Final Post - Simplicity

We are living in a huge universe of knowledge where thinks are linked and connected everywhere and this huge universe is our space of life.

We can learn now almost everything about almost anything just with a click on our PC keyboard.
We are leaving in an internet era where we can find all information we need on websites, we don’t need to go in a library to find a book, with just a click we can order it and have it at the door next day; we don’t need to spend time looking for furniture, we can see brochures, pictures or videos on internet and choose what we want; we can inspire the decoration of our new house, our garden, or prepare a good dinner for Sunday evening just watching on internet. It is our live better?

How is influencing simplicity business models?

Communiation
I was thinking…. Where are the joy of walking in a forest, riding a horse, staying in a chalet near to a lake and fishing…without TV, news, telephones who are calling every minute…just relaxing? Can we afford these days something like that when we are living our lives faster then ever, more complex and more difficult to manage? I’m afraid not, that’s why I am happy to have all this new technology near to me, telephones, blackberry, mobile internet connection, just in case I need…that’s make me more comfortable and let me relax and enjoy the small things. You should see my luggage…always plenty of charges and cables for loading and downloading. Now a laptop is very accessible and everybody is using the word:”download”- music, films, information and so one…
This is the good thing that I can bring with me wherever I am my universe of technology that became necessary for me, like the air, in order to make my life easier and nicer and allowed me to feel free. Am I really free? What are our next steps?

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Voluntary Simplicity
In his book "Laws of Simplicity", John Maeda explains the 10 rules for simple living like: reduce, organise, time, learn, differences, context, emotion, trust…Reduce and organise better..time, money, stress, live better and healtier, use the time for knowledge, feel emotions, be human. How far we can get on a simple idea is amazing. Based on a simple idea we can create complicate things so I think is difficult to stop the mind to remain simple, to put limits.
As Maeda writes are “too many laws “ and I could add “too many limits”; because people who have chosen to live more simply are all about choosing limits. They are free in their relationship because they respect others limits. They limit the hours they are wiling to work for money so they have more hours for fun and family. They limit the cost of living by not buying things they don’t need. They limit the intrusion of the commercial world into their homes by turning off the TV and reading, playing games and talking with friends. They limit what they buy from to products with limited toxins and pollutants and exploitation of others in their production. They limit the cost of gas by buying fuel efficient cars, riding bikes, taking busses, carpooling, telecommuting and walking when possible. They are masters of limits, not slaves of the “more is better” and “it’s never enough” mentality. They are choosing the “voluntary simplicity”.
Is just a style of life, simple, real, authentic, balanced, relaxed and healthy - healthy food, healthy relationship, healthy way to live.
What we can do is to come back to the nature and to create a worlds where our kids can live their life safeties and happiest. This is sustainable!

Design & architecture

Simplicity is the soul of design and architecture of these days, the artists are copying the nature in expression and colour or are building “eco-houses” using recycling materials. Excellent idea !

Travel
More and more peoples are travelling, so more and more destinations open and our needs in terms of satisfaction change as fast as the Web 2.0 technology. Simplicity is the key word for everything related to “e” concept. The impact of the internet in giving travellers greater control of their travel decisions. As we are entering in a “video” era we do not need to go in a travel agency to find information or advices about a destination.
Web site like www.tvtrip.com allows travelers to check out their hotel on video before they book it and get all the information on rates, amenities, hotel’s description, map information, nearby sites of interest and reviews of the property. etc… Searching made quick and easy, and it’s a really fun process and saves a huge amount of time.
(Since its launch in May 2007, the site now has over 200,000 unique visitors and is growing daily.)
Another example: the video website www. Tripfilms.com provides “authentic travel” experience from around the world.
Tony Cheng, one of the founders behind Tripfilms, sees online travel videos as an interesting growth opportunity because traditional television travel shows are expensive while web-based travel videos are a lot more cost effective.
This new trend who continues to be enriched - in the online space - is driving to inspire travellers to create new needs.
With online travel videos, you can watch anytime and anywhere with an online connection. Online travel sites are a very productive area for online advertising, and good content is the basis for attracting audiences.

