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Creating a step-changefor your business
Thursday 16th October, 2008
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The historical backdrop
A constantly growing category
Continuous market leadership
A relatively loyal customer base
A steady flow of new potential cruisers
In the past, P&O Cruises has benefitted from arelatively benign commercial environment
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However, we are now entering a Perfect Storm
Source: A Perfect Storm (2000)
A critical or potentially disastrous situation, created by a powerful concurrence of factors
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Capacity is rising steeply
Extremely tough targets in the short, mid and long term
Source: POC
Inde
xv
s2008
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Underlying demand is falling
Source: YouGov 2007
Millions
There are 1.3m fewer people in the pipeline than 2 years ago
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We are entering the worst downturn in living memory
Sources: Guardian, The Daily Telegraph, The Sun, Daily Mail, Daily Express, Daily Mirror
A particular problem for a large purchase, made far in advance of usage
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e face unprecedented competition
25 ships 5 ships 2 ships
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ields are under pressure
Source: Travel Trade Gazette
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osts remain difficult to control
,n Q3 2008 total*et cruise costsrose+ . % . . .4 6 Y O Y
Although fuel costs are now falling again,the business is inherently vulnerable to further increases
lmost entirelyue to fuel costsrising+ % . . .7 Y O Y
*Per available lower berth daySource: Carnival PLC
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he key implication of all this
The environmenthas changed
fundamentally
We need a-step change in
our approach
too
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-steps to step change
5. Strengthen the comms model
4. Evolve your tone of voice
3. Shift attitudes towards cruising
1. Change your mindset to existing customers
2. Re-define your competition
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-steps to step change
5. Strengthen the comms model
4. Evolve your tone of voice
3. Shift attitudes towards cruising
1. Change your mindset to existing customers
2. Re-define your competition
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There is a targeting dilemma at the heart ofthis brief
50s 60sABC1 empty nestersFinancially well off
More suburban and rural
30s - 40sABC1, with kids at home
Value consciousMore suburban
Part of a bigger balancing act betweenexisting customers and newcomers
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There are many arguments for a strong focuson newcomers
The business
The brand
The fleet
These are all powerful arguments and we agree that theATL emphasis in particular should broadly lie here
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,critical
to success
Existing POC customers = 165,000
We take them for granted at our peril
To achieve 44/56 and 50/50 newcomer/past passenger split targets for 2009 and 2010 bookings respectively:Currently, 2009 bookings split 37/63 remaining bookings must be 61/39 (88k) mainly via Oceana/VenturaWe need to avoid this situation for 2010 bookings & achieve 50% from the start (131k) mainly via Ventura/Azura
Total booking requirement for 2009 = 350,000
New to brand = 185,000*
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The truth about your customer base
37% are first-timers
(Yet to form a firm preference)
38% have cruised with at least one
other company(Will be considered customers byother cruise lines too)
They are less your customers in the conventional sense,and more past passengers that we still need to win over
Source: YouGov 2007, POC
On average, only 38% ofpassengers rebook within 3 years
(42% never rebook)
We need to protect them from
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We need to become smarter about who we target, when,and what about to ensure impact (not opt-out!)
We need to protect them fromexcessive contact
DM
OBTM
DM
OBTM
We need to target them more
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Use data to reflect P&O Cruises relationship and stand out fromcompetitor (and other Carnival group) communications
We need to target them moreeffectively
Timing
Use keyanniversaries
Identify lapsing
Past Booking
Recognise & tailorby next-trippropensity
Lifestage
Ensure relevancefor family/non-
family audiences
Engagement
Treat long-termloyals differently
from triallists
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e need to include them in themessaging
Our idea must be big enough to encompass bothdestinations and the on board experience
Non-cruisers Cruisers
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This will require a fundamental shift in mindset
From
Our customers
Behaviourally loyal
Dependable resource
Easily maintained
To
Other peoples customers
Attitudinally open-minded
Vulnerable asset
Fight hard for
Peripheral tooverall success
The foundations ofoverall success
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-steps to step change
5. Strengthen the comms model
4. Evolve your tone of voice
3. Shift attitudes towards cruising
1. Dont take your past passengers for granted
2. Re-define your competition
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-steps to step change
5. Strengthen the comms model
4. Evolve your tone of voice
3. Shift attitudes towards cruising
1. Dont take your past passengers for granted
2. Re-define your competition
It t t k i f th titi t
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How to regain perceptual ground lost to RCI?
