STRATEGIC MARKETING

Name: Davidson Peetala

Roll No: L00215

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TABLE OF CONTENTS

Table of Contents

INTRODUCTION ............................................................................................... 3

COMPANY BACKGROUND ........................................................................... 3

SEGMENTATION, TARGETING AND POSITIONING (STP) .................. 4

A. Segmentation ................................................................................................. 5

B. Targeting........................................................................................................ 6

C. Positioning ..................................................................................................... 6

COMPETITION…………………….………..………………………….……7

CONCLUSION……………………………………………………….…….….8

Reference……………………………………………………………………….9

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INTRODUCTION

The purpose of this essay is to critically analyse the strategic marketing principles of

segmentation, targeting and positioning of the Walt Disney Company that have been

responsible for the company’s spectacular performance over the years. This essay will also

look into the impact and significance of the implementation of these strategies.

Walt Disney was chosen because of the company’s outstanding proven track record over the

years. This was achieved by having an ideal strategic management plan in place. This we

shall be reviewing extensively in the course of this report.

COMPANY BACKGROUND

Disney is a name in popular entertainment that needs no introduction. As a creative innovator

in the cartoon industry it stands head and shoulders above subsequent figures. Disney World

Corporation is one of the most famous names in the animation industry, known for providing

entertainment directed to adults and children alike; with international theme parks and a

world-class animation studio and business franchise, the company nearly dominates the

industry. Being in existence for almost a century, Disney remains one of the most renowned

brands in the world. The man behind the scenes in the name of Walter Disney, a great

innovator and artiste Disney went from sketching a mouse to running a multi-billion dollar

domain.

The company was founded by Walt Disney in October 16, 1923, with his brother Roy

centring mainly on creation of cartoons. The Walt Disney Company went public in 1940 and

has successfully overtime diversified into a stream of business chains. Its headquartered is in

Burbank, California. Its current market position is as follows in 2011 fiscal year end: it

generated Revenue of US$ 40.893 billion with an Operating Income of US$ 8.043 billion. It

currently employs 156,000 personnel.

The company is current run by its leader Robert A. Iger who is the Chairman and Chief

Executive Officer along with the board of directors. Disney has a competitive advantage of

having one of the most successful business men on the board of directors, who have

considerable experience that facilitate in augmenting the power platform of decision making

and leading the company to an outstanding success.

The company has a simple mission statement which is “To make people happy”. The

company’s main objective “is to be one of the world's leading producers and providers of

entertainment and information. Using our portfolio of brands to differentiate our content,

services and consumer products, we seek to develop the most creative, innovative and

profitable entertainment experiences and related products in the world."

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The Walt Disney Company operates chiefly as five Strategic Business units (SBU): The

Walt Disney Studios, which consists of its motion picture, recording, and theatrical

sections; Parks and Resorts, having its theme parks, cruise lines; Disney Consumer

Products, that manufactures toys, outfits, and other merchandising products founded on

Disney characters, Media Networks, that comprises the corporation's TV and Internet

functions and the Interactive Media, which includes console and online game Units.

Even though Disney has such a multiple streams of diverse businesses, synergy is a core

basic concept in the strategy formation which has made the company a resounding success. It

is important to note that Disney put in place several critical horizontal mechanisms to

allow synergies between its business units.

SEGMENTATION, TARGETING AND POSITIONING (STP)

According to Fayol (1916), the maxim “managing means looking ahead” gives some idea of

the importance attached to planning in the business world and it is true that if foresight is not

the whole of management, at least it is an important part of it”.

The process of Segmentation, Targeting and Positioning is an integral part of Strategic

Marketing planning process which ensures the success of the goods and service of an

organization. The process of STP can be diagrammatically represented as follows

Fig 1: Source - adapted from Dibb, S (1998, pg 205)

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Having a strategic management plan is not enough nor is segmentation of the market. The

crux of the matter lies in the implementation of these strategies. However, sometimes the

segmentation process may fail, for instance due to the poor understanding of the

segmentation process or the non availability of practical guidance literature may be the

probable causes. (Dibb 1998)

Let us now examine how the STP process was used by Disney as a part of their Strategic

Management process and evaluate the implementation of this process.

A. Segmentation

According to Kotler (2000) Market segmentation is the subdividing of a market into

homogenous subsets of customers, where any subset may conceivably be selected as a market

target to be reached with a distinctive marketing mix.

Disney’s market segmentation has been done based on geographic locations, demographics,

and psychographics to locate their target market. This assists in targeting its precise

customers

Geographic segmentation refers to segmentation on the basis of factors such as Terrain,

population density and market size. Disney uses this segmentation to determine its location

for its theme parks which are then placed in the world’s most visited places. Currently it has

11 Disney theme parks globally which are situated the world’s foremost family holiday

destinations such as Hong Kong, California, Japan, France and Florida.

Demographic segmentation relates to segmentation on the basis of elements such as race,

gender, earnings, ethnicity, social class and age. Age is the major consideration in

demographics for instance such as tweens, adults, children, teenagers etc. Disney uses this

segmentation to decide the location of their Disney Stores which retails their consumer

products, where to issue their cinema, and even assists them in determining what will be the

content of the motion picture to be produced subsequently.

Psychographic segmentation pertains to segmentation on the basis of elements such as on

behaviour, motivations, standard of livings and geo demographics; this is also used to help

Disney establish the profile of the customers who will buy their future products.

The segmentation of its market was essential for Strategic Marketing as it helped Disney to

comprehend its versatile customer’s tastes and what they really wanted. This is because it has

customers globally and it was crucial to take them into account. Also, as it is such a huge

conglomerate it helped determine its target market for each of its diverse products.

