International Strategic Marketing: Walt Disney Parks and Resorts - Assignment Example

International Strategic Marketing Contents Introduction 3 Summary situation analysis 3 External Analysis 3 Internal Analysis 6 Global Marketing Strategy 7 Proposed strategic options for international growth 7 Recommended strategic option 8 Justification for rational of market selection 9 Recommended marketing mix 10 Conclusion 10 References 11 Appendices 13 Introduction Marketing Audit is very similar to the concept of financial audit in which a review is conducted on the current marketing activities that is being performed by an organization. Walt Disney Parks and Resorts are one amongst the five important business segments of the Walt Disney Company. This business segment was founded in the year 1971 and encompasses operations such as managing, conceptualizing and building the vacation resorts and theme parks of the company. As per statistics in the year 2013, the company had attended total guests of 132.5 million which in turn has made this theme park as the most visited and famous theme park across the globe. The theme park is located in Paris and the resorts are spread across Hong Kong, Shanghai, Tokyo and California. Summary situation analysis External Analysis In the external audit the economic environment analysis is carried through the PESTEL framework as stated in Appendix 1. In the 19th and early 20th centuries there was an immense growth in the amusement sector in United States. The most famous amusement parks during this time period were Cedar Point, Coney Island and Dorney Park. The growth of amusement parks during the time frame of 1830 to 1940 was the rising disposable income of individuals with more of leisure time which they spend with their families amidst the fun and entertainment offered by these amusement parks (Global Theme Park Industry, page 7). The growth of theme parks was witnessed in the year 1946 with the evolution of Santa Claus Land which was then followed by Walt Disney in the year 1955. The political factor that has an impact on the theme park industry is the increased taxes and unstable political conditions that greatly affect such businesses. The economic factors comprises of regional and global economic conditions and the turmoil that was taking place in the economy of United States. There is even a turmoil that has been observed in the financial markets that has increased the borrowing costs for the firms who are operating in the theme park industry. The other economic factor is decreasing disposable incomes of individuals for visiting such theme parks. The social factor comprises of changing lifestyle conditions of individuals, with changes in consumer tastes and preferences in terms of leisure and entertainment. The consumption patterns of consumers have changed over the years which have been impacting the theme park industry (Global Theme Park Industry, page 14). The advancements in technology and the need to store electronic data is necessity for the theme parks and resorts. The new lands and roller coasters can costs substantially more for the companies operating in this industry. The increased costs of this factor is majorly in terms of virtual reality, special effects, interactive technology and simulation games which makes the operators of the theme park industry to be highly dependent on the technology. The firms in this industry has been enjoying the revenues coming from the ride photography but in the last 20 years this has notice a downfall as individuals now prefer taking their photographs and videos (Technology, page 23). The environmental factor is a matter of concern for the industry as there are certain uncontrollable events that cannot be managed by the firms operating in this industry. There are increased competitive pressures in this sector along with the operations of the industry and the firms to be highly dependent on seasons. The legal factor denotes the changes in regulations that comprises of safety issues related to theme park operations and consumer products. The firms also face challenges in the form of protecting the intellectual rights, labour disputes and increasing costs related to postretirement, medical, welfare and pension of the employees (Global Theme Park Industry, page 14). Porter fives forces model as stated in appendix 2 is usually referred to while carrying out external analysis of a firm. The competitive rivalry for Walt Disney Parks and Resorts is high as there are other players in the industry such as Merlin Entertainment, Cedar Fair, Universal Parks and Resorts and Six Flags. The worth of global theme park industry in the year 2010 was US$ 24 billion and the forecasted value for this industry in the coming years is US$29.5 billion. The business segments of Walt Disney are diverse and this helps the company to supports its operations. The five major segments of the company are Media Networks, Studio Entertainment, Parks and Resorts, Interactive Media and Consumer Products. The company faces a tough competition from all the other players however the maximum revenue of the company is generated through Canada and US markets and 75% of the total revenue for Walt Disney comes from the US markets. There is lack of developmental properties in many countries that poses a major challenge to the company and thus faces risks in the markets of North America (Global theme park industry, page 13). The bargaining power of customers in this industry were relatively low in the initial years