I see a disruption in the business model; can be changed the decision of travellers who will prefer to stay home to watch videos in state of taking a plane and flight to a destination?

The fast-moving world of online travel creates the needs of an instant confirmation and guaranteed reservations.
Use of the internet for online booking as opposed to simply 'looking' – gathering information prior to booking a trip – continues to grow very fast.
When your decision for the destination is attributed to the weather condition a last-minute booking became the ideal solution.
As example: in only in 1 year it was a phenomenal growth in last-minute reservations on www.LateStays.com – from 53,585 room nights to 92,290. LateStays.com fulfils Asia Web Direct has more than 100 travel sites in its stable that attract more than three million visitors monthly.
“Our websites make travel planning easier than ever before, by offering travelers local-knowledge content, a comprehensive hotels database, exciting destination experiences like tours and adventures, combined with easy-to-use booking procedures that are supported by world-class service,” Ms. Eawsakul said.

Hyatt Hotels & Resorts has created “Web-In” and “Web-Out,” convenient, online check in and check-out systems available at over 100 of its North American properties through the www.Hyatt.com website. That means simplicity and time saving especially for business travellers.
Operations are user friendly. A “Check-In” button on the Hyatt.com homepage enables guests to check in via the Internet after 1:00 pm on their day of arrival. Room keys may be collected from hotel-lobby kiosks at each guest’s convenience. Hyatt’s “Web-Out” option is made available through e-mail. On the morning of a scheduled departure date, the guest will receive a message to review their account with an option to proceed with check out via their PDA or laptop. Once the check out function is complete, the guest will then be emailed a copy of a folio containing a "0" balance. This is of high importance to business travellers as it is typically required for expense purposes.
As another industry first, to be introduced in 2008, guests will soon be able to pre-select their guestroom of choice online or at the check-in kiosk, through enhancements introduced to the “Web-In” feature. Graphic images of floor plan layouts and room availability will make selection as simple as choosing an airline seat. In addition, every guest who makes a reservation online will soon receive a day-of-arrival email with a direct “Web-In” link.

Being a good concierge in the past was almost an art; now is a trend whose name is "e-Concierge". This online planner allows guests to plan the ultimate customized itinerary prior to arrival with the simple click of a mouse. Guests travelling on leisure or business can better plan for meals or schedule a relaxing spa visit around their busy schedules. Likewise, reserving tee times or arranging adventure travel excursions in advance of arrival means travellers do not have to waste time making decisions once on property.

How is disrupting ? I see the death of travel agents, tour-operators, guides, concierges and even receptionists. All this professions will disappear, peoples are replacing with machines, no smiling faces waiting for you in the reception, nobody who ask you if you felt good or if you enjoyed, only buttons and instructions on a screen…..this is the future? Is that trend sustainable?

Technology
Philips group understood that simplicity is the key word for the future and they add two words to their name brand “sense and simplicity”. Words like: ”care, relax, listen, look good, feel good” are very encouraging and give to the consumers the desire to buy.

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Can we reduce our ecological footprint by leaving in voluntary simplicity and by building Hi-Tech eco-houses? Are the things that simple? I thing that it is a complicate process to make all the changes we need to transform complicate in simple, artificial in natural, and to come back of the origin of the goal of life which is living in agreement with the nature. As Leonardo da Vinci said “Simplicity is the ultimate sophistication “.

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Food Industry - Innocentive

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Innocentive

Briefly describe the business: InnoCentive is the first online platform that allows world-class scientists and science-based companies to collaborate in a global scientific community to achieve innovative solutions to complex challenges.
InnoCentive began in 2001 as a start-up incubated through the e.Lilly division of Eli Lilly and Company, a leading innovation-driven pharmaceutical corporation who expanded into genetics, biochemistry and materials science and now promises to move into fields ranging from information technology to international development.

