Project 1 Report
Geo-Demographic Analysis
at Postal Zip Code level
Family Cruise Package Promotion Campaign
Group 2
Fengrui Bai
Chanyuan Bao
Haowen Ge
Siyuan Zhang
Data-Driven Marketing MIGB 7732 – 002
Professor Mohammad G.Nejad
1 October 2017
MIGB 7732 – 002 Data-Driven Marketing
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Executive Summary:
The purpose of this project is to discover meaningful market segmentations in order to help
Carnival Cruise improve sales in Texas. The project focuses on identifying areas with high
percentages of middle and upper social class families, and then propose managerial implications
to promote luxury family cruise package. In this way, Carnival Cruise will be able to identify
correct market segmentations and form innovative sales strategies for maximizing profits from
families with high level of income and education.
The methodology is to conduct cluster analysis to find out the potential marketing segments. The
data used in this project is demographic data based on zip codes in Texas. The three variables
used in this project are: Percentage Households, Income and Education. After selecting the
variables, the project will conduct Hierarchical Cluster Analysis with Furthest Neighbor Method
and Ward’s Method. After carefully comparing the results of those two methods, the project will
pick results from the Furthest Neighbor Method for managerial implications. The chosen
segments from Furthest Neighbor Method display the potential marketing areas with high
percentages of families with high level of income and education.
The Furthest Neighbor Method is able to identify two important segments from Table 2-2: one
with 83% Percentage Households, 180 Income Index, and 41% of the population with a BA
degree. Another one has 54% Percentage Households, 284 Income Index, and 59% of the
population with a BA degree. The two segments are going to allow managers to find the correct
zip codes to promote family package. Adding child-friendly activities, providing filial therapy
playground, arranging for professional babysitters on the cruise are going to attract more families
to buy family packages. Initiating such a family-oriented campaign will effectively boost sales.
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Introduction:
Carnival Cruises, based in Miami, Florida, is one of the major lines owned by Carnival
Corporation & PLC, which offers remarkable travel and leisure experience. Since 1972, Carnival
Cruise has become one of the most recognized cruise lines to US customers. Because the demand
for vacation from families rises, especially during winter holidays, a campaign named “Family
Package” will be introduced to Texas, focusing on promoting luxury cruise vacations to families.
In order to succeed this campaign, the project is going to segment customers in Texas and find
ideal locations to promote “Family Package”. The ideal group of Carnival Cruise would be high-
income families with a high level of education. In order to find this ideal market and increase its
share of markets, the project has conducted cluster analysis using Furthest Neighbor Method and
Ward’s Method. The result of the cluster analysis is going to provide market insights for
managers so that they would structure meaningful market strategies to better attract high-income
families. Overall, it summarizes in Flow Chart.
Background
Promoting family packages before winter holidays is that going to increase cruise sales. Based
on the data from Google Trend (Figure 2), the search volume of “cruise” increased every
December during the past five years. One of the major reasons behind this phenomenon is that
December has the longest holidays in a year for Americans. Adults and children both could enjoy
a two-week long vacation together. Therefore, creating a family-oriented campaign before winter
holidays to involve the whole families to enjoy the vacations together will ultimately improve
sales.
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Flow Chart
Figure1 Flow Chart
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Figure 2 Google Trend of “Cruise” between 2013 -2017
Moreover, family packages show a great potential in the cruise industry. People’s preference
towards cruise vacations is increasing, especially those with families. According to “US Family
Travel Survey” published by New York University School of Professional Studies, 49% of
families are more likely to take cruise vacations in the future than 22% in the past. Moreover,
with different choices of cruise lines, 78% of families will make their second cruise trip once
they finish the first cruise trip.
Figure 3 Travel Behaviors and Preferences & Loyalty
(Source: http://www.sps.nyu.edu/content/dam/scps/pdf/2015_FTA_Family_Travel_Survey.pdf)
Although Carnival Cruise accounts for a large market share in the U.S. cruise market, it is still
facing competitions from other companies. The main competitors of Carnival Cruise are Disney
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Cruise from Walt Disney and Royal Caribbean Cruise. In this campaign, Disney Cruise Line is
considered as one of the major competitors of Carnival Cruise. Disney Cruise Line has
successfully focused on luxury family tours and children’s entertainments on board. The
problems of Disney cruise are the expansive cruise tickets and lack of adults’ entertainments on
board. To compete with Disney Cruise Line, Carnival Cruise could provide relatively low cruise
price and offer entertainments for both adults and children.
Another competitive brand is Royal Caribbean Cruise. With high level of awareness among
customers in the United States, Royal Caribbean Cruise launched the world’s largest cruise ship
in 2016 and had great success so far. Although Royal Caribbean Cruise offers more adults’
entertainments such as shows and casinos, its lack of child-friendly entertainments makes it less
competitive in the family-oriented cruise market. As a result, with a focus on offering families
plans and special services for children on board, Carnival Cruise would win over a large portion
of the market share.
The U.S. News shows that Carnival Cruise is ranked lower than both of Royal Caribbean Cruise
and Disney Cruise in “Best Cruise Lines for Families”. In order to be successful in this industry,
the managers for Carnival Cruise have to offer more special services for children and adults in
order to stand out from its competitors. Promoting well-designed, adult and child friendly cruise
package is going to improve sales and boost revenues. The following parts of the project is going
to conduct detailed data and segment analysis. After the data analysis, the project is going
provide analysis aspects of data and marketing implications.
Data
The data used in this project is demographic data based on zip codes in Texas. Within the
variables, the project selects three important variables for this study and there are: Percentage
MIGB 7732 – 002 Data-Driven Marketing
Households, Income and Education (Table 1). The Percentage Households is useful for company
to pinpoint areas where it can find high percentage of potential customers. High income index
and high education years are important parameters to this study because the final reach of this
market segmentation is to promote luxury cruise package to customers with the purchasing
ability.
The reason to choose “% HH that are Families” is that taking a cruise vacation is a good deal for
families, especially families with children. The cruise packages bring more convenience and
comforts for parents. Thus, the project is going to find out areas in Texas with high percentages
of families. Those areas with a high percentage of families will be more responsive to this
campaign. The reason to choose “Income Index” is that Carnival provides luxury cruise
vacations. The project is going to target at customers with high income that are able to afford the
luxury experiences and services. The reason to choose “% Population age 25 or More with a BA
or More” is that families with higher level of education tend to prefer good quality vacation
packages.
