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The theory of market segmentation is straight forward and as marketers we ‘know’ how it works, but sometimes it’s only when we see it done badly that the lesson really sinks in.
I have recently booked a cruise that will take me from Buenos Aries in Argentina to the most pristine area on earth, the Antarctic. Cruising continues to be a growth industry and one that has increasingly widened its appeal across many diverse markets and booking this trip has made me think about how companies set out to segment and target those markets and how they position themselves. It is an interesting sector to use to contextualise the role of segmentation, targeting and positioning and in strategic marketing.
When we think about cruising, I wonder how many of us visualise sailing through the Mediterranean or the Caribbean with beautiful blue skies and never-ending sunshine? Huge luxury ships with bars, restaurants, and activities to keep us amused 24 hours a day until the next port of call. Where parents can rest assured that the children will not be bored, where younger people might make the most of the entertainment and night life on board or older people are able to enjoy a more relaxing experience if that is their preference. From that perspective it can be seen to be a mass market. There is something for everyone.
However, it is not as simple as that. There is not the scope within this blog to consider in detail the vast range of possibilities regarding how the market is segmented because there are so many different options. But it is worth considering the general principles of how cruise lines approach their marketing strategies.
I would suggest, that, the sector can be broken down into four different offerings:
Large ship cruises: differentiated strategies targeting young families, older people, mid income bracket. Positioning: fun and affordable
Small cruises: differentiated strategies targeting older people with mid to higher range disposable income. Positioning: more personal and mid-range pricing
River cruises: concentrated strategies targeting the 50+ market with higher disposable income. Positioning: relaxing and expensive
Expedition cruises: niche strategies targeting middle age to older market, adventurous, higher levels of disposable income. Positioning: adventure and expensive.
Segmenting the market for the larger ships may suggest that an undifferentiated approach is most relevant, where a mass marketing strategy is adopted. These ships attract young families where there are lots of activities for children leaving their parents in the knowledge, they are safe and being amused. Then there are the more mature, middle aged or senior market who are seeking a more relaxing experience. However, if we take, for example, the cruises sold under the Cunard flag with those of Virgin, there is a clear distinction. The former line has a more sophisticated edge; even the names of the ships suggest comfort, named, as they are after British Queens. There is an image of luxury and tradition. It is distinct from Virgin where their ships have a more party type of atmosphere with an appeal for younger travellers and families. The two brands position themselves in quite diverse ways. Cunard more sophisticated and a little more expensive, while Virgin is fun and more affordable. Both lines will adopt a differentiated strategy in terms of the targeting of their market.
With the largest ships now carrying up to 7,000 passengers, there is a market for those seeking smaller ships where a more friendly service may be offered and where access to smaller ports of call is possible. These ships may, though not always, be more luxurious. Inevitably, the size of the vessels means that there is not the range of entertainment or facilities of the massive ships and that suggests they will go for a more targeted approach, usually towards the older market, where the benefits sought are those around the ports of call rather than the entertainment on board. Again, it is a more differentiated strategy, but with a tighter definition for their market segments considering age, lifestyle, and income.
Another type of cruise which is very popular is the river cruise. I recently had my first experience of one of these which was a week-long cruise along the Rhine. It was a holiday which is normally targeted at the 50+ age group, with luxury accommodation, fine dining and including visits to historic towns. In fact, the marketing material even said that children under the age of 16 were not permitted. On the particular holiday I did, the company was trialling a more family orientated approach and a number of young children were on board. The river cruise industry hadn’t fully recovered from the pandemic and the company was trying to adopt a new strategy to fill their holidays. It was not a successful tactic. The children were noisy, taking over the pool, the ship wasn’t large enough to offer entertainment for both children and adults, and the excursions weren’t suited to all age groups.
This disenfranchised their usual market who wanted a leisurely experience. I chatted with the cruise director who accepted that attempting to diversify to attract patronage from families didn’t work. Neither the children, nor the older passengers were satisfied with the experience.
It is a fine example of where segmentation and targeting got confused and the conflicting desires of diverse groups meant that the service offering met nobody’s needs.
Taking on board (no pun intended) a niche approach is the expedition cruise. This has been becoming more popular in recent years. The concept is based on far smaller ships which visit more remote locations. They are cruises which focus on small local communities, or wildlife and nature and where, often, there will be specialists on board to offer lectures about the places being visited and the local flora and fauna. The cruise I have booked falls into this category where geoscientists are on board along with naturalists who take passengers out on small inflatable ribs to visit some of the most remote areas on the planet. It is about adventure rather than a more traditional holiday.
The way in which these cruises position themselves is clear; they are high price, based on an element of adventure. The companies use adopt a concentrated approach to targeting where they aim to reach the silver pound (mature travellers with higher
levels of disposable income), retired, active people where children have left the nest and those who seek a level of adventure in their travel rather than more mainstream experiences. As the population ages and travel is becoming increasingly accessible,
this is likely to be a growing market.
As I suggested in the opening paragraphs of this blog, first impressions may see the cruise sector as one mass market, particularly where increasingly large ships are being launched. I hope that this brief discussion offers some something to consider in terms of how complex a given market maybe and the negative impact of getting it wrong.
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