Marketing Management of The Norwegian Cruise Lines - Case Study Example

Marketing Management Examiner: Table of Contents Part I 3 The Norwegian Cruise Lines 3 Introduction 3 Marketing Trends and Dynamics 3 The Norwegian Market Segmentation 5 Part II 7 i)Importance of Market Research 7 ii)Importance of the Marketing Mix 11 iii)Importance of Service Innovation 13 Part III 14 i)Diversification 14 ii)Constant scanning of the market environment 15 iii)Exploiting new opportunities 15 iv)Involving in Strategic Planning 16 Conclusion 16 Bibliography 18 Part I The Norwegian Cruise Lines Introduction Cruise voyages are basically undertaken for leisure and recreational purpose, and this forms one of the most important parts of the leisure industry. The cruise industry is majorly characterized by its exceptional value proposition, unrealizable level of market penetration; wide appeal its customers, high rates of satisfaction by the guests and favorable imbalance through supply and demand. Marketing Trends and Dynamics The Norwegian Cruise line is a cruise company operating cruise ships headquartered at the Miami-Dade County, Florida. The company is among the three largest in the industry including the Carnival Corporation & plc and the Royal Caribbean Cruises limited. The Norwegian Cruises operate in several destinations including Alaska, Bermuda, Caribbean, Bahamas, North America, Europe, Mediterranean, Baltic, Canada, New England, Hawaii, Panama canal, Mexico, Transatlantic and Riviera. It operates about 14 ships including Norwegian Breakaway, Dawn Epic, Escape, Gem, Gateway, Jade Jewel, Pearl, sky, spirit, star, sun and the pride of America. Among the luxurious services that this company offers to its customers on board include; dining, accommodation, haven, weddings and romance, fun and entertainment, Casinos, Packages, spa, sports and fitness, family fun and youth programs (Phill, 2014). The Norwegian cruise market over the recent past has been experiencing a steady growth in the cruise industry. This can be indicated by the increased cruise capacities, number of passengers, number of cruises or ships, and available lower berths that have been managed to let the positive growth come. All these have been experienced despite the hard economic times that the company has been going through. However, it has also been noticed that there has been a decline in the revenue collected by this company considering the reduction in the spending nature of the onboard cruise vacationer. The competition in this industry which has seen several companies get into the same business is an enough indicator to signal the Norwegian cruise to up its game. Due to this stiff competition in the industry, which has taken several dimensions, this company has lost a lot of revenue to its competitors. The company has also engaged into investing heavily into new generational cruises to catch up with the competitive trends in the market. The cruise market therefore has been that which requires a lot of financial and resource input but without equal level of revenue collected. There is a lot going on in this company as a matter of attracting new and more vacationers. These are together with increasing the onboard facilities such as full-scale seagoing aquaparks, luxurious spa suites, increasing recreational facilities and making them separated for children, adults and teens. There is also the fixing if Wi-Fi to keep the passengers online while on cruise. These and much more are just a few tips to show how this company involves in heavy investment to keep up with competition which has a different edge in the market. As anyone would appreciate, North America is rated as the largest in cruise market worldwide, having close to half the total cruise market in the world. This is therefore enough evidence to show that, the Norwegian Cruise is really trying to survive in a very stiff market full of half the total cruise market in the world. There is an immense growth in the future in this industry that can still be exploited, provided by the low penetration of the cruise industry worldwide. Given the fact that there is a rise in consumer income and an increasing employment level, there is hope in the future of the cruise industry that depicts much growth. There is also a potential of exploiting the cruise markets in new areas such as Asia Pacific and Australia which have not been fully exploited by the cruise industry. The Norwegian Market Segmentation The Norwegian cruise market is segmented into six different segments of customers by the use of various variables as listed below (Voosh, 2013): i) Explorers: this segment is composed of folks who take vacations like four times a year. They have disposable income, take longer cruises and which are exotic and would like to explore other cultures. This is a group of educated people who like socializing and making friends. The segment is a small one, but more saturated and lucrative enough to sustain the cruise business. There is a future opportunity represented by this segment as depicted by the fact that, more couples are becoming empty nesters and at the same time, retired upscale boomers. ii) Admirals: this is a group of vacationers who have their preferred cruise provider and believe in traditional experience. This is the