Interface Between Marketing Strategies and Marketing Mix in Cruise Industry

INTRODUCTION

Marketing is a process done with the aim creating value for customers and building strong relations in order to obtain value in return. (Kotler, Bowen and Makens, 2014). It can be done by understanding the market place, designing a marketing strategy to deliver value and create customer satisfaction. With a customer centric goal in mind, a company has to manage its marketing strategies and design its marketing mix.

This report aims to assess marketing strategies in the hospitality industry and understand the significance of the marketing mix. To achieve the desired objectives, the author has reviewed literature to evaluate the relevance of the four P model and its co relation with the marketing strategies. Newer models of marketing mix are also reviewed. The relation is further measured by studying the implications of marketing strategy on the Cruise Line industry and development of marketing mix by the said business.

LITERATURE REVIEW

Kotler, Bowen and Makens (2014) define marketing through a simple five step model as the process to create value for customers, resulting in strong customer relationships that in return capture value from the customers. With a customer centric goal in mind, a company has to manage its marketing strategies and design its marketing mix. The process of deciding its customer base (segmentation and targeting) and how to serve them (differentiation and positioning) by designing a suitable marketing mix (product, place, place and promotion) can be illustrated through Figure 1.0. [pic 1]

Figure 1.0. Source: (Kotler, Bowen and Makens, 2014)

A company needs to deliver greater value than its competitors in order to win, retain and grow its customers by understanding their needs and wants. Since there are innumerable customers with different kinds of requirements, a company has to divide up the market, select suitable segments and design strategies accordingly. This can be done by developing a market strategy involving market segmentation, market targeting, differentiation and positioning. Figure 2.0. describes briefly the steps undertaken to design a marketing strategy.

  [pic 2]

Figure 2.0. Source: (Kotler, Bowen and Makens, 2014 )

A company begins to plan its marketing mix after the initial decisions regarding their strategy are made. Marketing mix is a combination of tools used by a firm to influence the demand of its product. This simple four element framework of Product, Price, Promotion and Place was introduced by Jerome McCarthy (1964) and embraced by practitioners and academics alike. However, scholars have argued its prevalence in the recent times. (as cited in Borden, 1964). It is a business oriented model and often ignores the significance of customer value and relationships. Considering this drawback, Robert Lauterborn (1990) proposed a customer oriented alternative, namely 4Cs of marketing: Consumer, Cost, Communication and Convenience. (as cited in Gronoos, 2000). Kotler et al. (2014) recommend marketers to think through the 4Cs and then build the 4Ps of that platform. Additional weaknesses of the 4P model identified comprise of lack of strategic dimensions, interactivity and personalisation as well as its internal orientation. (Constantinides, 2006). Other scholars (Sheth and Sisodia, 2012; Anderson and Billou, 2007) have also endorsed the use of 4A framework with factors including Affordability, Accessibility, Acceptability and Awareness for implementing marketing strategies. Affordability is a customers’ willingness to pay while accessibility refers to customers’ ability to acquire the product or service. Acceptability aims at meeting the customer needs and awareness include product knowledge and brand awareness. This customer centric framework helps to improve market productivity and accountability along with a more effective allocation of resources while taking a holistic view of business success. (Sheth and Sisodia, 2012).

The author observed that the 4A model is built on the bases of the 4C model and therefore found a link between the various frameworks of marketing as represented in Figure 3.0.[pic 3][pic 4]

Marketing mix decisions have a significant impact on the marketing strategy decisions. Segmentation and targeting are done on the basis of products. Positioning can be decided according to the price. These decisions in turn affect place and promotion decisions. Therefore, both marketing mix and marketing strategy decisions go hand in hand.

DISCUSSION

The cruise industry is one of the fastest growing and highly profitable segments of tourism market. It is relatively young, undergoing a sturdy transformation. (Weeden et al, 2011). It began as a luxury for the rich and famous mainly preferred by elderly segments, but has been widening its market to include younger people, families and multi generation groups by offering a diverse range of products. (Georgsdottir and Oskarsson, 2017)

Market Segmentation and Targeting

The cruise industry benefits greatly from segmenting passengers and adjusting products according to the target segments. Scholars have used different methodologies for segmenting the cruise industry and its passengers. Cruise Planners (2014) divided the cruise lines into four groups, namely, first class, premium, luxury and specialty. The first class lines have large ships with small cabins and branded as family friendly, activity oriented, short trips (usually less than a week). Premium cruise lines are smaller ships with large cabin targeting mainly adults for a relaxation oriented longer trips (more than a week). Luxury cruise lines have even bigger cabins or suites with trips longer than 10 days. Lastly, Specialty lines are adventure oriented very small ships with few sports and entertainment amenities. These groups target different market segments of customers based on various demographic, psychographic, behavioral or geographic factors. Wood (2004) segmented passengers on the basis of their spending power on cruises. These are categorized into budget passengers (tend to travel cheap), contemporary passengers (travel with large cruises), premium passengers (can afford expensive trips) and elite passengers (own cruise chips and sail frequently. (As cited in Georgsdottir and Oskarsson, 2017).

The family cycle stage (demographic) is another relevant basis of segmentation in cruise industry. It is paramount in influencing the facilities, activities and on board entertainment according to the customer needs. For instance, adult only ships or family friendly ships target just one specific segment. Geographic segmentation is used take decisions regarding positioning of starting point ports bearing in mind customer convenience and accessibility. Other methodologies include first time versus repeat cruisers segment, benefit and lifestyle segmentation, done by considering various factors of the marketing mix.