Case Study: Carnival Cruise Line

Case Study: Carnival Cruise Line

Pingping Huo (Eva)

BADM 6210 25 Managerial Communication

9/20/2016

The University of Mary Hardin-Baylor

Case Study: Carnival Cruise Line

Entrepreneur Ted Arison founded carnival Cruise Lines in 1972. Carnival Cruises is one of the world’s most innovative cruise lines. In 1987, Arison sold 20% of his shares in CCL and generated over $400 million for expansion. Since 2009, Carnival has been expanding its efforts in social media such as Facebook, YouTube, Twitter, Flickr, and Podcasts. The social media has been helping Carnival to attract more new guests and create more brand fans to continue its reign as the world’s largest cruise operator. However, after the engine fire on the Splendor on November 16, 2010, the company estimated that the total impact from voyage disruptions for the Carnival Splendor and related repair costs would result in about $0.07 reduction in the company’s 2010 fourth quarter earnings per share (O’ Rourke, 2013).

Carnival was facing issues that range from pirates to virus outbreaks to fires (O’ Rourke, 2013). It was lacking experience for contingency plans and drills, and it also had a food safety problem. Carnival had a confusing management for database and pricing. Carnival has a large past cruiser database, but did little with it, along with many other databases full of information scattered across different areas, such as the point of sale (POS) and property management system (PMS) systems (Askin, 2013). Carnival relied heavily on travel agents because 85% of guests are from travel agents, and Carnival did not have complete guest information from travel agents. The pricing of the average seven-day cruise is expensive after people add in the guest's on board spending. However, Carnival had known that its per diem price is less than the daily rate at many hotels and resorts around the world. Not only that, but the cruise also includes lodging, transportation, and entertainment costs that on shore venues would not include. In addition, Carnival has low customer loyalty because the information obtained by the company on their customers has often been severely lacking (Carnival Cruise Lines, 2016).

Carnival Cruise ships must develop and practice extensive contingency plans and drills in order to meet the International Maritime Organization (IMO) and U.S. Coast Guard standards. Carnival Cruise needs to ensure food safety and first aid measures are in order to change the brand image. It needs to adjust the price, and unified price and discount. Carnival Cruise line also needs to create a data about customers information in order to enhance the customers’ experience and loyalty through doing the following: based on age and marital status of customers, special suitable activities can be offered such as excursions and spa services for couples; offer a birthday or anniversary package with special discount or special gift. Carnival can create a seasonal themed cruise vacation such as Spring Break, Valentine and Christmas, and it also can add some new on-board facilities and entertainment to attract more guests. Carnival need to focus on guarantee customers’ loyalty such as company contacts the customer directly, often via e-mail, to offer a reward more tailored to the customer’s wants and needs, and it also need initiate a feedback loops with customers. Carnival need to develop a loyalty programs that means Carnival need to relatively low cost, provides an incentive for repeat purchases, rewards for being a loyal customer, and show that Carnival care about its customers. In addition, Carnival should develop the new ship because the new ship appeals to return and new customers, and Carnival also can receive cash from sale of old ship.