Strategic Information Systems in Theme Parks

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Executive Summary

The objective of this report is to study how strategic information system in theme parks can be used to enhance customer satisfaction and gain customer loyalty. This has been done through the case study of Disneyland, who pioneered the theme parks industry by introducing cartoon characters from television and cinema. Today, it has several theme parks opened up in the US, Europe, and even Hong Kong.

The case study shows that use of information strategy can enable better support of core functions, and help in reducing costs of operation by monitoring activities in the park, and in analysing customer data.

One of the major issues faced by strategic information system in theme parks including Disney theme parks is their integration between financial systems, customer-centric systems, innovation perspectives and internal business operations.

The focus of this report is to analyse the extent to which Disneyland has been able to integrate these perspectives, in order to eventually maximise customer satisfaction and engage the customers in the long-term to increase customer royalty.

To facilitate this analysis, data collected from various secondary sources on Disneyland has been applied to Porter’s five forces model to particularly analyse how Disneyland used information systems to gain competitive advantage to create customer satisfaction. To further gain customer satisfaction and loyalty, it is also important for the company to reduce the price of tickets, link to tourism databases and provide flexible options.

To do so, it is necessary to reduce operational costs and optimise customer-supplier links. Information in this regard has been collected from various secondary sources on other theme parks and applied to different models for analysis.

Based on these critical analyses, future recommendations are provided for Disneyland to be able to better manage financial, customer, internal business and learning/innovation perspectives using balanced scorecard. This will enable Disneyland to strategically align their information systems in order to maximise customer satisfaction and achieve greater customer loyalty.

Introduction

A theme park is an amusement park that carries themed attractions ranging from entertainment, food, and retail stores (O’Brien 1997). Theme parks are distinguished from amusement parks by the fact that there exists a theme that cuts across all the amusement attractions through which all the attractions are marketed. This theme becomes the main part of theme park experience.

A park manager uses the theme to increase attendance over a period of time, for example during specific events or festive seasons. It is subdivided into sub-themes which are found in different attractions. For instance, Frontier land, Fantasyland, Adventure land, and Discovery land are all in Disney’s magic kingdom.

However, other themes are just created to last for short period, for instance during special events. Theme parks are becoming increasingly popular and attractive to tourists who have limited time due to their unique nature as they provide a condensed holiday product (Dzeng & Lee 2007).

Theme parks tend to create an environment of a different world. The theme itself creates such an atmosphere where it represents a framework which gives a particular attraction at a given destination. In the U.S., the industry has grown since the inception of Disneyland in the late 1950’s.

Reports from the economist intelligence units suggest that theme park industry is growing at a fascinating rate. For instance in the U.S., it grew with a compound rate of 3% in attendance over the past decade (Kevin, Wong & Phoebe 1999).

The growing popularity of theme parks and the ensuing stiff competition makes it essential to maximise customer satisfaction and achieve greater customer loyalty (Lavery & Stevens 1990; McCarville 2009; Hallowell 1996).

However, Walt Disney as one of the major players in this industry has focused on edging its competitors by embracing information integration, hence achieving differentiation in the market place; a strategy that helped to regain customer loyalty. However, the current scenario of prevailing competition has made business tougher for Disneyland, despite its strong brand name and popularity among families and children.

In order to sustain competitive advantage, Disneyland has used its information systems as a supporting role, which consists of improved integration of internal processes – co-ordination, consistency, re-engineering of operations. The company is also focused externally, linking to customers and suppliers; and thus aligning with business strategy initiatives.

Theme parks consist of a variety of activities (see appendix 1) and it is important for the IS to integrate these activities. Customer satisfaction in theme parks depend factors such as price of tickets, opportunity to get information about the different activities which are available in the theme park, and the current status of events that are taking place.

Customers also need to know about the options to get there, parking facilities and so on. Additionally, other factors involving customer satisfaction are safety of customers and their belongings, dining and living experience, and convenient hours of operation among others (Hall et al. 2009).

Also, continuous customer engagement is important to understand consumer behaviour and to gain customer loyalty (Accenture 2008). It is an important issue for strategic information systems to use data from various interlinked systems to enhance customer satisfaction through reduced prices, better entertainment environment, and professional staff among other factors.

In this report, I reviewed previous literature with an aim of studying how individual information systems can be integrated to bring into line with the business objective of gaining customer satisfaction and loyalty.

For this purpose and having adequate knowledge about U.S. theme industry, I collected data about Disneyland and analysed it using Porter’s Value Chain and Porter’s 5 Forces models. This model aims at identifying the unique forces that the company assumes to remain unique in the industry, thus achieving its objective of meeting customer satisfaction and loyalty.

