Cunard line , Ltd.

Managing Integrated Marketing Communications

MKT 642

By:John Dehmardan

Background

• Subsidiary of Trafalgar House

• Cruise and steamship business since 1840

• Advent of jet travel

• Luxury vacation business

The Ships

• Cunard offered cruising on seven ships

• Luxury (5-star) category:

- Queen Elizabeth 2, Sagafjord, Vistafjord, Sea Goddess I, Sea Goddess II

• Premium ( 4-Star) category

- Cunard Countess and Cunard Princess

Queen Elizabeth II

• The finest cruise ship in the world• Offered ultra-luxury accommodations and exquisite

service • Capacity of 1850 passengers• It was marked as the ultimate in cruising• Traveled between New York and Europe • It was also used in the Caribbean• High season:$3000 to $15000 per person• Low season:$2400 to $12000 per person

Sagafjord and Vistafjord

• Ultra-deluxe five-star cruisers

• Positioned as ultra-luxury cruisers and offered services at the same level as QE 2

• Sagafjord: Primarily out of American ports to the Caribbean, Alaska and the South Pacific

• One annual round-the-world cruise

• Capacity of approximately 550

Sagafjord and Vistafjord

• Vistafjord: Five star cruiser

• It was based in Europe and was used primarily in that part of the world

• Capacity of 750 passengers

Cunard Countess and Princess

• Considered 4-Star (premium) cruise ships• Less formal and less expensively priced• Positioned as casual• Marketing for them tended to be more oriented to their

destinations• Capacity of approximately 800 passengers• Countess: Cruise among Caribbean ports• Princess: Mediterranean and Europe • High season: Range from $1700 to $6500

Sea Goddess I & II • Yacht-like ships for “intimate” ultimate deluxe

cruising

• Atmosphere of wealthy person’s yacht

• Capacity of only 58 couples

• $800.00 per person per day

• Sea goddess I:six months in Europe and six months in Caribbean

• Sea goddess II: six months in orient and six months in the Mediterranean

Queen Elizabeth II

Queen Victoria

Coronia

The Industry and Cunard’s Segments

• Cruise industry: 4 million boardings / year

• Luxury segment: (5-star) approximately 8%

• 10 luxury ships worldwide (5 Cunard ships)

- Cunard has about 50% market share

• Cunard’s demographics:

- 40% sailed from Europe

- 55% sailed from North America

- 5% from other places

The Industry and Cunard’s Segments

• 60% of the company’s business with passengers domiciled in the United States

• 95% of customers book their cruises through travel agents

• Cunard cruise ships consistently achieve approximately 90% occupancy

• 65% of passengers pay full list price

The Industry and Cunard’s Segments

• Luxury segment: Supply driven

- As more luxury ships come into service, there is a stream of additional customers available to purchase cabins

• Growth at an average compounded rate of 10% per year

• Overcapacity

• Discounting and price promotions

Cunard Marketing and Marketing Communication

• Cunard success: Excellence and elegance

• Marketing Communications Mission: to develop and

maintain Cunard image and to support each of the ships planning managers in their marketing activities ( 100% )

• Marketing budget: $20 million

- 50% strategic, 50% tactical

Cunard Marketing and Marketing Communication

• Direct mail- 25%

• Mass media advertising- 35%– 70% strategic– 30% tactical– Currently 50-50

Cunard Marketing and Marketing Communication

• Brochures and Travel Agent Co-operative Spending- 35%

• Public relations and promotional

activities- 5%

First dilemma

• “Sale-oriented” format with more emphasis on price for tactical advertising?

- Price = revenues

- Flexible pricing policy

Market changes

Purchase occasions

Target segments

First dilemma

• Possible conflicts with strategic objectives

• Creating a balance between brand image and tactical promotional efforts

- Magazines : Building brand and develop a distinctive image

- Newspapers: Tactical marketing to create short-term sales

- Direct mail

Company’s Image vs. Individual Ships’

• Directly related to the new organizational restructuring

- Each group is semi-independent

- An executive responsible for strategic and tactical planning to for each ship

• Not a very good idea

Which marketing communications elements?

• Increasing competition: Requires increase in promotional efforts

- Increase promotional activities

“one-day sale”

- Direct mail: stimulate demand, inform high potential prospect, and “close the sale”

• Travel agents spending (35%) : Internet

Success of the “One-day sale”

• Should engage in more “sales-oriented ” efforts

• Negative impact on brand equity

• Frequent aggressive sales promotions should be avoided

- Targeted

- In response to aggressive price cuttings