Bachelor in International Marketing Fudan University Lene Kristin Johansen Thomas Danielsen Ingjerd Figenschou Sørsand Stine Bruvold Nilsen HURTIGRUTEN ASA Real Experiences in Unique Waters Date: th June 4 2009 Program: Bachelor in International Marketing “This paper is done as a part of the undergraduate program at BI Norwegian School of Management. This does not entail that BI Norwegian School of Management has cleared the methods applied, the results presented, or the conclusions drawn.” I Bachelor in International Marketing Fudan University Introduction This diploma thesis has been written in cooperation with Hurtigruten ASA. The process of writing this thesis has given the authors valuable research and marketing education. Furthermore, the authors have gained great experience and insight of our research areas. Especially in the areas of; doing business in China, Chinese tourists’ preferences and creating a marketing strategy for Hurtigruten in the Chinese market. Ingjerd Figenschou Sørsand Lene Kristin Johansen Thomas Danielsen Stine Bruvold Nilsen II Bachelor in International Marketing Fudan University Executive summary This thesis presents the findings from a research done on behalf of Hurtigruten ASA on the Chinese cruise market. The aim of the research was to explore and understand the characteristics of the Chinese market for explorer cruises, and suggest improved marketing strategy for Hurtigruten. The company is today established through a Representative Office, selling their products through travel agents. The tourism industry in China is relatively young, just during the last ten years one has seen a development towards travel for leisure and outbound tourism. The market is still immature and cruise tourism is still at an infant stage. Due to little prior knowledge on the topic at hand, a qualitative research perspective was adopted. We conducted interviews with representatives of Hurtigruten both in China and Norway, as well as the agents distributing Hurtigruten’s products in China. To further broaden our level of insight, we also conducted interviews with several qualified people within the tourism industry. In order to reach the research aim several objectives were developed on how the situation is for Hurtigruten in the Chinese market, who their customers are, what the cruise market look like, and the possible needs for any product adaption in order to be more suited for Chinese preferences. Our findings show that there is currently limited competition for Hurtigruten in the Chinese market for explorer cruises. We could only identify two cruise lines operating within the same niche as Hurtigruten. Their customers are young, well educated, experienced travelers with high incomes. They are status oriented, though many within this segment have little prior knowledge of cruises. The research further showed potential for Hurtigruten within the B2B segments. Hurtigruten also faces some challenges in the Chinese market, especially in regards to the agents booking systems and the demand for more product adaption and more employees. III Bachelor in International Marketing Fudan University Acknowledgements The authors would like to thank the following contributors to our Bachelor thesis. First, the authors would like to thank Hurtigruten and Mr. Olav Lürh, who gave the authors the opportunity to write this thesis, and for being available for our questions during the process. Moreover, the authors express their gratitude to Mr. Liu Jie, whom patiently and professionally has assisted us with valuable information and establishing contacts within the industry. Secondly, the authors would like to thank our supervisor Mrs Karin Bryntse, for all her advice, suggestions and feedback during supervision on this research. Her guidance and support has helped the authors write a better thesis. Finally, the authors acknowledge all individuals that have contributed to this thesis, taking the time to answer our questions. Without whom this thesis could not have been made. IV Bachelor in International Marketing Fudan University Abbreviations and definitions CTS: China Travel Service Holdings ADS: Approved Destination Status GDP: Gross Domestic Product MICE: Meeting, Incentive, Conference, and Events NOK: Norwegian Kroner, Norwegian currency RMB: Ren Min Bi, Chinese currency INSEA: Institute of Sustainable Activities at Sea ATCM: Antarctic Treaty Consultative Meeting WTO: World Trade Organization PPP: Purchasing Power Parity IMF: International Monetary Fund UNWTO: United Nations World Tourism Organization FESCO: Foreign Enterprise Human Resources Service Co., Ltd V Bachelor in International Marketing Fudan University List of Figures Figure 1: Research figure Figure 2: Business areas of Hurtigruten (Own figure) Figure 3: Explorer division (Own figure) Figure 4: Organizational structure in China (Own figure) Figure 5: Resource-model (Grant 2008; 131) Figure 6: ACE-model (Solberg 2005; 145) Figure 7: Porter`s five forces (Grant 2006; 72) Figure 8: Service pyramid (Andreassen 2006; 22) Figure 9: Strengths and weaknesses matrix (Framnes et.al 2006; ) Figure 10: matrix (Framnes et.al 2006; ) Figure 11: Strengths and weaknesses matrix (Framnes et.al 2006; ) VI Bachelor in International Marketing Fudan University Research process of this thesis Figure 1: Research figure VII Bachelor in International Marketing Fudan University List of contents INTRODUCTION..................................................................................................................... II EXECUTIVE SUMMARY ..................................................................................................... III ACKNOWLEDGEMENTS .................................................................................................... IV ABBREVIATIONS AND DEFINITIONS ................................................................................ V LIST OF FIGURES ................................................................................................................ VI LIST OF CONTENTS ........................................................................................................... XII 1. INTRODUCTION ............................................................................................................ 1 1.1 BACKGROUND FOR THE RESEARCH ...................................................................................... 1 1.2 PROBLEM STATEMENT ........................................................................................................ 2 1.3 RESEARCH AIM ................................................................................................................... 2 1.4 RESEARCH OBJECTIVES ....................................................................................................... 3 1.5 RESEARCH LIMITATIONS ..................................................................................................... 3 2. HURTIGRUTEN ASA ........................................................................................................... 5 2.1 COMPANY HISTORY ............................................................................................................ 5 2.3 PRODUCTS.......................................................................................................................... 7 2.3.1 NORWEGIAN COASTAL CRUISE ........................................................................................ 8 2.3.2.1 Antarctica ........................................................................................................................ 9 2.3.2.2 Greenland ...................................................................................................................... 10 2.3.2.3 Svalbard ......................................................................................................................... 10 3. HURTIGRUTEN IN CHINA ............................................................................................... 11 3.1 HURTIGRUTEN`S OPERATIONS IN CHINA ............................................................................ 11 3.1.1 Marketing towards the Chinese market ..................................................................... 12 4. METHODOLOGY ............................................................................................................... 14 4.1 RESEARCH DESIGN............................................................................................................ 14 4.2 PRIMARY RESEARCH ......................................................................................................... 15 4.2.1 Critical evaluation of primary research .................................................................... 16 4.3 SECONDARY RESEARCH .................................................................................................... 16 4.3.1 Critical evaluation of secondary research ................................................................. 17 4.4 VALIDITY AND RELIABILITY .............................................................................................. 18 5. THEORIES AND MODELS ................................................................................................ 20 5.1 INTERNAL ANALYSIS THEORIES ......................................................................................... 20 5.1.1 Resource theory ....................................................................................................... 20 5.1.1.1 Tangible resources ........................................................................................................