In service industries, such as cruise tourism, intermediaries (agents) are crucial in the initial stages of foreign market penetration and business development. This is particularly important in emerging and protected markets such this of China a few years back.
As the market matures, however, and the consumer becomes savvier, the role of the agent declines, and direct sales become more popular.
We combine game theory and discrete consumer choice to construct a decision-making model for cruise companies, aiming to assist them in choosing the right pricing and sales strategy under different market circumstances and shocks (such as the COVID-19 pandemic).
Our numerical experiments convincingly demonstrate that collaborative pricing and sales is a winning strategy in most market environments, including unforeseen situations of major shocks. Competitive pricing and sales, instead, reduces profitability for both company and agent. Single channel sales strategies, either direct or through the agent, appear to be the less performing options while, were the latter to be the case, the cruise company would be better off by selling only to travel agents.
Although our methodology and results are of generic value, China has nonetheless proven to be an excellent case study of the way cruise product pricing and sales strategies have evolved, to cope with the transition from an emerging- to a mature cruise market.