Global Marketing Strategy and Planning
The United States is Club Med’s No.1 target. To increase U.S.visitors, Club Med is considering opening three new resorts around the United States, one of them being a resort for couples in the Dominican Republic, another being a family report in the Yucatan Peninsula near Mexico, and the third being a family resort in Brazil. It has invested over $350 million from 1998 to 2004in advertising to rejuvenate their strong brand name in the United States, which has been misunderstood because of poor advertising campaigns. Each village is now ranked with two, three or four tridents, based on amenities and comfort level, with the result that the 13 budget Club Aquarius villages are being folded into the two-trident category. A major expansion is under way around the Pacific Rim, including new resorts in Indonesia, China, the Philippines, and Vietnam. As part of its agenda to promote itself and leverage occupancy, Club Med has started entering strategic alliances with firms all over the world. In November 2002, it signed a deal with match.com, an online dating company and a part of USA Interactive, to offer vacation packages for singles to “casually” meet people in a different setting. This was part of its focus on the American customer.
In the year 2004, Club Med executed its new upmarket strategy, rebranding itself as upscale and family-oriented. Prior to that, French hospitality group Accor had acquired a 28.9 percent stake in Club Med, becoming the largest shareholder. Although it sold most of its stake in 2006, announcing that it wished to refocus on its core businesses, Accor’s affiliation once provided Club Med with the much needed financial assistance and associationwithapowerful ally.Tostart with,itchanged its brand identity and logo with a makeover expenditure of more than 500 million euros. The company believed that with consumers’
changing preferences, there were looking for a different vacation experience and it launched its “New Luxury” product. This included major renovations at its U.S. locations, namely Club Med Columbus Isle, Club Med Buccaneer’s Creek, and Club Med Thrkoise. Club Med Columbus Isle went through a $5 million upgrade to include more luxury features including kingsizedbeds,
flatscreenTVs,and well-stockedminifridges,among many other such facilities. Add to that three new dining options and a poolside with eclectic music, daybeds, and lounges and it hopes to offer an experience like none other. The company also spent $50 million on refurbishing its resorts at Buccaneer’s Creek and $6 million on the one at Thrkoise.
Case S • Honda in Europe • 679
Among the new experiences that Club Med is trying to bring to its members are the unique gym facilities in some of its resorts and the “Seven Senses of Summer Program” offering a different activity every day of the week (including art classes, movie nights, dancing, and meditation). In early 2005, the company launched its first flagship store in London, UK, known as the “The Travel Boutique.”
With its sights set on providing guests with nothing less than the best, Club Med continues to move its resorts further upscale. Renovations and remodeling efforts across our properties have added a new level of luxury, while innovative programs have made each location even more enjoyable than before. In 2006 and 2007,Club Med and its partners dedicated a total of $530 million to renovate and revamp the group’s portfolio of offerings. 2006 saw Club Med close five of its more rudimentary resorts and upgrade seven others (Club Med Cancun Yucatan, Mexico; Club Med Caravelle, Guadeloupe; Club Med La Plagne, French Alps; Club Med Opio in Provence, France; and soon Club Med Albion, Mauritius; Club Med Ixtapa Pacific, Mexico; and Club Med Buzios,Brazil).Forthe future, Club Medisscanningfornew properties in the Americas that it can convert into boutique style luxury properties like the one on Columbus Isle.
DISCUSSION QUESTIONS
1.
Given Club Med’s current problems, do you feel the company could have avoided its pricing scheme problems through different expansion plans?
2.
Why is Club Med unable to offer competitive prices?
3.
Given Club Med’s current problems, do you think that “the Club” will be able to survive by keeping its current pricing strategy or do you think a new strategy should be implemented?
4.
How can Club Med continue to differentiate itself in order to sustain its competitive advantage against its competitors who seem to be imitating its service concepts?
5.
Club Med has changed its strategy recently to a more luxury driven one.Bytheend of2008,the company hopestohavemost of its villas operating as luxurious boutiques. Spending $50 million a villa to refurbish it, how does that affect costs and eventually profits? In other words, what is the justification for these high expenditures?
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Global Marketing Strategy and Planning