History About The Walt Disney Company Marketing Essay

5481 words (22 pages) Essay

1st Jan 1970 Marketing Reference this

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The Walt Disney Company [i] or be simply known as Disney, is now widely considered as the largest media and entertainment conglomerate in the world. Started on October 16, 1923 as the Disney Brothers Cartoon Studio (founded by Walt Disney and Roy Disney), and then integrated as Walt Disney Company in 1929. Ever since, the company kept expanding its existing operation and has now focused on other divisions such as: theatre, radio, publishing, and online media.

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In addition to the success, the Walt Disney Company is also famous for its own film studio, the largest and best-known studios in Hollywood, the Walt Disney Motion Pictures Group. Besides, the expansion of the company also reaches for broadcasting (ABC broadcast television network, the network television networks: Disney Channel, ESPN, and ABC Family), publishing, merchandising and theatre divisions. The company is also famous as it owns and licenses eleven theme parks around the world, presenting in Japan (Tokyo), China (Shang Hai), Hong Kong, The U.S, etc…

According to the Fortune Ranking of CNN Money, as accounted on 2009, Walt Disney was ranked 13th out of the 50 most admired companies and the 1st rank in Entertainment with the overall score: 8.53. Providing the reason for this ranking, the CNN Money wrote: “The magical world of Disney is meeting economic reality. Despite hit brands like Hannah Montana, High School Musical and Pirates of the Caribbean that kids love, the company’s stock dropped nearly 29% in 2008. And net income fell sharply – 32% in the first quarter of 2009 — as pinched consumers visit Disney parks less and ad revenues from ABC and ESPN slide. But Disney hopes a new distribution partnership with DreamWorks and Steven Spielberg, a restructuring at ABC, and theme park discounts will bring back Mickey’s mojo. Children – and investors – are watching”. [ii] 

Disney’s Theme Parks: [iii] , [iv] 

Walt Disney Parks and Resorts is the segment of The Walt Disney Company that conceives, builds, and manages the company’s theme parks and holiday resorts, as well as a variety of additional family-oriented leisure enterprises [v] . It’s also one of the four major aspects that the company is operating (theatre, publishing, merchandising, and broadcasting).

Ever since the division is found (in 1971), it has kept developing and expanding. As accounted at the moment, the Disney’s company has licensed and owned about eleven theme parks around the world presenting in 3 continents: Europe, America and Asia, attracts a huge number of visitors each year.

However, throughout the time, most organizations surely had the “up and down” time, especially during this economic recession, Disney is no exception. In fact, lately, Disney has been hit hard by the declining in consumer spending. In fact, according to a revenue report lately of Disney, we could clearly see the influence that Disney has actually gone through:

C:Documents and SettingsPCDesktopRICparksrevenues2ndslarge2.jpg

Providing further information of this revenue report, “a 30% decline in attendance by customers from outside the United States contributed to a 6 percent drop in overall attendance at Disney’s U.S. parks in the quarter ended June 30”, Chief Financial Officer Thomas Staggs said in August. Hotel reservations at Disney’s parks this quarter were at that time down 10% from the same time a year earlier. And only in 2 years from 2001 to 2003, Walt Disney revenues drops almost 50%.This is a hardest hit for Disney, Its stock price plummeted more than 20 percent to $16.98 on Sept. 20. Since then it has rebounded somewhat, but it looks like the events of September 11 will have an impact on Disney for some time.

Afterward, the company decided to find ways to solve the problem, instead standing aside and see the revenue continue dropping. From this moment on of the project, I would focus on a specific example of the Mickey Pal product of the Disney World in Florida. In fact, I’ll give in detail the information of how this solution has actually helped the Magical World to capture its customer attention, along with its CRM (customer relationship management) strategy.

The idea of Pal Mickey: [vi] , [vii] 

pm5.jpg

After the huge lost mentioned, Disney decided to working on a CRM plan to improve their revenues and attendance in the park.

And this is the reason why Pal Mickey was born. Pal Mickey is an interactive plush toy developed by The Walt Disney Company and previously sold at Walt Disney World Resort. Pal Mickey was sold for use at the four theme parks at Walt Disney World Resort: the Magic Kingdom, Epcot, the Disney’s Hollywood Studios, and Disney’s Animal Kingdom. You could previously purchase Pal Mickey at various on site hotel gift shops, all four theme parks, and Downtown Disney.

It communicates invisibly with more than four hundred infrared transmitters around these parks. It will periodically giggle and vibrate to indicate that it has information to provide; when its belly or hand is squeezed, it will speak up with information about the immediate area, parade and show-time reminders, tips on what costumed walk-around characters may be nearby, and attractions with short queue times. It “remembers” where it has been so as to avoid repeating itself. If it is squeezed when it has no tips to provide or when it is not at a park, it will tell jokes and play simple games. The toy is programmed with over seven hundred pre-recorded phrases.

The Walt Disney Company Analysis:

Environmental analysis:

As to any organizations, before doing anything, especially before deciding and implementing a strategic plan, it’s an important task to look at the environmental analysis. The organization, therefore, could learn more about its current position and be aware of its difficulties or weaknesses (if available) in the industry. To be specific, elements that the organization/company should consider looking at are:

Industry Analysis

P.E.S.T.E Analysis

Five Forces Analysis

Industry Analysis:

According to the Disney Company overview, as in 2009, the company is ranked as one of the 50 world most admired companies (data given by CNN Money, 500 Fortune ranking). Through the report, as in the industry (entertainment), Disney places the 1st on the list, being the leader in different aspects. To be specific, below it’s the table of nine keys attributes of Disney’s reputation, which is recorded and ranked in the CNN Money site [viii] :

Nine key attributes of reputation

Industry Rank

Innovation

1

People management

1

Use of corporate assets

1

Social Responsibilities

1

Quality Management

1

Financial Soundness

1

Long – term Investment

1

Quality of products/services

1

Global competitiveness

1

Looking at the table, we could easily see that, in 2009, though the company is still under the influence of the global economic crisis, it’s managed well. In fact, according to the ranking given above, we could hardly tell if the company has any financial problem or any thoughts of any kind of suffer that the company went through.