when these theme parks were set but the changing conditions of the economy in relation to the recession period has enforced customers to be less interested towards theme parks thus affecting the profit margins of the companies in this industry. In case of Walt Disney the bargaining power of customers is high which forces the firm to offer discounts and even lower its ticket prices. The bargaining power of suppliers is high as per the industry as there are large number of players and each one of them wants to achieve the best of facilities so that they are appealing to the customers. As in context of United States there are no such new entrants that have been traced in the past few years. On the contrary there are large numbers of amusement and theme parks that has closed down in the recent times or has declared bankruptcy. However there is a great scope for new players outside this region as the firm has introduced its theme parks in Hong Kong and Shanghai. Hence it can be stated that threat of new entrants is low in this industry. The threat of substitutes is very high for the firm. As more number of vacation related activities can emerge in the future years which could capture the market share of the firm. The company faces an indirect competition from lodging, other entertainment forms, recreational activities and tourism. However the parks and resorts of the company are well known for delivering exceptional customer experiences and customer service (Global Theme Park Industry, page 13). Internal Analysis The internal analysis of the company is carried through preparing a SWOT framework for the company. The major strength of Walt Disney Parks and Resorts is that they possess a diverse portfolio and majorly the company as a whole is in favour of diversification into new markets with new product lines. This business segment has gained significant strength by acquiring one of the renowned animation studios known as Pixar Animation Studios. The other strength of the firm is its exceptional customer service which has resulted into a large base of loyal customers. The company even has developed its strength through marketing and promotional activities using local, national and international advertising mediums. Its brand portfolio helps it to manage any downturn in a specific business segment. The major source of revenue for the company is through room rentals, merchandise, rentals and sales of vacation clubs, beverage and food sales, and even cruise vacation sales (Global theme park industry, page 13). The company enhances its strength through four standards of service – safety that takes care about the peace and welfare of the guests, courtesy that considers each individual to be important, show that states exceptional and seamless entertainments for the visitors, efficiency which highlights the smooth operations of the resorts and theme parks ( Customer Service, page 27). The weakness of the firm is there is constant need to upgrade on its creative materials which requires a lot of time as well as investment. The firm even witnesses weakness in the form of lack in various developmental properties. The major opportunities that are available to the firm is in the form of restructuring its characters as the major focus of the company has always been towards girls with all its princess characters so it can change that concept by incorporating Toy characters that would be appealing to the boys. The other opportunities is to enter into mature markets such as China and Asia along with adding more of attractions for the crowd in the mature markets of North America, South Korea, Japan, Hong Kong and Western Europe (The Future of global theme parks, page 33).The threats that the company is bound to face is the struggling conditions of the global economy. The threats can be further extended to changing taste and preferences of customers, rapid advancements in technology, occurrence of uncontrollable events, financial market turmoil and seasonality of the business (Global theme park industry, page 14). Global Marketing Strategy Proposed strategic options for international growth The major threat that the company is bound to witness is the ever changing technology, customer preferences, recession and intense competition in the industry. The first strategy that can be adopted by the company would be to expand into areas such as Dubai, Asian markets such as China, India (Global Theme Park Industry, page 13).There is a great deal of scope for future growth in these markets as the competition is low and demand is high. On the other hand the markets in which the company has made its presence is becoming saturated which in turn would affect the profit levels of the company. The second strategy that can be adopted by the firm is applying the differentiation strategy to its services. This strategy would enable the firm to capture that market share who desires for Walt Disney experience but are not able to afford its facilities. This strategy would require the firm to design separate segments of theme parks and resorts that would be targeting specific consumer market segment. The third strategy that can be adopted by the company would be investing more in its theme parks and rides as it can even develop Marvel related rides in its theme parks in California as well as Paris. It can even extend on its channel and characters as it had acquired in 2009 Marvel Entertainment by an amount of US$4 billion which has given the firm all the rights to incorporate characters