The customer groups served: InnoCentive connects companies, academic institutions, and non-profit organizations, with a global network of more than 125,000 of the world's brightest minds on the world's first Open Innovation Marketplace.
They are bringing together creative minds to create breakthrough solutions and innovations that takes research and development problems in a broad range of domains such as engineering, computer science, math, chemistry, life sciences, physical sciences and business.
This innovative site plays matchmaker between freelance researchers-"Solvers"- and companies faced with challenging problems - "Seekers".
Seeker organizations post their challenges on the InnoCentive web site, and offer registered Solvers significant financial awards for the best solutions - currently between $10,000 and $100,000 per solution.
Since 2001, InnoCentive has awarded more than half a million dollars to 46 winning Solvers, and the number of disciplines it supports is growing steadily.
Seeker and Solver identities are kept completely confidential and secure, and InnoCentive manages the entire IP (the intellectual property) process.

What problems does it solve for customers, suppliers, partners and owner of the business? The process takes place almost entirely online.
Seekers browse available problems and register to learn more about those that interest them. This permits access to a challenge's "Project Room," a secure space online where Solvers can view details, send messages and submit proposed solutions.
A Solver may submit multiple solutions; those who submit an unsatisfactory solution will receive an explanatory e-mail and can try again. When the deadline has passed, Seekers review the accumulated submissions and determine the best solution. InnoCentive issues the reward amount, usually two to six months after the deadline date. The entire award goes to the Solver.
Companies pay InnoCentive to post their tough R&D problems on their virtual lab site -- anonymously to protect trade secrets -- and then the thousands of scientists tapped into InnoCentive’s site worldwide have an opportunity to solve those problems.

Seekers: Seekers are progressive, innovation-driven companies and not-for-profit organizations that have tough R&D problems that need solutions. Seekers post these problems to the InnoCentive Open Innovation Marketplace as InnoCentive Challenges and establishes a deadline or cut-off date for receiving proposed solutions.
The Seeker company determines which solution is best, InnoCentive is not involved in the solution selection Seekers submit “Requests for Proposals” to the InnoCentive Solver community. This global community includes organizations and individuals such as contract research organizations, scientists, university researchers and technology companies. After a Solver submits an response, the Seeker evaluates the responses and determines which Solver(s) to contact and begin further business discussions.

Lilly was the first Seeker at InnoCentive providing leadership on the initial InnoCentive problems and awards. InnoCentive is now incorporated as an independent company, and partners with various Seekers in many industries to revolutionize the way R&D is done. Seekers such as Procter & Gamble, Boeing, Pittsburgh Plate & Glass and the Rockefeller Foundation pay annual fees for access to InnoCentive's ad-hoc network of scientists in 125 countries .

Solvers: A Solver is the person or organization who registers to solve InnoCentive Challenges. Registration is easy and free, and all Solver’s must sign an online Solver Agreement. If their solution is selected to receive the award, the winning Solver needs to show they are capable of transferring ownership of their solutions.
InnoCentive has created a secure space online called a “Project Room” for Solvers to view the details and requirements of a challenge and submit solution proposal(s). The online project room is where are submitted all the final solution proposal(s). All proposal submissions should be done via the project room.
Solver may:

• submit ideas of their own ;
• submit third party information they have the right to and further the right to convey those rights to use and develop derivative works to seeker;
• submit information considered in the public domain without any limitations on use
  

When a solution is chosen and an award is given, the IP rights are transferred from the Solver to the Seekee.

InnoCentive Challenge:An InnoCentive Challenge is a unique problem posted by Seekers - companies and not-for-profit organizations – to the Open Innovation Marketplace. The Seeker is looking for the best solution for their problem and the Challenge can be large or small, short-term or long-term. If a solution is selected as “best” by the Seeker, the Solver receives a financial award, which varies per Challenge. Solvers may also qualify for partial awards.

