Merlins Competitive Position - Case Study Example

 Merlin’s Competitive Position Table of Contents Task 1 3 Customer Shifts 4 Synergies 7 Management Policies Template 10 Figures Figure 1 - Competitive strategies in the US theme park industry: a popular media perspective 8 Figure 2 – Merlin Domestic Patrons versus Tourist (out of town) Visitors 10 Table Table 1 - Management Policies Template 11 Task 1 Merlin Entertainment is situated in the arts, entertainment and recreation sector1 whose main competitors represent Disney Parks and Resorts, OCT Parks China, Comcast’s Universal Studios, SeaWorld Entertainment, Six Flags, and Cedar Fall2. In terms of considering the role of the company’s management in improving the competitive position of the company, it’s role is considered as those areas where management devises strategies and policies that are put into action based on an assessment of varied company strengths, core competencies and other factors it had or has over competitors as well as to consider success factors used by rivals it could potentially adapt and modify to fit its own operation synergies. As a means to understand the landscape of the sector a comprehensive study conducted by Liliestol3 was accessed rather than Merlin’s annual reports as it provided an unbiased external analysis of the industry unfettered by potential management perspectives. Liliestol’s4 research used 87 articles that resulted in the finding that theme parks use strategies that consist of value, niche markets, uniqueness, variety and quality, and innovation. These aspects were considered important in assessing the role of Merlin’s management in terms of improving the company’s competitive position. In conducting competitive research it was found that the only company, outside of Merlin that possesses all of these attributes (value, niche markets, uniqueness, variety and quality, and innovation) is Disney. As the world’s number one in the amusement park category, Disney has an extremely strong portfolio of brands, and most importantly the Disney name that stands as the unifying recognition factor. It only in this last area that Merlin has a slight issue as the company has such a broad range of brands (11) that the average person is not familiar with them. As shall be developed herein, Merlin has and is addressing this through the two policy areas selected that will explain how the company is shoring up this shortcoming as well as utilising other aspects within these strategies to heighten its competitive position. Merlin’s5 management has moved the company into the position as the second most visited theme park after Disney by employing competitive strategies consisting of transforming its theme parks into destination resorts and exploiting synergies6. The above policies represented the identification of important sector dynamics where management understood the company needed to increase visitor attendance and repeat attendance (transforming its theme parks into destinations resorts) along with leveraging the scale of the company (exploiting synergies). The transformation of Merlin’s theme parks into destination resorts represented it's forming a better understanding of its customer base by conducting research to arrive at the following understandings7: Customer Shifts A. Customer generalities Visitors to theme parks come for the safe rides, a shared experience with family or friends, building memories, interaction with characters, and as a vacation or holiday experience8. Whilst the source for this seems dated, it needs to be considered that Merlin management implemented its transformation and synergy strategies policies in 19999. 1. How it improved its competitive position The company added the emphasis of short-break stays to its customer marketing strategies to build on the aspect of increasing visitor repeat business over one, two and three day periods as opposed to just thinking about the theme park as a holiday destination. 2. Results Visitors to Merlin’s theme parks have increased from 30 million visitors in 200610 to over 66 million visitors in 201611. B. Customer understandings The theme in the company’s 2017 annual report represented “Delivering Memorable Experiences”12. 1. How it improved its competitive position This represented a part of its transformation of visitor frequency into more repeat traffic that has been lead by Legoland13. 