Since its inception in 1972 by Ted Arison Carnival Corporation has emerged as one of the leaders and innovators in the cruise line/vacation industry. One of the main reasons for Carnivals success has been its industry leading marketing strategy that has allowed the company to stay one step ahead of its main competitors such as Royal Caribbean. However, while its marketing has been innovative it has largely been unfocused and has led to a very generalized product and a very broad market segment. This has made it hard for Carnival to compete in an industry where the number of berths, or capacity, is growing at a much faster rate then demand, and where many new Cruise lines, such as Disney, are appealing to niche markets. .
The increased competition combined with stagnate customer base is forcing Carnival to consider ways to change its operations in order to stay profitable. The changes to consider include increasing marketing for the cruise line industry as a whole, in order to garner growth for the entire industry and bring the number of vacationers choosing cruises above 2%. Another option for Carnival is to change its product and image in order to diversify itself from its competition. A third option for Carnival to consider is cutting operating costs in order to offer reduced prices to consumers. .
Any of these alternatives could help Carnival continue its current success, however the most promising of the three is for Carnival to change its product and image so it will appeal more to an elite class of customers. This option a good choice is because its main competitors Royal Caribbean and Disney have chosen to focus of the middle-class and family markets, and it will be hard for Carnival to compete within this market segment. Carnival also currently owns several subsidiaries that provide luxury services making the change easier and relatively easy to integrate into the companies existing structure.
