Marketing strategies of the famous vocational services provider, the Club Med

By | April 11, 2014

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Executive summary

 

This assignment focuses analyzing the marketing strategies of the famous vocational services provider, the Club Med. There are three major parts in this assignment, the first part is about the core products of Club Med, and the second part of the assignment is attributed to the importance of service marketing concept to the success of Club med while the last part of the assignment tries to explain the sources of the core competitiveness of the Club Med in term of differentiation from international competitors in four marketing mix.

 

Content page

Executive summary………………………………………………………………………………………….. 1

1.     Company profile……………………………………………………………………………………….. 3

2.     The core product that Club Med offers………………………………………………………… 3

2.1      The concept of core products…………………………………………………………….. 3

2.2      The advantages of having core products……………………………………………… 4

2.3      Case analysis……………………………………………………………………………………. 5

3.     Service marketing………………………………………………………………………………………. 6

3.1      Basic concepts of services marketing………………………………………………….. 6

3.1.1     Services and service………………………………………………………………… 6

3.1.2     The services marketing mix………………………………………………………. 6

3.2      The importance of services marketing to Club Med………………………………. 8

4.     Differentiation strategies for Club Med in global marketing……………………………. 9

4.1      Product strategies…………………………………………………………………………….. 9

4.2      Price strategies……………………………………………………………………………….. 10

4.3      Promotion strategies……………………………………………………………………….. 11

4.4      Place strategies………………………………………………………………………………. 12

Reference……………………………………………………………………………………………………… 13


1.        Company profile

 

Club Med is short for Club Mediterranée, was set up by a pioneer called Gerard Blitz in 1950 by his sudden inspiration during his stay in the Olympic Club’s tent village. It is one of the leading vocational village service providers; it is famous for its all-inclusive resorts all over the world ranging from ski resort, sports resorts, golf, luxury club, spa resorts and so on covering more than 100 countries with more than 80 resorts. Club Med is poisoning the high end segment in the vocational resort market. And recently, it has expanded its business in the increasingly important Asian market and even makes changes to its marketing strategies and begins its Asianized model of business.

 

2.        The core product that Club Med offers

 

2.1    The concept of core products

 

Before going into the concept of core products, first we must know the concept of total product concept. As we know, products usually have different and various features that can meet the need of the customers. In the viewpoint of the customers, products can be divided into four levels according to the perception that the customer will of the value of the products. These four levels are: core product, expected product, augmented product and potential product (Theodore 1983). While the potential products and augmented product may not be offering the fundamental values that can satisfied the conventional needs of the customers, the expected products have already satisfied the basic requirements by delivering the products that containing the benefits of the core products.

 

Core products, also known as flagship products, are usually integrated into many end products and they are central to the company’s business performance and thus keep the companies competitive in the market. To put it in a simple way, core products are the most important and core fundamental resource that a company has to develop its business. For example, the Google search engine is Google’s core products and Macintosh is the core product for apple and so on.

 

2.2    The advantages of having core products

 

Compared with other three levels of products in the total product concept, the core products of a company have at least two advantages. First of all, core products provide the major revenue and profit growth to the companies. For example, windows series products and office software are the core products of Microsoft, and by the end of march this year, the revenue of the third quarter had increased by 6% compared to the same period in the last fiscal year. The growth of the revenue of the company was largely contributed by the revenue of the new windows serious product, windows 7 with its fast sale in just six months time since its release. (Qiao 2010). To April this year, according to Klein the chief financial official of Microsoft, 10 percent of the world’s computer had installed windows 7 system which explained the reason of its fast sale in the global market. And to the world’s most popular internet company Google, its core product Google search engine account for the major part of its total revenue, in year 2008 99 percent of Google’s revenue derived from its advertising programs which is connected to its search engine (Unknown 2009). Also the core products for most companies generate the major profits to the companies as well as they are not like the other level products that will need continual investment in order for them to develop into core products.

 

Secondly, core products help create core competency to the companies. Core competency sources greatly from the core products. Core products are usually hard for competitor to imitate and produce similar products for many reasons such as core techniques that the companies owns copyrights or high quality and low cost services which can not be provided at the same price level by other competitors.  And because of the uniqueness characteristic that the core products have, companies are able to differentiate their products and charge premium prices in the competitive market.

 

2.3    Case analysis

 

To Club Med, it actually is not the providing of some physical products such as mere beverages and delicious food to the customers that is important, it is the offer the total product and service in a package is attractive to the customers in a whole as a vacation service provider. But by looking into its development, there are two core products that help the club to evolve and continue to grow.

