Service Operations Case Study

Excerpt from Case Study :

Service Operations

Celebrity Cruises Inc. falls under the competitive premium or cruising industry. The company faces the task of surviving within the competitive market while executing effective and efficient differentiation process. The aim of the strategy of the organization is to stand out in the perspective of the consumers hence improving on chances to combat competition. The report seeks to evaluate the situation of Celebrity Cruises within the industry and offer effective recommendations to solve the problem at hand.

Celebrity Cruises, Inc. came into play after the initiative by the Chandaris Group in Greece. The company hit the market in 1989. At the initial stage, the company oversaw adoption of 47,000-ton vessels. The lower-berth capacity of the vessels was approximately 1,400 visitors. The destinations of the cruises at the initial stage were Alaska, Bermuda, and Caribbean. In order to improve the size of operations, the company saw the need to build three more ships between 1995 and 1997. Each of the additional vessels had the weight of 70,000 tons. In 1997, Celebrity Company oversaw involvement in one of the largest transactions in the cruise industry. This is because of the business merger with Royal Caribbean International. Royal Caribbean was to act as the mass-market cruise line thus enabling the company to target market segment. This is through maintenance of the two unique brands' promotion and processes separate. Between 1997 and 2002, the company felt the need to add lager ship vessels to its operations. This saw the addition of four ships each weighing 91,000 tons (Frei, 2005).

The merge of the two companies led to capturing of the one third of the market or cruise industry by 2001. This followed the increase within the industry by about fifty percent. In the current state of the company, almost eleven percent of the Americans has been to at least one cruise. In order to improve its volumes of trade and business transactions, the company decides to adopt segmentation systems in the market. This aims at differentiating the company within the premium market. Celebrity aims at adopting new features that would differentiate it from main players or competitors in the market (Carnival and Crystal Cruises). The main objective of the company is to make a name for itself within the operations and marketing practices. This plan or strategy aims at attracting and maintaining potential and actual clients in relation to cruises. The problem facing the company revolves around stiff competition from main players. This is because of the similar mode of presentation to clients on board. This calls for the charge of presentation levels and plans from the perspective of Celebrity Cruises to maintain its hold within the market (Frei, 2005).

The company runs on different segmentation system to attract different market sectors. The first approach is the adoption of 150 New Tastes in 2002 to allow clients to experience more luxuries while on board. The test of the program aims to adopt practices such as presentation of champagne, extended meal hours, icy towels by the poolside, art tours, and frequent star gazing in the company of an astrologer. The main objective was to reduce the cost of production or marketing while enhancing the quality of services to clients. The next program to differentiate the company from its competitors is the application of the captain's club. This represents loyalty program that allows cruisers to join for about $35 (Frei, 2005). In order to accommodate the diversity within the industry, the club operates under three different levels. Number of previous cruises determines the category within the club. Captain's club acts as the effective method to distinguish or differentiate the loyal clients from others cruisers in relation to Celebrity Cruises. The third strategy of the company revolves around the creation of concierge class. This would act towards differentiation of experience within the cruise. The aim of the program was to encourage clients or cruiser to pay the extra amount of funds for improved services.

Problem Statement

The main problem facing the Celebrity Cruises Company is the lack of differentiation within the premium market to attract potential and actual cruisers. The company seeks to differentiate itself from other cruise companies to increase its volume of transactions and revenue. This comes to serve the growing diversity within the cruise industry.


In order to solve the differential problem facing Celebrity Cruise within the premium industry, the company tries to adopt quality rather than quantity. This theoretical approach of focusing on the consumers would enable the company to maximize its total revenue while minimizing its overall cost of production. This explains the three approaches or strategies (Captain's Club, 150 New Tastes, and Concierge Class). The main aim of the strategies by the company is to enhance their relationship or transactions in relation to potential and actual cruisers. Captain's Club allows the company to identify its loyal cruisers hence adoption of appropriate measures on how to improve its services towards the relevant consumers. The Captain's Club strategy differentiates the company from its main competitors thus offering the needed competitive advantage. This represents a vital tool for the organization to manage its operations within the premium industry (Frei, 2005).

The other application of quality rather than quantity expresses itself in the treatment of consumers by staff members. The company promotes courtesy and creativity among the employees in dealing with the cruisers. The company adopts these modes of treatment to distinguish its operations from its competitors thus attracting new consumers and maintaining the original clients. The focus on consumer proves to be an effective strategy towards eliminating the competition within the premium industry. Main competitors have the advantage in their involvement, in the mass market; thus, the only available strategy towards surviving is to focus on segmentation. This would allow the company to capture the interest of potential cruisers to supplement the revenue from present clients (Ansari, 2011).

Another operation model to help enhance competitive nature of the organization is the merger of the business entities. Merger theory allows the organization or company to capture vast of the market thus increasing its chances within the target group. The merger between Celebrity and Royal Caribbean Companies represents an extensive step towards acquiring large portion of the market. This is because diversity of the market would drive interest and satisfaction from a variety of products and services in relation to cruising luxuries. The merger also allows companies to minimize their overall cost of operations while maximizing total revenues. This is by obtaining economies of large scale thus enhancement of production and operation levels. Celebrity applies this to maintain the large command within the mass market. Emphasis on unique organizations is an indispensable tool towards capturing the segments within the industry (Nedyalkov, 2010).


In order to fight and overcome competitive premium industries, Celebrity Cruises should adopt at least three strategies or recommendations. The first approach towards maintaining the strong hold within the market is conducting extensive and efficient promotions and advertisements. This would enhance awareness of the market on the available products and services at their disposal. Effective and efficient advertisement focuses on the consumers. It also focuses on quality rather than quantity. This would act as a vital tool towards attracting more consumers in the direction of the company. Advertisements should develop on the influence of extensive research on the market segmentation. This approach would reduce the cost of operations while boosting the need for maximum profits (Ansari, 2011).

The second recommendation or approach should focus on reforming the pricing system within the industry. This would enable the organization to stand out within the competitive industry. Price affects demand in the sense that relatively affordable prices would attract more consumers thus building on the actual client levels. It is critical for the organization to focus on attracting new consumers to build on…

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