Creating a Step-change for Your Business

8/14/2019 Creating a Step-change for Your Business

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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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1. Change your mindset to existing customers



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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

Email

OBTM

DM

Email

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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1. Dont take your past passengers for granted



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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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2. Position P&O Cruises in the wider holiday market


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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



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3. Communicate change not just range





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&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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4. Inject some immediacy





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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
http://www.flickr.com/


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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





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Creating a Step-change for Your Business

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