Cruising as a Segment of the Travel Industry - Case Study Example

Old and young, we are all on our last cruise. Robert Stevenson Overview Cruising is tourism which is travelling for predominantly recreational or leisure purposes on board a vessel or the provision of services to support this leisure travel. The World Tourism Organization defines cruising tourists as people who "travel to and stay in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited". Cruise Tourism has become a popular global leisure activity. In 2004, there were over 63 million international cruise tourist arrivals. Because of this, the development of cruising was incorporated into the tourism industry and the cruise industry grew into a separate tourism effort through the years. Name of Organisation Founded by cruise visionary Ted Arison in 1972, Carnival Cruise Lines had a very rocky start when its first ship, the former ocean liner Mardi Gras, ran aground off Miami on its maiden voyage. And while the competitors made fun of Arison by offering "Mardi Gras on the Rock" drinks aboard their ships, Carnival added two more former liners to its fleet. In 1981 the company's first newbuild, Tropicale, entered service, which was the beginning of a story of a tremendous and unparalleled success: from 1981 to late 2001, Carnival put into service 18 new ships, with five more on order until 2004. Today the world's largest cruise line, Carnival offers the well-known and extremely popular "Fun Ship" concept with colourful interiors and non-stop action around the clock. Key Product Portfolio Once considered to be the "party boat" cruise line for the 20-something crowd, Carnival has been undergoing an image overhaul in recent years. Carnival's newer ships reflect a main-stream dcor that is less glitzy than the older ships. However, Carnival's "Fun Ship" moniker lives on and there is plenty of fun to be had. On this cruise line, one will find something for every one of all ages. There is a great kids program "Camp Carnival" makes Carnival Cruisesa favourite for families on travel. Carnival also puts a lot of work into their entertainment style on board. The Las Vegas-style shows produced by Carnival's own production company are as good as any at sea. You are sure to find many lounges and bars on a Carnival Cruises ship with a variety of quality musical acts. In fact, it is safe to say that boredom will never be experienced on a Carnival ship, unless choosing to be. While the quality of food on Carnival has improved over the past few years, the portions and number of dinner courses have been reduced. Nevertheless, the options for dining are numerous and will satiate every appetite on a Carnival Cruise. Generally, the food is average to good with one exception; the new Spirit class ships have an upscale restaurant that got the Best Award for Alternate Dining in the Cruise Lines Competition within the industry. A. Issues with product portfolio As a segment of the travel industry, ship transportation is considered one of the oldest forms of travel, yet cruise ships are considered to be the "new kid on the travel block." In a real sense cruise ship companies are more in the entertainment business than in pure transportation. Whereas ships still provide "destination to destination" travel, cruise ships are veritable "floating hotels" featuring recreation and sports facilities, aerobic dance classes, and visits to ports of call. Because of the vast ports catering to cruise ships today, this paper focused its study on the changes of cruise ships and services in the ports of the United States and Canada and the tourists market that helped shaped the cruise services in the area. This thrust in the cruise ship style of service which caters to entertainment primarily and to travel secondly, makes it safe to assume that cruise services with Carnival Cruise Lines is highly profitable because: - Only a few people benefit from cruise ship tourism. Those that have the extra money to spend after the necessities in life like food, shelter and clothing. - Private harbour are sometimes managed by private companies who are sometimes owned by the same cruise companies thus, there are no extra charges for the shipping line when docked or using the port services - Enjoys tax incentives while hotels continue to face high taxes - discourages long- term permanent investments because of the mobility of the cruise ships. - Pays less departure taxes, majority of the port taxes goes to private harbour management companies. B. Issues of Product Lifecycle During the launch of Carnival Cruise Lines in 1972, the company sought to build product awareness and develop a market for the product. Thus, the marketing mix employed by the company is as follows: Product branding and quality level is established and intellectual property protection such as patents and trademarks are obtained by Carnival Cruise. Pricing was low due to the fact that penetration pricing is employed to build market share rapidly, and not high skim pricing to recover development costs. Distribution is selective and was marketed to people with money to spare or the "old-rich of Miami," until consumers show acceptance of the product. Promotion is aimed at innovators and early adopters and the early patrons of Carnival Cruise. Marketing communications sought to build product awareness and to educate potential consumers about the product. In the growth stage, the cruise line sought to build brand preference and increase market share by doing the following practices: Product quality is maintained and additional features and support services may be added through the acquisition of additional ships to cater to the growing clientele at that time and employing trained personnel on board to provide the services needed onboard. Pricing is maintained as the company began to enjoy the increasing demand with little competition in the market. Distribution channels such as ports and accredited travel agencies are added as demand increases and customers accept