Describe the Club Med experience for the international cconsumer. What are the elements of Club Med’s unique offering that cross cultural boundaries?

2) Do you think Club Med should perform a market research study for American consumers? If so, come up with a list of questions to ask or issues to explore. What would you like to know, and how would you ask the right questions to get that information?

3) What kind of methods (from those listed in Ex. 4) do you think would be effective in performing the reserch?

CS3−20

It was still raining in New York on May 31, 2014 when Claire
Moreau,1 CMO (chief marketing officer) of Club Med Sales, Inc.
(C.M.S.), returned to her office. She sat and went over in her mind
the events of the meeting she had just attended. When the bookings
for summer 2014 of C.M.S. had gone 4 percent below those of the
previous summer, a meeting with C.M.S.’s advertising agency had
been called to examine the situation.

The advertising agency’s answer to the dip in sales was to e-mail
a $200 discount coupon for September vacations to people who
had been to Club Med in the recent past. Club Med’s immediate
reaction had been, “Was a discount suitable for the Club Med cus-
tomer?” It became clear during the meeting that no specific defini-
tion of a Club Med customer existed. No formal market research
had yet been done on the American consumer. Did Club Med need
to do this research? If so, what kind should be done, and where?
What could be done in the short term to help boost sales? Were
there other more important issues that should be addressed?

HISTORY
From its inception as a nonprofit venture in 1950, Club Méditer-
ranée, C.M.S.’s parent, was a unique enterprise. Shelter for vaca-
tioners was furnished in a way never before seen in France. Gilbert
Trigano, part-owner of a family tent-making business, rented the
required tents to Club Med with no down payment.

In 1954, Gilbert Trigano formally joined Club Méditerranée
and turned it into a profit-making business. The original concept of
the straw hut village was born. It was meant to create a Polynesian,
“back-to-nature” atmosphere. The huts were bare of any luxury,
and the showers were communal. Outdoor activities were the main
focus of daily life. From this type of village came the image that

Club Med and the International ConsumerCASE 3-6

Exhibit 1
Financial Statements, Club
Méditerranée S.A. (Millions
of Euros)

Source: Club Med Annual Report, 2013.

2012
US $1 = €0.778

2013
US $1 = €0.894

Gross income 1,459  1,408

Gross margins   880    868

    62.1%      62.0%

Earnings        2       (9)

Consolidated EPS   0.02  (0.36)

Hotel days spent in zone (winter and
summer) in 000s

    Americas  1,353  1,388

    All other zones 6,623 6,367

Average bed occupancy rate

    Americas 67.8%      66.2%

    Europe/Africa 70.1%      72.2%

    Asia 64.8%      66.7%

        Total 68.7% 69.8%

1The characters and scenario are fictional. The company and market details are based
on fact.

Club Méditerranée had represented to the present day—sun, sea,
and sport.

Club Méditerranée expanded quickly, often adding one or two
resorts per year. In 1956, the first ski resort opened in Switzerland.
Club Méditerranée moved into what would become known as the
American zone in 1968. However, Europe continued to be its main
target. By 2013, Club Med was represented in 40 countries by 66
villages. Financially, Club Méditerranée had been profitable through
2012, but profits took a dip in 2013. (See Exhibit 1.) However, an
indication of Club Méditerranée’s success was that it had become a
household word in France, where it was known simply as “le Club.”

The Club Med concept was unique. Any package vacation that
Club Méditerranée offered had the same basics: a prepaid, fixed-
price holiday including airfare, meals (with unlimited wine and
beer), sports, sports instruction, and other activities such as a dis-
cothéque, arts and crafts, classical concerts, and cabaret shows at
night. Sports were varied and included pastimes such as archery,
snorkeling, deep-sea diving, horseback riding, and yoga, as well as
standard favorites like swimming, tennis, sailing, golf, and many
others. Vacationers could choose either to take part or not in these
activities. The villages also contained other facilities such as a
shop, car rental, and an excursions office, which were all within
walking distance. Club Med was famous for selecting the best avail-
able beach area in every country where it had summer villages.

A no-hassle, relaxed atmosphere was created because Club
Méditerranée arranged meals and leisure time. Each village staff
member (called Gentil Organisateur or GO) had responsibilities
in an area such as applied arts, sports, excursions, food, bar, or
receptions. There were about 80–100 of these organizers per vil-
lage. They would move to a different village every six months. The
GOs were encouraged to mix with the vacationers (called GMs

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Cases 3 Assessing Global Market Opportunities CS3−21

for Gentils Membres) and performed the various roles of hosts,
friends, teachers, and entertainers rather than staff.

