Sheffield Hallam University: MSc: Hospitality Assignments  

Strategic Management case study: CLUB MED SALES INC.

EXECUTIVE SUMMARY of The Current Situation report on CLUB MED SALES INC. *

Le Club Mediterranée: Background *

The American Market and Club Med Sales Inc. *

CONCLUSION *

The Current Situation report on CLUB MED SALES INC. *

Financial Situation *

Club Mediterranée Concept *

The American Market and Club Med Sales Inc. *

Club Med prices vs Competitor prices *

Organisation *

Marketing *

CONCLUSION *

EXECUTIVE SUMMARY of the report of a strategic plan for CLUB MED SALES INC. *

Identifying the causes of the fall in sales *

Market research *

Implementation of the Strategy's *

The internal re-organisation of Club Med Sales Inc. *

Relationship with Travel Agencies and Owner-Managers. *

Relationship with customers *

Re-defining the product *

Advertising campaign and policy *

CONCLUSION *

Post Script *

Report of a strategic plan for CLUB MED SALES INC. *

Identifying the causes of the fall in sales *

Market research *

Strategy´s implementation *

The internal re-organisation of Club Med Sales Inc. *

Club Med's relationship with Travel Agencies and Owner-Managers. *

Relationship with customers: Approach to them and creating fidelity *

Re-defining the product *

Advertising campaign and policy *

CONCLUSION *

Post Script *

REFERENCES *

EXECUTIVE SUMMARY of The Current Situation report on CLUB MED SALES INC.

On May 31 1983, Serge Trigano, Chairman and CEO of Club Med Sales Inc. (CMI) was very concerned about the bookings for summer 1983 of CMI had gone 3% below those of the previous summer. The advertising agency's main ideas, were to send to recent Club members a gift certificate for a $100 discount on September holidays and to continue the newspaper advertising campaign which had started in April. However, the problem was that the Agency was unable to describe the profile of the Club Med customers.

Le Club Mediterranée: Background

Club Meditarranée, from its inception in 1950 had been a non-profit venture. In 1954, Gilbert Trigano formally joined Club Mediterranée and turned it into a profit making business. Club Mediterranée expanded quickly. Financially, Club Mediterranée was very profitable.

The Club Med concept was unique and different from any package that was in the market. It offered a pre-paid, fixed price holiday including air fare, meals, sports, and many other activities which people enjoy on holiday. The villages contained a shop, car rental and excursions office. In the summer villages, the beaches were the best in the area.

The customers were called "The Gentil Membre" or GMs and they were from a variety of backgrounds but especially amongst office workers, executives and professional people.

The staff members were called "Gentil Organisateur " or GO and there were about 80-100 per village. The GOs were encouraged to mix with the GMs.

The American Market and Club Med Sales Inc.

In 1979, the deregulation in the US airline industry contributed to substantial changes in the package tour business. Some prices for airline tickets dropped by 30%, but Club Med had not yet decreased its prices. As a result, its prices were substantially more expensive than those of its competitors.

Club Med moved to the American zone in 1966. But it was only in the mid 1970s that it started to target the North America market specifically. In 1980, Club Med was restructured: marketing and operations were more closely linked. In 1980 Serge Triano took charge of American Zone. His first priority was to improve Club Med's image of sexual permissiveness. By the beginning of 1983, the prospects were quite good: Revenues had grown from the previous year, profits exceeded expectations and Club Med's image had improved.

The organisation in the American zone had Trigano as CEO and 25 people reported directly to him. 7 regional sales managers were in the sales promotion area who supervised 14 district sales managers. All the sales managers were former GOs. No formal system had been set up regarding which agents to visit at what time. Each representative performed his job differently and also operated independently developing creative ideas. This was consistent with the company culture.

The regional representatives salaries were over $50,000 a year with an additional bonus. District representatives earned $25,000. The expenses were approximately $50,000 for all representatives including travel.

Club Med used two types of advertising: Tactical (Radio, Newspapers) and Image (TV, magazine and billboards).

86% of CMIs sales came trough travel agents. Club Med had a reservation centre in Phoenix with 100 reservation employees. American travel agents received a 10% commission from Club Med. Competitors used to pay more.

CONCLUSION

Club Med's drop in sales of 3% from the previous year (1983), was a consequence of a lack of analysis of the North American market as well as poor organisation and leadership.

