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Case Analysis: The Fun Ship Experience At Carnival Cruise Lines

What is going to be covered in the case analysis? There is a new opportunity in the vacation market for the shipping companies. The case talks about how cruise owners take the new opportunity and repositioned themselves from transportation based company to the vacation travel company. In a deeper sense, the case also covers what are the main advantages and obstacles being in this industry, what strategies they follow to be able to get certain amount of customers as well as who are the main competitors for the cruise lines and what are the competitor's strategies in the market which give the cruise owners a rough time.

Situation Analysis A) External Analysis Size & Growth Strategies Before we talk about the growth strategy of the cruise lines, we need to say why they need to have these kind of strategies. It is because this is a highly competitive industry and to be able to protect their competitive position in the sector, they need to have ongoing development on their existing products. In the light of this information, we can say that there are two main size & growth strategies are mentioned in the case study. First one is the market development strategy. Within this strategy Carnival Cooperation started to do deal with different geography to be ale to increase it's income level and reach out more customers. Carnival Cooperation now serves worldwide including United States, Australia, Malta, Italy, Spain and more. Second strategy is market penetration. Carnival Cooperation has a position in the market which indicates that they have stunning entertainment and facilities on their beautiful cruises another words they want to show that they have real "having fun theme" at an affordable price for it's customers. As we see here, company wanted to use the price driven strategy to increase it's market share. Competition Analysis There are two types of competitors in the sector for the Carnival Cooperation. Firs one is obviously other cruise lines such as Royal Caribbean International (direct competitor) and second competitor is coming from land-based resorts and hotels in sightseeing destinations (indirect competitor). It is possible to talk about what are the differences between cruise line competitors and what are the competitor strategies with the given information. But unfortunately, there is no enough information for the land-based resorts and hotels. In this case we see that RCI is the most powerful competitor for the Carnival Cooperation. Starting with positioning strategies, Carnival positioned itself under the idea of "an unmatched value proposition on the promise of fun" on the other hand RCI is more sophisticated and their positioning strategy is "targeting vacationers who had an explorer mindset and focusing on active and adventurous of explorers." While one of them pointing out contemporary segments, other one is concerning more on premium market segments.

Both companies products and capacities had changed so much within the years. They added so many new attractions and activities on the board such as basketball courts, golf areas and courses, climbing walls, aqua parks etc. but here we can not really say that one of them is so much better than the other one, because when one of them increases it's passenger capacity or introduces new things, other one follows into the same direction after a little while. Both company is the aware of the fact that capacity, size and activities on the board are the most critical success factors and they want to obtain economies of scale, increase their profit line and financial capabilities. Customer Characteristics Although Carnivals target market was all about the consumers who are 25 to 54 years old who made $40,000 or more per year and the product was popular with families, honeymooners, singles, and seniors, it changed a lot within the years with the repositioning efforts of the company. Now company marketers believe that they have no prototypical Carnival customer, anyone who cruised to have fun is in their customer line.

B) Internal Analysis Marketing and HR Perspective Wen we look at the marketing and hr perspective of the Carnival Cruise Company, we see complete evolution of cruise experience. Comparing with the past, its products and services changed in so many ways and it is difficult to change the perception of the company in the eyes of its customers. That is the reason why they started to use TV commercials, they started to seen in famous TV series and also go with the most important marketing strategy which is 'word of mouth'. For the companies, if they want to be heard by other people via the channel of word of mouth, they need to make sure that they are giving an unforgettable and satisfying experience to its existing customers. That is the reason why company wanted to improve customer-employee relations with focusing on training of its staff. Within the new training programs, employees started to recognize the customers, say 'hi' to everyone wit a shining smile. They were aware of the importance of guest recognition and personalized attention. Customer expectations were changed and expand, that's why they changed their attitude towards its customers. Financial Ratios In 2004, Carnival Cruise Lines, reported record net income of $1.85 billion on revenues of $9.73 billion. If we look at the more recent ratios, we see that in 2011, net income billion. of the company was US$1.9

When we look at the ratios and consider the fact that they are growing everyday, we can say that it is a highly profitable company. Mission Mission statement of the company is stated on it is official web-side as follows, "Our mission is to take the world on vacation and deliver exceptional experiences through many of the world's best-known cruise brands that cater to a variety of different geographic regions and lifestyles, all at an outstanding value unrivaled on land or at sea."

