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Disney International Strategy: Essay Introduction
The purpose of this paper is to analyze Disneys international marketing strategy. Disney is one of the leading media and entertainment companies in the world. The company creates and distributes various entertainment products, such as films, animations, and cruise services (Walt Disney). One of the factors that account for the success of the company is its focus on expansion by entering foreign markets to increase revenue and profits. In this respect, the products and services that the company sells in overseas markets will be discussed. The business environment in which the company operates will also be analyzed. Additionally, the paper will shed light on the marketing research, pricing, product management, and communication strategies that Disney uses in international markets.
International Products and Services
Disney has five major business segments: media networks, parks/ resorts, studio entertainment, consumer products, and interactive media (Walt Disney). Media Networks provides entertainment services through several TV and radio stations in the US and other countries. The segments revenue comes from cable TV subscriptions, advertising, and production fees.
The parks and resorts division owns and operates high-end theme parks. These include the Walt Disney World Resort in Florida, Disneyland Resort in California, Aulani in Hawaii, Disney Vacation Club, Disney Cruise Line, and Adventures by Disney (Walt Disney). The services and products sold in this segment include food, beverage, park tours, hotel accommodation, and cruise vacation services./
The studio entertainment division produces and distributes films, animated motion pictures, live stage plays, and music. It also distributes music and films produced by third parties (Walt Disney). The consumer products division publishes and sells magazines and books. It also sells branded merchandise, such as apparel. Moreover, the division licenses third parties to use its film and TV characters to brand their merchandise. The interactive division sells multi-media games, online advertising, and website management services.
Disney operates on all continents in the world. Its music and films are distributed in nearly every country. The companys TV and radio channels are available in nearly 165 countries. Disney has theme parks and resorts in North America, France, Japan, China, India, and Hong Kong (Walt Disney). Moreover, Disney has 328 stores in North America, Europe, and Japan that sell its merchandise. It has also partnered with several independent distributors who sell its products in countries with no stores.
Environment
The major cultural factors that affect the competitiveness of Disney include the values, religious beliefs, attitudes, and customs held in high esteem in various countries (Thomas 35-47). Different religions have varying beliefs concerning entertainment products. For instance, Islamic countries discourage distributing films with sex scenes. It prevents the company from selling a variety of entertainment products. In China and India, people prefer to save rather than spend on non-basic needs, such as visiting theme parks. This value implies that the company must provide affordable services and create a demand for them through intensive marketing. People are increasingly developing a positive attitude towards new cultures and foreign products. It enables the company to overcome competition in foreign markets.
The main economic factors affecting the company include GDP growth, inflation, and exchange rates. GDP growth is the most important factor since it affects sales. The company enjoys high sales in countries with high GDP per capita, such as the US, Japan, and the UK (Walt Disney). It also earns high revenue in emerging markets experiencing rapid economic growth. An economic downturn often leads to low sales.
A high inflation rate increases the cost of production. It also erodes consumers purchasing power, thereby reducing sales. High inflation is a problem in the Middle East and African countries. Exchange rate fluctuation affects the competitiveness of products in export markets. For instance, an appreciation of the dollar against foreign currencies makes the companys products expensive in foreign markets and vice versa.
Trade liberalization and industry regulation are the main political factors that affect Disney. Nearly every country has laws that regulate its media and entertainment industry. For instance, TV stations in China are required by law to limit foreign-made programs to less than 50% of their content (Thomas 35-47). This means that Disney has to produce its programs in China to avoid breaching the law. Economic liberalization has removed tariff and non-tariff barriers to trade in most countries. It enables Disney to export its products to foreign markets.
Disney International Strategy
Disney focuses on serving emerging markets through exporting, licensing, foreign direct investment (FDI), and joint ventures. Exporting and licensing allow the company to concentrate on production while its distributors and licensees focus on selling its products. FDI enables the company to sell directly to customers through its stores to ensure customer satisfaction (Walt Disney). Joint ventures allow the company to utilize the capital and expertise of its partners in various countries to penetrate markets easily.