The Club Med CEO, Serge Trigano, seemed unaware of essential information about the company and its actual and potential market before the problem appeared. No one knew the answers to questions as to the Club Med customer type; origin; expectations; marketing message to the American customers; relationship with the travel agencies. Perhaps he suffered from the Marks and Spencer syndrome? Did he expect customers to come to him because of the high standing of Club Med in its traditional markets? The US was a new market and he should have had sufficient respect for new customers that had to be won over.

The CEO should have known everything related to the company. With this lack of knowledge about the Company and its positioning, he was in a weak position as Club Med's leader.

The company's culture was so distinctive and "laid back" that it could easily lead to a lack of organisation. No formal system had been set up regarding which agents to visit at what time.

The company needed a new global strategy that could involve all its internal and external aspects. Such a strategy will not only recover the fall in performance and improve the previous year's results, but to consolidate a good market position for the future.

The Current Situation report on CLUB MED SALES INC.

Club Mediterranée: Background

Club Mediterranée, from its inception in 1950 had been a non profit venture. In 1954, Gilbert Trigano formally joined Club Mediterranée and turned into a profit making business. The idea was to create a Polynesian "back to nature atmosphere". The huts were bare and the showers were shared. Outdoor activities were the main focus of daily life

Club Mediterranée expanded quickly. Club Mediterranée moved into what would become known as the American zone in 1968. By 1982, Club Med, was represented in 24 countries by 98 villages, 58 residences and 6 resort hotels.

Financial Situation

Financially, Club Mediterranée was very profitable.

	1980/81	1981/82
	US$1=FFr 5.67	US$107.25
Gross Income	3,180,523	3,593,812
Gross Margins	1,994,338	2,486,948
	(62.7%)	(62,9%)
Earnings	142,128	174,331
Consolidated EPS	43.99	50,46
Hotel days spent in zone
(winter and summer 000's)
North America	1,279	1,464
All other zones	5,635	5,693
Average bed occupancy rate
Total	71.51%	71.27%
Average bed occupancy rate
Europe/Africa	76.66%	75.76%
South America	50.44%	44.33%
North and Central America	59,24%	61.93%
Asia, South Pacific, Indian Ocean	65.18%	68.21%

Club Mediterranée Concept

The Club Med concept was unique. Any package vacation offered had the same basis: a prepaid, fixed price holiday including air fare, meals (with unlimited wine and beer), sports, sports instruction and other activities such as discotheque, arts and crafts, classical concerts and cabaret shows at night. The best available beach area was selected in every country where it had summer villages. The villages also contained facilities such as a shop, car rental and excursions office which were all within walking distance.

Each village staff member (called Gentil Organisateur or GO) had responsibilities such as applied arts, sports, excursions, food, bar or receptions. There were about 80-100 of these organisers per village. The GOs were encouraged to mix with the vacationers (called GMs for Gentil Members) and performed the various roles of hosts, friends, teachers, entertainers rather than staff. They moved to a different village every six months.

Club Mediterranée had ensured that it was fundamentally different from other package tours. First, the homogeneity of the villages meant that Club Med was not really selling a destination like other groups. Secondly, the way of life in the village, with its lack of money and formality, broke down the established barriers of class and wealth amongst vacationers.

International Business Week (Aug. 3, 1981) said Club Med "has the capacity to anticipate the needs of [its] clients". In Sept. 27, 1982, the same magazine called Club Med "the innovative French vacation specialist"

Although the firm's clients came from a variety of backgrounds, there was a larger representation of office workers, executives and professional people; nevertheless Club Med had not yet examined its customer base in great detail.

The American Market and Club Med Sales Inc.

On May 31 1983, Serge Trigano, Chairman and CEO of Club Med Sales Inc. (CMI) was very concerned about the bookings for summer 1983 of CMI which had fallen 3% below those of the previous summer. He attended a meeting with CMIs advertising agency whose answer to the dip in sales was to send a discount coupon for September vacations to every person who had been to Club in recent past. Club Med's immediate reaction had been "Was a discount suitable for the Club Med customer?" It became clear during the meeting that no detailed definition of Club Med customers had been formalised. 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 short term to help boost sales? Were there other more important issues that should be addressed? Some in Club Med management believed a variety of questions needed to be answered to find out why this successful global vacation concept was running into difficulties in the US.