Therefore, on the next part, I would go back focus on the PESTE analysis, in which clearly showed how the Disney World has adapted to the environmental changes for the past few years.

PESTE analysis:

Political: [ix] , [x] 

As we all know, the Disney World is placed in Florida, a state that was ranked the fifth most dangerous state in 2009, according to data given by CIA Fact Book. Ranking was based on the record of serious felonies committed in 2008. The state is governed via the mayor-council system. The mayor is elected in a citywide vote. The six members of the city council are each elected from districts.

Economic: [xi] , [xii] 

The Gross Domestic Product (GDP) of Florida in 2007 was $734.5 billion. Its GDP is the fourth largest economy in the United States. Per Capita personal income was $38,417, ranking 20th in the nation. Florida is one of the nine states that do not impose a personal income tax (list of others). The state had imposed a tax on “intangible personal property” (stocks, bonds, mutual funds, money market funds, etc.), but this tax was abolished after 2006. The state sales tax rate is 6%. Local governments may levy an additional local option sales tax of up to 1.5%. A locale’s use tax rate is the same as its sales tax rate, including local options, if any. Use taxes are payable for purchases made out of state and brought into Florida within six months of the purchase date. Documentary stamps are required on deed transfers and mortgages. Other taxes include corporate income, communication services, unemployment, solid waste, insurance premium, pollutants, and various fuel taxes.

At the end of the third quarter in 2008, Florida had the highest for mortgage payment delinquency rate in the country, with 7.8% of mortgages delinquent at least 60 days. The state also had the second-highest credit card delinquency rate, with 1.45% of cardholders in the state more than 90 days delinquent on one or more credit cards.

Social:

Opened in Orlando in Lake Buena Vista, Florida, Walt Disney World Resort is now located in one of the most popular tourist destination in the world. In this area, Disney had stimulated the economy creating over 60,000 jobs just within the Walt Disney World Resorts and hundreds of thousands in other tourist related markets. The four theme parks of Disney now are serving high demand of customer on fully entertainment services. Operating in Florida, the changes in social environment will lead to great impacts on the internal conditions and CRM strategies of company.

Florida is the state growing faster than the rest of the country. The teen birth rate [xiii] is somewhat higher and Florida is on the top 10 states with highest teenage pregnancy and birth rates in United States which means the growing market of young age customers for the Walt Disney World. Besides, Florida’s per capita income grew by 4.7 percent in 2007 to $38,444 according to preliminary estimates released Wednesday by the U.S. Bureau of Economic Analysis while the cost of living is lower than elsewhere.

These social conditions will somehow bring positive advantages for Walt Disney in Florida.

Technology [xiv] :

The technological environment also has a lot influences on the firm, as organizations use and apply advance effectively, it will create competitive advantages as well as many opportunities in the competitive market. The changes in technologies in Florida would somewhat affect the business strategy of Walt Disney world.

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Disney now uses many technologies in their services and the entertainment games such as the 3-D movie technology at the park, which aims for young children. Viewers put on 3-D glasses before entering the theater, and return the glasses upon exiting. The movie was filmed using 3-D technology, and successfully gives the illusion that objects in the movie are located not on the screen, but in space in front of the audience. The children also enjoin to encounter a giant Twinkie mountain, a leaky water hose and a bumblebee that carries them on a wild flight.

Besides, Florida also introduced new technology to track offenders: Rapid ID technology in Florida’s probation and sheriff’s offices. The system enables officers to biometrically confirm the identity of offenders who are required to report in by matching them to criminal history information already on file in the state. The combination of global positioning satellites, smart sensors, wireless technology and mobile devices is known as the corporate America’s most ambitious tryouts of the business use of IT convergence.

Disney also applied these developments in its four theme parks and already achieved the success.

Environment [xv] 

As far as we know, natural environment has really great affect on people’s behavior and attitude. With the apt of greenhouse effect and more garbage throwing to the Earth, our weather becomes worse and worse each day. You can easily feel the differences from the previous season to the next year, when summer are hotter and winter are colder.

Being in theme park industry, the Disneyland’s customers are directly affected by daily weather: rain, temperature, humidity… Their moo may go up and they may feel happy in line. On the contrary, the business surely goes down on bad days. So, as the weather becomes worse, Disneyland should pay more concern and attention to the customers in order to make them feel more comfortable.

Although it’s the state nickname, describing Florida as the Sunshine State is like calling Martha Stewart “manic.” It’s true, but not necessarily all the time – and it doesn’t nearly begin to describe the state’s other marketable assets. There’s a lot more to Florida than just sunshine and we get those pesky hurricanes. Weather aside, choosing the best of Florida is by no means simple. While millions of visitors flock here to escape the bleakness of winter and landlocked locations, they don’t all come down for sun, fun, and Mickey Mouse. Granted, the promise of clear skies and 800 miles of sparkling, sandy beaches is alluring, as are the animatronics and roller coasters in Orlando and Tampa, but there’s much more to the state than that. In many ways, Florida is like a beautiful, blond beauty queen who everyone thinks is all fluff until they find out she’s a Rhodes Scholar.

Here you can choose from a colorful, often kitschy assortment of accommodations, from deluxe resorts to the few-and-far-between mom-and-pop motels. Despite overdevelopment in many parts of the state, Floridians have maintained thousands of acres of wilderness areas, from the little respite of Clam Pass County Park in downtown Naples to the magnificent Everglades National Park that stretches across the state’s southern tip.

