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The Walt DisneyCompany

Danjel Lessard & Lauren NorthcuttBusiness 308: Principles of MarketingProfessor Simpson


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Disney

The Walt Disney 1Company Description

What started out to be nothing more than a dream of Walter Elias Disney, with the

release of Alice in Wonderland, a series of short film comedies, the beginning of a world

renowned global corporation Walt Disney had evolved. Walter and his brother Roy were

equal partners in what was originally the Disney Brothers Cartoon Studio in 1923 and

with the suggestion of Roy, it soon was renamed The Walt Disney Studio. After four

years of success and profit, Walter and Roy experienced a business set back when they

found their film distributor M.J. Winkler had stolen their cartoon characters and

animators in attempt to undercut them. With the help from their chief and loyal animator,

Ub Iwerks, Walt created Mortimer Mouse, which was renamed Mickey Mouse by his

wife. The first cartoon with synchronized sound was released at the Colony Theater in

New York, November 18, 1928. Walt Disney won its first Academy Award for Best

Cartoon in 1932 and continued to be honored with an Oscar every year for a decade. Walt

Disney consumer products started when Walt and Roy accepted $300.00 from a man that

insisted Mickey should be applied to paper towels for school children. The company

became public in 1940 and followed with the release of five successful feature films,

including Snow White, Fantasia, Pinocchio, Bambi and Dumbo. In turn they

revolutionized animation forever. In 1955, the first of many Disneyland theme parks were

opened. At the same time, television became a new, huge, and successful avenue for its

fans.

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"I can never stand still. I must explore and experiment. I am never satisfied with

my work. I resent the limitations of my own imagination." Walt Disney (Disney

Dreamer, 2007).

Due to this dream with determination, The Walt Disney Corporation became an

international powerhouse. Today, the company has four main business ventures:

consumer products, theme parks and resorts, media networks and studio entertainment.

The first being consumer products encompasses the development, advertising, promoting,

licensing and selling of products that represents all of the new and old Disney characters.

The theme parks and resorts that once started in California grew to one of the most

profitable and loved venues internationally. Television, radio, and cable properties are the

core of the media network. The driving force of the entire enterprise is the motion

pictures and animated cartoons which are managed by Touchstone, Pixar, Walt Disney

Pictures, Buena Vista, and Miramax.

The Walt Disney Companys Mission Statement

According to The Corporate Disney website, the mission of The Walt Disney

Company is to be one of the world's leading producers and providers of entertainment and

information. Using our portfolio of brands to differentiate our content, services and

consumer products, we seek to develop the most creative, innovative and profitable

entertainment experiences and related products in the world (http://www.corporate.

disney.go.com/careers/who.html).Walt and Roy believed that he had to stay one step ahead

of the competition in order to be the most innovative and creative animator of all times.

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It is without undeniable dispute that The Walt Disney Corporation has created an

empire that is unmatchable. They strived for excellence and are continually changing. They

have surrounded themselves with the best artists, the most innovative creators, and the

newest technology. Above all, the consumers are the driving force behind the genius

enterprise, and the two brothers never lost sight of that goal.

The Walt Disney Companys Target Market

Before a company even begins to look at its objectives, and marketing strategy,

they must first decide what they are selling, and who they want to sell it to. A successful

marketing plan requires a clearly defined and well researched target market, without

knowing the desires and needs of the people you are selling to, you can not create a

product that meets those needs. The well defined target market represents one reason why

the Walt Disney Company has been so successful since their public start in 1940. Walt

and Roy Disney started this company not to satisfy every consumers needs, but simple

To make people happy. This quickly segmented the Walt Disney Companys market

into children till the age of about twelve. After many years, it was soon realized that the

target market is not only young children, but often includes the decision makers. These

are usually the parents that take their kids to the movies and buy the merchandise. Disney

knows that it's one thing to make a great movie that kids are excited about but the efforts

often fall short if parents don't approve of it.

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The Walt Disney Companys most recent, slight change in the target market has

come from their new ideas of marketing and expanding. To reach kids and teens to

promote Disneyland's 50th anniversary this year, Walt Disney Co. will use one of the

hottest and most controversial gimmicks in the media business: "advergaming."

