Disney Pixar Marketing Strategy
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TABLE OF CONTENTS
EXEECUTIVE SUMMARY .............................................................................................PG #3
FINANCIAL OVERVIEW ...............................................................................................PG #3
CURRENT MARKETING SITUATION .............................................................................PG #6
SWOT ANAYLSIS .........................................................................................................PG #9
OBJECTIVES & ISSUES ..............................................................................................PG #13
MARKETING STRATEGY ............................................................................................PG #14
ACTION PROGRAMS ..................................................................................................PG #16
BUDGETS ..................................................................................................................PG #16
CONTROLS ................................................................................................................PG #17
REFERENCES .............................................................................................................PG #18
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Executive Summary
Founded in 1923, with headquarters in Burbank, CA, The Walt Disney Company, or as it is
more famously known Disney, is the world’s largest and most influential media
conglomerate. Ranked 66th on the Fortune 500 list and first in its industry, Disney is a
power house in the market.(Fortune 500, CNN) It is comprised of four segments that have
combined earnings of $41B and net income of $4B in the 2011 fiscal year.(Hoovers) Disney
has been in the market for more than 50 years and has been growing since its inception. In
the past few decades, Disney has done a wonderful job of creating animated films with
messages that resonate in the hearts and minds of their entire customer based. In the mid-
1990’s, Disney paired up with Pixar to create even better animated films that have grossed
huge revenues for both companies. In 2006, in a strategic move, Disney and Pixar merged.
Pixar uses new age technology and animation to create reality in fantasy, so to produce an
experience within the viewer’s heart and mind.
This marketing plan is an all-inclusive collection of the current position that Disney-Pixar
have in the market of animated films; a SWOT analysis; Market Strategy, Action Programs;
Budgets; and Controls, that all lead to a better understanding of what Disney-Pixar want to
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achieve and also how to ensure that they stay on top of a competitive market in which with
one failed project it can create massive losses for a company.
Financial Overview
Year Revenue Net Income Net Profit Margin
Sep 2011 $40,893.00M $4,807.00M 11.76%
Sep 2010 $38,063.00M $3,963.00M 10.41%
Sep 2009 $36,149.00M $3,307.00M 9.15%
Sep 2008 $37,843.00M $4,427.00M 11.70%
Sep 2007 $35,510.00M $4,687.00M 13.20%
Current Marketing Situation
Walt Disney Company’s current marketing situation takes numerous amounts of
characteristics into account: selling to existing customers, expanding their place in the
market, tracking business processes, continuous promotion of Disney and its subsidiaries,
and always finding ways to improve and/or add to existing products. Disney understands
that by continuously offering goods and services to its customers via all of its different
channels (website, parks, cruises, and visual entertainment), they can capture a better
portion of the ever expanding entertainment industry. By expanding strategically into
different parts of the world, by developing different entertainment opportunities that cater
to the different cultures and customs, they ensure that their customers in those areas are
comfortable with their products and more likely to invest in them. Disney also has another
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marketing strategy: continuous advertising. Disney never stops advertising. They know
that it is crucial to keep the company the customers mind, even if it is in the back of their
heads. Disney has enhanced this marketing technique by understanding its seasons and
adapting their marketing to it. In downtimes, they know that they must heavily invest in
advertising and marketing, knowing that at the year’s end, it will be made up. Additionally,
Disney never stops. They embrace change. Constantly working to modify, create and
expand the way that they can bring “magic” to its existing customers and potential
customers.
The entertainment industry is one of the most competitive industries that exist today. The
movie industry is the number one segment of the entertainment industry with the most
competition. People have always been attracted to movies. In 2011 alone there were 610
movies released, $10.2 billion dollars in domestic box-office sales and 1.28 billion tickets
sold. (Hoovers) Total movie production costs seem to be climbing fast, currently it is higher
than the $200,000 mark, and that does not include marketing cost which are also still on
the rise. Given the number of movies each studio produces every year, it creates an
extremely competitive market, in which a company must have the best movie of the lot if
they wish to recoup the losses and gain revenue.( Ainslie, 2005) One small mistake or “dud”
movie, and the company could face huge losses.
