Club Med Essay

792 Words Mar 28th, 2013 4 Pages
Introduction to the problem
Giscard d’Estaing is currently repositioning Club Med as an ‘upscale, friendly and multicultural’ tour operator. Having spent around EUR 1bn since 2004, this strategic turnaround had revived customers’ satisfaction toward Club Med’s tour experience. Unfortunately, revenue performance is still poor. Estaing is in need of a concrete strategy to increase Club Med’s revenue by 5 times by 2020 from 2010. The formation of the strategy is driven by Club Med’s 1) Strength - Strong and established brand name in Europe with acceptable balance sheet for funding flexibility , 2) Weakness – Concentration risk in the Eurozone experiencing sluggish economic growth, 3) Opportunity – Diversification into new growth geographies
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Strategic Options
In order to arrive at a well-rounded solution to Club Med’s problems, it is imperative to analyze the viability and overall attractiveness of each of the options.
Option 1: The implementation of ‘Club Med Timeshare’ is an option which will increase Club Med’s prestige and exclusivity. Instead of renting your vacations, Club Med’s customers will be able to own them. This would spur high income earners to spend extravagantly for a consistent quality holiday experience. Instead of charging USD 2,000 for a one time all-exclusive holiday, Club Med will be able to secure committed re-visits at an average rate of USD 21,800.
Option 2: Capture the growth of all-inclusive and upscale holidays in the fast developing markets (China, Russia and Brazil – “FDM”). As of December 2009, Europe contributes to about 72% of Club Med’s revenue. Customers from fast developing markets only constituted to 8% of Club Med’s total customers. As the fast developing markets are still under serviced, Club Med is at a favorable position to capture lucrative growth.
Option 3: Provide community concierge service. This would recreate Club Med’s brand legend by incarnating its unique community holiday culture. As such a prestigious club image is created which could further increase consumer loyalty.
Recommended strategy justifications
Option 1 and 2 will be the best option as Option

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