Cruise Ships
A case study for
Market Opportunity Analysis
Group 5
Presented by:
Mauricio Gonzales-quint
Chantharas Kanchanakool
Nina Krapf
Vincent G. Tenchavez
Bui Thi Thuy
Julia Vassiljeva
G5-C4
members
Mod
Vince
Nina
Julia
Mauricio
Thuy
G5-C4
outline
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
G5-C4
Introduction
Vince
G5-C4
introduction
Sea cruise was
viewed as:
Before the 1980’s
• dull and sedate
• vacation alternative
• for rich old people
G5-C4
introduction
During the 1980’s
Sea cruise
perception changed:
• 8.5% annual growth
• most profitable
• 2005: 6M customers
G5-C4
introduction
2005, 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
G5-C4
introduction
2002 – Cruise
Industry slowed
down:
• Terrorism
• Energy costs
• Harbor pollution
Problems
G5-C4
introduction
2005 – Cruise
Industry’s growth
continued:
• 6M+ customers
• UK, Europe,
Australia
• 2009 – forecast of
8% growth
Growth
G5-C4
Savvy Marketing
How?
Julia/Nina
G5-C4
savvy marketing
Characteristics of the Cruise
Vacation Industry
• Exceptional Value Proposition
– Including transportation, accommodation,
catering and entertainment for one allinclusive 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.
G5-C4
savvy marketing
•
Characteristics of the Cruise
Vacation
Industry
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
G5-C4
savvy marketing
•
Characteristics of the Cruise
Vacation
Industry
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
G5-C4
savvy marketing
Carnival’s Income
25%
mln 16000
USD
23%
14000
20%
20%
20%
18%
19%
19%
18%
16% 10000
Merged with
P&O Princess
Cruises
15%
12000
8000
10%
6000
4000
5%
2000
0%
0
2001
2002
2003
2004
Revenue
2005
Net income
2006
Net profit margin
2007
2008
G5-C4
savvy marketing
Ships and passengers carried (Carnival)
Ships
Passengers
thous.
9000
100
90
80
73
77
79
81
85
88
8000
7000
70
6000
60
5000
50
42
45
40
6,848
30
20
5,037
3,285
7,008
7,672
8,183
4000
3000
5,423
2000
3,549
1000
10
0
0
2001
2002
2003
2004
Passengers carried
2005
2006
Number of ships
2007
2008
G5-C4
savvy marketing
Building demand
• Building demand through strengthening
all aspects of marketing programs
• Goal: to appeal wider variety of
customer segments
G5-C4
savvy marketing
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
G5-C4
savvy marketing
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
G5-C4
savvy marketing
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
G5-C4
savvy marketing
How can you adapt ships for
target groups:
• Offer special activities related to the
target group: sports, music, relaxing,
SPA, ……
•  tailor all these things to the target
group (demographic, social, lifestyle,
age,….)
G5-C4
savvy marketing
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
G5-C4
savvy marketing
Examples of special arrangements:
• Cruises for single crowd
• Cruises for families with young children:
multiroom suites
supervised activities  children are
not bored and parents can enjoy
holidays ….
• Traditional target group cruises:
couples in the 50s and 60s
G5-C4
Cruises
Types, Benefits, Competitors
Thuy/Mod
G5-C4
cruises
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"
G5-C4
cruises
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
G5-C4
cruises
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
G5-C4
cruises
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.
G5-C4
cruises
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
G5-C4
cruises
Benefits Offered and Major Competitors
Types of
Cruises
Contemporary
/
Resort class
Premium
Rates
150-$300
Amenities/ Benefits
Major
Competitors
Value-oriented cruise of 3-7
days; casual environment, deck,
pool space; activities,
sports; sit-down and buffetstyle meals.
Carnival. Royal
Caribbean,
Norwegian
Cruise Line
Semiformal, premiumquality Cruises of 7 days
Holland
$250-$600 cruises; more space and service;
theme lounges, theaters, cigar America, P&O
Princess.
bars; activities, games, fitness
facilities; premium food and
beverage offerings.
G5-C4
cruises
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
Luxury Type
G5-C4
cruises
Major Competitors
Cunard Line, Crystal Cruises
G5-C4
cruises
Cunard - British-American owned cruise lines
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
G5-C4
cruises
G5-C4
cruises
Luxurious cruise ship line founded in
1988 and notable for its 2 mediumsized, high-end ships
Wholly owned by Nippon
Yusen Kaisha (NYK), the
largest shipping company in
the world
G5-C4
cruises
Rates: $1,000 plus
Exclusive Type
Amenities/Benefits:
Exclusive, yacht-like
environment with only
100-200 passengers;
high staff-to-customer
ratio allows highly
individualized service
G5-C4
cruises
Major Competitors
Seabourn, Silversea, Swan Hellenic
G5-C4
cruises
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 Personalised 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.
G5-C4
cruises
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.
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.
G5-C4
cruises
A British cruise line specialising in tours
of historical or cultural interest aimed at
the upper end of the cruise market.
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.
G5-C4
Future Challenges
Mauricio
G5-C4
future challenges
In spite of past success, the global cruise
industry may face some icebergs on the
horizon:
• 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
G5-C4
future challenges
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
G5-C4
future challenges
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
G5-C4
future challenges
CARNIVAL, for instance, OFFERS:
• Substantial
DISCOUNT to PAST
customers
G5-C4
future challenges
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.
G5-C4
Discussion Points
Group 5
G5-C4
discussion points
1.) Should the cruise vacation
industry switch to younger
generation customers or
concentrate on older customers
segment?
G5-C4
discussion points
The 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.
G5-C4
discussion points
• 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.
G5-C4
discussion points
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?
G5-C4
discussion points
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
G5-C4
discussion points
•
•
•
•
•
•
•
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
G5-C4
discussion points
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 highend vacation packages down ?
G5-C4
discussion points
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.
G5-C4
Thank you!!!
G5-C4