non-experimenting group of folks who tend to ritualize their cruise experience. They can only try another cruise provider when they realize that their favorites have started become stale or are radically changing to provide them with unsuitable treatments. This group of consumers is regarded as great cruise consumers who provide a loyal consumer base but, they are older and provide less growth opportunities in the cruise market. iii) Marines: this is a desirable, yet illusive group of consumers which is made up of motivated, upscale and very active young professionals. These people like to snorkel, para-sail, surf or rock climb. They keep on auditioning better cruisers, whether they are new cruisers or old ones. This group is intellectually curious, has involvement in the media, and they derive value in not only being active, but also from the fact that they can be challenged from the reality of learning. This segment is a good opportunity for cruise company growth. They are the targets of new cruise designs and because of them; there has been a tremendous change in the onboard facilities in the cruisers as well as an increasing trend in the internet marketing. iv) Little Mermaids: this is the segment which is made up of upper middleclass families. It is a group which is involved vigorously in the increasing daily activities. It is a group which is much involved in maximizing every little holiday opportunity to have a quality family time together. v) Escapers: this is described as the most desirable segment of the cruise market and also regarded as the core of the cruise market. This is a group that is really looking for a place or an opportunity to get relieved of a lot of stress after a long year’s work with traffic jams, having enough bad tempered people here and there and just abundance of things that need to be done. They then need time and a place to just relax for their vacations. They tend to be price sensitive, but all in all, they still find to spend money for the type of a trip and a treat they deserve. vi) Souvenirs: these are the groups of people whose careers are regarded as jobs and also have lives to live but, not lifestyles. Being that taking a day out for a trip isn’t as much priority for them as the price of doing so, they have a cruise habit of just taking a trip in more than just a specific destination or activities. They lack intense interests to explore the world and only have the internalized experience of where they are at the moment. vii) Drift: this is part of the group in every society that tries to distance itself from travel commerce. They don’t bother bout about what is happening in the world around them and most of the time, they do not poses a disposable income. This is the segment which is normally a target of the breweries and the bait shops, but not a target by the cruise market. They add no value to the cruise market. Part II Importance of Market Research, Marketing Mix and Service Innovation for the Norwegian Cruise i) Importance of Market Research Marketing research, as we know it is the process whereby we gather, analyze and interpret information about product or service that we offer and the market trends at large. It can therefore help NCL to understand the past, present and future trends in the market environment and enable them to make informed decisions (James, 2009). Market research focuses also on the customer analysis and their spending habits. Such information can also help the NCL to reconstruct its decisions about who their customers are, what are their spending habits, what services or products do they need and what can the NCL offer that will best suit the customer needs. It is also good to appreciate the location and needs of the business target market, the industry analysis, and especially the major competitors in the sectors so that relevant strategies can be applied to be able to become competitive in the market. For the NCL to be able to utilize the information of the market research effectively, it must be able to realize the importance of the various key segments analysis of the market. Some of these key segment analyses are as discussed below: a) Customer Analysis The NCL really requires a better understanding of who its customers are, and how these customers are likely to respond to its various marketing needs element. The major importance of customer analysis is that, it helps in market segmentation. When the NCL already knows its different market segments, as we had discussed previously, it will then be able to track and monitor each segment to be able to determine the needs of the customers in each segment, the levels of consumer satisfaction suitable product or services development to suit each market segment (Magaret, 2012). Using an example, since the NCL has already identified its different market segments, it might decide to separate the cruise into classes. This separation will be based on the different needs and spending levels of the different consumers onboard falling under different market segments. Those consumers who fall into the market segments like the ‘’marine’’, who are willing and ready to try new things and do not fear spending, such should be included into a separate class where they are able to spend well and enjoy the luxury that come with that