In light of the difficult economic and competitive conditions, should Cunard use a more “sale-oriented” format with more emphasis on price for its tactical advertising?
Prior to 1991, the cruise industry’s luxury segment was driven by supply, and there were only ten ships; the more capacity a company added, the more sales they made. In late 1991 however, demand slowed, creating excess industry capacity. This was partly caused by the Iraq War, which affected all companies with cruises near Europe and the Mediterranean. As a result, many companies have resorted to strong sale-oriented advertising formats focusing on heavy promotion and discounting. Holland America Lines, for example, announced a “$1000 off” sale on its entire line of four star cruises. This type of format is price-oriented, and therefore, has the potential to damage a brand image associated with high quality and elegance. Therefore, Cunard must alter its approach slightly.
In order to stay afloat in this tough economy, Cunard will need to implement a sale-oriented format. However, instead of using blatant statements of sales and discounting, Cunard needs to mention price in an understated manner. A great example of this is the “Cruising to the Sun” advertisement that Cunard ran on March 1, 1992. This advertisement announced a sale on cruises, but did not mention lowering the price. Instead, it stated that a second traveler could join for free if the cruise was booked on March 4, 1992; this was a more subtle approach as opposed to the aforementioned advertisement run by Holland America Lines. So, for the time being, Cunard must mention price in a subtle way in its tactical advertising.
In better economic times would your judgment differ regarding the above?
Yes, if the economy was thriving, Cunard would be smart to avoid a sale-oriented format. Cunard’s target market is people age 55 and older in the top 3-5% of income for its five star cruises and people age 45 and older in the top 20-25% of income for its four star cruises. These consumers are more affluent, and as a result, will likely be more concerned with quality than price in regard to cruises. In better economic times, using a sale-oriented format would negatively impact Cunard’s brand image of high quality and elegance. Cunard would be better off maintaining its strong brand image that appeals to its target market.
What is your recommendation to Cunard regarding the balance in the focus of marketing communications between the overall Cunard identity and image, and the identity and image of individual ships?
First and foremost, our target market is affluent individuals. These consumers have disposable income that they are willing to spend on vacation-like cruises. Within the target market, these consumers can be categorized into subsets based on their varying tastes. Consequently, Cunard needs to work from the outside in, or “drill down.” Cunard should focus on its overarching brand first, and then focus on crafting the image of different categories of ships. The consumers must desire to go on a cruise before they will look into what cruises are available. So, Cunard needs to first instill the desire to go on a cruise by promoting its overall identity and image. After that, Cunard can educate the consumers on the various categories of ships and what each ship has to offer.
Which marketing communications element do you believe should receive greater/lesser emphasis by Cunard? Why? Specifically, what about the role of direct marketing?
The travel agent/brochure marketing element should be emphasized more because 95% of Cunard’s customers booked cruises through travel agents. The brochure describes Cunard as a company, giving a brief overview of its history and what makes it great, and the travel agent closes the sale by encouraging the consumer to book a cruise. In regard to direct marketing, Eleanor Leslie, Vice President of Corporate and Marketing Communications, states that mailings have shown to be much more effective for targeting consumers of the five star cruises than those of the four star cruises. In light of this, Cunard should place less emphasis on direct mail for four star cruise consumers and redirect this emphasis to direct mail for 5 star cruise consumers. An important point to note is that each direct mailing has a statement encouraging the consumer to contact their travel agent for more information. Combined with an increased emphasis on the use of travel agents, direct mail should have a greater success rate.
What are the implications of the success of the “one-day sale” for Cunard?
The most obvious implications of the one-day sale are short-term. The revenue generated from the sale was ten times more than the cost, which is spectacular. Throughout the company, this was seen as a great success because it caused an immediate increase in sales. From a long term perspective however, this one-day sale faces Cunard in a direction that will eventually harm its brand image. Cunard has an image of high quality and elegance, which is associated with premium pricing. By offering sales on its cruises, Cunard risks diluting its brand image over time.
What effects do you expect of the impending organizational change to have on marketing communications at Cunard?
Currently, each ship has a marketing planning executive who has similar responsibilities to that of a product manager. Each executive controls tactical strategy, like revenue, pricing, marketing efforts, and gross margin for his respective ship. The development and execution of advertising and other marketing communications (strategic responsibilities), such as public relations, are completed by the marketing communications staff that Eleanor Leslie leads.
The impending organizational change would mean that the strategic and tactical measures for each category of ship would be controlled by a different marketing executive. Leslie’s staff would maintain control of certain marketing communications activities. Leslie fears that this organizational change will further dilute the Cunard brand because the marketing executives will spend too much money on promoting individual ships and their categories, and not enough on the Cunard brand name. Secondly, Leslie and her staff will lose some central control over the specifics of marketing and communication. Lastly, this new organizational structure will lessen marketing integration within Cunard and make it much more difficult to control marketing communications between the different ships and over different forms of media.
How would you prioritize and address the challenges facing Cunard?
The primary issue is how to maintain effectiveness, integration, and coordination of marketing efforts. If the marketing executives do not focus enough advertising on Cunard as a brand, it will be difficult to maintain its image of high quality and elegance because consumers will develop perceptions of specific ships or categories of ships instead of relating them to the umbrella brand. First, Leslie needs to set minimum standards on how much money to spend on advertising for the Cunard brand name. With this measure in place, at least Cunard’s brand name will receive some attention from advertising. Second, Leslie needs to maintain an open channel of communication with each of the four marketing executives, and have them report to her with updates on their plans and actions whether strategic or tactical so she can review them with her staff to make sure they are in the best interest of the Cunard brand name and the image of each of the ships and their respective categories.
Budgeting is the next issue that needs to be dealt with. Each category of ships needs to be given an equal amount of money for promotion of the Cunard brand name. Money for advertising and promotion of categories and individual ships can be given out based on the percentage of Cunard’s total sales volume; the ship with the highest sales will receive the most money.