Walt Disney Corporation Marketing Audit Max McKay Sabrina Coady Henrik Oiseth Principles of Marketing 308 Professor Simpson November 14, 2006 Walt Disney Corporation Founded in 1923, the Walt Disney Company has predicated itself as the world’s best in the family entertainment business. After 80 years in the business, who could argue with that statement? Today, Walt Disney Corporation dominates the market of family entertainment. An unparalleled experience is the direct affect of superior quality, innovative content, and brilliant storytelling.
To capture such a highly diverse market, Walt Disney has divided itself into four main business segments: Studio Entertainment, Parks and Resorts, Consumer Products, and Media Networks. The purpose of these different segments is to integrate, and effectively operate in performance to maximize exposure and growth (Disney Online, 2006). This paper will analyze Disney’s marketing strategies directed at promoting its theme parks and resorts, as well as the firm’s strengths, weaknesses, opportunities and threats. Business Mission
Walt Disney pioneered the world of entertainment into what we know today. In 1940, the Burbank Studio was constructed in California with a staff of more than 1,000 artists, animators, story men, and technicians (“Walt, Biography” n. d. ). Due to World War II, 94% of the Disney work was associated with special government work. This included the production of training and propaganda films for the armed services, as well as health films that are still shown throughout the world by the U. S. State Department of Health (“Walt, Biography” n. d).
Walt Disney’s dream came to life in 1955 when the first Disneyland amusement park was built in California, priced around $17 million (“Walt, Biography” n. d). Through all of this, Walt’s original purpose was to stimulate the idea of education in children through entertainment in his movies, shows, and theme parks. The company’s mission statement states Walt’s aspiration to “nurture the imaginations of children around the world a well as to celebrate American values” (“The Walt Disney Company,”1996). Walt Disney and company has successfully upheld this mission in the business for over 80 years now.
Objectives It was Walt’s objective to provide a service in which every person would desire now, as well as in the future. More than this, Walt Disney inspired to reach and touch as many people as possible, providing an unsurpassed experience in the world of entertainment. The firm’s stated objective is to be one of the world’s leading producers and providers of entertainment and information (“Disney Online,”2006). Walt Disney Corporation focuses on using its assortment of brands to differentiate its content, services and consumer products.
Disney online states that the company’s financial goals are to “maximize earnings and cash flow, and to allocate capital profitability toward growth initiatives that will drive long-term shareholder value” (2006). These goals of being the world’s leader in producing and providing entertainment are entirely realistic, considering the current financial position of Disney. The financial goals are also measurable in terms of revenue expected. Walt Disney Corporation is specifying goals by stating that they intend to differentiate content, services and consumer products, to run a superior business.
The time period in which this firm plans to accomplish this objective is alluded to in its financial goals, stating that the firm aims to sustain long-term shareholder value. Internal Strengths The Walt Disney Corporation brand name has powerfully distinguished itself nationwide as one of the best in the entertainment business. Operating at a multinational level, Walt Disney has over 58,000 employees worldwide, accompanied by more than 189,000 shareholders. Since 1995, Walt Disney has nearly doubled its sales to over $33 billion dollars.
In the same time frame, net income of this organization has more than doubled, from $1. 2 billion to $2. 8 billion. Disney stock prices have also increased steadily throughout its existence. Current stock prices are hovering around $30 per share (“The Walt Disney Company,”1996). Walt Disney Corporation can contribute much of its success to a large number of resources, superior experience, and its low-cost strategy. The company has developed a well -known brand name that has lead to high brand loyalty. This has given the organization the ability to adapt when product line sales decrease.
At the same time, financial stability has allowed Walt Disney Corporation to extend its product line and services into home video, film, merchandise, radio broadcasting, network television, and theme parks (“The Walt Disney Company,”1996). As product line sales declined in the US, Disney has effectively expanded its operations to Japan and Europe. Overall, financial stability is one of Walt Disney’s primary internal strengths, giving the firm flexibility to submerge into a variety of different markets and expand operations globally. Innovative thinking by Disney employees has been critical to the company’s success.