Partners:Innocentive has recently partnered with the Rockefeller Foundation , a partnership who evolves the Innocentive model to elicit and manage crowdsourced solutions for critical social medicine and other problems and challenges addressed by the Rockefeller Foundation. Rockefeller was interesting because they are forward thinking and they could imagine that the partnership was a great mechanism to engage some of the directed and activist philanthropy that is underway in society right now.
The non-profit Rockefeller Foundation area on InnoCentive’s scientific platform will bring to bear the talent of thousands of world-class scientists, innovators and entrepreneurs in solving the most pressing and complex humanitarian challenges posed by non-profit entities selected by the Foundation.
This “open innovation model,” which InnoCentive has pioneered in the “for-profit” arena using challenges posed by R&D-focused companies, will now be turned, for the first time, toward technological problems faced by poor or vulnerable people in the developing world.
The Rockefeller Foundation-InnoCentive partnership will provide a web-based platform to organizations, institutions and companies that are developing products and services for poor or vulnerable people so that they can access InnoCentive’s network of more than 125,000 registered “solvers” – the brightest minds in business, engineering, science, and technology – from 175 countries.

Here’s how the process works:
• To be approved as a “seeker,” the organization describes its objectives to the Rockefeller Foundation
• Once approved, the “seeker” organization works with InnoCentive to post its challenges on InnoCentive’s website and to post an appropriate monetary award
• InnoCentive’s registered “solvers” submit solutions, with the winning “solver” collecting the award
• The “seeker” only pays the award if the problem is solved successfully
• Once the award is made, the “solver” transfers the solution to the “seeker”

The revenue sources: InnoCentive capitalized on the fact that major companies spend billions of dollars on research and development that could more effectively be outsourced.
From the “seeker,” InnoCentive collects posting fees for the use of its platform. In addition, depending on the type of challenge, InnoCentive receives a commission on awards made by the “seeker” to the “problem solver.”

Conclusion: InnoCentive plans new models of innovation, such as incentive programs within companies to spark internal knowledge-sharing and collaboration tools and groupings on the website that allow 'solvers' to work together.
InnoCentive will regularly introduce new, exciting challenges for these creative thinkers in these multi-disciplinary areas- engineers, scientists, inventors, and business people with expertise in life sciences, engineering, chemistry, math, computer science.

This is a company where R&D expertise meets the ultimate in internet know-how.
InnoCentive has been recently featured in the New York Times, Business Week, and The Economist, among other publications - the latter awarded it “The Business Processes Award" category at the fourth annual Innovation Summit and Awards.

InnoCentive will change the world and influence the lives of people everywhere by applying our planet’s human creativity and intelligence to solving the most important challenges facing commercial, governmental, and humanitarian organizations today. By combining technology, economic incentives, and human ingenuity, it is possible to resolve these problems better, faster, and cheaper than ever before possible.

Innovation and R&D must “innovate the way to innovate”. The target is to power the markets, products, and services that enable this revolution using these uniquely human assets in solving the world’s challenges and creating value for organizations everywhere.
The goals of th employees, investors, communities, and customers are completely in alignment – InnoCentive will exemplify a new kind of corporation where returns to its investors and employees come hand in hand with extraordinary benefits for mankind.

Social entrepreneur

A social entrepreneurship is a nonprofit business who is driven by a social mission, a desire to find innovative ways to solve social problems that are not being or cannot be addressed by either the market or the public sector.
Social entrepreneurs act as the change agents for society, seizing opportunities others miss and improving systems, inventing new approaches and creating sustainable solutions to change society for the better.
Unlike business entrepreneurs who are motivated by profits, social entrepreneurs are motivated to improve society. Despite this difference, social entrepreneurs are just as innovative and change oriented as their business counterparts, searching for new and better ways to solve the problems that plague society.

Today, social entrepreneurs are working in many countries to create avenues for independence and opportunity for those who otherwise would be locked into lives without hope.
Whether they are working on a local or international scale, social entrepreneurs share a commitment to pioneering innovation that reshape society and benefit humanity.
Social entrepreneurs are driven to produce measurable returns with social effects. They are involving in: protect the environment, increase appreciation of the arts and culture, improve educational opportunities for children, help the poor,encourage diversity and tolerance, assist elderly people to live with dignity or provide shelter to abandoned or abused animals.
They do not need special education or experience for making the world better place to live.