the product. Promotion is aimed at a broader audience as more and more people have come to embrace the "cruising culture." At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The primary objective at this point is to defend market share while maximizing profit. Product features like food and service offered onboard have been enhanced to differentiate the product from that of competitors. Pricing was significantly lowered because of the rising fuel costs and the economic crisis that was also endangered in the market because of the new competition. Distribution becomes more intensive and incentives were offered like group discounts and package deals to families and other freebies were offered to encourage preference over competing cruise lines. Promotion emphasized product differentiation because of the proliferation of upstarts that used the name Carnival Cruise in dealing with clients but are not really affiliated with the shipping lines. Because of the global financial crisis, the sales declined at Carnival Cruise, and the firm opted for several countermeasures: Maintain the product's competitive edge, possibly rejuvenating it by adding new features and finding new uses they could offer repeat clients and other first time cruisers. They could also harvest the product - reduce costs and continue to offer it, possibly to a loyal niche segment. Or discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product. The marketing mix decisions in the decline phase will depend on the selected strategy of Carnival Cruise. For example, the product (cruise services) may be changed if it is being rejuvenated, or left unchanged if it is being harvested or liquidated to merge with other cruise lines. The price may be maintained if the product is harvested, or reduced drastically if liquidated. C. Issues in the external environment affecting product - Gift shop and services (bus transfers, tours) are controlled by a few individual companies, the majority owned by foreigners. - Uneven competitiveness - pays less taxes than hotels, hotels continue to face high taxes - Cruise ship benefits from national and regional marketing effort but does not contribute to its marketing expenses - Little contribution to social programmes that benefit local populations - Due to its shifting behavior it is not committed to sustainable development and cares very little about the economic, social and environmental impacts it leaves behind - Uses the best transportation leaving old and unreliable transportation to the public and other overnight tourism - Benefits from national marketing efforts but contributes very little to it. - Only a few destinations are visited causing high intensity and cumulative impacts - Displaces overnight tourist to other sites affecting delivery of packages, discouraging loyal and potential overnight visitors. - Traffic congestions and speeding on the rivers increases the probability of accidents and affects ecotourism activities - No adequate planning for parking and slow traffic vehicles (horse and cart) Oil pollution and solid waste disposal is a concern - Cruise ship taxis and related service vehicles have taken over local parking areas causing a reduction in local sales - Impacts on coral reef, cultural sites, and nature parks - No carrying capacity established for marine, terrestrial and cultural sites - It is difficult to control and monitor the impacts of many passengers simultaneously - Cruise ship tourism has the highest impact on society, on protected areas, archaeological sites, and to the environment, yet pays less fees. - No facilities or financing to assist local communities to ensure equity in the sharing of benefits. Suggested New Product To offer a floating hotel to clients who cannot afford the cruise line service but is amenable to engage in the experience of cruise comfort and luxury without the extra expenses. Carnival Cruise can offer a luxurious floating hotel decked with staterooms and ocean liner features like restaurants with al fresco dining on the decks of its featured ship. Guests can then enjoy tours on the ships or overnight stays for a fee and experience how it is to be on a cruise travel while still on land. Guests can now enjoy luxurious accommodations, excellent restaurants and ocean views for a fortnight without having to be away on long cruises to just experience the cruise culture. Carnival Cruise could also offer an academic training ground for students who choose to pursue a career in the ship industry even if it is as stewards, engine cadets or deck cadets, the students can very well be trained in actual ship environment and be accredited by Carnival Cruise as well. Suggested Re-Engineering of Product) a. Floating Hotel Re-engineering As a typical Luxury Cruise boat, and a 5-star hotel, it is assumed that Carnival Cruise can provide most of the amenities of a normal 5-star hotel, including a relaxing sun deck and swimming pool. All the meals will be included, though beverages and bottled water can be extra. There will be a large selection of alcoholic and non-alcoholic beverages available at the bar, and creations of innovative bar tenders. There will be an available en-suite, air-conditioned cabin and full use of all the boats facilities (restaurants, ships, sun deck, swimming pool, etc.) The use of several different 5 star cruise boats on the Carnival Cruise fleet will be scheduled and the information as to which boat will be used at the time of reservation, as the boats shuttle back and forth on various cruises with regular breaks for cleaning and maintenance will be updated. However, it is assured that Carnival Cruise regularly maintains and inspects to ensure that the boats are of the same 5-star deluxe standard they are touted to be. There will also be assigned guides on board with the clients. This means that the sightseeing tours are either when a client requests one or with small groups to help assimilate with other large groups in the boat. The guide is at the service of the clients