such as X-Men, Fantastic Four, Iron-Man and Spider Man (Themed Entertainment, page 25). The focus of the company can also be shifted towards adult in terms of designing characters that would be appealing to the adults such as there is a theme park to be designed in Paris which would reflect upon the story of a famous French Emperor known as Napoleon Bonaparte (Themed Entertainment, page 26). Recommended strategic option Amongst the three strategic options the most ideal one for the firm would be the strategy of market expansion. This strategy would enable the company to capture more market share and at the same time the firm can even achieve a sustainable position in the market. The Asian markets offer a great scope to the company as it is an emerging market with more number of middle class families aligned towards such entertainment. For many years to come the theme parks can consider the Asian markets to be platform for growth that looks forward to high quality thrills and entertainment. On the other hand the theme parks that are resistant towards such emerging markets face challenges in the form of demographics as the percentage of aged population is high in Europe (The Future of global theme parks, page 33). This strategy also is best suited for the company as it would enable the company to strengthen its brand position across the globe which would be a positive factor for the company for long run. The strategy needs to even incorporate the demands and needs of the Asian consumer market. The company has acquired Pixar Film Studios in the year 2006 which has a record of 13 family films that were outstanding and even encompasses 5000 characters of Merlin Entertainment. The firm should not only focus on the strategy of market expansion but also needs to formulate strategies on the type of services and entertainment that they would deliver to the Asian markets as the taste and preferences of this consumer market segment would not be alike as that the company has witnessed in American and European markets. On the other hand the company is recommended to encompass Fastrack ticket system which would help in shortening the queues which is a major problem in Asian markets and also would enhance its customer service by enabling visitors to come back at their convenient time (Queues, page 28). Justification for rational of market selection In the year 2011 there was a great milestone that was achieved by the theme park market of Asia and that was its renowned 20 theme parks had a total of 100 million visitors. In comparison to 2010 the theme park industry in the Asian market has witnessed a growth by 7.5% which is predicted to increase in the coming years and this in turn would help the Asian markets to overtake markets of North America. In the present scenario the total number of roller coasters in Asia is 1186 which is far more than that in Europe where it is 787 and in North America it is 759. 60% of the population of the world lives in Asia which sums up to 4.2 billion and this large consumer market is an opportunity for Walt Disney Parks and Resorts. In countries such as China, Indonesia and India there has been a significant growth in economy which clearly indicates that more number of people living in these regions can afford visiting these parks and resorts. This is the best market for the company to expand on its business as the middle class is predicted to grow by 2020 to approximately 3.2 billion people. In this segment Asia would hold half the percentage, China is expected to constitute 12% of the growth and it would increase to 74% by the end of the year 2030 (Asian market, page 19).This increase in population specifically in the middle class segment would provide immense opportunity to the company. Recommended marketing mix The recommended strategy for the company needs to be supported by proper marketing mix comprising of four elements that are product, price, promotion and place (Promotion, page 31). The product of the company would be its dining facilities and the Disney characters that are major attraction of the Disney parks. The product modification can be in the form of changed ascent of the characters and even incorporation of more innovative cartoon characters that are better known to the customers in the new market. The pricing for the theme park would be moderate to high pricing strategy. This strategy would be based on the broader concept of market penetration strategy. The firm can offer reasonable prices for its tickets for those customers who belong to the middle class segment and high prices can be charged from those customers who belong to upper class with some added facilities. However the entertainment zone for both the income group would remain the same to avoid any discrimination (Themed entertainment, page 25). The promotional strategy that could be used by the firm would be utilizing the approach of social media and to advertise on TVs and radios. The other form of promotional techniques can be through offering discounts at the time of launch so that more customers get the experience of Walt Disney. The distribution would be through establishing theme park in the central location of the market and even to set up resorts in the prime locations in Dubai. Conclusion Walt Disney Parks and Resorts have been able to achieve a significant position in the market through its wide scale operations over the years. However with the changing market scenario the company is witnessing major challenges that are even creating an impact on the profitability level of the company. The intense competition with Merlin Entertainment has made the company enter into price wars. The firm is expanding its theme parks across the globe and as per the current scenario the best strategy for the company is to enhance its market expansion strategy. References The Chartered Institute of Marketing. 