According to The Economist, despite the worsening recession, the number of tourists had increased. The package tours of Club Med remanded popular. Deregulation in the US airline industry in 1979 had contributed to substantial changes in the package tour business. The number of travel agents had increased from 7,000 in 1970 to over 22,000 in 1983. Travel agents demanded higher commissions when group selling became a large part of their business. As in Europe, travel agents were the primary channel for sales in travel business.

As a result of deregulation, some prices for airline tickets had recently dropped by 30%. Club Med had not yet incorporated these decreases into its prices and they were substantially more expensive than those of its competitors.

Club Med prices vs Competitor prices

	CLUB MED	COMPETITOR
	(one week vacation)	(one week vacation)
Before decrease	$799 *	$505**
After decrease	$799	$399

* Includes air fare of $400, shelter, all meals, all sports and other activities

** Includes air fare, hotel and breakfast

Club Mediterranée in North America

Despite Club Med's move into the American zone in 1960, it was in the mid 1970s when Club Mediterranée started to target the North American market specifically. By 1983, North America represented 15% of GMs world-wide, but less than one half of 1% of North America population were Club Med clients. Total sales in North America were almost $ 140 mn in 1981/82, representing some 120,000 GMs.

In 1980, Serge Trigano took charge of the American zone. His first priority was to improve Club Med's image in the North American market because there the organisation had had an image of sexual permissiveness.

By the beginning of 1983, Serge Trigano felt he was achieving the goals he had set: Revenues had grown by 6% over the previous year; profits had exceeded his expectations and he also felt good progress had been made toward improving Club Med's image.

Organisation

Serge Trigano was the CEO and he had about 25 people reporting directly to him (PR, transportation, operations, advertisement agency co-ordinator, finance, sales promotion, etc..) In the sales promotion area, there were 7 regional sales managers, who supervised 14 district sales managers.

Marketing

All the regional and district sales managers were former GOs. They had to make sales calls to the travel agents, give them brochures and talk to them about the Club Med concept.

It is very enlightening to note that no formal system had been set up regarding which agents to visit and at what time. As a result, each representative performed his job differently. Each one also operated independently in developing creative ideas to boost sales. This arrangement was consistent with the company culture.

Regional representatives were earning over $50,000 a year with additional bonus up to 25%. District representatives earned $25,000 a year. These figures did not include expenses that were approximately $500,000 for all representatives, including travel.

Club Med used the words "tactical" and "Image" to distinguish between its two types of advertising.

Tactical, was a call for action in the short term which would generate revenue in the follow week: Radio and newspaper.

Image, intended to build up in people's minds a long-term concept of Club Med and what it represented: Television, magazines and sometimes billboards.

One-third of the advertising budget was currently allocated to tactical advertising.

Eighty-six percent of CMI's sales came trough travel agents. Club Med had a reservation centre in Phoenix with 100 reservation employees who serviced the public as well as the bookings from agents.

American travel agents received a 10% commission from Club Med, the usual rate given for business. Competitors, however, frequently raised commissions with special promotions. Sometimes a direct cash bonus was offered for selling certain packages. The net effect of these programs was that travel agents could sometimes earn 15% commissions and, or rare occasions, even as much as 20%. Club Med did not have such offers.

CONCLUSION

The Club Mediterranée drop in sales of 3% from the previous year (1983), was a consequence not only of a lack of proper knowledge of the North American market but a lack in its own organisation and leadership.

The Club Med CEO seemed unaware of essential information about the company and its actual and potential market before the problem appeared. No one knew the answers to questions such as what was the type of Club Med customer; from where they came; what were their expectations; does the marketing campaign have the appropriate message to the American customers; was the relationship with the travel agencies mutually satisfactory. Perhaps he suffered from the Marks and Spencer syndrome? Did he expect customers to come to him because of the high standing of Club Med in its traditional markets? The US was a new market and he should have had sufficient respect for new customers that had to be won over.

Serge Trigano as a Chairman of Club Med should have known everything related to the company. With this lack of knowledge about the Company and its positioning, he was in a weak position as Club Med's leader.

The company's culture was so distinctive and "laid back" that it could easily lead to a lack of organisation. No formal system had been set up regarding which agents to visit at what time.

The company needed a new global strategy that could involve all its internal and external aspects. Such a strategy will not only recover the fall in performance and improve the previous year's results, but to consolidate a good market position for the future.

EXECUTIVE SUMMARY of the report of a strategic plan for CLUB MED SALES INC.

Identifying the causes of the fall in sales

Club Med should establish the causes of its drop of 3% in sales and then implement the results of its analysis to not only to recover this drop but to enhance the performance.

