Carnival's Bread and Butter

[IntrepidFromDC]

According to Carnival's annual report to shareholders, their strategy is primarily focused on creating excess demand and cutting tablecl- er, I mean costs.

 

The demand creation strategy centers around refurbishing ships and replacing them with new ships with a focus on "fun" (they use on-ship breweries as an example), which would attract new cruisers and repeat cruisers alike.

 

"We accelerated progress on our cost containment efforts, delivering $95 million of savings in 2016, bringing the

cumulative savings to date to over $190 million." This is reflected in my experience, lower quality food, disappearing tablecloths, reduction in staff, which erodes service. They go on to say they plan to further accelerate cost cuts. Yikes.

 

Their disclosure on market segmentation says nothing about demographic segmentation, nothing about targeting repeat/new cruisers, but rather the strategy is intended to increase volume of both segments. Their segmentation strategy is geographic segmentation, and throughout the report they discuss seeing opportunities for growth worldwide.

 

Carnival's 2.8 billion net earnings in 2016 was more than double their 2013 earnings.

[Towel Critter]

I am going on my first cruise in 3 weeks. We chose Carnival mostly due to price. If I cruise again, I will want to go to a different place or if I return to the same port, I will want to do something different. Excursions are important to me; I want something interesting but not too expensive. I don't go just to swim or relax on a beach. I can do that without the expense of a cruise.

Congrats on your first booked cruise! I feel the same way about being able to lie in the sun without the expense of a cruise.

[FruitStandaficionado]

Granted, I have not read the entire thread, so I apologize if this opinion has already been expressed - I believe carnival does not give a rats azz to whether those who book are new to cruising or have cruised 2 or more times. Sure, they hope to build brand loyalty but they own the majority of the brands. Like a hotel, they just want to fill cabins as the bread and butter revenue is cabin purchase. The booze, excursions, fine dining are extra revenue streams. I'm sure they keep close tabs on metrics but even if they found one group spending less than another, they would be more interested in figuring out how to get the group that spent less to spend more. They would not want to alienate either group.

 

 

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[SadieN]

According to Carnival's annual report to shareholders, their strategy is primarily focused on creating excess demand and cutting tablecl- er, I mean costs.

 

The demand creation strategy centers around refurbishing ships and replacing them with new ships with a focus on "fun" (they use on-ship breweries as an example), which would attract new cruisers and repeat cruisers alike.

 

"We accelerated progress on our cost containment efforts, delivering $95 million of savings in 2016, bringing the

cumulative savings to date to over $190 million." This is reflected in my experience, lower quality food, disappearing tablecloths, reduction in staff, which erodes service. They go on to say they plan to further accelerate cost cuts. Yikes.

 

Their disclosure on market segmentation says nothing about demographic segmentation, nothing about targeting repeat/new cruisers, but rather the strategy is intended to increase volume of both segments. Their segmentation strategy is geographic segmentation, and throughout the report they discuss seeing opportunities for growth worldwide.

 

Carnival's 2.8 billion net earnings in 2016 was more than double their 2013 earnings.

 

 

 

That's for all the CCL lines, not just Carnival Cruise line. We see a consolidation of services. Our home port of Los Angeles (Long Beach/San Pedro) has least 5 cruises, Carnival and Princess, leaving weekly. Can get better toilet paper pricing servicing 5 ships than one at a time.

 

Read the boards, all lines CCL or others, they're all reducing/consolidating/changing things to become more competitive.

Pricing has come down (price indexing), something has to give.

[mpdog42]

So, in your opinion, is their strategy to constantly woo new cruisers primarily, with perhaps little interest in retaining those new cruisers for more than two or three cruises? In other words, do you think Carnival prefers a high turnover when it comes to customers?

 

 

Yes!!!!

[CHOG-LIFE]

Booze & casino are their bread and butter. They don't care if tyou're new or cruised 50 times before.. a booking is a booking. As for itineraries, many people like the same thing over and over and over again, so the itineraries that are boring to you are prefect for them. Some people like what they like.. and don't want to deviate.

