In the last year, Royal Caribbean International has become the "Nation of Why Not." Norwegian Cruise Line has made sure people know that on its ships, they are "Free to Whatever."
Even Carnival, which has advertised itself as the "Fun Ship" line since the 1970s, has reformulated the way "fun" is communicated.
The question facing these companies is whether, in today’s environment of rock-bottom cruise prices, brand advertising falls on eyes blinded by discounts.
Cruise lines have always worked hard to keep their products from becoming the commodities that airlines became, but according to several travel agent surveys, the current price war has made communicating specific brand messages more difficult.
In two surveys conducted for Travel Weekly in the last month by major host agencies, travel agents overwhelmingly said that price was the most important determining factor in a cruise purchase.
A survey of more than 100 America’s Vacation Center independent affiliates found that 79% of clients cited price as the most important factor in a cruise purchase, while only 7% chose "cruise line."
Even more extreme was the answer from more than 200 CruiseOne and Cruises Inc. agents when asked, "What is the biggest factor for consumers today in cruise purchases?" Price was cited by 83.6%, while only 1.8% said it was a specific cruise line.
The results mirror a Wave season survey conducted by Travel Guard in February and in fact suggest that the trend has increased since then. At that time, Travel Guard found that 44% of agents said price was the key factor for clients who were considering a cruise vacation. Specific cruise line preference ranked third, at 14%.
In the Travel Guard survey, destination was not far behind as the second most important factor, cited by 34%. On the other hand, the recent AVC and CruiseOne and Cruises Inc. surveys found destination to be a distant second, at 14% and 11.8%, respectively.
Agents and cruise lines say that determining what these surveys actually mean for branding and brand marketing depends on how you look at them.
"Price drives them in the door," Brad Tolkin, president of CruiseOne and Cruises Inc., said of his clients. "They’re not saying to their family, ‘We’ve never done a Europe trip before. Let’s do it.’ They’re saying, ‘A Europe trip is only $750 per person.’ This is uncharted territory."
But to some extent, Tolkin said, consumers are responding to the cruise lines’ deep discounting.
"Everything is about price, because that’s what they’re advertising," Tolkin said.
The cruise lines acknowledge that the recession has pushed them to shift much of their advertising from a focus on brand to tactical discounting.
"Unfortunately a good portion of marketing in this environment is led by price," said Kevin Sheehan, CEO of Norwegian Cruise Line. "The value has always been there, but it’s gotten ridiculously better."
Cutting through the clutter
Jeff Anderson, vice president of marketing for America’s Vacation Center, said that in today’s environment, the role of travel agents has shifted to cutting through the clutter of deals.
"Brand preference is a big challenge out there in terms of low prices vs. the value that one vendor offers over another," he said. "When you have so many offers out there, making sure that consumers are still buying a vacation that will make them happy, rather than what they perceive is good for their pocketbook, is what our job is today.
"Quite frankly, suppliers pay us to make sure that we sell customers the right product and can demonstrate the value of their products."
Ruben Rodriguez, Carnival Cruise Lines’ executive vice president of marketing and guest experience, said the line has always blended brand marketing, designed to retain Carnival’s high level of awareness and to increase consideration, with tactical marketing, especially in print and online.
"Consumers are certainly more price-sensitive now," he said. "So the overall balance has skewed a little more to tactical this year. We also have more executions now that are both about the brand and also that introduce a promotional price point."
Vicki Freed, senior vice president of sales at Royal Caribbean International, said the line has tailored its marketing message to reflect value more than it has in the past, in part because its travel agent advisory board recommended doing so.
"We heard from them that we need to scream a little bit louder on the price points, because the price points are there," Freed said. "We talk about the brand, and we talk about the value. What we heard from the travel agents is we should be talking more about the pricing, too."
Freed said the line has already found that price-point advertising tests well with consumers.
"You can go to Europe for $80 a day," she said. "That is definitely testing well."
