Product Design & Pricing Case Study

Client:

A leading cruise line company

Business Problem:

Assessing whether there was enough demand to justify building additional ships.

Approach

MaPS worked closely with senior management at the cruise line to develop a comprehensive demand model of the cruise industry.

Online interviews were conducted among consumers to understand their preferences around taking a cruise vacation. The centerpiece of the survey was a ''choice task" where respondents were presented with a variety of realistic cruise options comprising different cruise lines, itineraries, stateroom types and destinations and asked to select their most preferred option.

Based on this data, MaPS developed a sophisticated discrete choice model to understand the likelihood of consumers selecting a particular cruise vacation as a function of price, itinerary, destination, and available stateroom type.

Finally, MaPS conducted an elaborate optimization analysis in collaboration with the client's revenue management team, to develop strategies for maximizing occupancy and revenues with fleets of various sizes. Our analysis provided guidance on:

What itineraries to sail and at what times of year
Which products to offer (e.g., 4-day cruises vs. 7-day cruises)
How to price various itineraries and staterooms

Results

The study indicated strong support for adding additional ships to the company's fleet, as estimated demand was consistently and substantially higher than current capacity. In addition, the company used the results as the basis for introducing new itineraries and implementing pricing changes.