Potential Strategic Options for Walt Disney Park and Resorts International Strategic Growth - Example

Name Class Unit Contents Contents 2 Introduction 2 Situational Analysis 3 Potential strategic options for Walt Disney Park & Resorts’international strategic growth 5 Positioning approach 5 Product/service approach 6 Change in marketing strategy 6 Recommended strategy with justification for Walt Disney Park & Resorts 7 Justification and supporting rationale for market selection 8 Marketing mix to support the strategy 8 Price 9 Promotion 9 Product 9 Conclusion 10 References 11 Appendix 12 SWOT ANALYSIS 12 Porter 5 forces analysis 13 PEST analysis 14 Introduction Amusement park industry started a long time ago in the late 19thy and early 20th century. The parks have gone evolvement from the amusement parks to theme parks. After the collapse of the theme park, parks were now created under a theme. Santa Claus was the first theme park which was created in the 1946 and dedicated to Santa Claus. Walt Disney revolutionised the industry in a great way. He opened the Disneyland in 1955 located at Anaheim California. This transformed the theme parks and was the beginning of the change in the industry. Walt Disney was a success in the industry and in the first year of operation it was able to attract more than 4 million visitors. The company second theme park was built in Florida in 1971. The park have been enjoying high turnover with 16 million visitors in 2011. The Disneyland is the most popular theme park worldwide. The company is in an industry which is hard to imitate. Several companies that have tries to emulate Disney land have failed (SMGbb.cn, 2009). The company has global operations in Asia and Europe. The theme park has been able to maintain 13 theme parks worldwide (Zhang, 2002). As a marketing consultant, I have been assigned a task to carry out a strategic audit. This will involve analysis of the factors that have an impact on the future of the organisation as well as its parent company. I will look at the changing nature of the theme parks and the key issues that have impact on the Walt Disney Parks and Resorts and its parent company. I will also advise the company on the way it can develop a successful brand inodrer to maintain their competitive position in the globe. Situational Analysis Despite Disney world lead in the theme park industry, the global industry has gained other new players who are able to compete with them. The market has become highly competitive and the operational costs have been increasing. There is both direct and indirect competition which faces the industry. The main source of competition is other theme parks and resorts. There is also competition from other forms of entertainment. The company brand is known for their service and having a unique customer experience. The company main source of revenue have been the US and Canadian market. Though the company has been profitable, the market it relies on is venerable to risks. This has made the company to be keen in venturing to the emerging market. The risks that the company has been able to record in their operations are the changes in the economic conditions, changes in consumer tastes and preferences, changes InTechnology and consumption patterns, poor intellectual rights management, increasing competition among other issues. The company has the most popular theme parks in the world with the top eight most visited theme parks globally. The company has been able to dominate the entertainment industry. Despite this, the competitors such as Merlin Entertainment and the Universal Studios have been doing well. Both companies have been registering increase in their revenues. For example, Merlin Entertainment was able to record 46.4 million visitors which made it the second largest theme park. The company has been showing fast growth in the entertainment industry due to their high investments (SMGbb.cn, 2009). Merlin entertainment has been aggressive in the entertainment industry making them a threat to Disney World. At Europe, Merlin entertainment is the largest indigenous company in the theme park industry. Universal parks and resorts have been able to compete with the Disney parks and Resorts due to the resources owned by their parent company. The company also owns the Universal pictures and television networks. NBC had their revenues rising by 4pecrent in 2011 while their theme park division experienced revenue rise of 24%. There are also other smaller theme parks worldwide. The theme park market has been developed in most parts of the world. At the moment, Africa market is the most undeveloped. Most of the theme parks in the continent are small and underdeveloped (Zhang, 2002). The African market has high potential for future market due to its high number of population aged below 15 years. At the moment, Disney world have been trying to maintain their market position by opening new theme parks as well as looking for strategies that will give them a competitive edge (Anton Clavé, 2007). More situational analysis is indicated in the appendix section by figure 1,2 and3. Potential strategic options for Walt Disney Park & Resorts’international strategic growth Walt Disney Park & Resorts’ international strategic growth will be enabled through proper strategic development. The potential strategies that can help the entertainment company attain a sustainable growth are positioning approach, product approach, and change in marketing strategy. Positioning approach Walt Disney Parks and Resorts will be required to redesign their positioning approach. This is a strategy that will ensure that the company will address each of their varied