Norwegian Cruise Line, the world’s third largest cruise company, sent a customized ship to China to grab a share of the booming market. Yet after 19 months of sailing, the ship Joy had left China for good, so had the company. Norwegian Cruise Line spent $ 50 million on an overhaul and removed all Chinese elements. What did the company do wrong?
How “made for China” failed in China
Norwegian Cruise Line adopted many Chinese characteristics on its new ship Joy, from the “phoenix” on the topsides of the ship to tea houses and Karaoke rooms. Ironically, “foreignness” turned out to be an attribute valued by Chinese tourists, who were looking for an exotic, western cruising experience.
Customization backfired.
The kettle was part of Norwegian Cruise Line’s customization: the Chinese love drinking hot water, but having access to it also gave them a reason not to buy drinks onboard. The gross margin of beverage could reach to 85%, yet beverage consumption remained low on Joy.
Middle class Chinese could afford a nice vacation, but were prudent with their money
Chinese travelers’ love of high-end brands is well-known, so is their reputed affection for gambling. Yet the customer segment Norwegian Cruise Line ended up with was the emerging middle class, people who could afford a nice vacation but were prudent with their money.