during the short stay on the "cruise" to help with any problems with either the cabin, dietary requirements at mealtimes, or just to sit and talk about answering any questions the clients may have. b. Academic Training Ground As an academic training ground for future seafarers, Carnival Cruise should be committed to uphold quality in everything it does and to do things right the first time, at all times. To ensure this, Carnival Cruise should first obtain the proper certifications like the ISO 9001-2000 from Germanischer Lloyds for Quality Management System. By affirming this commitment to the continuous improvement of future seafarers and the processes and services that Carnival Cruise will offer in order to comply with international standards of quality, Carnival Cruises will be ensured of quality services they can provide clients locally as well as external or international customers and measure its compliance with quality standards by undertaking regular performance appraisal, operational audits, and external/internal customer satisfaction surveys. It should be the firm belief of Carnival Cruise that the promotion of health and safety, as well as the protection of the environment, should always be a joint effort between the academic training institute and its employees. To this end, it should: * Support all relevant activities aimed to protect and improve the performance of future seafarers, through training. * Ensure that accidents are prevented through training and administrative controls. * Contribute to the upkeep of the environment through increased awareness among trainees and compliance with all governmental and international requirements. * The goal is to achieve high degree of excellence through training. * Ensure all the time for customer satisfaction. Issues that might affect lauchrelaunch of product a. Culture Influences Carnival Cruise will do well to launch this new product to the ports of America and Canada because of the culture. The seafaring industry may have originated form the Vikings of Europe, but the culture of cruising as well as competitive education has been embraced well by the citizens of theses two countries. Proof of this is the countless American Cruise Lines that cater to American and Canadian clientele, thus to fully take this niche in marketing and exploit this part of the market, it would be wise to launch this new product there. Since the idea of the "tourism industry" is especially complex, this industry is considered to be very large, comprising a very wide range of businesses and other organizations, touching virtually all areas of economy. This perception can make a good springboard and may begin with tourists, noting their consumption patterns. And since consumption patterns are shaped by their cultural influences, it would be wise enough to study the targeted audience and take note of their spending patterns and trends. Carnival Cruise should also bear in mind that all the suppliers of all the goods and services tourists require are assumed to represent components of a tourism industry. While this leads to claims about a huge tourism industry, it also leads to perceptions of a highly fragmented industry. Satisfying this complexity will help push this new product into the right direction. b. Target Clients Generally, Carnival Cruises' clients are older passengers who belong to the 40-60year-old bracket who have more time and money. However, with the changes in market conditions and in the category of length cruises, a great majority of cruise clients are under age 35. This age group can be targeted as most of them have children who are nearing an age considering college or know someone who considers a career in seafaring. It can also be wise to attract families of this age bracket who needs the time to get away from the hassles of family and work life and be alone with their spouse for a night or two in a luxurious vessel. c. Onboard Amenities Since many cruise lines charge for the purpose of travelling onboard to exotic places, the problem now becomes on how to satisfy the clients onboard without leaving the port at all. It is up to the creative mind of Carnival Cruise then to offer features or services that the clients cannot get from other five-star hotels in the immediate area. d. Cruise Industry Trends and Changes Changes continue to take place in the cruise industry. Growth, company mergers and, exciting progress in ship designs, cruise features and itineraries are just part of the picture. a great deal of data has been compiled and there are estimates for future trends and figures, as provided by the Cruise Lines International Association: The cruise industry has tripled in size every 10 years. The cruise industry is young - an estimated 36 million passengers have taken cruises since 1970 and 70% of those were generated from 1980. Market potential is huge, with an expected 10 million passengers per year. Cruise products are diversified, with a type of cruise vacation available for just about everyone. Cruises rate extremely high as far as performance and satisfaction, when compared to other leisure travels. 