2012. Case Study December 2012 and March 2013. Available at: http://www.cimtutors.com/store/assessments/attachments/1375/original/A_D_Case_Study_D12_M13.pdf. [Accessed on: 31st July, 2014]. Appendices Appendix 1: Appendix 2: Appendix 3 Porter’s Value Chain FIRMS INFRASTRUCTURE Top down management system with well defined cultural values The management board comprises of members from the Walt Disney company as well as individuals from other segments The company has adopted the policy of energy saving throughout the system The company considers safety to b the first priority and comprises of well structured legal team HR MANAGEMENT The company has a large employee base and it hires employees from Asia for the theme parks and resorts in Hong Kong. This even helps to handle the unemployment issue of Asia. For all its resorts and theme parks the company recruits for the management positions citizens of that particular region who can understand the demand of that region. The company even has organized a training centre for training its entire staff annually. TECHNICAL DEVELOPMENT The company utilizes the best technology so as to remain highly competitive in the industry in the form of appropriate ride facilities. The firm is also expanding on its technology in the form of Toy Story Land which would be the first one in Asian region. It even utilizes advanced technology to develop subways so that it would be easy for the visitors to reach theme parks and resorts. PROCUREMENT The designs that are used in the theme parks of the company are mostly common in all the divisions of the company. The company even imports certain products from the Disneyland at Tokyo. The fashion designer for Walt Disney in the Hong Kong region is separate who designs the Chinese costumes for the different characters. INBOUND LOGISTIGS High dependency on various suppliers so that the products are delivered right on time and is within the cost. OPERATIONS It’s a process that helps to produce good products or services. The company hire entertainers so as to deliver the best entertainment possible to its customers. The environment is so build by the company that it can entertain its visitors. They even provide special service for those customers who have disabilities. OUTBOUND LOGISTICS The company has set up at different locations theme parks and resorts and even comprises of well trained employee base who can effectively handle the operations at these locations. MARKETING AND SALES The company uses the marketing technique of not only advertising through print media but also focuses on positive word of mouth which reflects good feedback about the company. They even organize special events on occasions or festivals. It even enters into joint ventures with all forms of local attractions. SERVICE These theme parks and resorts focuses on developing services that are family oriented. The service of the company is divided into four major segments such as safety, courtesy, efficiency and show. SWOT Analysis Strengths Weaknesses The major strength of the company is that it has a diverse portfolio Acquisition of Pixar Animation Studios has enhanced its strength Exceptional customer service More number of business segments that supports the downfall of any specific business Local, national and international marketing activities There exists a need to constantly upgrade on its creative elements which gives rise to huge investment as well as it is time consuming Increase in operations and lagging revenue in terms of consumer products Lack in developmental properties Opportunities Threats The opportunities are in the form of restructuring characters and incorporating more of Toy Story characters so that equal entertainment can be given to girls and boys To enter into emerging markets of China and India Incorporation of more of attractive elements for the crowd of mature markets of Japan, South Korea, Western Europe, North America and Hong Kong The company is subjected to economic turmoil Changing taste and preferences of customers, rapid advancements in technology, occurrence of uncontrollable events, financial market turmoil and seasonality of the business PESTLE Analysis State of the entertainment industry Walt Disney Parks and Resorts POLITICAL This factor reflects on political conditions of a region Political instability and increased tax rate greatly affects the industry and its profit margins Factor of terrorism is a great risk for the companies in the industry POLITICAL Terrorism can greatly affects the theme parks and resorts of the company Formation of strategic alliances by the company may go against the competition laws Increased tax rate hinders the profit margins of the company ECONOMIC Excessive pressure on those companies in the industry which are not able to perform well Recession greatly affecting the industry Ever changing global economic conditions makes the industry difficult to attract much of the market share Excessive turmoil in the financial markets that in turn has increased the cost of borrowing for the firms in this industry ECONOMIC As recession increases customers spend less on such theme parks and resorts