(http://www.usatoday.com/money/media/2005-01-17-disney-advergaming_x.htm).

Seeing as how the age-range of people that play video games are a little older than kids,

they will be targeting at a teenager level. The attempt to expand Disney into a wireless

network also stems the interest of an almost different type of target market. The Walt

Disney Co.'s decision to launch a wireless service aimed at its best customers pre-teen

children and their families have focused a spotlight on two significant industry trends:

the growing segmentation of services marketing and a fascination with the hottest of

those segments, the youth market. (http://telephonyonline.com/mag/telecom_service

_providers_target/).

The Walt Disney Companys Marketing Objectives

Every company, whether a service enterprise, a retail shop, a restaurant, or a

theme park must have one objective in order to be in business. It is the sole reason one

goes into business, no matter how much they may have wanted to improve the lives of

others. The foremost goal of every business is to make money. In an article published by

the London Times, former Chief Executive Officer Michael Eisner was quoted as saying,

We [The Walt Disney Company] have no obligation to make art. To make money is our

only objective, (Rowan, 2005). At the time Eisner was CEO of Disney; from 1984

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2005 he nurtured Disney from a $3 billion company to a $60 billion dollar company, a

testament to the primary goal of the business (Eisner, 2007).

Even though when Walt Disney first opened Disney Land in 1955 he coined the

phrase, The happiest place on earth, (Oberleitner, 2007) the real reason for opening his

entertainment park was to attract fans of Disney Studio Productions, promote his

characters, and make money. Without a profit the Walt Disney Company, or any other

company for the matter, would not be in business for long. Companies, especially large,

well established companies like the Walt Disney Company, use their profits to do many

things: expand their market share; research and development; expansion; new product

lines; and various activities that help attract more customers. The Walt Disney Company

has many fields in which they participate to make money: television; studio productions;

theme parks; consumer products; and cruise lines, to name a few.

Disney consumer products and theme parks are very essential to Disneys

ultimate goal of making money. The placement of Disney products on school supplies,

lunchboxes and backpacks, in malls across the country, and within the walls of their

marketing-giant theme parks themselves is, a daily advertisementfor our cartoons,

[that] keeps them all [consumers] Mickey Mouse minded, as stated by Walts brother

Roy Disney (Rowan, 2005). No matter the means behind the ultimate goal, the goal

never changes.

As stated in the Walt Disney Companys Mission Statement, another of their

goals is to be, one of the worlds leading producers and providers of entertainment and

information, (Walt Disney Co., 2007). For the accomplishment of this goal Disney

already has a substantial foot in the door with organizations in studio entertainment and

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theatrical productions for children, teens and adults of all ages; television stations

targeting a wide variety of audiences ABC for news and families, the Disney Channel

for children, ESPN, ESPN2, ESPNEWS, and ESPNU for the sports fanatics and even

SOAPnet for the stay at home mothers and fathers; theme parks like Disneyland,

Disneyworld and the Disney World Resort to attract families with younger children

looking for a good vacation; and one of their newest additions is the Disney Cruise Line

that tour the Bahamas and Caribbean Islands and even make a stop at Disneys privately

owned Castaway Cay Island (Walt Disney Co., 2007).

Disneyland in particular, the first park ever to construct rides, shows and

attractions around separate themesthe themes of Walt Disneys motion pictures

(Wikipedia.com, 2007)was constructed and dedicated by Walt Disney to those people

who want to relive memories of the past and [that]youth may savor, (Wikipedia.com,

Disneyland, 2007). Disneyland itself was not just built to entertain young children, but

also to give their parents a vacation in a place that they could remember from their pasts

and relate to in a way for them to enjoy the experience.

With this impressive display lineup and many more to support the Walt Disney

Companys goal of being a leader in entertainment it is safe to say they are well on their

way to accomplishing this feat. Disneys reach is global, with theme parks in China,

France, Japan, and all around the United States. They also have Disney stores across the

globe selling Disney consumer products throughout the United States and also globally,

both within their Disney resorts and theme parks and in globally placed retailers. The

Disney trademark is recognized all over the world, once again keeping consumers

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Mickey Mouse minded, and showing what kind of a leader Disney can be simply

through the reach of its grasps.