 

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[Towel Critter]

Granted, I have not read the entire thread, so I apologize if this opinion has already been expressed - I believe carnival does not give a rats azz to whether those who book are new to cruising or have cruised 2 or more times. Sure, they hope to build brand loyalty but they own the majority of the brands. Like a hotel, they just want to fill cabins as the bread and butter revenue is cabin purchase. The booze, excursions, fine dining are extra revenue streams. I'm sure they keep close tabs on metrics but even if they found one group spending less than another, they would be more interested in figuring out how to get the group that spent less to spend more. They would not want to alienate either group.

 

 

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Your post sounds logical to me, especially the part about trying to figure out how to get the group that spent less to spend more, as opposed to targeting one group. IMO, that is at least the way they should be doing it.

[supertop]

"This is reflected in my experience, lower quality food, disappearing tablecloths, reduction in staff, which erodes service"

 

 

I really don't care about tablecloths. I do care about food quality. I think if they want repeat cruisers, they should also care about food quality. If their burgers taste like McDonald's, I won't like it. Also I won't be splurging on pictures and drinks. Maybe I'm not a typical first time cruiser.

[bury me at sea]

 

"We accelerated progress on our cost containment efforts, delivering $95 million of savings in 2016, bringing the

cumulative savings to date to over $190 million." This is reflected in my experience, lower quality food, disappearing tablecloths, reduction in staff, which erodes service. They go on to say they plan to further accelerate cost cuts. Yikes.

 

Carnival's 2.8 billion net earnings in 2016 was more than double their 2013 earnings.

 

I apologize for editing your post but am quoting only the portion to which I am responding.

 

I believe Carnival is catering more to new cruisers who don't see the effects of cumulative $190 million in cost containment savings. They never experienced tablecloths in the MDR nightly, sufficient MDR wait staff to provide great, personalized service, ample bartenders both wandering around the ship and in the bars, twice a day cabin service as the ordinary, not the extraordinary, etc.

 

While cutbacks bother and disappoint me, new cruisers don't know the difference.

 

A genius at Carnival has convinced some repeat cruisers to mimic the phrase ad infinitum, "Options are Good."

 

Add for-fee items to the room service menu while deleting other items that used to be included: Cheerleaders say more options are good. Some of us lament no more shrimp salad or lox and bagels. Debatable whether this is really more options.

 

Replace seafood lunch formerly included with a for-fee seafood shack with a different selection at an additional charge, same thing. Sure it's more options, but it's also a cutback in what used to be included.

 

All cutbacks probably represent good business decisions, but they also tell me Carnival is counting on new cruisers.

 

The next time someone starts a thread bemoaning the fact some of us selfish, sloppy, cheap, entitled people want twice a day cabin service, please repeat your post about the cost containment savings.

 

Meanwhile, to the original point of this thread, I believe Carnival is not only projecting many more new cruisers, but also dearly hoping platinums and even golds will disappear not with a bang, but a whimper.

 

 

[JMAE]

I think they market to the new to newer cruiser. We started crusing in 2001. I think a contributing factor is all the special things that have been adding to the ship's. The big thing on our first cruise was the S slide at the pool and they sold the service. Service was much better not saying the staff isn't doing a great job today but in the past the ice bucket was filled when you got on the ship, staff to passenger ratio was much better, etc, etc. You rarely had to ask for anything.

 

We still love CCL!

 

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[BoDidly]

I but also dearly hoping platinums and even golds will disappear not with a bang, but a whimper.

 

Don't forget the lowly Diamond. :D Good points.