Another aspect of the Club Med concept was the absence of the
real world in the form of clocks, phones, radios, money, tips, and
rigid dress code; people could dress casually or more formally as they
wished. Extra drinks were purchased using prepaid bead necklaces.

Club Méditerranée had ensured that it was fundamentally dif-
ferent from other packaged tours. First, the homogeneity of the vil-
lages provided a predictable fantasy within a Club Méditerranée
world anywhere, so that Club Méditerranée was not really selling
a destination like other tour groups. Second, the way of life in the
village, with its lack of money and formality, broke down the estab-
lished barriers of class and wealth among vacationers.

Furthermore, Club Méditerranée had overcome the seasonality
problem by opening some resorts all year round and by providing
both winter and summer vacation locations. Also, Club Méditer-
ranée had been operating for a long time and had built up much
goodwill—70 percent of their European vacationers had been to
Club Méditerranée before.

Bloomberg Businessweek had called Club Méditerranée “the
innovative French vacation specialist.” The company earned this
reputation by refusing to sit back and let its proven formula work.
It was continually adjusting and adding to its offerings. Its success
was so great that it received the compliment of having the “capacity
to anticipate the needs of [its] clients.”

Broadly speaking, a whole range of holiday makers were repre-
sented among the Club Med customers. However, there was a larger
representation of office workers, executives, and professional people.
Club Méditerranée had not yet examined its customer base in detail.

THE AMERICAN MARKET AND CLUB
MED SALES, INC.
The Economic Climate According to the U.S. Depart-
ment of Commerce, the number of American tourists going travel-
ing abroad had increased. (See Exhibit 2.) One point that favored
Club Med in the travel industry was that packaged tours generally
remained popular; however, perhaps because of the lingering reces-
sion of 2009, many people were taking cheaper or shorter holidays
or staying closer to home.

Competition in the airline industry in recent years had contrib-
uted to substantial changes in the packaged tour business. Price
wars had slashed travelers’ costs, uncovering a new mass market

2011
(OOOs)

2012
(OOOs)

2013
(OOOs)

Canada† 11,595 11,887 12,008

Mexico‡ 20,084 20,307 20,546

Europe   9,674 11,245 11,408

Caribbean and Central America   8,080   8,829   9,052

South America   1,973   1,703   1,703

Other areas 10,187   6,725   6,830

Total 61,593 60,696 61,547
*Includes business travel; excludes cruises, travel by military personnel, and other government employees stationed abroad.
†Visitors staying one or more nights in Canada.
‡Visitors staying one or more nights in Mexico.

Exhibit 2
Destinations of U.S. Travelers
Abroad, 2011 to 2013*

Source: U.S. Department of Commerce,
Bureau of Economic Analysis.

CLUB MED
(one-week vacation)

COMPETITIOR
(one-week vacation)

Before
decrease

$1,695* $1,405†

After
decrease

$1,645 $1,100

*Includes airfare, shelter, all meals, all sports, and other activities.
†Includes airfare, hotel, and breakfast.

for cheap air travel. The number of travel agents had increased
from 7,000 in 2001 to over 22,000 in 2013. Travel agents demanded
higher commissions when group selling became a large part of their
business. With the subsequent increase in commissions, it became
even more attractive to set up an agency. As in Europe, travel agents
were the primary channel for sales in the travel business.

Club Med felt that it occupied a unique position in the market
and had no directly comparable competitors. However, its closest
competition did come from other packaged tour operators.

As a result of deregulation, some prices for airline tickets had
recently dropped dramatically. Club Med had not yet incorporated
these decreases into their prices as aggressively as some competi-
tors. The following table gives an example of the price structure,
comparing a trip with Club Med from Los Angeles to Cancun,
Mexico, to a competitive package sold by a packaged tour operator.

It was estimated that some 7.5 million residents of the United
States had gone on packaged tours in 2013, including about
3.5 million who had taken cruises. Many others took vacations to
“sun destinations” without using packaged tours. For example, it
was projected that in 2016 about 1.5 million people from the U.S.
mainland would go to Puerto Rico, a destination that was within
the same geographical area as seven Club Med villages. Another
4.5 million were expected to go to the Caribbean islands, and
2.2 million to Bermuda alone. Exhibit 2 gives a breakdown by des-
tination of U.S. travelers abroad during 2011–2013.

