Cruising is a growth industry, expanding by 6% to 7% annually for the past 30 years. Recognizing

Question:

Cruising is a growth industry, expanding by 6% to 7% annually for the past 30 years. Recognizing this growth opportunity, Celebrity Cruises, Inc., has enlarged its offerings in the premium upscale experience at an intelligent price” segment of the industry by continuously growing its fleet. As CEO Lisa Lutoff-Perlo notes, “Celebrity Cruises has always been recognized as an innovative, trend-setting brand, and the Celebrity ships are just another instance in which we keep raising the bar in modern luxury travel.” To meet this opportunity and related challenges, Celebrity has committed the resources necessary for a five-ship expansion. But that was the easy part. Now Celebrity must determine the exact specifications of the new ships.

Like other products, ships are designed for specific tasks and markets. For a cruise line, the design options are huge. Consider Celebrity Cruises’ new ships. First, think of a hotel for 3,000 passengers and a staff of over 2,000. Then put the hotel on a huge power plant that can move the hotel around the world at 22 nots and supply all of the power necessary for heating, air-conditioning, laundry, kitchen, and all the other amenities expected on a luxury vacation. Then add the massive support necessary for 5,000 people. This means ware ho using and refrigeration for all the food to feed 5,000 people at least three meals every day (although the average passenger on a cruise consumes close to 4½ meals per day); fresh water for cooking, bathing, and multiple swimming pools; plus storage tanks for fuel to be used at the rate of 3,500 gallons per day.

In the cruise business, it helps to think of the ship as a small city where everyone in town is on holiday. The ship size, room accommodations, restaurants, and sundry onboard features from theater to library to retail space must all be designed to meet unique customer demands for specific market segments. Even the type of power plant (turbine versus diesel) impacts cost and environmental issues. Additionally, the selection of ports that both the ship and passenger preferences must be as part of the “product design.With a capital investment of over $400 million per ship,

Celebrity needs to get the product design right. To develop new ships, Celebrity has put together a “building committee” made up of key executives including the Senior VP of Global Marine Operations, the VP of Hotel Operations, the VP of Sales, and the VP of Revenue Management. Additionally, in a uniquely creative way, Celebrity has also invested in a special Innovation Center” featuring the largest virtual-reality (VR) facility in the world (as shown earlier in this chapter) so it can design a “state-of-the art” experience on board the ship. The VR capability allows management personnel, as well as design personnel, to visualize various areas (restaurants and bars), features (theater, library, card room), and activities (spa, gym, putting green) on the ship early in the design stage. This is particularly helpful by providing insight into dynamic aspects of design such as the flow of passengers and supplies, as well as aing of luggage.

Discussion Questions1. Identify the product design options that Celebrity Cruises has as it designs a new ship.2. How does Celebrity’s product strategy differ from the strategy of its sister companies, Royal Caribbean Cruises Ltd. and Azamara Club Cruises?3. How might Figure 5.3 be modified to reflect the product development cycle at Celebrity Cruises? 4. How does Celebrity’s product development process compare with the product development organizations suggested in your text? You may wish to view the video accompanying this case before addressing these question.