Defensive Strategy

Carnival’s Branding Problem

23 Jan 2012  

This is tough time for Carnival, the world’s largest cruise company.

The big issue, of course, is the sinking of the Costa Concordia off the coast of Italy. This is a branding disaster for Costa and for Carnival. The problems are fairly obvious.

First, it is tragedy, with more than a dozen deaths.

Second, this is a visible problem. The ship, half-submerged, is a powerful image, broadcast all over the globe day after day. And it seems like the ship might be there for a long time.

Third, there is a general feel of incompetence about the incident, with the captain apparently steering the ship into hazardous waters while dining with a lovely young woman and then the crew struggling with the evacuation.

This is all not good news for the Costa brand, of course: anyone eager to take a cruise with those folks?

The problem is that this all reflects back on the Carnival brand, too.

Costa is a fairly small cruise line with a total of fifteen ships. Carnival is a much bigger cruise line, with twenty-two ships, including some of the largest ships in the world. The Costa brand is damaged, clearly, but the Carnival brand is also being hurt as the crisis drags on.

Carnival has a problem because the corporate name, Carnival, is the same as an operating brand. So when a different operating brand like Costa has a problem, it reflects back on the corporate brand, Carnival, which also hurts the operating brand, Carnival.

It is interesting but not surprising that the press has rarely mentioned Carnival’s other brands, such as Princess, Cunard and Holland America, when discussing the Costa disaster. I suspect most people don’t know the brands are all connected.

One way to avoid a problem like this is to have a distinct corporate brand. This is the P&G model; P&G is just the corporate name. P&G’s operating brands are all distinct: Tide, Pampers, Old Spice and all the rest. With this model, the troubles of one brand are not likely to damage the other brands.

Carnival’s approach is simpler, of course, the corporate brand is an operating brand that people see and understand. It is also perhaps better for the stock, since people can invest in a brand they know.

Carnival’s decision to use the Carnival brand at the corporate level made sense in some respects but it ultimately it increased the branding risk. The company is dealing with that today.

1 Response

  1. AJ Senff says:

    I would also argue that this disaster is just bad for all cruiselines – the entire category. To be fair, I didn’t watch a lot of the press coverage of the Costa Concordia. I don’t think there needed to be a lot of mentioning of Holland, Princess, etc. for this event to be bad for those brands too.

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