Club Méditerranée in North America In the mid-
1970s, Club Méditerranée started to target the North American
market specifically. In 1980, Club Méditerranée was restructured
so that marketing and operations were more closely linked. North
and South America made up the American zone, which had its
own profit responsibilities. By 2014, North Americans represented

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CS3−22 Part 6 Supplementary Material

19 percent of the Gentils Membres worldwide (60 percent were
from Europe/Africa and 21 percent from Asia), but less than 1
percent of the North American population were Club Med clients.
Total sales in North America were almost $240 million in 2012–
2013, representing some 140,000 Gentils Membres. In 2011, Claire
Moreau took charge of the American zone. She made the improve-
ment of Club Med’s image in the North American market her first
priority as there was a feeling in the organization that an image of
sexual permissiveness was deterring many Americans from patron-
izing the Club. Club Méditerranée felt that the North American
market represented a sound base for growth.

By the beginning of 2014, Claire felt she was well on the way
to achieving the goals she had set, but challenges remained. Rev-
enues and profits had been slipping, but she felt good progress
had been made toward improving Club Med’s image. Club Med
spent several million dollars a year on image-oriented consumer
advertising, emphasizing the uniqueness of the concept. In the
past, campaigns had generated considerable favorable public
relations for the organization, and it had been nominated for a
prestigious CLIO award in the advertising industry. The 2013
“happiness” 22-language global advertising campaign of Club
Med experiences being shared with family and friends seemed to
be well-received. The problem of eroding financial performance
remained, however.

CLUB MED SALES, INC., STRATEGY
Organization In the organization in the American zone
sales promotion area, there were seven regional sales managers
(about 35 years old) who supervised 17 district sales managers. (In
contrast, one single airline had 40 sales representatives for the New
York market alone).

Marketing All the regional and district sales managers were
former GOs. They were to make sales calls to the travel agents,
give them brochures, and talk to them about the Club Med con-
cept. No formal system had been set up regarding which agents
to visit at what time. As a result, each representative performed
his or her job differently. Each one also operated independently
in developing creative ideas to boost sales. Some representatives
had consumer shows where people could hear about the Club Med
concept. Others participated in professional travel shows or ran
cooperative advertising with their own copy. This arrangement was
consistent with the company culture, which allowed the person run-
ning a Club Med village to be his or her own master in designing
enjoyable vacation programs.

Regional representatives were earning over $100,000 a year
with an additional bonus up to 25 percent, while district representa-
tives earned a straight $75,000 a year. These figures did not include
expenses, which were approximately $500,000 for all representa-
tives, including travel.

Claire Moreau was the final decision maker for sales promotion
and advertising. The total marketing budget for 2014 for the U.S.
market is presented in Exhibit 3.

Club Med used the words “tactical” and “image” to distinguish
between its two types of advertising. Image advertising intended
to build up in people’s minds a long-term concept of Club Med
and what it represented. Television, Internet ads, magazines, and
sometimes billboards were considered the most effective media for
this type of advertising. Tactical advertising, on the other hand, was
a call for action in the short term that would generate revenue the

Exhibit 3
Total U.S. Marketing Budget, 2014 (Millions of Dollars)

Advertising $ 12*   

“Push”† 5

Brochures 3

Reservation Center (toll-free 1-800 number) 6

Travel agents’ commission (10% of sales) 12 

Miscellaneous      2    

$ 40     
*Advertising in 2011 had been $7.5 million.
†Sales managers’ salaries and expenses, trade advertising, travel agents,
familiarization trips, promotional material directed at travel agents.

following week. Club Med used radio and newspaper for this type
of sales-oriented advertisement. One-third of the advertising budget
was currently allocated to tactical advertising.

Eighty-six percent of C.M.S.’s sales came through travel agents.
Club Med had a reservation center in Phoenix with 100 reserva-
tion employees who serviced the public as well as the bookings
from agents. (In contrast, only 35 percent of Club Med sales were
through travel agents in the French market.)

American travel agents received a 10 percent commission
from Club Med, the usual rate given for business (such as airplane
tickets). Competitors, however, frequently raised commissions
with special promotions. For example, if a travel agent’s volume
exceeded a certain level, the commission would be increased, or
if travel agents sold packages during certain periods, they earned
more. Sometimes a direct cash bonus was offered for selling cer-
tain packages. Large travel agent organizations that did a sizeable
volume of business for a competitor often got a higher base com-
mission. The net effect of these programs was that travel agents
could sometimes earn 15 percent commissions and, on rare occa-
sions, even as much as 20 percent. Club Med did not have such
offers.

THE ADVERTISING AGENCY MEETING
The climate of the meeting was tense because Claire Moreau was
not pleased that bookings had dropped to 4 percent below the sales
of the previous summer, doing little to reverse the recent decline in
sales and profits. The advertising agency had reserved a conference
room in the Hotel Meridien in New York and had asked its own
CEO to make an elaborate presentation (booklet, PowerPoint, and
past TV spots shown on video as well as current summer newspa-
per and Internet advertising). The agency was anxious to appease
Claire, whom they sensed was very concerned.