The advertising agency's suggestion to boost sales by offering a discount was deemed to be insufficiently backed up by an analysis of the market. Accordingly, market was required. However, the CEO did not wait for the market research results to drop prices immediately in the Californian market where Club Med air travel was 30% higher than competitive package tours.

Market research

Five studies were carried out to help Club Med learn more about its customers and its markets. It worked with the advertising and with an outside research firm.

Through the results of these studies, Club Med knew the profile of its members, what "types" of people were interested in Club Med and where they came from.

Club Med knew as well, the prospect's opinion of Club Med. It could draw a picture of Club Med members and prospects and identify member's and prospect's expectations of vacations.

The results helped it to understand the impression their members were communicating. One of these studies looked also at US travel agents to determine their attitude toward Club Med so that Club Med could improve its working relationship with the agents.

Did the company's current strategy fit with the findings? If not, what changes should be made in positioning, communication, product, pricing and distribution? CMI had to decide who should be its customer and how to persuade this potential customer to patronise Club Med villages.

Implementation of the Strategy's

The CEO of Club Med Inc knowing and analysing the study's results, should make changes:

INTERNALLY	EXTERNALLY
In its own organisation	In its relationship with the Travel Agencies In its relationship with its customers In the product which were selling In the advertising campaign

The internal re-organisation of Club Med Sales Inc.

The structure of Club Med Sales Inc was a functional structure. The CMI's CEO had about 25 people reporting directly to him. However, Club Med as an organisation, has a lack of leadership, control and clear objectives to achieve.

Club Med Sales Inc. could avoid some of its problems if it developed a company culture with boundaries, establishing corporate values and a friendly but serious image. The Club Med Sales Inc image of sexual permissiveness could be the immediate consequence of it peculiar company culture. After the research, there were changes inside the organisation. Participation of the CEO and the staff was important. More staff training and better communication with them, were part of the Club Med strategy.

Relationship with Travel Agencies and Owner-Managers.

Club Med realised that its relationship with the Travel Agencies should improve, because they were the primary channel for sales in the travel business. Trying to remedy this situation Club Med created its owns travel agencies schools. For the owner-managers, Club Med created the VIP Program.

Relationship with customers

The organisation trying to maintain its customers, and to generate fidelity towards Club Med set up a membership list. The members of the list paid a yearly fee in return for some benefits.

Re-defining the product

The product was modified according to customers' demands such as enlarging breakfast time until noon, creating singles rooms and creating at least two different restaurants in each village,.

Advertising campaign and policy

The advertising campaign was made more aggressive and the policy was changed to increase the budget so as to achieve the targets.

Club Med decided to focus in 8 markets with the highest sales volume, of the 14 previously targeted. Attractive brochures were made and the advertising budget reflected new expectations for sales. Club Med was determined to change the impression of sexual permissiveness.

CONCLUSION

The drop in bookings made the management realise that an urgent change in strategy was needed. Implementing a research study was the best way to identify if the company's strategy fitted with the findings. As a result of the research study, short-term actions involved measures which concerned staff, its product/market, the competitive strategy and the relationship with travel agents and customers.

The company's culture changed. The CEO, showing leadership, participated in the entire research process and all the results were explained to the staff. The Club Med Sales Inc CEO, asking the staff's participation in the study research, not only showed a caring attitude to its staff but also achieved a perfect way to motivate them. The product was re-defined according to the customers' demands. Not only the area of indirect sales but also the area of direct sales were focused to achieve some goals. Some of them caused the elimination of a number of jobs.

The advertising policy was considerably changed. It tried to change the bad image that some people had of the Company.

The short-term actions were a success because the Company had quite a flexible structure. By the end of 1983, the Company not only had reversed the 3% dip in sales but had an increase of 5% over the previous summer's figure. Turnover amongst the top travel agents went from 50% to 38% and the number of bookings per top seller increased by 15%.

Post Script

Club Mediterranée is now "embracing the internet as part of a wider plan to revamp its sales channels. Club Med Online will launch its web portal to derive revenues from the large members of internet users who visit the group's different websites.. and promote and sell the company's products and serve as a gateway for services linked to other leisure activities. Another plan is to market Club-Med brand products, including sportswear, sunglasses, luggage, perfumes and skin-care. A chain of resorts in cities is planned including "archery, dancing, concerts and fine dining - but not the beaches.

