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[ANALYSIS OF CASE: WALT DINEY ]

2004
INTRODUCTION:
I am appointed by Walt Disney Company as their marketing consultant to solve the case
studygiven and make the case study analysis. In order to do so, I have conducted
research and indept h i nt er vi ews of Wal t Di s ney pr of es s i onal s . Whi l e
conduct i ng t he r es ear ch and goi ngthrough the case I came up with some
important findings and recommendations which have been discussed in the pages to
come.Wal t Di s ne y i s a $ 27 bi l l i on dol l ar ent er t ai nment gi ant . I t was
s t ar t ed by a per s on namedWal t er Di s ne y i n col l abor at i on wi t h hi s br ot her
cal l ed Roy O Di s ney i n 1923. Si nce t henDisney has come a long way. Disney has
been a leader in 4 consumer markets which are WaltDisney studios and motion pictures,
Disney Theme parks and resorts, Disney T.V channelsand media networks and Disney
consumer (merchandising) products. Likewise all companies,Di s n e y t o o h a s s o me
S t r e n g t h a n d we a k n e s s e s a n d b e i n g a g i a n t h a s s o me t h r e a t s
a n d opportunities as well which are also discussed in the following pages. I was
asked to make theSWOT analysis and also discuss Disneys strategic marketing
Goals. I have made Disneyscons umer behavi or s t r at egy r el at ed t o i t s f amous
char act er Ki m pos s i bl e. I have made i t s targeting strategy, positioning strategy,
product strategy, pricing strategy, channel strategy and promotional strategy. I have also
made some findings related to new consumer markets andsegmentation. In the end I
have made some important recommendations so that Walt Disneyimproves on its
weaknesses and also prepares for the threats to be faced in years to come.

HISTORY OF THE CASE:
Wa l t Di s n e y Co mp a n y
i s a $ 2 7 b i l l i o n a y e a r Gl o b a l E n t e r t a i n me n t g i a n t wh i c h i s a n Amer
ican based company was started by Walter Disney in venture with his brother
namedRoy O Disney in 1923. In 1928, Walt Disney created Mickey Mouse for
which Walt wantedto call his character Mortimer but his wife convinced him to
be called as Mickey Mouseand since then Mickey has been a classical hit for Walt Disney.
In 1937 Disney presented their first feature full length Musical animated movie called
Snow white and the seven dwarfswhich is still a huge hit and remained in the hearts of its
consumers forever.Walt Disney recognizes what is customer value in Disney brand.
They value a fun experienceand homespun entertainment based on old-fashioned
family values. Disney responds to theseconsumer preferences by leveraging the
brand across different consumer markets. Lets saythat an American family goes to
see a Disney movie together. They have a great time. Theywant t o cont i nue t he
exper i ence. So Wal t Di s ney of f er s Di s ne y s cons umer pr oduct s wi t hmultiple
product lines aimed at specific age groups.Wal t Di s ney has been a gi ant i n f our
cons umer mar ket s namel y, Wal t Di s ney s t udi os andmotion pictures, Disney
Theme parks and resorts, Disney T.V channels and media networksand Disney
consumer (merchandising) products.
4


SWOT ANALYSIS:
STRENGTHS:

Walt Disney is maintaining formidable position vis--vis their immediate competitors.
Company is maintaining good company relationship with the suppliers.
Company is maintaining healthy relationship with collective bargaining agent (CBR).
Walt Disney is financially strong.
The operational system is inclusive of procedures, processes & operations managementreflects
the element of that the company is meeting the desired standards.
Walt Disney is capable of producing new Products and Services in a short span of time.
WEAKNESSES:
Walt Disney needs more rigorous analysis in understanding the consumer behavior.
Walt Disney needs improvement in tracking the changes in cultural values.
Walt Disney also does need strategic improvement in conducting the segmentation andapplying
the more soft techniques namely psychographic and lifestyle.
The mission of the company strategic directions and long term objectives needsimprovement.
H.R needs improvement. Training and development programs should be done andhiring and
selection criteria should also be taken into account of rectification.
Marketing management needs improvement.

