The End of Euro Disneys as a White-knuckle Ride - Essay Example

Case Study: DISNEYLAND EUROPE EXECUTIVE SUMMARY EuroDisney, now referred to as Disneyland Europe, has experienced significant losses since the theme park was opened in the 1990’s. Despite these losses, as of August 2008, the company was finally beginning to experience growth through new strategy formulation and clever marketing efforts. However, despite positive growth in consumer patronage and revenue, the business requires an advanced shift in current marketing efforts to turn the firm around. This report highlights two specific strategic scenarios on how best to make Disneyland Europe a success. Case Study: Disneyland Europe STRATEGIC SCENARIO #1: The Short-Lived Credit Crunch (2009-2014) By August of 2008, the global credit crunch had begun to affect a multitude of businesses both domestically and in foreign operating environments. It is not expected for growth in the European sector to be experienced until 2010 or 2011, which will require Disneyland Europe to find innovative methods to draw higher crowd volumes and ensure profit success. Additionally, rising commodity prices which will be felt in 2009 will seriously erode the potential for profitability in this year, with the business forced to cut costs where necessary and appropriate. One publicity expert identifies that theme park industries are highly competitive and strategic success involves the volume of guests which pass through the entrance turnstile every day (Kohl, 2000: 48). Further, the author identifies that attendance is so widely important that many executive leaders have hourly tourist counts pumped into their mobile devices for the sake of tracking customer numbers (Kohl). This is especially true at Disneyland Europe which relies on customer volumes to generate annual profit. Getting higher sales volumes, however, in the midst of the current credit crunch requires understanding competitive behaviours whilst redesigning Disneyland Europe with a new, modernised logo to attract the contemporary consumer. Readjustments to marketing will be the proverbial saving grace for Disneyland Europe in the next five years. In 2009, Disneyland Europe must make a stronger effort to understand its customers. Since over 40 percent of all customers are French, repositioning the EuroDisney brand to focus on French lifestyle can ensure a higher revenue stream during the current economic crisis. This will be increasingly difficult beyond 2008 and will require research into existing consumer behaviours in French markets. Snyder (2002) offers that the French tend to link Disneyland Europe with American culture, giving them a negative perception of “cultural imperialism” in which the theme park is attempting to force American lifestyle into a proud, French culture. Negative cultural perceptions must be eliminated whenever possible in the new marketing model. In 2009, the company will redesign the existing corporate logo as a means of appealing to the French mentality and to avoid perceptions of cultural imperialism. Unlike the Japanese Disney theme park established in which citizens demanded Americanisation and lifestyle (Snyder), this element must be removed from all marketing literature targeted at the French community. The current logo, based on the American version of Disney theme parks, will be redesigned with the famous “mouse ears” sporting a French beret with a new marketing slogan, Oui. Simply for you!. This redesign of logo and marketing literature is a low-cost effort to appeal strongly to the French culture (who make up a large majority of patronage) and repositioning EuroDisney as a lifestyle enhancement tool and community forum rather than merely a theme park with a particular number of rides and attractions. One of the main problems, by August of 2008, was an inability to create a sense of urgency for potential customers in order to build higher customer volumes. Consumer sentiment is not largely affected by economic downturns, however it is the responsibility of leadership to establish this sense of urgency for potential customers in 2009 and 2010 to offset the rising costs of commodities and fuel prices. Disneyland Europe must be positioned as a stand-out leader in pricing value and as a necessity product to get through tough economic conditions with EuroDisney as the focus. In this two year period, sales revenues will likely continue to fall and layoffs, as a cost-reduction tool, will be necessary without an adjustment to existing marketing strategy. The marketing mix, at EuroDisney, is crucial to the 2009 and 2010 forecast. In terms of promotion, this is where the company must give its strongest emphasis. In 2008, the company witnessed a 13 percent sales increase due to the changes to park infrastructure and by recognising consumer needs and adjusting pricing to fit consumer expectations (Sylt and Reid, 2008). The business cannot rely on continued investments from independent investors to rescue the firm from potential bankruptcy or a mangled balance sheet. Since consumer behaviours and spending is likely to decrease throughout 2009, marketing is the most appropriate measure to build consumer satisfaction and urgency to patronise EuroDisney. Understanding the consumer needs of the French population will be the focus of most strategic