Club Med

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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 and 4) Threats – Intense competition driven by low barriers to entry. Club features rating:

Club features rating:
Club Med’s Major Issue: Repositioning strategy dealt with skepticism from customers resulting in stagnant customer growth Source: TopTenReview, internationally recognized review agency for the newest technology, products and holiday providers Source: TopTenReview, internationally recognized review agency for the newest technology, products and holiday providers

Despite an aggressive and costly upscale repositioning, customers’ perception of Club Med is still poorly ranked against international competitors like Marriott, Disney and Hilton. This could be attributable to Estaing’s emphasis on renovation of existing infrastructure on the back of limited capital. It is clear that Estaing’s strategy lacks a strong commitment on meeting customers’ perception of an upscale tour experience. We see a lack of focus on building prestige and exclusivity to Club Med’s new positioning. Valuable dollars are wasted to renovations with no tangible effect of converting customers to pursue Club Med’s all-exclusive and upscale tour lifestyle. In conclusion, Club Med must implement a detailed strategy that serves to satisfy its goal...
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