Oceanic Consulting [March 13, 2012] Team 2: Hostetler | Lewis | Panutsos | Yang | Zhao
Agenda: 1.
2.
3.
Challenge & Key Considerations
Setup & Framework
Market Analysis & Strategy
6.
5.
4.
Risks & Mitigations
Strategy for Implementation
Options & Suggested Action
1.
2.
3.
Objective & Key Considerations
Setup & Framework
Market Analysis & Strategy
6.
5.
4.
Risks & Mitigations
Strategy for Implementation
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
6.9%
Star 9.7%
• Keep up with increasing demand • Capacity, age of ships, amenities • Market strategies for expansion • Identify and capitalize on trends
Royal Caribbean 31.9%
Carnival Cruise Lines 51.6%
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.
2.
3.
Objective & Key Considerations
Setup & Framework
Market Analysis & Strategy
6.
5.
4.
Risks & Mitigations
Strategy for Implementation
Options & Suggested Action
Image Comparison
Cruise Distinctions:
Royal Caribbean
Carnival Fun Ships
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
Weaknesses
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
Increasing debt and borrowings Limited market cover Incomplete and inefficient database No concerted program for attracting repeated guests
Framework: Opportunities New markets to develop Customers’ demand for cruising booms consistently New technologies Potential value of customer data.
Threats Cruise industry transformation Competitors’ growth Distributing conflicts between travel agencies and company direct channels
1.
2.
3.
Objective & Key Considerations
Setup & Framework
Market Analysis & Strategy
6.
5.
4.
Risks & Mitigations
Strategy for Implementation
Options & Suggested Action
Carnival Cruise
7 days
7 days
Hotel
$700
[Included]
Rental Car/ Gas
$340
[Included]
Breakfasts
$126
[Included]
Lunches
$140
[Included]
Dinners
$280
[Included]
Entertainment
$210
[Included]
$1,796
$1,651
Duration
Total
$1,651
Trad'l Vacation
$1,796
Cost Comparison:
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: Luxury
Price
Destination Premium Contemporary
Quality
Demographics: 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
More diverse Average cruiser
46 years old Household income $65k
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 Customer Sources by Channel: PVP efficient and grow fast Still try to appease travel agents 85% of sales through travel agents 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:
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2.
3.
Objective & Key Considerations
Setup & Framework
Market Analysis & Strategy
6.
5.
4.
Risks & Mitigations
Strategy for Implementation
Options & Suggested Action
Pro Forma Analysis:
Feasible Alternatives: Target new first-time customers through streamlined marketing strategy with focus on “fun ship” image Increase focus on direct-to-consumer sales using CRM to eliminate or reduce 10% of revenue cost structure Use CRM to develop a rewards program linked to the Sail & Sign card and targeted at repeat-customers
Option Analysis: Criteria (Weightedby Importance)
Opt 1
Opt 2
Opt 3
Revenue Growth (30%)
1
1
2
Cost Reductions (30%)
-1
2
-1
Customer Perception (20%)
0
1
1
Distributor Relationships (20%)
1
-2
2
Totals
1
2
4
0.2
0.7
0.9
Weighted Totals
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.
2.
3.
Objective & Key Considerations
Setup & Framework
Market Analysis & Strategy
6.
5.
4.
Risks & Mitigations
Strategy for Implementation
Options & Suggested Action
Implementation: 0-6 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
6-9 Months
• 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
6-9 Months
9-12 Months
12-24 Months
Implementation: 9-12 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
12-24 Months
• Assess effectiveness of newly implemented strategies • Check in with travel agents to assess their response to the new changes • Mitigate any concerns effectively to prevent disharmony between channels
0-6 Months
6-9 Months
9-12 Months
12-24 Months
1.
2.
3.
Objective & Key Considerations
Setup & Framework
Market Analysis & Strategy
6.
5.
4.
Risks & Mitigations
Strategy for Implementation
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.