efforts during these difficult years. Reduced food prices and multiple-role staff members will also contribute to the new economic model of business for 2009 and early 2010. Even though commodity prices are on the increase, there must be a strong incentive to attend the park and slashing ticket prices is not the answer for business success. Promotional literature targeting the French population will include various coupons and incentives, such as Buy1Get1 food items at certain snack stands or events “clip and deliver” coupons for in-park events at a steep discount will ensure higher customer patronage by appealing to the need to save money during difficult times. EuroDisney, always with the French customer, understands their pain in 2009 and 2010 and will provide discounts whenever possible as part of relationship-building and creating a long-standing loyalty. These costs can be recuperated in other areas such as presenting modest pricing increases in non-edible Disneyland Europe merchandise sold in-park. During an extended period of economic decay, it becomes crucial to focus on inexpensive marketing, rather than making sizeable infrastructure developments, as a path forward toward strategic growth and profitability. Repositioning Disneyland Europe as both a lifestyle necessity and as an increasing value for French consumers (by focusing on unique cultural needs and logo presentation) is the key to a successful five year strategic plan. Below are expected customer volumes, after implementation of the new strategic marketing plan, for the years 2009-2014: 2010 – 11 million 2011 – 12 million 2012 – 16 million 2013 – 18 million 2014 – 19 million These assumptions are based on the sizeable increases in customer patronage in 2008 due to infrastructure improvements and new marketing efforts. Fall-offs of customer volumes are natural and expected during economic slowdowns, however by repositioning the company as a lifestyle product and service, EuroDisney can outperform competition and improve customer volumes, through the establishment of cultural connection, well beyond 2012. STRATEGIC SCENARIO #2: Continuing Negative Economic Climate This strategic scenario recognises that there will be absolutely no rapid growth in the European marketplace over the next five years (2009-2014). Escalating credit crunches, rising commodity prices, and overall strain on consumer pocketbooks will greatly impact EuroDisney. Walsh (2005) identifies that external environmental factors, such as the economic climate, must rely on a competent PESTEL analysis in order to create strategic policy which can plan for unpredictable environmental conditions and identify key market variables which impact whether customers attend EuroDisney activities. After careful analysis, the social variables are most vital to this long-term strategic plan. It was previously identified that customer values, especially amongst the French, are somewhat anti-American in terms of how these consumers demand theme park presentation. As part of the new strategic plan, the company will take an international marketing approach to draw in customers from outside of the French marketplace and appeal to unique, European lifestyles. For instance, MacIntosh (2008) suggests that InBev, owner of Anheuser-Busch beer company, has experienced a significant sales increase in beer due to higher American theme park attendance. This is an incredible opportunity to create internationally-focused, strategic partnerships with beverage makers to lure German customers (and other beer-minded citizens) to the new 2009-2014 EuroDisney business model. Unique marketing literature highlighting a variety of Disney characters engaging in alcoholic beverage consumption (adult-themed and targeted) can create a progressive and modern image of EuroDisney and also establish long-term partnership agreements with various alcoholic beverage makers for long-term strategic edge. All print advertising will focus on InBev promotions (or other manufacturers of adult beverage products), highlighting that during tough economic times, one can always rely on EuroDisney for a quick spirit and community commiseration. Along with this promotion will be the construction of an inexpensive weekly celebration within existing buildings at the park to offer customers to enjoy on-tap beer products for a significantly reduced price. Deemed the new Friends and Spirits marketing campaign, adult-minded consumers looking for an appropriate place to celebrate can turn toward the more progressive Mickey Mouse and Pluto engaging in adult beverage consumption. This is a radical shift in strategic policy, however in order to expand the marketing reach of the new, progressive EuroDisney, efforts such as these are necessary to boost sales volumes at a time where families are feeling the economic pinch and are unwilling to spend largely on theme park visitation. Therefore, the business can no longer rely on the French consumer to make up the majority of sales but must rely on innovation through marketing to appeal to a much broader (and accessible geographically) market outside of the French community. This low-cost approach to international marketing changes will bring higher sales volumes in the short-term and also add long-term value to the name Disneyland Europe by making the park a contemporary