The launch of Club Med World is another step in Bourgignon's rescue and restructuring of Club Med, which was losing money and lacking direction when he joined just under three years ago.

Report of a strategic plan for CLUB MED SALES INC.

Identifying the causes of the fall in sales

The backdrop was a very disappointing fall of 3% in sales below that of the previous summer of 1982. The CEO of Club Med Sales Inc, considering the circumstances of the American market should urgently adopt short and long term actions not only trying to recover and increase the previous summer's figures but to place the company in a solid position in the North America market.

However, analysing and comparing the Financial Statements of 1980/81, 1981/82, the percentage of Total Average bed occupancy rate in 1981/1982 was lower than the previous year, when logically and at list, this should be equal o higher. Despite the Earnings and Consolidated EPS was higher than the previous year, this low rate in 1981/1982 compared with the same percentage from previous year, had to have done an attention call.

As Stacey (1996) states "Strategic actions have widespread, long term consequences that establish the posture of an organisation and its position. The strategy is the pattern in actions. The posture of an organisation refers to matters such as:

the composition of its activities in terms of products lines and markets operated in

the technologies on which these activities are based

the manner in which the organisation is structured and controlled

the predominant shared behaviour or culture of people in the organisation

The posture of an organisation is its shape and its capabilities. We can describe the position of the organisation in terms of aspects such as:

markets shares in particular segments

customer image

competence in relation to competitors

the posture and position determine the performance of the organisation at the time and performance refers to:

financial dimensions such as cost levels, return on capital, profit growth; and operational dimension such as quality and service levels

As Horovitz (1987) explains, the agency's presentation and its idea to boost sales offering a discount of $100 on vacation in September 1983 to former "Gentil Members" generated certain questions which need an answer, such as :

Was the discount idea suggested by the Agency suitable for the Club Med customer?

Was the discount idea suggested by the Agency consistent with Club Med's long term strategy in the market ?

What was the Club Med customer really like?

What could be done in the short term to help boost sales?

Were there other more important issues that should be addressed?

For Johnson (1993): "Traditionally, strategy has been viewed as the response of an organisation to its environment. However, faced with similar environments, organisations responds differently, these differences are accounted for by the influence of managerial decision making strategy ... Management is also about the application of managerial experience gained over many years and often in the same organisation or industry. It is therefore important to recognise the significance of cultural aspects of management.

Strategy usually involves incrementally. Strategy change tends to occur as a continual process of a relatively small adjustments to existing strategy through activity within the subsystems of an organisation,

The incremental change in organisations is likely to occur through cultural, social and political processes".

Club Med, did not follow the agency's suggestion to introduce the discount idea.

However, the Club Med CEO dealing with an open-ended change in its company's situation made quick decisions far from certainty of outcome.

Stacey (1986) said that "An organisation is far from certainty when its members face open-ended change situations, that is, when they must act in unique circumstances they have never before encountered. Without the benefit of similar past experience they are not able to make reliable connections between cause and effect and, therefore, they cannot predict the outcome of their actions over the long term."

For the Club Med CEO, the dip in sales of 3% from that of the previous year, was an unexpected and a concerning situation which created a lot of confusion and disagreement between the Club Med CEO and it advertising agency. North America was a quite resistant market and the Company was trying to achieve a good position in it.

Serge Trigano, CEO of Club Med Sales Inc, facing the open-ended change situation in its Company, immediately dropped prices in the Californian market where Club Med air travel rates were 30% higher than competitive package tours.

Gertner (1999) explained "all price competition includes the possibility to react to a competitor's price decisions. .. A company considering a price cut should bear in mind the entire impact of the price cut on profits".

Furthermore the advertising campaign was changed to emphasise all the activities, meals, etc. included in Club Med's price that were not available in others tours.

Stacey (1996) quoted Collingridge who explained "Effective decision-making in this situation is a search for error and willingness to respond to its discovery. (..) You need to choose an option that can most easily be found to be in error; error that can most easily be corrected."

Nevertheless, Club Med, before adopting any further measure, decided that all those questions which are asked some lines above, they needed be answered. This action would be the first step to recover the sales and to gain better position in the market.

For Kay (1999) "business strategy is concerned with the match between the internal capabilities of the company and its internal environment. The methods requires analysis of the characteristics of the company and the industries and markets in which it operates".

The actions should involve first of all, Market analysis, followed by Marketing analysis, which will improve Club Med Sales Inc.'s financial situation. For this reason, the process must be rigorous, rational and analytic. The research should be designed as quick as possible. Through the results, the Company will identify its problems - internal and external - can make decisions and implement the strategy to solution them.

