Club Med the External Environment Case Study

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Club Med Case Study

The external environment -- Club Med in Spain currently competes mostly with major tour operators who develop and sell inclusive package holiday products. These competitors enjoy better customer awareness, greater ubiquity at travel agency distribution channels and a 30% lower price for package holidays to destinations comparable to Club Med's. Club Med justifies its premium price by positioning itself as providing a unique experience with organized activities and entertainment. Indirect competition includes non-inclusive travel options which have a tendency to cost the traveler more money, but allow more flexibility in terms of food, activities, etc.

In the future, Club Med is vulnerable to new competition from other all-inclusive resorts that offer a similar guest experience as well as the burgeoning cruise line business (Emmons, 2000). With most Spanish GMs being between the age of 30 and 50 and most traveling as singles or couples, these new competitors could see the market for Club Med products as being far enough along in the PLC to make market entry very appealing.

Product life cycle -- The Spanish market is in the growth phase with just 8,000 customers. The market opportunity is perceived as large, with a goal of growing the customer base to 50,000 customers over a five-year period.

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Customer analysis and evaluation -- Club Med Espana is targeting the most affluent segment of the Spanish population, especially liberal professionals such as doctors, lawyers, property owners and business people. This market is believed to be 375,000 customers. Over 75% of Spanish GMs fell into this group, of these, most were between the age of 30 and 50, and most traveled as singles or couples, with less than 20% of the bookings consisting of families. Twenty-six percent of its GMs travel during the winter. Most Spaniards spend their holidays in Spain, but the number has increased from 7% in 1985 to 19% by 1990. The leading foreign travel destination is France.

TOPIC: Case Study on Club Med Case Study the External Environment Assignment

Factors driving tourism vary. Within Spain, diversion and change of environment (41.6%) as well as visit family and friends (31.5%) are leading reasons. Tourism drives the decision to travel to foreign countries. Preferred activities include cultural activities (86%) and relaxation (49.4%). However, sports activities are the principal motivations for a Club Med purchase.

Analysis of present customer's behavior -- An amazing 70% of Club-Med's customers and 80% of potential customers hear about Club Med through word of mouth. A customer satisfaction survey indicates high overall satisfaction with positive ratings for sports activities, children's activities and the food. But the same survey shows that customers voiced dissatisfaction on the quality of accommodations, the inflexibility of time schedules, the high degree of organization and the use of French as the principal language of the Club. Customers also expressed concern that the Club concept was not adequately explained in the brochure or at the point of sale. Even so, the retention rate is 70% in France.

Customer perceptions are a major influence of the analyses in this paper. Good customer retention, determined by customer satisfaction and proactive customer relationship management, is vital to a business such as Club Med because a slight reduction (5%) in the customer defection rate has a disproportionately positive effect on profitability, ranging between 25 and 80% (Improving customer retention is vital to profitability and growth). Further, because customers hear about Club Med primarily through their friends and acquaintances, the Club needs to have positive perceptions to maintain these referrals.

Critically evaluate how the product/company is currently marketed:

Product - Club-Med vacations are upscale all-inclusive vacations. Overtime, the company has added upscale activities such as gulf, special facilities to accommodate children and a more diversified product line ranging from straw-hut villages and bungalows to luxury resorts. However, in doing so, Club Med has lost some of its communal appeal and customers feel that it is "overorganized." This may make it very easy for competitors to offer similar all-inclusive packages and force Club Med to begin competing on price.

Promotion -- Promotional expenditure is concentrated in advertising followed by distribution of Trident brochures to travel agents and directly to customers. This is one of Club Med's major Achilles heels. There appears to be no framework such as AIDA or any other model this is more customer-focused in nature. Instead, promotion is product centered, focusing on the Club itself.

Place -- Two-thirds of GMs book their trips directly through Club Med boutiques in Spain. The other one third of sales is made through 40 travel agents. However, Club Med's goal is to generate two-thirds of its sales through agents by 1995-96. Club Med has training programs for these agents and expects sales volume to further entice them. With low awareness, there's room for special incentives to help Club Med attract more agents.

Price - Club Med pursues a premium pricing strategy appears to be successful as evidenced by its global expansion to over 100 villages in 33 countries around the world. However, as a growth-stage company, additional competition could make continuation of premium pricing difficult. This means that the strength of the Club Med brand will become even more important for the company's ability to charge above-market prices (Premium pricing strategies build on long-term brand value). Otherwise, Club Med could reduce prices and still maintain margins if it meets it travel agent distribution objectives.

Part B

1. The PLC phases of Club Med in France and Spain are very different. France is in the maturity phase as evidenced by France's position as the Club's largest single market providing over 35% of its total customer base with 431,700 GMs and having revenues of FF 2.3 billion and more than 300 employees. In sharp contrast, Spain is in the growth stage with only 8,000 customers, a national awareness rate of only 1.5% and 25 employees. Therefore, relevant marketing activities should be quite different. Spain will need to focus on creating product differentiation, penetration pricing, creating intensive distribution, advertising that builds awareness and interest in the mass market, and sales promotions that reduce expenditures to take advantage of consumer demand while France should concentrate on diversifying product brand and models, building more intensive distribution, advertising that stresses brand differences and benefits and increasing sales promotions to encourage brand switching (New-product development and life-cycle strategies).

2. "Domestic organizations entering international markets to sustain aggressive growth objectives continue to make the age-old mistake of ignoring the differences of individual locales by standardizing marketing communications for cost-efficiency reasons. Although markets may share fundamental human needs which may justify standardizing a product, marketing successfully to these wants and needs is never universal." (Lang, 2005). Therefore, Club Med would be making a huge mistake if it were to pursue a standardized communication mix in Spain.

Specifically, given Club Med's current marketing strategy in Spain, it needs to focus on its localized products, summer, winter-sun and winter-ski offerings, its unique target, the affluent segment, and a far more diverse distribution channel than France. Advertising will need to appeal to the motivations of tourist travel within Spain, address aspects of the products that conflict with Spanish expectations and deal with Club Med's lack of awareness and confusing identity. Brochures will need to reflect local destinations.

3. The largest issue with Spain's marketing strategy is its product differentiation. The three geographically-diverse versions of the Trident do not reflect that most Spaniards still spend their holidays in Spain. Certainly, a localized product and catalogue developed exclusively for Spain would be appropriate. The product and brochure need to focus on those attributes important to customer satisfaction in the Spanish market such as quality accommodations, flexible time schedules, a strong interest in sports activities and Spanish as the principal language.

"Marketing needs to be integrated over more finely targeted segments of consumers." (Malthouse, Calder and Kobayashi) Club Med defines its target market as… [END OF PREVIEW] . . . READ MORE

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How to Cite "Club Med the External Environment" Case Study in a Bibliography:

APA Style

Club Med the External Environment.  (2009, May 31).  Retrieved January 16, 2022, from

MLA Format

"Club Med the External Environment."  31 May 2009.  Web.  16 January 2022. <>.

Chicago Style

"Club Med the External Environment."  May 31, 2009.  Accessed January 16, 2022.