and adult-focused organisation well beyond 2014. It is likely that other firms which are affected by the credit crunch, such as alcoholic beverage makers, will be quite interested in partnering with EuroDisney if the agreement entails providing brand-specific beverages within the theme park. This is a win-win scenario both for the partner and for Disneyland Europe. Siegel (2006) offers that incentives, when utilised properly, work to gain consumer interest and will often draw higher visits to online company websites. Incentives are a very low-cost and effective way to appeal to a consumer audience which is feeling the economic pinch. The new strategic direction will require the establishment of country-specific websites, each linked to the home page for Disneyland Europe, offering unique incentives for attending the park based on nationality. For example, visiting the Denmark site will offer a 2-for-1 offer on in-park accommodations with a one week booking. In Spain, an online printed ticket good for 30 percent off ALL general merchandise and souvenirs can draw the shopping-minded tourist. In essence, Disneyland Europe must create a wide variety of incentives to lure customers, despite the short-term loss in revenue expectations, in order to turn these customers through the entrance turnstiles and generate revenues from ticket sales. Free return visits, also, will act as the strategic incentive necessary to boost short-term sales volumes and increase customer patronage at EuroDisney. Each customer who attends the park between 2009 and 2010 will receive a return ticket (valued up to $75) good until 2014. This 2-for-1 offer will promise free park entrance, regardless of the actual ticket prices in the future, as a means to boost sales in a slumping economy. The 2-for-1 offer will be associated with premium park entry tickets (those with multiple in-park services). This will give customers the incentive to buy the higher-priced tickets and enjoy the many services the park offers and prevent customers from using the current economic crisis as an excuse to buy discounted, inferior ticket options. Because ticket prices were cited as a main concern of customers in the European marketplace (Sylt and Reid), it is crucial in this five-year plan to give customers the incentives necessary to pay one-time premium prices for the promise of free services in the future. This effort will also undercut any competitors internationally who will likely be struggling with lower sales volumes, higher commodity prices, and eventual staff layoffs as a cost-savings effort. Customer volumes in this five-year strategic plan with a heavy focus on marketing are expected as follows: 2010 – 14 million 2011 – 14 million 2012 – 14 million 2013 – 18 million 2014 – 22 million The new focus on international marketing and lifestyle connections, along with a progressive EuroDisney environment, will create the most value in the long-term by securing strategic partnerships and appealing to diverse international customers. Short-term incentives will only bring long-term value to the company and a positive consumer reputation in the process. DISCUSSION OF STRATEGIC MODELS: Case Analysis Tools and Relevance to Strategy The PESTEL Analysis (most elements of this acronym) is vital to the strategic assessments for EuroDisney. Political factors are not highly relevant during economic crisis, only in terms of satisfying international requirements for international marketing literature changes focusing on adult-focused entertainment provided by the firm. Economic conditions, however, are highly important. This will require Disneyland Europe of perform extensive consumer research for French and other European (and non-European) customers and set an appropriate pricing model based on consumer needs and income levels across the globe. Technological environmental issues, such as the ability to use low-cost internet marketing as the focus of international business, will greatly improve international visibility for EuroDisney and bring both short- and long-term value to the new business model. Of critical importance is the marketing mix for Disneyland Europe. Price, product and promotion must be the focus for all business developments both during economic slowdown and during periods of growth. EuroDisney provides a superior product catering to families and the adult-minded consumer and marketing efforts must indicate the progressive changes made to the existing company model. Promotion will be key for long-term value and for increasing revenues during slowdowns in the international economy. At a time where new park infrastructure improvements are simply too costly to the company’s profitability bottom line, the business must rely on creative marketing and emphasising aspects of the marketing mix which appeal to different consumers across the globe. Heavy online incentives and promotion are low-cost, strategic tools for success, making marketing the most effective model for ensuring continued growth at Disneyland Europe. The SWOT Analysis diagram, also, is vital to understanding what strengths the business can capitalise upon as well as its internal weaknesses. A SWOT Analysis will illustrate areas of the business in which changes can be considered, as opportunities for improvement. At the same time, this assessment