Measuring and Managing Return on Marketing Investment - Case Study Example

Universal Studios Hollywood Marketing Report Student Name: Mingming Yang (Eva) Student ID: 589549 Executive Summary This report provides an analysis of the Universal Studios Hollywood. And this report will develop a strategic marketing plan for this company. And do an analysis of MACO environment (Political, Economic, Socio Cultural, Technological, Environmental, and Legal and Demographic changes); it will also define the current customer chain and market main competitor. PESTEL framework may be utilised for identifying how future trends in the political, economic, social, technological, environmental as well as legal environments could affect the organization. The PESTEL framework offers a wide-ranging list of impacts on the possible failure or success of certain strategies. Then base on this information to pick up a strategic theory. Using all findings a long-term plan for next five years will be developed. The main point of the plan will include: overview of Universal Studios Hollywood, PESTLE analysis, competitors analysis, current customers, strategic formation and objectives, and action plans. In addition, this report will examine and analyse some components in the organisation. In the recommendation part will show evidences and reasons to support that the new action plan can improve and build new market chain for the property company. Table of Contents 1.0 Company Overview NBCUniversal Inc is the largest entertainment and media company that leading movies, entertainment, radio, television and news etc. in the industry. Accounting for early history, the first Universal Film Manufacturing and created by Laemmle in 1912, one of the most famous movies ‘Jurassic Park’ presents by Universal. And NBC founds in 1926, the company was focusing on develop radio, television. Until August of 2004, NBC and Universal join together to become NBCUniversal Inc one of the company under the ownership of Comcast. NBCUniversal Inc never stops revolution the digital and it is creating extraordinary legacies in the modern world of picture product. NBC and Universal owns and operates American television networks, channels and few local stations in the United States. It also owns motion picture companies, world-renowned theme parks and a suite of leading internet-based businesses. The vision of NBC and universal is to build on the legacy of quality and innovation (NBCUniversal 2015). Universal Studios Hollywood is one of the film studios and theme park operate by Universal Studio company that belongs to NBCuniversal Inc. The Location is on the universal city of the Los Angles in California of United States. There also have numerous theme parks under the brand Universal Studios around of the world, such as one in Japan and another one in Singapore. People call Universal Studios Hollywood as ‘The Entertainment Capital of L.A’. The scale of the company is between 1000-5000 employees. It is one of the important tourism places for the city. Universal Studios Hollywood provide featuring and scenes of a real movie world experiences to customers. There has ground –breaking attractions, such as ‘Jurassic Park- the Ride’, ‘Transformers: The Ride-3D’, ‘Shrek 4-D’, ‘Despicable Me Minion Mayhem’ and ‘Fast & Furious- Supercharged’. In the side of the theme park, has some delicious American local restaurant. To make visitor more convenience come and few accommodation build on universal city, like Hilton and Sheraton. Customers can find further information through the official website. 2.0 Macro Analysis-Industry and Market According to Powell (2012, p.9), the strategic change or strategies of a company must be anchored to its strategic position. In this case, the strategic position focuses on recognizing the impact on external environment strategy, the strategic capability of the organisation (competences and resources) as well as the influence and expectations of stakeholders. As stated by Salvá (2011, p.7), the PESTEL framework assists managers to comprehend the organization’s strategic position in a macro-environment. 2.1 Political Undoubtedly, Universal Studios Hollywood as a theme park generates storm water, wastewater and air emissions; therefore, they are expected to adhere to environmental safety and health laws under Environmental Protection Agency (EPA) auspices. Besides that, they are expected to comply with the Clean Air Act and Clean Water Act. Besides that, a key political concern facing Universal Studios Hollywood is the strict visa and immigration rules. Although Los Angeles where Universal Studios Hollywood is based appears an attractive tourist destination, it takes long and costs a lot to get a visa. For this reason, the U.S. Travel Association in 2011 tried to persuade the government to ease rules about visa so as to gain more travellers (Wallace et al., 2014, p.5). This led to the creation of Visa Waiver Program, where tourists from other countries within the program are allowed to travel in the United States without Visa for trips not more than 90 days. Moreover, the US government is reluctant to loosen the visa rules because of terrorism threat and immigration. 