[mosiegirl]

In your opinion, or in a few cases based on knowledge - accurate or not - is Carnival's bread and butter repeat customers or new customers? I got to thinking about that because of the apparent constant increase in ship size and thus decrease in the amount of ports that can be visited. This, in my mind, seems to cater more to new cruisers who haven't yet grown weary of the same three or four Caribbean itineraries. On the other hand, new cruisers become experienced cruisers over time (at least some of them) and they too will grow tired of visiting the same few islands over and over. Just something to ponder and perhaps discuss. My fear is it will get to the point for us Carnival loyalists where our only option is a handful of cruise line run ports. Do you think that is where we are headed, or do you see something different down the road? Discuss.

 

Yes, I do realize there are other lines that have more varied itineraries, but that doesn't pertain to my question and is a different discussion for a different day. I also realize Carnival has "Journeys" cruises on occasion, but those aren't available on a constant basis.

 

Thanks in advance for your thoughts. Please, keep it friendly.:)

I agree.. we are now at the point that there are only two ports we haven't been to yet (out of Fort Lauderdale, Orlando and Miami) and thats Ocho Rios and St Kitts.. we hope to get those two in by next year..

[SkyPiglet]

I am a somewhat new cruiser. The first cruise was my Honeymoon, and DW and I book a yearly cruise for our anniversary. We have ONLY been on Carnival because we know Carnival, its benefits, quirks, and cons; as well as how to navigate it. Even in just these past five years, I have seen a few trends that folks are discussing in this thread. The lack of everyday table cloths (I really don't care), the introduction of fee-based dining in place of former "included in your price" dining options (I don't like this trend), what appears to be a reduction/re-purposing in staff/services, and the reduction/cheapening of "included in the price" room service options (very disappointed). I would imagine there are also cost-cutting measures happening "behind the scenes." While I still do like Carnival a lot and am not complaining, I do wonder if the future of cruising with Carnival will look very different than what I know right now.

 

Assuming the level of service don't change, the only thing that would cause me to choose another line would be more diverse itineraries.

[summersigh]

In order to fill the ships during the time schools are in session it's necessary that the cruise lines also woo we retirees. Most of us specifically choose our cruises when there are not so many kidlets aboard.

Many of us have saved for years in order to have disposable income to enable us to vacation and the cruise lines do want their share of it :D We don't necessarily need adventure amenities like wall climbing and wave surfing pools - good food, drink, good service and warm sunny weather make us happy

[sparks1093]

I gave this one a little thought and think it's a bit of both. CCL knows that they are a gateway drug to the cruising addiction and the many people will eventually try other cruise lines as their personal economics allow.

[Warm Breezes]

There are three types of Carnival cruisersThe newbie, the loyalist, and the independent (my term, I couldn't think of a better word). In my work place, I can find examples of each with Carnival. Our HR assistant is a newbie. She just came back from her first cruise on the Carnival Magic. Carnival did a good job catering to her because she loved it. Our Purchasing manager is a Carnival loyalist. He has been on approximately 10 cruises, all Carnival. I don't think he even looks at other lines because he has always had a great time on Carnival for a great price. I am an example of an independent. I choose the ship that best fits our wants for that vacation at the price we are willing to pay...no matter what the line. IMHO I think that Carnival does a good job in appealing to all 3 groups for various reasons. Their are also the never Carnival cruisers and those that have used Carnival as their starter line and have moved on from them...I know a few of them as well.

 

Having said I think most of Carnival's revenue comes from the newbies. But I think, based on the past guest parties, that the Loyalist and Independents are not far behind.

 

 

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[Drazil65]

What ever strategy they are using, they sail virtually full every time.

 

This.....

 

 

Look they are a business, every business I know of depend on expanding their customer base while keeping the current customer coming back. Most people realize that once they sail with CCL it becomes quite apparent (in many cases, not all but many) that it is the best value out there for most people that choose to sail it the first time (especially families). It works for CCL and will continue to work....

[MissKIA]

Am I the only one who thought this was going to be about bread and butter?

 

Anyway, It seems as though many first time cruisers start out with Carnival and then eventually venture off to try other lines. It probably has to do with price and convenience. I agree that first time cruisers probably on average spend more money on board than experienced cruisers. I've only been on 5 cruises so far, and I think I have definitely spent less money on each one. It makes sense that you would want to experience everything on your first cruise.