Market Description
Disney-Pixar is in the animated film segmentation of the entertainment industry and has
about three different target markets. Disney uses geographic, demographic and
psychographic segmentation. In other words, it uses multi-segment/differentiated
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targeting. (Armstrong, 2011) Although it may seem like Disney targets only kids, Disney’s
target market is the whole family. Walt Disney had once said, “You’re dead if you aim only
for kids. Adults are only kids grown up, anyway.”(Company Overview, 2012) Their primary
market is children because they drive the animated film market. Children are the ones that
grow up watching these movies, collecting memorabilia and being whole-heartedly
invested in the characters. Once they grow up, they will have jobs and families and want
their children to experience the same love for Disney as they did and will bring their
families to the movies and buy into the memorabilia again. This leads into their secondary
market which is Parents. They are sub divided into two groups: parents that grew up on
Disney and parents that did not. The parents that grew up on Disney know that wonderful
ways of the Disney Corporation and all the wonderful memories, experiences and lessons
that Disney has to offer their children via animated movies. The parents who did not grow
up with Disney, which is a small population of Disney’s target market, are the ones to which
Disney has the most to say. All parents want their children to be exposed to educational
information as well as entertaining. Disney has capitalized on this. Disney has found a way
through animated shorts and films to create stories that are entertaining to the children so
that their attention is held and educational so that their parents are happy. Disney has
found a way to subtly sneak in educational information into their films that makes their
films even more powerful. Disney’s final target market is everyone else. Disney’s core
constituency is the urban, median-income family who wants to have fun but it goes beyond
race, ethnicity and social status. Disney believes that everyone should feel the experiences
of their movies. Disney creates movies that are enjoyable for all ages and all races.(Walt
Disney, 2008)
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Product Review
Disney Pixar offers exquisite animated movies, that not only keep the attention of children
and adults alike, but they create masterpieces that even though are animated seem to come
alive. They do this with their use of proprietary technology and creativity.
3-D computer animation--a rudimentary rendering of his left hand that could be
rotated and viewed from all angles. It allows for you to see a person with more
depth (Schlender, 2004)
Render-Man Pro: creates more life-like 3-D images. “It includes rendering mode
feature that boots throughput but automatically harnessing multi-processor
systems that lay idle. It also includes Irma, shading and lighting development re-
rendering tool and AlfServer, which enables distributing parallel rendering.”
(Ochiva, 2003)
Developed new methods for animating multiple humans so that every character’s
hair, clothes, and muscles moved in a unique way. The company also applied
techniques used in live-action films, recording real shadows and blending them with
computer graphics (Palmquist, 2005).
Competitive Review
Disney has been creating animated shorts and movies since its inception. Before its
strategic partnership with Pixar, it was one of its top competitors. Today, Disney’s
competitors are News Corporation, Viacom, NBC Universal and Times Warner. They
compete with Disney in all the divisions of its company.(Morningstar, 2010) However,
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because Disney uses a marketing approach that is more focused on family, it calls for the
children and the parents to have purchasing power instead of looking at the customers
individually like other companies. Therefore, Disney has a marketing advantage while
appealing to not only children but also for the parents. The leading competitors against
Disney in terms of Pixar with animated movies, is Warner Brothers and Fox.
Warner Brothers has their long standing animated television and movie characters that
also hold strong places in the minds of consumer. Looney Tunes, Scooby-Doo and Tom and
Jerry are just a few of the characters that have strong positions in the mind of Disney’s
audiences. Fox also has long standing characters that compete for a place in consumer
minds, such as The Simpsons, The Flintstones and even Batman. While Warner Bros. in
response to Disney’s lead started to come out with movies and characters that are similar
to that of Disney with such movies as Yogi Bear and Happy Feet, Fox took a completely
different route and decided not to compete with Disney animation, but rather focus on
television programming. They were successful for a couple of years, but where ultimately
purchased by Disney and eventually sold the four hours of Saturday morning time.