separate class; but at the same time, they will be required to pay a lot of fee for the class. On the other hand, a class like the ‘’Drift’’, which is composed of people who do not even like spending and probably do not have a disposable income, should be given a cheaper class on the cruise where they will have to enjoy a little luxury of the cruise, and pay a little less. Those with families like the ‘’admirals’’ should be given a separate class with family facilities like accommodation, children facilities and such like, and their prices should be determined by their segmentation. Another important way through which marketing research through consumer analysis can be able to be of importance to the Norwegian Cruise Line (NCL), is by helping the company to identify the product (company) life cycle and also to develop the strategy to implement the marketing mix. When the company has an opportunity to understand the behavior of its consumers, it will be able to predict possible changes in consumer behavior that will be very vital in making new future plans for the consumers according to their new changes in their behavior. Due to the increasing level of employment and the rising income levels of consumers, there is a new group of customers that is trying to come into this cruise industry that the NCL needs to trap. It is also good to realize that the biggest challenge today to the NCL marketers is the emergence of new consumers. This is because new consumers’ expectations normally vary greatly from the traditional consumer to the modern and technology driven consumers who would like to experiment new ideas. Through a thorough market research, the NCL will be able to determine such challenges and actually know how its customers’ expectations and be prepared to meet their expectations. b) Market Analysis Through a good market research, the NCL will be able to carry out a good market analysis that will help the company to discover the possible opportunities and threats in the market environment. We have seen before how the market environment, under which the NCL is operating, is very dynamic. For this reason, this market and the cruise industry at large, brings with it challenges that need to be addressed by the company’s marketing managers. It is only through market analysis that all that will be able to be discovered and addressed in a proper manner. The challenges in the North America Cruise market has resulted into challenges such as increased competition, market segmentation and increased consumer sophistication which have so far become major problems to manage for the NCL. The market place also keeps on changing to bring about new behaviors, threats, and new opportunities. Therefore, the NCL’s marketing manager needs to track these changes in the market in advance, through good market research strategies, to be able to identify and deal with the possible opportunities and threats in the market. In this way, the manager can plan on ways to minimize the threats and seize the opportunities. c) Industry context Analysis There is also a need for a market research for the NCL so that they can be able to carry out a good industry analysis to determine the attractiveness of the cruise market in the industry. In this case, the company will be looking at the overall profitability of the industry. In its endeavors to do so, the NCL will be able to use the Porter’s five forces to be able to determine whether the market is attractive or not, and whether the industry is profitable or not. Through these forces, the NCL will be able to know its level of competitiveness in relation to the whole market in the industry. These forces include the analysis of the bargaining power of suppliers and consumers, threats of new entrants, threats of new substitute and the competition within the industry. d) Competitor analysis During a market research, the process cannot be duly completed without a good look at the analysis of the competitors in the industry. The NCL marketing managers must know that growth in this company is only achieved by gaining the competitors’ market share (Jim, 2012). The company should monitor the competitors to be able to identify the firm’s competitive advantages and disadvantages. After the NCL shall have known the strengths and weaknesses of its competitors, it will be able to prepare itself in a good position to launch an attack and also prepare for stronger defense against the competitors’ attacks. NCL therefore needs to do a thorough research to find out, or rather, through a market research, the NCL will find out who its competitors are, what their strategies are, what their objectives are, what their strengths and weaknesses are, and how their reaction patterns are. These kinds of information will be very important to the NCL since by identifying the competitors, the company will be able to avert great risks that come from potential competitors. ii) Importance of the Marketing Mix Through good use of a successful marketing mix, the Norwegian Cruise Line will be able to provide the right product, at the right price, in the right place through the use of a suitable promotional method. This summarizes the 4 P’s of marketing which are: product, price, place and promotion (Jeff, 2012). a) Product The NCL needs to scan the