Hong Kong Disneyland - Cost Optimization and Service Marketing - Term Paper Example

Tourism Table of Contents Table of Contents 1 Introduction 2 Tourism in Hong Kong 2 Hong Kong Disney land 3 Target Market 4 7 P’s of service marketing 5 Recommendations 11 References 14 Introduction Tourism is such an industry that cannot be defined properly. One cannot group this industry under a single heading in the standard industrial classification. Unlike any other industry product is not the defining characteristic in case of tourism industry rather purchasers known as tourists define this industry. Most of definitions of tourism include various services provided by number of industries like hotel and catering industry, travel industry, entertainment and retail industry etc. to the tourists. One of the most common definitions of tourism which is internationally acclaimed says “Tourism comprises the activities of persons travelling to and staying places outside their usual environment for not more than one consecutive year for leisure, business and other purposes” (House of Commons, 23 June 2000). Tourism industry is one of the most important industries for the economy of any country. Huge number of job opportunities has been created by this industry in almost every part in the world. This paper focuses on the tourism industry in Hong Kong and a special tourism operation in the region. Hong Kong Disney land has been chosen as the special tourism operation. The paper include an in depth service marketing analysis which include analysis of 7’Ps of service marketing. It is needless to say that this analysis has been done in the context of Hong Kong Disney land. Tourism in Hong Kong Like any other economy tourism industry is also an important pillar of Hong Kong economy. Almost 3.4 percent country’s GDP is contributed by this industry. More than 190,000 people are employed in tourism industry of Hong Kong and this is almost 5.6 percent of country’s total employment. But recent global financial turmoil has greatly affected the industry. It has been found that tourist arrivals in the first half of the last year were down by almost 3.4 percent. Still there were approximately 8.3 million tourist arrivals in the mainland of Hong Kong in the first six months of 2009. There are 158 hotels with more than 57588 rooms in Hong Kong. Number of total hotel room has increased by 9.5% from previous year. It is quite expected that Hong Kong government would promote tourism industry as it is a major contributor to the country’s GDP. There is tourism commission that was set up in 1999 with purpose of providing leadership and policy support to tourism development in the region. Main objective of this commission is to promote and establish Hong Kong as a premier destination to the business and leisure visitors. There is Hong Kong Tourism Board (HKTB) whose main objective is to provide strategic recommendation and help to the government of Hong Kong for the development of tourism (Hong Kong Government, n.d.). Hong Kong Disney land In November 1999 the government of Hong Kong first announced that the city would be having a Disney theme park which would be created by the joint venture of government and Walt Disney Company. Then in 2003 the construction work first begins and finally in September, 2005 Hong Kong Disneyland resort started with a grand opening. Today there are almost 5000 cast members in Hong Kong Disneyland resort. It is one of the largest employers in Hong Kong entertainment industry and quite obviously it has great influence on the economy of the region. But till now it is smallest Disneyland among all although an expansion plan has already been adopted and this is likely to be completed in 2014. There would be three more new theme areas namely “Grizzly Trail”, “Toy Story Land” and “Mystic Point”. This expansion would increase the size of the theme park by 23%. 30 more new attractions are likely to come with the expansion. There are only five Disney Resorts in the world and the fifth one is located in Hong Kong. Hong Kong Disneyland gives the opportunity of experiencing world class entertainment to the individuals of all ages from all over the world. Hong Kong’s diverse and vibrant culture has greatly influenced the ‘Imagineers’ of the resort to create huge number of world class entertainment opportunities which are unique and distinct in nature. Hong Kong Disneyland is a joint venture between The Walt Disney Company, Hong Kong government and Hong Kong International Theme Parks Limited. In this venture government of Hong Kong is having the major share with almost 57 percent. 43 percent share is being held by the Walt Disney Company. The resort is one of the premier leisure destinations for both domestic and international tourists (Hong Kong Disneyland, n.d.). The Hong Kong Disneyland is run by an efficient management team which include the managing director Andrew Kam, vice president of park’s operations Noble Coker, Vice President of Costuming and Entertainment laurie Jordan and vice president of marketing Maple Lee. Hong Kong Disneyland is found to be very much concerned about the welfare of the society especially about the wellbeing of the children. It has taken the initiative of Disney Children Programs in Hospitals with the objective of improving the hospitalized children’s lives (Hong Kong Disneyland, n.d.). Target Market Hong Kong Disney land is mainly targeted to the children, teenagers and family people of mainland china. However people of all ages visit the Disneyland resort in order to have some great entertainment experience. It has