Internal Environment Analysis
Carnival Cruise Line Business Model
Carnival Cruise Lines, as the market leader in the cruise industry, serves more than 8.5 million people around the world annually who seek an exceptional vacation experience with no discrimination to lifestyle or budget level (Carnival Corporation, 2010). In promoting a fun and relaxing atmosphere amongst their ships, Carnival provides exceptional vacation cruises aboard luxurious cruise ships to selected hot spot water side destinations, and offer an enormous amount of amenities and entertainment to the guest such as, all inclusive meals, concerts and performances, casino gambling, bars, dance clubs, spa treatments, physical fitness equipment, off boat excursions and much more.
Offering a wide-range of products provides the guest with an outstanding value which has made Carnival the most profitable company in the leisure travel industry today. This can be contributed to the business model Carnival has developed to spawn profit. Carnival makes most of their money not on ticket sales but on the up sale of the amenities and services provided while on the cruise (Frey, 2006). The items that are the big money makers for Carnival Cruise Lines are, onboard casinos, internet service, photographs, spa and salon services, liquor sales, onboard ship stores, and off ship excursions.
In order to remain the leading cruise provider in the world and to hold on to their current 55% market share in the U.S. and 52% market share in rest-of-world, Carnival Cruise Lines uses differentiation to sustain their competitive advantage (Cruise Market Watch, 2010). To complete this goal, Carnival has differentiated from the competitors by offering short, less expensive cruises which has made Carnival the low price leader. By providing less expensive cruises to people looking an exceptional vacation attracts a larger customer base. In addition, Carnival prides themselves on the “fun” psychographic experience provided onboard which creates a reputation of an enjoyable relaxed cruise line. However, the differentiation technique that has brought in the most attention from consumers is the organizations innovative and effective marketing plan (Wheelen, 19990). Carnival aggressively endorses promotional campaigns to gain loyalty from former cruisers and promotes innovative shipboard activities and luxuries to attract new customers to the industry. To sustain these advantages, Carnival utilizes their enormous amount of repeat business, is building new and innovative ships, and maintains a low break-even point.
Business Strategy
Carnival dedicates much effort in improving the competitive position of the company’s products and services within the leisure industry it serves. To facilitate improvement, Carnival strongly focuses their efforts around the company’s competitive business strategy coupled with the lower cost market strategy they employee (Dev, 2006). In doing so, Carnival Cruise Lines aims their aggressive marketing techniques toward the broad mass market, and implements cost reduction and overhead controls so ticket prices can remain lower than competitors. As a result of utilizing these strategies, Carnival earns above-average returns on their investments, develops high bargaining power in the purchasing process, and implements a barrier of entry for others attempting to join the industry.
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Cruise Market Watch. (2010). Cruise Market Shares. Retrieved Apr. 12, 2010, from Cruise Market Watch, Miami, Florida. Web site: http://www.cruisemarketwatch.com/blog
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Carnival Corporation. (2010). Corporate Information. Retrieved Apr. 13, 2010, from Carnival Corportation and plc, Miami, Florida. Web site: http://phx.corporate-ir.net/phoenix.zhtml ?c=20767&p=irol-prlanding.
Wheelen, T. L. & Hunger, J. D. (1999). Case Study - Carnival Cruise Lines, Inc - a Successful Company Rapid Growth. Retrieved Apr. 10, 2010, from Scribd. Web site: http:// www.scribd.com/doc/26363095/Case-Study-Carnival-Cruise-Lines-Inc-A- Successful- Company-Rapid-Growth.
Frey, David. (2006). The Carnival Cruise Line Profit Machine. Retrieved Apr. 10, 2010, from Evan Charmichael, New York, NY. Web site: http://www.evancarmichael.com/Marketing /77/The-Carnival-Cruise-Line-Profit-Machine.html.
Dev, C. S. (2006). Carnival Cruise Lines: Charting a New Brand Course. Retrieved Apr. 9, 2010, from Entrepreneur. Web site:http://www.entrepreneur.com/tradejournals/article/ 149214179.html.