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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?