been found from various surveys that 80 percent of residents in Hong Kong actually enjoy the presence of Disney Land (Ewing, January 6, 2006). But 7 million people in Hong Kong are not the target market of Hong Kong Disneyland rather 1.4 billion people in the Chinese mainland are the main target market of the theme park. 7 P’s of service marketing While evaluating any product or service analysis of marketing mix is crucial. Traditional marketing mix is consists of four P’s (product, price, place and promotion). But in case of service this marketing mix has been extended to seven P’s which are product, price, place, promotion, people, process and physical evidence. Like any other service Hong Kong Disneyland’s service can also be evaluated by analyzing these seven P’s. Product Product could be referred to the goods as well as the services that are offered to the customers. In case of goods product is tangible in nature whereas in case of service it is intangible. There could be several elements like packaging that would be attached to the product or service in order to attract the customers. Elements like features, quality, services, options and brand name that is associated with the product are crucial for the success of any product or service. In case of service quality is the key element. Customer would actually be purchasing the function, appearance and quality of the product. As far as service is concerned it is intangible, inseparable and perishable in nature (Purdue University, n.d.). As far as Hong Kong Disney land is concerned there are several parks and hotels which are the main product of the resort. However world class entertainment experience is actually the product that is sold to the customers or rather it can be said that customers visit the resort to just purchase a memorable experience. If physical products of Hong Kong Disneyland are considered there are fantasy land, tomorrow land, main street USA and adventure land. In fantasyland customers can experience several life time journeys by visiting and experiencing attractive places like “it’s a small world”, Mickey’s Philhar magic, the golden mickeys etc. In tomorrow land also there are several places where customers can have great experiences. Some these are UFO zone, Autopia, space mountain, orbitron etc. Apart from these lands there are Disneyland hotel, Hollywood hotel, places for fairytale weddings and business meetings. Among these two are themed hotels. Disney experience would not be complete without staying in one of these two hotels where customers can enjoy spacious rooms, incomparable Disney services and breathtaking views (Hong Kong Disneyland, n.d.). Moreover there are excellent places in the entire park for shopping and dining. So finally it can be said that the main product that is sold in the Hong Kong Disney land is a life time experience. Price ‘Price’ could be referred to how much is charged for a particular product or service. It is very important to determine the price of the product and service properly because price is an important determinant for attracting customers. Determining price could be frightening and tricky. There are several strategies for determining price of the product or service. Pricing strategies which are mainly used in business are cost plus, value based, target return, competitive, psychological and ongoing. There are several discount policies that are adopted by the organizations. In case of service quality is an important factor while determine price. In case of Hong Kong Disneyland several pricing policies are applied as there are huge number of products and services in the resort. Mainly value based pricing strategy is being applied for various experiences and journeys. For various parks there are system of one day tickets and annual passes. There are different ticket prices for different aged people starting from children to adult. Regular day ticket price for adult is 295 HK Dollar and for children it is 210 HK Dollar (Hong Kong Disneyland, n.d.). Price of annual pass of various parks starts from 650 HK Dollar. As far as the hotels are concerned room fares are decided on the basis of the position or type of the room. Different types of room (garden view, sea view and balcony, sea view, fantasia room, kingdom suit) have different fares, e.g. in Hong Kong Disneyland hotel one garden view room would cost at least 1800 HK Dollar. Same concept is applied in case of Disney’s Hollywood hotel. Room fares are also set on the basis of the value provided to the customers and value perceived by the customers. All these prices and fares could vary from season to season. Hong Kong Disney land does not apply ongoing pricing strategies because there is hardly any competitor of it and it is mainly renowned for the value it provides in the form of experience to its customers. Place ‘Place’ could be referred to as the distribution channels through which product or service reach to the customers. Generally products or services are sold to the customers either directly or through any intermediaries. Services are mainly sold where it is produced because by nature service is inseparable from its provider. Since services are intangible they need to be produced in nice attractive place so that they look attractive to the customers. Hong Kong Disneyland is located in Hong Kong in an area of 130 hectares. As such there is no distribution channel for delivering the service of Hong Kong Disneyland as it is involved in providing service in the form of experience. Service is created and delivered at the same place. Same is applicable in