Disney uses a transnational strategy to compete in international markets. This strategy allows a multinational corporation to achieve global efficiency and local responsiveness (Kazmi 35). The transnational strategy involves integrating global business activities by ensuring close cooperation between headquarters and international subsidiaries. Disney has adopted the strategy because the international markets that it operates in have unique challenges that make it difficult to implement a one-size-fits-all strategy./
The company believes it must recognize and consider various countries cultures and consumer habits to design a strategy that allows it to remain relevant in the market. In this respect, the company develops product and operations strategies that enable it to respond to the conditions in each market.
Disney has also adopted a horizontal management approach to pursue its transnational strategy effectively. The company has granted authority and autonomy to managers of its international subsidiaries to formulate their own strategies to compete effectively. The company hires nationals of host countries who have vast market knowledge and experience to run its international subsidiaries (Walt Disney). The headquarters, on the other hand, focuses on coordinating the operations of international subsidiaries to ensure efficiency. It reduces the time required to make critical decisions in the company. It also encourages innovation by allowing the company to use its employees diverse skills and experience in various markets to develop effective products.
Marketing Research
Disney uses both primary and secondary marketing research to understand market needs. Primary research involves collecting and analyzing data directly from the public. Disney uses several methods to collect primary data. These include online surveys, face-to-face surveys, focus group discussions, and interviews. The company uses surveys and interviews to obtain customer feedback concerning its products and marketing activities, such as sales promotions. It also uses interviews to collect data concerning market conditions from key informants such as industry regulators and leaders of professional associations (Walt Disney). Focus group discussions allow the company to gather detailed information from specific groups of customers.
Secondary research, on the other hand, involves collecting and analyzing data that already exists in databases (Ranchord and Marandi 56). Disney also uses big data analytics to collect and analyze data from diverse sources such as social media and its sales websites. Marketing research helps the company in the following ways. First, it enables the company to understand customers unique tastes and preferences in various markets. This allows the company to develop and launch products relevant to various markets. Second, marketing research sheds light on the level of customer satisfaction. The company uses customer feedback concerning product quality to improve its services. Finally, research facilitates access to market intelligence, which Disney uses to develop the right product, price, promotion, and distribution strategies in foreign markets.
Export Pricing and Product Adaptation
Disney uses a cost-plus pricing strategy to sell its exports in the international market. This strategy considers the cost of producing and exporting a product to a given market (Kazmi 74). It enables the company to avoid selling its products at a loss in foreign markets. Disney focuses on reducing the cost of producing its merchandise and entertainment products. For instance, its merchandise is manufactured in China and India, with low production costs. Reducing the cost of production enables the company to sell its products at the average market price, thereby overcoming competition.
Product adaptation is one of the key strategies that enable Disney to improve its competitiveness in foreign markets. Product adaptation involves modifying the features of a product to suit local market needs (Ranchord and Marandi 63). In countries whose cultural values are comparable to those of the US, Disney focuses only on minor product modifications. For instance, the company often provides the same movies and TV programs in Europe and the US. However, the content is usually translated into local languages such as French to attract customers./
The company usually engages in significant product modification in countries such as China, whose cultures are very different from those of Western countries. For instance, Disneys theme parks in India differ significantly from those in the US and China. The parks and resorts in India and China incorporate local customs and festivals in their entertainment programs. Similarly, their menus include local or traditional meals to attract customers.
In the film industry, the company collaborates with artists and producers from various countries to deliver the right content to local customers (Walt Disney). For instance, Disney uses Chinese characters to produce movies and TV programs that it distributes in China to ensure success. Moreover, the company aligns the content to the values of every market to ensure acceptance. Product adaptation enables the company to ensure customer satisfaction and brand loyalty. This leads to high sales in foreign markets./
International Communication Efforts
Disney utilizes integrated marketing communication (IMC) to convey clear, consistent, and compelling messages concerning its products in foreign markets. An effective IMC strategy facilitates using various communication channels to deliver the same message in a particular market (Kazmi 86). Disneys international communication mix includes advertising, sales promotion, public relations, and direct marketing.