Employees have highly contributed to several box office hits in Disney productions. Creative and unique ideas this firm continually produces has overshadowed much of the competition. In an industry where extreme amounts of capital investments are required for new market entrants, Walt Disney has intimidated many new market entrants by dominating the market of entertainment. Much of this success is contributed to the organization’s internal assets in human resources. Another internal strength of Walt Disney is its ability to control costs.
Disney benefits from implementing a low-cost-corporate-strategy while delivering superior goods and services at the same time (“The Walt Disney Company,”1996). The low-cost strategy has subsequently minimized financial risks within the organization. Once again, this is possible because of limited competition. Internal Weaknesses Although Walt Disney is a very successful organization, every company fights one or several weaknesses within the organization. A case study on Walt Disney Corporation points out three primary internal weaknesses. The first is an affect from the firm’s large work force.
Communication is critical to any organization’s success and problems will inevitably exist with ideas and information circulating across 58,000 employees. The large work force inadvertently creates a high bureaucracy level within the corporation, which promotes stages of inequality between employees. By diversifying into more niches, Disney must be able to support the expansion of the company’s work force through efficient and effective means of communication (“The Walt Disney Company,”1996). With Disney’s persistent growth, supporting such a large number of employees and constant changes in top-management positions can become dangerous.
The firm’s intentions are to bring in fresh ideas and different perspectives by changing executives, but employees may not always understand the reasoning behind this tactic, thus leading to inefficiency and possible moral dilemmas within the company. Although there are several positives that supplement structural changes, resistance and heavy expenses are often associated along with these changes (“The Walt Disney Company,”1996). The third and final internal weakness noted in the case study of Walt Disney Corporation is the firm’s high overhead expenses.
The case study notes that, “Large overhead costs are usually direct effects of a large work-force and a large number of fixed assets” (“The Walt Disney Company,”1996). As Disney products and services expand globally, a vast amount of employees and fixed assets tied into the company is impossible to avoid. External Opportunities For an organization to be successful, recognizing external opportunities is crucial. After recognizing an opportunity, the company must research and continue to analyze the research to respond quickly and effectively to the market.
Walt Disney Corporation has taken full advantage of external opportunities presented throughout its livelihood in the entertainment business. One opportunity Disney recognized and responded to at an early stage was the deficient movie market for young children. The newly animated movies produced by Disney have specifically targeted a young audience and has done so effectively, resulting in high profit margins. Although their target audience is generally the younger generation, many teens and adults have found themselves enjoying Disney productions.
Competition has found it difficult to penetrate the company’s highly diversified product/service mix in such a highly specialized industry (“The Walt Disney Company,”1996). Diversification of products and services is a strategy that the Disney Corporation clearly focuses on in order to establish a competitive advantage in the entertainment market. In addition, extraordinary initial capital investments are essential to enter the business. The entertainment industry itself has presented itself to be a high opportunity market. People will relentlessly seek amusement and entertainment in until the end of times.
Movies, cartoon shows, toys, and Disney theme parks all have a value that consumers will actively pursue as we have seen on a daily basis. With such a high market share, Disney obtains considerable leverage in pricing. If the demand for Disney products and/or services is high, the organization can increase prices. If the demand is low, Disney can afford to lower prices. This is another direct affect of the firm’s financial stability they have established through 80 years of successful operations. Another external opportunity is seen in positive government attitudes towards the organizations operations.
Although government is generally recognized as being more of a negative factor in large corporations, government forces nationwide have contributed to Walt Disney’s product/service mix. For example, the French government invested over USD 1. 2 billion in a Euro Disneyworld development. Benefits of this investment went towards tax reliefs in cost of goods sold accounts and communication facilities (“The Walt Disney Company,”1996). The French government’s financial support in this situation would make it difficult for Walt Disney Corporation to lose large amounts of capital in a new theme park.
Consistent funding from government entities is an advantage every corporation dreams about. External Threats Despite the number of external opportunities presented to the Disney organization, there still lies a few external threats. Although Disney has been very successful in the movie line, the business itself is extremely risky. Marketing research is important in the case of the movie and network-television industry. Understanding when and why the market shifts suddenly and frequently is critical to every organizations success.
