out of box consulting out of the box consulting nick durbano kevin gardner gregory karan...

Out of Box Consulting

Out of the Box Consulting

Nick D’UrbanoKevin Gardner GregoryKaran ShanmugarajahAdam Skoreyko

A3

Out of Box ConsultingRoadmap

Recession Strategy New Value Proposition

Europe Expansion Conclusion


Recession StrategyNew Value Proposition

Premium European Leader

Trough

Peak

Recovery

• Economic implications

• Pricing strategy

• Reallocate capacity

• New markets & demographics

• A culture of tech & green

• Positioning

• New marketing plan

• Capacity outlook

Goals

Deliverables

Out of Box ConsultingRecession Out of the Box Consulting

01/0

3/19

5001

/03/

1952

01/0

3/19

5401

/03/

1956

01/0

3/19

5801

/03/

1960

01/0

3/19

6201

/03/

1964

01/0

3/19

6601

/03/

1968

01/0

3/19

7001

/03/

1972

01/0

3/19

7401

/03/

1976

01/0

3/19

7801

/03/

1980

01/0

3/19

8201

/03/

1984

01/0

3/19

8601

/03/

1988

01/0

3/19

9001

/03/

1992

01/0

3/19

9401

/03/

1996

01/0

3/19

9801

/03/

2000

01/0

3/20

0201

/03/

2004

01/0

3/20

0601

/03/

2008

0

200

400

600

800

1000

1200

1400

1600

1800

S&P 500

S&P 500




So far we are approximately 17 months into the recession

Peak TroughPeak to Trough

Trough to Peak

Start EndAug. 1929 Mar. 1933 43 50May. 1937 J un. 1938 13 80Feb. 1945 Oct. 1945 8 37Nov. 1948 Oct. 1949 11 45Jul. 1953 May. 1954 10 39

Aug. 1957 Apr. 1958 8 24Apr. 1960 Feb. 1961 10 106Dec. 1969 Nov. 1970 11 36Nov. 1973 Mar. 1975 16 58J an. 1980 Jul. 1980 6 12Jul. 1981 Nov. 1982 16 92Jul. 1990 Mar. 1991 8 120

Mar. 2001 Aug. 2002 19 63Dec. 2007 ? ? ?

Average (I n Months) 14 59**National Bureau of Economic Research

Senerios Months YearsBest Case: 8 0.7Expected: 14 1.1Worst Case 43 3.6Thus Far: 17 1.4

Number of Months

Can’t time the market

Plan for 5 years, Expect 2 years

Abnormal recession,Abnormal consumer response




So far we are approximately 17 months into the recession

Can’t time the market

Plan for 5 years, Expect 2 years

Abnormal recession,Abnormal consumer response



Out of Box ConsultingRecession Value Proposition Out of the Box Consulting

Communicate Maintain

Value Premium Image




Objectives

Spur Demand

Increase Margins

Spur Demand: Maintain Loyalty (USA)• Too difficult to acquire new customers• Induce returning visits

Increase Margins• Increase yield/customer• Separation from deep discount pricing




Objectives

Spur Demand

Increase Margins

Communication Strategy

“Thank You for Being a Loyal HAL Customer”• Attract existing customers

Leverage DRM and CRM systems• Thank you letters • Less discounts and more on-board amenities to attract customers

• Free credits (casino, stores, drinks, excursions)




Objectives

Spur Demand

Redistribute Supply• Redeploy vessel to Europe

• Specifically the Noordam• No balance sheet space for buying• Lower opportunity cost• Good fit with European market

Increase Margins

Reducing Supply Reduce Need to Discount• Leads to higher price point• Preserves brands “prestige” factor









Trough

Peak

Recovery






• Positioning



Goals

Deliverables

Out of Box ConsultingNew Value Proposition Out of the Box Consulting

Heavy Investment in IT & New Forms of Communication

• Twitter• Social networking ning.com• Custom log-in page on ship• CRM to customize delivery

