It originates from France and the idea was created by Gaward Blitz and Gilbert Training who started the all-inclusive concept with this company. Club Med has had a total of 140 holiday villages, however this number decreased to 70 villages they have nowadays. These villages are located all over the world among 4 continents on tropical destinations.
Club Med operates under multiple brand names like Vulture, Club Med Affair’s and Club Aquarius. Next to that Club Med also handles two cruise lines and is specialized in sporting activities. The members of Club Med are one third French and two third exists of mainly Americans and Japanese. (Club Med, 201 3) At one point this all-inclusive resort concept appeared to be the fastest growing trend in the tourism industry. Club med grew very rapidly during the years, what at one point was even hard for the management team to keep up with.
Next to that in the early nineties more and more competitors rose what caused an intensified competition. The unique concept of Club Med wasn’t so unique anymore and it has become outdated. Club Med faced brand positioning problems and needed to find a way out as quickly as possible. This is when trouble in paradise arose. (Wiley, 2003) Background To go back in time, Club Med has had quite the history considering the commercial development. First of all their original strategy has been a genius idea in my opinion. Creating a club for vacationers and make them a member of something makes them feel connected.
As they were really focusing on angles and young couples this was a very smart decision to make. Receiving newsletters, brochures, getting discounts and the fact that members had to pay an annual fee, made customers return to Club Med for future holidays. There can be said that brand loyalty increased rapidly among the customers. The mission statement completes this strategy which includes striving to bring people together in an environment that is “care-free” which takes them away from their daily lives. It is a strong formula and was very unique at that moment. Club Med, 201 3) Competition until 1 986 Club Med was strongly positioned against other companies in the all-inclusive resort industry. There was a high level of bargaining power with suppliers and buyers, Club Med even received discounts because of their large number of bookings. However, this is also the period where the degree of rivalry became higher in the all-inclusive resort industry. This made it harder for Club Med to compete when more firms are benefiting from the success formula of Club Med and create their own resorts.
The one thing Club Med did not have in its all-inclusive package were the alcoholic drinks. Furthermore all holiday activities were included in their prices, but the competitors like for example Super-clubs organizations, did not include the activities. They offered the customers the options to choose which activities they preferred during their holiday. Like this they could offer lower package prices than Club Med and profit from this competitive advantage. For Club Med at this point it was very difficult to change the prices more into individual ones so they kept the same strategy. Global Marketing Today, 201 2) Problems A disadvantage for Club Med was that competitors had small number of actions and Club Med itself was situated all over the world. This makes Club Med facing loads of problems regarding politics or currency devaluation because of the many different countries and environments. Also the economic instability in some countries where Club Med is located made sure it was not attractive to go to these locations. These external trends and factors made it difficult for Club Med to manage all these situations, in a way they lost the control over the management in my opinion.
Another thing Club Med noticed in late nineties, is that people’s preferences and wants regarding lady’s had changed. The customers did not want to pay a lot of money for holiday packages which included all the sporting facilities they would not use anyways. Club Med saw its competitors made it possible for their customers to put together their own holidays, which was the introduction of tailor made traveling. Believe for Club Med it would have been wise to make a change right away as this was quite an important trend.
Listening to your customers is essential for your business. (Global Marketing Today, 201 2) The attacks on September 11 in the USA also caused problems for Club Med. Due to an obvious decline in traveling all over the world in general, Club Med was forced to close down 15 resorts worldwide. This whole situation combined made Club Med struggle to attract new customers and increase the sales. The bottom line is Club Med was not able to increase the sales volume and obtain the market share they wanted.
They were not in a good position to compete globally within the all-inclusive resort industry. I believe they did not have the correct overview of what was happening in all the countries they were located in. Their marketing activities therefore, were not effectively applied in many of hose countries, because they could not manage to give the proper support in multiple environments at the same time. Upscale Move In 1 998 a new chairman was presented, Philippe Burgeoning, and introduced a new plan of approach worth of 500 million dollars.
He used this budget to refurbish older resorts. Next to that it appeared also very difficult to maintain all the beautiful resorts worldwide so a lot of them were shut down unfortunately. This change was actually good for Club Med and there was an increase in the sales. They maintained this strategy, because the net profit clearly was improving every year. In the year 2004 Club Med thought it was time for a change, they called it the upscale move. From 1998 to 2004 Club Med invested more than 350 million dollars in repositioning itself as more luxurious and family-oriented.
They wanted to focus more on the upscale segment of the global tourism industry and wanted to meet the expectations the international customers have nowadays. Finally they are aiming more at the wants and needs of their clientele. Their goal was to attract and retain a base of family customers worldwide. They went through this upscale transformation by implementing a new strategy which focuses on ewe resort openings and refurbishments. They wanted all the resorts to show and express the same image, but they created a ranking of two, three, four and five star resorts.
Like this they were able to attract customers on varied budgets. Their aim is to combine comfort with friendliness, sophistication and contemporary lifestyles. Club Med also innovated their activities which are customized following the type of program or resort to promote its new image. Besides, they finally included the drinks into their all-inclusive packages to be able to compete with the competitors that already offered this in their cages. Currently Club Med is a stable business and manages to have a net profit again. It is continuing the upscale move strategy and it is working.
Their brand loyalty has risen again which is a positive aspect for sustainable growth for their upscale business model. Conclusion Club Med is a company that faced difficulties to adapt to the global changes that were made rapidly as from the nineties. Their development and keeping up with their competitors was not going quickly enough and they had to find a new strategy to reposition itself. They invested a lot in this new global arresting strategy to be able to manage external factors in the many environments they are located in.
In my opinion Club Med failed in managing the local marketing globally. They did not invest enough into marketing research when it was really necessary to be able to attract as many customers as possible. Like this the competitors got the free hand in gaining more market share than Club Med. Would suggest to really focus on the markets that matter like France, LASS and Japan where the main customers are coming from. Like this you selectively focus on the people you want to target and the arresting will be more efficient.
That is why I think they never should economize on the marketing budget. Next to that I think it is really smart to focus on the loyalty system, as Club Med was the first one to be successful with this aspect, and focus on the clientele that really matters. Besides all resorts have to meet the requirements of the business goal and otherwise it would be best to shut them down. In general I believe Club Med is still a unique concept, but they have to keep up with the trends and developments in the current tourism industry to avoid more trouble in paradise.