A study of Club Med’s marketing strategies 

By | April 20, 2015

1

Introduction

Club Med is a French corporation of vacation resorts, which is considered as the inventor of the all-inclusive resort concept. Its predecessor was a non-profit organization founded in 1950. The Club has changed from a not-for-profit association to a for-profit public limited company in 1995. Now, Club Med, found in many parts of the world, is focusing on the holiday villages and for upmarket vacationers.

A product is defined as a good, service or idea offered to the market for exchange. For many a product is simply a marketing offering, whether tangible or intangible, that someone wants to purchase and consume. Actually, products have many different features that can provide value for customers. These features of a product just like a bundle of attributes. At the most basic level, products must own the ability to satisfy a need or want that makes value to potential customers. To make more value than competing offerings, products must be understood on a more comprehensive view by customers. In order to actively explore the nature of a product further, I will describe the product in terms of its four levels: core product, expected product, augmented product, and potential product, as shown in figure 1. (Elliott 2010)

figure 1.0

Figure 1

The core product

The core product that is the service or benefit the customer is really buying. For example, a hotel guest is buying “rest and sleep”. The purchaser of a drill is buying “holes”. For a marketer, it is important to understand the key benefit customers want from a product that will greatly assist in providing the right product to the market, and make sure customers purchase from you, not a competitor. Generally, core products are integrated into a variety of end products which sold to customers, thus regardless of other changes made to a product, the core product generally remains the same. Core products are usually the first products and the most directly related to core competency of a company like Macintosh for Apple Inc., Windows OS for Microsoft, Google search for Google, etc.

The expected product

The expected product is a set of attributes that actually deliver the benefit that forms the core product buyers normally expect when they purchase this product. For example, hotel guests expect a clean bed, fresh towels, working lamps, and a relative degree of quiet. Marketers generally try to differentiate their offering in fundamental characteristics including quality standards, branding, packaging, and more at the expected product level, but it is difficult to accomplish. Also take the hotel for example, because most hotels can meet those expectations, the traveler normally will settle for whichever hotel is most convenient or least expensive.

The augmented product

At the augmented product level, goods and services are involved in a product, which provide additional value to the customer’s purchase. Although these factors may not be key reasons leading customers to purchase, these items strengthen the purchase decision to some extent. In developed countries, brand positioning and competition take place at this level. The augmented product level enables marketers to significantly differentiate their offerings from those of competitors. This can include support services, such as warranty. For example, when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car’s manufacture, and any after-sales service. Over time, augmented benefits can become expected benefits and necessary functions. For example, years ago, hotel guests expect cable or satellite television with a remote control and high-speed Internet access, but as time passed the features have became part of the expected product.

The potential product

The potential product encompasses all the possible augmentations and transformations the product of offering might undergo in the future. Here is where companies search for new ways to satisfy customers and distinguish their offer. For example, after successfully launching iPhone 4, Apple will introduce refreshed iPod, with upgrades and price changes. The iPod is expected to feature a Web-based iTunes service from the Lala online music streaming service. (Seher Dhillon 2010)

Club Med’s product

Now I will describe Club Med’s product in terms of its four levels in accordance with previous content.

Apparently, the core product Club Med offers is all-inclusive holiday, which including transportation, destination, food, entertainment, freeing up guests to enjoy their vacations. Club Med provides singles, couples and families with somewhere exotic to vacation. Holidaymakers can enjoy everything with no worries; try out all activities and holiday with the peace of mind that a controlled budget brings. At the expected product level, Club Med owns 15,000 employees of 100 different nationalities, 75 villages around the world and 1.2 million clients, which operates in 40 countries. Club Med brand is synonymous throughout the world with dreams, happiness and hospitality. Club Med provides 4 and 5 Trident Resorts, sites of natural beauty, a wealth of activities, comfortable settings and tailored services. The product experience Club Med wishes to share: nature, cultural discovery, spa & well-being, sports and high-level skiing. At the augmented product level, Club Med runs computer workshops in some villages for more business-oriented guest. For its Sanya village, Club Med’s blueprint has meeting and convention facilities, a golf course, and a casino for Chinese gambles. Also, Club Med is training its staff in Japanese and Korean so that Asian travelers feel comfortable in the various group activities. In Japan, would-be Club Med vacationers can check out their intended destination by watching videos in the company’s Tokyo salon. However, entire vacation industry is under-developed at the potential product level including Club Med. If Club Med wants to get greater advantages, it must offer new ways to differentiate its product and increase the value for customers.