Disney must understand the external environment in this case and sustain sales through market orientation. Despite the overall market barrier in this industry, competition is always a factor in the network-television industry. The Disney channel has many rivals as new cartoons have surfaced in television both domestically and internationally from Sponge Bob Square Pants to Scooby-Doo. Disney has created a niche in targeting a specific age group of young children in its movies and cartoon shows, resulting in much of the firm’s success.
One factor that has limited the firm’s external threats is the expansion of its business. The Walt Disney Company case study writes that, “… the company has hedged itself to the macroeconomics factor, as it has diversified its business worldwide” (1996). If there happen to be an economic depression in one area of the world, operations in another site would support in covering losses by increasing revenues. Although most businesses would be affected by a recession, Disney has taken full advantage of the opportunity to expand globally.
The primary rationale for not pursing high revenue on a consistent basis is because the corporate policy is to grow slowly and not try to impress anyone. With economic depression seldom spreading across the world instantaneously, this firm can rest easier than most organizations in the entertainment business. Strengths tied to Opportunities Opportunities that have been recognized and taken advantage of by Walt Disney Corporation can be contributed to the organizations internal strength of human resources. Disney executives take on a decentralized management approach by encouraging ideas from employees within the organization.
The most creative and artistic employees usually meet every Sunday in what is called a “Gong-Show” (“The Walt Disney Company,”1996). Here, employees brainstorm in order to come up with innovative ideas and new business concepts/strategies (“The Walt Disney Company,”1996). Top employees benefit from special perk-packages, higher bonuses and an increase in salary. Although this expense is heavy, Walt Disney Corporation has dedicated itself to employee satisfaction, knowing much of the organization’s top achievements have come by way of its own workers. Porter’s Five-Forces Model is alluded to in any marketing case.
Throughout the SWOT analysis, several relationships were brought up that tied this model to the Walt Disney organization. Examples aforementioned, integrated in Porter’s Five-Forces Model, include new entrants, customers, and competitors. Below is a diagram of the model: Michael Porter’s Five Forces Model Walt Disney Marketing Strategy Good enough to get by is not good enough for Disney. Unlike other organizations that claim to be the best at what they do, Disney has the numbers to back up this statement. Disney’s Parks and Resorts attract over 50 million people annually.
This number is unmatched by any competitor in the industry. The very reason behind their success lies in the firm’s marketing strategy. The marketing strategy of a business will undoubtedly make or break an organization. Such work is the daily commerce of Walt Disney’s imaginers, a core group of creative and highly skilled professional wizards (Eisner, 22). These employees combine imagination with engineering to create the reality of dreams that is Walt Disney World, Disneyland, Disneyland Paris, and Tokyo Disneyland, the world’s most popular vacation kingdoms.
The desire to take his passion for storytelling far beyond the confines of two-dimensions, Walt Disney inspired to construct an adventure park that emulated the sensation of stepping inside a theatre for the first time. Walt wanted every inch of the place to be part of a story, as in a movie or television show. Walt and his first team of imaginers invented the theme park business by inventing the process of “Imagineering. ” Imagineering is the process of learning and succeeding by dreaming and acting (Eisner, 11). Walt Disney Parks and Resorts initiated the slogan, “Where Dreams Come True. To make this more possible, Walt Disney Parks and Resorts have grown to encompass the Disney Cruise Line, seven Disney Vacations Club resorts, Adventures by Disney, and five resort locations (encompassing 11 theme parks) on three continents. Disney’s drawing board concepts are designed to bring Disney experiences to new markets. Within new markets, Disney remains dedicated to the promise that its cast members turn the ordinary into the extraordinary. Making dreams come true every day is a central theme to Disney’s global growth strategy.
Walt Disney’s Five Marketing Strategies A successful marketing strategy defines the future for a company. Walt Disney Corporation has five marketing success strategies. First, Walt Disney sells more to existing customers. At Walt Disney theme parks, customers are continuously offered other products and services to purchase. For example, upon exiting an attraction, customers enter a store themed to that attraction with gifts. In addition, while traveling on trams, monorails, trains and boats, there are continuous marketing announcements.