To become a leader in information Disney has constructed a team of people and

engineers and tasked them for this assignment. They call the process of developing new

technology Disney Imagineering. This is basically the research and development section

of Disney which thinks up, designs, and implements all aspects of the Walt Disney

Company. From developing rides and attractions of Disneys theme parks, water parks,

and cruise ships to their Disney resorts, Disney Imagineering is involved in all

development.

The goal of the Disney Imagineering section is to continuously design and

implement new, fun and exciting products for the Disney Company that will attract,

amaze, and excite their customers. By developing fun new rides for Disneyland parks

that drop you faster than gravity, new movie technologies offering cutting edge visual

effects, or even combining the two into one gut wrenching, heart stopping, scream-of-a-

good-time they have realized their goal.

The latest example of innovation at the Walt Disney Company is discussed in an

issue of Business Week on November 12, and it outlines plans by Disney to release a

mobile phone service in Japan. Disney will be involved in the phone from the ground up,

from developing the handsets to dealing with subscriptions. In order to stay true to

Disney practices, they will be offering content dealing with their characters and

distributing cartoons to their subscribers (Telecom Asia, 2007). The cell phone market is

one of the fastest growing markets in the world, growing in leaps and bounds-from

110,000,000 people in the United States in the year 2000 to 159,000,000 people in just

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2003 (Bergman, 2004, and Johanson, & King, 2002). As the use of cell phones continues

to increase at an exponential rate it becomes more clear how important it is to have a

stake in them, and Disney, realizing this, has become a player in the market and is using

cell phones to spread their company name. To do this they offer many things that are

popular among cellphone users, such as ringtones, graphics for wallpapers, games, and

text message updates. Disney offers a cellphone in the United States, however Disney

has recently announced it will be discontinuing their cellphone service as of the end of

the year, December 31, 2007. They did not give any specific reasons for the cessation

(Disneymobile.go.com, 2007).

The utilization Disney has made of the mobile phone service brings to light their

trend of target marketing. Cellphone users continue to grow younger as the devices

become more popular and easier to afford, and Disney is trying to reach them. In an

article by Merissa Marr in the Wall Street Journal on November 19, 2007, this marketing

strategy is shown even more profoundly. For years Disney has attracted young girls

through the Disney Princesses Belle, Ariel, Sleeping Beauty, Snow White, Cinderella,

and Jasmine. Now Disney is under continuous pressure to continue growing their Disney

Princess Sector, and the result is the targeting of even younger girls girls still in the

crib. To accomplish this Disney will be making products such as cribs and various infant

products picturing the various princesses and even some new princesses who are due to

make their appearances in the near future (Marr, 2007, B1).

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The Walt Disney Companys Industry Analysis

The Walt Disney Company is in the entertainment industry. This is a very simple

way of saying something much more complicated: The Walt Disney Company is in

business to produce entertaining theatrical productions that are family oriented and

family friendly; they are in business to create products and toys that will promote their

theatrical productions that are both entertaining and safe for children, and also

stimulating enough to attract new customers; they are in business to entertain families

with children who are looking for a fun, interactive and safe vacation spot both with

resorts and parks, and also cruise lines; and finally they are in the business in keeping

their name reputable and substantial in a growing business.

A key point that is very important to staying reputable in the consumer products

industry is safety. An extreme example of this is portrayed in the Wall Street Journal by

Nicholas Casey on November 20, 2007. This article highlights the problems Mattel has

been having with their toy manufacturers in China and lead paint levels in the paints that

are dangerous for children (B8). The rise in these dangers have raised lawsuits against

Mattel and Toys R Us, a lead distributor, and it is in question whether or not the Mattel

Company will survive because its name is now tarnished.

The Walt Disney Company has a long history and an established name, not only

in the United States but throughout the world. Walt and Roy Disney founded the Walt

Disney Studios in 1923, produced its first full length animated feature film, Snow White,

in 1937, and the rest is history (Datamonitor, 2007, p. 9). From there they grew into an

entertainment powerhouse acquiring TV channels, building theme parks based on their

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animated films and youthful dreams, and growing into one of the most recognizably-

named companies in the world. If The Walt Disney Company were to incur a spot on

their name in the same way Mattel suffered due to the lead scandals, how would Disney

fare? If history were to repeat itself, it would say that a tarnished name spells a bad fate

for any company.

