Out of Box Consulting
Out of the Box Consulting
Nick D’UrbanoKevin Gardner GregoryKaran ShanmugarajahAdam Skoreyko
A3
Out of Box ConsultingRoadmap
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of the Box Consulting
Recession StrategyNew Value Proposition
Premium European Leader
Trough
Peak
Recovery
• Economic implications
• Pricing strategy
• Reallocate capacity
• New markets & demographics
• A culture of tech & green
• Positioning
• New marketing plan
• Capacity outlook
Goals
Deliverables
Out of Box ConsultingRecession Out of the Box Consulting
01/0
3/19
5001
/03/
1952
01/0
3/19
5401
/03/
1956
01/0
3/19
5801
/03/
1960
01/0
3/19
6201
/03/
1964
01/0
3/19
6601
/03/
1968
01/0
3/19
7001
/03/
1972
01/0
3/19
7401
/03/
1976
01/0
3/19
7801
/03/
1980
01/0
3/19
8201
/03/
1984
01/0
3/19
8601
/03/
1988
01/0
3/19
9001
/03/
1992
01/0
3/19
9401
/03/
1996
01/0
3/19
9801
/03/
2000
01/0
3/20
0201
/03/
2004
01/0
3/20
0601
/03/
2008
0
200
400
600
800
1000
1200
1400
1600
1800
S&P 500
S&P 500
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingRecession Out of the Box Consulting
So far we are approximately 17 months into the recession
Peak TroughPeak to Trough
Trough to Peak
Start EndAug. 1929 Mar. 1933 43 50May. 1937 J un. 1938 13 80Feb. 1945 Oct. 1945 8 37Nov. 1948 Oct. 1949 11 45Jul. 1953 May. 1954 10 39
Aug. 1957 Apr. 1958 8 24Apr. 1960 Feb. 1961 10 106Dec. 1969 Nov. 1970 11 36Nov. 1973 Mar. 1975 16 58J an. 1980 Jul. 1980 6 12Jul. 1981 Nov. 1982 16 92Jul. 1990 Mar. 1991 8 120
Mar. 2001 Aug. 2002 19 63Dec. 2007 ? ? ?
Average (I n Months) 14 59**National Bureau of Economic Research
Senerios Months YearsBest Case: 8 0.7Expected: 14 1.1Worst Case 43 3.6Thus Far: 17 1.4
Number of Months
Can’t time the market
Plan for 5 years, Expect 2 years
Abnormal recession,Abnormal consumer response
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingRecession Out of the Box Consulting
So far we are approximately 17 months into the recession
Can’t time the market
Plan for 5 years, Expect 2 years
Abnormal recession,Abnormal consumer response
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingRecession Value Proposition Out of the Box Consulting
Communicate Maintain
Value Premium Image
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingRecession Value Proposition Out of the Box Consulting
Objectives
Spur Demand
Increase Margins
Spur Demand: Maintain Loyalty (USA)• Too difficult to acquire new customers• Induce returning visits
Increase Margins• Increase yield/customer• Separation from deep discount pricing
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingRecession Value Proposition Out of the Box Consulting
Objectives
Spur Demand
Increase Margins
Communication Strategy
“Thank You for Being a Loyal HAL Customer”• Attract existing customers
Leverage DRM and CRM systems• Thank you letters • Less discounts and more on-board amenities to attract customers
• Free credits (casino, stores, drinks, excursions)
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingRecession Value Proposition Out of the Box Consulting
Objectives
Spur Demand
Redistribute Supply• Redeploy vessel to Europe
• Specifically the Noordam• No balance sheet space for buying• Lower opportunity cost• Good fit with European market
Increase Margins
Reducing Supply Reduce Need to Discount• Leads to higher price point• Preserves brands “prestige” factor
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingRoadmap
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of the Box Consulting
Recession StrategyNew Value Proposition
Premium European Leader
Trough
Peak
Recovery
• Economic implications
• Pricing strategy
• Reallocate capacity
• New markets & demographics
• A culture of tech & green
• Positioning
• New marketing plan
• Capacity outlook
Goals
Deliverables
Out of Box ConsultingNew Value Proposition Out of the Box Consulting
Heavy Investment in IT & New Forms of Communication
• Twitter• Social networking ning.com• Custom log-in page on ship• CRM to customize delivery
New Customer Demographics
Baby Boomers (Euro) Affluent emerging professionals
New Value Technology & Environment
