Creating a step-change

for your business

Thursday 16th October, 2008

 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 a

relatively benign commercial environment
 However, we are now entering a ‘Perfect Storm’

“A critical or potentially disastrous situation, created by a powerful concurrence of factors”

Source: ‘A Perfect Storm’ (2000)
 Capacity is rising steeply
Index vs 2008

Extremely tough targets in the short, mid and long term

Source: POC
 Underlying demand is falling
Millions

There are 1.3m fewer people in the pipeline than 2 years ago
Source: YouGov 2007
We are entering the worst downturn in living memory

A particular problem for a large purchase, made far in advance of usage

Sources: Guardian, The Daily Telegraph, The Sun, Daily Mail, Daily Express, Daily Mirror
We face unprecedented competition

25 ships 5 ships 2 ships

 Yields are under pressure

Source: Travel Trade Gazette

 Costs remain difficult to control

In Q3 2008 , total Almost entirely

net cruise costs * due to fuel costs
rose rising
+ 14 . 6 % Y . O . Y . + 77 % Y . O . Y .

Although fuel costs are now falling again,

the business is inherently vulnerable to further increases
*Per available lower berth day
Source: Carnival PLC
The key implication of all this

The environment We need a

has changed step-change in
fundamentally our approach
too
5 steps to step - change

5. Strengthen the comms model

4. Evolve your tone of voice

3. Shift attitudes towards cruising

2. Re-define your competition

1. Change your mindset to existing customers

5 steps to step - change

5. Strengthen the comms model

4. Evolve your tone of voice

3. Shift attitudes towards cruising

2. Re-define your competition

1. Change your mindset to existing customers

There is a targeting dilemma at the heart of
this brief

50’s – 60’s 30’s - 40’s

ABC1 empty nesters ABC1, with kids at home
Financially well off Value conscious
More suburban and rural More suburban

Part of a bigger balancing act between

existing customers and newcomers
There are many arguments for a strong focus
on newcomers
• The business

• The brand

• The fleet

These are all powerful arguments and we agree that the

ATL emphasis in particular should broadly lie here
 However, existing customers remain
critical
to success
•Total booking requirement for 2009 = 350,000

•New to brand = 185,000*

•
• 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/Ventura
•We need to avoid this situation for 2010 bookings & achieve 50% from the start (131k) – mainly via Ventura/Azura
 The truth about ‘your’ customer base

37% are first-timers 38% have cruised with at least one

(Yet to form a firm preference) other company
(Will be considered customers by
other cruise lines too)

On average, only 38% of

passengers rebook within 3 years
(42% never rebook)

They are less ‘your customers’ in the conventional sense,

and more ‘past passengers’ that we still need to win over
Source: YouGov 2007, POC
 We need to protect them from
excessive contact

DM DM

Email Email

OBTM OBTM

We need to become smarter about who we target, when,

and what about to ensure impact (not opt-out!)
 We need to target them more
effectively
Timing Past Booking Lifestage Engagement
Use key Recognise & tailor Ensure relevance Treat long-term
anniversaries by next-trip for family/non- loyals differently
Identify lapsing propensity family audiences from triallists

Use data to reflect P&O Cruises relationship and stand out from
competitor (and other Carnival group) communications
We need to include them in the
messaging
Non-cruisers Cruisers

Our idea must be big enough to encompass both

destinations and the on board experience
This will require a fundamental shift in mindset

From To

‘Our’ customers Other people’s customers

Behaviourally ‘loyal’ Attitudinally open-minded

Dependable resource Vulnerable asset

Easily maintained Fight hard for

Peripheral to The foundations of

overall success overall success
5 steps to step - change

5. Strengthen the comms model

4. Evolve your tone of voice

3. Shift attitudes towards cruising

2. Re-define your competition

1. Don’t take your past passengers for granted

5 steps to step - change

5. Strengthen the comms model

4. Evolve your tone of voice

3. Shift attitudes towards cruising

2. Re-define your competition

1. Don’t take your past passengers for granted

 It’s easy to take a narrow view of the competitive set

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 0.3
Makes each passenger feel special 0.3
Offers high quality food on board 0.3
Offers high quality entertainment 0.3

How to regain perceptual ground lost to RCI?

Base: All aware of brands
Source: YouGov 2007
This is certainly part of the task

Wherever possible, we
will make sure to
differentiate vs. RCI by:

Exploiting our Highlighting unique

unique tone of product/service points
voice
 However , we can ’ t be complacent about
our other rivals
who have also used
% POC passengers

There is actually greater overlap (currently) with some of the other cruise lines
Source: YouGov 2007
 Moreover, the real competitive set is much wider
% 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 only cruise

– typically we compete with a host of other holiday options
Source: TGI 2008
The real enemy

A conventional holiday in Gran Canaria or Majorca

Understanding this broader mindset is
crucial to success
The precise format is a Holidays play a disproportionate
secondary issue for most role in their lives

For both past

passengers and
potential newcomers

They want their They believe they have

money’s worth worked hard for their break

It is only by taking a step back that we can unify the two

audiences and compete for a larger share of their holiday spend
5 steps to step - change

