Carnival Cruise Lines Harvard Case Solution & Analysis

Carnival Cruise Lines

Q1.) How did Carnival’s management build the line into the dominant brand in the industry?  Specifically what were the elements of Carnival’s success over the years?

Carnival Cruise Lines (Carnival) had successfully used the mass market cruise customers, who were the first time visitors instead of emphasizing on the repeat customers as the market and size of new visitors was larger than the old visitors. Meanwhile, all the brands were managed independently and they were free to adopt their marketing and sales strategies in order to increase their individual revenues and this decentralized approach not only enabled each brand to adopt the strategies that suited their local tradition, culture and customer preferences. However, it also helped the Carnival in the form of competition within the individual brands, which improved their services and encouraged each branch to develop their differentiating positions.

Fun Ships: Carnival made the interior of cruise in such a way that entertained the guests and it introduced such activities that provided fun to cruisers such as the launch of bars on cruise, which differentiated their position in the cruise industry. Cruise’s one of the key success factors was its understanding of the cruise industry, which helped it to develop a clear vision that focused on the provision of such services that were expected by guests, who used to go out for vacations and wanted to experience something very much entertaining and exceptionally funny. Along with this, Cruise identified its customers’ interests, attitude and opinions in order to provide entertain them. Valuable product design is the core success factor for any business and Carnival has developed its ships structure in a way that provides fun and amusement to customers. All these differentiating features of Carnival made it a leading brand of the cruise industry.

Other than that, Carnival’s management has always used forward looking approach for the management of Carnival’s ships because the customer’s profiles, interests, likes and dislikes keep on changing. Therefore, Carnival’s management has kept their product consistent with the changing preferences of its changing customer base. Moreover, Cruise’s management took care of procurement of new ships. Its negotiation skills and long established relations with the ship builders have enabled them to buy new ships cheaper than its cost to its competitors because usually competitors pay 25% to 30% more for a new ship. Furthermore, Carnival has maintained various facilities on the ship that attracted customers. It was committed not only to meet the customers’ expectations but to exceed them. This approach led Carnival to provide quality services and products during the vacation period and attracted more customers.


Q2.) What customer data is currently being captured by Carnival?

Carnival is concerned about customer’s loyalty because the number of repeat customer visits at Carnival is only one third despite the fact that customers were 98% satisfied. Fewer visits of previous customers have also confused the management; therefore, Carnival’s management is gathering the details of customers who repeatedly visit Carnival. That analysis of customers’ data reveals that repeat customers used the Carnival brand not more than two times and on average each repeat cruiser returned to use Carnival brand after an average period of 1 year to 25 months. Furthermore, the analysis also reveals that percentage of repeat customers is falling and only 20% customers have returned to use the Carnival brand in comparison to repeat visitors over the last seven years. However, the repeat visitors have increased their spending by 15% during their vacation on Carnival.

Additionally, Carnival has introduced an online registration process and it uses this online web portal in order to capture the data of customers, who reserve their cruise for the first time and they are required to get their passes by registering online web. This data typically comprises of name, phone number, mailing address, email address, and date of birth of guests. In addition to this, Carnival also uses online sources to compile data regarding the use of different services by cruisers before the date of journey. During the embarkation, they take photographs of each customer and paste them on electronic cards. They give these cards to each customer for their identity on Carnival ships. On the other hand, it has purchased its customers’ list from a fulfillment house that faced bankruptcy. That list contained records of 20 million individual customers of Carnival.

Furthermore, Consumer Response System (CRS) is there, which gathers information of customers’ interactions with ship crew during their cruise and other incidents that take place on a particular journey. Along with this, customers buying habits get recorded during their on board spending. Buying habits and Carnival’s web based systems have been used in order to collect data regarding customers’ plans of using the cruise in future, which enables Carnival’s Management to  forecast revenues and need of inventory in future. In addition to this, loyalty programs require customers to become members that helps Carnival to collect details of their age, address, income levels, buying frequency and to track their spending history during their cruise..............

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The main potential value of customer data and choices and challenges the firm faces in trying to capture that value. Carnival collects a significant amount of individual-level behavioral and demographic data for the client. Top management must now decide how to use this wealth of data to improve the performance of the company through customer targeting and acquisition, customer retention, and customer profitability strategy. "Hide
by Lynda M. Applegate, Robert J. Kwortnik, Gabriele Piccoli Source: HBS Premier Case Collection 32 pages. Publication Date: July 7, 2005. Prod. #: 806015-PDF-ENG

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