Create a culture of technology
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingNew Value Proposition Out of the Box Consulting
• Flight/Hotel 205kg/day Cruise 230kg/day
• Fort Lauderdale and Copenhagen shore power upgrades
• Water Purification• Soy Inks• Ship to Shelter
New Customer Demographics
Baby Boomers (Euro) Affluent emerging professionals
New Value Technology & Environment
Option to purchase off-sets
Green Initiatives: Taking a Leadership Role
Promote environmental efforts
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingRoadmap
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of the Box Consulting
Recession StrategyNew Value Proposition
Premium European Leader
Trough
Peak
Recovery
• Economic implications
• Pricing strategy
• Reallocate capacity
• New markets & demographics
• A culture of tech & green
• Positioning
• New marketing plan
• Capacity outlook
Goals
Deliverables
Out of Box ConsultingCarnival Product Portfolio Out of the Box Consulting
Cruise Line Category Sourcing Number of Ships
Carnival Contemporary North America 22
Princess Premium North America 17
HAL High Premium North America 14
Costa Cruises High Contemporary Italy, France, Spain 6
AIDA Mid Contemporary Germany 5
Cunard Line Low Luxury United Kingdom 3
Iberocruceros Mid Contemporary Spain, Brazil 3
Seabourn Luxury North America 3
P&O Premium United Kingdom 2
P&O Australia Premium Australia, N.Z. 2
HAL can expand to Europe and not hurt Carnival’s structure
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box Consulting
Country PopulationGDP per Capital 2009
Private Consumption
2008
GDP Change
YoYRisk Competition Total
Score
Switzerland 1 3 3 2 3 3 16Netherlands 2 3 2 2 3 3 16Austria 1 3 2 2 3 3 15Norway 1 3 3 2 3 3 18France 3 3 3 1 3 3 19Germany 3 3 3 2 3 3 20UK 3 3 2 1 3 3 18Italy 3 2 2 1 3 3 16Spain 3 3 2 2 3 3 18Slovakia 1 2 3 3 3 3 16Poland 3 1 2 3 3 3 16
What European Countries? Out of the Box Consulting
• HAL already present in Denmark • BMW Metric used as a “sanity check”
Recession Strategy New Value Proposition
Europe Expansion Conclusion
BMW Metric
11133332211
Legend3 = High1 = Low
Out of Box ConsultingPositioning Map in Europe Out of the Box Consulting
Luxury
Premium
Contemporary
Norway U.K. Germany France Spain
Segment
Country
Hapag-Llyod(4)
Phoenix Reisen(1)
Fred Olsen(5)
Pullmantar(6)Thomson
(5)
CDF Croisière France(1)
Discover(1)
Transocean(1)
Norwegian(11)
MSC(9)
MSC(9)
MSC(9)
MSC(9)
MSC(9)
Azamara(2)
HAL’sZone of Strategic Fit
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingMarketing in Europe Out of the Box Consulting
How do Europeans choose their vacations?#1 Word of Mouth: 29.3%
#4 Travel Agents: 11.4%
What type of holidays would travelers give up?#1 Winter: 41.6%#2 None: 18.8%
Most important consideration when selecting?#1 Value: 33%#2 Price: 16%
Main European periods for holiday travel?#1 August: 27%
#2 July 24%
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingMarketing in Europe Out of the Box Consulting
Goals
Objective
StrategicFocus
Tactics
Positioning
Premium “GO-TO” European Cruise Line
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingMarketing in Europe Out of the Box Consulting
Goal
Objectives
StrategicFocus
Tactics
Create Brand Awareness• Limited brand equity• Need to generate buzz
Gain Distribution Networks• Leverage Carnival’s other lines• Travel agents less important• Online vacation websites
Drive to Website• Best reach in international market
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingMarketing in Europe Out of the Box Consulting
Goal
Objectives
StrategicFocus
Tactics
Carnival (CCL)• Fits with cluster strategy• Leverage CCL’s current operations in Europe
Holland America Line• “Up-Selling” is a key focus• Value proposition
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingMarketing in Europe Out of the Box Consulting
Goal
Objectives
StrategicFocus
Tactics
Features?• Destinations• Activities• Testimonials
Big Idea: “The Cube”
Where?• Metropolitan cities • High traffic areas
How are you attracting people?• Pixmen• Teaser: Web (What’s in the Cube?)