 

The first core product was offered together with the establishment of the Club Med. It is the idea of all inclusive holiday by Club Med; this concept was invented by two pioneering spirits who set up the Club Med with this idea in 1950 (Club Med Malaysian official website 2010).  This simple idea may be copied by other competitors as a strategy, but it is the management of the vocational parts under the all inclusive price mode that is difficult for other competitors to follow and thus makes the idea become the core product of the club.

 

Another core product to the Asian Club Med is the localized products and services. As said in the case, instead of standardized vocational parks Club Med had made breakthroughs by providing local food, hiring more non French staffs, offering customized packages in the Asian Club Med to serve the people in the Asian culture which is different from the western culture, it is a culture within which people are less adventuresome and have more complex social network which means social activities are more important than in the west.

 

3.        Service marketing

 

3.1    Basic concepts of services marketing

 

3.1.1            Services and service

 

Before we can go to the topic of service marketing, first one thing that needs to be clarified is the differences between the concept of service and services. Services are activities performances or benefits that are offered for sale but which involve neither an exchange of tangible goods nor a transfer of title (Elliott, Thiele & Waller 2010, p374). So services are products with different physical characteristics with tangible goods in comment sense, they are behaviors and activities that could bring benefits and create value to those who buy the services. And in contrast, service is just the act of delivering a product which could be tangible goods or intangible services.

 

3.1.2            The services marketing mix

 

The services marketing mix include four most important characteristics of services that are not owned by tangible goods: intangibility, inseparability, heterogeneity and perishability. Intangibility is the most fundamental nature of services that distinguishes the services from the goods. Intangibility refers to the fact the services are not like physical goods that could be perceived by physical sense like touch, smell, taste and hearing. Take human resources management consulting services as an example, their existence could not be perceived by traditional physical senses. But as for the human resources management consulting services, there are also tangible components such as classrooms, trainers and study materials. And in most case, products are mixture of tangible goods and intangible services as there are not absolute pure service or pure products. And when a product contains tangible and intangible components, there will be two kind of mixture: one is adding tangible components to its intangible services and the other is adding intangible service components to its tangible goods. But adding tangible components to the intangible service components could not cover the property of intangibility of the services.

 

The second characteristic of services also known as simultaneity is inseparability which means that there is no separation between the production and consumption of the services, at the same time when the services are created the consumption of them will happen which means there will be delay between these two procedures. For example, hair sculpture is service that is provided by barber; at the same time when a barber provides this service the customers also consume the service as well.

 

The third characteristic of services is heterogeneity, it refer to the variation of the quality of service due to the variations of the staffs in term of mood, skill and willingness (Elliott, Thiele & Waller 2010, p381). This is because that service needs people to deliver, and with the growth of the business it will be more difficult to control the quality of the services as the variations from the human factors will influence the quality of the services. So to the marketers maintaining a relatively stable and consistence level of quality of services under the fluctuation of the heterogeneity and at the same time meet the expectation of the customers is always a target.

 

The last but not least is the perishability of the services. As mentioned above, the production and consumption of the services are happening at the same time, and this characteristic of inseparability further lead to the fourth character of the services: perishability. Because of the inseparability of products which unlike physical goods that could be stored up and sold later must be consumed when they are produced, marketers need to balance the demand and the supply in this fast changing relationship. And this balance is normally achieved by the flexible pricing strategy that could stimulate demand or restrict demand. For example, the seats in an airline is perishable, on the day of departure if there are still a lot of available seats out there with no hope of selling them, then the empty seats will be wasted in price of zero. But the promotional activity could control the waste of this kind. This is what Airasi does in the past, when the airline expects that in some days, there will would not be enough of demand according to the past experience, the airline will in advance release the promotional tickets to stimulate the demand in the certain period of time. Such promotion could even be release one whole year before the schedule flight departure time.

 

3.2    The importance of services marketing to Club Med

 

What Club Med provides are famous vacation resorts that all in more than 100 countries, these vacation resorts the services are mixtures of physical goods such as drinks and souvenirs and intangible services such as accommodation and hair cut. It is true that the physical supply is necessary to make the tour possible and practical, but it is the quality of the service that attract the tourists from choosing the resorts from the many options of relaxing. It is critically important to the Club Med for at least two reasons.