Social entrepreneurs pioneer innovative and systemic approaches for meeting the needs of the marginalized, the disadvantaged and the disenfranchised – populations that lack the financial means or political clout to achieve lasting benefit on their own.
Muhammad Yunus, recipient of the 2006 Nobel Peace Prize, is a more recent example. He began offering microloans to impoverished people in Bangladesh in 1976, thereby empowering them to become economically self-sufficient and proving the microcredit model that has now been replicated around the world.
Another example is Social Entrepreneur Corps who seems to be a great opportunity to see micro-enterprise in action. They are involving local communities and teach them to become entrepreneurs.They are developing programs in Guatemala like: A Community Enterprise Solutions Initiative
Sampling of Projects: Water Catchments or Water Filtration

"One day, a few other Social Entrepreneur Corps participants and I were taking surveys in rural Guatemala. A man welcomed us warmly into his house, even though his was the smallest and simplest on the block. We sat in a circle on the dirt floor of his home and asked him how his wood-burning stove was working; he said he loved it. To me, this experience encapsulates the spirit of the Social Entrepreneur Corps and the philosophy of its leaders. Only by going to the homes of the poorest Guatemalans and talking with them can you accurately assess their needs. Only through such raw encounters with the impoverished can you feel the true impact of your work. And only when you meet a man whose hospitality never falters in front of five strangers will you understand the enduring warmth of the Guatemalan people." – Jessica, G.

While social entrepreneurship isn’t a new concept, in my opinion this is not a trend, is much more then a responsibility of everybody, individuals and companies to create, develop and sustain this kind of initiative.
The major challenge confronting social entrepreneurship is the lack of adequate financing. Because social entrepreneurs operate within a social context rather than the business world, they have limited access to capital and traditional market support systems. As a result, social entrepreneurs must be exceptionally skilled at mustering and mobilizing human, financial and political resources.
In my opinion they shouldn’t focus so much in spending time to finding money; they should be supported not only by foundation and governments , but also by the companies who has to sponsors and helps them with human resources and founds. The world is ours and the world’s health is our responsibility. That's why we should act together!

Ventes Privee

Vente privee is a mode of sales in witch the product(expensive brands) are sold with strong reductions (30-80%) and the sale is limited in time (every day or 2-3 days).The key word of strategy of sales is the price and allow to finish waiting on specific period of the year to be able to obtain products of large marks not expensive at the time of a sale.
- Sales are open only to one number limited individuals (the subscribers are invited by another member-"parrainage").
- Customers can afford to buy products from expensive brands and not out of fashion (current year collection)
- Supliers can clean their stocks continuing keeping a good image of their products.
For ex.in the normal sales a store can sell 25000 shoes by years, via internet they can sell 50000 by day.
For them is more interesting to sell with reduction via online then to wait the discout periods.

-Vente-privee.com specialized on flash sales on internet, is the pioneer of “vente privée”. The website has 2 millions subscribers and propose 2-3 sales by day of different brands with 60% -80% reduction.
They propose different brands and different products (Longchamp, Dolce & Gabbana, Seb, Nivea, Adidas, Samsonite, etc)
The sales start at 7 o'clock in the morning and stop next day at midnight, but usually the good products are sold immediately (30000 connexions by second).

-The sales strategy of Peugeot using vente privee.com
Peugeot chosed to organize an operation on the site of sales aimed to run out a stock of vehicles of demonstration Peugeot 1007 going back to 2004.
The car manufacturer chosed to test the channel of distribution by opening on January 18 at 7 hours of the morning a sale of Peugeot 1007 on vente-Privee.com.
This operation assembled by Vente-Privée.com was managed on line with the Commerce direction of Peugeot France, via its subsidiary company SVO in load of the vehicles of occasion. The objective consisted in testing a new distribution system in BtoC for the vehicles of occasion on the Web.
The commercial deal with Sale-Privée.com make possible Peugeot SVO to test the flow of second-hand cars on line near general public.