Screen Snaper Image1.bmp

Another dimension of environment is the “live green” trend. The higher level the society achieve, the more we care about environment and the more effort we put in waste-recycling and environment friendly activities. Although these actions take time and cost not a small amount of money to do, more companies are still trying to be “greener” this way and I believe it’s worth enough to.

Five Forces analysis: [xvi] , [xvii] 

Porters_five_forces.PNG

Industry Rivalry:

Show the risk that the competitors may compete for market position and if their competitive tactics are likely to be effective such as: Price competition, advertising, increased customer service or through offering longer warrantee periods. In Disney case, the most important point is understand the competitor’s plan or reduce to the standard price of Pal Mickey base on market position, industry growth rate, switching costs, high fix cost to decide which strategy we will choose to go on.

Threats of Substitutes:

It can be hard to differentiate between a competitor and a substitute as they both compete against you and the difference is really how narrowly you have defined your industry. From that in Disney case, set up the best price for the Pal Mickey but also analyze Disney competitor’s price product to be consider to avoid the threat that customers will compare and substitute to their product, if so Pal Mickey will still keep their customers belong to him

Buyer Power:

The customer who can challenge the company against their competitors, they always demand or require for better and higher quality also the improved service at the same price or better price. With Disney’s case, these kind of customer often very powerful and likely to push a lot of commercial pressure on Disney, however it make Walt Disney’s Pal Mickey has chances to improve and upgrade rapidly to get through the pressure along with better service.

Supplier Power:

It is identifies the extent to which your suppliers can choose to raise prices and reducing quality and service without consequence. In Pal Mickey case, to create the best product you need to choose a strong supplier with competitive environment and might consider to reject the supplier has limited competition. Then the strategically product like Pal Mickey will be able to reach the best quality

Threats of Entry:

The number of competitor in the same industry has an impact on how competitive the industry, especially a new competitor enter industry by using an aggressive growth strategy. In that case, it shall force Disney to defend their territory or market position to expense of its profit. The better the barriers to entry the less Disney likely it is that new competitor will emerge.

Current practice of Planning, Implementing and Maintaining CRM in a consumer environment.

Planning:

According to the idea of Pal Mickey [xviii] , the toy is a ten inch (26.5 cm) Mickey Mouse, soft and easy for children to hold. Inside, it contains a microprocessor, a speaker, three AA batteries, three squeeze sensors (one in each hand and one in its belly), and an infrared receiver in its nose. A loop on the back of its head fits a clip or a lanyard hook for ease of carrying. Customers can previously purchase or simply rent Pal Mickey at various on site hotel gift shops, all four theme parks, and Downtown Disney.

It communicates invisibly with more than four hundred infrared transmitters around these parks. It will periodically giggle and vibrate to indicate that it has information to provide; when its belly or hand is squeezed, it will speak up with information about the immediate area, parade and show time reminders, tips on what costumed walk around characters may be nearby, and attractions with short queue times. It “remembers” where it has been so as to avoid repeating itself.

As the role of a tour guide, Pal Mickey [xix] can help you build up your own trip without wondering whether to visit. It is set up to know over 700 fun facts and theme park tips for the four theme parks. Therefore, no matter you are, the innovative technology inside Pal Mickey allows you to explore the parks and get the correct information at just the right time, the right place. Pal Mickey can still entertain visitors outside of WDW (Walt Disney World), even when they are back home, Pal Mickey can tell jokes and play 3 interactive games. However, the disadvantage of this product is its battery doesn’t last long.

Implementing:

The implementation was planned in a phased manner. During the design phase of the implementation, a cross-functional team was chalked out of business and IT managers.

This was done to ensure that the IT department had a comprehensive understanding of the business strategies and customer’s needs. Different sets of requirements were made for different customer profiles.

How each individual client interacted with the organization was given chief importance. It was concluded that there were primarily three areas where client interaction was most – customer service center, dispatch department and online portal.

This process helped the company to focus on specific technologies that would improve customer service and discard those that weren’t right for the company’s goals.

Consequently, the company bought individual software applications (instead of a complete end-to-end CRM system) for customer interaction and operation management and integrated them with the existing order-processing technologies.

Maintaining CRM programs: [xx] , [xxi] 

After the first introduction in May 2003 and achieved a lot of successes and compliments, Mickey Pal has carried out possible actions to improve the functions as well as the performance and appearance. From the very beginning to the end day, Pal Mickey had mainly 3 versions along with the changes in prices and outside clothes in order to provide the best interactive toy to customers.

The original version of Pal Mickey (commonly referred to as “1.0”) was dressed in red shorts with white buttons, white gloves, and yellow shoes. It sold for US$50, with rentals available for $8 per day. This version of the toy was presented with a clip and the rental program was discontinued at the end of 2004.

The next version is the “Happiest Celebration on Earth” introduced with the start of the Happiest Celebration on Earth events on May 5, 2005. The Mickey is dressed in red shorts with gold buttons, white gloves, and yellow shoes; it wears a tailcoat and a gold bowtie, both of which fasten with Velcro. The new Pal Mickey is priced slightly higher than the previous version (US$65 plus tax). This version improves on the original in many small ways by additional features such as having a louder speaker, and it is able to sing Disney songs and ask Disney character trivia questions. Permanently attached to its right hand is a golden medallion; squeezing its right hand will make Mickey giggle and will make a “Happiest Celebration on Earth Glow Medallion” (sold during 2005) light up.

In September 2006, the “Pal Mickey Sorcerer Costume” (commonly referred to as “3.0”) replaced the previous version. This Pal Mickey is dressed in a (removable) blue Sorcerer Mickey hat, red robe, and blue shorts (sewn on over Mickey’s red shorts, which have white buttons like the first release). It does not have the medallion on its hand. Not too long time later, a Spanish language version of Pal Mickey is also available.

