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Carnival Cruise Lines Case Solution

Solution Id Length Case Author Case Publisher
2510 1946 Words (7 Pages) Lynda M. Applegate, Robert J. Kwortnik, Gabriele Piccoli Harvard Business School : 806015
This solution includes: A Word File A Word File

The case study is about Carnival Cruise lines. The Carnival Corporations were established in 1972 when Ted Arison, the founder of the company, formed carnival cruise lines. Ever since It has become one of the largest cruise companies situated in North America. Every week, the company offers its services to more than 60,000 passengers. This experience is the benchmark, against which the excusers compare other experiences. Carnival Cruise is positioned as the "fun" psychographic and is famed for enjoyable, casual cruises. Furthermore, Carnival has a strong market expansion and penetration strategies to attract the masses. It is usually the first choice of the first-time cruisers. The firm is aware of the industry dynamics and offers price leadership. Leading them to attain double-digit growth in the industry. Due to this level of customer attraction over the years, Carnival Cruise is able to gather ample customer data. However, it had not been put too much use. By analyzing customer data, they channel their marketing efforts effectively, as their prime focus is to keep sustainability in the market without compromising on the services. The company’s management has also been opting for various tactics and strategies in order to retain customers and make them loyal. One option under consideration is to use Customer Relationship Management software. The AI and algorithms used by the software will be able to facilitate Carnival Cruise in offering services that the customers value the most. It may be able to offer custom offerings to individual customers. 

Following questions are answered in this case study solution:

  1. How did Carnival’s management build the line into the dominant brand in the industry? 

  2. Should Carnival do “CRM”? What should CRM look like at Carnival? What does CRM mean to Carnival’s management? 

  3. How should Carnival go about implementing a CRM strategy? What is needed? 

  4. What else should do to leverage customer data for enhancing the guest experience and company’s bottom line? 

  5. How could Carnival Cruise Lines retain its customers?

  6. Can the company improve its services more? If yes, how?

Case Study Questions Answers

1. How did Carnival’s management build the line into the dominant brand in the industry? 

The management at Carnival Cruise considers their business like any other vacationing on land business. This outlook enabled them to access to a much broader customer base. This contrasting belief from the rest of the industry was fuelled by the management’s belief that a cruise offers a unique and beneficial value proposition to the vacationers, especially the cost-conscious ones. The Cruise offers accommodation, food, and entertainment with the added class of being on the water. This is a very unique value proposition for the consumers. Cruise Carnival offers all of it for about 100 dollars a day. Equipped with an entertainment mix of Las Vegas Broadway and beyond, cruises have really become the one stop vacation experience, offering multiple flavors under one roof, hence attracting more and more consumers.

What the Cruise Carnival management opted for was that instead of focusing their efforts on marketing and advertising to retain the 3 million guests that sailed with them in 2004, they focused on the 300 million potential first-time cruisers that were taking land vacations. This strategy of expansion helped Cruise Carnival to outperform the competition by 17%. Now with all new customers, word of mouth is generated, which attracts even more customers. Slowly and steadily, the brand name Cruise Carnival took hold into people’s minds. With such a wide customer base, growth was inevitable. This growth not only benefitted the company, but it also established an image of cruising as a vacation in the minds of the clients. Strengthening the industry and cementing its own image! Due to it being the price leader, it does stay in business more than its competitors, however, the issue is that there are seldom repurchases. Once a vacationer gets the flavor of the cruise, they move on to fancier cruising companies. This means a loss of business. If a mechanism were to develop where a class of customer were offered an exclusive and fancier experience, they may be willing to cruise with Cruise Carnival again. In 2004, Carnival Cruise reported a whooping profit of 1.03 billion USD, the highest so far. This indicates that the company is highly successful in creating value for consumers and has positioned cruising effectively in the minds of the consumers.

2. Should Carnival do “CRM”? What should CRM look like at Carnival? What does CRM mean to Carnival’s management? 

Having collected tons of data and not putting it to any use does not sound very efficient. Using this data to power innovation and elevate customer experience makes sense in an industry that is characterized by hospitality, care, and comfort. It is high time that the senior management leverages this data and translates it into strategies to acquire and expand the consumer base, to offer new, innovative and relevant services and facilities to the consumers. Such strategies may be facilitative in cutting costs as well. 

The conversion of data into knowledge, of course, has a cost attached to it, however in the long run it pays off. Currently, the cruise is performing well apparently, it is putting up effectively with the increasing economic costs and adversities, however careful analysis of data will be required to ensure that the company is not wasting its potential, and is not slowly inching towards decline.

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