Essay on "Strategic Management in Any Competitive Industry"

Essay 12 pages (3731 words) Sources: 24

[EXCERPT] . . . .

Strategic Management

In any competitive industry, companies are required to continually innovate their product and reposition themselves in order to remain competitive. This is perhaps particularly so in the cruise ship industry, where competition is increasing to provide customers with the most memorable, interesting experience possible. The cruise ship company Cayamo has done this successfully by providing a cruise that includes song writers and their music. By including a popular segment of entertainment on the cruise, the company has ensured customer loyalty, and its market position, for years to come. When competition from other, similar service providers is considered, it is clear that a significant market exists for the industry to provide targeted audiences with experiences that they would be interested in.

The Market for Cayamo

Cayamo operates in the cruise ship industry, and as such, several market factors need to be taken into account if an analysis of its position is to be made. In the UK market at the time of the Mintel Report on UK Cruise Ships (2007), the cruise sector has begun to enjoy increasing popularity among the public. The main reasons cited for this is the increase of expenditures on holidays and short breaks among consumers. Indeed, cruise holidays have generated about ?1.75 billion in the UK in 2006, according to the Mintel report. Furthermore, cruise holidays are particularly popular among the British, who are reported to have taken more ocean cruises than any other nationality in Europe. The market is therefore rich, not only for new entrants, but also for existing competitors to create excellence in their products and services. Based on this history, the report estimated an increase in demand and supply for cruise ships across the industry over the years following the report.

Another interesting element is that the cruise ship industry tends to be based upon destination in its marketing endeavours. Hence, popular destinations away from the UK include northern destinations such as the Baltic and the fjords. When looking towards 2012, the report estimated a growth of 51% at the prices that were current at the time, with the equal of 28% of real-market increase. A per annum growth rate of 8.5% was estimated.

Ocean cruises at the time had the largest market share, at 90%, which was projected to remain the same for subsequent years. Steady and sustained growth were projected for the future.

According to the Segment Performance section of the report, cruise holidays have enjoyed their exponential growth partly due to the decline of other types of holidays, such as beach excursions, which had seen a decline over the years prior to 2007, as opposed to a 63% growth for cruises. Indeed, cruises saw a popularity level similar to other high-level tourist endeavours, including city breaks and coach tours.

Cruise holidays are also ideal for multi-destination holidays, which were also on the increase. Providers in this holiday sector also had the opportunity to capitalise upon the package offering, which was shown to be preferred by customers booking holidays that were out of the ordinary. Importantly, cruise providers have the opportunity to capitalise upon specialised items, such as the music cruise offered by Cayamo. Because the industry is increasingly popular as a holiday choice, it is important to offer a unique choice to potential customers. Another possibility for positioning is to offer a stress free means of transport to a specific holiday destination.

According to the Market Share section of the report, there has been a marked increase in cruise holidays away from the UK. Cruising from UK ports has for example increased 100% at the time of the report. This is despite the withdrawal of Airtours Sun Cruises in 2005, which negatively impacted the number of flycruises taken during this year. Cruising within the UK was driven by larger ships, such as those offered by Thomson Cruises from Newcastle. Destinations such as Greenland, Iceland and the arctic also saw high increases during 2004 and 2005. Flycruises tended to have their greatest success in the exotic location market, including Australia, the South Pacific, the Indian Ocean, and the Red Sea.

An interesting aspect in this section is high end cruises, which offer ultimate luxury to their passengers. Examples of providers in this market include Crystal Cruises, Regent Seven Seas Cruises, and Windstar. Although ultra-luxury cruises only compose 1.8% of the total cruise market, their total revenues amount to 6% of the share as a result of the high prices.

Perhaps exemplary of the success that is possible in the cruise market is the Carnival Corporation, featuring under the Companies and Products section of the report. The corporation includes 12 leading cruise brands, including Carnival Cruise Lines, Princess Cruises, Cunard Line, and Swan Hellenic. It operates cruises in the United States, United Kingdom, Germany, Southern Europe and Australia, with destinations across the world. The corporation's revenues for 2006 amounted to $11.8 billion.

Some of these cruise companies offer services to specific market niches in order to attract passengers who would not normally take cruise holidays. Ocean Village, for example, has positioned itself as "the cruise for people who don't do cruises." The target market for this effort included people who had never taken a cruise, whether these are singles, couples, or families. This addressed a specific gap in the cruise market. Ocean Village 2 went a step further to provide 3-berth cabins specifically for single-parent families.

The target age group for Ocean Village was also somewhat younger than the traditional, older market who are perceived as the ideal market for cruising. Persons between 30 and 50 were offered a combination of relaxation and adventure, which focused on informality, activity, and value for money. The report mentions several surveys indicating the perception that cruises are generally meant for older people, such as those over 50 or 60. To attract their target market, the company signed a contract with Neil Morrissey to handle the voiceovers for the company's advertisements. This is an indication of an increasing awareness among cruise providers that a certain image is required to target a younger market.

Other efforts at market positioning to increase the cruise customer base include Ventura's ship specifically designed for families, and Princess Cruises that offered an informal, American-style atmosphere for its cruises. Swan Hellenic, on the other hand, provided a focus on cultural cruising, with educational content provided by guest speakers such as diplomats, historians and botanists. This type of specialisation has become an increasing trend among cruise companies. Some position themselves according to the entertainment provided on board, while others provide a specific type of atmosphere to attract a specific target market. Others simply capitalize on size or luxury, such as Celebrity Cruises, whose aim was to set a new standard for cruising across the globe.

Others, such as Star Cruises plc, offer not only specialised destinations, but also food and decor to match. Star Cruises for example has the unique position of being the only line that offers cruises to the Far East throughout the year, while Asian food and decor are offered on board.

One of the most important considerations when determining a company's market position is the requirements and demographic of the consumer. Because many in the older age group are unlikely to go on cruises again once they have taken such holidays once, it is primarily important to the industry to target the younger and singles market. According to the report, there is a vast untapped market of potential cruisers in the UK; a third of the population would consider taking such a holiday. Once this sector of the population has been convinced to take a cruise once, they are likely to do so again. Those who remain unconvinced are limited by cost, the limited space on board, and the perception of boredom on ships.

Demographically, those who are most likely to take a cruise remain the older generation, whose children are no longer in the house. Indeed, over a fifth of the general customer base for cruises come from this age group, and is reported to be likely to grow. This is something that Cayamo might keep in mind when considering its market position and future strategy. Another important factor in this age group is marital status. Those who are widowed, separated, or divorced, for example, are reported to be less likely to go on cruises than their married counterparts.

Here it is important to maintain a relationship with customers who have shared the cruising experience by means of regular communications and events. This can have the added function of forging friendships that can encourage single cruisers to partake in the experience with friends.

There is an untapped cruise market, focusing on young people. Here both Cayamo and other cruise providers can consider their positioning effort. Those between 16 and 19, for example, as well as families with pre-school children offer a good resource of potential customers. These are sectors that Cayamo should keep in mind to plan for its future strategy. Family-friendly cruises are often… READ MORE

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