Company: Renaissance Cruises
Case: Itinerary Development and Positioning Research (2000-2001)
The highly competitive leisure travel industry has seen price achievement (yields) undergo significant stress during periods of global conflict and economic hardship. The confluence of these factors along with a marked ramp-up in capacity exacerbated the need for niche travel marketers like Renaissance Cruises to pursue innovative offerings for past guests and prospective new customers. Comprehensive marketing research programs became a critical element in assessing potential consumer demand, price elasticities and in determining the optimum marketing messaging to draw brand trial and loyalty.
Boutique full service research firms like Sports and Leisure Research Group provide clients, like Renaissance Cruises, with both a means to test and assess the impact of various marketing strategies and communications platforms, directly with best customers and prospective guests. They combine skills in both classic marketing research methodology and an intimate understanding of the dynamics of a particular industry to offer not only marketing data, but tactical direction and strategy recommendations, drawn directly from the research. The principals of the firm, in 2001, were able to deploy research in a way that helped optimize return on investment in a number of areas, while the cruise line prepared itself to secure refinancing and exit strategies with outside investors.
At the turn of the new century, the high-end luxury cruise segment was confronted with burgeoning capacity growth coupled with a saturation of the core U.S. passenger cruise market. At the time, roughly only 9% of all US households had cruised previously. With political instability in various foreign markets and a mild recession domestically, this time period was a particularly challenging environment for cruise lines as they sought greater customer volume to fill their growing fleets, as well as repeat business from past guests.
Earlier research into the cruise consumer’s mindset had demonstrated that travelers typically chose a cruise vacation for reasons including, the all inclusive nature of the experience, the ability to visit multiple exotic destinations without having to pack and re-pack, the allure of being on the open sea and a welcome environment for relaxation around intensive touring. This phenomenon led to the launch of many new vessels by major players in the cruise industry, particularly Carnival, Royal Caribbean and their various brands. These ships were often categorized as floating cities, with capacities of 2,500+ passengers and onboard amenities that included rock climbing walls, skating rinks, large theaters and extensive shopping and dining choices. These mega-ships were largely positioned in the warm waters of the Caribbean Sea. Characterized by some as floating parties, they met many of the expressed needs of U.S. based cruise guests, but fell woefully short for others.
Niche players like Renaissance Cruises sought to develop alternative offerings for a more discerning and older clientele. Renaissance in the late 1990s had committed to build and market four new 650 passenger vessels as smaller, more intimate alternatives that still offered high end amenities like spa treatments and flexible dining choices, but with a greater focus on the destination intensive touring opportunities that many cruise customers felt were lacking among the larger new ships. Renaissance deployed their ships largely in Europe, but had committed two of the new vessels to the South Pacific Islands of French Polynesia. It was evident by 2000 that demand for the South Pacific sailings, even among Renaissance’s loyal past guests was not meeting expectations. Because Renaissance Cruises had committed to the French Polynesian itineraries, redeploying the vessels was not an option. The Executive management team sought marketing research to uncover both potential objections to the French Polynesian sailings as well as to identify best prospective customers to target for the sailings and the optimal messaging to pique potential interest.
Renaissance Cruises did not want to resort to the rampant discounting that was proliferating in other areas of the cruise market. Because the line was positioning itself for sale, it was critical that yields were maintained as best as possible. So the research team sought out a dual methodology of qualitative research to first tap into and identify key objections and expectations, followed by a rigorous and projectable quantitative study, conducted online, to test the hypotheses raised by the qualitative work and gauge their magnitude among key customer groups.
The researchers took great care in isolating several different groups of sample so as to be able to perform gap analysis against these targets and determine if needs and objections varied among different groups. The research studied past guests who had already sailed on the South Pacific itinerary to determine overall satisfaction and to identify strengths of the cruise offering that could be potentially accentuated in marketing communications. The more impactful propositions were then developed into a variety of direct marketing collateral (both email and print) that were tested against samples of both past Renaissance guests who had not yet sailed the South Pacific as well as prospective cruise guests in the company’s database that had been unresponsive to itinerary specific marketing. Prior to the concept testing, respondents were questioned about their vacation habits, their specifics desires for a cruise vacation as well as their perceptions of a cruise to the South Pacific and price expectations for the same.
Among the more significant findings of the research was that those who had the itinerary exhibited great concern about the ease of travel into the region, and duration and cost of transportation to the ship. This insight led directly to a variety of tactical product innovations by Renaissance that included the more subtle use of various maps and graphics that showed French Polynesi’s proximity to the west coast of the U.S. and the Hawaiian Islands. The research and marketing teams also used this insight to creatively package a variety of inclusive airfares and discounted charter flights into the region. This combination of adjustments to both the product offering and its promotion, enabled Renaissance to stay away from potentially de-valuing the core cruise offering and tarnishing the brand through discounting, while addressing potential customer concerns about the destination’s accessibility and affordability by enhancing the air offering.
Bookings for the itinerary and overall satisfaction did increase, after the above and other enhancements suggested by the research were implemented. Ultimately, cruise line management was able to execute their exit strategy and sell the line’s assets to outside investors.
CORPORATE PROFILES and AUTHOR BIOGRAPHIES
SPORTS AND LEISURE RESEARCH GROUP
For more than 20 years, the principals of Sports and Leisure Research Group have coupled an acute understanding of the sports, travel and leisure markets with a classical marketing research approach to combine market insights with actionable strategies. Headquartered in White Plains, New York, the firm plans, executes, analyzes and interprets the results of its custom research and recommends specific actions. SLRG’s full service market research capabilities include focus groups, mail surveys, telephone surveys, internet research and one-on-one interviews, with a particular expertise in serving clients in sports, travel and media. Visit the firm at www.sportsandleisureresearch.com.
Jon Last is founder and President of Sports and Leisure Research Group.
His previous experience includes more than seven years as Vice President of Corporate Marketing, Research and Brand Development for the Golf Digest Companies and in senior marketing and strategic planning roles within the leisure and sports industries, including eight years overseeing marketing for the Professional Golfers’ Association of America (PGA).
A frequent speaker at national industry conferences and a recognized expert in the golf, travel and media research space, Last served as the national president of the Marketing Research Association (MRA) from 2008-2009 and is also on the national boards of Marketing Research Institute International (MRII), The Executive Women’s Golf Association and Council for Marketing and Opinion Research (CMOR). He received the MRA’s Award of Excellence in 2004.
Last holds an M.B.A. from The Wharton School of the University of Pennsylvania and is a magna cum laude graduate of Tufts University.