Cruise Ships A case study for Market Opportunity Analysis Group 5

1. 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

2. members Mod Vince Nina Julia Mauricio Thuy

3. 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

4. Introduction Vince

5. introduction Before the 1980’s • Sea cruise was viewed as: • dull and sedate • vacation alternative • for rich old people

6. introduction During the 1980’s • Sea cruise perception changed: • 8.5% annual growth • most profitable • 2005: 6M customers

7. 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

8. introduction Problems • 2002 – Cruise Industry slowed down: • Terrorism • Energy costs • Harbor pollution

9. introduction Growth • 2005 – Cruise Industry’s growth continued: • 6M+ customers • UK, Europe, Australia • 2009 – forecast of 8% growth

10. Savvy Marketing How? Julia/Nina

11. savvy marketing 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.

12. 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

13. 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

14. savvy marketing Carnival’s Income Merged with P&O Princess Cruises

15. savvy marketing Ships and passengers carried (Carnival) Passengers thous.

16. savvy marketing Building demand • Building demand through strengthening all aspects of marketing programs • Goal: to appeal wider variety of customer segments

17. 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

18. 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

19. 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

20. 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,….)

21. 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

22. 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

23. Cruises Types, Benefits, Competitors Thuy/Mod

24. 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 Carnival Cruise line

25. 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 Royal Caribbean

26. 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 Norwegian Cruise Line

27. 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 Holland America

28. 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 P&O Princess

29. cruises Benefits Offered andMajor Competitors

30. 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

31. cruises Major Competitors Cunard Line, Crystal Cruises

32. 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

33. cruises

34. cruises Luxurious cruise ship line founded in 1988 and notable for its 2 medium-sized, high-end ships Wholly owned by Nippon Yusen Kaisha (NYK), the largest shipping company in the world

35. cruises Exclusive Type Rates: $1,000 plus Amenities/Benefits: Exclusive, yacht-like environment with only 100-200 passengers; high staff-to-customer ratio allows highly individualized service

36. cruises Major Competitors Seabourn, Silversea, Swan Hellenic

37. 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.

38. 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.

39. 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.

40. Future Challenges Mauricio

41. 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

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

43. to increase the growth in passengers booking to fill the growing capacity and recoup the huge investment in new ships. future challenges The primary challenge is: One way to do this: • Is to develop long-term relationships with past customers in the hopes of generating more repeat business

44. Substantial DISCOUNT to PAST customers future challenges CARNIVAL, for instance, OFFERS:

45. 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. future challenges

46. Discussion Points Group 5

47. discussion points 1.) Should the cruise vacation industry switch to younger generation customers or concentrate on older customers segment?

48. 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.

49. 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.

50. 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?