The company uses its TV and radio channels to advertise its products in various markets. It also uses social media and popular magazines to advertise its products and services. In sales promotion, the company provides short-term incentives to customers to improve sales. The sales promotion tools used by Disney include discounts, point-of-sale displays, and coupons. The company uses public relations (PR) initiatives to build a good corporate image through positive publicity (Walt Disney).
Disneys PR tools include press releases, product launch events, and publishing articles. Direct marketing is a communication strategy that involves engaging customers in conversations to obtain immediate feedback. Disney uses direct communication tools like email, telephone, and fax to convey personalized marketing messages.
Disney adapts its international communication strategy to ensure effectiveness. It uses local languages to convey marketing messages in countries where English is not popular. The company also uses local firms to design adverts appropriate for every market. This includes using local celebrities to endorse their products.
Marketing communication strategies improve the competitiveness of Disney in the following ways. First, they improve product awareness, which in turn improves sales (Thomas 35-47). Second, the strategies enable the company to build a strong brand image. PR initiatives and advertising have enabled Disney to create a brand known for reliability and high-quality entertainment. Consequently, the company enjoys customer loyalty in foreign markets. Finally, the strategies enable the company to create a desire ethically. This ensures a high demand for its products.
International Product Management and Branding Strategies
Disney uses the product life cycle framework to manage its products in the international market. In the introduction stage, the company focuses on creating awareness about its new products. For instance, it often advertises new movies before their release date to create awareness. The company focuses on improving brand preference and sales in the growth stage of the life cycle (Walt Disney). The company maintains high product quality to attract customers. It also makes the products available in several markets to increase sales. In the maturity stage, the company focuses on differentiation to overcome competition. Disney uses incremental innovation to add new product features to increase its market share. In the decline stage, the company develops new products to replace old ones.
Disneys international brand management strategy focuses on improving brand loyalty, awareness, and identity. The company focuses on delivering its brand promise by providing a high-quality and unparalleled entertainment experience. This improves brand loyalty. Disney creates brand awareness through its marketing communication efforts, such as advertising. The company enhances brand identity using consistent marketing messages and positioning strategies in various markets. For instance, it has a logo and slogan that enables customers to recognize its products easily.
Pricing Strategy
Disney uses different pricing strategies for its various product categories in overseas markets. The company uses value-based pricing to sell its theme park, resort, and cruise services. It means that the prices are determined by the benefits that customers derive from the services. The resulting improvement in customer satisfaction increases sales (Kazmi 112).
Disney also uses competition-based pricing in foreign markets. This strategy involves setting prices that are comparable to those of competitors. For instance, Disneys apparel, toys, and cable TV subscription fees are often comparable to average market prices. This strategy promotes the companys products by ensuring they are not overpriced (Walt Disney). Competitive-based pricing also enables the company to avoid price wars in various markets. For instance, various toy manufacturers and cable TV stations can reduce prices to defend their market share. This means that undercutting major competitors can significantly reduce profit margins, thereby causing product failure.
Price skimming is another strategy that Disney uses. In this strategy, the company sets high initial prices for its products with high demand in its life cycles introduction stage. For instance, the company often launches new movies and games at high prices because of high demand and the willingness of customers to pay premium prices. As the products become popular, the company reduces prices to counter competition from firms that sell similar products. Price skimming enables Disney to recoup the high cost of developing high-quality films.
Disney Globalization Strategy: Essay Conclusion
Disney sells a wide variety of products and services in various countries. These include entertainment services, books, magazines, and apparel. The company uses a transnational strategy to compete in the international market. This strategy enables the company to ensure efficiency and responsiveness to local market needs. The company also uses marketing research to gain insights into market needs. The insights enable the company to adapt its products to satisfy unique tastes and preferences in each market. The companys international marketing communication efforts focus on creating brand awareness and increasing sales in foreign markets.
Works Cited
Kazmi, Sam. Marketing Management, London: Sage, 2007. Print.
Ranchord, Anthony and Edward Marandi. Strategic Marketing in Practice, New York: McGraw-Hill, 2005. Print.
Thomas, Amos. Cultural Economics of TV Program Cloning or Why India has Produced Muli-Millionaires. International Journal of Emerging Markets 1.1 (2006): 35-47. Print.
Walt Disney. About Us 2014. Web.
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