New Customer Demographics

Baby Boomers (Euro) Affluent emerging professionals

New Value Technology & Environment

Create a culture of technology



Out of Box ConsultingNew Value Proposition Out of the Box Consulting

• Flight/Hotel 205kg/day Cruise 230kg/day

• Fort Lauderdale and Copenhagen shore power upgrades

• Water Purification• Soy Inks• Ship to Shelter

New Customer Demographics

Baby Boomers (Euro) Affluent emerging professionals

New Value Technology & Environment

Option to purchase off-sets

Green Initiatives: Taking a Leadership Role

Promote environmental efforts









Trough

Peak

Recovery






• Positioning



Goals

Deliverables

Out of Box ConsultingCarnival Product Portfolio Out of the Box Consulting

Cruise Line Category Sourcing Number of Ships

Carnival Contemporary North America 22

Princess Premium North America 17

HAL High Premium North America 14

Costa Cruises High Contemporary Italy, France, Spain 6

AIDA Mid Contemporary Germany 5

Cunard Line Low Luxury United Kingdom 3

Iberocruceros Mid Contemporary Spain, Brazil 3

Seabourn Luxury North America 3

P&O Premium United Kingdom 2

P&O Australia Premium Australia, N.Z. 2

HAL can expand to Europe and not hurt Carnival’s structure




Country PopulationGDP per Capital 2009

Private Consumption

2008

GDP Change

YoYRisk Competition Total

Score

Switzerland 1 3 3 2 3 3 16Netherlands 2 3 2 2 3 3 16Austria 1 3 2 2 3 3 15Norway 1 3 3 2 3 3 18France 3 3 3 1 3 3 19Germany 3 3 3 2 3 3 20UK 3 3 2 1 3 3 18Italy 3 2 2 1 3 3 16Spain 3 3 2 2 3 3 18Slovakia 1 2 3 3 3 3 16Poland 3 1 2 3 3 3 16

What European Countries? Out of the Box Consulting

• HAL already present in Denmark • BMW Metric used as a “sanity check”



BMW Metric

11133332211

Legend3 = High1 = Low

Out of Box ConsultingPositioning Map in Europe Out of the Box Consulting

Luxury

Premium

Contemporary

Norway U.K. Germany France Spain

Segment

Country

Hapag-Llyod(4)

Phoenix Reisen(1)

Fred Olsen(5)

Pullmantar(6)Thomson

(5)

CDF Croisière France(1)

Discover(1)

Transocean(1)

Norwegian(11)

MSC(9)

MSC(9)

MSC(9)

MSC(9)

MSC(9)

Azamara(2)

HAL’sZone of Strategic Fit



Out of Box ConsultingMarketing in Europe Out of the Box Consulting

How do Europeans choose their vacations?#1 Word of Mouth: 29.3%

#4 Travel Agents: 11.4%

What type of holidays would travelers give up?#1 Winter: 41.6%#2 None: 18.8%

Most important consideration when selecting?#1 Value: 33%#2 Price: 16%

Main European periods for holiday travel?#1 August: 27%

#2 July 24%




Goals

Objective

StrategicFocus

Tactics

Positioning

Premium “GO-TO” European Cruise Line




Goal

Objectives

StrategicFocus

Tactics

Create Brand Awareness• Limited brand equity• Need to generate buzz

Gain Distribution Networks• Leverage Carnival’s other lines• Travel agents less important• Online vacation websites

Drive to Website• Best reach in international market




Goal

Objectives

StrategicFocus

Tactics

Carnival (CCL)• Fits with cluster strategy• Leverage CCL’s current operations in Europe

Holland America Line• “Up-Selling” is a key focus• Value proposition




Goal

Objectives

StrategicFocus

Tactics

Features?• Destinations• Activities• Testimonials

Big Idea: “The Cube”

Where?• Metropolitan cities • High traffic areas

How are you attracting people?• Pixmen• Teaser: Web (What’s in the Cube?)

