P&O Princess and the International Passenger Cruise Industry

The passenger cruise market is one of the fastest growing sectors in the international tourist industry. In the 1990s it is characterised by new 'megaliners' which can carry over two and a half thousand passengers in luxurious accommodation. The market has expanded with new passengers, new ideas, new destinations and new itineraries. As both demand and supply increase, the marketing challenge concerns passenger numbers and filling the ships - the service cannot be stored for later sale. Like most services, people are crucial for delivering the service and implementing the desired competitive strategy. Yet, the cruise industry is characterised by international staff complements, people living away from their homes, an intensive work environment and many temporary contracts. P&O Cruises, which includes Princess Cruises, is number three in the world and the largest UK-based competitor. It enjoys two distinct positions in the market with its two brands. Whilst both P&O (UK) and Princess (US) offer cruises in the popular Carribean and Mediterranean regions, Princess has focused attention on Alaska and the Panama Canal, where in each case, it has become the leading competitor. In the case of Alaska, this has been achieved by the development of an infrastructure to open up the territory for tourists. Nevertheless, the potential for growth is huge if more newcomers can be tempted to cruise for the first time to join those who decide that once is not enough. This case study looks at issues of competition and strategic positioning, enterprise and change in a unique service business.