 

On one hand, services marketing help maximize the profit of the business of Club Med. As just mentioned, the flexible pricing strategy in the services marketing is usually used to adjust the demand to maximize the revenue against the cost to achieve the profit in the end. Club Med does provides discount fare to encourage the pre-book of the journey, and this has make the future demand more predictable and what is more Club Med also offer special promotional fares to those who visit the villages in period during which the demand is in a  low level (Club Med China 2010). Beside this pricing strategy, services marketing also focus on managing the expectation of the customers and standardizing the quality of the services in order to provide relatively stable services in term of quality to make the services in consecutive.

On the other hand, Club Med needs the good performance of services marketing to help enhance its brand. Brand is a “name, term, sign, symbol or design, or a combination of them which is designed to identify the goods and services of one seller or group of sellers and to differentiate them from other sellers (American Marketing Association 2008). And compared to other resorts, the branding of Club Med is famous for its special services, people have the impression of Club Med that by buying the tourist packages they do not need to worry about the budgeting and everything is arranged well and relaxing is promised. This branding impression is mostly contributed by Club Med’s well designed and control services.

 

4.        Differentiation strategies for Club Med in global marketing

 

In area of service marketing, services are unlike physical products that could avoid imitation by applying copyright of the design of the products. So it will be difficult to maintain the services from imitation of other competitors. Most marketers in services marketing usually differentiate their products and services from their competitors by offering fundamental characteristics of their services. These fundamental characteristics could be classified into the 4 P’s in the marketing mix.

 

4.1    Product strategies

 

In term of product strategies, Club Med has been actively trying to develop new products to meet the changing needs of the customers by applying adaptations to its products. As said in the case, Club Med in was famous in applying a standard approach to the design and operation of its villages which is , but now with the raising Asian markets with different and distinct culture systems Club Med is trying to expand its blueprint by applying adaptations to its Asian business. With the eager to visit as many places as possible of the Asian customers, this need is well satisfied by Club Med’s creation of “package deals” for Asians in which there will be a three day Club Med stay as part of a larger tour. What’s more local food is also provided as Asian people are less adventuresome. Observing the raising market of Japan and Korea, Club Med has been training its staffs in Korean and Japanese to better serve the people in these two countries,

 

Beside the new product development another product strategy that the Club Med uses to differentiate its products is the theme resort; theme resort means that it is designed to fit the need to different kinds of relaxation. The initiative to create theme resort is to satisfied purpose of tour by different roles that people play in the society. For example, there are eight kind of resorts in the Club Med in the United States: family resorts, luxury resorts, golf resorts, Club Med spas with prestigious partners, wedding & honey moons, eco nature resorts, Club Med Decouverte: tours and mini-tours- Club Med resort packages and friends resorts (Club Med United States 2010). By grouping the villages Club Med differentiates its villages from its competitors and serves the customers better by providing more customized services to the special purpose.

 

4.2    Price strategies

 

In term of the pricing strategies, again the all-inclusive pricing would be mentioned here. By providing the all-inclusive price in about 80 of its villages, Club Med is aiming at release the people from the real world by including all the activities in the free paid before tour starts. But not all the consumptions are included, bar drinks and goods that purchased in the shops would be recorded on a tab and paid by the end of the vacation. So such ways of charging fees could avoid as many financial decisions as possible. Irrespective of how the fee is paid this is more closed to the product strategy than pricing strategy, but the price level that Club Med is charging is high compared to other competitors. And whether high or low should also be compared to the value that customers perceived rather than mere comparison between Club Med and competitors.

 

There are some pricing tactics that are used by Club Med to differentiate itself from other villages. The first tactic that is used is the prestige pricing strategy; this strategy is mostly used in Club Med’s section of “luxury by Club Med”. The prestige pricing refer to the pricing behavior to set the prices in a artificially high level to convey an image of prestige and quality and exclusivity (Elliott, Thiele & Waller 2010, p245). This pricing tactic is adopted by Club Med to maintain its leading position of providing quality and prestigious services in the industry. The second pricing tactic that is used by Club Med it the value based pricing which involves the psychology of pricing. For example, a promotional fare to Club Med Punta Cana which is located in Dominican Republic for travel between July 3rd, 2010 and February 18th next year will be priced at only from USD 799 which is physiologically more acceptable than USD 800 due to customer value perceptions (Club Med United States 2010). This example also mentions the third usual pricing strategy which is captive pricing which set a low entry price to attract potential customers.