Francois Fornier also was attending the meeting. Along with
10 representatives from the agency, Francois had been invited
to the meeting to be briefed on C.M.S.’s advertising strategy
because he had recently been promoted to a managerial role to
assist CMO Claire Moreau, with major responsibilities in sales
and marketing.

One of the main ideas presented by the advertising agency was
to e-mail recent Club Med members a gift certificate coupon for a
$200 discount on a September holiday. Otherwise, despite the dip
in bookings, the agency proposed to continue the same newspaper
advertising campaign that had started in April.

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Cases 3 Assessing Global Market Opportunities CS3−23

When asked for his opinion about the discount idea, Francois
said:

The advertisements you just showed me, used mostly in the
winter, appear to be targeted at an upscale customer. If Club
Med is attracting that kind of person, how will they react to
a discount on the same holiday they paid full price for last
year? I’d worry that they might wonder just who will start
coming to Club Med. We might lose this upscale customer
and attract another kind. Is that what we want?

Furthermore, Claire felt that the present advertising campaign
was not aggressive enough and would not attract sales in the short
term. Also, September was the end of the season, and Claire ques-
tioned waiting so long before attempting to remedy such an imme-
diate problem.

The agency indicated that it felt Club Med was overreacting and
that business would pick up. “Don’t worry; our plan will work,” the
agency replied. It also suggested that bookings would increase if
the agency sweetened the sales opportunities for the travel agents.

Claire then tested this assumption on the agency personnel:

You seem sure that the Club Med customer will rush to the
villages because of a $200 discount. But, who is the Club
Med customer?

Taken aback, the agency admitted that, without any recent for-
mal market research, it could not accurately describe the Club Med
customer. This answer strengthened Francois’s resolve to examine
the discount suggestion more closely. She remarked that it would be
a good idea to do some market research. The agency agreed.

After the meeting, Claire and Francois talked over the poten-
tial for market research. Claire encouraged Francois to develop a
research proposal, and also to offer other suggestions that would
address the problem. Both agreed that, in the short run, it was
important to stay within the current $40 million marketing budget
(see Exhibit 3).

Preliminary enquiries by Francois the next day provided a list
of the different types of research and their associated costs. (See
Exhibit 4.)

Francois returned to his hotel and thought through the situa-
tion. There were several important questions. What should Club
Med do in the short term to improve its bookings? Was a market
research study necessary, and, if so, what kind and where? What
did they need to know, and what will they do with the results when
they get them? Francois was aware that Club Med Sales had not
done formal market research before and that, for results to be used
effectively, the project would have to be carefully implemented in
the organization.

QUESTIONS
1. Describe the Club Med experience for the international

consumer. What are the elements of Club Med’s unique
offering that cross cultural boundaries?

2. Do you think Club Med should perform a market research
study for American consumers? If so, come up with a list of
questions to ask or issues to explore. What would you like to
know, and how would you ask the right questions to get that
information?

3. If you answered “Yes” to a research study, what kind of
methods (from those listed in Exhibit 4) do you think
would be effective in performing the research?

4. Should Club Med offer the $200 Internet “discount cou-
pon” to its past customers for the upcoming booking sea-
son? What effect do you think it would have?

Copyright ©1987 by IMD – International Institute for Management Development,
Lausanne, Switzerland (www.imd.ch). No part of this publication may be reproduced,
stored in a retrieval system or transmitted in any form or by any means without the
permission of IMD.

DATA COLLECTION METHOD APPROXIMATE COST

1. Mail survey (costs depend on return rate, incentives, and follow-up
procedure)

             $10–18

2. Internet survey (site access, mailing list, follow-up)              $10–18

3. Telephone interviews

a. 7-minute interview with head of household in metropolitan
area, depending on market chosen

               $7–15

b. 15-minute interview with small segment of national population
from central station

             $25–35

4. Personal interviews

a. 10-minute personal interview in middle-class suburban area (2
callbacks and 10 percent validation)

             $30–40

b. 40- to 60-minute interview of national probability sample (3
callbacks and 10 percent validation)

             $50–60

c. Executive (VIP) interviews (1–2 hours)                  $250

d. One focus group of 15 people (includes analysis and a report
on the session)

   $3,000–4,000

*Including travel and telephone charges, interviewer compensation, training, and direct supervision expenses.

Exhibit 4
Comparative Direct
Costs per Completed
Response*

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