Club Med’s survival strategy – lessons in marketing
Imagine your company described being as “the best idea since the invention of happiness”. That was the surprising quote attributed to French communications Guru Jacques Séguela when referring to one of the best known holiday resorts, The Club Med.
In 1955 this French holiday resorts cooperation conquered the shores of Tahiti and built bungalows there, making paradise accessible to Europeans. On one condition: you needed to take four months holiday: one month to get there by sea, two months on the island and month for the return journey. Unique and affordable too as it could be paid off interest-free over an eighteen month period. Those were the days… What has remained the same though is Club Med’s philosophy of happiness and hand-picked exotic destinations.
Reaching for five tridents
Since its establishment in 1950 by Gérard Blitz, former Belgian water polo champion and son of a diamond merchant, and with financial contribution by Baron Edmond de Rothschild in the 1960s, it has grown to become one of the most reputable companies within the travel industry, serving over 1.2 m clients per year. But with every success story there comes a time when one needs to stop and reflect. The group’s shares had long been under-performing the market. When the new CEO Henri Giscard d’Estaing arrived in 2002 he spotted the trouble.
His options were either to play it safe and continue along old lines or fundamentally revamp its operations. Taking into account the added factor of encroaching competition, Club Med settled for a restructuring campaign, returning to what it does best, holidays for the well-heeled clientele and their families. Taken that the brand has such a strong recognition level a little polishing on the surface wasn’t going to do any harm.
Financial acquisitions have been an intrinsic element in the new scheme. Over the past seven years it has sought out new partners to help fund its emerging ventures. Close to 1bn euros has been invested since 2003. Today Club Med runs 80 resorts in 40 countries. The effects of its new upscale strategy are being noticed. By the end of 2010, Club Med has returned to growth and positive cash flow. Village operating incomes passed from €36 million in 2009 to €42 million in 2010. And over the year, Club Med acquired 11,000 additional customers in the 4 and 5 Trident segment.
To complement its new innovated image, a finely-tuned marketing strategy has been put into operation. Swiss Style had the pleasure to speak with Madame Laure Baume, who is Club Med’s Managing Director Switzerland to hear what she has to say about the implementation of this new marketing strategy and the particularities facing the countries she represents.
“We have one brand, one positioning” says Baume, “which is multicultural, upscale and friendly”. Through this single defining image, the company’s position can regain its clarity. When a business keeps on growing it sometimes looses touch with its roots. A brand analysis has enabled Club Med to determine what had originally made its name so successful. Improvements on the physical level have also helped to reinforce the new image. Many old basic resorts are being scrapped and investment is being redirected to building new and exclusive luxury villas. These brand development initiatives are coming into effect because Club Med is once again able to set itself apart from its competitors.
Granted that the strategy is very specific, does one not run into a dichotomy? It would appear that such an up-scale image runs the risk of alienating the lower-tier holiday-makers. “Baume responds that “customers are differentiated through various touch points”. Club Med’s marketing strategy is executed with sophistication through a two layer approach. In the first instance the overarching image of friendly up-scale holiday in a lush setting is what will get people through the door. Thereafter the purchasers can be shown the holiday specificities that appeal most directly to them. The existence of a second approach provides clients with individual attention and choice, bestowing them with an additional service and also firmly placing Club Med in the upper-range of all-inclusive holidays. Successful branding is about developing a relationship with the customer through communication.
To retain the exclusiveness it is ensured that the degree of sophistication in the marketing approach is on par with the particular product being offered. For instance as Baume explains, “4% of the Swiss customers desire the elite 5* villas.
For this kind of clientele we have a special media approach, which includes the use of PR”. This is marketing at its best, combining branding with service. It makes the brand resonates with the customer. “For the rest of the clientele we have an emotional delivering of the brand because we know this is what they will respond to best”.
Limiting its environmental impact is a major concern for Club Med. Therefore, at its first eco-nature resort at Cherating Beach, wildlife is closely preserved. Cherating Beach is an exceptionally beautiful 4T Resort in Malaysia situated between protected jungle and the jade-green South China Sea. The village site includes a nature reserve for turtles under threat of extinction, as well as a home for macaque monkeys and many more tropical species.
Navigating through the specificities on the individual level is demanding enough but what about on the national level. Baume who works in Switzerland and is of French nationality, finds that she constantly has to switch her cultural goggles. Not only do the French pose obvious disparities to the Swiss, but within Switzerland there are further discrepancies.