But while Freed agreed that people are buying on price, she also said consumers are still buying their favorite brands, but for less.
"Many people are not going to change, and now they get the product they really want for a great price," she said.
Freed found that in this environment, some consumers are even more brand loyal than ever because they are overwhelmed by the plethora of deals, which she said results in "consumer confusion."
"They are getting hit by so many offers and deals," Freed said. "And there is so much screaming in the marketplace, so consumers say, ‘Let me go with the brand I trust and like.’ "
Freed said this has resulted in a greater number of repeat passengers. But, she added, part of this is because past cruisers recognize greater value.
"They say, ‘How can I not take advantage of this incredible deal?’ "
Rodriguez agreed that consumers, faced with an uncertain economy and a clutter of deals in the market, do not want to introduce more uncertainty by trying brands with which they are not familiar.
But he has also found that as popular sentiment has shifted toward frowning upon conspicuous consumption and embracing value, Carnival’s pricing structure has become more attractive to a broader swath of the population.
"Value is in, independent of demographics," Rodriguez said. "So while people tend to be loyal and don’t want to introduce the risk of trying something new, they also care a lot about value. For Carnival, it’s great, because it introduces the brand to people who perhaps were aiming for vacations that were more expensive but now care more about value."
Motivating non-cruisers
He said Carnival’s motivation is not to get premium cruisers to switch to Carnival but to bring in consumers who have never cruised and might have taken more expensive, noncruise vacations in a different economy.
But first, the cruise lines have to get those people interested in cruising, Rodriguez said, and that is where brand advertising is important. In Carnival’s case, that means delivering the "fun" message. But just as crucial is word of mouth from Carnival’s past cruisers, especially in an uncertain economy.
"The experience of those who have been on the brand and are advocates becomes more important," he said. "Word of mouth has always been important in our category, but now more than ever."
Consumers, Rodriguez said, "need to believe it’s a great vacation for them. They only have one vacation a year, and they are not going to risk it."
Only if a consumer is already interested in a cruise does tactical advertising become influential.
"For people who haven’t cruised before but have a positive perception of it, price or value can probably motivate them." Rodriguez said.
For NCL, a particular advantage of this market is the opportunity to use price points to attract both first-time cruisers and veteran cruisers who in the past have preferred other brands.
"The goal is to ride through this environment and hopefully build up some loyalty with the people who are accommodated," Sheehan said. "At the end of the day, that loyalty will hopefully stick with us when the market improves."
Sheehan said NCL was sacrificing profits now by cutting prices while simultaneously improving the onboard experience in order to build demand when the economy improves.
"You get a whole new group of people who have not cruised and see this as a golden opportunity," he said. "You will never [again] get a cruise in Alaska for the prices that people will be able to cruise this summer."
Sheehan said that seizing this opportunity was essential for NCL as a way to counter negative market perceptions related to its U.S.-flag Hawaii program. Sheehan said NCL could use pricing to introduce, or reintroduce, its brand to consumers, "now that we are out there and doing a good job of customer service … and have cleaned up the part of the business that wasn’t working."
Luckily for people who might have been put off by a bad experience with NCL — or any other cruise line, for that matter — studies have found that consumers are more disloyal now than ever.
PhoCusWright research director Carroll Rheem said one metric that hints at the disloyal behavior among travelers is the average number of websites people use to search for vacations on the Web, which is 3.7.
"After years of booking online, people continue to shop around," Rheem said. "Consumers are not settling into brand-loyal behavior."
Branding has become less important, Rheem said, because the Internet enables people to learn about products and read user reviews of them.
Twenty years ago, brand name was the best way to know what a product would deliver. Now, for people who use the web to learn about vacations, a cruise line name is only as good as someone’s last cruise.
"It changes the dynamic of brand interaction," she said. "Older travelers are more likely to indicate loyal behavior. We see an age-driven trend toward becoming more disloyal as time goes on."