2.2 Economic After experiencing decline in their revenue in 2009 because of the global economic recession, a 2.2 to 5.3 per cent revenue growth has been witnessed in the amusement park industry. Besides that, the Tax and Price Index (TPI) of lodging as well as food and beverage have increased tremendously in Los Angeles, but airfares as well as motor fuel have decreased. In Universal Studios Hollywood location the average daily rate for a room was 171.54 US Dollars as of 2013 with more than 2000 hotels in Los Angeles. In the duration between 2011 and 2012, over 70 per cent of the beds in the over 2000 hotels in Los Angeles were occupied (Wallace et al., 2014, p.6). The economy health is without doubt fundamental for the entire amusement park industry given that demand relies heavily on disposable income of the customers. Furthermore, savings rates, inflation rates as well as consumer purchasing power are important determinants for Universal Studios Hollywood. 2.3 Socio Cultural As a whole, the amusement park industry is strongly impacted by changes in the lifestyles of the consumers. Particularly the Cocooning trend may adversely impact Universal Studios Hollywood since many people prefer staying at home where their home entertainment systems entertain them. Additionally, the increased utilisations of social media have an effect on Universal Studios Hollywood since the park not only must be existent on social networking sites such as Twitter and Facebook, but also have to track reviews by the customers as negative reviews can harm the company. Still, these social networking sites also offer Universal Studios Hollywood marketing department an opportunity to interact directly with customers as well as to build relationships that are stronger and long-lasting. Teenagers aged ten to nineteen are the most important age group for Universal Studios Hollywood; therefore, demographic changes in this age group may result in attendance changes at theme park. 2.4 Technological Theme parks intend to use technology in three main areas: cost cutting, seasonal updates as well as guests’ overall experience. Similar to other parks in the US, Universal Studios Hollywood close during the winter months; therefore, to lure back the customers for the new season, technological and headliner rides are installed. Theme parks should continually be aware of novel technologies so well understand how they can integrate these technologies into their experience offer so as to remain up-to-date and be attractive (for example, suing digital displays or offering Smartphones’ applications). Still, advancement in technology may have an effect on Universal Studios Hollywood marketing. Through utilisation of digital technology marketers, Universal Studios Hollywood marketing may take advantage of the increased adoption of new technologies to directly target customers through customisation of the marketing content. Besides that, new techniques of marketing brought about by new technologies like social media or search engine advertising can help make Universal Studios Hollywood marketing even more efficient. 2.5 Environmental The theme park can be impacted by adverse weather conditions brought about by long-term or short-term change in weather patterns or through disastrous events like hurricanes, excessive rain or heat, earthquakes as well as tsunamis. For environmental protection, the government always make sure that the management of theme park management abides by the set environmental regulation; for example, the whole theme park must be enough dustbins and cars should not enter the theme parks; rather be left in separate parking yard so as to reduce air pollution. 2.6 Legal and Demographic changes Numerous different legal claims can be accessed by people who are injured during a ride in the theme park. Even though the specific claim relies on accident nature, they are mostly attributed to product liability and negligence (Nolo, 2014). In this case, if an accident at the theme park was caused by the inattention or carelessness of the park or its employees, then they can be sued for negligence. Besides that, a number of accidents at the theme park are caused by defective components or rides as well as by poor operation, inspection, or maintenance. All these fall under the product liability. Demographic factors are also crucial determinant for Universal Studios Hollywood: since most developed countries are experiencing demographic shift, the theme parks must change accordingly their marketing strategies so as to target not just young families or young customers. 3.0 Competitor Analysis Universal Studios Hollywood main direct competitors in terms of attendance include Walt Disney, SeaWorld Parks & Entertainment as well as Six Flags Inc. Universal Parks Hollywood attendance has been increasing steadily (see Appendix two), an in 2014 it had an attendance of 6,824,000 guests while its main competitors the Magic Kingdom had 19,332,000 guests, Disneyland Park had 16,769,000 guests, Islands of Adventure had 8,141,000 guests, and Disney’s Hollywood Studios had 10,312,000 guests (Green, 2015). Furthermore, SeaWorld and Disneyland concentrate on tweens and kids, but must have parents to go there. Besides that, Disneyland concentrates on making a unique place where “dreams come true” while SeaWorld Parks & Entertainment concentrates more about sea life with the goal of making attendants learn by utilising the differentiation strategy. Universal Studios