-Sales strategy of Stonfield InWorld using Vente-du-diable.com
Vente-du-diable.com proposes the total solutions of integration of Internet and of the Virtual Worlds in their strategy of development. This site which records today a community of more than 120 000 people offers balanced products from 30% to 60% coming directly from the manufacturers.
Shopping Attitude is specialized in the design and the organization of event-driven sales in Second Life Vente-du-diable.com and Stonfield InWorld linked to propose to the residents of Second Life the first private sale of products high-tech.
They proposed - especially for the residents of the Virtual Worlds - on a particulary date (November 13, 2007)- to sell a selection of 15 products: Wifi helmets, readers MP3, configurations PC on vitaminized, flat-faced screens, GPS... at incredible prices, up to 60% of handing-over compared to the public prices.
The 1st private sale High Tech organized in Second Life is signed vente-du-diable.com and Stonfield InWorld. For vente-du-diable.com this sale in Second Life is a single opportunity to obtain comments in real times of its customers in order to unceasingly improve quality of its services.
vente-du-diable.com regularly organizes sales of products high-tech very demanded on the market.
“….this private sale of November 13, 2007 is a new occasion to illustrate the commercial capacities of the Virtual Worlds to the service of the companies and consumers”
To take part in this 1st private sale High Tech in Second Life was necessary to register on vente-du-diable,to have an account Second Life (or to create one of them free: www.secondlife.com) and to register on the site of Shopping Attitude:
The number of guests being limited, the first registered voters was able to reach the island the day of the sale. The teams of Shopping Attitude and of vente-du-diable.com accomodated the residents on the spot and answered all on line their questions.
Reff:http://www.stonfield.net/stonfield/2007/11/communiqu-de-pr.html

- The website voyage-privée is based on the same principle of sales limited in time (3 days) with strong reductions only for members. Reductions can be from 30% to 70% and the offer is very divers.

Freemium

When the service is free, word spreads.
Free didn't become a serious option until the Internet gave low-cost online distribution. Adobe did it with its PDF Reader in 1994, Macromedia with its Shockwave Player in 1995. Both became the industry standard, and those companies were able to make money by selling the products' authoring software.
In these days of Web 2.0 services that rely on quick customer adoption, the strategy has become so common that VCs have coined a term for it “freemium”
Companies like Six Apart, which offers its LiveJournal blogging platform for free and has sold 2 million of its customers a premium version, which costs $20 for a one-year subscription.
(Business 2.0 Magazine)

Danny Rimer, the London-based venture capitalist with Index Ventures, has been an enthusiastic investor in freemium-type businesses since 1999. His firm led an $18.8 million investment in Skype, which resulted in a handsome return after the $2.6 billion buyout by eBay
Web-based users who don't have to pay for it will often start evangelizing the benefits to others.
Right now Rimer has several freemium-style businesses in his portfolio. He's an investor in music information service Last.fm; MySQL,a provider of open-source database software that has become the second-largest open-source software firm after Red Hat; and Stardoll, a digital doll creator and online community that attracts a largely preteen following.
MySQL makes money from customer service as well as from fees charged to firms that redistribute the software
Companies like Six Apart and MySQL are following the example of MySpace and Skype by offering a free basic product and charging for premium service
Reff: http://money.cnn.com/magazines

Advantages:

1. Best probability to keep the regular clients by making them feel the real added value of the product
2. Easy access to your product with just one click
3. Customer suggestions can help speed up product improvements or inspire ideas for premium services.
Freemium works because "you reduce the main stumbling blocks of product adoption,"

Disadvantages:

1. Offering a product for free can be far riskier than if you actually charged for your product
2. If the revenue from your premium service do not covers the cost of the free service have to cut your losses and move on to the next start-up.
3. If a product will be given away for free and you make changes you risk alienating customers accustomed to getting your product for free.