The first step in this process is to carry out wide-ranging market research, to identify with as much detail as possible, the type of customer of Club Med. This market research is vital for Club Med's recovery.

Moreover, with this information Club Med, can analyse and establish if the company's organisation, its strategy and the marketing campaign were correctly target. Furthermore, Club Med, knowing who its customer profile, will find out if the marketing message of the organisation and its product, are the correct for these potential customers that it wants as a "Gentil Members".

Mitchell (1999) said " Change via internal development involves building on existing resources, such as technical skills production processes, marketing systems and managerial expertise. The key advantages of internal development are speed, co-ordination and protection from competitors. ... This co-ordination is particularly important when changes involve the active, ongoing participation of many people and functional areas."

Market research

Five studies were done to help Club Med learn more about its customers and its market. It worked with the advertising agency and with an outside research firm.

1. The first study gave a demographic profile of the Club Med members.

2. The second study compared the profile of Club Med members to a cluster of 40 groups representing all US residents. This information helped determine what "types" of people were interested in Club Med and where they come from. After the major "types" were identified they were correlated with the detailed "tastes" data such as media habits, activities and interests in order to distinguish likely tastes of Club Med members.

3. In the next stage, a detailed two-phase study of the consumer market was conducted for Club Med.

a) Phase one, called Focus Group consisted of an in depth discussion with small groups of Club Med members and non-members to elicit hypotheses for a thorough survey of members and prospective members.

B) Phase two, called the Quantitative Study was a survey which:

helped understand members' and prospects' opinions of Club Med.

helped draw a picture of Club Med members and prospects.

identified members and prospects' expectations of vacations.

helped Club Med understand the impression their members were communicating.

helped understand members' booking behaviour.

helped Club Med understand the prospective customers' cost perception of Club Med vacations.

demonstrated Key Prospects' interest in particular vacation activities and services.

4. The fourth study looked at US travel agents to determine their attitude toward Club Med so that Club Med could improve its working relationship wit the agents.

5. The last study, the Destination Study, determined the number of inhabitants from selected cities who travelled to particular geographical locations.

After the data were collected, Club Med had another set of decisions to make. Did the company's current strategy fit with the findings? If not, what changes should be made in positioning, communications, product, pricing and distribution? CMI had to decide who should be its customer and how to persuade this potential customer to patronise Club Med villages.

Strategy´s implementation

Schendel (1999) quoted Drucker, the management guru, who said that strategic management "worries about doing the right things and operations management worries about doing the things right."

Diwan (1999) wrote "An effective statement of strategy has three characteristics that are not commonly recognised:

Operational Guidance: The guidance provided by a statement of strategy must be pervasive and operational. The statement must provide guidance to all the managers in the organisation in sufficient explicit terms to allow each manager to proceed with his tasks in the knowledge that his actions are consistent with the objectives of the organisation.

Personal commitment: Another characteristic of an effective statement of strategy is that it is drafted by the manager who must carry it out. Two of several advantages of personalised strategies are: First, encouraging each manager to use his imagination to devise the best strategy he can increases the vitality and creativity of the organisation and second, a personalised strategy engenders a personal commitment. In discussing the relevance of personal values in the determination of strategy "Somebody has to have his heart in it."

Expectation of the change: The inevitability of an involving strategy does not mean that managers should not take the trouble to make the current strategy explicit or that the task should be done in a casual manner; it does meant that any such explicit statement should be viewed as only currently useful.

The Ashridge mission model defines the organisation strategy as "the commercial logo of the business. It defines the area which the organisation is to operate, the rationale for its operation, the source of competitive advantage it is going to tap, the distinctive competence it is going to provide, the special position is going to occupy."

The CEO of Club Med Inc knowing and analysing the study's results, should make changes:

INTERNALLY	EXTERNALLY
In its own organisation	In its relationship with the Travel Agencies In its relationship with its customers In the product which were selling In the advertising campaign

The internal re-organisation of Club Med Sales Inc.

The structure of the Club Med Sales Inc was a functional structure. As Stacey (1996) explained "This form represents a significant shift from centralism to decentralism. The integrating function is performed by a superior manager; the managing director, Chief executive or chairman, who acts as the leader of a formally appointed team of managers"

As it is stated above, the Club Med Sales Inc.'s CEO had about 25 people reporting directly to him. In the sales promotion area, there were 7 regional sales managers, who supervised 14 district sales managers. However, Club Med as an organisation, looks like a firm with some lack of leadership, control and clear objectives to achieve.