• Interactive• 3-D• Tiles on the floor• Walk around and see
different images
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingThe “Cube” Marketing Concept Out of the Box Consulting
What’s in the Cube?What’s in the Cube?
Created by• Sid Lee Inc.
• Ad agency
Successes in• New York• Boston
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingEuropean + Premium Capacity
2008 2009 2010 2011 2012 20130
5000
10000
15000
20000
25000
30000
35000
40000
Forcasted Capacity: Europe + Premium Segment
MSC Cruise Fleet Azamara HAL (Euro)
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box ConsultingCarnival Total Capacity
AIDA Carnival Cruise Lines
Costa Cunard Holland America Line
Ibero Ocean Vil-lage
P&O Cruises P&O Cruises Australia
Princess Seabourn
0
10000
20000
30000
40000
50000
60000
Carnival Total Capacity
2008 2009 2010 2011 2012 2013
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Out of Box Consulting
Final Thoughts Out of the Box Consulting
Recession Strategy
New Value Proposition
Europe Expansion
• Increasing margins
• Survival and positioning for growth
• Prepare for Europe
• Leverage technology and “green”
• European marketing plan
Recession Strategy New Value Proposition
Europe Expansion Conclusion
Holland America Line Market leader for Europe in premium division
Out of Box ConsultingHolland America Line Out of the Box Consulting
No matter where you go, enjoy excellence.
Thank you very much!Any Questions?
Out of Box ConsultingAppendices Out of the Box Consulting
Roadmap Roadmap
SAP HistorySAP History
Recession outlook Recession outlook
BalanceBalance
Recession: Object. Recession: Object.
Recession: Demand Recession: Demand
Technology Technology
SustainabilitySustainability
Product Portfolio Product Portfolio
What Countries?What Countries?
Positioning MapPositioning Map
Marketing: EuroDataMarketing: EuroData
Marketing: GoalMarketing: Goal
Marketing: ObjectiveMarketing: Objective
Marketing: StrategyMarketing: Strategy
Marketing: Tactics Marketing: Tactics
Marketing: CubeMarketing: Cube
Conclusion Conclusion
Why not the BRICWhy not the BRIC
Information SourceInformation Source
Holiday Draw BacksHoliday Draw Backs
ConsiderationsConsiderations
Cruise Sales RegionCruise Sales Region
Green Marketing Green Marketing Risks & MitigationsRisks & Mitigations
MTKG: Germany MTKG: Germany
MKTG: U.K.MKTG: U.K.
MKTG: NorwayMKTG: Norway
MKTG: SpainMKTG: Spain
MKTG: FranceMKTG: France
Carbon CreditCarbon CreditRecession: Margins Recession: Margins
On-shore PowerOn-shore Power
Social NetworkingSocial Networking
CapacityCapacity
Out of Box ConsultingWhy not the BRIC? Out of the Box Consulting
Brazil
• Ibero acquisition covers contemporary segment• HAL in Brazil would oversaturate market• Doesn’t fit premium status
Russia
• Political Instability• Would have to create everything from scratch
India
• Little port access• Difficult to gain Indian consumers
• Doesn’t fit premium status
China
• Negative growth in the region• Lack of spillover
• Doesn’t fit premium status
Out of Box ConsultingInformation Source Out of the Box Consulting
Out of Box ConsultingHoliday Draw Backs Out of the Box Consulting
Out of Box ConsultingMost Important Consideration Out of the Box Consulting
Out of Box ConsultingCruise Sales by Region Out of the Box Consulting
Cruise Value Sales
US$ million 2006 US$ million average growth 2005-2010
North America 19,364 4.4 Western Europe 5,237 4.5 Asia Pacific 3,753 -0.7 Latin America 225 8.4 Australasia 199 7.9 Eastern Europe 93 5.8
Africa and Middle East 16 5.6
Source: Marketing
Out of Box ConsultingHow to market sustainability Out of the Box Consulting
Medium Execution
Web -Larger Section on sustainability - Initiatives taken -Introduce carbon off-set program
Public Relations - Press Release when new initiatives begin- Invite media members to cruise - Incentive to promote
The “Cube” - Sustainability square - all the advantages of HAL