These recordings inform customers of ways to upgrade their tickets, persuade them to stay longer, dine at Disney’s restaurants, or go to other attractions that Disney and company offers. Recognizing that current customers are the easiest to sell to, Disney targets them by taking every opportunity to sell them more. The next marketing strategy Walt Disney follows is expanding its marketplace. Walt Disney World in Orlando, Florida, attracts visitors from all over the world. With extensive environmental scanning and research, Disney realized they could expand its business if the firm offered its products to other marketplaces outside of the USA.
As a result, Disney developed country specific theme parks and delivered its products to these marketplaces, constructing its global vision. Disney has increased its marketplace and created worldwide brand recognition by building these country specific theme parks. Now that the firm’s market has increased, its resorts and parks are easier to visit and ultimately more available to Disney’s target market, families. The exclusiveness of Disney’s theme parks has not affected tourists from traveling across the world to visit Disneyland or Walt Disney World.
The value of service and experience presented by Disney is unsurpassed in the world of entertainment. Most Disney Theme Parks are mostly open seven days a week for 10-12 hours a day to satisfy customers as much as possible (Orlando Sentinel, 2006). Walt Disney Theme Parks cover a very big area and an individual can not go through an entire park in one day. For this reason, it is more than just a one day visit to the park, it is a destination. Since 1971, Disney has been the top family-vacation destination in the world because visitors can spend several days experiencing everything Disney has to offer (Orlando Sentinel, 2006).
Add many fine restaurants and shopping venues on top of thrilling roller coaster rides, and customers see that there is plenty to keep them busy while wondering inside Walt Disney Parks. Disney offers many different hotel options for travellers looking to stay on-site. For an example, Grand Floridian Resort & Spa and Animal Kingdom Lodge are some of the few hotels that place guests in the finest surroundings, alongside exceptional service and luxurious on-site dining. Disney’s All-Star Resorts provide high-quality accommodations at reasonable prices.
Walt Disney provides transportation between on-site hotels and its theme parks. Even if an individual or family does not stay on-site, it is easy to take Disney’s transportation services between the Magic Kingdom, Epcot, Animal Kingdom, Disney-MGM Studios and other Disney destinations (Orlando Sentinel, 2006). The service aspect of the Disney Company illustrates their ability to entertain and satisfy visitors, young and old. Walt Disney World Theme Parks strive to improve and add to their offerings. Disney is constantly expanding, building, and looking to improve.
With its existing theme parks, Disney is always introducing innovations to its parks. Buzz Light-year Astro Blasters was recently unveiled at Disneyland. This ride entails riders to turn circles in their cars while shooting laser cannons to defeat the evil Emperor Zurg. Riders compete for points, but the interactivity does not end there. People at home can download a free video game on his or her computer and play along with the riders in real time. These regular improvements draw back repeat visitors.
In addition to improving its existing theme parks and building new theme parks, Disney is persistently inventing new products to sell. Walt Disney movies are the most well known of its products. Disney’s studios are always working to create new motion pictures and releasing them into the marketplace to produce consistent profits. The company further leverages its movies by incorporating its products into theme park attractions. The synergy Disney has developed between its theme parks and movies helps drive the organization’s movie sales, creating a well-defined marketing mix.
One thing that makes Disney parks unique is that they pioneer some of the most innovative and one-of-a-kind attractions. A couple examples are Indiana Jones and Test Track, which is the first of Disney’s true thrill rides (Cabico, 2006). These are just a few of the Disney Theme Park rides that have put Disney ahead in the theme park industry. Disney Theme Parks also have the reputation of being the most clean and professionally run parks in the world (Cabico, 2006). A primary reason for this is that cast members working these parks make it a priority to make each and every guest feel special (Cabico, 2006).