2

When the term product is used in marketing, it can refer to a tangible physical good, an intangible service, an idea, or an experience. Most products that are marketed are physical goods, such as apiece of furniture and an article of clothing. When purchasing a tangible good, the consumer buys the actual product. However, other products, such as a haircut and a medical exam, are intangible services. When purchasing a service, it is the outcome of the process that the consumer purchases, such as looking attractive after a good haircut of feeling healthy after a medical treatment. The marketing process is the same for all types of products, no matter they are goods or services. Although a comparison of goods and services marketing can be beneficial, since most products contain elements of goods and services, in reality it is hard to distinguish. Nevertheless, services have some unique characteristics that distinguish them from goods. (Charles W. Lamb & Joseph F. Hair & Carl McDaniel 2007)

Services have four unique characteristics that distinguish them from goods. Services are intangible, inseparable, heterogeneous, and perishable.

Intangibility

This is the most basic and often quoted difference between goods and services. Unlike tangible goods, services can not generally be seen, tasted, felt, heard, or touched before being consumed. Services can not be stored and are often easy to duplicate. Intangibility introduces a certain element of risk for purchasers of a service. The inability of a customer to examine a service before they purchase it increases their feelings of uncertainty. (Bonita M. Kolb 2006) For Club Med, intangibility makes it difficult to promote the features and benefits of service attributes. Club Med as a service provider, it is important to make as many elements of the service as tangible as possible. For example, when designing a brochure or ad to promote the village to holidaymaker, a photo of the tangible features of the village, such as building, parks, and scenery, can be used. Messages about accommodation should relate to the décor, the neatness of service areas, and the staff’s manners and dress. Club Med can also reduces the level of risk perceived by customers through testimonials and positive word-of-mouth. Testimonials provide potential customers with the confidence that other individuals or organizations have been happy with the service Club Med provided. Positive word-of-mouth can create corporate reputations more quickly than commercial advertising.

Inseparability

Goods are first produced, then sold and finally consumed. In contrast, services are first sold, then produced and consumed at the same time, as shown in figure 2. In other word, their production and consumption are inseparable activities. Service inseparability refers to the fact that the production and consumption of a service occur simultaneously, and are embodied in the transaction of the service. Services are also inseparable from the perspective of the service provider. Thus, the quality of service that corporate are able to deliver depends on the quality of their employees. (Peter Mudie & Angela Pirrei 2006) For Club Med, ensuring that the vacation experience meets the holidaymaker’s expectations is not very easy, because it will be affected by the attitude of the service worker. Service workers with a poor attitude and a lack of knowledge about the village will negatively affect the holidaymaker’s enjoyment. So service workers should be educated on how to positively interact with the public. The training must provide service workers with the knowledge needed, such as answer any questions the holidaymakers might have. To ensure that high standards are maintained, it is recommended that Club Med should develop programs that recognize and reward outstanding service workers.

Physical goods Service
Production Sold

↓ ↓

Sold Produced and

consumed at

Consumed the same time

Figure 2

Heterogeneity

Services are provided by humans who, unlike machine, are subject to variations in mood, skill and willingness to provide service of an agreed quality. This makes it unrealistic to promise perfect service every time. The inevitable variations in the service provided give services the characteristic of heterogeneity. For Club Med, the challenge is to provide a product with a reasonably consistent level of quality that matches customers’ expectations. Here are the key strategies Club Med can take to increase quality control.

