International Marketing: Walt Disney Company

Introduction

Walt Disney is one of the dominant firms in the global entertainment industry. The company was established in 1920 in the United States (Walt Disney). However, it has since expanded its operations by joining markets in other parts of the world.

In this paper, the international marketing strategy of Walt Disney will be analyzed. The analysis will focus on aspects of international marketing, such as pricing, product adaptation, brand management, and marketing communication.

Disney’s Products

Walt Disney has five business segments, which include “media networks; parks and resorts; studio and theater entertainment; consumer products; and interactive media” (Walt Disney). Each of these segments produces and sells diversified products in the international market.

The media networks division provides entertainment services through various platforms such as radio and television channels. It also provides research, marketing, distribution, and communication services to other companies (Walt Disney).

The parks and resorts segment provides recreational and tourism services. Disney’s studios produce and sell movies, music, and stage plays. The products sold in the consumer products segment include toys, books, fine art material, and apparel. Finally, the interactive media division provides interactive entertainment services such as online games through digital media.

The Markets Serviced by Disney

Disney’s consumer products are sold in 190 countries through direct distribution and partnerships with independent distributors. By the end of 2012, Disney had 108 TV channels that were viewed by 426 million households in various parts of the world (Walt Disney).

Disney’s TV and Radio channels are available in 166 countries. Additionally, Disney’s ESPN has a portfolio of 27 sports channels that are available in 190 countries. Overall, one billion households consumed the company’s TV and radio entertainment products across the globe in 2012 (Walt Disney).

Disney’s parks and resorts are available in Florida, California, Orlando, and Hawaii in the USA, as well as, Paris, Hong Kong, Shanghai, and Tokyo. The company’s studio, theatrical, and home entertainment products are sold in the USA. Additionally, independent distributors sell them in over 190 countries.

The Economic, Cultural, and Political Environment

The economic environment presents several challenges to the company. Economic decline, such as the recent European crisis always reduces the demand for the company’s products in the affected markets. This results into a reduction in sales volume and profits (Walt Disney).

However, steady economic growth in emerging markets such as Brazil, India, Russia, and China have led to an increase in the company’s sales. This is because high economic growth in these markets improves the purchasing power of the customers, thereby increasing demand for entertainment products.

An increase in inflation in various markets also has negative effects on Disney’s competitiveness. For instance, the rising cost of energy in the USA, Europe and Africa, increases the company’s operating costs. Besides, the high cost of energy reduces the company’s sales as customers reduce home entertainment in order to save on energy expenses.

The revenue of Disney is negatively affected by exchange rate fluctuations since it is an international company. For instance, the appreciation of the US dollar against other currencies makes the company’s products more expensive, thereby reducing their demand in overseas markets.

The cultural environment also presents serious challenges to the company in the international market. The citizens of various countries have different cultures, attitudes, and values, which influence their consumption of entertainment products.

For instance, in Europe and the USA where the holiday culture is common, the company is able to receive a high number of visitors in its parks and resorts (Walt Disney). Culture also influences the company’s product development decisions.

This is because different cultures demand different entertainment products. In this regard, the company has to align its products to the diverse tastes and preferences of its customers in order to defend its market share.

The political environment is characterized with high regulation of the entertainment industry and barriers to international trade. In some countries in Africa and Asia, the governments regulate programming by imposing commercial limits and banning content that is deemed inappropriate.

Additionally, ownership of television and radio channels is regulated (Walt Disney). Weak regulation in some markets, especially, in Asia and Africa leads to anticompetitive actions such as breach of Disney’s copyrights.

This leads to losses through illegal access to the company’s entertainment products (Walt Disney). Barriers to international trade such as high import duties, import quotas, and total ban on imported entertainment products in countries such as China also limit the ability of the company to compete effectively in various international markets.

International Strategies

Walt Disney’s international marketing management approach allows its subsidiaries in various markets to be semi-autonomous. Concisely, most of the production, sales, and marketing activities are decentralized to enable the company to meet market needs effectively.

The company’s marketing plan is developed through a bottom-up planning approach (Walt Disney). In this case, the subsidiaries develop their own marketing plans and objectives to enable the company to achieve innovation through local initiatives.

Disney positions itself in the international market as a premium entertainment company that offers high-quality services. Thus, it differentiates its products and maintains high product quality in order to overcome competition. The company focuses its international marketing initiatives on increasing its market share by launching new products, conducting sales campaigns, and offering competitive prices.

Market Research

The company conducts both secondary and primary market research in order to access the information that is central to its marketing decisions. Secondary research involves reviewing existing studies and obtaining data from publications such as national census reports.

Primary research involves collecting and analyzing data from a specific population. Disney uses various methods to conduct primary research. These include surveys, focus group discussions, interviewing key informants and field trials.

The company’s media networks division normally conducts the primary research through online surveys, telephone interviews, and in-person surveys. In order to gain an unbiased view of the market, the company also hires independent research companies to conduct research on its behalf.

Market research helps the company to launch new products in the following ways. First, it enables the firm to understand the tastes and preferences of the consumers. Consequently, the firm is able to develop and to launch products that meet the expectation of its customers.

Second, it helps the firm to understand the dynamics of the market, such as customers’ sensitivity to price changes and the level of competition. This enables the firm to launch its products at the right prices in order to penetrate the market.

Market research also helps the company to join new countries. In this regard, research enables the company to access vital information such as market size, nature of regulation, level of competition, customers’ culture, and availability of appropriate distribution channels (Walt Disney).