Four costumes for the toy were made available in early 2006. The costumes are “Mickey Mouse Club”, “Pin Trading”, “Safari”, and “Rain Wear”, and sell for US$10 each. In October 2006, “Pirate Cap’s” and “Santa Mickey” costumes were made available for US$12 each. The “Santa Mickey” sold out during December 2006 and was not available for order through the Walt Disney World Mail Order department. However, it has returned for the 2007 Holiday season and has been seen in the parks. It appears to be available only seasonally.

In fall 2008 the toy was discontinued. All previously purchased toys will still work; Disney simply isn’t producing anymore.

In the lifecycle of product, Pal Mickey already reached the last stage of Decline: discontinuous production. However, during its period, Mickey Pal has completed its mission to restore the luster of Disney’s aging brand, increase its efficiency and boost attendance. It is considered as a new evolution of CRM by using a risky but cutting-edge technology strategy.

Organizational analysis:

Target Market:

Whenever the name “Disney” appear, it reminds us of is theme parks, Disney Channel, the Disney animate characters ( Mickey, Minnie Mouse, Pluto, Lillo and Stitch, Snow White and Seven Dwarfs, etc..). As I mentioned in the introduction, Disney is now operating in variety fields of entertainment (publishing, merchandising, theme-parks, broadcasting, etc…). Whenever we go, we could easily find the appearance of Disney, on TV, magazines, posters. Asking a 10 year old kid (or even younger), he/she could easily name out a non-stop list of what he/she knows about Disney. In short, from this fact, we have no hesitant to tell the target market that Disney aims at is family, kids and teenagers.

According to this target market, there’s also a need for Disney as reserving the image of an ethical organization. As the brand identity is tied with the sensitive market – kids, and teenagers, in case there is any news that goes against the ethical image, Disney will be influenced and criticized badly.

Aside from the ethic issues, as the target market of Disney is about family and the young market, when the situation comes to economic recession like the time being, the Disney revenue is also affected. The main reason for this is under the woe, all family want to cut cost in spending, therefore the need to be entertained would be listed on unnecessary list. In fact, in 2008 and 2009, Disney has gone through a hard time under this decrease in consumer spending.

S.W.O.T. analysis [xxii] 

Strengths:

Mentioning about the strength of this company, first we have to mention about its strong brand. The Disney brand, in fact is a well-known brand all over the world. In people’s mind, the image that Disney brings is all about healthy and positive, therefore it’s easily accepted by its target segments.

Beside, the other thing that we can assure about this company is its strong financial background. One specific and closest example we can get is from the being economic recession. Although being hit hard as the consumer spending decreases as well as the other economic recession effects, the company lately is still ranked as the one of the 50 most admired companies in 2009. In detail of the record of Fortune 500, Disney is ranked as the 1st for the following aspects in the overall entertainment industry: financial soundness, long-term investment, and use of corporate assets. Still, under the effect of the economic recession, t is very important for Disney Store to have market development and store improvement.

The other strength we can tell of this company is of its exclusive for the products (Toys, clothing, stationary and gift items, etc…). Through this section, it provides many choices for the customers (especially the young ones) and satisfies their needs. Besides, as the Disney products is quite unique , and is only distributed by Disney Co., the customers, therefore, might think of Disney Store immediately when they want to buy Disney’s items.

Weaknesses:

Aside from all of the strengths above, Disney also covers several weaknesses, which is mostly about its stores. Firstly, it’s the unchanged visual merchandising and the lack of theme decoration of Disney stores. According to this first weakness, the author recorded that though time has passed; the decoration or the visual merchandising display is still the same and has not changed regularly. For this, the customer may easily find boring as there’s nothing new to stimulate and attract them. Besides, since there’s nothing seem to be excited, the customer would leave shortly after entering the stores.

Another weakness that is written in the article was about the passive staff’s attitude of Disney. According to the author:” Staff seldom greet and farewell customers. Although they answer enquires from customers, few of them introduce products and new information to customers proactively. Therefore, they fail to identify customers’ needs”. For me, I have never ever been to any stores or theme park of Disney, therefore, I have no chance this examine the information given. In fact, it’s contrary to all things that I have been heard about a positive Disney, a master in the hospitality industry. However, from this comment of the author, we can see that’s also a point of view from a customer. Therefore, if indeed, Disney has this weakness, I think Disney should cover it quick to catch the customers’ satisfaction.

Opportunities: [xxiii] 

At the moment, countries around the world are giving away the best effort as to minimize the growth of economic recession. In fact, lots of action and policies has been done around the world as to slow down the situation of the crisis and to set the economic to the stable status. Therefore, I think for this 2010, Disney would have more room to grow and expand more, which in fact, the company has already has plan to implement the expansion.

According to the information given on Wikipedia [xxiv] , telling about future properties of Disney, right now Disney aims to expand more in the three continents, which it’s called the Asia and Europe projects and American projects. In the overall, these projects are focus on the expansion of additional theme lands to the parks, as well as plans for another theme park in America and plan of new resorts, expected to open in 2014 in the China.

Therefore, for whom that has interest in Disney theme parks, and resorts, all they have to do are staying patient and wait. Because in a real near future, there will be more than enough of Disney for all of us

Threats

As looking back at the analysis of the strengths and the opportunities of Disney, it’s clearly to see that Disney has been achieved such of a success in the business, and no doubt, in the future, it’ll will expanse and develop even more.

However, relevant to the success, there also comes the rivalry and it’s also mean lots of jealousy, and criticism would be going on. Disney Company therefore has to be more careful to remain its ethical image in consumer’s mind.