Club Med Sales Inc. could avoid some of its problems, if it developed a company culture with boundaries, establishing corporate values and a friendly but serious image. The Club Med Sales Inc image of sexual permissiveness could be the immediate consequence of it peculiar company culture.

As Stacey (1996) asserts "The culture of any group of people is that set of beliefs, practices and way of thinking that they have come to share with each other through being and working together. It is a set of assumptions people simply accept without question as they interact with each other."

In fact, after the research, there were changes inside the organisation. There was a significant and evident participation of the CEO in the research process. At the same time, it appears that Club Med's CEO wanted to be closer of its staff asking them to participate in the process and establishing afterwards with them fluent communication. Certainly, the CEO found the perfect way to motivate his people making them feel an important key to the company's success.

Stacey (1996) mentioned Pascal (1982) for whom "An organisation succeeds when its people are emotionally engaged in some way, when they believe in what their group and their organisation is doing, when the contribution they make to this organisational activity brings physiological satisfaction of some kind, something more than simple basic rewards. People believed and are emotionally engaged when their organisation has a mission or set of values and when their own personal values match those of the organisation".

More care of the staff, training and better communication with them, were part of the Club Med implemented strategy inside the organisation.

For Hussey (1991) "Training and development is an important implementation tool not only because it motivates people, but also because it provides the skills required for strategy implementation."

Club Med's relationship with Travel Agencies and Owner-Managers.

Club Med realised that its relationship with the Travel Agencies should improve, because they were the primary channel for sales in the travel business. In fact, there are some findings in the Exhibit nº 16 which are astonishing such as "Sixty five percent of the travel agents have never visited a Club Med village". There is still much misperception about the Club Med's activities: especially in the mid-west area, it is considered as a singles place with a wild reputation."

These findings are the result of a lack of the right strategy from Club Med to the travel agents.

Trying to remedy this situation, Club Med implemented a strategy which consisted in the development of subliminal and permanent links with the travel agents through the creation of an exclusive program: The Club Med Expert Program.

To carry out this program, Club Med opened its own travel agent schools where the agents paid tuition. They were several sessions a year, with each one being held in a different village. Moreover, with these schools, Club Med achieved not only the best way to train some travel agents in the Club Med concept but also to consolidate its prestige in the market. Furthermore, Club Med created the concept of Flying Team of six Gentil Organisateurs (GO) which would teach in the travel agents schools.

Club Med cared a lot to maintain the created relationship with the school's students - now experts. From time to time, so long as they remained in the Club Med's computer, it sent to them gifts as a reminder of the course. These gifts were always yellow and grey: the Club Med Expert Program colour scheme.

The strategy with the owner-manager, was giving them the respect that they think they deserved. Club Med created the VIP Programs which consisted in several lunch and week-end meetings with regional sales managers to generate a marketing program. This program was very profitable for Club Med in two ways. First, because it was challenging and a for a very low cost, certain sales quotas were reached and new ideas generated. Secondly, because it was the perfect vehicle for the owner-managers to feel important to the organisation and to motivate the skills and self-esteem of the regional sales managers.

Indeed, before each meeting, the regional sales manager had to reach certain sales quotas. They were also expected to suggest one idea per season to improve Club Med's sales. These ideas were fully developed with methods for tracking results.

The regional sales managers were helped in their duties by the Flying Team doing promotions in varies cities. This arrangement proved to be more successful than when district sales managers visited travel agents. Therefore 14 district sales managers' positions were eliminated.

Relationship with customers: Approach to them and creating fidelity

Club Med took more care about its clients. It is often said "It is ten times more difficult to capture a new client then it is to maintain an existing client" The organisation trying to maintain its customers, and to generate fidelity towards Club Med, set up a membership list. Members paid a yearly fee in return for benefits such as information about Club Med packages or brochures, the possibility to have a Club Med Visa credit card or the possibility to have free vacation.

This initiative was worth it because through it Club Med not only improved its relationship with its customers but also achieved a Club Med customers' data base for future use.

Re-defining the product

The product was modified according to customers' demands such as enlarging breakfast time until noon, creating singles rooms and creating at least two different restaurants in each village.

Advertising campaign and policy

The advertising campaign was made more aggressive and the advertising policy was changed to increase the budget so as to achieve the targets.