Scope of the study

This study focuses on Disneyland theme parks and goes further to find out how it has used information system to maximise on customer satisfaction and loyalty with intent of gaining competitive advantage over its rivals.

Aims and objectives

To find out how Disney has used information system to maintain a competitive edge in the industry.
To investigate how Disney has used information systems to maximise customer satisfaction and loyalty.
To find out how different information systems have assisted Disney in meeting its customer needs

Methodology

The methodology used is qualitative methods using secondary sources of data. The use of qualitative methodology is justified due to the intangible aspects of customer satisfaction and loyalty, which is difficult to measure quantitatively.

The information analysed was sourced from Disneyland websites, Walt Disney’s annual reports, information systems reports, other reliable websites, articles from academic journals such as Strategic Information Systems Management, practitioner journals such as Harvard Business Review, books suggested in the reading materials and news articles from reliable sources such as BBC News, Financial Times, The Economist and many others.

Hence, Disneyland theme park can be analysed by subjecting the information collected to Porter’s Value Chain model and 5 forces model of competitive advantage. This is because the focus of this report is on how information systems can be integrated towards maximising customer satisfaction, which is key to achieving competitive advantage.

Application of the Value Chain model is justified by its focus on the overall value chain, which consists a variety of actors such as end customers, distributors, suppliers of commodities (see appendix 1), and employees within the theme park, local communities, environmental agencies and government.

Disneyland’s Information systems applied to the Value Chain model

Theme Park value chain (VC Model)

Fig. 1: Theme Park value chain (VC Model) (Source: Rajaram and Ahmadi, 2009)

Most ‘primary’ activities (as shown in the above figure) of Disneyland include new product development such as introduction of new themes, rides, marketing and sales, and distribution of tickets.

Hasam (2010) suggests that these primary activities in Disneyland are managed through:

Ticketing systems designed to handle different types of tickets such as barcode, magnetic and paper tickets,
Membership management systems used to track customers such as a CRM database on the registered members,
Reservation systems that can be handled via phone, web or email,
Finance management systems that can handle visitors’ accounts and process payments using different methods such as cash, credit/debit cards, and link to different banks,
Point of sale terminals and payment counters,
Parking systems, Lockers management, Service management that links to parking lot, ticket box, phone booths, toilets, visitor centre, and tour bus service; and also to supporting facilities,
Access control and security systems (such as CCTV), Reporting systems, Statistics and Staff management, and
Extended functionalities such as mobile access, information kiosks, public information displays, building management, suppliers and workers management and third-party integrations.

Among the ‘support’ activities, Disneyland’s ERP system plays a strategic role in organisational management activities such as theme park planning (Pollack 2010). Computer-aided design methodology such as plan-o-grams is used in planning of the Disney parks, and in deciding where different facilities can be located. The plan-o-grams use real-time information collected through CCTV.

For instance, car-parking behaviour of customers is studied over a period of months to check if more space is needed. One Disneyland study suggests that travellers who come in their own vehicles tend to stay in the theme park facilities for 2-3 days.

There is greater potential from these travellers to stay in accommodation facilities within the theme park. Those who use public transport or hired vehicles tend to visit only for one day (Nunes 2009). Using CCTV coverage, queues for rides and other activities are studied to plan how to develop queue lines to ensure that customers do not have to wait for too long.

Reports generated from EPoS and other online systems used in ticketing are used to identify seasonal variations of consumer behaviour. By looking at seasonal variations, Disneyland reduces or increase accommodation facilities, food services among others, and also provides additional discounts.

The information linked through these integrated systems also help Disneyland in managing resources dynamically – for instance, more personnel can be hired during peak seasons and labour and services can be cut during off-peak seasons. As the employees play an important role in customer satisfaction in the theme parks, human resource management activities such as recruiting better staff are managed.

The central ERP database also connects global customer service centres, technical support, billing offices, development centres, manufacturing units, testing units, logistics and top and middle-level management such as accounting, finance, legal among others.

Every Disneyland has an internal IS team that manages access to the system for existing permanent employees, contract workers, outsourced contractors and customer support groups.

The value chain analysis shows that Disneyland mainly manages its operational workflows between internal operations (support activities) and external (primary activities – marketing, new product development and ticketing) using efficient information systems and business processes. This has allowed them to reduce costs and eventually reduce ticket prices, which have attracted a good deal of customers.

Disneyland’s Information systems applied to the Porters 5 Forces model

Porter’s 5 Forces analysis for Disneyland IS

Fig 2: Porter’s 5 Forces analysis for Disneyland IS

Disneyland uses its Information systems effectively to lock in customers via high switching costs, making it expensive for the customer to switch to a competitor. Customer opportunities are identified by collaborating with travel and tourism companies and websites; and providing special offers (Oi 1971; Cooper 2003).