2. Results The company’s visitor traffic is presently in excess of two/thirds of its overall visitor numbers due to an increase in the short-break strategy14. This represents an important shift to more domestic repeat and frequent visitors and less of a reliance on what is termed as fly-in markets15. The company also reported that visit advance booking has increased significantly which represents more repeat visits16. In terms of exploiting synergies, the company’s 2017 annual report stated17: “We seek to leverage the scale of the Group to exploit enhanced operational, marketing and buying power. An example is our investment in e-commerce initiatives that provide commercial benefits and improved ‘digital journeys’ for our guests. Our rollout of the accesso® e-commerce platform is largely complete, with the aim of finalising the upgrade of our admissions systems at our major locations targeted for 2018.” The above represents the use of the important elements described by Liliestol’s18 research that found key theme parks strategies consist of value, niche markets, uniqueness, variety and quality, and innovation. Synergies A. Strong brands and iconic assets Through heightened emphasis in online presentation via the company’s website as well as social media it has increased the sales of its annual pass that provides admission to all of its theme parks for just £13919. In addition, the company encourages visitors “…to upgrade to cluster or multi-day tickets, annual passes, or Fast-Track passes to maximise their time at an attraction”20. 1. How it improved its competitive position Through online and annual pass, multi-day and fast-track passes, Merlin obtains customer e-marketing data where it sends event and other information under an Annual Pass Calendar21. 2. Results In terms of comparatives, the company has increased its competitive position from the number 4 position in 2007 to number 2 behind Disney in 2017. This is a true indication of the success of this strategy approach to increase traffic. Figure 1 - Competitive strategies in the US theme park industry: a popular media perspective22 B. Increase company-wide brand marketing synergies The coordination of customer marketing efforts toward short-breaks, and the encouragement of repeat visit annual pass, multi-day pass, and fast-track passes have already been mentioned. These factors are repeated here as well because these annual and multi-pass options mean visitors get to experience the other Merlin theme parks as well. The company uses company-wide programmes for these passes which means that all of its theme parks stand to gain added admissions and repeat business through cross-marketing23. This is a critical use of theme park resources that help to increase the brand value offered. This represents the value, niche market, and variety aspects of Liliestol’s24 investigation regarding “Competitive strategies in the US theme park industry: a popular media perspective”. 1. How it improved its competitive position Increased emphasis on e-marketing techniques and company-wide brand synergies represents the recognition that your best visitor prospect is the one you already have at one of your theme parks. By providing visitor pricing options that reduce coats for patrons, visitors are essentially just paying for food and gifts they purchase as admission is covered. This would seem in indicate that they might recommend friends or bring added patrons on return visits. 2. Results The increase in the company’s visitor traffic attendance since 2007 is proof that Merlin’s strategies to improve its competitive position are having the desired effects. Whilst annual and multi passes are not the complete story nor is cross-brand marketing, and branding synergies, it is the combination of these and other programmes that together are having a distinct impact. Since the company has moved from number 4 to number 2 behind Disney, the impact of these two strategies in conjunction with others are proof of the results achieved. These two strategies have been selected because they represent the key reason Merlin is in business, to attract visitors. The company’s 2017 annual report provided a key set of percentages that showed Merlin’s domestic visitor percentage is now 64% compared to 36% for tourists25. Figure 2 – Merlin Domestic Patrons versus Tourist (out of town) Visitors26 The above figure reveals the success of Merlin in lessening dependence on foreign tourism as a driver for theme park growth and the effectiveness of annual / multi-pass programs, Management Policies Template The following Management Policies Template has been constructed to provide a side-by-side analysis of the two selected strategy areas used my Merlin Entertainment management as a means to influence and improve its competitive position. It will show that the two areas selected tie into each other as they represent a focus on its customers using value, niche markets, uniqueness, variety and quality, and innovation that was described in Liliestol’s27 work that utilised 87 articles from found in 34 sources as the basis for him compiling the list mentioned above. This proved helpful in assessing the policies put into place by Merlin’s management and thus the role these policies played in affecting the company’s