Club Mediterranee Case Study

Case type: Problem Case

Company Background and Problem Identification

Club Mediterranee or more commonly known as "the Club" was founded in 1950 as a non- profit sports association. Over the years Club Med grew to become the ninth-largest hotel company in the world in 1986, and they were offering all-inclusive vacation packages to over 108 destinations. The rapid and huge success of Club Med was because of the lack of competition within the industry that they were in. Whoever in recent years, the success of Club Meds all-inclusive vacation packages has attracted several parties/organizations to copy the Club Med experience, and it has really affected the monopolistic competition of Club Med. Inc. it previously enjoyed. The biggest issue that

Even though there is huge demand to work for Club Med, 920 employees (2000 x 46%) do not even make it past their first season, that puts a huge amount of stress on company resources as they will need to spend more money training their replacements. To help reduce employee turnover, Club Med should offer its employees potential for advancement, from being a GO (gentil organisateaur) to a Village Chief. This will give employees (GOs) more incentive to work harder and look forward to new experiences. Club Med has a strong bargaining position in negotiating wages, and although this helps the company reduce its fixed costs, low wages provide little incentive for an employee to stay with the company and even less incentive to work hard. With other major competitions on the rise, GOs will have greater choice in choosing their pay rate. As for Club Med having a mass-marketing scheme, this marketing technique has its major positive and negative effects. Even though Club Med is able to attract a huge consumer base because of its broad market appeal it risks losing many of its customers to other specialized organizations. Club Med has always had an image of offering vacation packages that meet the eye of the budget conscious buyer, with its Spartan rooms that lack basic amenities, Jacques Giraud (CEO of Club Med) would make it extremely difficult to attract luxury consumers. Therefore, my recommendation to Giraurd would be to diversify Club Meds product mix to offer premium vacation packages to the luxury consumer, that will enable the company reap profits from all target segments. Lastly, even though Club Med focuses on building social interaction between its consumers by only offering single beds and assigning roommates. I would recommend that since (according to Exhibit 9) 48% of Club Meds demographic is married and 40% has children;