Regarding cross-border variations, the Swiss are a wholly different clientele to the French. “The Swiss are more upmarket and are demanding in terms of quality and service” asserts Baume. These dissimilarities also have an impact on the intensity of the marketing Baume explains. “Hard-core marketing urging the customers to book works perfectly fine in France, whereas in Switzerland a more delicate and restrained approach has more impact. Although the Swiss generally take their time to book holidays, by the end of 2010, we have noticed an increase of the early booking tendency”. Perhaps this is partly down to the fact that the Swiss are less acquainted with the Club Med brand.
The trickiest part of Baume’s job however is accounting for the disparity on Switzerland’s home turf. From marketing perspectives, the purchasing attitudes of the German-speaking part and the French-speaking part are quite at odds, more so than the differences between France and Switzerland.
When making a booking, consumption habits of the German speakers lead them to accentuate on the practicalities of their holiday. Room size in particular has been shown to be a sensitive matter as has level of service and value for money. In contrast the purchasing patterns amongst the French won’t allow rational factors to govern their holiday. They have a more lenient approach, letting enjoyable factors such as the atmosphere and the general holiday-feel of the place act as the primary guiding principles. We are speaking here about the passionate lot versus the cerebral lot. As usual cultural pre-conceptions hold true in business too.
It is important that when approaching these differences one is still able to see the forest for the trees. Whilst the individual strategies have to be carefully adapted, consistency in the overall brand image must remain stable wherever one is. In difficult periods, such as the Jasmine Revolution and the turmoil in Egypt, it is more important than ever to have a strong, precise and distinguished brand.
“There is no doubt, we are in a difficult period,” declares Baume. “It of course also has a strong impact on consumer behaviour. The main objective is to best satisfy our customers, to react and respond quickly to their needs, ensuring their safety and delivering quality service”. With the reopening of the 3 resorts, Djerba La Douce in Tunisia on February 26, Sinai Bay and El Gouna in Egypt, respectively on March 5 and March 19, Club Med would like to remain a key player in the tourism industry of these two markets. Moreover, Club Med remains optimistic because winter and summer 2011 sales show a double-digit growth on the short and long hall. In times of uncertainty all-inclusive holidays offer the reliability and sincerity that we are searching for.
Last year’s increase on reservations is an indicator of future health. However given the volatile nature of the European economy, it may be safer to place our bets on the Chinese market, which Club Med aims to make its second-biggest customer base, with a target of 200,000 customers by 2015. Its first Chinese club will be a ski resort in Yabuli, followed by another five resorts over a period of five years. Fosun, China’s largest private-held conglomerate has already agreed to help finance the new resorts. There is no denying that travel and transport is not the easiest sector to be working in at present. But that can only make it more exciting, right? Especially if one takes guidance from Club Med’s business strategies from specialised branding, distinguished marketing techniques and expanding into new booming markets. If all fails, we can at least be ensured that paradise is not yet lost.
Club Med luxurious Villas and Chalet-Apartments
Club Med continues to innovate by offering the freehold acquisition of Villas or Chalet-Apartments, to a select few to enable them to experience the exceptional “in their own home”. These luxurious Villas and Chalet-Apartments, designed with refinement and bearing the mark of local traditions, are located at the heart of exceptional sites that are part of the most beautiful Club Med Resorts in the world: La Plantation d’Albion (5 Tridents) and soon Valmorel (Resort 4 Trident – Chalet-Apartments 5 Tridents).
1950 Gérard Blitz and Gilbert Trigano jump start the concept of “all-inclusive holiday” – the birth of the Club Méditerranée brand
1955 First bungalows are being built in Tahiti
1956 First mountain holiday village is set up in Leysin, Switzerland
1965 Under the patronage of King of Morocco, Club Med’s first perma- nent village is set in the floral park of Agadir
1989 Setting sails for holidays – the Club’s first village on water. The passenger ship can take aboard up to 450 voyageurs
2004 Club Med becomes more interna- tional, more exclusive more inclusive – New luxurious additions – destinations such as Brazil become available – Opening of the resort Marrakech La Palmeraie – Club Med Baby Welcome® service Present Creation of the luxury Club Med Villa concept – first ski resort in China Yabuli – new resorts in Egypt, Sinaï Bay – presentation of the new chalet program in Valmorel, France.
Article by Rodica Miron