segments requirements. Each of the area that the company operates has different requirements. In developing a new market, Walt Disney Parks and Resorts will be required to carry out appropriate study in order to fulfill the demands and expectations for the target group. For example, Africa has large untapped market in the entertainment industry. If Walt Disney Parks & Resorts is to open a theme park in the region, there is need to have appropriate information on the market. The African market will need to be addressed with lower prices and services that suit the population. This strategy will help the company to venture into new markets at ease and make profits (Zhang, 2002). Product/service approach In some cases, Walt Disney Parks and Resorts will be required to design their products for different markets. The consumer taste is varied making it hard to use a standard product. Though the company has utilized the strategy in the Asian market, it needs to be redesigned. There is need to modify the product to fit into different economic groups. While product diversification has focused on varieties, there is a need to make products which are according to the region economy. The company can venture into the African market and come up with lower cost services that will be affordable by the consumers. The facilities that are available in theme park and resorts have to be addressed independently taking into account the market being targeted (Zhang, 2002). Change in marketing strategy Marketing the theme parks and resorts has to be looked at as multi-pronged effort. The marketing approach used has to be tailor made to suit the specific segments. Walt Disney Parks and Resort have to make sure that there positioning and marketing objective is segment specific. The marketing strategy that is used by the company should focus more on maximizing the number of visitors which translates to more revenue. Each of the market needs to be approached with a specific model. The marketing strategy should start by being able to understand the market. This can be done by data collection and carrying out market research. There is need to choose the right target market for the product which will be determined by the consumer trends. This will be followed by having a campaign that is appropriate for the audience. Though the marketing strategy being used have enabled Walt Disney Parks and Resorts to succeed, the changing market and entrant of new competitors needs reevaluating of the strategy (Anton Clavé, 2007). Recommended strategy with justification for Walt Disney Park & Resorts Change in marketing strategy is the best strategy that Walt Disney Parks and Resorts can utilize. Though the company enjoys a strong brand identity, the international theme park industry is growing but facing bottleneck problems. The number of theme parks is growing and business in some areas such as Europe is declining due to graying population. Due to the changing environment, the best strategy to adopt is change of the marketing tactics. Expanding into different global markets cannot be based on duplicating the original version. The expansion to the international market has not been always profitable for Walt Disney Park and Resorts. The marketing strategies that are used by the company have a direct effect on the profit a company gains as well as its development. The company has to address the market environment before embarking on the strategy change. This involves addressing both the macro environment and the external environment. The company has to look at what the customer want in a particular market and match it with its needs (Anton Clavé, 2007). The needs of the customer and the company must always be related in any market. When the market is turbulent, a change in strategy is needed. The theme park market has become more competitive with the consumer becoming demanding and more experienced. There is also rise in trend where the consumers are becoming more selective in the market. The Chinese market is becoming more competitive and the number of theme parks and amusement parks are increasing. The consumers in the Chinese market have become demanding. The market initial success created unrealistic expectations among the investors who increased their investment (Xu, 2008). The new marketing strategy should be able to recognize the local culture. For example, the initial failure of the Euro Disneyland was attributed to the ignorance of the local culture. The main drivers to change in the marketing strategy are politics, economy, social, technology, environment and the existing competition in the industry. Walt Disney Parks and Resorts needs to change their strategies as the situation changes. The company has been entering into new environment which makes it impossible to rely on same marketing strategies (Anton Clavé, 2007). Justification and supporting rationale for market selection In order to select the appropriate market, Walt Disney Parks and Resorts have to look at several factors that will be able to determine the marketing strategy to be used. The three main aspects that have to be looked at are climate, language and culture. For example, before entering the Chinese market it is important to know that the culture is different and English is not used as the first language. The Chinese people are more culture conscious hence it is hard to copy from the American culture (Xu, 2008). In this context, Walt Disney Company has to combine both Chinese and US cultures. There is need to do market analysis which will determine the competition, economy and the available market. The size of the park should be determined by the resources available and