CRM and Information Systems Strategy at Carnival Cruise
This paper examines whether Carnival Cruise Lines should adopt a customer relationship management (CRM) strategy and how information systems (IS) can support that effort. Drawing on industry analysis, value chain analysis, and customer service life cycle frameworks, the paper argues that CRM is essential for Carnival to tap into the more than 80% of the North American market that has never cruised. The paper discusses how IS can inform competitive positioning, guide targeted marketing to family demographics, and build lasting customer relationships. It concludes by outlining the upside potential of a CRM initiative, including converting one-time travelers into repeat customers and compounding market share growth over time.
- Should Carnival Pursue CRM?: Argues CRM is essential for Carnival's growth
- Information Systems and the Five Competitive Forces: IS enables competitive, value chain, and lifecycle analysis
- IS and the Value Chain: A Family Demographic Example: IS profiles families to enable targeted cruise marketing
- The Customer Service Life Cycle and IS: IS maps customer stages to improve satisfaction and retention
- Upside Potential of a CRM Strategic Initiative: CRM can unlock the 84% of untapped North American market
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What makes this paper effective
- The paper grounds each argument in a concrete business context — Carnival's "fun ship" origin story — which makes abstract concepts like CRM and IS immediately relevant to the case.
- The family demographic example in the value chain section is a vivid, well-constructed illustration of how IS translates raw consumer data into targeted marketing decisions.
- The use of a specific statistic (only 16% of the North American market has cruised) gives the CRM upside section a compelling quantitative anchor.
Key academic technique demonstrated
The paper demonstrates applied business analysis by linking theoretical frameworks — Porter's five competitive forces, value chain analysis, and the customer service life cycle — directly to a named company's strategic situation. Rather than defining these frameworks abstractly, the author shows what each reveals specifically about Carnival's market position and growth opportunities.
Structure breakdown
The paper is organized as four question-driven sections, each building on the last. It opens by establishing the case for CRM, then explains how IS supports competitive analysis, moves into a detailed value chain illustration, and closes with the strategic upside of adopting CRM. This Q&A structure is common in case-study coursework and keeps the argument focused and sequential.
Should Carnival Pursue CRM?
Carnival should definitely pursue customer relationship management (CRM). Carnival obtained its identity as the "fun ship" when its maiden voyage ran onto a sandbar: the management team turned the disaster into an enjoyable experience for passengers by opening the bar for them. It was an inspired reaction to a difficult situation — and it helped earn the cruise line its enduring reputation.
However, having developed over the decades and become a mid-tier line (neither cheap nor expensive, though it offers an experience that competes well against any of the luxury brands), Carnival wants to expand its services to the untapped market in North America — that is, all the people who have never been on a cruise before. To attract those customers and convert one-time cruise passengers into repeat customers, CRM is necessary.
CRM is data-dependent, which means it requires assistance from the IT department in terms of gathering and organizing customer data. By having all data collected and accessible in one place, managers can see what guests are interested in, what made their experience good or bad, whether complaints have merit, and whether certain customers are worth going out of the way to win back. IT and IS are tools for generating value creation by getting to know the customer better — it is that simple.
Information Systems and the Five Competitive Forces
IS can impact the five competitive forces at Carnival by providing CRM with information about guests that would otherwise be unavailable. Since Carnival is the "fun" cruise line, it pays to know what makes the experience fun for its guests. Opening the bar for stranded passengers on the maiden voyage may have been a fortunate accident that shaped the line's image, but as the years pass, management needs a systematic way to reconnect with its passengers. Without another sandbar grounding, Carnival must use the tools available to connect with customers. IS allows the cruise line to connect with passengers by generating information about them, building profiles for managers, and enabling the line to cater to the guests it seeks to win for repeat purchases.
IS allows for industry analysis, value chain analysis, and customer service life cycle analysis (Piccoli, p. 235). Categorizing systems also enable the line to better understand its passengers by projecting models that show the effect of specific actions toward a specific type of customer and how those actions benefit the line. By analyzing the industry, Carnival can see what its competitors are doing so that it can match their output. By analyzing the value chain, Carnival can see how it is effectively creating value for the consumer. And by analyzing its own customer service life cycle, Carnival can trace the progression of steps a customer goes through when considering whether to purchase a ticket — allowing the cruise line to better prepare the right pitch and product for the consumer and attract more business.
IS and the Value Chain: A Family Demographic Example
IS could be used to attract vacationers to cruises by gathering data on how people from a specific demographic, region, or consumer group make decisions about where to go for vacation, what to do, what offers the best value, and why they choose a particular type of vacation. For example, if a mother and father who are both 35 years old have two children aged 2 and 4, they might prefer a vacation where they can have fun together as a family — something like Disney World. So how can Carnival attract that family to a cruise? IS can provide the cruise line with a profile of the family, revealing what types of services the family regularly spends money on (whether the mother enjoys spas, whether the father frequents bars or shows), how the parents spend money on the children, and what kinds of activities the family enjoys.
If the data reveals a consistent trend about what families like this do with their free time and vacation budgets, Carnival could adapt its offerings accordingly. It could, for instance, advertise to the female demographic with images of onboard spas and relaxing massages, while the same advertisement shows the father entertaining the children at a ball pit, an indoor pool, a fun park on the ship, or a show the kids would enjoy. It could also show the father getting some personal time at the bar or watching a sports game with other adults. This type of marketing is targeted to appeal to every member of the family, demonstrating that there is something enjoyable for everyone on a cruise. If the families IS profiles are interested in beaches, the marketing could also highlight that the cruise stops at beach destinations.
What IS allows the company to do is gather and pool information about the targeted market, reveal consumer habits, and identify the preferences of specific segments. The company can then adjust its offerings accordingly if the data reveals a trend that competitors are not addressing. By focusing on this target and seeking to grow its consumer base, the company could achieve significant year-over-year growth — all because IS made information about the consumer available that the company did not previously have.
References
Applegate, L., Kwortnik, R., & Piccoli, G. (2006). Carnival Cruise Lines. Harvard Business School.
Piccoli, G. (n.d.). Value creation with information systems.
Value Creation with Information Systems. (n.d.). PowerPoint Presentation.
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