Besides, the target market that Disney aims at is the family and kids segment. Therefore, one thing that the company should be noticed about is the decreasing birth rate. As this fact is turning to be a trend, it can cause somewhat a shr

The Walt Disney Company [i] or be simply known as Disney, is now widely considered as the largest media and entertainment conglomerate in the world. Started on October 16, 1923 as the Disney Brothers Cartoon Studio (founded by Walt Disney and Roy Disney), and then integrated as Walt Disney Company in 1929. Ever since, the company kept expanding its existing operation and has now focused on other divisions such as: theatre, radio, publishing, and online media.

In addition to the success, the Walt Disney Company is also famous for its own film studio, the largest and best-known studios in Hollywood, the Walt Disney Motion Pictures Group. Besides, the expansion of the company also reaches for broadcasting (ABC broadcast television network, the network television networks: Disney Channel, ESPN, and ABC Family), publishing, merchandising and theatre divisions. The company is also famous as it owns and licenses eleven theme parks around the world, presenting in Japan (Tokyo), China (Shang Hai), Hong Kong, The U.S, etc…

According to the Fortune Ranking of CNN Money, as accounted on 2009, Walt Disney was ranked 13th out of the 50 most admired companies and the 1st rank in Entertainment with the overall score: 8.53. Providing the reason for this ranking, the CNN Money wrote: “The magical world of Disney is meeting economic reality. Despite hit brands like Hannah Montana, High School Musical and Pirates of the Caribbean that kids love, the company’s stock dropped nearly 29% in 2008. And net income fell sharply – 32% in the first quarter of 2009 — as pinched consumers visit Disney parks less and ad revenues from ABC and ESPN slide. But Disney hopes a new distribution partnership with DreamWorks and Steven Spielberg, a restructuring at ABC, and theme park discounts will bring back Mickey’s mojo. Children – and investors – are watching”. [ii] 

Disney’s Theme Parks: [iii] , [iv] 

Walt Disney Parks and Resorts is the segment of The Walt Disney Company that conceives, builds, and manages the company’s theme parks and holiday resorts, as well as a variety of additional family-oriented leisure enterprises [v] . It’s also one of the four major aspects that the company is operating (theatre, publishing, merchandising, and broadcasting).

Ever since the division is found (in 1971), it has kept developing and expanding. As accounted at the moment, the Disney’s company has licensed and owned about eleven theme parks around the world presenting in 3 continents: Europe, America and Asia, attracts a huge number of visitors each year.

However, throughout the time, most organizations surely had the “up and down” time, especially during this economic recession, Disney is no exception. In fact, lately, Disney has been hit hard by the declining in consumer spending. In fact, according to a revenue report lately of Disney, we could clearly see the influence that Disney has actually gone through:

C:Documents and SettingsPCDesktopRICparksrevenues2ndslarge2.jpg

Providing further information of this revenue report, “a 30% decline in attendance by customers from outside the United States contributed to a 6 percent drop in overall attendance at Disney’s U.S. parks in the quarter ended June 30”, Chief Financial Officer Thomas Staggs said in August. Hotel reservations at Disney’s parks this quarter were at that time down 10% from the same time a year earlier. And only in 2 years from 2001 to 2003, Walt Disney revenues drops almost 50%.This is a hardest hit for Disney, Its stock price plummeted more than 20 percent to $16.98 on Sept. 20. Since then it has rebounded somewhat, but it looks like the events of September 11 will have an impact on Disney for some time.

Afterward, the company decided to find ways to solve the problem, instead standing aside and see the revenue continue dropping. From this moment on of the project, I would focus on a specific example of the Mickey Pal product of the Disney World in Florida. In fact, I’ll give in detail the information of how this solution has actually helped the Magical World to capture its customer attention, along with its CRM (customer relationship management) strategy.

The idea of Pal Mickey: [vi] , [vii] 

pm5.jpg

After the huge lost mentioned, Disney decided to working on a CRM plan to improve their revenues and attendance in the park.

And this is the reason why Pal Mickey was born. Pal Mickey is an interactive plush toy developed by The Walt Disney Company and previously sold at Walt Disney World Resort. Pal Mickey was sold for use at the four theme parks at Walt Disney World Resort: the Magic Kingdom, Epcot, the Disney’s Hollywood Studios, and Disney’s Animal Kingdom. You could previously purchase Pal Mickey at various on site hotel gift shops, all four theme parks, and Downtown Disney.

It communicates invisibly with more than four hundred infrared transmitters around these parks. It will periodically giggle and vibrate to indicate that it has information to provide; when its belly or hand is squeezed, it will speak up with information about the immediate area, parade and show-time reminders, tips on what costumed walk-around characters may be nearby, and attractions with short queue times. It “remembers” where it has been so as to avoid repeating itself. If it is squeezed when it has no tips to provide or when it is not at a park, it will tell jokes and play simple games. The toy is programmed with over seven hundred pre-recorded phrases.

The Walt Disney Company Analysis:

Environmental analysis:

As to any organizations, before doing anything, especially before deciding and implementing a strategic plan, it’s an important task to look at the environmental analysis. The organization, therefore, could learn more about its current position and be aware of its difficulties or weaknesses (if available) in the industry. To be specific, elements that the organization/company should consider looking at are:

Industry Analysis

P.E.S.T.E Analysis

Five Forces Analysis

Industry Analysis:

According to the Disney Company overview, as in 2009, the company is ranked as one of the 50 world most admired companies (data given by CNN Money, 500 Fortune ranking). Through the report, as in the industry (entertainment), Disney places the 1st on the list, being the leader in different aspects. To be specific, below it’s the table of nine keys attributes of Disney’s reputation, which is recorded and ranked in the CNN Money site [viii] :

Nine key attributes of reputation

Industry Rank

Innovation

1

People management

1

Use of corporate assets

1

Social Responsibilities

1

Quality Management

1

Financial Soundness

1

Long – term Investment

1

Quality of products/services

1

Global competitiveness

1

Looking at the table, we could easily see that, in 2009, though the company is still under the influence of the global economic crisis, it’s managed well. In fact, according to the ranking given above, we could hardly tell if the company has any financial problem or any thoughts of any kind of suffer that the company went through.

