Case 1: The Fun Ship Experience at Carnival Cruise Line
We’re perfectly happy to be the Wal-Mart of the cruise industry.1
—Terry Thornton, vice president of marketing planning, Carnival Cruise Lines
In July 2005, the 2,974-passenger, 110,000-ton2 Carnival Liberty set sail after being christened by its “godmother,” actress Mira Sorvino. Built for $500 million, the ship was the 21st vessel sailing in Carnival Cruise Lines’ fleet, giving Carnival more passenger-carrying capacity than any other cruise line in the world. With 800-plus oceanview or balcony staterooms, 22 lounges and bars, four swimming pools, and a spiral water slide, Carnival Liberty was a far cry from the Mardi Gras, Carnival’s first ship, which was a converted transatlantic liner bought in 1972 for $6.5 million. For its part, the Mardi Gras seemed to signal an inauspicious beginning for Carnival when the ship ran aground at the tip of Miami Beach on its inaugural voyage—in full view of gawking vacationers. However, as Carnival lore had it, bartenders poured free drinks (including a new rum cocktail that a creative bartender dubbed a “Mardi Gras on the Rocks”3), passengers had fun, and the spirit of the “Fun Ships” brand was born.
The differences between the Mardi Gras and the Carnival Liberty symbolized the metamorphosis of the Carnival brand. Today’s Carnival was dramatically different than the company that cruise industry pioneer Ted Arison started with secondhand ships and savvy marketing. While North American passenger volume doubled between 1994 and 2004, Carnival’s volume tripled. More than 3 million guests sailed Carnival in 2004, the most in the company’s history, and a figure representing nearly one out of every three cruisers. For the fiscal year that included 2004, Carnival Corp. & plc, the parent company of Carnival Cruise Lines, reported record net income of $1.85 billion on revenues of $9.73 billion. Nine of Carnival’s ships, almost half of the line’s available berths,4 had been…