Out of Box ConsultingMarketing in Germany Out of the Box Consulting
•HAL is Octoberfest 365 Days a yearTagline
•Berlin-Hauptbahnof •Station Stuttgart
CubeLocation
•Die Unterschrift der Exzellenz
Slogan Translation
Out of Box ConsultingMarketing in U.K. Out of the Box Consulting
•Even the Queen thinks HAL is great valueTagline
•London Waterloo•Birmingham New Street Railway Station
CubeLocation
•N/ASlogan Translation
Out of Box ConsultingMarketing in Norway Out of the Box Consulting
•The ship that gives you an even better quality of life. Tagline
•Oslo Central Station•Bergen Train Station
CubeLocation
•En signatur på eksellense
Slogan Translation
Out of Box ConsultingMarketing in Spain Out of the Box Consulting
•Why run with the bulls when you can soar the seasTagline
•Madrid Atocha Train Station•Barcelona: Sants Station
CubeLocation
•Una firma de excelencia
SloganTranslation
Out of Box ConsultingMarketing in France Out of the Box Consulting
•Since 1895, HAL has aged like French Wine. Tagline
•Paris: Gare Du Nord•Marseille: Saint-Charles
CubeLocation
•Une Signature d’Excellence
Slogan Translation
Average House Carbon Level/365 days= 2800kg/365 = 7.7kg/dayAverage Air Travel Level= 1971 kg CO2Total for Air Travel and Home for 10 days= 2048 kg CO2
Carbon Level per Day at Sea = 230 kg C02Total for Sea Travel for 10 days= 2300 kg CO2
Source: Center for Alternative Technology
Carbon Credit
Out of Box ConsultingOn-shore Power
• Terminal 91 is currently scheduled to go on-line in Seattle at the end of April 2009
• Average savings of 87 tons of CO2 per call with Holland America in 2006
• Reduced pollution can be accounted for because when in port, emissions from the ship can be eliminated thanks to the shore power, according to the Port of Seattle.
• Lighting, pumps, ventilation, and refrigerators are a few of cruiseships major power users that can take advantage of the new technology.
Out of Box ConsultingSocial Networking
• Ning.com offers a customizable social networking front-end that can be used as an alternative to a external solution
• Ability to integrate into the existing website and servers for HAL• Can be used in conjunction with a log-in screen aboard HAL vessels
• Twitter can be used pre-trip, during trip and post-trip in different capacities• Pre-trip implementation would involve itinerary updates and travel warnings• During trip implementation would allow activity updates and potential up sells• Post-trip would involve survey follow-ups and alerts about future trips and
promotions
Out of Box ConsultingRisks & Mitigation
Impact
Probability
Timing
Ship is delayed in production
Fuel costs
Seasonality
Pirates
Metrics Risks
Terrorism
Out of Box ConsultingRisks & Mitigation
Ship is delayed in production
• Creates backlog in capacity• Opportunity + refund costs
Apply a heavy penalty for delayed contracts
Impact Probability Timing
Out of Box ConsultingRisks & Mitigation
Fuel costs
• Large fluctuations in price• Unpredictable
Fuel surcharge – hedge – repurchase
Impact Probability Timing
Out of Box ConsultingRisks & Mitigation
Seasonality
• Leads to wide shifts in demand• Uneven capacity utilization and scheduling problems
Expand coverage to other area’s of Europe & Caribbean
Impact Probability Timing
Out of Box ConsultingRisks & Mitigation
Pirates
• Increasing activity• Increase in violence
Ensure due diligence for dangerous
routes with the Navy
Impact Probability Timing
Out of Box ConsultingRisks & Mitigation
Terrorism
• Potential target with huge impact• Operation in hostile environment
Create a system of best practices to ensure
appropriate protocol and training
Impact Probability Timing
Out of Box ConsultingVarious Comparative Capacity Totals
2008 2009 2010 2011 2012 20130
20000
40000
60000
80000
100000
120000
140000N.A. vs. Europe Capacity
N.A. Europe
2008 2009 2010 2011 2012 20130
10000
20000
30000
40000
50000
60000
70000
N.A. Contemporary N.A. Premium Europe Contemporary Europe Premium