[Towel Critter]

Am I the only one who thought this was going to be about bread and butter?

 

Anyway, It seems as though many first time cruisers start out with Carnival and then eventually venture off to try other lines. It probably has to do with price and convenience. I agree that first time cruisers probably on average spend more money on board than experienced cruisers. I've only been on 5 cruises so far, and I think I have definitely spent less money on each one. It makes sense that you would want to experience everything on your first cruise.

LOL. The possibility of a literal interpretation of "bread and butter" didn't occur to me. I can certainly understand why you thought that though. Funny!

 

I think many of us strive to save money on cruises. I'm not sure this effort is out of frugality in many cases though. I think many repeat customers do this so they can afford to go on more cruises. In those cases, I think both the cruiser AND Carnival benefits.

[Organized Chaos]

So, in your opinion, is their strategy to constantly woo new cruisers primarily, with perhaps little interest in retaining those new cruisers for more than two or three cruises? In other words, do you think Carnival prefers a high turnover when it comes to customers?

Just the opposite, in fact. Carnival's chief marketing officer, Kathy Tan Mayor, recently discussed this. She said that they believe the third cruise is the point when someone becomes a cruiser. They'd like to work towards making first and second-time cruisers reach the point beyond that three-cruise threshold to become loyal Carnival customers. They want to build a relationship with new cruisers based more on an actual enjoyment of the product rather than driven more by loyalty perks. From a business standpoint, it makes perfect sense. If their customers truly enjoy the product, they'll keep coming back. Whereas, those whose loyalty revolves more around the perks they receive, it can be a rocky relationship. Many of them threaten to leave, actually do leave, or sometimes badmouth the brand because of being unhappy with their perks. Carnival doesn't want that. I think it's all about finding a balance right now. They don't want to completely alienate their long-time loyal cruisers, but need to build new cruisers into loyal customers.

[NPCIN]

Carnival's bread and butter...new guests or past guests? I'd say new guests. Its interesting to speak to the passengers while at dinner on the ship or by following Cruise Critic for years. Many will tell you they spend more money on their first cruise than the others. They tend to spend more on pictures, excursions, etc. Once they've sailed a few times...they may go look at the photographs for something to do, but don't buy them like they did on their first cruise. As far as excursions...if they've been there a few times...they seem to go off on their own to a beach or shopping. I used to book my own excursions to save money, but Carnival and other lines have made that near impossible now with newer contracts they have with the businesses. I went on a horseback excursion recently in San Juan. Its was close to $150 through Carnival. I tried to book it on my own though the same business for $76 and was told as long as a Carnival ship was in port...I had to book with the cruise line per the contract. If Carnival wasn't there that day...it was $76. I think newer cruisers want to have balcony or ocean view cabins. The people who I know who cruise regular seem to not care as much as they have the mentality of "as long as I'm on the ship...who cares" attitude. Sure some will only sail or continue to sail with needing a window or balcony...

Alcohol and the casino are obviously big money makers, but I'm not sure being new or past guests plays into that.

[amsred2]

I think that new cruisers bring in the big bucks, while repeat cruisers are what keeps the company afloat (pun intended) during the slower off season.

[Jemery]

I'm glad I'm not the only one who thought this thread was about Carnival's bread. For the record, I could live the rest of my life on Carnival's bread and butter. Maybe with some jam.

[JayDeeJay]

I'm a Diamond retiree, cruising since 2004, If carnival looks at demographics, hopefully they realize repeat retirees are a valuable resource. We enjoy the ship as the destination; if the mood strikes we'll go ashore and amuse ourselves, however we enjoy being on the ship during port days, visiting with others who also like to stay onboard. hopefully carnival realizes repeat cruisers bring in $$$.

[skywalkr2]

I came to this thread hoping that we would be discussing bread and butter!!