The information concerning these aspects of the market enables the firm to identify the most appropriate market entry mode and customers’ needs. For example, information concerning customers’ culture enables the company to adapt its products to local tastes and preferences.

Export Pricing and Product Adaptation

The company uses a market-differentiated pricing strategy to set the prices of its products in overseas markets. This involves using a pricing policy that takes into account market dynamics such as the level of demand and industry factors such as competition in every country.

Thus, the company charges different prices for the same product in order to address the challenges attributed to the unique characteristic of each market, as well as, to meet its marketing objectives such as market penetration (Walt Disney).

Product adaptation involves modifying or improving an existing product in order to make it relevant in a particular market. Disney adapts its products in several ways. These include providing its TV and radio entertainment services in 34 different languages in order to reach audiences with poor command of English (Walt Disney).

The company also modifies the content of its products (videos and animated films) to make them appropriate for various age groups. Similarly, the company often modifies the designs of its consumer products such as toys and apparel to meet the diverse tastes and preferences in various markets (Walt Disney).

International Communication Efforts

The company uses different international communication channels to reach its existing and potential customers. These include advertising, public relations, sales promotion, and internet marketing (Walt Disney). In advertising, the company uses its media platforms such as TV and radio channels to market its products (Walt Disney).

The company’s public relations initiatives involve issuing public statements and publishing information on print and electronic media to improve its image and to market its products (Walt Disney). Similarly, the company uses its sales website to market its products in various parts of the world.

Disney’s international communication efforts are characterized with standardization and adaptation. The company uses standardized communication to advertise its global brands such as the ESPN sports channel. However, it adapts most of its adverts to the needs of every market.

In this case, adaptation of global communication is essential for the company because it operates in markets with different cultures and languages. These differences often make standardized communication irrelevant in international markets.

International communication initiatives help Disney to grow in several ways. First, they enable the company to improve awareness about its products, thereby increasing its sells. Second, international communication enables the company to build relationships with its clients.

For example, internet marketing enables the sales and marketing team to engage customers in real-time discussions about their expectations and the company’s products. The feedback obtained from such conversations enables the company to win the trust of its customers, which in turn improves its brand loyalty.

Third, international marketing communication enables the company to share information with its internal and external, as well as, local and international stakeholders. This facilitates the development of its marketing strategy (Walt Disney).

Finally, initiatives such as public relations not only create awareness about the company and its products, but also enable it to perform its social responsibility. For instance, the company usually publishes articles on print media, which educate the public on how to plan and budget for a dream holiday (Walt Disney).

International Product Management and Branding

Disney’s international product management strategies focus on differentiation and segmentation. In particular, the company focuses on differentiating its products through regular improvements as the products evolve through their life-cycle stages (Walt Disney).

Differentiation enables the company to position its products as the best in the market. Apart from differentiation, the company focuses on developing new products or improving existing ones such as video games in order to satisfy its customers’ needs (Fritz).

The company focuses on improving its brand equity in the following ways. First, it concentrates on regular improvement of its entertainment products by enhancing their accessibility and quality (Barnes). The objective of this strategy is to enable the firm to keep its brand promise, which in turn improves its brand equity.

Second, the company uses its international communication initiatives to improve its brand awareness. Finally, the firm focuses on establishing a strong and consistent brand culture across the globe for its standard products (Walt Disney). This involves engaging various stakeholders, including the customers as co-creators of its brands.

Pricing Strategy

Disney uses three pricing strategies namely, skimming, return on investment pricing and penetration pricing to meet its marketing objectives and to overcome competition. It uses skimming to price high-quality products that have little competition in the market.

This enables the company to recover its production costs before the prices begin to decline as more companies launch similar products. The company uses the return on investment pricing in markets with high competition.

This involves setting prices that are comparable to the industry level, but enables the firm to make profits. Finally, Disney uses the penetration pricing strategy when entering new markets. This involves charging lower prices than the industry level. The resulting increase in sales enables the firm to gain market share within a short time in the new market.

The methods used by the company to promote its products include competitions, advertising, and free samples. Competitions enable the company to reward its customers for their loyalty (Walt Disney). Additionally, they encourage the existing and potential customers to seek information about the products, thereby improving product awareness.

Similarly, advertising promotes the products by creating awareness about them. The company uses free samples to encourage its customers to try its products. This involves allowing customers to try certain products such as cosmetics for free in order to encourage future purchases.

Conclusion

Walt Disney sells a variety of entertainment and consumer products in over 190 countries. Disney’s competitiveness is highly influenced by the economic, political, and cultural factors of other countries since it is a multinational corporation.

These factors determine the strategies adopted by the company to enter new markets, to develop new products, and to price its products.

In order to overcome competition in various markets, the company uses product adaptation, differentiation, and market-differentiated pricing strategies. Similarly, it uses various communication channels and promotional activities to improve the competitiveness of its products in various markets.

Works Cited

Barnes, Brooks. At Disney Park, a Bracelet Meant to Build Loyalty and Sales. Newyorktimes.com, 7 Jan. 2013. Web.

Doole, Isobel and Robin Lowe. International Marketing Strategy. London: Cengage Learning, 2008. Print.

Fritz, Ben. Disney Tries Anew to Raise its Score on Digital Games. Wsj.com, 15 Aug. 2013. Web.

Muhlbacher, Hans, Helmuth Leihs and Lee Dahringer. International Marketing: A Global Perspective. London: Thomson Learning, 2006. Print.

Walt Disney. Annual Financial Report: FY 2012. Walt Disney Company, 30 Dec. 2012. Web.