Case Study - Club Med

Case study --- Club Med

1. Problem definition

For Club Med, How to survive against the increasing competition in the lodging industry is their major problem to deal with right now. Club Med has been so successful and almost no direct competition for the past decades years. However, the lodging industry is lucrative business, thus more and more new companies are entering into the market to compete with the Club. Most of them are providing the same or even attractive all inclusive service that Club Med has been offering for years. The key strategy of reaching the goal is to enhance competitive power so that they can survive in the lodging market. There are several issues involved when we considering the problem:

 Should we position ourselves as a family friendly, for singles, or couples instead of Spartan style?

 Should we include alcohol in our price?

 Should we use other promotion besides word-of-mouth?

 How can we improve employee turnover rates?

2. Alternatives

Bases on the issues above, I develop four alternatives for Club Med to select to accomplish the goal.

1) Redesign the all-inclusive vacation packages/offerings.

Club Med can redesign different packages for different types of customers base on their needs. For example, honeymoon package for new-married couple; Provide single room for singles and so on

2) Provide more value for the customers/ change price

Club Med can include alcohol in their all-inclusive price; offer some discount or promotion for old members.

3) Invest more in marketing and select more means of promotion besides word of mouth.

Word of mouth business plays an important role in Club Med's history. However, because of the changing environment, this promotion strategy may risk losing potential customers that never heard of the Club. Advertising may be a better option.

4) Improve employees' effectiveness and satisfaction

Employees feedback, offering training session, or improve employee benefits can directly improve employee satisfaction.

Here is the Pro's and Con's for all listing alternatives:

Pro's Con's

New packages/offerings  Attract some trendier customers  Scare away hard core customers

 High cost

Value / Price  Potentially generate higher profits

 Choice allows for broader audience  Operating costs increases

 Price is the core of the business. Change price may change everything

Promotion means  Attract some new customers  High cost

 Not consistency

Employee focus  Lower turnover costs

 employees' effectiveness and satisfaction increase

 better customer return rates  higher fixed cost

From Pro's and Con's Chart, we can clearly learn that employee focus receives most benefits and least drawbacks.

3. Crucial issues

I evaluate these four alternatives base on four criteria.

 Do