• Interactive• 3-D• Tiles on the floor• Walk around and see

different images



Out of Box ConsultingThe “Cube” Marketing Concept Out of the Box Consulting

What’s in the Cube?What’s in the Cube?

Created by• Sid Lee Inc.

• Ad agency

Successes in• New York• Boston



Out of Box ConsultingEuropean + Premium Capacity

2008 2009 2010 2011 2012 20130

5000

10000

15000

20000

25000

30000

35000

40000

Forcasted Capacity: Europe + Premium Segment

MSC Cruise Fleet Azamara HAL (Euro)



Out of Box ConsultingCarnival Total Capacity

AIDA Carnival Cruise Lines

Costa Cunard Holland America Line

Ibero Ocean Vil-lage

P&O Cruises P&O Cruises Australia

Princess Seabourn

0

10000

20000

30000

40000

50000

60000

Carnival Total Capacity

2008 2009 2010 2011 2012 2013




Final Thoughts Out of the Box Consulting

Recession Strategy

New Value Proposition

Europe Expansion

• Increasing margins

• Survival and positioning for growth

• Prepare for Europe

• Leverage technology and “green”

• European marketing plan



Holland America Line Market leader for Europe in premium division

Out of Box ConsultingHolland America Line Out of the Box Consulting

No matter where you go, enjoy excellence.

Thank you very much!Any Questions?

Out of Box ConsultingAppendices Out of the Box Consulting

Roadmap Roadmap

SAP HistorySAP History

Recession outlook Recession outlook

BalanceBalance

Recession: Object. Recession: Object.

Recession: Demand Recession: Demand

Technology Technology

SustainabilitySustainability

Product Portfolio Product Portfolio

What Countries?What Countries?

Positioning MapPositioning Map

Marketing: EuroDataMarketing: EuroData

Marketing: GoalMarketing: Goal

Marketing: ObjectiveMarketing: Objective

Marketing: StrategyMarketing: Strategy

Marketing: Tactics Marketing: Tactics

Marketing: CubeMarketing: Cube

Conclusion Conclusion

Why not the BRICWhy not the BRIC

Information SourceInformation Source

Holiday Draw BacksHoliday Draw Backs

ConsiderationsConsiderations

Cruise Sales RegionCruise Sales Region

Green Marketing Green Marketing Risks & MitigationsRisks & Mitigations

MTKG: Germany MTKG: Germany

MKTG: U.K.MKTG: U.K.

MKTG: NorwayMKTG: Norway

MKTG: SpainMKTG: Spain

MKTG: FranceMKTG: France

Carbon CreditCarbon CreditRecession: Margins Recession: Margins

On-shore PowerOn-shore Power

Social NetworkingSocial Networking

CapacityCapacity

Out of Box ConsultingWhy not the BRIC? Out of the Box Consulting

Brazil

• Ibero acquisition covers contemporary segment• HAL in Brazil would oversaturate market• Doesn’t fit premium status

Russia

• Political Instability• Would have to create everything from scratch

India

• Little port access• Difficult to gain Indian consumers

• Doesn’t fit premium status

China

• Negative growth in the region• Lack of spillover

• Doesn’t fit premium status

Out of Box ConsultingInformation Source Out of the Box Consulting

Out of Box ConsultingHoliday Draw Backs Out of the Box Consulting

Out of Box ConsultingMost Important Consideration Out of the Box Consulting

Out of Box ConsultingCruise Sales by Region Out of the Box Consulting

Cruise Value Sales

US$ million 2006 US$ million average growth 2005-2010

North America 19,364 4.4 Western Europe 5,237 4.5 Asia Pacific 3,753 -0.7 Latin America 225 8.4 Australasia 199 7.9 Eastern Europe 93 5.8

Africa and Middle East 16 5.6

Source: Marketing

Out of Box ConsultingHow to market sustainability Out of the Box Consulting

Medium Execution

Web -Larger Section on sustainability - Initiatives taken -Introduce carbon off-set program

Public Relations - Press Release when new initiatives begin- Invite media members to cruise - Incentive to promote