the market share. Market analysis will determine the possibility of entering into a new market and its selection. Once a market is selected, the marketing strategies that are used should be specific to it and not copied from another market (Zhang, 2002). Marketing mix to support the strategy To support the new marketing strategy, the marketing mix used should be in line with it. This can be best outlined using the marketing mix. Marketing mix looks at the contribution of the elements which can provide the industry with a competitive advantage. Through marketing, the industry is able to communicate the product value to the customers. Change in marketing strategy will go with the following marketing mix. Price The price is used in determining the value of the sales. This is the perceived value for the product or service by the consumer. The pricing that Walt Disney Parks and Resorts will use will be determined by the market. Each of the market segments should use its own pricing mechanism. The price should vary depending on the market environment (Zhang, 2002). Promotion This involves having communication with the customers. Through promotion, it is possible to help the consumers make decisions. Each region that Walt Disney Parks and Resorts are operating should utilize specific promotional techniques. The competition in a market should be used to determine the level of promotion that is to be used. For example, the competition in the Chinese market will lead to use of more promotional techniques such as price reduction and offers (Xu, 2008). Product The product offered by the company has to conform to the market needs in a region. This will make it easier to come up with appropriate marketing techniques. Each of the market should have the product designed with the right features. The marketing strategies that are used should be for the specific product in a specific market. The type of service that is offered at the Chinese market should fit the culture and consumer preferences (Xu, 2008). Each of the market has their preferences hence not all products will fit in the market. Conclusion As a marketing consultant, I would advise Walt Disney Parks and Resorts to change their marketing strategy. The company growth will be determined by how they market themselves amid the growing competition in the market. By critically analyzing the global theme park market, there is increasing competition. For example, the Chinese market has attracted many investors in theme parks which have made it more competitive (Xu, 2008). There have been rise of other companies which have been recording growth in the industry which have become a threat to Walt Disney Parks and resorts. The marketing strategy should be segment specific implying that the marketing that is done in China should be different from the marketing in US. The marketing mix used should look at price, promotion and product for good returns and in order to cope with the changing global theme park industry. References Anton Clavé, S. 2007, The Global Theme Park Industry, England: CABI. SMGbb.cn, 2009, Disney: five theme parks in a different operating condition. Retrieved August 23, 2014 from: http://www.smgbb.cn/zixun/shishi/2009-11-04/342208.html. Xu, Z. 2008, ‘Future of Chinese Theme Parks’. City and Life, Vol.13, no.1, p. 45. Zhang, L. 2002, ‘Where are Theme Parks Heading’. Tourism Tribune, 84, 23-26 Appendix SWOT ANALYSIS FIGURE 3: Apple SWOT Analysis Strengths Weaknesses One of the biggest entertainment company globally. The company have a wide portfolio. The company is highly innovative. Have a great customer service. Strong brand name. Have been accused of influencing children negatively. Increasing competition. Wide range of product can lead to reduced focus. Poor working conditions. Opportunities Threats High profits can help in renovating parks. Growing technology offers a lot of opportunities to the company. There is an untapped customers group. Increasing unemployment rates in some countries. Increased technology such as online streaming leads to reduced DVD sales. Increase in labour costs. Fig.1 SWOT analysis Porter 5 forces analysis FIGURE 6: Porter’s 5 Forces SUPPLIER POWER (high) The power of the suppliers can be termed as average. This involves the manufacturers, vendors and construction firms. The company has large powers as compared to some of the suppliers. BUYER POWER (low) The company can increase the prices without drop in number of the customers. The consumers are willing to spend cash in order to experience Disney entertainment. The powers of the consumers are low. THREAT OF SUBSTITUTES (low) There is low threat as zoos and museums cannot match with amusement parks. The company brand name is well known. THREAT OF NEW ENTRANTS (medium) The market requires a lot of investment. This makes it hard for new entrant. RIVALRY There is high rivalry among existing firms. The company competes with many entertainment firms which are also in the theme park industry. The main competitors are Universal Studios and Luxury chain hotels. Fig. 2 Porter 5 forces analysis PEST analysis Political Tax paid by the animation company. The establishment of special economic zones in some countries. High cost on trainings. Economic The salaries and cost of production depends on the country economy. The varying costs of production in different countries. Varying salaries in different countries. Social The use of television plays a major role. Use of special programs that leads to consumer loyalty. Technology The changing technology has an effect on the animation industry. Rise of technology have led to copyright infringement and streaming. Fig. 3 PEST analysis Read More