Objectives & Strategies We already talk about some strategies they have in the market before. Other than these strategies we can mention about their investigation of co-branding strategies to be able to increase guest experience and strengthen their carnival image in the market. Another important strategy they followed in the case was direct channel of distribution on their accommodation selling activities. They opened their direct selling channels via internet and personal vacation planners. After this movement, they had greater control on their selling activities. They were no longer working only with the travel agencies.

C) Swot Analysis After talked about all the external and internal situations of the company, it can be said that Carnival appeals to all market segments with its different style cruises from budget to luxury (Princes line serves to customers who seeks more luxury products and service) and it is world-wide famous. They are able to affect large amount of customers with their specially trained staff and loyalty member clubs. They say that they established their own distribution channel, but case does not talk about it very much, it may be because of their weaknesses on this field. But from the year of 2004, they high probably improved their direct selling channel. New geographic and demographic segments which are not in the focus area of the Carnival company will be always consider as opportunity for them. As indicated before direct competitors and indirect competitors will always be a threat for the company. Easy copy of the new trends from the followers is another unpreventable threat for the Carnival. Furthermore, pirate attacks, natural disasters like tsunami will always be treating the whole industry.

Main problem Main problem for the Carnival Company was also problem for its competitors. We talked about how competitive industry was and we said that the new changes, capacity size could easily be copied one from another. That is the reason why the main problem was to differentiate theirselves from each other. Carnival Company needed and will always need to find reasons for customers to choose them.

Alternative strategies In our case study, we see that Carnival uses cost leader strategy. But, we can not say that they can keep going with this strategy. Because, their competitors may also be able to decrease their prices and this can't go on like this. It may worked well for some time but company needs to consider other alternative strategies. I personally can recommend focus or niche strategy for them to use.

What are the advantages and disadvantages of the strategy? With focus or niche strategy, they can consider the different demographics which never or merely issued by its competitors. Which can be niche market for the Carnival Cooperation? Since all the cruise companies focus on adding more and more entertainment on the board, most of the old people would not li,e to share the same environment with the families with little kids or crazy environment with many parties. Also recent researches show that there is a high demand for luxury cruise experience from the Chinese people. Gay market would be another niche market for the Carnival Cruise company. Advantages include reaching out the customers who haven't been focused yet. These groups can increase the economies of scale of the company. On the other hand, if the niche market is a small one may not be profitable for the company. Also when the company focused on the some special niche markets, competitors can easily follow them and have better strategies to attract these customers which can also be considered as disadvantages of this strategy.

Recommendation - Why do I recommend this alternative strategy? I recommend this strategy for the Carnival because they can have better understanding the needs of these niche markets and meet the required needs. When they narrow their focuses, they expand their sales margin. Perceived value of their products and services can increase among the eyes of the niche customers.

Implementation - Marketing Perspective & HR Perspective When it comes to implementation of the strategy, they may need to consider working on new marketing strategies, promotions and specially trained staff. For example, if we think that company wants to focus on Chinese market, since it is a totally new market, they need to spend money on market research, advertisements and promotions in the Chinese market, and train their staff who understands unique Chinese culture and their language.

References
Corporate Web Page of Carnival Cruises. Retrieved 03 19, 2013, from http://phx.corporateir.net/phoenix.zhtml?c=140690&p=irol-index David, F. R. (2011). Strategic Management: Concepts and Cases, Thirteenth Edition. Prentice Hall. Enz, C. (2010). Hospitality Strategic Management: Concepts and Cases. Wiley. Official Web Page of Carnival Cooperation . Retrieved 03 19, 2013, from http://www.carnival.com/ Wikipedia. (n.d.). Retrieved 03 19, 2013, from Wikipedia-Carnival Cruise Lines: http://en.wikipedia.org/wiki/Carnival_Cruise_Lines