model identifies threats, such as competition, allowing the company to create strategies which outperform other competitors. For instance, Strategic Scenario #1 identified opportunities to differentiate EuroDisney from other Americanised theme park and recreation facilities. This pointed toward internal weaknesses and also offered opportunities to change misconceptions about the contemporary EuroDisney environment; that is no longer just for youths and families. Without the SWOT Analysis as a means of identifying the business’ current economic and reputational position, opportunities for international and lifestyle-focused marketing could not have been identified. Porter’s Five Forces model, which recognises threats of new entrants and various buying/bargaining power of different suppliers and partners, was also highly relevant to the new, progressive EuroDisney business model. Fortunately for the company, there is no threat of new entrants in this market, giving Disneyland Europe a unique competitive position. However, the bargaining power of suppliers (such as those who distribute in-park foods and beverages) had to be considered as part of the new strategic scenarios. Strategic Scenario #2 identified opportunities to create partnerships with adult-oriented beverage makers (such as InBev) in order to gain control over supply issues. By granting a potential partner new opportunities to increase beverage sales by agreeing to promotions within EuroDisney, the Five Forces model recognised the company’s inability to control supplier issues and gave the motivations for a proper strategic policy regarding partnerships as a means to boost consumer incentives and company profitability in the process. Without this analysis model, partnership agreement opportunities would not have been identified. Ansoff’s Matrix model, additionally, was of critical importance of creating strategic scenarios as this model identifies issues of market penetration and diversification, two business strategies requiring adjustment at Disneyland Europe. These weaknesses would not have been identified without this model. This model also allows the strategic leader to consider issues of readjustment of business strategy based on product-related attributes and marketing focus. For example, when determining the appropriate strategy to outperform economic crises, Ansoff’s matrix identified that EuroDisney required a new approach to gaining increased market share in foreign marketplaces. Since less than half of all customer revenues currently come from French customers, Ansoff’s Matrix allowed new strategy to be considered based on the unique needs of potential foreign customers. For example, does Finland require specific child-friendly eating areas or is this a more mature and adult-minded culture? How should EuroDisney penetrate this market or redevelope products and services to fit these unique, cultural needs? All of these factors were considered through the Ansoff Matrix model. Clearly, above any other model, models involving assessment of current marketing and brand positioning were of critical importance to projecting both short- and long-term business outcomes. During times of economic crisis, it becomes increasingly important to lure customers into Disneyland Europe without slashing staff wages or decreasing service intensity. Marketing efforts to include short-term incentives and heavy promotion in multi-cultural environments are the keys to success at the company. Issues of the value chain will be impacted in unpredictable ways between 2009 and 2014 in both given scenarios, therefore the business must consider methods to gain control over the traditionally-uncontrollable in order to emerge a business leader in times of economic decay. It is service, lifestyle and promoting the business in a fashion which is acceptable to different cultural environments which will serve EuroDisney well and provide strategies to gain profitability in any economic climate. Bibliography Kohl, Susan. (2000). Getting Attention: Leading-Edge Lessons for Publicity and Marketing. Butterworth-Heinemann: 48. MacIntosh, Julie. (2008). ‘Anheuser lifted by prices and new product’. Financial Times, London. 24 Jul: 17. Siegel, Carolyn F. (2006). Internet Marketing: Foundations and Applications. 2nd ed. Houghton-Mifflin Company: 305. Snyder, Dan. (2002). ‘EuroDisney S.C.A.: Individual Term Paper, International Marketing’. Accessed 23 Dec 2008 http://www.angelfire.com/alt/dansnyder/InternationalMarketing.PDF Sotto, Eddie. (2000). ‘EuroDisney”. Accessed 24 Dec 2008 http://www.themedattraction.com/dissertation3.htm. Sylt, C. and Reid, C. (2008). ‘The end of Euro Disney’s white-knuckle ride?’. Spectator, 8 Aug 2008. Walsh, Philip R. (2005). ‘Dealing with the uncertainties of environmental change by adding scenario planning to the strategy reformulation equation’. Management Decision, London. 43(1): 113-123. Appendix A: Historical Gross Domestic Product of France to 2000 The French economy, as indicated by the chart above, has been relatively flat since 1995. GDP is generally an indicator of the health of an economy. With a struggling French economy in place, this justifies the necessity for an international approach to marketing to lure more non-French customers to EuroDisney. Uncovered during PESTEL Analysis of EuroDisney. Read More