Therefore, on the next part, I would go back focus on the PESTE analysis, in which clearly showed how the Disney World has adapted to the environmental changes for the past few years.

PESTE analysis:

Political: [ix] , [x] 

As we all know, the Disney World is placed in Florida, a state that was ranked the fifth most dangerous state in 2009, according to data given by CIA Fact Book. Ranking was based on the record of serious felonies committed in 2008. The state is governed via the mayor-council system. The mayor is elected in a citywide vote. The six members of the city council are each elected from districts.

Economic: [xi] , [xii] 

The Gross Domestic Product (GDP) of Florida in 2007 was $734.5 billion. Its GDP is the fourth largest economy in the United States. Per Capita personal income was $38,417, ranking 20th in the nation. Florida is one of the nine states that do not impose a personal income tax (list of others). The state had imposed a tax on “intangible personal property” (stocks, bonds, mutual funds, money market funds, etc.), but this tax was abolished after 2006. The state sales tax rate is 6%. Local governments may levy an additional local option sales tax of up to 1.5%. A locale’s use tax rate is the same as its sales tax rate, including local options, if any. Use taxes are payable for purchases made out of state and brought into Florida within six months of the purchase date. Documentary stamps are required on deed transfers and mortgages. Other taxes include corporate income, communication services, unemployment, solid waste, insurance premium, pollutants, and various fuel taxes.

At the end of the third quarter in 2008, Florida had the highest for mortgage payment delinquency rate in the country, with 7.8% of mortgages delinquent at least 60 days. The state also had the second-highest credit card delinquency rate, with 1.45% of cardholders in the state more than 90 days delinquent on one or more credit cards.

Social:

Opened in Orlando in Lake Buena Vista, Florida, Walt Disney World Resort is now located in one of the most popular tourist destination in the world. In this area, Disney had stimulated the economy creating over 60,000 jobs just within the Walt Disney World Resorts and hundreds of thousands in other tourist related markets. The four theme parks of Disney now are serving high demand of customer on fully entertainment services. Operating in Florida, the changes in social environment will lead to great impacts on the internal conditions and CRM strategies of company.

Florida is the state growing faster than the rest of the country. The teen birth rate [xiii] is somewhat higher and Florida is on the top 10 states with highest teenage pregnancy and birth rates in United States which means the growing market of young age customers for the Walt Disney World. Besides, Florida’s per capita income grew by 4.7 percent in 2007 to $38,444 according to preliminary estimates released Wednesday by the U.S. Bureau of Economic Analysis while the cost of living is lower than elsewhere.

These social conditions will somehow bring positive advantages for Walt Disney in Florida.

Technology [xiv] :

The technological environment also has a lot influences on the firm, as organizations use and apply advance effectively, it will create competitive advantages as well as many opportunities in the competitive market. The changes in technologies in Florida would somewhat affect the business strategy of Walt Disney world.

Disney now uses many technologies in their services and the entertainment games such as the 3-D movie technology at the park, which aims for young children. Viewers put on 3-D glasses before entering the theater, and return the glasses upon exiting. The movie was filmed using 3-D technology, and successfully gives the illusion that objects in the movie are located not on the screen, but in space in front of the audience. The children also enjoin to encounter a giant Twinkie mountain, a leaky water hose and a bumblebee that carries them on a wild flight.

Besides, Florida also introduced new technology to track offenders: Rapid ID technology in Florida’s probation and sheriff’s offices. The system enables officers to biometrically confirm the identity of offenders who are required to report in by matching them to criminal history information already on file in the state. The combination of global positioning satellites, smart sensors, wireless technology and mobile devices is known as the corporate America’s most ambitious tryouts of the business use of IT convergence.

Disney also applied these developments in its four theme parks and already achieved the success.

Environment [xv] 

As far as we know, natural environment has really great affect on people’s behavior and attitude. With the apt of greenhouse effect and more garbage throwing to the Earth, our weather becomes worse and worse each day. You can easily feel the differences from the previous season to the next year, when summer are hotter and winter are colder.

Being in theme park industry, the Disneyland’s customers are directly affected by daily weather: rain, temperature, humidity… Their moo may go up and they may feel happy in line. On the contrary, the business surely goes down on bad days. So, as the weather becomes worse, Disneyland should pay more concern and attention to the customers in order to make them feel more comfortable.

Although it’s the state nickname, describing Florida as the Sunshine State is like calling Martha Stewart “manic.” It’s true, but not necessarily all the time – and it doesn’t nearly begin to describe the state’s other marketable assets. There’s a lot more to Florida than just sunshine and we get those pesky hurricanes. Weather aside, choosing the best of Florida is by no means simple. While millions of visitors flock here to escape the bleakness of winter and landlocked locations, they don’t all come down for sun, fun, and Mickey Mouse. Granted, the promise of clear skies and 800 miles of sparkling, sandy beaches is alluring, as are the animatronics and roller coasters in Orlando and Tampa, but there’s much more to the state than that. In many ways, Florida is like a beautiful, blond beauty queen who everyone thinks is all fluff until they find out she’s a Rhodes Scholar.

Here you can choose from a colorful, often kitschy assortment of accommodations, from deluxe resorts to the few-and-far-between mom-and-pop motels. Despite overdevelopment in many parts of the state, Floridians have maintained thousands of acres of wilderness areas, from the little respite of Clam Pass County Park in downtown Naples to the magnificent Everglades National Park that stretches across the state’s southern tip.

