Survival of the Smallest

Instead of viewing the industry giants as a threat to their survival, small lines look to benefit from the larger cruise companies’ sales marketing efforts and competitive pricing policies. The general feeling among several small cruise hoes surveyed by CIN is that the advertising and discounting being done by the large lines will serve to broaden the base of consumers who, having cruised once and had a good experience with cruising, will now look for a different cruise product.

“We consider the publicity by Carnival and Home Lines a resource, and we are capitalizing on other cruise lines advertising cruising as a vacation,” said Rick Williams, Senior V.P. Marketing and Sales Bermuda Star Line. He added: “We want to see Carnival be eminently successful. What they are doing is good for all of us.”

While this may indeed be the case several years down the line, “there is zero evidence to the effect that the second cruise won’t be Carnival, said Bob Dickinson, V.P. Sales and Marketing for Carnival. Research conducted by Carnival indicates that 71 percent of passengers are first­ timers and Carnival passengers tend to cruise two, three and four times with the line.

“Smaller cruise lines are going to have a harder and harder time competing with the large lines,” said Dickinson. “The ones that survive will be the niche players” like Exploration Cruise Lines and Clipper Cruise Lines, he added.

Low Pricing and Discounting

Nevertheless, many small lines are publicizing the fact that the prices of their cruises are considerably less than costs of big-ship cruising, and they employ discounting tactics to boot.

Per diems on Bermuda Star, for instance, range from $125 to $150, and early-booking discounts take 10 percent off these prices. Williams said: “We would rather reward passengers for booking early than late.” While its marketing budget has increased minimally, according to Williams, Bermuda Star intends to increase its travel agent sales force from 3,500 to 7,000 by January 1989.

According to Mariniki Vlastara, Marketing Services Manager, Dolphin Cruises cuts cruise/air prices by $200 per couple in some categories if the cruise is booked 90 days in advance. A seven-night package on Dolphin runs about $895 to $1,195. Vlastara said Dolphin carries an average load factor of 103 percent.

In a somewhat curious approach, Dolphin, which advertises in major-city newspapers, claims to save some advertising money by not advertising in the metropolitan New York area. Vlastara commented: “New Yorkers are more aware of what’s going on, and they would come on our cruises whether we advertised or not. “

Scaling Down the Market

For some, targeting a particular geographic region has been very effective.

Crown Cruise Line, which has exclusive port rights in Palm Beach, concentrated its marketing and sales strategy in the Southeast Florida market in its first year of operation, 1986. Last year, Crown redesigned its strategy to include the entire state of Florida.

“We’ve been extremely successful and have seen constant load-factor increases,” said Linda Michel, V.P. Sales and Marketing for Crown. She reported gains of 18 percent in January 1988 over January 1987.

Crown does very little discouning, although last year they offered discounts on sailings during mid-week in off-season (September, October and November). “This year, I’m not sure we’ll even do that,” Michel said.

Commodore Cruise Line concentrates its marketing in 11 states in the Southeast, the East Coast and the Midwest. “Since we are small, we have to scale down. This gives us a good return on investment,” said David Christopher, V.P. Marketing and Sales for Commodore.

“We have an efficient operation and a major pricing advantage. Our prices are $200 to $700 per person less than they are on larger ships,” he said.

“Deep Pocket” a Stability Factor?

“Because we are aligned, we will be able to survive,” said David Christopher, V.P. Marketing and Sales for Commodore Cruise Line. Commodore is affiliated with the Finnish Steamship and Johnson Line, a conglomerate that carries some five million passengers a year on its crmse ferries.

He went on to say that if a smaller cruise line doesn’t have backing, life will be more interesting.

Ron Kurtz, Senior V.P. of Windstar Sail Cruises commented on Windstar’s affiliation with Holland America Line and affiliations in general. “A deep-pocket can help you get through tough times, but nobody’s going to tole rate losses for a long time. You need a good, solid marketing approach which includes target marketing and promotion in order to show profitability.

Market Niche

Windstar has a tightly defined concept of its target market the “somewhat younger, active and self-confident person who wants to be a participant and not a spectator and isn’t overly concerned about sightseeing and shopping,” according to Kurtz.

Sun Line Cruises markets to the upscale traveler, according to a spokesperson. The line emphasizes a combination of luxury cruise vacation/educational experience it offers in its advertisements, appearing in such publications as Smithsonian, National Geographic and National Geographic Traveller.

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