63 new builds are on order through 2005! Newly built ships usually cost a minimum of $350 million each! The top cruise destination markets are the Caribbean, Alaska, the Mediterranean, Europe, trans-canal (Panama), Mexico and Bermuda Mega-ships and small boutique ships will dominate the next generation of new builds Mega means mega when you're talking about a ship that's 102,000 tons with a passenger capacity of 3, 315! Conclusions/Impacts Given the considerations raised above, how then can an educational institution move from the status quo to ideal within the current missions of education, research, and public service combine with leisure, recreation, and tourism The following impacts embrace the tenets previously presented. The cultural impact of introducing this new and innovative product is a complex and varied topic because there are many different kinds of floating hotel tourism and a great variety of host societies. The safe generalization is that introducing this new kind of tourism will never leave a host society and its culture unchanged. The objective assessment of the impact of this new product into the fold is rendered even more difficult by intrusion of ideology into the evaluation. Broadly there have been two polar views on the impact of tourism on new product introductions. The sanguine view, generally associated with government and private promoters and beneficiaries of this change in tourism, stresses the positive aspects of any change on tourism as a source of foreign exchange, a way to balance foreign trade, a source of international amity, peace and understanding, a generator of internal wealth and employment, in short, manna from heaven. The opposite view emphasizes the negative impact as a form of cultural imperialism by the rich capitalist countries over Third and Fourth World peoples, a destroyer and corrupter of indigenous cultures, a source of ecological destruction, an assault on peoples privacy, dignity and authenticity, a type of economic exploitation benefitting only the local bourgeoisie and foreign capitalism, in short a symptom of inequality, dependency and domination linking the rich and the poor, both within and between nations. The critical perspective is more characteristic of the social science literature. a. Impact on Tourism and Language Use Interaction is often inhibited by language barriers. Even when speaking the same "language," dialectal differences based on class education, or regionalism almost inevitably set the two groups apart. b. Impact on the Arts It is often invoked as a paradigm of what happens to exotic cultures when exposed to the corroding influence of cruise tourism Artistic production becomes "commoditized," and to be sure, it is, and there are many examples of traditions becoming cruder under the pressure of commercialization. Craftsmanship becomes sloppier, materials cheaper, designs more stereotyped and repetitive, techniques less sophisticated and so on. c. Impact on Authenticity and Ethnic Consciousness Since "culture contact" will redefine ethnic boundaries and consciousness, it will inevitably involve a presentation of the "ethnic self." Governments and commercial promoters will conscious try to project a picture of their culture to prospective customers. A set of preconceptions and expectations often based on crude stereotypes will shape and modify the normal behaviour often in subtle and complex ways. In conclusion, the complex and unpredictable ways that the re/introduction of these products in the market will change the behaviour of the host (place and its environs), - but the very definition of the self as well. of course, this will involve interaction between the client and Carnival Cruise, but it will also involve interaction with the local culture and the Carnival Cruise client(s) and thus have an impact o the social science literature context. However, locals often have the vitality to recapture their own heritage, the creativity to invent the new, and the resilience to resist the encroachments of the global village. To paraphrase Mark Twain, news of the death of Third and Fourth World cultures is greatly exaggerated. and where cultures die, tourism is seldom to blame. Recommendations In addition to the various items discussed, it is recommended that Carnival Cruise possess the following skills for the new product be launched successfully: Knowledge about the new product Utilize training manuals; attend seminars and conferences; read brochures, industry magazines, and the consumer press; watch videos; and be familiar with floating hotel and cruise ship events and promotions that can be applicable to the new product. Join professional organizations that can assist in skills and training, and provide with contacts and resources. Access to references and resources to answer questions and obtain information Have online database information; subscribe to and purchase reference books and publications; have brochures, videos, and other selling tools accessible, organized and updated. Good research skills and communication skills to relate information Knowledge of current promotions, special offers and possible preferred supplier relationships Procedural skills to reserve space, handle payments and other documentation necessary, and to provide professional services However, in launching this new product, caution should be practiced as to the huge range of the general market in the hospitality industry that gives rise to the countless opportunities for distinct touristic markets. Most contemporary tourists or clients seem dependent to some extent on a range of goods and services acquired in markets. The purpose of selling this new product in the market is to make something available that is not tangible, or can be seen, such as an experience, and sell it and make it tangible to the clients. It all depends on how perspectives and strategies make a particular business succeed. Thus, it is also recommended that: a relatively small number of indicators be developed as soon as possible to permit comparative analysis of previous performance, trends, and forecasts of the industry as a whole and the new product in particular; that the range of performance indicators introduced by representatives of the transport, accommodation and attraction sectors of the industry provide the basis for further development, by an interdisciplinary group, before implementation. Bibliography Aron, Cindy S. (1999).Working at Play: A History of Vacations in the United States. New York: Oxford University Press. Bain, Kaith and Peter Howell. (1988). Understanding Markets: An Introduction to the Theory Institutions and Practices of Markets. London: Harvester-Wheatsheaf. Brown, Dona. (1995). Inventing New England: Regional Tourism in the Nineteenth Century. Washington, D.C.: Smithsonian Institution. Cocks, Catherine. (2001). 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