Despite this competition, Disney has made it a point to stay one step ahead of its
competitors. It has carved out a place in the minds of its target consumers and has a
competitive advantage because of this.
Channels and Logistics Review
Disney is not simply a studio, it is a combination of entertainment media that well
surpasses any other media company. Disney has its feet in all forms of media. Disney uses
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this to distribute its products to its consumers. It uses a variety of channels. It implements
its ideas via radio, television, products and countless other medium. However, in this new
age where everything is digital, Disney has begun to heavily use the internet. Disney is
digitalizing their content and offering more online interactions to develop customer loyalty,
mainly due to the fact that more and more people are using technology. They are heavily
investing in social media and technology, understanding that it has a higher percentage of
reaching more people. Their website allows for more interaction, by allowing people to buy
products, book visits, watch television and get sneak peeks of new movies. (Hoovers)
SWOT Analysis
Strengths Weaknesses
Recognition
Diverse Portfolio
Diversification
Financial Security
Pixar
Creativity
High Costs
Opportunities Threats
Expansion
Merchandise
Recycling
Global Economy
Changing Technology
Piracy
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Strengths: Every company has certain internal capabilities that outshine other companies,
or strategic moves that put them ahead of their competitors. For Disney, they include a vast
number of capabilities.
Brand Name Recognition and Reputation: Disney has the advantage over other industry
players because of its well established reputation and brand name. It is the producer and
distributor of numerous animated full-length features, with collaborations with such
companies as Pixar to bring about the 1995 hit Toy Story (the first fully computer animated
feature film), its sequel Toy Story 2 (1999), A Bug’s Life (1998), 2001’s Monsters, Inc., and
Finding Nemo (2003).(Company Overview, 2012)
A Vast and Diverse Portfolio: Since the inception of Disney, the Disney brothers made it a
major role to create imaginative characters that would create special bonds with all those
that would experience them. They wanted to make characters that the world would fall in
love with. With their creative and impressive collection of old classics such as Alice in
Wonderland, Sleeping Beauty, Robin Hood, and many others, Disney has created movies
that star not only in the movies but also in our hearts. We also cannot forget the true
Disney originals that will forever stay in our hearts such as Mickey Mouse, Minnie Mouse,
Donald Duck, Pluto, Woody, Buzz, Jasmine and Aladdin. The Walt Disney Company’s huge
portfolio is the single best strength of the entire organization(Company Overview, 2012)
Diversification: Disney has done a wonderful job of being diverse. They have evolved well
beyond the early animated Mickey Mouse cartoons. While the company is still heavily
invested in production and distribution of animated films, and other related media, it is no
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longer only known for being an “animation” or “production” company. They know own
Theme Parks and Resorts, Cruise Lines, Television Broadcasts and even Radio. However,
their leading revenue generator is still the media division.
Acquisition of Pixar Animation Studios: In 2006, The Walt Disney Company made a
strategic move by acquiring Pixar Animation Studios. In the early 1990’s they had
collaborated with Pixar to create box office and DVD hits such as Toy Story, Finding Nemo,
and Monsters Inc. to name a few. With the addition of Pixar, they will create a new
generation of animated films and will create huge revenues and for years to come be one of
the best moves Disney has made. Pixar is instrumental to its animated movie success.
Instead of being a competitor, it is an asset.
Strong Financial Security: The Walt Disney Company also began launching and purchasing
media outlets for which their productions and promotions to air. Disney owns now several
media broadcasting networks television as well as several radio stations. This is all possible
because of the immense financial stability that Disney has. Had it not been so successful in
the past, it would never have been able to acquire and merge with so many different
industry segments, and ultimately would not been the powerhouse industry leader that it is
today.
Weakness: Companies also have some internal capabilities that are harmful to its success.
The Constant Need of Successful Creative Material: Disney is extremely apt at creating
successful creative material—only they are in constant need of creative material. The
weakness here is being the “constant need.” Disney is one of the greatest generators of
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creative material that is enjoyed by all, but the constant need to create successful film after
film is a daunting task. At any point, there could be a box office flop or a negatively
reviewed attraction and the company that prides itself of perfection is ruined.
