In an attempt to extend the summer, Gilly and I have just returned from a highly enjoyable cruise to the Canaries. Here are a few marketing thoughts from the experience.
The total cruise industry worldwide is estimated at $36.2 billion (a 4.5% increase over 2012) with 20.9 million annualized passengers carried (a 3.3% increase over 2012). Worldwide, it has an annual passenger compound annual growth rate of 7% from 1990 – 2017. (www.cruisemarketwatch.com). On each of my recent cruises I’ve met many “first timers” and they seem to be in the mood for repeat purchases when they leave so perhaps growth is assured for at least the short to medium term.
Despite the recent high profile problems such as the sinking of the Costa Concordia and the Carnival Triumph fire in the US my instinct tells me that this industry will continue to grow in terms of passengers and revenue. The figures above may be suggesting that the cruise lines are also increasing the yield from each passenger.
I suspect that the industry has some of the best marketing professionals in the business (from marketing planning to advertising) and really know how to work the Ansoff matrix as well as the marketing mix! The product is a pretty good mix of traditional routes and innovation and is clearly value for money. The sales structures and distribution channels are excellent from direct online to concessions in large department stores, and promotional activity is well managed. This industry is one of the few where I positively welcome their publicity though my door even though not a week goes by without at least one or two pieces of cruise-related direct mail falling though the letterbox to transport me from the mundane to the fanciful. That acceptance of direct mail is a real success for the industry if it translates across customer segments!
The element of the cruise marketing mix that is most interesting to me is price. There is some pretty complex dynamic pricing going on here that, should I ever get the time, I’d love to spend some time tracking in detail. I watched my last cruise prices bounce around over several months and had the impression that there was some smart thinking going on rather than simply discounting. For instance at one point the inside and outside cabins were so closely priced that the natural inclination of the new buyer would be to trade up (“only cost me £50 more to have a window rather than inside cabin”). Subsequently the prices moved apart more for a while, presumably reflecting buying activity. I think I detected a good time to buy a balcony cabin (Id already bought an inside though!) but given the pricing complexity I suspect this may not work for my next cruise.
As with many industries much of the value of the business is in reputation and this industry has its share of cruise blogs and review sites. These sometimes tell you more about the person posting comments than that which they post about. However, in general, they were pretty fair descriptions of what we found on the cruise. Cruise ships are unlikely to get it all right and for some people some features are more sensitive than others. This must be one of the most difficult things to manage for a cruise line. Price has an effect here too as given the dynamic pricing you are likely to meet someone who may have paid significantly less that you did for a similar cabin. But as a cruise line you want people on board spending money so this needs to be in the algorithm too. There are great challenges ahead for the cruise industry but I reckon they are probably capable of meeting them.
As a final aside, our cruise staff treated us like gods. They even thought we could walk on water. They were keen to help us manage our “Footprint on the water”. A cynic would say that this just meant that they might not have to wash so many towels. However, we had a great time and this is not a time for cynicism.