As generations change so do their goals and views of life. For example, the Baby

Boomer generation is very work oriented and dedicated to their professional life, and

sometimes their family lives suffered because of it. On the other hand, Generation X are

more family oriented than their parents generation. As described by Lamb, Hair, and

McDaniel in Marketing 9th Edition (2008), Gen Xers are a highly desired target for

travel providersGen Xers have no qualms about taking a midweek trip for fun, (p. 80).

Generation X like to take spur of the moment trips and are not necessarily as worried

about the completion of their job tasks, which not only makes them more attractive to

travel providers but also to companies who provide vacation resorts, or, more

specifically, theme parks.

Because the generations are changing and families are more prone to taking

vacations, the entertainment industry is a hot commodity. This produces a demand for

entertainment and many opportunities for new players to enter the mix. This also creates

a lot of competition, even for Disney, a well-established entertainment company. In

Disneys case, a lot of their competitors for their vacation spots are the same as their

competitors for their theatrical productions: Universal Studios has theme parks and, like

Disney, is a global organization with operations in the United States, Japan, Singapore,

Dubai, and Korea; Paramount Parks is a more local example with many parks situated

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throughout the United States and one in Canada; and Disneys most adverse competitor,

and the leader in numbers in the industry of theme parks and amusement parks, is Six

Flags Theme Parks who is also associated with Warner Brothers Studios (Wikipedia.com,

2007). Disney however has the advantage in its global reach, where Six Flags is

domestic. Also, industry wide, Disneys name and history in the entertainment industry

supersedes all of their competitors.

The history and name of Disney are very important when it comes to competition

in terms of positioning their products and services in the minds of their consumers.

Position as defined by Hair, Lamb, and McDaniel (2008) is, the place a product, brand,

or group of products occupies in the consumers minds relative to competing offerings,

(pg. 231). The Walt Disney Company utilizes multiple positioning bases to their

advantage, due to their long, successful history.

The attribute base is employed within Disney by the customer benefit-a family-

friendly, safe, fun environment that is open for business all year. Disney offers specials

for families, such as discounts on flights, car rentals and hotel roomsmany are seasonal

to attract more people to their parks, and this tactic is considered in the price and quality

base indicating a value bargain to their potential customers. But the most important

positioning base utilized by the Walt Disney Company is the one that distinctly sets them

apart from any of their competitors: Emotion (Hair, Lamb & McDaniel, 2008, p. 233).

Emotion is, how the product makes customers feel, (Hair, Lamb & McDaniel,

2008, p. 233). This is where the Disney history comes into play in a huge part because,

being founded as a cartooning company in 1923 that produced widely popular childrens

videos, the name Disney has been a part of peoples lives for a very long time. Entering a

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place called Disneyland, which embodies the characters every child has enjoyed since

1923, can have the effect of bringing the fond memories of their childhood back to them,

producing a sense of eternal youth. Another advantage for Disney is that not only can it

have an attracting effect on adults, but because Disney is now a powerhouse in the

entertainment industry and recognized throughout the world, they can attract children of

various ages. Disney can attract younger children who identify with the Disney

characters and enjoy seeing them in full life form. Disney can also attract the older

children who still identify with the characters in the form of knowing them and enjoying

the movies they have seen them in, but also enjoy the themed rides that feature their

favorite movies and characters in them.

To conclude the industry analysis the entertainment business is a growing

business due to the change in demographics and the orientations of todays generations.

Disney has a strong foothold in the industry, a feat accomplished mainly due to their

history and roots in the American culture. Their reach to the four corners of the United

States and beyond has aided Disneys stronghold on the entertainment industry.

The Walt Disney Companys S.W.O.T Analysis

There are four things an organization should consider and analyze during various

stages throughout the fiscal year that are crucial to keeping up with the competition and

giving a relatively accurate perspective on where they stand. Those four things are the

companies Strengths, Weaknesses, Opportunities and Threats (often referred to as the

SWOT analysis). The SWOT analysis helps an organization understand the current and

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potential environment for their particular product and service (Hair, Lamb & McDaniel,

2008, p. 40) which allows them to adjust their marketing tactics in order to help focus

their strategy. When doing a SWOT analysis it is important to recognize that the

Strengths and Weaknesses are internal reflections, whereas the Opportunities and Threats

are external reflections.