High (and Increasing) Cost of Operation: Unfortunately for the Disney Company, their
industry is one with extremely high costs and expenses. To create successful films and
build enormous theme parks is highly expensive. With the recent economic downfall and
diminishing profits, Disney now has to come to realization that increasing costs are only
the beginning of continuing to do business.
Opportunities: While internal factors dictate how a company is going to function, external
factors have just as much weight on the workings of a company as well.
Expansion into Untapped Geographical Areas: A wonderful opportunity for Disney, is the
idea of expanding into previous unused geographical areas.
Merchandise (Character Reputation): The fact that Disney has so many different characters
and they are all well known, makes their merchandise an opportunity for them to create
more revenues. Once a new character is brought out or an old character is “re-vamped”
Disney can use the love for this character and create a new yearning for the new
merchandise.
Reuse of Past Portfolio: Disney can use the fact that they have a vast and diverse portfolio
to create more revenues. Disney has already used this idea with Mickey Mouse. It is the
oldest and most well known character they have and they still to this day use it as a “cash
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cow.” Disney can use this idea with other of its well known characters to create a cash
inflow to help revenues.
Threats: With strengths there are weaknesses, so with opportunities there are threats.
Struggling Global Economy: There is no need to list the enormous list of major threats to
the world economy, but with the slow recovery of the economy, it seems as though it will
be a part of our business processes for years to come. It is the largest factor in the threats
to a company, Disney being no exception. Disney must also take into account the fact they
are an entertainment, leisure driven company that produces nonessential products.
Rapid Pace of Changing Media and Technology: The rate at which media and technology
has changed in the last in the last 15 years is unprecedented. Due to the widespread use of
the internet in the late 1990s, media and technological advances have created more and
more media and technological advances. It is wonderful for consumers, but it leaves
companies like Disney that rely on having exclusive technology and right to use it, in a
place where their technological departments must try stay one step ahead or at least up to
date with the constant changes occurring daily.
Piracy: The creation of unauthorized copies and piracy of these products has an adverse
effect on the company’s businesses and profitability as these products reduce the revenue
that the company could potentially receive from legitimate sale and distribution of its
products and services. Increasing piracy would have an adverse effect on the company’s
businesses and profitability.
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Objectives and Issues
Objectives: “Walt Disney’s objective is to be the world’s leading producers and providers of
entertainment and information, using its portfolio of brands to differentiate its content,
services and consumer products. The company’s primary financial goals are to maximize
earning and cash flow and to allocate capital growth initiatives that will drive long-term
shareholder value.” (Investor Relations, 2012)
Short Term Objectives: Objective through 2012 is to increase net income from FY 2011 of
$4.8 billion by more than 21% and revenue of $40.9 billion by more 7%. Also to increase
earnings per share, which this FY was a record $2.52. (Investor Relations, 2012)
Long Term Objectives: Disney wants to increase its market shares outside of North America.
They want to ensure that the movies they produce are welcomed with high sales in other
countries. They want sales to increase from 45% to 65% in global areas by 2015.
Issues: The economy is still on its way to recovery and because of the EU problems,
spending in global countries has decreased. Also, some countries believe that movies about
their countries or set in their countries is a way of exploiting them, therefore when those
movies are out in the respected countries, they are less likely to go see them, thus creating
a stand still on Disney’s long term objective.
Marketing Strategy
Positioning: Disney has positioned itself as “a magical world where dreams come true.” It
has therefore positioned itself on the basis of the targeted customers' demands. For all the
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movies that it creates, Disney positions itself in the mind of each and every viewer. They
create an emotional experience for each customer.
Product Strategy: Disney products are more than simply tangible goods or services. They
offer well known high quality and worldwide brand recognition. Disney customizes all its
products with specific characteristics of its company which help define and differentiate
their products from others.