Its easy to take a narrow view of the competitive set
Base: All aware of brandsSource: YouGov 2007
RCI lead over POC(Marks out of 10)
Offers a high standard of service 0.4
Offers freedom to do what you want 0.4
Better for younger passengers 0.4
Offers range of ships for different people 0.3
Good for families 0.3Makes each passenger feel special 0.3
Offers high quality food on board 0.3
Offers high quality entertainment 0.3
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his is certainly part of the task, Wherever possible we
will make sure to. :differentiate vs RCI by
Highlighting unique/product service points
Exploiting ourunique tone of
voice
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, owever we can t be complacent aboutur other rivals
There is actually greater overlap (currently) with some of the other cruise lines
Source: YouGov 2007
%P
OCpassen
gers
who
havealso
used
M th l titi t i h id
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Moreover, the real competitive set is much wider
Source: TGI 2008
% of cruisers who have also been on a non-cruise in the last 12 months
Canaries/Balearics 8
Italy 7
Portugal/Spain 5
France 4
Germany 4
USA/Canada 4
South/Central America 4
North Africa 3
Caribbean 3
Asia 3
Turkey/Greece 2
Total 47
There are very few people who onlycruise typically we compete with a host of other holiday options
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Understanding this broader mindset is
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Understanding this broader mindset iscrucial to success
The precise format is asecondary issue for most
Holidays play a disproportionaterole in their lives
They believe they haveworked hard for their break
For both pastpassengers and
potential newcomers
They want theirmoneys worth
It is only by taking a step back that we can unify the twoaudiences and compete for a larger share of their holiday spend
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-steps to step change
5. Strengthen the comms model
4. Evolve your tone of voice
3. Shift attitudes towards cruising
1. Dont take your past passengers for granted
2. Position P&O Cruises in the wider holiday market
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-steps to step change
5. Strengthen the comms model
4. Evolve your tone of voice
3. Shift attitudes towards cruising
1. Dont take your past passengers for granted
2. Position P&O Cruises in the wider holiday market
t s easy to be negative about
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cruising
Sources: YouGov 2007/MCBD qualitative research 2008
39% of non-considerers are concerned it would beboring but even potential cruisers harbour doubts
,ndeed the industry likes to knock
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itself
Perpetuating the myth that cruising is passive,uninteresting and of little value
&he fact is that a P O Cruises
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oliday offers something thatrdinary holidays can t
To wake up most mornings to find ourselves cominginto yet another new island was rather special
Customer comment from 2009 brochure
The unique ability to bring new experiences on a daily basis
his appeals strongly to cruisers
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Cruisers like to think of themselves asrelatively adventurous types
aspirations
67% try to gosomewhere different
on holiday every time
(Index = 175)
Only 15% like to spend theirholiday just eating, drinking
and lying in the sun
(Index = 80)
AND
Base: All who have been on a cruise in the last yearSource: TGI 2008
t is equally appealing to potential
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cruisersThere is one very striking area of agreement and alignment
between cruisers and nearly cruisers
They are all strongly drawn to the idea of itinerary holidays
-the travel itself is part of the enjoyment
-brief encounters with different places is pleasurable
-multiple visits on one holiday
A finding which is confirmed by the YouGov data
Source: Acacia Avenue, 2008
For both groups, highlighting this aspect
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exposes the weakness of other holidays
When our audience think about it,they begin to question their routine decision-making
Get up every day
Do the same old thing
In the same old place
In the same old way
This brings us to our key consumer insight
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This brings us to our key consumer insight
Both past passengers and potential newcomers
If we can communicate the truth that a P&O Cruises holiday is theantithesis to a routine break, this will be motivating to both groups
Feel guilty about
their routine holidaychoices
And drawn to the
notion of a morevaried experience
We have never exploited this truth before
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We have never exploited this truth before
In the past, we havecommunicated
A world of extraordinaryexperiences
But neither we nor thecompetition have evercommunicated
We bring you a constantlychanging world of experiences
all in one holiday
RANGE CHANGE
Our original proposition to communicate this
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sentiment
Keep moving
xciting as a spiritTrue
Differentiating Flattering for consumers
Inspirational for staff
,ut if taken literally couldsuggestPhysical motionForced participation
Frantic pace
Ultimately, exhaustion
We therefore directed the creatives to convey thespirit without incurring the downsides
-steps to step change
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5. Strengthen the comms model
4. Evolve your tone of voice
3. Communicate change not just range
1. Dont take your past passengers for granted
2. Position P&O Cruises in the wider holiday market
-steps to step change
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5. Strengthen the comms model
4. Evolve your tone of voice
3. Communicate change not just range
1. Dont take your past passengers for granted
2. Position P&O Cruises in the wider holiday market
&O Cruises clearly has a different tone
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rom RCI
American
Populist
Energetic
British
Aspirational
Effortless
However, this can lead to rather passive orintroverted communications
e believe it s time to be more
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opinionated
Generally, be more charismatic in our communications
Have a point of view on life
Share it with the world
Have the confidence to talk even when things arent fully in place
In particular, we need to inject some immediacy...
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Whenp
lantog
oonacruise( %
)
We need to overcome peoples natural tendency to procrastinateand encourage them to book a holiday with us NOW
Base: Hopefuls (want to go on a cruise in next 1-4 years)Source: YouGov 2007
. . . ithout explicitly telling people
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hat to do
Instructing people can have an incendiary effect on potential customers
Seizetheday
Liveeveryday
Makeeverydaycount
Grabthedaywith bothhands
Getmoreoutofeachday
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-steps to step change
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5. Strengthen the comms model
4. Inject some immediacy
3. Communicate change not just range
1. Dont take your past passengers for granted
2. Position P&O Cruises in the wider holiday market
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e need more energy and advocacyonline
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P&O Cruises has 415 content uploads (with 36,509 views)RCI has 2,200 content uploads (with 123,490 views)
P&O Cruises has 3 bookmarksRCI has 298 bookmarks
P&O Cruises has 8 photo sharing groups with 10,681 photosRCI has 25 photo sharing groups with 45,634 photos
P&O Cruises has 16 mentionsRCI has 93 mentions
Averageink
P&O Cruises posts have an average of 327 words, with no commentsRCI posts have an average of 489 words, with an average of 4.87
comments per post
Source: Rocket XL Front Line reconnaissance
,verall we need a different kind ofhannel model
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NotThe wholesale rejection of channels which we know
can work well (e.g. TV, press, inserts, radio)
ButMore actively engaging
ways of using thesetried and tested channels
AndThe introduction of newer
channels whose inherent strengthis active engagement
: -n summary 5 steps to step change
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5. Active engagement acrossthe customer journey
4. Inject some immediacy
3. Communicate change not just range
1. Dont take your past passengers for granted
2. Position P&O Cruises in the wider holiday market
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