 

4.3    Promotion strategies

 

In this part advertising, the two promotion mix which includes public relations and personal selling will be analyzed to see the promotion strategies of Club Med. For public relations, as a vocational service provider that encourages the escape from busy commercial world back to nature, Club Med has long been putting effort in the charity that relates to the environment. In all its websites, under the column of “Green Globe” there are description about programs that Club Med has participated or is still working on to demonstrate its promise about eco nature resort by Club Med. Such programs have build up very good public relations between the Club Med and the stakeholders.

 

Personal selling refers to the personal communication that aiming at persuades potential consumers to buy the products and service, the it is usually involving large cost to spend on the training and stimulating the sale forces. But the personal selling of Club Med, the cost problem would not be too much of a problem as the Club Med was the originally set up by a group of travelers, the members of Club Med are the most influential and effective sale forces to the Club Med. Club Med because the members are the best sale persons that knows the products pretty well and they are interested in tourist and could offer true and attractive persuasion to the consumers. Club Med is able to utilize its large number of member by providing discount to the old members who can persuade new members usually families and friends to buy the tour.

 

4.4    Place strategies

 

In term of the placing strategies that Club Med uses, the scheduling plays an important role in the placing and distribution of the vocational services of the resorts. Such scheduling is actually the control over the capacity and the demand as mentioned above because the vocational services could not be stored and it must be consumed upon production. And such control over the demand in the service industry is usually achieved by pricing strategies in term of promotion and artificially high pricing in the certain periods of time. And the control of the capacity could be reached by management of the temporary hiring in the peak of demand. Also, like other competitors Club Med also uses retailers to distribute its services to the customers and the retailers as intermediaries are useful to add the value to the distribution chain. On the other hand, Club Med is also careful in choosing partner in the new markets. For example, in China where the first Club Med resorts is going to go into the business operation, as the Asian CEO of Club Med said recently that Club Med will choose a partner in China (Yu 2010) to expand its distribution channel and work with the tourist agents to make its placing network more comprehensive.

 

 

Reference

 

American Marketing Association 2008, Brand definition, accessed on 17 Jul 2010 [online] available:http://www.marketingpower.com/Pages/default.aspx

 

Club Med China 2010, 早订早优惠 (The earlier booking, more discount you will enjoy), accessed on 17 Jul 2010 [online] available: http://www.clubmed.com.cn/cm/%E5%BA%A6%E5%81%87%E6%9D%91-%E2%80%93-%E9%80%89%E6%8B%A9-%E6%97%A9%E8%AE%A2%E6%97%A9%E4%BC%98%E6%83%A0_p-66-l-ZH-amp;p-66-amp;l-ZH-pa-66_EARLYBIRD_BONUS-ac-od.html

 

Club Med Malaysian official website 2010, About Club Med, accessed on 17 Jul 2010 [online] available: http://www.clubmed.com.my/cm/all-inclusive-vacations-about-club-med_p-252-l-AE-pa-A_PROPOS_DE_CLUB_MED-ac-at.html

 

Club Med United States 2010, WOW Rates for families, accessed on 17 Jul 2010 [online] available: http://www.clubmed.us/cm/all-inclusive-family-vacations_p-115-l-US-pa-FAMILY-ALL-INCLUSIVE-VACATION-DEAL-ac-od.html

 

Club Med United States 2010, Our selection of Club Med vacation ideas, accessed on 17 Jul 2010 [online] available: http://www.clubmed.us/cm/all-inclusive-vacations-our-special-selection-for-you_p-115-l-US-pa-SELECTIONS_VILLAGES-ac-at.html

 

Elliott, G., Thiele, S. R. & Waller, D. 2010, Marketing, John Wiley & Sons Austraila, Milton, p374, p381, p245

 

Qiao, Y. 2010, Windows 7销售强劲致微软收入上升 (Strong windows 7 sale contributed to the sale increase of Microsoft), accessed on 17 Jul 2010 [online] available: http://news.newhua.com/news1/news/2010/423/1042393643CF2AJGD6FI2HEHA5KDK2C458DE66623DFA3C9J46F3D19.html

 

Theodore, L. 1983, The marketing imaginations, The Free Press, New York

 

Unknown 2009, Annual Report (PDF) – About Google! accessed on 17 Jul 2010 [online] available: investor.google.com/…/2008_google_annual_report.pdf

 

Yu, Y. 2010, Club Med落户中国首推滑雪 (Club Med established in China with promotion of skiing), accessed on 17 Jul 2010 [online] available: http://bj.huanqiu.com/travel/2010-04/48908.html