Disney Consumer Products : Marketing Nutrition to Children

Disney in the maelstrom

Growing Obesity among children

The Main Issue

Obesity Estimation

1 .America

Year 2004

Age group (5-9)

30% - overweight14% - obese

2. EuropeFrom 1993

To 2003

Obesity rates doubled

What could be the main reason ?

The Main Cause !!

What should be the next step ?

The Act of 2003

What did the act say ?

Excessive consumption of food

-Effects on the companies

Advertising Increased

What happens then?

Rise of controversy

Reconsideration of entire range of products

Steps Taken

1. Increasing nutrition value of food products

2. Introduction of fresh fruits

3. New license to :

The Imagination Farms

How did Disney rise ?

Mickey Mouse Debut

Academy Award for the best cartoon : Flower and Trees

Michael Eisner : The new CEO

What changes

did Michael Eisner bring ?

Increasing Entertainment Assets

Mickey Mouse valued at $5.8 Billion

Winnie the Pooh & Friends values at $5.6 Billion

World’s Largest Licensor in 2005 of licensed products

In 1932, Disney Licensing became • a formal business unit.

DCP faced 10-15 % decline in the sales in

U.S and Japanese market

What could be the reason for that decline ?

“As a big brand, we’re accustomedto setting terms with licensees, but the landscape was changing and licensees were not as willing tohave terms dictated to them” ,

“Retailers haveincreased scale. It is a bigger business proposition to deal with them now,”

-Dolman

How did the company overcome the decline?

-Turn to one of two other models: sourcing or direct-to-retail (DTR).

-The third model, DTR, entailed partnering directly with retailers

In winter 2004, DCP conducted research to size the food business opportunity and to discover if Disney’s brand equity would transfer to a line of children’s food .products

DCP discovered

1 . There was a gap between the foods children requestedand the foods their mothers were willing to buy for them.

2. Peer pressure and advertising stronglyinfluence kids’ preferences.

3 . Kids demand products that make them ‘in’ with their peers and

that means either national or character-driven products

Mother’s perception of

Disney :

High Quality.

IOM’sRecommendations to food and beverage companies

1. Actively promote healthful diets for children.

Nutritional Guidelines setup by FDA

DCP derived many of its recommendations fromFDA’s dietary guidelines, which prescribedoptimum consumption levels for foods.

After Nutritional Audit

41 % no changes

9 % products

out of complianc

e

15% exempted

28 % to be phased out

What the company needed to do for creating •brand food products ?

Adopted three approaches

1 . Would offer products that already had broad appealing such as mil or peanut butter.

2 . Take the products that were healthy and make them more fun.

3 . Use of

packaging

Disney began licensing its characters to

Imagination Farms, in march 2006

Why did this happen ?

“My partners and I saw an opportunity to build a company around increasing consumption of fruits and vegetables among children and we looked at Disney as a way to help us achieve our mission,”

-Goodwin

-What was their product

development strategy ?

1. Differentiate commodity produce through promotion

2. Create value added products through product preparation or packaging

3. Develop exclusive product varieties that would yield more child friendly food.

Who were in the DISNEY and IMAGINATION FARMS ‘s

competition ?

As the top rated U.S. basic cable network since 1996, Nickelodeon was seen by 89 million households

The evolution of SpongeBob Squarepants and The FairlyOdd Parents.

Sesame Workshop

consumption of broccoli increased by 28% when thevegetable was branded with a Sesame Street character.

Warner Bros and Ready Pac

Planned to feature Warner’s Bugs Bunny, Tweety and TasmanianDevil characters on its Cool Cuts Ready Snax single-serving packages of fruit

What were the Risks that the company faced ?

1 . Pricing & Value

DCP managers understood that its products had to be affordable

2. Legacy

Mooney wanted his managers to focus their attention on DCP’s current strategy rather than its legacy

3. Differentiation & Competition

“We expect competition and channel friction, but we believe we can beat the competition because even if they develop and match our nutritional standards, they cannot access Disney magic,”

-NDI

4 . Growth and distribution

“Other retailers won’t turn our products down because of the Kroger relationship. We need to find exclusives for them, too. Their chief concern—and ours—is that our products are profitable forthem,”-Mooney

These slides were created by Yovan Sethi,

as part of an internship done under the guidance of Prof. Sameer Mathur (www.IIMInternship.com)

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