which brings down the profitability level of the company Decreasing percentage of market share due to economic turmoil SOCIAL Higher class society are more prone towards spending their holidays in these destinations The revenue of the companies in this industry is based on the increase in demand for leisure time of society Changing patterns in consumption observed in consumer market segment SOCIAL Increase in aging population in regions where the company operates affects its business as they possess less interest in such concept Increase in market share as more number of people desires for spending holidays in such renowned theme parks and resorts of Walt Disney TECHNOLOGY Rapid pace of technological advancements makes the industry competitive Evolution of new concepts such as 3D technology triggers the growth of this industry in terms of offering higher degree of entertainment to the visitors Increased technological costs in terms of virtual reality, special effects, interactive technology and simulation games TECHNOLOGY - There is constant investment by the company to incorporate best technologies so as to remain at par with other players ENVIRONMENTAL More concern towards reduction of waste in the environment All possible measures taken so as to safeguard the species so that they are not harmed ENVIRONMENTAL Proper measures needs to be taken by the company at all levels so that any business operation does not violate environmental laws LEGAL Safety issues related to theme park operations and consumer products Protection of intellectual rights Labour disputes and increasing costs related to postretirement, medical, welfare and pension of the employees LEGAL The company maintains a legal team to handle such laws and works according to the set legal framework Porter’s five forces SUPPLIER POWER (high) There are more number of options available to the suppliers in the form of increased range of players in the industry The condition of all the players to acquire best facilities increases reputation and even cost of suppliers BUYER POWER (high) The bargaining power in the initial stages of the customers was low but with turmoil in economic conditions this factor has become high The high buyer power due to losing interest in such parks and resorts has enforced the company to reduce its prices and also offer discount THREAT OF SUBSTITUTES (high) High demand of consumer market towards spending luxurious holidays The company faces an indirect competition from lodging, other entertainment forms, recreational activities and tourism. BARRIERS TO ENTRY (medium) In United States there has not been such an establishment over the years In other regions such as Asian markets such theme parks are gaining importance which poses threat of new entrants for the company Higher investment in setting up such an infrastructure enhances the barriers to new entrants in the industry RIVALRY (high) There are large number of players in the industry such as Merlin Entertainment, Universal Parks and Resorts, Six Flags and Cedar Fair The company also participates in price wars so as to remain appealing to all the visitors McKinsey’s 7 Current situation Future Situation Gap analysis Strategy Possesses first mover advantage charging high prices Applies differentiation strategy Market leadership through exceptional customer service Leadership would b highly dependent on innovative elements Rapid advancement in technology would require more of investment Cash cows of the company are aligned towards reaching the maturity phase which would require new innovative features in product and service Structure Hierarchical structure with sufficient degree of flexibility in the system The leaders would be moving out of their roles and focus towards multicultural aspect while operating in different regions New structure of management that would enhance the vision of the company Systems Heavily dependent on suppliers .Gain sufficient control on all the suppliers The key features needs to be more of high quality and reliable Incorporation of proper quality management systems Tight control through formulation of strategic alliances Shared values The brand value is maintained in all the products and services being offered by the company This should sustain at the heart of the company so as to motivate the employee base to succeed towards the common goal The cultural aspect of the company needs to be spread across all the regions of its operations Skills Creative and technical skills has led the company towards the position of being a market leader Design and technology can be considered to be a commodity To deliver value it is essential that the company sustain on its technical skills To reduce the overall cost the company needs to outsource resources which would help in decreasing the investment of new product development and R&D Staff The company has a base of good quality staff Staffs remain satisfied and hence deliver exceptional customer service Increase in competition would result into more demand for quality staff Ongoing training would be required for good customer service Customer loyalty related to low turnover rate of staff Good incentives required for encouraging staff Style The style of the management is shaped through entrepreneurial spirit and vision of the leaders The new leader who are nominated needs to handle the pressure in terms of achieving short term goals The leadership needs to be localised and the vision should be encompassed within the culture of the company Read More