case of Hong Kong Disneyland where services are provided in different parks, themed hotels and various other places. Promotion Promotion of a particular product or service is mainly done either to push the product to the customers or pull the customers to the products or service. In case of service customers are generally pulled by the service creators to the place where it is being created and various promotional strategies are adopted for this purpose. Several promotional tools include advertising, public relation, sales promotion etc. Advertising and public relation are mainly used in the service industry. Electronic media and print media are mainly used for advertising purpose. Since it is an internet dominated market online promotion is very important for promoting any product or service among the common people. Several promotional strategies have been adopted by the Hong Kong Disneyland in order to make their offerings more attractive to the target customers. Several seasonal discounts are offered in the ticket price and hotel room fare. Generally electronic media especially internet is used to promote various offerings of Disneyland. Recently two MICE products are launched by Hong Kong Disneyland. The main purpose of this launching is to attract its corporate clients. These products are developed by considering the current economic condition which is creating enormous work pressure on the employees of most of the organizations. So to provide some relaxing moments to these employees Disneyland has developed its MICE products. Furthermore there are Group Ticket Promotion and Special Meeting Package which are excellent financial solutions for Disneyland’s corporate clients’ employees (Asia Traveltips, 21 April 2009). In 2005 Disneyland expanded its partnership with Coca Cola to promote Hong Kong Disneyland. They jointly organized a Coca Cola “Gold Cup”. 10,000 lucky winners of this were given the opportunity to visit and experience the magical Hong Kong Disneyland. People ‘People’ falls among the last three extended P’s and this is relevant only in case of service. Service is often evaluated on the basis of the people who are involved in providing the same. As a consequence it becomes very important for the service providing organizations to recruit right people to deliver the service properly. The principle reason behind this is that consumers of any service mainly interact with these people as service cannot be separated from its providers. People are the key elements in the Hong Kong Disneyland where everything is made by the people and run by people. One of the main reasons that consumers want to visit and experience Disneyland is the people of the parks and hotels. People who are working in the parks and hotels are the face of the Disneyland because consumers are interacting only with these people. All the services in each of the parks and hotels are being delivered by the people who are employed in Disneyland, so if tomorrow an individual wants come back and enjoy Disneyland once again is because of these people. Process Process could be referred to the system that is being used by the organization to deliver the service. An efficient service must have an excellent process of delivery and based on this process consumers often evaluate service. Depending on the process a service is delivered either fast or slow and this in turn greatly influences the satisfaction level of the consumers. Entire operation of Hong Kong Disneyland is the combination of enormous number of processes because of which such a large activity is going on efficiently and successfully. All the theme parks and hotels are working in predefined proper process so that each and every customer get the best of services. Customers are allowed to purchase tickets or book hotel rooms online. Physical Evidence Physical evidence refers to place where the service is being delivered. This is also important element that is used as a parameter in the process of making judgment regarding a service providing organization. For instance on a flight if an individual is travelling in first class, he or she would expect sufficient so that he or she can lay down (Learnmarketing, n.d.). Physical evidences of Hong Kong Disneyland are the parks and hotels where the services are delivered. There are several parks which include fantasy land, tomorrow land, adventure land and main street USA. There are two themed hotels, Hong Kong Disneyland hotel and Hollywood hotel. Apart from theses there are places for fairytale weddings, business meetings, shopping and dining. All these are the biggest physical evidence of Hong Kong Disneyland. Recommendations Since recommendations are made on the basis of the problems. So it is crucial to define the problems of Hong Kong Disneyland before making any recommendations. It is true that Hong Kong Disneyland is one of the most popular theme parks in the entire Asia. But initially it was not all good and still there is not everything running smoothly. Among all the five Disney lands in the world Hong Kong Disneyland is the smallest in terms of size of the park. As a consequence western visitors do not find the park as attractive as any other Disneyland in the world. Even people who are originally from Hong Kong or mainland china but greatly influenced by western culture also find the park less attractive than others. Furthermore Hong Kong Disneyland’s main target market, people of mainland of China is also found to be reacting unexpectedly. It has been found that people of mainland China apparently have a great time in the Disneyland but