International Marketing Strategy Report Walt Disney Parks and Resorts
This paper is about Walt Disney Parks and Resorts. It is a diversified global entertainment company. It runs five business segments which are parks and resorts, studio environment, media networks, interactive media and consumer products. Walt Disney is situated in Florida, California, Tokyo and Hong Kong (Walt Disney 2014). The study will conduct a situation analysis, strategic options with respect to Ansoff’s Matrix, marketing Mix, and BCG Matrix and finally, a recommendation on the best strategic option.
Situational analysis is carrying out an environmental scan to establish both the internal and external forces that may affect the business success. SWOT analysis is the best tool for conducting situational analysis. The strengths and weaknesses focuses on the internal environment while the opportunities and threats focus on the external environment. An illustration of Walt Disney’s SWOT analysis is found at the appendix section (see table 1).
Walt Disney is a well established brand. With more than ninety years in existence, the company is regarded as the most popular entertainment platform. The company has gained recognition due to its Disney Park resorts, Disney channel and movies from Walt Disney studios (Walt Disney 2014). Moreover, the company boasts of a strong product portfolio. Its products consist of broadcast television network, ABC and cable networks such as Disney Channel. It is one of the most watched cable networks internationally. Diversification is also strength. The company runs five different business segments. These are parks and resorts, studio environment, media networks, interactive media and consumer products. These segments are conducted offline and online. It is also one of the largest resorts internationally with more than thirty thousand acres of land (Walt Disney 2014). The company has excellent customer service. The employees are committed to customer service and the customers will cite ‘Mickey Mouse’ as a testimony of its good services.
The company heavily depends on income from the North American markets. Even though its businesses are found in more than two hundred countries, it heavily relies on Canada and the U.S. markets for its revenue (The Chartered Institute of Marketing 2012). This is a challenge because any changes in the U.S. market may affect its profitability. High operating costs is also a weakness. It is costly to produce film or design a theme park. There is a slow revenue growth from the consumer products division compared to other business segments (The Chartered Institute of Marketing 2012). The slow rate in revenue growth means that the company is not aggressive in its marketing campaigns with respect to consumer products division.
The lack of more property for development in other parts of the world such as Hong Kong, Paris and Shanghai is a problem. The company has vast lands in Florida however, future developments in other parts inclusive of California’s Disneyland resort is a challenge because of the rapid pace at which property was bought in the 1940s when the company became popular hence, limiting Disney’s land around the resort (Walt Disney 2014). The opportunity to expand to emerging markets: Disney has the opportunity to expand to China. The company views china as an untapped market for its entertainment properties. The company is aiming to develop the new Shanghai Disney Resort in order to attract China’s growing middle class (The Chartered Institute of Marketing 2012). The company expects to succeed because it is accustomed to the host environment’s culture. For instance, it operates Hong Kong Disneyland hence, having rich knowledge about China.
Stiff competition is a threat to the company. Universal studios and Universal’s island of Adventure is also situated in the U.S. and is popular and offers activities that are similar to what Walt Disney offers (The Chartered Institute of Marketing 2012). A part from the competitors in its geographic area, the company may lose its customers to several theme parks that are opening. Piracy is another threat. Technological advancement allows copying, transmission and distribution of copyrighted material. With the rising number of internet users and the internet speed, this may affect Disney’s profit margins because few people would watch movies in cinemas or buy its DVDs, as it can be downloaded online (Walt Disney 2014). There is also a strong growth of online movie and online TV renting. This may affect the company’s media and movie production businesses.
Strategy1: Ansoff’s Matrix
Ansoff’s matrix is made up of market penetration, market development, product diversification and product development. Market penetration is increasing sales in existing markets using existing products (Hollensen 2012). The company has recorded high growth in its current market basing on 3D animation and parks and Resorts (Walt Disney 2014). The company should advertise these products in its current market to increase its market share. Market penetration is considered as less risky for a company to improve. The company can also use its website to increase its products coverage. The company should improve its search engine to increase access on its products and services (Walt Disney 2014). It should also modify its website to include other languages to assists its international consumers to easily understand their products and services.
Market development is targeting existing products on new markets. The company views china as an untapped market for its entertainment properties. Therefore, the company can use market development while trying to expand to Shanghai Disney Resort (The Chartered Institute of Marketing 2012). The company can also introduce its products in Sri Lanka. This can be an opportunity for the company to open a new outlet in South Asia noting that the company has no outlet in that region (Okumus, Altinay & prakash 2010). Although market development appears to be a risky initiative, Walt Disney is good at this following past acquisitions in which the company was successful in.
Product development is developing new products that targets existing market segments. Because Walt Disney operates under entertainment sector, the company can develop a new product such as Disney underwater parks in order to differentiate itself from other parks and resorts (Walt Disney 2014). Creation of new products will assist the company to widen its customer base by attracting new customers. Because of rapid technological change, creating new and exciting adventures on theme parks including exciting motion pictures and animated cartoons will help to increase the market share. New product development is an important business strategy for a firm to gain competitive advantage.
Diversification is developing new products that targets new markets. The company shifted from the production of animated movies to theme parks and vacation properties (Walt Disney 2014). This has enabled the company to expand to new markets where it did not exist initially.
Strategy 2: Marketing Mix
Walt Disney’s products and services include media networks, parks and resorts, Walt Disney Studios, Disney consumer products and Disney interactive. The media networks consist of cable, radio, broadcast, publishing and digital businesses across two divisions: ESPN and Disney / ABC television Group (Walt Disney 2014). On the other hand, when Disneyland was opened in 1955, a unique destination was built around storytelling and experience leading to a new era of family entertainment.