Club Med decided to focus in 8 markets with the highest sales volume, of the 14 previously targeted. The company moved into two new cities a year spending at least $250.000 on advertising in each city. The strategy of this campaign consisted in a planned public relation and a press package.

Regarding the advertising policy, new more attractive brochures were made and the advertising budget reflected expectations for sales based on how long Club Med had been in the market. The budget for a targeted area had a minimum threshold of $250.000. However the overall budget was held at a fixed percent of sales. to hold the overall budget can be controversial because if the sales are low, the amount to spend in advertising will be low and perhaps more advertising is necessary, i.e. more money to spend, to achieve the targets.

Club Med was determined to change its image of sexual permissiveness that some travel agencies could have. For this reason, Club Med spent an important amount of money on advertising in trade magazines. The campaign, which was awarded a prize, tried to detach the company from that impression in a very ingenious way,.

CONCLUSION

A drop of 3% in the bookings for summer 1983 from those of the previous year, made the Club Med Sales Inc. management realise that an urgent change was necessary re-defining its entire strategy, to recover this fall in sales and to increase the previous summer's figures.

Implementing a research study was the best way to identify if the company's strategy fitted with the findings.

As a result of the research study, the Club Med short-term actions involved measures which concerned its staff, its product/market, the competitive strategy and the relationship with travel agents and customers.

The company's culture changed. The CEO, showing leadership, participated in the entire research process - before, during and after- and all the results were explained to the staff. With this attitude the CEO demonstrated his concern towards the Company's progress and his determination to solve the problem with the participation of the staff of the Club Med Sales Inc.

The Club Med Sales Inc CEO, asking the staff's participation in the study research, not only showed a caring attitude to its staff but also achieved a perfect way to motivate them.

The product was re-defined according to the customers' demands. Not only the area of indirect sales but also the area of direct sales were focused to achieve some goals. Some of them caused the elimination of a number of jobs.

The advertising policy was considerably changed. It tried to change the bad image that some people had of the Company.

The short-term actions were a success because the Company had quite a flexible structure. By the end of 1983, the Company not only had reversed the 3% dip in sales but had an increase of 5% over the previous summer's figure. Turnover amongst the top travel agents went from 50% to 38% and the number of bookings per top seller increased by 15%.

A good knowledge of the company (product, staff, etc.) of the market, of its competitive position, of its direct competitors, and the goals to achieve, are the key elements to implement the right strategy. As Kay said "The modern subject of business strategy is a set of analytic techniques for understanding better, and influencing a company's position in its actual and potential market place".

Post Script

Club Mediterranée is now incorporating new technology to sell and market its holidays along with other new products and services.

Samer (2000) wrote in the Financial Times "Club Mediterranée is embracing the internet as part of a wider plan to revamp its sales channels. Club Med Online, a newly created subsidiary will launch its web portal shortly in an attempt to derive revenues from the large members of internet users who visit the group's different websites.

Prada (2000) explained also the launch of the Club Med web in the Wall Street Journal Europe "One of the Club Med's plans for the future is developing an Internet portal that will promote and sell the company's products and serve as a gateway for services linked to other leisure activities such as fitness, relaxation, music and film. Another plan is to market Club-Med brand products, including sportswear, sunglasses, luggage, perfumes and skin-care, while another is to enhance its traditional business by developing new services for holidaygoers and the customer base for its vacation resorts world-wide".

Another new plan of Club Med is to set up a chain of resorts not in beaches, but in cities. O'Connell (2000) wrote "Chairman and chief executive Philippe Bourguignon says London is on the list of cities lined up for the company's new Club Med World project. (...) There will be the typical Club Med activities -trapeze, archery, dancing, concerts and fine dining- but not the beaches.(...) The launch of Club Med World is another step in Bourgignon's rescue and restructuring of Club Med, which was losing money and lacking direction when he joined just under three years ago."

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Samara Islander (2000) "Club Med forms internet plan to extend sales". Financial Times, January 12, 2000.

Pride, P. (2000) "Club Med shift focus to Web. Vacation Giant Posts surge in Earnings" Wall Street Journal Europe. January 12, 2000

O'Connell D. (2000) "A truly capital idea from Club Med" Sunday Business. January 23, 2000.

Esperanza Martinez-Zurita

Sheffield Hallam University: MSc. Hospitality Management

Sheffield Hallam University: MSc: Hospitality Assignments