Hollywood together with SeaWorld and Disneyland target the young audience as well as their parents; therefore, the rivalry between these competitors with reference to the target audience is exceedingly high (Garcia, 2012). However, the branding of Universal Studios Hollywood and its marketing activities are less powerful as compared to that of Disney’s. Therefore, in spite of having an awareness that is moderately high based on its brand name, Universal Studios Hollywood’s brand equity is lower as compared to that of Disney because it has not succeeded in creating an emotional relationship with its customers. Furthermore, Universal Studios Hollywood akin to SeaWorld also frequently always offer coupons and discounts so as to create interest as well as offer customers a reason for visiting the park proves why the theme park has low customer loyalty. 4.0 Current Customers The primary customers of Universal Studios Hollywood is children between the age of 4 and 12 and youths between 13 years and 20 years, which is broadly diverse consisting of younger half who are still children as well as the older half who are in their teenage years. Basically, this segment is primary for the reason that they can greatly influence decisions made by their parents and they are also thrilled by the brand. Universal Studios Hollywood secondary customers comprise of women and men aged between 35 and 55 who mostly are parents. These customers are considered secondary for the reason that they have previously experienced the traditional atmosphere of Universal Studios Hollywood. Therefore, Universal Studios Hollywood endeavours to attract small children who are yet to experience the initial thrill of Universal Studios Hollywood as the primary customers have.  5.0 Strategic Formation and Objectives So as to make the strategic planning work, the objectives, missions, goals, performance targets, or other top management expectations have to be made real by others down the organizational chart. Starting from the highest levels of the Universal Studios Hollywood, there is a hierarchy of strategic formulation from which it is translated consistently from one level to another in order that all departments understand their contribution to the overall mission of NBCUniversal Inc. Universal Studios Hollywood is positioned uniquely to empower, inform as well as motivate its staff and customers, and has embraced opportunity of creating conversation as well as mobilizing action to handle the critical issues facing the company. Besides that, Universal Studios Hollywood champion a culture that is inclusive and endeavors to develop and attract a diverse, skilled labor force to develop as well as deliver a range of content that reflects the changing and current face of the world. Strategy formulation as described by McFarlane (2013, p.4) connotes the process of selecting the most suitable strategy for achieving organizational objectives and goals and in so doing, realizing the organizational vision. Universal Studios Hollywood differentiates itself from other theme parks through its fundamental synergy practice and knowledge all through its efforts of diversification. Universal Studios Hollywood has exhibited a concise and clear corporate strategy that has brought about lengthy success, and eventually has generated value. The NBC Universal, the parent company of Universal Studios Hollywood has long-term vision dubbed Evolution Plan, previously recognized as the Vision Plan. The vision represents long-term investment of 3 billion US dollars for upgrading and improving NBC Universal’s post production and studio production facilities, adding new office space for media purposes, improving Universal Studios Hollywood theme park as well as creating a new residential neighbourhood (Horowitz, 2009). 6.0 Action Plan The marketing mix according to Goi (2009, p.2) is an integral tool for developing an effective marketing strategy in addition to implementing it tactically. 6.1 Pricing Universal Studios Hollywood concentrates on involving the mass population; therefore, the pricing always considers the middle class. Universal Studios Hollywood wants parents and their kids to have their merchandise; so their pricing strategy should ensure that the low and the middle class also enjoy. Besides that, Universal Studios Hollywood one day the ticket goes between 87 to 95 US dollars, even though not cheap, they are undoubtedly economical and so a person can visit the place frequently. 6.2 Promotion Universal Studios Hollywood is mainly holistic since the theme parks hardly need a push. Actually, customers wait eagerly for their visits to the theme park. For this reason, promotion at Universal Studios Hollywood is done mainly internally and to some extent externally. The theme park promotes various packages as well as tours and tours, hence, making it easier for persons to visit Universal Studios Hollywood. Besides that, the theme park has embraced the social media platforms, mainly Twitter and Facebook where it promotes itself to potential customers. 6.3 Distribution Universal Studios Hollywood is placed in Los Angeles, but the products produced by its parent company the NBC Universal are distributed across the globe, and the company through its Evolution Plan seeks to expand its current market. The main attractions at Universal Studios Hollywood (includes the theme park, and being amongst the top theme parks in Northern America it is well known by people across the globe. 