Promotion Marketing activities are a critical part of a company’s strategic plan. An organization may have an outstanding product, but if they are unable to communicate that to the market, the product is not likely to be successful. While the common interpretation of marketing is advertising, additional components, including the product itself, promotion, sales promotion, public relations, and pricing strategy are also critical components of the marketing mix. When developing a marketing plan, companies must take into account their target market.
Disney Theme Parks’ target market is family. One of the best ways to reach families and appeal to the market is through promotional activities. Walt Disney Theme Parks practice continuous promotion. They have a marketing budget and a plan that’s designed to keep their message in front of their audience. People regularly see Disney’s ads on TV, in print publications and on the Internet. Disney also sends direct mail pieces to past customers with varying offers. Disney’s promotions are designed to continuously remind its customers that they are waiting for them.
The “Year of a Million Dreams” is Disney’s latest promotional marketing campaign. The yearlong celebration began on October 1, 2006 at the Walt Disney World Resort in Florida and the Disneyland Resort in California. It has been called the “Disney Dreams Giveaway” promotion. During this campaign, Disney Park employees will present gifts, or “dreams,” to visitors. One recipient was awarded the fast-pass allowing them to skip the park’s lines. Guests were also given the opportunity for overnight stays in the new Cinderella Castle Suite at Magic Kingdom Park (Disney Online 2006). Advertising
Disney has created a strong advertising appeal for families to visit Disney theme parks. “Where dreams come true” is Disney’s unique selling proposition. On May 5, 2005, Disney Theme Parks began to celebrate their 50th year of the 1955 opening of the first Disneyland. The 50th year anniversary was an opportunity for Disney to practice institutional advertising, building their image and educating the public about Disney Theme Parks. To educate the public about Disney Theme Parks and the 18-month anniversary celebration, Disney used different media to reach their target markets.
Disneyland’s 50th anniversary necessitated that marketers within Disney’s resorts search for creative ways to spread news across the entertainment company’s various media outlets. This required observation of the marketing environment to determine a new way of reaching out to consumers. Walt Disney’s idea for the 18-month international anniversary celebration was taking passive entertainment and making it immersive in an attempt to educate the public about Disneyland. Disneyland is celebrating its 50th anniversary with an estimated $150 million in marketing support (Cabico, 2006).
Television presents creative opportunities that allow Disney to advertise through targeted channels and reach their target market. The Disney Channel is targeted to the tween-to-teen viewer, aged roughly 8 to 15. This targeted channel allows Disney to reach children, an audience within their target market. ABC also did a segment on videos filmed on Walt Disney. To advertise this campaign, the program starred three actors on ABC’s most popular shows to obtain people’s interest. Playing off the hype of a star to promote Disney represents the halo effect.
The stars involved were: Kim Yun-Jin from Lost, James Denton from Desperate Housewives, and Isaiah Washington from Grey’s Anatomy. These actors gave testimonials about their hopes and dreams. Country singer Sara Evans, a contestant on Dancing with the Stars, also appeared on ABC (People’s Daily Online, 2006). The ads were shot in a reflective, documentary style. The message, advertising Disneyland, explored the dreams of each individual and what it took to accomplish them. Even new SOAP net got involved in advertising the Disney parks for the 50th anniversary.
On January 1, 2005, during the anniversary celebration, Disney kicked off its global branding campaign. SOAP net’s telecast of the Tournament of Roses parade adopted the theme, “Celebrating Family. ” Targeting families in its parade theme can be traced back to Disney’s mission statement, “nurturing the imaginations of children and celebrating American qualities. ” The anniversary exceeded expectations. Disney Chief Financial Officer Thomas O. Staggs told investors and analysts during a conference call in May of 2005 that overall profit increased 12% in the second quarter (People’s Daily Online, 2006).
An estimated 63. 1 million people visited Disney’s parks in Anaheim, California and Orlando, Florida last year (People’s Daily Online, 2006). “Attendance at Disneyland was up 8. 5% last year over 2004,” said John Robinett, senior vice president of Los Angeles-based Economics Research Associates (People’s Daily Online, 2006). Effective advertising attracted the increased attendance at Disney Theme Parks. Pubic Relations After Disneyland hit the half-century mark, the Walt Disney Co. faced some critical challenges. One of these challenges is geographic.
