In 1970, Italian Gianluigi Aponte founded the Mediterranean Shipping Company (MSC) with a single second-hand ship and just $5,000 in capital to move cargo between Europe and Africa. Despite a challenging, price-based competitive environment, MSC has since prospered and grown to become the world’s second-largest container operator, behind Maersk, with a fleet of over 400 ships and operations in 150 countries.

MSC ventured into passenger cruises in 1989 with the acquisition of Lauro Lines, a division they would later rebrand as MSC Cruises. By 2003 they had recognized that they could not successfully compete in the growing cruising sector with the low-cost second-hand ship approach that had worked so well in their shipping container division, so they embarked on a substantial new ship investment program.

Today they have 12 new luxury cruise ships in operation and are the leading cruise brand in Europe. They plan to become the world’s third-largest cruise line by 2025...................................

Questions 1. Outline the competitive advantages of a cruise versus a traditional flight-resort holiday package. Which holiday choice would you prefer? Which one would you be willing to pay a premium price for?
2. The ease of comparison on the Internet tends to encourage price-based consumer decisions. What could MSC Cruises do to help take the consumer’s focus off price to some extent and consider other attributes?
3. Which of the three pricing strategies discussed would work best for MSC Cruises, given their overall market share growth goals? Why?
4. Review MSC’s pricing approach of providing a relatively low up-front price but then relying on additional sales for profitability. Outline the strengths and weaknesses of this approach.