  1. Invest heavily in good hiring and staff training. Recruiting the right employees and providing them with excellent training, including responsiveness, initiative, a caring attitude, goodwill and problem-solving ability, to effectively implement the service delivery and to manage the expectations of customers.
  2. Standardize the service-performance process throughout the organization. By developing and implementing, detailed procedures that cover every aspect of service are recorded in a flowchart, with the objective of recognizing potential fail points.
  3. Monitor customer satisfaction. Employ suggestion and complaint systems and customer surveys. In addition, service providers must work to ensure the service they deliver matches the service they promote. In other works, they must be careful to not ‘over promise and under deliver’. (Philip kotler & Kevin lane keller 2006)

Perishability

Perishability refers to the inability to store services for use at a later date. Perishability is not a problem when demand is steady. When demand fluctuates, service firms have problems. For example, public transportation companies have to own much more equipment because of rush-hour demand than if demand were even throughout the day. Some doctors charge patients for missed appointments because the service value exists only at that point. For Club Med, several strategies can produce a better match between demand and supply. (Joe Reif & Kirsten M. Ditterich & Mitch G. Larsen & Robert A. Ostrea 1997)

On the demand side: Club Med can differentiate pricing to shift some demand from peak to off-peak periods. For example, Club Med can discount price for Yabuli ski village to attract more holidaymaker in summer holiday. Club Med can promote mini-vacation weekends in the local resorts to cultivate nonpeak demand. Club Med should provide reservation system, which is a way to manage the demand level. Also, customers can conveniently book airline and resorts in advance. On the supply side: Club Med can hire part-time employees to serve peak demand. This approach not only saves cost, but also overcome the problem of manpower shortage during the peak period.

Conclusion

No doubt, the four characteristics of service marketing are very important for service organizations. Only if Club Med is a full understanding of intangibility, inseparability, heterogeneity and perishability of service marketing, then efficient marketing strategy can be developed. Therefore, the four characteristics are vital for the development of Club Med.

3

Introduction

The increasing political economic, social, cultural and technological interconnectedness of countries throughout the world has given rise to the concept that we are living in a ‘global village’. There are thousands of businesses across the country engaging with the world through their marketing activities. However, organizations want to stand out in the global market is not an easy task. How to differentiate their products from the competitors has became a part of their global marketing strategies.

The reason that the majority of companies initially develop global markets is to provide a cost effective way of generating new market opportunities and increased demand for a successful domestic product range, or to simply offload excess capacity. Global marketers need to understand the similarities and differences that exist in the marketplace and marketing environments in which they operate. Success in global marketing depends to a large extent upon satisfying the demands of the market and, ultimately, on whether the product or service offered is suitable and acceptable for its purpose. Clearly, success also depends on building market awareness and ensuring availability of the product by effective use of the other marketing mix elements. (Chris Phillips & Isobel Doole & Robin Lowe 1994)

Presently the most widely accepted service marketing mix contains 7 P’s. They are product, price, place, promotion, process, people and physical evidence. Now I will analyze the 7 P’s of Club Med to identify how Club Med differentiates its services from its competitors.

Product

Service product can be defined as a mix of intangibles and tangibles offered by the marketer at a price. As I have been illustrating in the earlier section, the distinctions between a product and a service are blurring, and it is difficult to find a completely tangible ‘product’ and a completely intangible ‘service’ in the true sense. Just like Club Med that provides service to customers but its service delivered by tangible ‘product’. The service firm has to differentiate its services from the competitors to create its own position in the minds of the customers. Differentiation gives the service its own position in the face of competition. (Victor T. C. Middleton & Alan Fyall 2009)

I identify Club Med’s product as an “all-inclusive international vacation”, which includes transportation, accommodation, food, and sports and entertainment. These four items are as the “four pillars” for Club Med, which became the symbol of Club Med’s value and distinctions: the ability to provide holidaymakers with free experience from the beginning they decide to vacation until the time they go back home and discuss which Club Med to visit next. Club Med modifies each detail of the pillars to keep up with technological development and various requirements of different locations. For example, transportation changed from boats and trains to airplanes; accommodation changed from tents to hotels; food changed from fishing and hunting to international food; and entertainment changed from simple games to a broad of variety of recreational items.

Price

Pricing is a fundamental tool of positioning. Consumers often compare competing products based on price, and to some extent this assessment can occur relatively independently of some of the other elements of the marketing mix. Price is therefore crucial in how the organization’s offering is positioned in the minds of each of its target market segments. The objective of Club Med to establish a high-quality, prestige image naturally implies setting prices at, or above, the top of range for the industry. (Rajendra Nargundkar 2006) There are also several major elements involved in Club Med pricing its service: cost, competition and strategic objectives.