market thoroughly to realize the dynamics that are available in the current market and through good consumer segmentation, the company will be able to develop and provide the right products to the consumers. The right product here means, the right type of cruises which are fitted with the right facilities to meet the customers’ satisfactions. The company can be able to achieve this through having consumers grouped into different segments in terms of sex, age, singles or families, social class and size of disposable income. In ths way, the company will also be able to find a good chance to differentiate its product in such a way that each segment of consumers on board can well be served by the company. These segmentations will differ in levels of facilities and types of facilities available and also pricing per segment will be different. b) Price: the NCL should provide the right prices to its products to meet what the customers can afford. This is where the company is face with a problem to know what prices are suitable for what type of customers. There are different types of customers out there. The aim of the NCL should be to define its prices in such away as to accommodate all sorts of customers it has out there. In this case, nobody should be left out, so there should be something for everybody. To manage this, the company will again use its segmentation of consumers into different social classes, income levels and demographic factors, in order to determine the right prices to charge. Through this way, the company will differentiate its cruises into different classes where different classes have different levels of satisfaction, and that will determine the prices that will be charged per class. c) Place: The NCL Company should ensure that they avail their cruises in the right place, and at the right time. In this way, the company will determine which destinations to provide their services and when to be at such places. The destinations with more customers should be visited frequently or have several cruises assigned to pick customers at, than those destinations with little demand for cruises. The customers should not be kept waiting for these services where the company has designed as its destination, but instead, the company should avail enough cruises to overwhelm the customers. d) Promotion: on to promotion, the company should identify the right channels to reach its target group. The company should first know whom they are targeting with their services, and where this target group is, for the promotional services to be selected effectively. If the company can use, for instance, social media to reach to its youthful and progressive group of customers while use TV adverts, radio, magazines, newspapers, road shows and the rest to reach other targeted groups of consumers. iii) Importance of Service Innovation The company will need to have and implement service innovation in order to meet the ever changing customer sophistication (Berry, 2006). As we had discussed earlier, different customers have different levels of expectation from the kind of services or products that a company offers. The trickiest group to deal with in this segment is the new customers who are just exploiting the market for the first time. The company has a hard time to know the level of innovation that such kinds of customers expect to find in the market. However, the company is supposed to do market scanning and have a good knowledge of the business environment and the changes, dynamics and trends that are available for them to know the kind of innovation to bring to the business and the industry at large. The level of innovation is set high already in the cruise industry. Being a tourism sector, much is added to the sector in terms of innovation order to make the sector more attractive to the customers. This is another strategy used by the NCL to attract more customers who are already in the industry and those who have not joined the industry yet. With the recent introduction of free Wi-Fi in most of its cruises, there has been a customer tendency of travelling even to longer destinations since they can manage and monitor their businesses online as they stay onboard. The customers can now stay online as they are onboard as long as they have internet enabled gadgets. Therefore, innovation has benefits to the NCL Company which are together with attracting new customers, allowing customers to travel frequently and use longer travels or visit longer destination. All these turn to be advantages on the parts of the company since they are able to derive more revenue from such activities. Part III Marketing techniques to increase competitiveness and sustainability of the Norwegian Cruise Lines i) Diversification As the newly appointed marketing manager for the NCL company, my main objective would be to diversify the business in order to increase its competitiveness and sustainability. The company might not be able to get sufficient revenue just by the onboard charges per different classes in different cruises. However, if the company can diversify its operations and major into offering other services to this group of customers onboard, the company will be able to derive much profit from the business and at the same time remaining on top of the competitive