Euro Disney Marketing Analysis

Euro Disney Marketing Analysis

MKTG522 - Spring 2013 Session 2

Tuesday Nights - Glendale Facility

Marcus Corley

Richard Ellis

Jeff Klein

Background

In 1955, Disney opened their first theme park "Disneyland" in Anaheim, California. During that time, Disneyland was one of the largest theme parks in the world. The theme park was built on 160 acres of land and took approximately 17 million dollars to build. Today the theme park generates about 14 million visitors a year that spend roughly $3 billion. After the successful opening of their first theme park, Disney looked to expand their emerging company to the east coast of the United States. The decision was made to locate the new theme park in Orlando, Florida which would eventually be named Walt Disney World. Disney secretly purchased approximately 27,433 acres of swampland in preparation of building the new park.

In 1971, Walt Disney World opened their doors to nearly 10,000 visitors who could choose from a list of park attractions. The resort included two resort hotels, a campground, and Magic Kingdom as the main attraction to the theme park. The resort was expanded with the addition of Epcot, Walt Disney World Village, and six other resorts. The investments into the new resorts brought in 100 million visitors within eleven years of Disney World's opening. Walt Disney World became the company's largest property and eventually one of the United States most popular vacation destinations. In 1983, the company proceeded with an expansion outside the United States when they opened Tokyo Disneyland. Although the theme park was not owned by Disney, the park was still a success.

In 1992, Disney took on their second international project with Euro Disney. Euro Disney was seen by Robert J. Fitzpatrick as "our big project for the rest of this century" and that project came with a big price tag. The cost of the project was estimated to cost over two billion dollars. The park included some of the same amenities as Walt Disney World, but on a bigger scale.

External Analysis

Disney entered into the new project with many complications to overcome, including: the economy, the traditions, and the day to day trends of the European culture. Besides the cultural dissimilarities, Disney failed to realize the emerging recession in the late 1980's and the consequences that the Gulf War would have on tourism. The collapse of communism in 1989 also had an effect on the world economy. These changes in the economy were threats to the development and future of the major European project.

To compare and contrast the differences, the Europeans were not willing to stay in a hotel that could cost up to $600 for a family of four. The European family traditions and spending habits differed far from the American families. The hotel prices were just as high as some of Paris's top hotels. Another astonishing difference was that Europe is the largest consumer of wine in the world. The assumption that Europeans would be willing to attend a theme park that restricted the consumption of alcoholic beverages was a costly miscalculation. The American style of frequent short vacations is not the same as with the European visitors. The variances in the European tradition developed into key complications during the first few years of operation.

The ability to manage the day to day operations was difficult because of the actual attendance patterns in Europe were different from what the company originally planned. This caused the theme park to be understaffed on some of the busiest days of the week. Typically in America, the high volume days are either Friday or Saturday. In Europe, Mondays are a usual beginning of the week vacation day therefore, making it a high volume day. This was not researched or planned. Euro Disney's management was not able to use the American tactics like "hiring and firing" employees because France had strict laws for the employee rights. The company had the assumption that Europeans did not eat breakfast which resulted in not having enough resources to feed their guests in the hotels. Overall, the cultural and economy factors played a major part on the decisions made by Euro Disney's management.

Internal Analysis

Euro Disney had a variety of strengths and weakness during the development and operation of the theme park. Some of the advantages that Euro Disney had were the incentives that were offered by the French government. They had an estimated 310 million perspective visitors within a two hour flight radius and an additional 17 million visitors in a two hour driving radius. The project had an initial value of about $127 million, but after Disney's stock went public, the value reached $1 billion just from the reputation of Disney alone. The company was able to receive loans and land below market value. They were able to negotiate tax incentives for writing off the taxes on construction cost. They were able to get the French government to provide construction work on the rail and road links for free.

Despite all the incentives and financial benefits that Euro Disney received, this project consisted of more problems and weakness throughout its implementation. Although the initial estimates presented a lot of potential, the initial performance of the project was not as expected. In the first few years, Euro Disney lost millions after opening their doors in 1992. The park did not reach the attendance that was initially projected. The attendance in the first year was only 9.2 million versus a plan of 11 million. The estimated amount that each visitor would spend was 12 percent less than what experts predicted. The internal strategic planning of Euro Disney had a wide variety of flaws throughout the planning process. They showed lack of knowledge in the culture of the European people and it cost them dearly. They failed to establish the right marketing plan that would appeal to the tourists they were trying to reach. The assumption that the European culture was similar to that of the American culture proved to be a weakness in the marketing plan for Disney.

SWOT Analysis

Euro Disney had internal positive strengths and negative weaknesses that affected their ability to be successful in the early stages of the park's inception along with the first few operating years.

Disney's major strength is in its overall resources (including a huge library of exclusive content), history