To address KidZania’s current problems of stagnating growth and increasing competition, this memo recommends the adoption of alternative 4, namely, the development of content to extend the brand to other media. Unlike the company’s theme parks, entertainment media such as movies do not necessarily require the acquisition of a physical location or the establishment of a franchising contract. As a result, the reach of a film would be substantially higher than that of the parks, reaching into regions where KidZania parks are unavailable and capitalizing on new consumer bases. Additionally, by providing alternative media options to customers, KidZania would differentiate itself from its primary competition and obtain a substantial advantage.
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The movie that KidZania is considering can generate substantial revenue if it succeeds, possibly recouping its cost and ultimately making a profit. As Terech et al. note, the film industry is growing steadily, and many content-creating companies and properties have reached massive valuations (11-12). There is substantial potential for the film to be a financial success, particularly because KidZania can mitigate its advertising costs by using its parks to promote it. However, Terech et al. add that the primary expectation for the movie is that it will increase park visits and merchandise purchases while also providing a foundation for further initiatives (12). As a result, the park’s growth would improve, supplying it with the resources to work on other efforts.
Moreover, the transfer of KidZania’s intellectual property into new media would differentiate it from its competition. The concept is not novel, as some of the most prominent amusement parks in the world, including Disneyland and Universal Studios properties, are successful in part because of their robust presence in film and other media. However, KidZania does not compete with these large parks because of its concept as a local venue that children frequently visit rather than a massive destination that they go to rarely. Moreover, few, if any, businesses that compete with KidZania directly have this dual presence, likely because many of them copied the concept with little innovations, and the new addition would distinguish the company.
First, it will be necessary to secure the resources and personnel required to produce the movie. To that end, KidZania will have to find investors for its venture and choose and contact the people whom it would like to produce the film. The procedure should take several months, after which pre production will begin. The hired staff will start designing the scenario and preparing to begin filming by deciding on the sets and securing locations, which should also take one to two months. Once these procedures are finalized, the filming and post-production can begin, likely taking one to two years. While it is ongoing, KidZania will be working on the other aspects that contribute to the film’s success.
Most importantly, it will be necessary to secure venues where the movie will be shown to audiences. To that end, KidZania will contact theaters in Mexico and secure contracts for the showing of its films. For other nations, it will contact production companies that will localize the movie and distribute it locally. These processes will last throughout filming, but it is preferable to start them early so that the film can be adapted successfully and released in a synchronized manner. It will also be necessary to conduct marketing, intensifying it several months before the film’s release. As mentioned above, it will be beneficial to run a promotional campaign at the KidZania parks to spread awareness at a lowered cost.
Terech, Andres, et al. “KidZania: Spreading Fun Around the World.” Case Research Journal, vol. 38, no. 3, 2018, pp. 1-24.
|Political||Medium importance: it is necessary to consider the various laws that pertain to the safety of minors for a park such as KidZania, but otherwise, the legal framework is not restrictive.|
|Economic||High importance: KidZania relies on the demand for children’s entertainment, which is defined by the local economic situation. Moreover, its growth has recently stagnated because of the peso’s depreciation.|
|Social||Medium importance: children will typically be present in large numbers in any population, alleviating demographic concerns, but it can be beneficial to adapt to the local culture.|
|Technological||Medium: competitors in the industry are investigating the possibilities of new technologies such as virtual reality to obtain an advantage. However, the fundamental attraction of a theme park such as KidZania is in human interaction and the activities, which are mostly not reliant on technology.|
Porter’s Five Forces
|Competition in the Industry||Low: most theme parks similar to KidZania operate in specific regions and have little to no competition.|
|Potential of New Entrants into the Industry||High: due to the constant innovation in the entertainment industry, people with new ideas can create competitive enterprises relatively easily.|
|Power of Suppliers||Medium: Parks’ partnerships with malls and companies that provide their services are mutually beneficial, with neither party having extensive leverage.|
|Power of Customers||High: customers can choose the mode of entertainment that they prefer from a continuously increasing variety, challenging providers.|
|The Threat of Substitute Products||High: there is a large variety of options for children’s entertainment, which includes educational opportunities that can replace parks.|
Internal Environmental Analysis
|Management Preferences||Needs: short-term as well as long-term financial growth.|
|Beliefs: KidZania is a company that benefits children, schools, employees, and businesses while generating profits.|
|Job context: working with children as well as numerous business partners in a diverse range of industries.|
|Resources||Valuable: KidZania’s key resources have enabled it to succeed internationally and in a sustained manner.|
|Rarity: Few companies have access to reputations and partner networks comparable to KidZania’s.|
|Cost to Imitate: some other businesses have successfully imitated KidZania’s model in other regions where there was no competition, but with it, it is generally expensive to do so.|
|Organization: KidZania is well-organized to take advantage of its resources, which has contributed to its success.|
|Organization Capabilities||Organization Structure: KidZania operates using a franchising model, which enables fast growth but generates market entry issues.|
|Leadership Behavior: Some leadership is overly concerned with short-term profits because they affect their immediate pay.|
|Behavior and Culture: KidZania has a friendly culture that is centered on its internal identity.|
|Goals||Creating fun and educational environments for children|
|Core competences||Innovative concepts, industry partnerships, cultural adaptability, feedback incorporation|
|Value Proposition||Local entertainment, educational, free parents’ time, reward repeated visits|
|Product-Market Fit|| |
Cost and Potential Revenue
|Costs||Production: $35 million |
Marketing: $7 million
|Revenue||Licensing Proceeds from Ticket Sales: $45 million (assuming 6 million viewers from park visitors, their parents, and new customers as well as $7.50 of revenue per ticket) |
Increases in Park Ticket and Merchandise Sales: $4 million (assumed to be 10% of the total sales in these categories as of 2015)