OPPORTUNITIES:
Economic conditions prevalent in USA reflect moderate position.
Walt Disney is reasonably equipped to internalize the social shift.
Walt Disney is implementing all the related laws concerning entertainment industry.
USA is maintaining favorable strategic directions towards entertainment industry.
The company is reasonably proactive in both sensing & implementing the newtechnology.
International components for Walt Disney apparently seem favorable. Therefore newmarkets
should be searched and taken into consideration in foreign developedcountries like Malaysia,
Singapore, and Thailand etc.
THREATS:
The entertainment is experiencing social shift whereby members of the society areseeking out
value, more leisure activities and have become savvy also.
Entertainment industry is subject to various legislations which a pass at reasonable pace.
The formal policies of USA are not based on objective analysis and judgment.
Technologies advancement shift is quite significant resulting in impact onentertainment
industry.
strengths Weaknesses
1. Strong product portfolio
2. Brand reputation
3. Competency in acquisitions
4. Diversified businesses
1. Heavy dependence on income from
North America
2. Few opportunities for significant growth
5. Localization of products through acquisitions

Opportunities Threats
1. Growth of entertainment industries in
emerging markets
2. Expansion of movie production to new
countries
1. Intense competition
2. Increasing piracy
3. Strong growth of online TV and online
movie rental