The “Cube” - Sustainability square - all the advantages of HAL

Out of Box ConsultingMarketing in Germany Out of the Box Consulting

•HAL is Octoberfest 365 Days a yearTagline

•Berlin-Hauptbahnof •Station Stuttgart

CubeLocation

•Die Unterschrift der Exzellenz

Slogan Translation

Out of Box ConsultingMarketing in U.K. Out of the Box Consulting

•Even the Queen thinks HAL is great valueTagline

•London Waterloo•Birmingham New Street Railway Station

CubeLocation

•N/ASlogan Translation

Out of Box ConsultingMarketing in Norway Out of the Box Consulting

•The ship that gives you an even better quality of life. Tagline

•Oslo Central Station•Bergen Train Station

CubeLocation

•En signatur på eksellense

Slogan Translation

Out of Box ConsultingMarketing in Spain Out of the Box Consulting

•Why run with the bulls when you can soar the seasTagline

•Madrid Atocha Train Station•Barcelona: Sants Station

CubeLocation

•Una firma de excelencia

SloganTranslation

Out of Box ConsultingMarketing in France Out of the Box Consulting

•Since 1895, HAL has aged like French Wine. Tagline

•Paris: Gare Du Nord•Marseille: Saint-Charles

CubeLocation

•Une Signature d’Excellence

Slogan Translation

Average House Carbon Level/365 days= 2800kg/365 = 7.7kg/dayAverage Air Travel Level= 1971 kg CO2Total for Air Travel and Home for 10 days= 2048 kg CO2

Carbon Level per Day at Sea = 230 kg C02Total for Sea Travel for 10 days= 2300 kg CO2

Source: Center for Alternative Technology

Carbon Credit

Out of Box ConsultingOn-shore Power

• Terminal 91 is currently scheduled to go on-line in Seattle at the end of April 2009

• Average savings of 87 tons of CO2 per call with Holland America in 2006

• Reduced pollution can be accounted for because when in port, emissions from the ship can be eliminated thanks to the shore power, according to the Port of Seattle.

• Lighting, pumps, ventilation, and refrigerators are a few of cruiseships major power users that can take advantage of the new technology.

Out of Box ConsultingSocial Networking

• Ning.com offers a customizable social networking front-end that can be used as an alternative to a external solution

• Ability to integrate into the existing website and servers for HAL• Can be used in conjunction with a log-in screen aboard HAL vessels

• Twitter can be used pre-trip, during trip and post-trip in different capacities• Pre-trip implementation would involve itinerary updates and travel warnings• During trip implementation would allow activity updates and potential up sells• Post-trip would involve survey follow-ups and alerts about future trips and

promotions

Out of Box ConsultingRisks & Mitigation

Impact

Probability

Timing

Ship is delayed in production

Fuel costs

Seasonality

Pirates

Metrics Risks

Terrorism


Ship is delayed in production

• Creates backlog in capacity• Opportunity + refund costs

Apply a heavy penalty for delayed contracts

Impact Probability Timing


Fuel costs

• Large fluctuations in price• Unpredictable

Fuel surcharge – hedge – repurchase



Seasonality

• Leads to wide shifts in demand• Uneven capacity utilization and scheduling problems

Expand coverage to other area’s of Europe & Caribbean



Pirates

• Increasing activity• Increase in violence

Ensure due diligence for dangerous

routes with the Navy



Terrorism

• Potential target with huge impact• Operation in hostile environment

Create a system of best practices to ensure

appropriate protocol and training


Out of Box ConsultingVarious Comparative Capacity Totals

2008 2009 2010 2011 2012 20130

20000

40000

60000

80000

100000

120000

140000N.A. vs. Europe Capacity

N.A. Europe

2008 2009 2010 2011 2012 20130

10000

20000

30000

40000

50000

60000

70000

N.A. Contemporary N.A. Premium Europe Contemporary Europe Premium

out of box consulting out of the box consulting nick durbano kevin gardner gregory karan...

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