Customers that have registered through online ticketing systems are recorded into the CRM system using customers’ emails. The CRM system sends regular updates about new themes and products in Disneyland theme parks such as introduction of new characters.

Repeat customers are also given discounts such as ‘2 for 1’ and free Fast pass, which allow them to avoid long queues. Disney also introduced a Pal Mickey, which is a huge robotic Mickey Mouse that collects electronic information from CCTV and tells the visitors ‘on the fly’ about which sections in the theme park have long queues. However, the Pal Mickey concept was also plagued with privacy concerns.

Later, Disney also introduced the SMS service that personalises a member’s theme park interests and provides timely messages about queue status and special events while the visitor is in the theme park. Disney’s information systems across the parks are thus linked together to provide up-to-date information about consumer choices that give Disney the leading edge in customer satisfaction (Kelly 2009).

Further, Disneyland’s Information systems have been able to lock in suppliers via easy-to-use connections, discouraging them from changing to another business.

Disneyland’s ERP systems linked to EPoS have helped in demand forecasting, making decisions on pricing, coordinating production and inventory management between producers and retailers, better management of logistics and in automating operations and accurately tracking commodities within the theme park (Milman 2001).

Disneyland’s major suppliers consist of food service suppliers, commodities such as souvenir shops, accommodation such as hotels, camping grounds, villas and many more.

Disneyland’s information systems are integrated with these service-based suppliers using phone and web-based ‘service-oriented architecture’ that allows Disneyland and its supplier to use a common interface despite having a different set of information systems. This has developed strong linkages between Disneyland and its set of suppliers that have helped in reducing inventory and enabling just-in-time production.

However, rather than connections through IS, Disneyland has a strong brand name and suppliers get pride in supplying to Disneyland, and hence they do not want to switch to other businesses or theme parks.

Disneyland, using its information systems has also been able to create entry barriers for new competitors, thereby raising the costs to enter the market. For instance, Disneyland uses business intelligence from its Walt Disney system to identify that a particular Disney character on television or cinema is gaining increasing popularity.

By use of such information, these characters are incorporated in its theme parks (HowStuffWorks 2005). Since families with children are the main target customers of Disneyland theme parks, by integrating systems with Walt Disney Productions and other linked organisations, Disneyland theme parks are updated with latest themes and characters.

This enables Disneyland to lead the market and reduce the threat of substitutes available to the target market.

Disneyland’s membership management system is linked to various organisations and external entities such as environment, tourism industry, television industry, and local community issues (Oi 1971; Cooper 2003). This has enabled Disneyland to establish alliances with other organizations and set standards. However, this has led to increased purchase costs rather than reducing purchase costs and providing benefits for everyone.

Disneyland forecasts service demand using its information systems in order to reduce costs of operations by keeping inventories low and by optimizing the effort required to manage operations.

By integrating activities in the value-chain (as seen from the value chain analysis – previous section), Disneyland has achieved efficiency and cost-reduction in operational activities, which has eventually led to decreased prices for tickets, which enhance customer loyalty. Thus, Disneyland has been able to reduce costs, which in turn reduces prices.

However, Disneyland has not been achieving good profitability, especially in the many years of establishing the theme parks. For instance, the Disneyland Paris could not achieve profits for up to 10 years of its establishment. Hong Kong Disney also struggled with understanding customer requirement in the first 2-3 years of its operation and has not been able to achieve profits yet (Disneyland Annual Report 2010).

The Balance Score Card (BSC)

Balance scorecard as a performance management framework is used by the management to arrive at the right decisions regarding their businesses (Wober et al. 2010). It not only sets the firms future goals but also closely monitors the progress towards attainment of such goals. Interestingly, it provides a view of organisations from both external and internal perspective.

In this Disney’s case, balanced scorecard (BSC) shows how use of information systems has led customers to have a positive view of the park as a result of its unmeasured contribution towards growth of internal business processes through continued learning which ultimately impacts positively on the park’s finances.

The table below helps to explain the four perspectives of a BSC and how they can be applied to determine the impact of information system (IS) in Disney’s case.

The Balanced Score Card

Fig 2: The Balanced Score Card (Source: Kaplan & Norton 1996)

Disneyland has set a vision of taking the lead in theme park industry by embracing Information technology to gain a competitive edge. This vision is well explained by the above diagram.

Internal business processes perspective

The park has a strategy of incorporating the IS in its day to day operations to make it more efficient and meet its customers’ needs.

With the increased use of technology, the customers’ desires more convenient ways of carrying out bookings, identification of the parks products among others and these are more evident in Disneyland where they have installed systems for online ticketing, online reservation, online membership management and online finance management to handle customer accounts.