EasyGroup model assessment

EasyGroup is the business incubator owed by Stelios, the well-known entrepreneur behind easyjet launched in 1995. The organisation creates “easy”-branded companies that operate independently and maintain the principle of low-cost services typified by airlines.
The organisation’s success depends on taking advantage of opportunities in mew marketplaces ahead of the competition. The company has establishes precise criteria for selecting applications so that its business model is maintained when it launches new businesses. More then 95% of the customer’s bookings take place online, so is necessary to have web-based systems that can be deployed quickly and without expensive developments costs to can continue to offer lo-cost services to the customers.
In 2004 the group carried out a through review of booking and administration system based on Microsoft technologies which can maintain its business model, creating independent online enterprises quickly and at low-cost.

Changes in the structure of the way airlines, railroads, cargo operators, hotels and tour operators compete, manage their capacities and book and sell their products have fundamentally transformed these businesses. Increasingly, pricing control has been lost and power has shifted to consumers and to low-cost service providers. Tariff fences and market segmentation tools no longer effectively differentiate passengers, guests or customers. Customer loyalty erodes as price becomes the dominant driver.
In environments where fixed costs are high, variable costs are low, demand is volatile and competition is keen, profitable growth can be achieved only with sophisticated solutions designed to help you provide the right product, at the right time, for the right customer, at the right price – 365 days a year
Yield management gains in popularity in many service industries. Yield management is a method that can help a firm sell the right inventory unit to the right customer at the right time and for the right price It guides the decision of how to allocate undifferentiated units of limited capacity to available demand in a way that maximizes profit or revenue. To lower cost and increase efficiency is a mantra for all companies these days.

The cruise line industry, is among the fastest growing sectors in the leisure travel market. The Cruise Industry is currently growing at an average of 8.2% per year(Cruise Line Industry Association (CLIA), 2007), twice the average annual rate for Tourism in general. Shipbuilders’ order books are full and, for the next 10 years the prognosis suggests increased capacity and even higher growth rates
Using Yield management's tool, agents can provide travelers with complete cruise shopping and booking capabilities on the agent's Web site, bringing added value to the agent and providing customers the ability to shop and book through their preferred agent 24 hours a day.
Cruise lines face an enormously complex problem: capture the greatest revenue yield from every voyage, either leaving berths unsold or overfilling with discounts so that higher paying demand must be turned away.
The cruise lines are taking the practice of Yield management far beyond achieving the optimum cabin rate and give an exceptional ability to manage availability controls in the reservation system to help to maximize revenue from expected demand, continually fine-tune performance and monitor results.

EasyCruise is one of the latest ventures launched by Stelios (stelios.com), the serial entrepreneur and chairman of the easyGroup (easy.com). In 1995, Stelios founded easyJet (easyJet.com), Europe's leading low cost airline.
Operating since May 2005 the company havs been offering a unique holiday experience to independently minded travellers from across the globe. From Athens, Greece they have been operating their first ship "easyCruiseOne" in the Greek islands in 2007, and from April 2008, the second ship "easyCruise Life" with begin cruising to the Aegean Islands and Turkey, calling in Bodrum every Monday and allowing people to join a 7 day cruise from Turkey or Greece.

Yield managent applicable in cruise line industry



What does a cruise cost? As with other commodities, the price of a cruise is governed by the laws of supply and demand. Generally speaking, the greater the demand, the higher the price. And in the cruise industry, several factors influence demand: The most important are seasonal ups and downs, length of the cruise, age of the ship, and popularity of the itinerary.
In practice, the price for any given cruise boils down to what people are willing to pay. High- and low-season fluctuations affect pricing to every cruise destination.
In addition to seasonal differences, the duration of a cruise can be a primary factor in determining its price.
This curious fact reflects a larger trend in the marketplace: Two- to five-day cruises are "the cruise industry's hottest growth category," according to the Cruise Lines International Association (CLIA), the industry marketing group that represents virtually all the major cruise lines. Carnival's short cruises are a good example of this phenomenon: Its four- and five-day cruises to Canada out of New York operate at "essentially full occupancy," according to the line, which allows the company to charge accordingly
A ship's popularity also plays a big role in determining the price of a cruise. Not surprisingly, newer ships tend to command higher prices, since everybody wants to sail on the latest, biggest, and best.
Conversely, older ships often come with a lower price tag, since they're usually less in demand. These ships can represent some of the best bargains in cruising. Less desirable itineraries, such as repositioning cruises and one-time sailings, are the next piece in the cruise-pricing puzzle. These sailings often have a more narrow appeal to the public at large, and the cruise lines have a more difficult time filling all their berths. So the cost of these cruises is among the lowest on a pier-diem basis

How Cruise Lines earn money with yield management?