edge in the industry as well as mainstreaming the sustainability of the business. Through diversification, the company can be able to introduce services such as tour guiding and operations which will be charged independently from the boarding charges. There would be services to take care of the children for the customers onboard so that their parents cannot keep on worrying about the safety of their kids which might bar them from enjoying their trips. The company can come out of the plain cruising business to a more diversified kind of business where it will be able to provide a lot of services under one roof in the same cruise so that the customers can also have value for their money spent. The company can also operate several of its own hotels to provide hotel services to their clients. This can open up the business in that, many customers, some of which only came to board the hotels, can sometimes change their minds and have a board on a cruise for a vacation. ii) Constant scanning of the market environment As a marketing manager, my main work would be to carry out constant scanning of the internal and external market environment in order to familiarize myself with the frequently changing weaknesses and strengths in the internal environment and also know the threats and opportunities that the external environment has for the business (Kennedy, 2011). By doing that, I will be able to equip myself with strategies to utilize the strengths that the company has in order to improve its competitiveness and also to become sustainable. On the other side, I will also be able to identify the weaknesses of the company n advance and be equipped with tactics to improve on the weaknesses so that the competitors cannot take advantage of such. I will also be able to identify my threats in advance and be ready to launch defense mechanisms as well as exploit the opportunities that present themselves in the industry to foster competitiveness and sustainability. iii) Exploiting new opportunities To be able to have a sustainable cruise business for the future, there will be need to exploit new opportunities that present themselves in the Asian Pacific and Australia which are less exploited, yet show immense potential. I will have to engage my team into thorough market research all over the world so that, any little opportunity that will present itself as potential and can be exploited, I will be able to through expanding the branches of the NCL to all such areas of potential. It is a fact that the cruise industry is not fully exploited, with only a few dominant players, most of which are based at North America. The new trend in this market will be to exploit new regions and make the NCL be the pioneer of some regions so that it can enjoy the benefits of pioneering virgin markets. iv) Involving in Strategic Planning Last, but indeed not the least, as the marketing manager of the company, I will ensure the company has a good and straight forward strategic planning to enable marketing strategy to fall well in place so that all the goals, objectives and missions of the company are merged in the goals, strategies and missions of the marketing departments department (Mittenthal, 2014). Through a strong strategic plan of the company, the company will have a consistent plan of action which will be executed by the marketing department to achieve its goals. The strategic plan will ensure that all the divisions within the company are focused towards achieving the company’s objectives, and marketing department is one such division. The plan will be able to show this department to be more pro-active in executing all its duties in order to achieve the competitiveness and sustainability. Conclusion In a nutshell, the Cruise industry is such industries that are not much exploited across the world and much of it is based in the North America. The Norwegian Cruise Lines is one of the companies that operate in the North American Cruise market. Through market research, this company is able to achieve consumer, industry, competitor and market analyses to help the company sort out its marketing problems. Through marketing mix, the company is able to provide the right product, at the right price, in the right place, using the right promotion. The company needs to diversify its operations, make good strategic plan, exploit new markets and maintain constant environmental scanning to be able to increase competitiveness and sustainability. Bibliography Berry, L. (2006). Creating New Markets Through Service Innovation. A Journal of the Sloan Management , 1-2. James, D. (2009). Market Research. Entrepreneur Journals , 1. Jeff, C. (2012). Marketing Theory: Marketing Mix. Journal of Business Case Studies , 1-4. Jim, R. (2012). Competitor Analysis. Tutor2u Journal , 1-3. Kennedy, J. (2011). Scanning the Marketing Environment. New York: McGraw-Hill. Magaret, R. (2012). Consumer Behavior and Analysis: Understanding Customer Behavior. Icrossing Journals , 1-5. Mittenthal, R. (2014). Ten Keys to Success: Strategic Planning. Tcc Group Journals , 1-3. Phill, N. (2014). Norwegian Cruise Line. A Journal of the Norwegian Cruise Line , 1-5. Voosh, T. (2013). Cruise Market Size and Segments. A Journal of the Cruise Market Watch , 1 5. 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