Below are price ranges for three different contemporary cruise lines for August 2009 sailings, balcony cabin, all 7-day eastern Caribbean cruises:
- Brand 1 = $739 - $1,309
- Brand 2 = $999 - $1,149
- Brand 3 = $1,463 - $2,309
Why is one line able to fill cabins at rates 50% to 100% higher than the others? Why are consumers willing to pay a steep premium even in tough economic times?
It is due to passion - consumer's passion for the brand. Review the passion pyramid below. At its pinnacle is aspirational attainment - a brands ability to fulfill a market's goals and dreams. Consumers who get here feel a kinship with the brand, they are where they belong and are willing to pay to get there. At the bottom is the mass market, where there is no pricing power because the vacation experience is a commodity competing on price.
Consider an example from the auto industry, where consumers pay more to purchase and maintain large SUV's with four-wheel drives that are rarely if ever engaged. What is engaged is the fulfillment of the dream or idea that one could escape - a member of the group that can climb mountains and steer around avalanches - even if it is only on the way to the suburban grocery store.
A family vacation at its core is functional, but the choice of what vacation you take is "what does it say about me." Consumers today consciously choose to associate with your brand. It is the label you use to display your kinship, like kachina dolls displayed in Native American Hopi family dwellings to designate membership in various clans. It is not just your vacation, it is telling others who you are.
And who is willing to pay a 100% premium for a contemporary cruise? Consumers who aspire to become members of the Disney clan. Disney's power is derived from the fact they are not communicating in monologue, but engaging across multiple channels; cable networks, teenage pop stars, theme parks and 80-year-old characters that are cultural icons. Professor Ludwig Von Drake introduces me to cruising via podcast on my iPhone.
Most recently Disney Cruise Line is partnering with Kodak and Disney Channel to deliver themed cruises where cruisers will mingle with stars from Disney Channel shows like Hannah Montana, Sonny With A Chance, The Suite Life on Deck, JONAS, Camp Rock and High School Musical. All complete with autograph session and live performances.
"A dream come true for hundreds of kids this summer by offering kids the possibility to hang out with their favorite Disney Channel stars."
Now that is something to aspire to.
Hi Dave! Appreciate your observation, enough that I referred to it and quoted you on my blog today . . . “Some Cruise Biz Observations”.
Some great and unique insights Richard. Here is link to your post.
“Passion brand” or not. The world is in a financial crisis and here is a company offering a premium product at premium prices. While the major lines are cutting prices, so too is DCL. You can go to a number of sites and get discounted DCL cruises, because they are unable to fill their two ships – and they have two more larger ones coming.
If people are truly in love with the Mouse, they’re going to simply visit the parks – as they are offering incredible deals as well at a fraction of the cost of a cruise.
Because cruising/vacationing is the epitome of discretionary spending, you are going to see the masses flock to those lines which provide the most value for the dollar…if they choose to cruise at all.
Airlines mothball their jets out in the Mohave desert all the time because there is too much capacity. I am certain we’ll see older ships retired sooner, and at least one line will be the first to delay a new build or attempt to sell it off to another party (as unlikely as that may be). I believe the NCL F3/Epic build is a case in point where this came very close to happening as the second ship was cancelled, the Epic did stop work for a period, and there were stories that the shipyard did go out and shop the ship around midway though the build.
There were some pretty good cruise bargains this year, next year there will be an abundance of them – even from DCL.
Anonymous, the main point of the post for me was A) I believe Disney has a marketing advantage and B) certain brands like Apple, Starbucks etc., achieve a status among consumers that allows them pricing power.
Next year will be interesting to watch and I’ll be updating my 2010 projections around November this year so stay tuned.
Very interesting Dave. I do think that the Disney Branding does make consumers willing to pay more for the Disney Experience. For our family, a couple of trips to Diseny World and Disney land has more than filled our need to the Disney Experience. I would never pay more for a cruise for the Disney brand and Disney Experience, it is just not that big a deal for me, but I know many many families and adults alike who are very into that experience. Since the brand is not over saturated, with just a few ships and just a few iteneraries, the Disney Cruise can command a higher price. I think if they over expanded that price would come way down. Thanks for the insight Dave, I always love reading your stuff.
Disney has everything families want both on land and at sea. Disney Cruise Line[DCL] keeps bringing people back to the most relaxation possible at sea. Tons for everyone to do. Adult areas and children/family areas, activities, and a happy crew with tidy cabins makes for an incredible vacation. DCL’s private island Castaway Cay is truly an all Disney oasis. DCL listens to its customers and delivers. How do you put a price tag on that?
Exactly! Thanks Regina, I hope the point of my post was clear. Creating a passion brand is the end game that only a select few can achieve, and it brings value to both shareholders and customers. Indeed, how can you put a price tag on that.