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Another dimension of environment is the “live green” trend. The higher level the society achieve, the more we care about environment and the more effort we put in waste-recycling and environment friendly activities. Although these actions take time and cost not a small amount of money to do, more companies are still trying to be “greener” this way and I believe it’s worth enough to.

Five Forces analysis: [xvi] , [xvii] 

Porters_five_forces.PNG

Industry Rivalry:

Show the risk that the competitors may compete for market position and if their competitive tactics are likely to be effective such as: Price competition, advertising, increased customer service or through offering longer warrantee periods. In Disney case, the most important point is understand the competitor’s plan or reduce to the standard price of Pal Mickey base on market position, industry growth rate, switching costs, high fix cost to decide which strategy we will choose to go on.

Threats of Substitutes:

It can be hard to differentiate between a competitor and a substitute as they both compete against you and the difference is really how narrowly you have defined your industry. From that in Disney case, set up the best price for the Pal Mickey but also analyze Disney competitor’s price product to be consider to avoid the threat that customers will compare and substitute to their product, if so Pal Mickey will still keep their customers belong to him

Buyer Power:

The customer who can challenge the company against their competitors, they always demand or require for better and higher quality also the improved service at the same price or better price. With Disney’s case, these kind of customer often very powerful and likely to push a lot of commercial pressure on Disney, however it make Walt Disney’s Pal Mickey has chances to improve and upgrade rapidly to get through the pressure along with better service.

Supplier Power:

It is identifies the extent to which your suppliers can choose to raise prices and reducing quality and service without consequence. In Pal Mickey case, to create the best product you need to choose a strong supplier with competitive environment and might consider to reject the supplier has limited competition. Then the strategically product like Pal Mickey will be able to reach the best quality

Threats of Entry:

The number of competitor in the same industry has an impact on how competitive the industry, especially a new competitor enter industry by using an aggressive growth strategy. In that case, it shall force Disney to defend their territory or market position to expense of its profit. The better the barriers to entry the less Disney likely it is that new competitor will emerge.

Current practice of Planning, Implementing and Maintaining CRM in a consumer environment.

Planning:

According to the idea of Pal Mickey [xviii] , the toy is a ten inch (26.5 cm) Mickey Mouse, soft and easy for children to hold. Inside, it contains a microprocessor, a speaker, three AA batteries, three squeeze sensors (one in each hand and one in its belly), and an infrared receiver in its nose. A loop on the back of its head fits a clip or a lanyard hook for ease of carrying. Customers can previously purchase or simply rent Pal Mickey at various on site hotel gift shops, all four theme parks, and Downtown Disney.

It communicates invisibly with more than four hundred infrared transmitters around these parks. It will periodically giggle and vibrate to indicate that it has information to provide; when its belly or hand is squeezed, it will speak up with information about the immediate area, parade and show time reminders, tips on what costumed walk around characters may be nearby, and attractions with short queue times. It “remembers” where it has been so as to avoid repeating itself.

As the role of a tour guide, Pal Mickey [xix] can help you build up your own trip without wondering whether to visit. It is set up to know over 700 fun facts and theme park tips for the four theme parks. Therefore, no matter you are, the innovative technology inside Pal Mickey allows you to explore the parks and get the correct information at just the right time, the right place. Pal Mickey can still entertain visitors outside of WDW (Walt Disney World), even when they are back home, Pal Mickey can tell jokes and play 3 interactive games. However, the disadvantage of this product is its battery doesn’t last long.

Implementing:

The implementation was planned in a phased manner. During the design phase of the implementation, a cross-functional team was chalked out of business and IT managers.

This was done to ensure that the IT department had a comprehensive understanding of the business strategies and customer’s needs. Different sets of requirements were made for different customer profiles.

How each individual client interacted with the organization was given chief importance. It was concluded that there were primarily three areas where client interaction was most – customer service center, dispatch department and online portal.

This process helped the company to focus on specific technologies that would improve customer service and discard those that weren’t right for the company’s goals.

Consequently, the company bought individual software applications (instead of a complete end-to-end CRM system) for customer interaction and operation management and integrated them with the existing order-processing technologies.

Maintaining CRM programs: [xx] , [xxi] 

After the first introduction in May 2003 and achieved a lot of successes and compliments, Mickey Pal has carried out possible actions to improve the functions as well as the performance and appearance. From the very beginning to the end day, Pal Mickey had mainly 3 versions along with the changes in prices and outside clothes in order to provide the best interactive toy to customers.

The original version of Pal Mickey (commonly referred to as “1.0”) was dressed in red shorts with white buttons, white gloves, and yellow shoes. It sold for US$50, with rentals available for $8 per day. This version of the toy was presented with a clip and the rental program was discontinued at the end of 2004.

The next version is the “Happiest Celebration on Earth” introduced with the start of the Happiest Celebration on Earth events on May 5, 2005. The Mickey is dressed in red shorts with gold buttons, white gloves, and yellow shoes; it wears a tailcoat and a gold bowtie, both of which fasten with Velcro. The new Pal Mickey is priced slightly higher than the previous version (US$65 plus tax). This version improves on the original in many small ways by additional features such as having a louder speaker, and it is able to sing Disney songs and ask Disney character trivia questions. Permanently attached to its right hand is a golden medallion; squeezing its right hand will make Mickey giggle and will make a “Happiest Celebration on Earth Glow Medallion” (sold during 2005) light up.

In September 2006, the “Pal Mickey Sorcerer Costume” (commonly referred to as “3.0”) replaced the previous version. This Pal Mickey is dressed in a (removable) blue Sorcerer Mickey hat, red robe, and blue shorts (sewn on over Mickey’s red shorts, which have white buttons like the first release). It does not have the medallion on its hand. Not too long time later, a Spanish language version of Pal Mickey is also available.

