Case: Health Cruises, Inc
Key Players: Susan Isom, DeForrest Young, Investor Board
Action Required: A decision is required within 48 hours. Key players must decide whether to:
- Option 1: Abandon/Cancel the planned cruise
- Option 2: Move ahead with cruise despite current insufficient booking numbers
- Option 3a: Infuse $6,000 to acquire a projected 20 extra bookings prior to cruise
- Option 3b: Infuse $15,000 to acquire a projected 40 extra bookings prior to cruise
- Strengths: Experts in behavior modification, psychologists/health specialists, credibility, experience, medical expertise.
- Weaknesses: Outsourcing of ad marketing, cruise ship.
Channel Factors – New segment targets health-seekers. Substitutes low. Constraints: Supplier power high – set charter rates. Buyer power low for segment offering.
Consumer Factors – Poor habits/behaviors, travel comfort/leisure-driven, peer-influenced, stress-prone, older urban fast-paced workers – seek escape, travel, and assisted change. Esteem, social and self-actualization needs. Value: social, destination, health.
Competitor Factors – Market: Conventional cruise substitutes oriented to entertainment, tourism. Beginning of peak holiday/Caribbean cruise season. No direct competitors indicated.
Marketing Environmental Factors – End of year, final quarter, time short for remaining bookings. Christmas, holiday ads competing for ad space, challenging to get slots, get attention or attract customers in the noise.
Pros & Cons of Options:
- Option 1: $75,000 loss. Business image damaged. Cruise vendor/passenger relationships damaged. Staff jobs lost. Embarrassment. Loss of credibility.
- Option 2: Net loss of $40,384.62. Without further financing or bookings, cancellation possible, leading to financial loss than Option 1, but not ideal. (Exhibit 2)
- Option 3a: Additional $6000 ad investment (and fixed expense increase). Breakeven point increased by 5 units. Net loss of $17,307.69 expected. (Exhibit 3)
- Option 3b: Additional $15000 in fixed cost. Breakeven point increased to 238 units. Positive income of $2,307.69 expected. (Exhibit 4) NOTE: If success ratio same as historical, this option risks falling short by 11 units. (Exhibit 1)
Options 1 & 2 are not viable to preserve brand, reputation, image, vision, future or investors. Option 3a is better, but not adequate.
I recommend seeking $15,000 from investors to acquire a minimum of 40 additional passengers through recommended print ad campaign by Pittsford and LaRue. While it is impossible to predict that Option 3b will yield the full guaranteed result, it is the best option to minimize potential loss, maximize bookings, satisfy investors and provide a successful event for credibility/future foundation of further offerings from Health Cruises, Inc.