6.4 Product Universal Studios Hollywood products consist of both tangible and intangible goods as well as services, which are offered at the theme park and virtually through the internet. Besides that, Universal Studios Hollywood should in the future customize every its product with specific attributes of the company that will enable the company to differentiate as well as demarcate their products from those of their competitors. Universal Studios Hollywood is a profitable theme park and it offers once in a life time experience to its customers, where people go on rides and experience the mystic Universal Studios Hollywood first hand. 7.0 Conclusion In conclusion, the report has offered an analysis of the Universal Studios Hollywood and also developed a strategic marketing plan for this company. As evidenced in the report, growth in this industry is very challenging due to various factors indicated in the PESTLE analysis. Without doubt, Universal Studios Hollywood cannot grow if it does not diversify its resources. Furthermore, Universal Studios Hollywood marketing objective should focus on constantly making its customers comfortable and aware of its products and should improve their promotion strategy so as to reach people with purchasing power. Universal Studios Hollywood shows itself as a company extremely attentive to the significance of diversification as well as the synergy true nature. As indicated in the essay, competition is high in the theme parks industry and so Universal Studios Hollywood should develop a strategic plan that will see them improve the number of people who attend the park. 8.0 Recommendation Aside from its Evolution Plan, Universal Studios Hollywood should in the next five years ensure they concentrate on the innovation as well as creativity of products, and not primarily to over focus on the expansion. When the company over focus it may unexpectedly increase the market share of the competitors. Before 2020, Universal Studios Hollywood should be able to step outside the box by diversifying to other states and countries so as to make sure competition from other theme parks does not draw near them. Imperatively, to realise the Evolution Plan objectives Universal Studios Hollywood must partner with real estate brokers all across the United States in order to be able to find potential property that may be utilised 5 to 15 years later. Universal Studios Hollywood is without a doubt a favourite theme park, but must put marketing strategies in place for attracting the next generation. As indicated in the report, children influence adults’ life and decisions, but they are not drivers of revenue. Therefore, Universal Studios Hollywood should widen its primary customers segment by diversifying its target and also including the adults. Therefore, Universal Studios Hollywood should advertise as well as appeal to this segment considering that they are the money makers and make Universal Studios Hollywood experience accessible to their children. 9.0 References Garcia, J., 2012. Theme parks step up push to attract young kids. [Online] Available at: HYPERLINK "http://articles.orlandosentinel.com/2012-01-13/business/os-theme-parks-battle-for-kids-20120113_1_theme-parks-toni-caracciolo-seaworld-orlando" http://articles.orlandosentinel.com/2012-01-13/business/os-theme-parks-battle-for-kids-20120113_1_theme-parks-toni-caracciolo-seaworld-orlando [Accessed 3 September 2015]. Goi, C.L., 2009. A Review of Marketing Mix: 4Ps or More? International Journal of Marketing Studies, vol. 1, no. 1, pp.1-14. Green, J., 2015. Universal Studios Park Attendance Rises in 2014. [Online] Available at: HYPERLINK "http://insideuniversal.net/2015/06/universal-studios-park-attendance-rises-in-2014/" http://insideuniversal.net/2015/06/universal-studios-park-attendance-rises-in-2014/ [Accessed 3 September 2015]. Horowitz, L., 2009. NBC Universal Commits $3 Billion to Improving L.A. Facilities. [Online] Available at: HYPERLINK "http://www.thewrap.com/nbc-universal-commits-3-billion-improving-la-facilities-8103/" http://www.thewrap.com/nbc-universal-commits-3-billion-improving-la-facilities-8103/ [Accessed 3 September 2015]. McFarlane, D.D.A., 2013. Is the Process of Strategy Formulation Different in Complex Organizations? E-Journal of Business and Economic Issues, pp.1-14. NBCUniversal, 2015. NBCUniversal. [Online] Available at: HYPERLINK "http://www.nbcuniversal.com/" http://www.nbcuniversal.com/ [Accessed 3 September 2015]. Nolo, 2014. Legal Claims in Amusement Park Accident Lawsuits. [Online] Available at: HYPERLINK "http://www.nolo.com/legal-encyclopedia/amusement-park-accidents-32457-2.html" http://www.nolo.com/legal-encyclopedia/amusement-park-accidents-32457-2.html [Accessed 3 September 2015]. Powell, G.R., 2012. Marketing Calculator: Measuring and Managing Return on Marketing Investment. new York: John Wiley & Sons. Salvá, M.S., 2011. What Is the Medium-Term Impact of the Bric Countries? München, Germany: GRIN Verlag. Wallace, E. et al., 2014. Los Angeles Tourism - A Domestic and International Analysis. Research Paper. Los Angeles : Los Angeles Area Chamber of Commerce. 10.0 Appendix Universal Studios Hollywood Attendance Read More