Club Med has a set of costs—land, buildings, equipment and salaries which constitute its capital costs. Club Med is known for the unique experience that it provides in holiday packages, so there are airplane, accommodation, food and recreation facilities which will form the other recurring costs. In addition, it has to invest additional funds to maintain equipment, modernize facilities and so on.

Price competition usually emerges when competitors’ offerings are not significantly differentiated in the minds of consumers. The major competitors of Club Med are Sandals and SuperClub in the U.S. and Caribbean, which all provide high-quality all-inclusive vacation. In terms of price, they are basically the same.

Pricing can be driven by company objectives. Club Med wants to project its brand as exclusive, hard to own, as belonging to a luxury category, so Club Med is appropriate to price the product high, because it can reinforce the image of a high quality brand.

Promotion

The promotional mix available to services marketers includes personal selling, advertising and sales promotion. This mix can be used to create demand or to project an image. In general, all of the elements of the promotional mix can be used to:

  1. Inform prospective clients about the benefits of the service.
  2. Encourage them to try the service.
  3. Remind them later about the benefits they enjoyed by using the service.
  4. Develop and maintain a favorable corporate image.
  5. Differentiate the service and the organization.

Personal selling

Club Med uses personal selling when the objectives of promotion are to detail the customer and encourage the customer to consume the service. Personal selling is also used by Club Med as a follow-up to service consumption-personal contact after consumption can increase satisfaction with the service. In terms of differentiation, Club Med’ staffs are always courteous, efficient, and attentive to the client, so good personal selling contributes to the overall image of Club Med.

Advertising

Most people recognize Club Med on web, newspapers and magazines, which provide clues or cues about Club Med and offer the customer the opportunity to judge the organization as well as the service offering. In services marketing where services and service providers are seen as similar or undifferentiated, advertising can create a perception of difference. In fact, Club Med with its better image that shows on media as demonstrated has got a distinct advantage.

Sales promotion

Club Med offers an initial consultation for free. Customers can get information as much as possible before booking a vacation by free telephone, email or face-to-face communication. Honeymoon packages customized for the newly married couples, including many free services, such as double spa massage, romantic dinner and honeymoon room layout. Sales promotions involving off-peak pricing schemes are also provided by Club Med. For example, holidaymakers can enjoy 30% discount to go on holiday in Yabuli ski resort in summer. In addition, Club Med advocates the earlier booking, the cheaper price. The maximum benefits up to several thousand dollars.

Place

The distribution of services is primarily concerned with having the service in a location and at a time that are convenient for the consumer. (James L. Burrow & Jim Bosiljevac 2008) Distribution requires a chain or network of organizations and individuals. The chain that exists between producers and consumers is known as a distribution channel. The key organizations that make up the distribution channel are called intermediaries. The main intermediaries are wholesalers, industrial buyers, agents, and retailers. Distribution channel intermediaries themselves often rely on a host of specialist service providers.

Club Med was the inventor of the holiday club concept, becoming the worldwide leader in all-inclusive holidays. It is present in 40 countries, with 80 Villages on five continents and a cruise ship. Club Med is marketed by over 1500 travel agencies all over the world, through its direct and indirect distribution networks. In china, Club Med has been building multi-channel distribution network to cover the large and complex Chinese market effectively to help consumers know clearly and directly about the brand and to get more information. Club Med Store is a major part of that network. The stores will be set up by Club Med and its travel agency partners. The store offers consultation and reservations services for luxury vacation to consumers. After the opening of the Shanghai store, Club Med will open stores in Beijing, Guangzhou, Shenzhen, and Chengdu in 2011. In addition there will be two flagship stores opening in Shanghai and Beijing after that, and there will be a new office in a different city each year in the future.

People

The ‘people’ in the extended services marketing mix are those coming into contact with customers who can affect value for customers: the organization’s staff; the customers being served; and other customers either directly or indirectly involved in the service experience. The most controllable factor in service delivery is the organization’s staff.

Club Med staff is called “G.O.” means Gracious Organizer, who constitutes an ingredient in a medley of talents and skills. Beyond the specialty of each G.O., Club Med G.O.s have real, specialized professional skills which furthermore show an abundance of energy and personality. Club Med provides training programs to its staffs, which have been developed to continually reinforce everyone’s expertise and broaden their skills. The Club Med School enables G.O.s to develop the new information and knowledge through practical and theoretical teaching. For each profession, Club Med gives G.O.s the opportunity to advance. The Club Med University aims at making it possible to advance towards management posts. After training, each of G.O.s is able to deliver service effectively, efficiently and to the standard expected by customers and the organization.

