Table of contents
2. Theoretical Background
3. Hong Kong Disneyland - The international marketing mix
5. List of References
International growth is a key objective for many Multinational Enterprises (MNEs). Companies who want to market their business across national boundaries are challenged with a range of new tasks, since different people all over the world have different needs. Various factors have an impact on a company’s ability to outclass competitors. One important element is the international marketing mix, where a decision has to be made about which approach is the best for the company: standardization or differentiation.
The Walt Disney Company, which entertains the young and the young at heart with its products, via TV and in theme parks, has been largely focused on expanding its businesses world wide. One of their most profitable business segments internationally is Walt Disney Parks and Resorts. (The Walt Disney Company, 2005, [Online], #20). Relying on their strong brand name Disney runs mostly standardized theme parks, but also adapted them to local customs. In 2005 Mickey, Minnie and all the other famous characters moved to a “brand-new” home, when the company opened its third theme park outside the US - Hong Kong Disneyland. No barriers to trade, transparency and clearly defined rules of law, make Hong Kong very attractive for starting overseas operations. In 2006 Hong Kong was the top country in the Index of Economic Freedom. (Heritage Foundation, 2006, [Online], #9).
To build and operate the park a new joint-venture company- Hong Kong International Theme Parks Ltd- was formed by Disney (43% stake) and the Honk Kong government (53% stake). Walt Disney’s biggest challenge in this project is to market an American product to an unfamiliar audience with a different culture and different needs.
The question is how far did Disney adapt its marketing mix for the overseas market?
2. Theoretical Background
The central role of marketing is value delivery and customer satisfaction. The marketing process, which is based on the overall objectives of the company, includes investigating market opportunities, selecting target markets, developing the marketing mix and managing the marketing achievement. Once the market has been divided into smaller segments and the most promising one is set as a target, the company can start planning the details of the marketing mix. (Kotler and Armstrong, 2001, #1).
The marketing mix is often referred to as the “four P’s”: product, price, promotion, and place. They are tools a company can use to provide its product or service with the optimal characteristics to cause high demand.
The following is an overview of the “four P’s” and the various tools for each.
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(Source: Kotler and Armstrong, 2001, page 67, #1)
On a global scale a few characteristics need to be added to the “four P’s” to develop an international marketing mix. First of all, deep research is necessary to understand the target market and its consumers. Differences in values, customs, languages and currencies need to be considered when companies expand their businesses to different regions of the world. (The Times 100, 2005, [Online], #19).
The central point of the marketing mix is the product. It includes features like size, shape, design, quality, brand name, packaging and service. A fundamental issue in international marketing concerns the degree to which the product should be adapted across national boundaries. One way is providing a standardized product to all markets. The advantage of this approach is a reduction in cost of production or promotion, for example.
However, there are also disadvantages. People in different regions have different tastes and buying habits. The product might not appeal to the audience and therefore, should be differentiated. Companies whose products carry a strong and widely known brand name will usually try to use standardization, but will make some variations to address different needs. Coca-Cola, for instance, is a world wide recognized brand. The company uses the brand name globally and offers variants like Cherry Coke or Diet Coke in some, but not all countries. (Douglas, S., P., 1999, [Online], #5). Product types that are often marketed with the motto: “Think global, and act local” are toys, computer games, sporting goods or soft drinks. Whereas, food or clothing products are often differentiated by global companies. The demand for these products is closely related to income, which varies widely among countries. (Wall and Rees, 2004, #3).
The decision on which price is appropriate for the product is influenced by factors like the competitor’s prices, cost of production and the company’s objectives. Again, market research is very important: How much are consumers willing to pay and able to pay? (The Times 100, 2005, [Online], #19). Further questions arise when selling products internationally. The company might have to adjust prices to assure profitability, in case the exchange rate or government regulations on tariffs, taxes or price setting change. (Wall and Rees, 2004, #3).
Via promotion the company communicates with the customer. It means providing information about the product and its qualities, with the aim to persuade the consumers to buy it. Companies can use advertising campaigns, direct selling or public relations.
However, sometimes it is difficult to apply a tool, due to barriers in the market. There may be restrictions about the content of the advertisement, the technological infrastructure could be limited or some kind of advertisement might just not appeal to the audience.
Getting the right product to the right place at the right time is a major challenge. A successful distribution is closely connected to using the right channel. Companies could work with local suppliers to whom they built a good relationship over past years or suppliers can be chosen who are close to the consumers and therefore, know the target market better. If a service is offered a third party could be included, e.g. a local agent, who is employed to sell the product. (Wall and Rees, 2004, #3).