they are not found to be spending much less amount of money than they were expected to. They spend most of their time in taking photographs. They do not purchase photo from Disney rather they take photographs of themselves on Space Mountain’s monitor image. People take picture of their children making them stand beside the balloon seller but they are not found to be buying balloon form that seller. Recommendation on pricing policy Analyzing all the above mentioned problems it could be stated that there might be some real problems regarding the pricing or the service or even the size of the park. In Hong Kong Disneyland pricing strategies are mainly based on the value propositions by the park. This strategy should be revised. Disneyland should try to find out whether the services that the customers are enjoying or the experience that they are carrying with themselves after leaving the theme park are really worth of the amount of money that they are paying. Hong Kong Disneyland should conduct an extensive market research in order to find out the level satisfaction among the visitors regarding the ticket prices and other fares. Recommendation on product Another important aspect is the Chinese culture. Since the target market of Hong Kong Disneyland is not the 7 million people of Hong Kong but the 1.4 billion people of mainland China. As a consequence Disney should look after the culture aspect with special care. Chinese culture is a vast culture and there are several elements in that culture. Disney should capitalize on this and come up with another land or park whose theme would be based on the Chinese culture. There is already a park whose theme is based on the street of USA and this land attracts significant customers especially western or Chinese who are influenced with western culture. Similarly if a theme park is created which would be based on the traditional Chinese culture then it would definitely improve the footfalls in the entire Hong Kong Disneyland. Most importantly there are many westerns who actually like the traditional Chinese culture. So creating a ‘China land’ should be a useful idea to work on. This recommendation is basically regarding the first P among the seven P’s in service marketing mix. Recommendation on promotion The global financial meltdown which started from mid 2008, has greatly affected almost all the developed and developing economy in the world. Hong Kong and Chinese economy are no exception. Most of the Organizations are trying to reduce their total cost of operation and as a part of this they have reduced several employee facilities. Employees are not getting free passes of any leisure and entertainment park. Even the business meetings are getting conducted in places where fare is pretty low. These facts have greatly affected Hong Kong Disneyland’s overall business. Organizations are not found to be giving facilities like giving free Disneyland passes or tickets to the employees or even conducting their business meetings in Disneyland. In order to solve above mentioned problem Hong Kong Disneyland should come up with special corporate packages which would be more accepted by the organizations from financial perspective. Disneyland should get into some alliances with some of the big corporate houses in Hong Kong and mainland China. The theme park should be extensively promoted not only Hong Kong and mainland but also in other developing countries which are located just nearby. For instance India could be a potential market in the near future for Disneyland. Disneyland should focus the internet market for the promotion of the theme park. Several public relation and social activities could be undertaken in order to promote the theme park among the community especially among the children. References Asia Traveltips, 21 April 2009, Hong Kong Disneyland launches MICE Promotion, Retrieved from http://www.asiatraveltips.com/news09/214-HongKongDisneyland.shtml Disneyland, April 7, 2005, Coca-Cola and Disney Expand Global Alliance throughout Asia, Press Release, Retrieved from http://www.hongkongdisneyland.com/eng/discover/20050407.html Ewing, K. January 6, 2006, Hong Kong a roller coaster for Disney, Asia Times Online, Retrieved from http://www.atimes.com/atimes/China_Business/HA06Cb01.html House of Commons, 23 June 2000, The Tourism Industry, Retrieved from http://www.parliament.uk/commons/lib/research/rp2000/rp00-066.pdf Hong Kong Government, No Date, Tourism, Hong Kong: The Facts, Retrieved from http://www.gov.hk/en/about/abouthk/factsheets/docs/tourism.pdf Hong Kong Disneyland, No Date, Corporate Information, About our company, Retrieved from http://hkcorporate.hongkongdisneyland.com/hkdlcorp/en_US/aboutOurCompany/overview?name=CorporateInformationPage Hong Kong Disneyland, No Date, Children and Families, Community relations, Retrieved from http://hkcorporate.hongkongdisneyland.com/hkdlcorp/en_US/communityRelations/overview?name=ChildrenPage Hong Kong Disneyland, No Date, Delightful Hotels with Disney Themes, Retrieved from http://park.hongkongdisneyland.com/hkdl/en_US/hotels/overview?name=HotelsOverviewPage Hong Kong Disneyland, No Date, Park Tickets, Tickets and Reservations, Retrieved from http://park.hongkongdisneyland.com/hkdl/en_US/ticketsAndReservations/tickets?name=TicketsPage Learnmarketing, No Date, Service Marketing Mix/Extended Marketing Mix, Retrieved from http://www.learnmarketing.net/servicemarketingmix.htm Purdue University, No Date, Marketing’s Four P’s: First Steps for New Entrepreneurs, Purdue Extension, Retrieved from http://www.ces.purdue.edu/extmedia/EC/EC-730.pdf Read More