When vacationers book cruises, they often purchase a combined air and cruise package. Cruise lines typically set prices for the package based on market conditions. If the actual airfare paid to transport the customer is less than expected, the cruise line earns a greater margin. If airfare is more than expected, the margin decreases. Even when a cruise line charges separately for the cruise and for airfare, the “air fare supplement” is typically only an approximation of the actual airfare incurred to transport the passenger.
For a large cruise line, airfare expenses can exceed 20% of revenue. The cruise line typically negotiates airfares on a city-pair basis with each airline. Fares for the same city-pair can vary widely between airlines. For a city-pair, cruise lines may or may not have “guaranteed access” to its negotiated fare for a certain number of seats. When additional seats are needed, the cruise line may pay higher airfares.
Reducing airfare costs can have great leverage, as each additional dollar paid on airfare often represents one dollar less profit. Consequently, cruise lines have a strong interest in minimizing the total cost of routing all its passengers across its flight network, subject to meeting certain customer service standards.

We are taking the example of easyCruise.com who will offer low-cost flight from easyJet.com, same group, same system, the price for the trip can be very low comparing to the 4 big company cruise line( Carnival, Holland America, Royal Caribbean, Celebrity, Princess and Norwegia).

Furthermore, since the cruise ship makes money on complementary goods and services once the person is on board, the margins are effectively even lower (some would even argue that the margins are negative).
easyCruise has also employed a US east coast based consultancy, CB5 Restaurant Group, who has worked with hotel groups and on more than 85 restaurants. CB5 is in the process of designing an on-board food and beverage concept to be used on all easyCruise vessels. Since launch easyCruise has offered its passenger the freedom and independence to go ashore by day and by night as they please. But within the first year of operation more passengers opted to stay on board and enjoy the atmosphere. The sports bar menu on offer turned out to be too limited for passengers and the demand has been for more international cuisine. So in response to customer feedback and to satisfy the desires of its younger clientele, easyCruise has decided that it is worth offering a more upscale dining experience on board.

This is a very complex industry with many prices. Prices vary across time and across types of accommodations, itinerary, type of ship, and other factors. Quantities are also complex in that there are different types of berths, ships and itineraries.
Thus, the cruise lines were able to fill up the berths even with a large short run increase in capacity. Of course they accomplished this, in part, through use of yield management.
Individual sailings open up for sale twelve to eighteen months before the ship departs. The four major cruise companies have a combined 75 ships. If each ship were sailing seven-day voyages, each ship would have 50 to 75 voyages with tickets available at any given time. Conservatively, that would be 3,750 voyages.Each ship has ten to twenty different cabin types, in four major categories – interior, ocean view, balcony and suites.
Conservatively, that leads to 37,500 different products for sale at any given time. However, there is at least twice that number of prices, since the cruise lines have both individual and group prices for almost all cruises. At a minimum, there are 75,000 prices at any given time before we discuss discounting. The cruise lines often offer targeted discounts to past passengers or passengers from certain localities, and often give special deals to select travel agencies. The cruise lines also often use upgrades as a form of discounting. Many passengers buy their plane tickets through the cruise lines that purchase blocks of seats from the airlines. Since the cruise line often “charge” significantly above or below their negotiated price with the airlines
*** The average voyage length for sailings in our data is just under 7 days, with 52% of cruises 7 days, 31% less than 7 days, and 17% over 7 days.

The question is how long will take to the companies who are not using the yield management to resist on the market without the system? Let's take the example of smalls cruise line company who are selling trips in Turkey without the system. See Blue cruise website.
If you want to buy a cruise in Turkey you have to fill a reservation form to get the price and availability. But this worth waiting! Landscape and peoples are wonderful