competitive position. Table 1 - Management Policies Template Strategy Area Strategy Explanation Strategy Components Improve-ment of Competitive Position Extent the Policies Improved the Competitive Position From Theme Parks to Destinations This represented a major shift in the approach by Merlin’s management to change the company from a theme park to a destination resort. This represented a change in how customers perceived its parks as a place to be enjoyed on weekdays and weekends, short-stay breaks from work and over the weekend and durations of three to five days28. This aspect employed key elements of Liliestol’s 29 investigation and understanding of what customer seek from theme parks. These represent value, niche markets, uniqueness, variety and quality, and innovation. Customer Generalities And Customer Understandings This represented Merlin developing a key understanding of its customers as well as differences between it and other theme parks, Merlin’s huge number of different attractions means that one can visit one of its 11 branded parks that all differ in terms of attractions, rides, and features30. Under customer generalities, the key benefit that the company’s management understood is the variety, value, niche markets, uniqueness, variety and quality, and innovation. By devising a policy that combined value (annual and multi passes), variety (represented by its 11 brands), uniqueness (as represented by the differences between the theme parks) and Merlin’s innovation in the assembly of a highly diverse number of brands to provide customers with choice. The most important metric to measure the success of policies for a theme park are its traffic. The company’s 2017 annual report indicated that its destination has seen visitor traffic increase to 66 million in 2016 from 30 million in 291731. This is a clear indication of the success of the policy that has also moved Merlin from the number 4 position in the category in 200732 to number 2 presently33. Strategy Area Strategy Explanation Strategy Components Improve-ment of Competitive Position Extent the Policies Improved the Competitive Position Synergies Strong brands and Iconic Assets along with Company-wide Brand Marketing synergies Merlin’s 11 brands provide it with the most diverse mixture of theme park attractions of all global competitors. Through internal development and innovation (the latter is on Liliestol’s, 201534 list of competitive strategies), it has leveraged the strengths of its company to appeal to a broader demographic that translates into increased traffic. The indicated leveraging of the company’s 11 brands that represent a competitive advantage over all but Disney, has propelled it from 4th place globally in the theme park category in 200735 to 2nd place in 2015 6, 201736. As indicated in the section above this column, the most important metric to measure the success of policies for a theme park are its traffic. The company’s 2017 annual report indicated that its destination has seen visitor traffic increase to 66 million in 2016 from 30 million in 291737. This is a clear indication of the success of the policy that has also moved Merlin from the number 4 position in the category in 200738 to number 2 presently. References D&B Hoovers (2018) Merlin Entertainment PLC. Retrieved from http://www.hoovers.com/company-information/cs/company-profile.merlin_entertainments_plc.3323a45c5b2183cb.html Legoland (2018) Annual Pass Calendar. Retrieved from https://www.legoland.jp/en/tickets/annual_pass/ap-calendar/ Liliestol, T (2015) Competitive strategies in the US theme park industry: a popular media perspective. Journal of Culture, Tourism and Hospitality Research, vol. 9, no. 3, pp.225-240. Merlin Entertainment (2017) 2017 Annual Report. Retrieved from file:///C:/Users/harco/Downloads/Annual%20Report%20and%20Accounts%202017%20-%20Printer%20Version.pdf Merlin Entertainment (2017) 2017 Annual Report. Retrieved from file:///C:/Users/harco/Downloads/Annual%20Report%20and%20Accounts%202017%20-%20Printer%20Version.pdf Merlin Entertainment (2018A) What is Merlin. Retrieved from file:///C:/Users/harco/Downloads/Introduction%20to%20Merlin%20Presentation%20-%20March%202015%20-%20Final%20(2).pdf Merlin Entertainment (2018B) Merlin Annual Pass. Retrieved from https://www.merlinannualpass.co.uk/ Pikkemaat, B., Schuckert, M. (2007) Success factors of theme parks: An exploratory study. Preliminary Communication. vol. 55, no. 2, pp. 197- 208 Statista (2015) Leading amusement and theme park companies worldwide in 2015, by revenue (in billion U.S. dollars). Retrieved from https://www.statista.com/statistics/258810/theme-und-amusement-park-companies-ranked-by-revenue/ Statista (2015) Theme park attendance. Retrieved from https://www.statista.com/statistics/258810/theme-und-amusement-park-companies-ranked-by-revenue/ Read More