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B. Targeting

Targeting strategy for all Disney’s product line is on the basis of the market segmentation. It

targets primarily children as well as their families. As was said famously by Walt Disney

“"You’re dead if you aim only for kids. Adults are only kids grown up, anyway."

Disney uses the Multisegment targeting strategy to determine its success. According to Lamb

et al (2011) Multisegment targeting is a strategy when a firm chooses to serve two or more

well-defined market segments and develops a distinct marketing mix for each.

Disney fascinates individuals of every types; from a kid, to a teenager, or an adults alike. For

little kids, it provides cartoon pictures, playthings and other commodities in its consumer

products part; it also has section on the Disney Channel dedicated to them. For elder children

like tween kids and adolescent kids, they have the Disney Channel, Radio Disney and their

cartoon character films, such as Green Lantern. Disney's action films such as the recent

Avengers movie draw grown-ups as well. Disney theme parks are also established as a family

holiday filled fun time. It targets every member of the family. The adverts for the theme parks

also stress and aim at parents with phrases like “Let the memories begin” and “Magical

Land”.

According to Pride et al, Disney singles out its specific customer groups and then directs its

marketing efforts to efficiently compete with its competitors. Thus, it can be seen that Disney

does not have a single target market but instead targets each member of a family unit. It

principally aims at middle class families who are city dwellers. The pricings of their products

are competitive.

C. Positioning

According to Kotler (2000), positioning can be defined as ‘the act of designing the

company’s offer so that it occupies a distinct and valued place in the target customer’s mind’.

In this the company positions itself at a particular location within the targeted market segment

making clear statement to both its customers and competitors about the position of its

products and services located in the market. (Groucutt 2005)

Being one of the early entrants in the Film industry the “theory of first mover advantage” has

been well established. This theory suggests that being a first mover can have significant

competitive insinuations, particularly comparative knowledge advantage and Brand Loyalty.

Firms that establish a first-mover advantage may control global trade prices and market share

of that product (Lieberman, 1988). The company gained a competitive advantage above its

competitors which are NBC Universal, News Corp, Time Warner. Walt Disney has over the

years become the world largest entertainment conglomerate.

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Thus, it has a unique position in the market which makes it a Market Leader. This serves as

the source for Disney’s reputation to deliver a distinctive experience which is magical to all

customers. It has become more memorable and accessible through Innovation, pioneering

technology, content and developing internationally.

COMPETITION

Disney's foremost competitors are the other media conglomerates, such as Viacom, Time

Warner, DreamWorks Animation and News Corporation.

The company’s wise decisions as to which capabilities and resources are best to utilize in the

competitive environment form part of the factors. Its positioning is unique with the following

factors aiding advantage over competitors

With a clear understanding to the impact of “branding and identity” the Company

declined short term profit activities that will hinder its control or diminish its identity.

A Strong brand name has given a distinctive edge that allows it to charge premium

charges for their products which its customers are ready to pay.

Also in a bid to secure control, Disney tries to have full possession of almost every

facet of its creations, by retaining control over its characters; thus retaining the profits

associated with them.

Disney has customer focussed marketing where customers are the focal point of all

marketing activities. (Pride 2006)

The inimitability of the Disney’s product and services is also a thing to be considered.

For instance Disney’s “Magic” cannot be duplicated by any other company.

Synergy between diverse businesses is another significant component of Disney that

has helped its growth.

Most importantly, the company’s constant strategic innovations and prudence, keeping up

with technology trend are landmarks to the company’s success giving it an overall

competitive advantage. The Walt Disney Company has taken into accounts its Strengths

and Unique Selling Point (USP) and worked out on their Distinctive competences which are

their key success Factors.

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CONCLUSION

This Research was aimed at and has succeeded in analyzing Disney’s implementation of the

strategic marketing principles of segmentation, targeting and positioning, that have made it

such a sensational triumph. The Critical Success Factors (CSF’s) that have been responsible

for the success of Disney are innovative and sustainable product development, Brand

Marketing and the most important is of diversification.

It is also recommended that before carrying out any STP analysis, it is necessary to keep into

perspective the limitations of this process before making any marketing decisions.

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REFERENCES

Books:

1. Dibb, S (1998),’ Market Segmentation: Strategies for success’, Marketing Intelligence

and Planning, Vol. 16(7), pp. 394-406

2. Fayol, H. (1916) General and Industrial Management, 1st Edi., Pitman, London

3. Groucutt, J.(2005) Foundations of Marketing, 1st Ed., Palgrave Macmillan

4. Hall, M. (2008) Tourism and Innovation, 1st Ed., Routledge.

5. Lamb, C., Hair, J. et al (2011) Essentials of Marketing, 7th

Ed, South-Western

Cengage Learning (pg 277)

6. Lieberman, M. and D. Montgomery, (1988) ‘First-mover advantages’, Strategic

Management Journal, Volume 9, pp. 41-58

7. Pride, M., Ferrell, O. (2006) Marketing: Concepts and Strategies,1st Ed., Cengage

Learning, Inc. (pg 203, 204)

Websites:

1. http://thewaltdisneyco.blogspot.co.uk [Accessed on : 01 Aug 2012]

2. http://thewaltdisneycompany.com [Accessed on : 01 Aug 2012]

Bibliography:

1. Weinstein, A (2004),’ Handbook of Market Segmentation: Strategic Targeting for

Business and Technology firms, 3rd

Edi., Palgrave

2. Dunn, J. et al (2006) Market Opportunity Analysis: Text and Cases, 1st Edi., Best

Business book

3. Sandhusen, R.(2000) Marketing, 3rd

Ed., Routledge.

4. Capon, N. (2009) Capon's Marketing Framework, 1st Ed., Pitman.