,

P&O Princess.

Benefits Offered and Major Competitors

cruises

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Luxury Type

Rates: $600 to $1,500

Amenities/Benefits: Cruises emphasize greater choice of food, beverages, and entertainment options in a more formal atmosphere; more spacious and luxurious accommodations; more exotic itineraries

cruises

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Major CompetitorsCunard Line, Crystal

Cruises

cruises

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Founded in 1840 as the British and North American Royal Mail Steam Packet Company before gradually adapted itself to become one of the world’s largest passenger lines and had provided year-round service until 1968 before changing itself to concentrate on cruising and summer transatlantic voyages for vacationers

Cunard - British-American owned cruise lines

cruises

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cruises

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Wholly owned by Nippon Yusen Kaisha (NYK), the largest shipping company in the world

Luxurious cruise ship line founded in 1988 and notable for its 2 medium-sized, high-

end ships

cruises

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Rates: $1,000 plus

Amenities/Benefits: Exclusive, yacht-like environment with only 100-200 passengers; high staff-to-customer ratio allows highly individualized service

cruisesExclusive

Type

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cruisesMajor Competitors

Seabourn, Silversea, Swan Hellenic

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A luxury cruise line that operates four luxury, all-suite cruise ships that sail itineraries all around the world throughout the year .Silversea provides its guests an option called Personalis ed Voyages, a cruise industry first . This program allows guests to choose their own embarkation and disembarkation ports, essentially allowing them to create their own voyages .

cruises

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The company refers to itself as The Yachts of Seabourn.Seabourn specialises in small yachts, small enough to fit in many exotic ports around the world that large cruise ships can't reach.

Seabourn Cruise Line is an ultra luxury cruise line operates all around the world, from short seven day Caribbean cruises to exotic 100+ day cruises. It is owned by Carnival Corporation, part of the "World's Leading Cruise Lines" marketing group, Passengers typically range in ages from the 40s to the 60s, but children are still welcome.

cruises

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Each cruise itinerary is a unique, cultural travel experience, blending world-class sites with smaller, off the beaten track destinations. It also invites distinguished guest lecturers to travel along the trips as to deliver lectures in accordance with the destinations.

A British cruise line specialising in tours of historical or cultural interest aimed at the upper end of the cruise market.

cruises

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Future Challenges

Mauricio

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•terrorist attacks and political unrest around the world disrupted industry revenues in 2002 and may to do so in the future.

•high energy cost may squeeze industry profits

future challenges In spite of past success, the global cruise industry may face some icebergs on the horizon:

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One of the industry’s biggest potential challenges is over-capacity• The substantial growth and profits cruise lines enjoyed during 1990´s spurred them build more bigger ships at an increasing rate

future challenges

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The primary challenge is:• to increase the growth in passengers

booking to fill the growing capacity and recoup the huge investment in new ships.

One way to do this:• Is to develop long-term

relationships with past customers in the hopes of generating more repeat business

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CARNIVAL, for instance, OFFERS:• Substantial

DISCOUNT to PAST customers

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Given that the vast majority of vacationers around the world have never gone on a cruise , however, the greatest potential for growth involves converting nonusers into new customers

But attracting new customers will require an even better UNDERSTANDING OF WHAT THOSE PEOPLE WANT from a vacation and how they make their leisure purchase decisions.

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Discussion Points

Group 5

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1.) Should the cruise vacation industry switch to younger generation

customers or concentrate on older customers segment?

discussion points

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discussion pointsThe cruise vacation industry

should not SWITCH to younger generation customers. But rather, this industry should REATAIN older generation

customers while at the same time EXPAND and CATER to

the younger customers.

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• Population is getting older. Older people tend to have more money than youngsters and are more willing to spend their vacation in comfort and luxury.

• Should certainly invent special cruises for younger groups of people with plenty of entertainment and sport facilities, but this should be rather exception than a rule, i.g. a short school trip, seminars, bachelor party etc.

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2.) According to surveys, the rate of people booking trips for

holidays shrinks… What are the reasons for

that and how can companies offering ship

cruises hold their level of customers?

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Reasons:Financial crisis people are afraid of spending money

Economy slows down salaries shrink, or don’t rise at the same level as inflation

Fear of terror attacks people stay in their own countries not to risk their lives

Fear of diseases like H1N1

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How to hold level:• Special promotions for past customers• Cheaper cruises• Better safety guidelines• Better health arrangements against diseases• More service• Higher quality standards• More money for marketing, research and

development to be able to totally fulfill customers needs

discussion points

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3.) With the worldwide economy fluctuating and

prices of goods and services going up, should cruise lines

follow suit and bring the prices of luxury and high-end

vacation packages down ?

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Cruise lines should retain prices of luxury and high end vacation

packages. They may opt to cut costs without sacrificing the quality of their product to keep up with the times. This is because luxury and

high end packages cater to a certain market niche – those who are not price sensitive and are willing to

spend for such luxury.

discussion points

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Thank you!!!