5. Strengthen the comms model

4. Evolve your tone of voice

3. Shift attitudes towards cruising

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

1. Don’t take your past passengers for granted

5 steps to step - change

5. Strengthen the comms model

4. Evolve your tone of voice

3. Shift attitudes towards cruising

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

1. Don’t take your past passengers for granted

 It ’ s easy to be negative about
cruising

39% of non-considerers are “concerned it would be

boring” but even potential cruisers harbour doubts
Sources: YouGov 2007/MCBD qualitative research 2008
Indeed , the industry likes to knock
itself

Perpetuating the myth that cruising is passive,

uninteresting and of little value
The fact is that a P & O Cruises
holiday offers something that
ordinary holidays can ’ t

“To wake up most mornings to find ourselves coming

into yet another new island was rather special”

Customer comment from 2009 brochure

The unique ability to bring new experiences on a daily basis

 This appeals strongly to cruisers ’
aspirations

67% “try to go Only 15% like to spend their

somewhere different holiday just “eating, drinking
on holiday every time” AND and lying in the sun”

(Index = 175) (Index = 80)

Cruisers like to think of themselves as

relatively adventurous types

Base: All who have been on a cruise in the last year

Source: TGI 2008
 It is equally appealing to potential
cruisers

“There 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
exposes the weakness of other holidays

•Get up every day

•Do the same old thing
•In the same old place
•In the same old way

When our audience think about it,

they begin to question their routine decision-making
This brings us to our key consumer insight

Both past passengers and potential newcomers

Feel guilty about And drawn to the

their routine holiday notion of a more
choices varied experience

If we can communicate the truth that a P&O Cruises holiday is the

antithesis to a routine break, this will be motivating to both groups
We have never exploited this truth before

In the past, we have But neither we – nor the

communicated competition – have ever
communicated

RANGE CHANGE

“A world of extraordinary “We bring you a constantly

experiences” changing world of experiences –
all in one holiday ”
Our original proposition to communicate this
sentiment
Keep moving

Exciting as a spirit But if taken literally , could

•True suggest
•Differentiating •Physical motion
•Flattering for consumers •Forced participation
•Inspirational for staff •Frantic pace
•Ultimately, exhaustion
•
We therefore directed the creatives
• to convey the
spirit without incurring the downsides
5 steps to step - change

5. Strengthen the comms model

4. Evolve your tone of voice

3. Communicate ‘change’ not just ‘range’

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

1. Don’t take your past passengers for granted

5 steps to step - change

5. Strengthen the comms model

4. Evolve your tone of voice

3. Communicate ‘change’ not just ‘range’

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

1. Don’t take your past passengers for granted

P & O Cruises clearly has a different tone
from RCI

American British

Populist Aspirational

Energetic Effortless

However, this can lead to rather passive or

introverted communications
We believe it ’ s time to be more
opinionated

•Have a point of view on life

•Share it with the world

•Have the confidence to talk even when things aren’t fully in place
•
•

Generally, be more charismatic in our communications

 In particular, we need to inject some immediacy...
When plan to go on a cruise (%)

We need to overcome people’s natural tendency to procrastinate

and 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
 ... without explicitly telling people
what to do

Live
y e ver
iz e t he da yd
Se ay count
ev er y day
Make

Ge
tm
b oth h and s or e
it h
Grab the day w out
o f ea
ch
day

Instructing people can have an incendiary effect on potential customers

5 steps to step - change

5. Strengthen the comms model

4. Inject some immediacy

3. Communicate ‘change’ not just ‘range’

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

1. Don’t take your past passengers for granted

5 steps to step - change

5. Strengthen the comms model

4. Inject some immediacy

3. Communicate ‘change’ not just ‘range’

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

1. Don’t take your past passengers for granted

You have a long and complex customer journey

We need to actively engage people at every step of this journey

 In particular , we need to engage
people online

E.g. While only c.5% book their cruise online

It’s likely that 50%+ conduct online research

at some point during the process

Source: POC
 We need more energy and advocacy
online

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 bookmarks

RCI has 298 bookmarks

P&O Cruises has 8 photo sharing groups with 10,681 photos

RCI has 25 photo sharing groups with 45,634 photos

P&O Cruises has 16 mentions

RCI has 93 mentions

P&O Cruises posts have an average of 327 words, with no comments

Average
‘ink’
RCI posts have an average of 489 words, with an average of 4.87
comments per post

Source: Rocket XL Front Line reconnaissance

Overall , we need a different kind of
channel model

Not
The wholesale rejection of channels which we know
can work well (e.g. TV, press, inserts, radio)

But And
More actively engaging The introduction of ‘newer’
ways of using these channels whose inherent strength
‘tried and tested’ channels is active engagement
In summary : 5 steps to step - change

5. Active engagement across

the customer journey

4. Inject some immediacy

3. Communicate ‘change’ not just ‘range’

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

1. Don’t take your past passengers for granted

Our idea