Windstar cruise discount

The cruise industry is no longer young or immature. What was once considered a vacation option for a privileged few is now considered relatively commonplace.

Approximately seven million consumers will cruise this year, spending in excess of $10 billion for those vacations; and, cruise line managements are sufficiently optimistic about the future to place $20 billion in new ship orders on the books.

The growth of cruise travel can be attributed to many factors, not the least of which is the industry's ability to overcome most of the historic obstacles to purchase, like price and the perception of a relatively rigid, lethargic experience. More recently noted constraints such as available vacation time and fear of "disconnecting" from business and the marketplace, have also been addressed. The cruise lines have held pricing down (making them more competitive with alternative vacations), introduced variety and flexibility (e.g., more dining options), added more short cruises, and introduced convenient, reasonable communications with home and office (e.g., Internet cafes).

Promoting the aforementioned actions caused an increase in product awareness and market broadening. The new audience is quite pleased with the cruise experience: three-quarters rated their most recent cruise "excellent" or "very good," and an even larger percentage said it met or exceeded their expectations.

Choppy Seas Ahead

If everything is moving in such positive fashion, one would guess that forecasts call for smooth sailing ahead. But, unfortunately that is not the case; rather, a problem has been developing and at least some of the cruise brands may shortly experience choppy seas.

From an overall industry perspective, there is some concern regarding absolute market size (just how big is the potential universe) and developing new stimuli to motivate incremental first timer and repeater business, a dilemma that afflicts various industries.

From the individual lines' perspective, there is concern about capturing share, particularly if traffic growth slackens. Research has shown that, on average, brand knowledge is low, differentiation between major cruise brands is minimal, and even among a large portion of repeaters, brand loyalty has been usurped by price shopping.

When business is booming, all of the lines win. However, when it slackens, capturing share is paramount. And, while price has historically been a utilized marketing tool, pricing absent other messages or product differentiation may not be sufficient in the future, particularly if you are not No.1 or No.2 in the marketplace.

Over the years, cruise lines have been categorized in many fashions. Back in the mid-'80s--the heyday of cruise growth--interested parties essentially addressed three segments determined substantially by the lines' cruise lengths, itineraries and price points. At the top was the luxury market, the smallest piece, distinguished by longer cruises and global itineraries at high per diem prices. The second segment was the premium quality market: lines with voyages of one or two weeks, per diems in the $250-300 area and diversified itineraries. The third segment was "standard" quality: largely Caribbean operators with lower per diems.

Today, we more likely have a two-way breakout, "standard" and "upscale," primarily price-based differentiations. The standard market has two basic categories: popular cruises (e.g., Carnival) and traditional cruises (e.g., Holland America). But much of that differentiation is fading as brands look to broaden audiences.

A finer segmentation could be proffered. For example: yacht-like cruises, such as Windstar; destination cruises, like American Hawaii; family-oriented cruises, ala Disney However, that finer delineation collectively incorporates less than one-quarter of the industry as the larger players blend more and more alike.

While the industry has done a good job of exposing cruising to the general populace, potential clients are unable to distinguish between the alternative brands available for purchase. For example, only six cruise lines are "known" by at least one-third of adults planning to cruise in the next two years. Put another way more than two-thirds of that audience have no knowledge of the majority of brands in the marketplace.

Discounting is not new to cruising. However, few pundits felt it would become as broad-based as it has. Purchasing a cruise ticket at discount has now become the norm--some 3-out-of-4 cruisers purchasing their most recent cruise were below full tariff.

While the cruise mavens would like to capture more of the "list price," it will be hard pressed to do so as long as significant incremental capacity is being added, and the lines maintain a "100% occupancy" objective.

The new ships introduced in recent years have attracted newcomers to the market, due to their newness, accommodations and more diverse on-board offerings. Those same ships have also delivered some economies of scale allowing the lines to hold prices.

However, to fill those large ships, the cruise lines are boarding heterogeneous audiences, or pretty much anyone who will pay. And, since all of the major lines are going through this capacity metamorphosis, there is a good degree of "sameness."

What Needs to Happen

Although discounting is contributing to disintegration of brand preference, it will remain part of the marketing landscape for the foreseeable future; and, larger ships will account for an increasing share of product on the shelf.

Thus, the challenge for cruise lines that want to shine in good and bad times is to develop individual personalities and effectively communicate those differences to targeted audiences. A second challenge is to do a better job of customer retention, keeping repeaters in the fold.

To get there, the first step in the process is to establish an identity determining what the product and audiences can and should be. Using appropriate research and industry knowledge, this can be achieved.

Communication options are already on the table, but the proper messages need to be developed. The travel agency community is relatively easy to reach and should be reached. However, agent influence is fading as consumers increasingly look to friends, relatives, advertising and the Internet for clues. Accordingly, the cruise lines will have to do a better job of reaching potential clients directly.

Of course, one cannot forget execution. The cruise lines will need to deliver what they promise if they wish their messages to be credible.

Viewing of new advertising campaigns will give us a good clue regarding which lines are moving in what directions, and who will experience smoother sailing during the stormier times ahead.

Cruise industry consultant Murray Markin is president of Strategic Decisions, Boca Raton, Fla. He can be reached at (561) 447-8771.