The Walt Disney Companys Strengths

"I knew if this business was ever to get anywhere, if this business was ever to

grow, it could never do it by having to answer to someone unsympathetic to its

possibilities, by having to answer to someone with only one thought or interest, namely

profits. For my idea of how to make profits has differed greatly from those who generally

control businesses such as ours. I have blind faith in the policy that quality, tempered

with good judgment and showmanship, will win against all odds." Walt Disney (Disney

Dreamer 2007).

Walt Disney had many ideas that helped the Walt Disney Company gain the

strength of having such a tremendous foothold in the market to this day; The Walt Disney

Company is the second largest media and entertainment corporation in the world, after

Time Warner, according to Forbes. In a report by Datamonitor (2007) the Walt Disney

Company, together with its subsidiaries, is a diversified entertainment company. It owns

media networks as well as parks and resorts. It also makes movies and markets consumer

products.

Furthermore, the company clearly has developed a very strong and well known

"brand-name and image" over many years. Disney has one the most recognized and

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powerful brand names in the entertainment industry. According to Datamonitor 2007, the

Walt Disney Company was ranked 8th in the Top 100 Global Brands ranking of the

BusinessWeek Magazine and Interbrand, a branding consultancy, in 2006. Not only does

the company have a strong corporate brand, they have additional brands such as ESPN

(one of the biggest sports channels in the world), Miramax, Touchstone, and Pixar.

These, being other brands of Disney, have high brand equity. Because of this, the

availability of entering new businesses and being able to produce new brand products is

quite accessible.

According to Telephonyonline, the Walt Disney Company is attempting to expand and

team with Sprint to create a mobile virtual network operator (MVNO) service that targets

families with children and adult Disneyphiles. With this said, they are going a different

direction to expand their already broad product portfolio. The company already operates

through four different business segments. These segments consist of media networks,

parks and resorts, studio entertainment and consumer products.

The Walt Disney Companys Weaknesses

Two of the Walt Disney Companys main weaknesses relate with a great

possibility of problems. The idea of Disneys frequent change in top management and the

tremendous amount of employees is where the problems all arrive. As of September

2007, there were 130, 000 people working for Disney in some way or another. By

expanding their broad product portfolio and gaining many different niches it gives them a

bigger image, but it also means that there are going to be that many more workers. This

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means greater possibilities for miscommunication and a high chance for a bureaucracy in

the company.

The most recent weakness of the Walt Disney Company has come from Hong

Kong Disneyland Resort. According to many, the resort has yet to live up to the

expectations of Disneys resorts and parks. The $1.8 billion theme park has only 16

attractions, only one of which is a classic Disney thrill ride (Space Mountain), compared

to 52 at Disneyland Resort Paris. A recent study of Hong Kong Polytechnic University

showed that 70% of the local residents had a negative opinion of Hong Kong Disneyland

Resort. (Datamonitor, 2007). If the downward sloping performance of this resort

continues, the image of the Disney Company will also start to take that direction.

The Walt Disney Companys Opportunities

The markets of today are becoming more versatile to outsourcing and

globalization. The trend towards globalization is not immune to the entertainment

business and The Walt Disney Company is revealing this by expanding outside of the

United States and offering theme parks in France, Japan and China. According to

Datamonitor, nearly 25% of their operating income comes from outside the United States

and Canada (Datamonitor, 2007, pg. 22). Another expansion opportunity from U.S. soil

was mentioned earlier regarding the Disney Cruise Line, a service well placed and

growing in popularity.

Another opportunity for Disney was also mentioned earlier considering Disney

and their Imagineering section. Research and Development has promised to provide new

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attractions such as the Finding Nemo Submarine Voyage presenting an under the sea

experience for consumers (Datamonitor, 2007, pg. 23).

The Walt Disney Companys Threats

Threats that are more prevalent in the era of globalization are the laws and

regulations of other countries. There is a need for constant monitoring of the differences

in the laws of other countries and the United States when organizations are outsourcing.