Pricing Strategy: Disney prices of its products are directly proportional to its hype. The
more demand for a certain product the higher the price. They use the law of demand and
supply extremely well. They use a type of price skimming, where their products start out
high and then decline as demand for them decreases. (Armstrong, 2011)
Distribution Strategy: Disney distributes its products all over the world. They have found
that by positioning themselves in areas that have high flux of people, they are more likely to
have get their brand out there and have even more recognition than they already have.
Marketing Communication Strategy: Disney succeeds in this area extremely well, especially
in low peaks of the year. With entertainment, especially movies, Disney has used line
extension to create different stories for well known main characters so that it can defend
itself against the low peaks of the year.
Market Research: With each movie, character, park/resort, and toy that Disney decides to
take on, the do research. Their research identifies what the consumers are looking for and
how to go about creating that product for them. Disney’s number one goal is total customer
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satisfaction; therefore, before they bring any new product onto the market, they first
ensure that it will satisfy their customer. They do this through primary and secondary
research.
Market Organization:
Ricky Strauss is the Marketing President, and oversees the Studios' global marketing
strategy encompassing creative, media, digital, promotions, publicity, research and synergy
across all distribution channels for motion pictures released under the Walt Disney
Pictures.”(Studio Executive, 2012). Each segment of Disney has their own VP, but they all
report to Mr. Strauss when it comes to marketing.
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Action Programs
Present – end of 2012: Disney will keep creating new movies that draw their target
consumers to buy and go see their movies. They will also create derivates that a line
with their movies in order to create more revenue
2013-2015: Disney will create movies that speak to global countries to allow for
more revenues outside of North America. They have already created “Brave” a
movie based in Scotland that they believe will attract more global recognition.
Budgets
With Disney being a conglomerate of many different companies and industries, it is hard to
pin point an exact budget for the Studios. However, they do have fixed costs of $33,112,000
and revenues of $40,898,000. We know that they must maintain these levels if they are to
stay afloat. (Annual Reports, 2012)
Controls
Disney will continuously test and check indicators of success like brand awareness, churn
rate, viewing rates, and theater traffic. We will run analyses on projected effects of our
marketing strategies and compare to the state of actual market conditions.
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References
Ainslie, A., X. Dreze & F. Zufruyden. (2005). Competition in the Movie Industry. Marketing
Science, 24 (3), 508-17 Retrieved from
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Annual Reports | The Walt Disney Company. (n.d.). Home | The Walt Disney Company.
Retrieved June 14, 2012, from
http://thewaltdisneycompany.com/investors/financial-information/annual-report
Armstrong, G. M., & Kotler, P. (2011). Marketing: an introduction (10th ed., global ed.).
Boston
Company Overview | The Walt Disney Company. (n.d.). Home | The Walt Disney Company.
Retrieved June 14, 2012, from http://thewaltdisneycompany.com/about-
disney/company-overview
Investor Relations | The Walt Disney Company. (n.d.). Home | The Walt Disney Company.
Retrieved June 14, 2012, from http://thewaltdisneycompany.com/investors
Morningstar. (2010). Walt Disney World/Viacom/Time Warner/. Retrieved from
http://library.morningstar.com/
Ochiva, D. (2003). A REVIEW OF NEW PRODUCTS. Millimeter, 31(8), 48.
Palmquist, M. (2005). Pixar’s The Incredibles. Business 2.0, 6(3), 95.
Schlender, B. (2004). THE MAN WHO BUILT PIXAR'S INCREDIBLE INNOVATION MACHINE.
Fortune, 150(10), 206-212.
The Walt Disney Company | Company profile from Hoover's | 818-560-1000. Hoovers |
Business solutions from Hoovers. Retrieved June 14, 2012, from
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The Walt Disney Studios Executive Team. (n.d.). The Walt Disney Studios » Walt Disney
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Studios Home. Retrieved June 14, 2012, from
http://www.waltdisneystudios.com/corp/management
The Walt Disney Company - 2008 Corporate Responsibility Report - Children and Family -
Partnering With Parents - Marketing Practices. Disney | Official Home Page for All Things
Disney. Retrieved April 18, 2012, from
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ctices.html>
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