Walt Disney parks and Resorts have developed into one of the world’s leading providers of family travel and leisure experiences, offering several guests an opportunity to spend time with family and friends each year. Walt Disney parks and Resorts consist of eleven theme parks and resorts and forty four resorts in North America, Asia and Europe, with a sixth destination under development in shanghai (Walt Disney 2014). Its parks and resorts also consist of the Disney Cruise line with its four ships: Disney Wonder, Disney magic, Disney Fantasy and Disney dream.
Currently, the studio offers quality movies, music and stage plays to the customers both locally and internationally. The Disney consumer products offer creative and engaging product experiences across various classifications of toys, apparels, fine art and books (Walt Disney 2014). Disney interactive is one of the leading creators of high quality interactive entertainment across all current and emerging digital media channels. The products and content released and carried out by Disney Interactive consist of console games, blockbuster, online virtual worlds and Disney.com.
Because Walt Disney focuses on attracting families, its prices are reasonable. The company mainly targets the middle class. In addition, the company wants all parents and kids to buy their merchandise. Hence, their prices are fixed in such a way that it also attracts the middle class consumers (Lamb 2009). The Disneyland tickets are not highly priced to encourage the people to visit the park frequently. The prices are also based on seasons with high prices when the market is good and prices are reduced during the low season.
Walt Disney is situated in Florida, California, Tokyo, and Hong Kong. Their products are displayed at various stores (The Chartered Institute of Marketing 2012). The stores are situated in urban centers, malls, and supercenters where there is a lot of walk in traffic. This increases brands visibility. The stores are also found in their theme parks hence, selling them to families who visit the park.
Its productions such as movies are promoted via social and print media and T.V. commercialization. Its adverts on TV feature reduced or free tickets and low priced rooms. Disneyland markets itself by offering discounts hence, making it easy for people to visit Disneyland. Moreover, the company has its own channel where the products and movies are promoted (The Chartered Institute of Marketing 2012). In sum, merchandising is promoted through different retail stores, point of sale terminals such as resorts and theme parks and online stores.
People and Process
The company is recognized as the best in terms of customer service. The company has its own university where it trains its employees about Walt Disney’s values and culture. The company views its customers as direct contributors to the bottom line because its customers serve as ambassadors (Goeldner & Ritchie 2009). Training its employees before working for the company has improved its corporate image. The employees are motivated because they have the relevant skills and knowledge that is sufficient to deliver results.
Walt Disney’s slogan is ‘the happiest place on earth.’ Other popular slogans include ‘where dreams come true’ and ‘where the magic begins’ (Walt Disney 2014). People value these slogans. Those who have visited Disneyland still hold memories about the place and have praised Walt Disney’s for their innovation.
Strategy 3: BCG Matrix
BCG matrix consists of the stars (high growth, high market share), question marks (high growth, low market share), cash cows (low growth, high market share) and dogs (low growth, low market share) (Keegan & Green 2013). Walt Disney’s media networks are the stars. It generates forty five percent of the company’s profits (Enz 2010). Similarly, there is high growth of media network across the globe and the company has a high growth of market share in existing markets.
Studio entertainment is classified as a question mark because of a high growth but low market share. Parks and resorts is the cash cow. It still generates more cash for the company at a low market share compared to media networks (Gershon 2008). Consumer products and interactive media are classified under dogs because of low growth and low market share. They produce eight percent and three percent of the company’s market shares respectively (see chart 1).
The key issues facing Walt Disney are improving visitor experience and investment in new rides and attractions. Visitor experience is important to theme parks. Its audience is teenagers, young families and young adults seeking for fun and excitement. If people experience a poor experience, the chances of coming back are low. It is therefore important for the theme parks to be innovative in order to generate repeat visits (The Chartered Institute of Marketing 2012). Secondly, the company can increase interest in the park by constantly adding new rides and attractions to encourage more visits to the park. Due to fluctuating economic growth, Walt Disney is wondering whether to invest on a large scale in new rides and attractions or wait for the economy to fully recover in order to implement the project and realize a return on investment in the long run.
Recommendations and conclusion
Ansoff’s matrix on diversification is recommended. The company has been able to diversify through horizontal and vertical integration. The aspect of diversification has enabled Walt Disney to develop new products that are appropriate for its target market who are mainly teenagers, young families and young adults (Hitt, Ireland & Hoskisson 2014). In addition, diversification has enabled the company to stay close to its customers by opening new markets within the reach of these customers hence, no need to travel to Florida or California to experience the products and services.
The wide knowledge about its customers is an ability on which the company can formulate corporate level competencies in relation to marketing and promotion. With these competencies, the company is able to develop economies of scope via corporate related strategies as it sells its products via the distribution channels that are part of its parks and resorts and consumer product businesses (Hitt, Ireland & Hoskisson 2014).
I therefore recommend product, place and promotion as the marketing mix that aligns with diversification. Promotion will assist the company to record sales during low seasons as it diversifies. The place or distribution strategy helps the company to locate its parks and resorts in places with customer potential (Walt Disney 2014). Notably the company is good at identifying places for its parks and resorts as demonstrated by the success in Europe, Asia and America markets.
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International Marketing Strategy Report Walt Disney Parks and Resorts
Walt Disney’s SWOT analysis
Well established brand
Strong product portfolio
Largest resort with more than thirty thousand acres of land
Excellent customer service
opportunity to expand to emerging markets
Heavily depends on income from the North American markets
High operating costs
Slow revenue growth from consumer products division
Lack of more property for development in other parts of the world
strong growth of online movie and online TV renting