Do Business Well

Most consumers in delegation mode are following the first of the four basic strategies: Let someone else shop for, select, and buy a particular product or service. The responsibilities of a delegated personal shopper include, but go beyond, selecting and buying. The supplier becomes involved in various activities on behalf of its customer, and has to be skilled at one, sourcing, that is, locating suitable offerings; two, negotiating, particularly on price; three, bundling and prepackaging solutions, meaning putting together the pieces of the desirable package; and four, seamlessly managing the delivery of the goods to the customer.

A prime example of the first strategy is the intent of the cruise vacation—a delegator’s dream of one-stop shopping, requiring just one decision and one payment. Once the reservation is made and paid for, everything is taken care of: voyage, cabin, meals, entertainment, and activities for kids. The vacationer’s only added expense is souvenirs and cocktails; her biggest decision is whether to work out in the ship’s gym or visit the casino.

The industry’s growth is testimony to the rise of delegation. In 1980, an estimated 450,000 people bought cruise vacations in the United States. Ten years later, that number had grown to 3 million annually. In 2000, 6.5 million passengers are expected to spend about $7 billion cruising. And the industry leader, with two million passengers spending $3.5 billion in 1999, is Carnival Cruise Lines.

The market has grown so rapidly mainly because cruise companies have managed to make these vacations affordable. Twenty years ago, people who took cruises were regarded as an elite group. In 2000, Carnival Cruise Lines offered a one-week cruise to the Caribbean for $549. With the industry’s capacity now growing faster than the market, Carnival’s seven-day trips have been discounted as low as $389. Carnival, which enjoys a 30 percent share of the cruise market, has been growing through acquisitions. More important, its expansion comes from new and repeating customers. Bob Dickinson, president and chief operating officer at Carnival Cruise Lines, reports half of its clients are first-time cruisers, while 80 percent of the other half have previously cruised with Carnival.

The line’s Fun Ships offer swimming, movies, casinos, disco, shopping, food, and more food, with excursions and shopping at ports of call. You can eat around the clock in the pizzeria, then work off the pounds on the treadmill or climbing machine. It’s prepackaged fun for everyone. Carnival works tirelessly to deliver the fun it promises; it trains crews to interact with passengers at every opportunity and offers a “guaranteed vacation“: Any passenger who expresses disappointment, for any reason, before the first port of call will get a prorated refund and a free flight home. Dickinson told me that a minuscule minority—fewer than one- tenth of 1 percent—make use of that offer.

Yet Carnival doesn’t think of its business as cruising; instead, Dickinson says, it has a tiny slice, a mere six-tenths of 1 percent, of the 300 million trips taken annually that make up the vacation industry. Assuming that perspective, he says, forces Carnival to avoid complacency and focus on how people choose to spend their leisure time.

Being in the vacation business also means that Carnival’s competition is not just other cruise lines but alternative vacations, including the Disney theme parks, Yellowstone Park, Hawaii, resorts like Cancun, and gambling capital Las Vegas, where now the hotels, like Carnival’s ships, provide a total entertainment experience for the family: golf, youth activities, shows, meals, and more, in addition to casinos.

Competing in that league, Carnival still sees a huge untapped potential: Only 12 percent of Americans have ever been on a cruise. As the appetite for one-stop shopping and hassle-free fun continues to grow, Carnival is expecting to raise its capacity by nearly 60 percent, expanding its fleet to twenty-one ships.

Possibly related posts: (automatically generated)
Choose for the Customer

• Challenges of building online customer relationships
• Networking Ecommerce: Listening to and Hearing from your Customers
• What's New About Market Leaders?
• Managing the Email Marketing List Part 1
• Business to Business (B2B) Relationship Marketing
• Love your customers as they have never been loved before! Part 2
• Love your customers as they have never been loved before! Part 4
• Offer superior service
• Love your customers as they have never been loved before! Part 1
• Does your business service a favor, Service Investments
• Managing Stakeholder Relationship (continue)

5 Comments »