To evaluate whether the set-out strategy is achieved, Disneyland has been reviewing its IS from time to time to find out areas which need upgrading to meet the required targets.

Finance perspective

This perspective helps to find out whether the IS strategy assumed by Disneyland assists to operate within the budget and also to determine whether the various park activities contribute to attainment of the park’s goals. Through automation, it becomes easier to determine how the various activities of the park contribute to the achievement of the park’s financial targets.

This is easily reflected from the automatic reports generated from the information system in use. Further, sound IS enables the park to project its desired financial targets over a period of time, and as such, it embarks on different initiatives directed towards attainments of such targets.

Customer Perspective

By introducing the information systems, Disneyland theme park is able to assess the customers’ response and how they perceive them. This is highly reflected by customers’ usage of the scientific-based methods rather than the traditional physical methods. As such, the park management is able to understand the customer’s perception of the business upon implementation of the new IS.

Learning and Growth

Introduction of the new IS calls for training of staff members on how to manage them. So, for Disneyland to benefit from this, it had to commit substantial amounts in training staff to manage the new system.

However, continued use of the IS leads to new inventions which when applied across the park also leads to continued business growth (Porter 1998). Surprisingly, the new technology follows the same process to facilitate expansion of the business as a whole.

Through use of IS, Disneyland has been able to maintain a lead in theme park industry as it attracts high numbers of both local and international clients who find it easy and more convenient when purchasing its services. Clients from all corners of the world can be able to learn about the park’s products as well as doing online bookings from the comfort of their homes.

This feature has enabled Disneyland to maintain a lead in the industry as it attracts many tourists across the globe (Rajaram & Ahmadi 2009). More so, Disneyland clients can learn about new park’s products hence limiting the chances of switching to the competitor.

Discussion and Conclusion

By analysing Disneyland, it can be concluded that theme parks can use IS as a strategy to effectively gain competitive advantage over their rivals, which in essence leads to customer satisfaction, continuous customer engagement and customer loyalty.

Currently, strategic information systems in most theme parks are being used as a supporting role. Integration of these facilities helps in reducing operational costs. The supporting role can be extended further by integrating the strategic IS to more business functions such as marketing and sales to understand customer’s behaviour; and thus gaining better customer satisfaction and loyalty.

The case of Disneyland theme parks shows how this can be done by diversifying product lines and maintaining synergy in the products through the use of information systems. For instance, by identifying popular characters from its television shows and incorporating them in their theme parks, Disneyland has succeeded in keeping competitors and substitutes away.

However, Disney has also faced several challenges in effective implementation of systems such as complex Pat Mickey based systems. Simple solutions such as ‘on the fly’ SMS service to visitors about waiting times can enhance customer satisfaction to the next level. However, Disney has also had its share of problems while operating in a cross-cultural environment such as through opening of theme parks in Paris and Hong Kong.

This could also be a reason for not achieving effective learning about customer behaviour on timely basis and earning profits. These profits could be channelled faster for greater learning and innovation so as to incorporate updated popular characters and achieve even greater customer satisfaction and loyalty (Bemowsky1992; Brah 2002; Edwards & Ewen 2004).

Future Recommendations

The IT department staff should perform future design exhibitions and trade show stands, personalize journeys and rides, access systems, tracking systems and adopt innovative display technologies such as RFID technologies (Ward & Peppard 2002; Grant et al. 2010; Boddy & Boonstra 2005). In application of RFDI technology, wristbands can provide customers in attraction site with security and also enhance convenience.

Previous research shows that 27% of families who visit Disneyland theme park lose their children while there. RFID technology can help to prevent children from being lost as they are issued to park-goers at the point of ticket purchase and stores basic information such as names, telephone number and address of the person wearing the band.

Parent with lost children can go to the park administration and retrieve their lost children. More so, cruises, festivals and concerts could also benefit from RFID technology which not only assists in tracking customers but also providing them with convenience and security.

Disneyland theme park can use secondary data through its business intelligence and ERP system to measure and analyse number of visitors per day, customer queries, parking systems and so on, and continue to use the FASTPASS and SMS services, which have been successful in maximising customer satisfaction (Bemowsky1992; Brah 2002; Edwards & Ewen 2004).

Disney should also continue to be price competitive by providing discounts to repeat customers and to those using internet-based booking systems. Disney can focus on its new theme parks by measuring the customer survey data collected to be able to provide unique cartoon characters and attractions localised to the local culture rather than using standardised characters.

In addition, Disney can continue to measure and achieve greater operational efficiency in its value chain using its information systems linked together. This will help in transferring reduced costs to cheaper prices of tickets and to effectively respond to customer queries and be able to use customer delightful services such as the FASTPASS and SMS services.

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