Holidaymakers are consumers with particular expectations. In Club Med, the services designed require the customer to act in effect as a ‘co-producer’ in the service delivery. For example, the special feature of Club Med is that the G.O.s and holidaymakers play, dine, drink, and dance together every day and night. Outdoor buffet dining mixing holidaymakers and G.O.s, daytime sport-playing and evening shows with extensive audience participation, are part of the holiday experience.

Process

In the services context, process refers to all of the systems and procedures used to create, communicate, deliver and exchange an offering. An organization’s processes define the manner in which the service is coordinated and delivered. The travel and tourism experience consists of both process and outcome, perhaps more than for any other service products, the outcome is highly dependent on the quality of service delivery as perceived by the user. (Victor T. C. Middleton & Alan Fyall 2009)

With the technological advances playing a major role in the tourism industry, Club Med has a comprehensive information system that will process the financial, customer-relations and other related operations of the company. Club Med use it to maintain an excellent customer relations to ensure the continuous flow of customers. Club Med maintains customer relations that aim to meet the demands and needs of its clients as well as to satisfy them. Customer satisfaction remains a key factor in the success of any organization. The best way to retain customer loyalty and to expand the existing customer base is to listens and responds to the needs, demands and complaints of clients, promptly and in a courteous way. Club Med has streamlined its processes and procedures. As a result the time taken to process a booking is reduced, service delivery is faster and the process is far more efficient.

Physical evidence

The intangibility of services makes it difficult for customers to evaluate the quality and suitability of services, especially when using the service for the first time. Marketers can use to manage the uncertainty that intangibility creates is to offer tangible cues as to the quality of the service. Customers look to these cues and other physical evidence as a way of evaluation the service prior to purchase. Intangibles are added to tangibles in order to achieve differentiation on soft aspects of service. For instance, Club Med is known for the unique experience that it provides in holiday packages. Club Med is not like any other resort or hotel. Rather, its unique architecture makes it resemble a village with its own feel. The food presented there is not the simple stuff that we eat. Rather, it is display of world cuisine that tickles senses. The equipments are not simple bland equipments. They are means to have fun and experience learning something new; it is a platform for socialization and the events there create continuous fun and celebration.

Conclusion

It is not difficult to find that Club Med settles its differences deep into each service marketing mix. Club Med puts its customers needs and wants at the heart of marketing and business decisions. Club Med knows that customers are the God, the best way of differentiating its services from the competitors are to meet even exceed their needs and wants to achieve and even lead their satisfaction.

Reference

Bonita M. Kolb (2006), Tourism Marketing for cities and towns: using branding and events to attract tourism, Butterworth-Heinemann, pp.209.

Charles W. Lamb & Joseph F. Hair & Carl McDaniel (2007), Marketing, 9, Cengage Learning, pp.334.

Chris Phillips & Isobel Doole & Robin Lowe (1994), International marketing strategy: analysis, development, and implementation, 2, Routledge, pp.283.

Elliott (2010), Marketing, 1, John Wiley, China, pp.204.

James L. Burrow & Jim Bosiljevac (2008), Marketing, 3, Cengage Learning, pp.323.

Joe Reif & Kirsten M. Ditterich & Mitch G. Larsen & Robert A. Ostrea (1997), Services–the export of the 21st century: a guidebook for US service exporters, World Trade Press, pp.20.

Peter Mudie & Angela Pirrei (2006), Services marketing management, 3, Butterworth-Heinemann, pp.3.

Philip kotler & Kevin lane keller (2006), Marketing Management, 12, Pearson Education International, pp.376.

Rajendra Nargundkar (2006), Services Marketing 2E, 2, Tata McGraw-Hill, pp.158.

Seher Dhillon (2010), Apples potential products, Topnews, http://topnews.co.uk/27457-apple-s-potential-products, 13/7/10

Victor T. C. Middleton & Alan Fyall (2009), Marketing in Travel and Tourism, 4, Butterworth-Heinemann, pp.139-147.

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