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Disneyland Parks: Global Marketing Research Paper

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Updated: Aug 30th, 2021

It is worth noting that Disneyland parks are functioning in such countries as the USA, France, Japan, and China. In Shanghai, the park consists of a theme park, resort hotels, a shopping and entertainment district, and a leisure park. Moreover, a special subway station was built to ensure that visitors could reach the place easily. Such a developed structure is typical for all Disneyland parks and resorts. The purpose of this paper is to analyze the US and Chinese markets and discuss the major similarities and differences between them.

Micro and Macro Environments

To analyze the environment, it is necessary to decompose the internal and external factors that affect the company in the host and foreign markets. In terms of the microenvironment, it is essential to stress that the company has a brand name, which is known all over the world (Shanghai Disney Resort, n.d.). Also, the enterprise has a broad product portfolio, which focuses on popular characters and famous fairy-tales (for instance, Marvel heroes, characters from Pirates of the Caribbean).

One of the important similarities between the markets is that the parks are always multi-generation and family-oriented. However, the difference lies in the way this orientation should be regarded given the fact that many Chinese families have one child. In particular, the target consumer of the company are children, and China is a country in which the Walt Disney Company may introduce various educational games for families with a single child (Morrison, 2014). Moreover, the market in Shanghai may be characterized as a promising one given the growing middle class and the rise of popularity of Disney characters in the country.

One-Child Policy

However, one of the differences between the environments of the two countries is also related to the one-child policy applied throughout China (Lasky, 2017). In the US, there are no initiatives restricting the number of children a family may have, and citizens tend to bring all their children to the park. In the host country, the enterprise benefits greatly from such an environment since the main consumer group is minors. Therefore, it has an opportunity to diversify the services provided to tailor the needs of underage visitors. In China, a policy exists that allows citizens to have only one child or two children in rare cases.

This has imposed a certain degree of complexity on the operation of Shanghai Disneyland (Lasky, 2017). In particular, the foreign market has to create a strong intergenerational appeal. The park needs to offer entertainments designed and suitable for older visitors to ensure that parents can have a good time in the park apart from visiting the locations aimed at entertaining their children.

Apart from that, the policy also affects the characteristics of the visitors, which is important for the business strategy. In comparison to the US, as well as to other countries, in the Chinese market, the average age of clients is higher (Lasky, 2017). In the American market, the company caters children in a special way since it is their main customer group. Meanwhile, in China, the enterprise has to consider the interests and peculiarities of older visitors since families almost always have one child, and the needs of parents also need to be tailored. This is one of the major challenges faced by the company in the foreign environment.

Further Aspects

The company has chosen different locations to situate parks in the US and China. In the US, the site is located almost in the center of the city. However, in Shanghai, the park has been built in Pudong. This is the eastern part of the city, and it may take citizens up to several hours to get to the place (Tschinkel, 2018). Given that residents are still getting acquainted with the Disney world and its characters, this location ensures a greater immersive experience, which is not necessary for the host market.

Notably, there are other challenges to be considered as applied to the foreign market. The company mainly focuses on standardization of processes across its theme parks. However, the Walt Disney Company has had to adapt its strategy to the local needs and requirements (Alon, Jaffe, Prange, & Vianelli, 2017). For example, some of the characters of popular movies and fairy-tales have to wear Chinese costumes and clothing. In addition, the company has had to adapt its practices to local traditions and celebrations to make the activities in the park distinctly Chinese.

One of the major differences between the US and Chinese parks are festivals and celebrations held there. The Disneyland park in the foreign market has to organize special events to celebrate the Chinese New Year to address the local needs of its clients. Another example is the absence of a Chinese version of Main Street USA (signature opening land), which can be observed in other parks across the world as well. In Shanghai, the company had to modify its strategy and introduce the Gardens of Imagination, which allude to the Chinese zodiac and gardens (Tschinkel, 2018). This peculiarity may be regarded as an opportunity for diversification to create value for the customers.

Fierce competition among Chinese theme parks is another threat experienced in the foreign market (Ji, Li, & King, 2016). In the US, the company has a strong brand image. In Shanghai, there are other theme parks with a solid reputation, which are direct rivals of the Walt Disney Company. Given the location of the site, it is possible to assume that not all consumers are aware of Shanghai Disney. Moreover, it is quite likely that the park will not be accepted by all citizens. There are other scenic spots in the area (such as Happy Valley), which reflect Chinese culture better and are already known and loved by the clients.