Four costumes for the toy were made available in early 2006. The costumes are “Mickey Mouse Club”, “Pin Trading”, “Safari”, and “Rain Wear”, and sell for US$10 each. In October 2006, “Pirate Cap’s” and “Santa Mickey” costumes were made available for US$12 each. The “Santa Mickey” sold out during December 2006 and was not available for order through the Walt Disney World Mail Order department. However, it has returned for the 2007 Holiday season and has been seen in the parks. It appears to be available only seasonally.

In fall 2008 the toy was discontinued. All previously purchased toys will still work; Disney simply isn’t producing anymore.

In the lifecycle of product, Pal Mickey already reached the last stage of Decline: discontinuous production. However, during its period, Mickey Pal has completed its mission to restore the luster of Disney’s aging brand, increase its efficiency and boost attendance. It is considered as a new evolution of CRM by using a risky but cutting-edge technology strategy.

Organizational analysis:

Target Market:

Whenever the name “Disney” appear, it reminds us of is theme parks, Disney Channel, the Disney animate characters ( Mickey, Minnie Mouse, Pluto, Lillo and Stitch, Snow White and Seven Dwarfs, etc..). As I mentioned in the introduction, Disney is now operating in variety fields of entertainment (publishing, merchandising, theme-parks, broadcasting, etc…). Whenever we go, we could easily find the appearance of Disney, on TV, magazines, posters. Asking a 10 year old kid (or even younger), he/she could easily name out a non-stop list of what he/she knows about Disney. In short, from this fact, we have no hesitant to tell the target market that Disney aims at is family, kids and teenagers.

According to this target market, there’s also a need for Disney as reserving the image of an ethical organization. As the brand identity is tied with the sensitive market – kids, and teenagers, in case there is any news that goes against the ethical image, Disney will be influenced and criticized badly.

Aside from the ethic issues, as the target market of Disney is about family and the young market, when the situation comes to economic recession like the time being, the Disney revenue is also affected. The main reason for this is under the woe, all family want to cut cost in spending, therefore the need to be entertained would be listed on unnecessary list. In fact, in 2008 and 2009, Disney has gone through a hard time under this decrease in consumer spending.

S.W.O.T. analysis [xxii] 

Strengths:

Mentioning about the strength of this company, first we have to mention about its strong brand. The Disney brand, in fact is a well-known brand all over the world. In people’s mind, the image that Disney brings is all about healthy and positive, therefore it’s easily accepted by its target segments.

Beside, the other thing that we can assure about this company is its strong financial background. One specific and closest example we can get is from the being economic recession. Although being hit hard as the consumer spending decreases as well as the other economic recession effects, the company lately is still ranked as the one of the 50 most admired companies in 2009. In detail of the record of Fortune 500, Disney is ranked as the 1st for the following aspects in the overall entertainment industry: financial soundness, long-term investment, and use of corporate assets. Still, under the effect of the economic recession, t is very important for Disney Store to have market development and store improvement.

The other strength we can tell of this company is of its exclusive for the products (Toys, clothing, stationary and gift items, etc…). Through this section, it provides many choices for the customers (especially the young ones) and satisfies their needs. Besides, as the Disney products is quite unique , and is only distributed by Disney Co., the customers, therefore, might think of Disney Store immediately when they want to buy Disney’s items.

Weaknesses:

Aside from all of the strengths above, Disney also covers several weaknesses, which is mostly about its stores. Firstly, it’s the unchanged visual merchandising and the lack of theme decoration of Disney stores. According to this first weakness, the author recorded that though time has passed; the decoration or the visual merchandising display is still the same and has not changed regularly. For this, the customer may easily find boring as there’s nothing new to stimulate and attract them. Besides, since there’s nothing seem to be excited, the customer would leave shortly after entering the stores.

Another weakness that is written in the article was about the passive staff’s attitude of Disney. According to the author:” Staff seldom greet and farewell customers. Although they answer enquires from customers, few of them introduce products and new information to customers proactively. Therefore, they fail to identify customers’ needs”. For me, I have never ever been to any stores or theme park of Disney, therefore, I have no chance this examine the information given. In fact, it’s contrary to all things that I have been heard about a positive Disney, a master in the hospitality industry. However, from this comment of the author, we can see that’s also a point of view from a customer. Therefore, if indeed, Disney has this weakness, I think Disney should cover it quick to catch the customers’ satisfaction.

Opportunities: [xxiii] 

At the moment, countries around the world are giving away the best effort as to minimize the growth of economic recession. In fact, lots of action and policies has been done around the world as to slow down the situation of the crisis and to set the economic to the stable status. Therefore, I think for this 2010, Disney would have more room to grow and expand more, which in fact, the company has already has plan to implement the expansion.

According to the information given on Wikipedia [xxiv] , telling about future properties of Disney, right now Disney aims to expand more in the three continents, which it’s called the Asia and Europe projects and American projects. In the overall, these projects are focus on the expansion of additional theme lands to the parks, as well as plans for another theme park in America and plan of new resorts, expected to open in 2014 in the China.

Therefore, for whom that has interest in Disney theme parks, and resorts, all they have to do are staying patient and wait. Because in a real near future, there will be more than enough of Disney for all of us

Threats

As looking back at the analysis of the strengths and the opportunities of Disney, it’s clearly to see that Disney has been achieved such of a success in the business, and no doubt, in the future, it’ll will expanse and develop even more.

However, relevant to the success, there also comes the rivalry and it’s also mean lots of jealousy, and criticism would be going on. Disney Company therefore has to be more careful to remain its ethical image in consumer’s mind.

Besides, the target market that Disney aims at is the family and kids segment. Therefore, one thing that the company should be noticed about is the decreasing birth rate. As this fact is turning to be a trend, it can cause somewhat a shr

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