1. strong product portfolio. Walt Disneys products include broadcast television network ABC
and cable networks such as Disney Channel or ESPN, which is one of the most watched cable
networks in the world. Combining the significant audience reach of these cable networks,
(ESPN has nearly 300 million and Disney Channel 240 million subscribers) and the solid
growth of cable television, Disneys product portfolio provides a competitive advantage for
the company over its competitors.
2. Brand reputation. Walt Disney brand has been known for more than 90 years in US and has
been widely recognized worldwide, especially due to its Disney Channel, Disney Park resorts
and movies from Walt Disney studios. The company is perceived as the primary family
entertainment provider and was the 13th most valuable brand (valued at $27.4 billion) in the
world in 2012.
3. Competency in acquisitions. One of the strongest sides the company has is its competency in
acquisitions. The Walt Disney Company has acquired Pixar Animation Studios in 2006,
Marvel Entertainment in 2009 and Lucasfilm in 2012. The former 2 acquisitions have already
proved to be very successful in terms of revenue and profit growth. The third acquisition is
expected to be just as successful because Disney has acquired rights to all of the Lucasfilm
previous works including Star Wars. Few other Disney competitors have had such record of
successful acquisitions.
4. Diversified businesses. The business operates five different business segments: media
networks, parks and resorts, studio environment, consumer products and interactive media.
These companys segments are operated online and offline, in many different economies and
are generating their income using different business models. Due to such diverse operations,
Disney is less affected by changes in external environment than its competitors are.
5. Localization of products. Recently, Disney has started adapting its products to suit local
tastes. Besides the parks and resorts, companys movies and consumer products are adapted
for Chinese market to attract more visitors. This is rarely initiated by the movie studio itself
and is something that few other studios are doing.
Weaknesses
1. Heavy dependence on income from North America. Although, Disney operates in more
than 200 countries, it heavily depends on US and Canada markets for its income. More than
70% of the business the revenues come from US alone, while the major Disneys competitor
News Corporation receives less than 50% of revenues from US, making it less vulnerable to
changes in US market.
2. Few opportunities for significant growth through acquisitions. The Walt Disney Company
is the largest entertainment provider in the world and has become so due to acquisition of
competitors. The last Disneys acquisition had to be approved by Federal Trade Commission
so that the company wouldnt have to deal with antitrust problems. This means that the size of
the Disneys business has become a concern for the government due to significant market
concentration and that the company has very few opportunities to acquire competitors.
Otherwise, Disney may become a subject to antitrust laws.
Opportunities
1. Growth of paid TV industries in emerging economies. The Asia Pacific region accounted
for more than 50% market share of the world pay TV subscribers (394 million) in 2011. It
was expected to grow to more than 55% by the end of 2016, where China would account for
more than 27% of the market. The similar growth is expected in India as well. Disney
Company has already entered these markets and should continue to strengthen its position
there to benefit from such high industry growth.
2. Expansion of movie production to new countries. Disney has an opportunity to expand its
movie production to such countries as India or China, where movie production industries
have developed good quality infrastructure. This would result in lower movie production
costs and more localized movies for India and Chinas markets.
Threats
1. Intense competition. Disney operates in very competitive industries such as media, tourism,
parks and resorts, interactive entertainment and others. The competitive landscape changes
quite drastically in the media industry, where news and TV go online and new competitors
with new business models compete more successfully than incumbent media companies.
Disneys parks and resorts business segment also receives strong competition from local
competitors who can offer better-adapted product. This results in growing competitive
pressure for Walt Disney Company.
2. Increasing piracy. The advancements in technology allow copying, transmitting and
distributing copyrighted material much easier. With an increasing number of internet users
and the speed of internet, this poses a great risk to Disneys income, as fewer people would go
to watch movies in a cinema or buy its DVD, when its freely available online.
3. Strong growth of online TV and online movie renting. Besides internet piracy, Disneys
media and movie production businesses may suffer from online TV and online movie rental
growth. Subscription to online TV streaming and movie rental websites costs much less than
to usual cable television providers. In addition, internet infrastructure is often managed by
different companies, thus taking the power away from cable network providers.
Media Synergy: Through the companies owned by Disney, it can both produce and
distribute its products. Also, Disney creates media that extends beyond one product
into multiple other tie-ins, such as online games that play off their feature films
(Battikh). An important factor of its success is the integrated nature of its products
with synergies between film, television, media, theme parks and resort operations
(Laws).
- Diversification: Walt Disney has focused on market diversification for years. The
company covers a wide variety of products and services; its movies, shows, themes
parks, music, TV, radio and merchandise offer a range for all tastes, cultures and
ages.
Competition
Disneys competitors differ in each segment of business. Walt Disney is classified as
Entertainment-Diversified and over the years has created a unique portfolio and niche position
that is not matched by a single company in all its areas (Battikh). However, in the Media An
Analysis of The Walt Disney Company 7
Network segment, Disney competes directly with Time Warner, Inc. and News Corporation.
Time Warner is a major competitor to Disney and is composed of three divisions: Cable, Filmed
Entertainment Networks and Publishing. It owns Time Inc., Warner Brothers, and TBS Networks
(Strategic Management). Like Time and Disney, News Corp is a diversified international media
and entertainment company that operates in several segments: Filmed Entertainment, Television,
Cable Network Programming, Direct Broadcast Satellite Television, Magazines and Inserts,
Newspapers, Book Publishing, and others (Strategic Management).
The company also faces competition from NBC Universal (owned by Comcast) in TV
and with their Universal studio entertainment, theme parks and resorts sector and Paramount
Pictures.
Though the Walt Disney Company is an entertainment leader, these other competitors
pose definitive difficulties because they are all diversified conglomerates with a solid presence in
the global market.
In many cases, Disney has dealt with new competition my buying and integrating
emerging competitors. Disney bought Pixar in 2006, as it emerged as a highly profitable
animation giant. In July 2011, Disneys ESPN acquired television rights to air the Wimbledon
tennis tournament for 12 years, thus replacing NBC which previously showed the annual event.
In 2011, for the first time ever, ESPN offered the NBA finals in 3-D (Cohesion Case). However,
with the increasing success of ESPN, more stations are coming into the sports mix as
competitors. ESPN now competes with NBC Sports and 21st
Century Foxs Fox Sports West
cable channels. If this trend persists in the future, as expected, it may drive up programming
costs (Hellman)
Competition
Disneys competitors differ in each segment of business. Walt Disney is classified as
Entertainment-Diversified and over the years has created a unique portfolio and niche position
that is not matched by a single company in all its areas (Battikh). However, in the Media An
Analysis of The Walt Disney Company 7
Network segment, Disney competes directly with Time Warner, Inc. and News Corporation.
Time Warner is a major competitor to Disney and is composed of three divisions: Cable, Filmed
Entertainment Networks and Publishing. It owns Time Inc., Warner Brothers, and TBS Networks
(Strategic Management). Like Time and Disney, News Corp is a diversified international media
and entertainment company that operates in several segments: Filmed Entertainment, Television,
Cable Network Programming, Direct Broadcast Satellite Television, Magazines and Inserts,
Newspapers, Book Publishing, and others (Strategic Management).
The company also faces competition from NBC Universal (owned by Comcast) in TV
and with their Universal studio entertainment, theme parks and resorts sector and Paramount
Pictures.
Though the Walt Disney Company is an entertainment leader, these other competitors
pose definitive difficulties because they are all diversified conglomerates with a solid presence in
the global market.
In many cases, Disney has dealt with new competition my buying and integrating
emerging competitors. Disney bought Pixar in 2006, as it emerged as a highly profitable
animation giant. In July 2011, Disneys ESPN acquired television rights to air the Wimbledon
tennis tournament for 12 years, thus replacing NBC which previously showed the annual event.
In 2011, for the first time ever, ESPN offered the NBA finals in 3-D (Cohesion Case). However,
with the increasing success of ESPN, more stations are coming into the sports mix as
competitors. ESPN now competes with NBC Sports and 21st
Century Foxs Fox Sports West
cable channels. If this trend persists in the future, as expected, it may drive up programming
costs (Hellman)





RECOMMENDATIONS:
In the light of the above mentioned SWOT analysis of Walt Disney, Strategic MarketingGoals,
Consumer Behavior strategy of Kim Possible, Its Targeting strategy, Product
strategy,Positioning strategy, Pricing Strategy, Channel strategy and Promotion Strategy, I would
liketo make the following recommendations by which Walt Disney would be benefited in terms
of increased Market share, Higher Revenues and Profits and improved Goodwill.