Importantly, it is yet not clear whether the park will cover the operating costs. According to the company report, the investment “may have short-term returns that are negative or low” (The Walt Disney Company, 2017, p. 17). As shown in Figure 1 (see Appendix), the company also experienced an increase in interest expense. However, it can be assumed that this regional park may become a significant branding experience given the challenges and possibilities the Chinese market has revealed (Alon et al., 2017). A significant opportunity, which is also one of the major differences as compared to the US market, is the nature of the Chinese entertainment market. At present, it is mainly lead by media conglomerates, which means that an international competitor of such scale will specify the industry’s direction in the region.

Restrictions

One of the major threats associated with the opening of Shanghai Disneyland is laws and regulations applied in the region (Alon et al., 2017). In the host country, the rules of leading a business in the entertainment industry are not that strict as in China. Apart from safety regulations, which the company has to follow, and cultural differences that make it hard to predict the behavior of customer groups, China also imposes specific legal restrictions on foreign enterprises. For instance, the company has faced censorship of almost all media channels and digital platforms. Therefore, it is difficult for Shanghai Disneyland to advertise itself and carry out any marketing activities.

Joint Venture, Legal and Economic Aspects

It is crucial that the company had to follow specific legal requirements imposed by the authorities to be able to open a park in Shanghai. Operating in China implies increased government reliance for any foreign business, which is another major difference between the two markets. The authorities require all foreign companies to establish joint-owned ventures. In particular, at present, the city government is the owner of 57% of the assets, and the remaining 43% belong to the American company Walt Disney (The Walt Disney Company, 2017).

At the same time, 70% of the share in the management company belongs to the American side and the rest – to the city authorities. In terms of investment, according to various sources, from 3.5 billion to 5.5 billion dollars were spent on the construction of the park (Levine, 2016). The approach has allowed the Chinese government to maintain the communist regime in the country while, at the same time, the state may still actively cooperate with global players in the international market.

Mode of Entry

The mode of entry employed by the company was indeed creative. As it comes from the discussion of the macro-environment, the entertainment industry is heavily regulated and censored by the country authorities (Ji et al., 2016). Initially, the Walt Disney Company was unable to get into the foreign market due to media restrictions. However, the enterprise is known for their original approach and strategies, so they have decided to enter the Chinese market through educational programming. Children are the company’s main customer group, and the education industry is not intensely regulated in the country; for that reason, Disney English was introduced (The Walt Disney Company, 2017). Through this program, the company was able to address the needs of their main clients and receive all the necessary approvals.

It may be assumed that the strategy was aimed at reaching long-term goals. Disney English allowed the enterprise to enter the foreign market and create a cultural presence as well (Levine, 2016). In the US, children know and love Disney movies and characters such as Mickey Mouse. The similar nostalgia could not be observed in the market of Shanghai. Disney English was utilized as a tool to get into the hearts of minors. Therefore, a creative approach and orientation at long-term goals are the main features of the company’s global strategy. It has also allowed the Walt Disney Company to build the required relationships with the government and comprehend the peculiarities of the foreign market.

Concluding Points, Implications, and Recommendations

Thus, it can be concluded that the micro and macro environments of the host and foreign markets are different. The company had to modify its global strategy to address the realities and peculiarities of the Chinese culture. The main implication of the analysis is that multinational corporations should adapt to the cultural setting of each particular region. It is crucial to be able to coordinate the marketing plan and approach in accordance with the foreign environment. One of the recommendations to maintain the leadership position is to accommodate local attitudes. The company needs to reverse its policies if necessary in order to comply with local requirements. In this case, it will be able to create the same cultural presence as it has done in the host country.

References

Alon, I., Jaffe, E., Prange, C., & Vianelli, D. (2017). Global marketing: Contemporary theory, practice, and cases (2nd ed.). New York, NY: Routledge.

Ji, M., Li, M., & King, B. (2016). Incremental effects of the Shanghai free-trade zone—An Internet informed assessment of Hong Kong’s tourism competitiveness. Journal of China Tourism Research, 12(1), 24–41.

Lasky, J. (2017). . The New York Times. Web.

Levine, A. (2016). . USA Today. Web.

Morrison, A. M. (2014). Chapter 1: The concepts of destination management and marketing [PowerPoint slides].

Shanghai Disney Resort. (n.d.). . Web.

Tschinkel, A. (2018). . Web.

The Walt Disney Company. (2017). Fiscal year 2017 annual financial report. Web.

Appendix

The data showing an increase in interest expense
Figure 1. The data showing an increase in interest expense (The Walt Disney Company, 2017, p. 26).
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