The company is set to open its 11th park in Hong Kong in September and could soon announce plans for another in mainland China. The question is how many more places in the world can support a massive new multi-day theme park? From a public relations perspective, Mickey and Minnie were just two of several characters to use at the opening of the Hong Kong Disneyland to carry their message. The PR excitement for the mid-sized amusement park is stemming from two contentious parts of society, big business and government (Cabico, 2006). The promises that Disney made for Hong Kong Disneyland aised public relations pressures, issues that may elicit public concern. The first promise is Disneyland’s fundamental appeal that kids and families will have fun together at the park. The second promise is that Disneyland will help drive the next generation of Hong Kong tourism and possibly help to stimulate the country’s economy. The third promise is that similar to Disneyland, Hong Kong will enhance its position as an international capital, attracting world-class culture, investment, brands, and talent (People’s Daily Online, 2006).
These promises that Disney is making are placing positive information in the news media to attract attention to their services. However, it is risky for any company to make a promise, as the result may enhance or detriment Disney’s image. Disney’s biggest challenge, however, may be keeping the attention and dollars of a generation raised on video games. The demand for games is extremely high and has slowly gained leverage over Disney’s entertainment than most Disney attractions provide. Almost everything Disney does today is passive, while kids today expect everything to be interactive,” said Martin Lindstrom, a brand expert and author who has previously consulted for Disney (People’s Daily Online, 2006). As mentioned above, Disney has already begun to offer interactive entertainment such as, the new Buzz Light-year Astro Blazers ride. Riders compete for points, but the interactivity does not end there. People at home can download a free video game on his or her computer and play along with the riders in real time.
Disney is also counting on the Internet, cell phones, digital projectors and other technology to make its parks more appealing to Generation Y, while maintaining the nostalgia that appeals to baby boomers at the same time. In an effort to enhance their image and promote health in kids, Walt Disney Parks and Resorts declared on October 16 of 2006, that well-balanced meals for children will now become the standard offering at Disney-operated restaurants and kiosks in its U. S. , as part of the firm’s new food guidelines to promote health in kids (Disney Online, 2006).
The guidelines will be adapted internationally over the next several years. Walt Disney Parks and Resorts announced a plan to eliminate all added Trans fats and enhance the taste of most of its food offerings for kids and adults by the end of 2007. Disney’s new food guidelines are aimed at giving parents and children healthier eating options. Disney Consumer Products has already begun to offer many licensed products that comply with the guidelines. There are now kid sized apples and bananas. Consumers can also purchase organic food and pasta shaped as Mickey, or one of the other well-known characters.
The chairman of Walt Disney Parks and Resorts said: “This is a terrific initiative because it makes it easier for parents, even while on vacation, to offer their children well balanced meals with kid appeal” (Disney Online, 2006). Disney is generally synonymous with fun and can play a very important role in getting kids to eat a more balanced diet. Price The price for certain attractions varies dependent on the theme park location and which ticket that customer purchases. Disney’s slogan that accompanies their ticket prices reads: “The Longer You Play, The More You Save Per Day. Disney accepts many different payment options and purchase options to lessen the hassle for customers. Disney also offers several different packages to satisfy consumers. One of these packages is called Magic Your Way Package. Magic Your Way Ticket, costs $67 and will give each member of the party entry to one theme park a day for each day of the ticket (Disney Online, 2006). There are four parks within Disney Theme Parks, Animal Kingdom, Magic Kingdom, Epcot and MGM. If an individual purchases the Magic Your Way Package they can only attend one of these four parks.
Some of the benefits people get by buying a Magic Your Way Package are three hours of extra time after regular park closing and transportation to different places throughout the park (Disney Online, 2006). Another significant benefit is that cast members provide a 24-hour service to ensure that the vacation is as worry-free as possible (Disney Online, 2006). A ticket called, Park Hopper, allows a person to visit more than one of the four theme parks each day of the pass (Disney Online, 2006). The Park Hopper