My First Recommendation is to find new market segments for Kim Possible by doingmarket
segmentation on the basis of Psychographic and Life style characteristic.

Then I would recommend expanding the Product line of Kim Possible as mentioned earlier in the
Strategic Marketing Goal section of this report.

I would recommend Walt Disney to cater the needs of people belonging to differentSocial
Classes, Sub-cultures and Age groups. Therefore following the consumer behavior and targeting
strategy mentioned earlier in this report.

I would recommend Walt Disney to follow the product strategy mentioned in this report inorder
to expand the product line of Kim Possible by the introduction of Products andservices
mentioned in the Product strategy.

Then I would recommend Walt Disney to Position the expanded line of Products using theLife
style positioning method by conducting research to know the Activities, Interest andopinions
(AIO) of the targeted consumers and then by using the perceptual mappingsoftware, positioning
the Products appropriately.

After Positioning, I would Recommend Walt Disney to Price the expanded line of Products
correctly. Prices should be set in a way that caters the needs of all the Socialclasses that means
that it is affordable for the Lower and Middle Americans as well as for the Upper Americans. In
this regard my recommendation is to follow the Pricing strategymentioned earlier in the Pricing
strategy section of this report.


Porter's Five Forces Model
Threat of New Entrants
Since the Walt Disney Company has been able to find a very unusual niche within the industry,
the entrance barriers are high relatively. The company is able to grow over a long term period,
and has to develop from the departments of Research and Development (R&D), marketing, and
finance. By depending on past experience, the company officials know to a large extent what the
target customer wants. (scribd.com, n.d.)
Threat of Substitute
The products or services are moderate to low. Other cartoon figures, theme parks, and movies
can search the market in which the Walt Disney Company is operating in, but this is obviously
representing a significant threat. The Walt Disney Company has placed price controls on many
of its product lines already, and should be able to cope with other new competitors. However, by
upgrading products and services, the threat alone of new entrants into the market requires the
Walt Disney Company to hedge against such risk by simultaneously. (scribd.com, n.d.)
Bargaining Power of Suppliers
The suppliers are governed by a few companies as the Walt Disney Company is operating in a
highly differentiated and unique industry with high switching costs associated with operations.
Besides, they are most probably very concentrated. However, the Walt Disney Company is a
unique company and important customer of many suppliers. Furthermore, the size of the
company may be a great advantage certainly. The company will create a dependency relationship
in the industry by being able to order large volumes of unique products from unique suppliers.
(scribd.com, n.d.)

Bargaining Power of Buyers
The bargaining power of buyers is high in the service and in the entertainment industry. The
customers have powers certainly since a large number of customers are needed to make the Walt
Disney Companys operations run smoothly. For example, if the price on a particular home video
is too high, customers may be averse to spending the money needed to purchase the products.
Another example is the entrance fee charged at the Walt Disney Companys theme parks.
Furthermore, the entertainment industry does not take the buyer money, even if it is planned in a
way that it will make the buyer spend more. A majority of the Walt Disney Company's product
mix focuses on intangible returns of the buyer's money. However, some customers may not
realize that they are getting such a return may increase the bargaining power of the customers. (s
4.5 Rivalry among Existing Firms
It does not play a very important role in the Walt Disney Company's external operational
environment. Nevertheless, it is true that the company's exit barriers are extremely high.
Furthermore, capacity is expanded in extremely large investments. However, there are no closer
direct competitors to the Walt Disney Company's operations. Competitors such as "Lonely
Tunes" retail stores do not appear to appoint themselves to expensive advertising campaigns in
order to obtain market shares. Moreover, the Walt Disney Company's products are highly
differentiated. The switching costs are therefore quite significant. A multinational corporation
such as the Walt Disney Company faces internal weaknesses and strengths, which can to a
certain extent be controlled. The external forces such as opportunity and threats are more
difficult to control, and the Walt Disney Company has to adopt and take advantage to those
forces.
When it comes to delivering the produced products and services to the consumers,Channel and
distribution strategy is very important. Therefore, I would recommend Disneyto have its own
distribution channel by opening its own specialty stores of Kim Possible products and providing
logistics to its end users for delivering of the goods. Thusfollowing the Channel Strategy
mentioned earlier.
Walt Disney should expand product line of Kim Possible and to promote them with a
hugePromotional campaign. Therefore following the promotional campaign elementsmentioned
in the Promotion strategy.