In Disneys case their theme parks must meet the safety regulations of the countries in

which they operate in order to stay in business and maintain their international status.

As with any business a main aspect of the Threat analysis is the competition. The

analysis of what competitors are selling, how they are selling it, whether or not they are

selling it effectively and profitably and how your product or service differentiates from

theirs is a crucial way to know how to attract more customers to your organization.

In the case of The Walt Disney Company and the theme park industry there are

many competitors, such as Paramount Parks, Universal Studios and Six Flags Theme

Parks, as mentioned earlier. However, there are many other less visible competitors that

one might not naturally think of when assessing the competitive market in which Disney

deals. For example, there are hundreds of water parks and various funplexes that can also

be considered as cheaper or more valuable competition for Disney. Competition, in any

form, can diminish Disneys market share in the entertainment industry (Datamonitor,

2007, pg. 23).

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The Walt Disney Companys Marketing Mix

According to Lamb, Hair, and McDaniel in Marketing 9 th Edition (2008), the

marketing mix is a unique blend of product, place, promotion and pricing, (p. 48).

Those four Ps are the skeletal aspects for a product industry, however, it is clear that The

Walt Disney Company does not solely provide products but also, in the case of their

theme parks, they are providing a service. Therefore, three additional Ps are needed

people, process, and presentation.

The Four Ps of The Walt Disney Company

The Walt Disney Company is very good at the product and placing aspects of the

four Ps, resulting from over eighty years experience in the business. This history has

given them an advantage of instinct and familiarity when it comes to selling their

products. As new theatrical productions are released, it allows for new product lines

based off the features characters to be made and sold in strategically placed stores

throughout the United States. The stores are located in malls and super centers, in urban

locations in order to for them to be visible, and they are nationally located within their

theme parks where they will be heavily sought after by eager vacationing families.

The next two Ps are promotion and pricing. Promotion is intertwined throughout

The Walt Disney Company, surfacing in theatrical productions, books, consumer

products and theme parks. Every aspect of Disney promotes not only itself but every

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other aspect as well in a circular rotation and, as Roy Disney was quoted earlier, keeps

[consumers] Mickey Mouse minded.

Since Disney is a family oriented company they want to be able to attract families

of median incomes. Therefore, the pricing, relative to the theme parks and true to the

pricing strategy is, the quickest element to change, (Hair, Lamb & McDaniel, 2008, p.

49). The prices for admission are subject to the seasons. Disney ads on television are

often seen offering packages for round trip airfare for cheap, kids fly free, and hotel

packages all to attract consumers to their parks and resorts.

The Three Additional Ps of The Walt Disney Company

To address the three additional Ps (people, process, and presentation) Disney has

constructed its own University that employees must attend and complete before ever

being allowed to work at a Disney Theme Park. According to Jim Cunningham the

customer service of The Walt Disney Company is known as being the best in the world,

and Disney University emphasizes two key points: The front line is the bottom line,

and, Its 10 percent product and 90 percent service, (Service, 1997). This break down

shows Disneys devotion to their customers and their customers experiences while

encountering the Disney tradition.

Conclusion

After careful and in depth analysis from an outside perspective there are many

things that we have found to be true: The Walt Disney Company in very interdependent

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on its various sections; it is a global leader in the industry of entertainment; and it is a

continuously growing company with a strong foothold on several aspects of business

practices. Because Disney depends on its studio productions to act not only as an

instigator of their product lines, but also as a continuous advertisement, everything seems

to be codependent on this starting point. The studio productions seem to get the ball

rolling, providing characters to base their products after, and themes to model their

attractions.

Because of the rich selection Disney has from which to produce its products and

attractions, it enables Disney to have many options and opportunities to expand their

product lines. They certainly are a leader in the domestic market in the United States,

and with their reach into many different diverse countries their global expansion is also

among the tops in the industry.

The most basic goal of The Walt Disney Company is, To make people happy.

Because they have been producing films for children since 1923, and their ability to

invoke a feeling of eternal youth just through the mention of their name, it would seem

that they have done an excellent job in fulfilling that goal.

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28217879 the Walt Disney Comapany