Mba Euro Disney

Case summary

Disney Paris

• April 1992, EuroDisney SCA opening. Located by 20 miles east of Paris, it was the biggest and most lavish theme park that Walt Disney Company had built to date.

• Much to Disney management’s surprise, Europeans failed to “go goofy” over Mickey (lack of study the European culture).

• EuroDisney, families were reluctant to spend the $280 a day needed to enjoy the attractions of the park. Staying overnight was out of the question for many because hotel rooms were so high priced.

• The Disney hotel price is as expensive as the top hotel in Paris. (it didn't motivate the visitors to stay on)

• Financial losses became so massive at EuroDisney that the president had to structure a rescue package to put EuroDisney back on firm financial ground.

• Disney response to French bankers was that their views reflected the cautious, Old World thinking of Europeans who did not understand U.S.-style free market financing. (US economic style Vs. European economic style & high risk taking by US investors and very low risk taking by French) (SRC & Ethnocentrism of Disney management).

• Disney management rapidly revised its marketing plan and introduced strategic and tactical changes in the hope of “doing it right” this time.

• The Spain location was to be very successful than Paris as Disney can take any available places between Barcelona and Valencia because the Spain good location with sunny Mediterranean climate. Unlike with the dismal winter weather of northern France.

• The claim of selection of Paris was countered with references to the success of Tokyo Disneyland, where resolute visitors brave cold winds and snow to enjoy their piece of Americana. (which is not a need for European people that need to see sun and warm temperature)  (unlike the American decision making approach based on rational and informational approach, this decision was quite emotional and lack of analysis)

• Wrong planning, by summer 1994, EuroDisney had lost more than $900 million since opening. Attendance reached only 9.2 million in 1992, and visitors spent 12 percent less on purchases than the estimated $33 per head. (not SMART objectives)

• An unforeseen combination of transatlantic airfare wars and currency movements resulted in a trip to Disneyworld in Orlando being cheaper than a trip to Paris. (Lack of studying the macro-Economic factors before select Paris).

• EuroDisney management took steps to rectify immediate problems in 1992 by cutting rates at two hotels up to 25 percent, introducing some cheaper meals at restaurants(overcome the first wrong pricing for rooms to motivates Europeans to come and stay for longer time)

• “The French see EuroDisney as American imperialism— plastics at its worst.”  (un-controllable US foreign policy & French perception un-controllable culture factor)

• The well-known, sentimental Japanese attachment to Disney characters contrasted starkly with the unexpected and widespread French scorn for American fairy-tale characters. French culture has its own lovable cartoon characters such as Astérix, the helmeted, pint-sized Gallic warrior, who has a theme park located near EuroDisney (SRC of Disney management as French has their own lovable cartoon characters. & Lack of analyzing competitors)

• Hostility among the French people to the whole “Disney idea” had surfaced early in the planning of the new project (EuroDisney as “a cultural Chernobyl.”) &in fall 1989, during a visit to Paris, French Communists pelted Michael Eisner (Disney CEO) with eggs. (US Capitalism Vs. France Communism) (culture conflicts)

• EuroDisney ads focus on American icon which seemed to aggravate local French sentiment rather than the variety of rides and attractions (SRC & lack of Developing a Global Awareness  two points (1) tolerance of cultural differences and (2) knowledge of cultures, history, world market potential, and global economic, social, and political trends.)

• Expensive trams were built along a lake to take guests from the hotels to the park, but visitors preferred walking

• Total park construction costs were estimated at FFr 16 billion in 1989 but rose by $340 million as a result of all these add-ons. Hotel construction costs FFr 5.7 billion.

• EuroDisney and Disney managers unhappily succeeded in alienating many of their counterparts in the government, the banks, the ad agencies, and other concerned organizations.kick-the-door-down attitude seemed to reign among the U.S. decision makers (Global awareness conflict)

• “They had a formidable image and convinced everyone that if we let them do it their way, we would all have a marvelous adventure.” “We were arrogant—it was like ‘We’re building the TajMahal and people will come—on our terms.’ ” (Disney start to isolate American SRC & Ethnocentrism from EuroDisney problems to be able to adapt)

• Disney and its advisors failed to see signs at the end of the 1980s of the approaching European recession, dramatic events included the Gulf War in 1991, which put a heavy brake on vacation travel for the rest of that year, high interest rates and the devaluation of several currencies against the franc. (failed to analyze the global Political & Economic events that affected their business)

• EuroDisney also encountered difficulties with regard to competition—the World’s Fair in Seville and the 1992 Olympics in Barcelona were huge attractions for European tourists. (failed to analyze the external environment& wrong selection for the opening date)

• Disney management’s conviction that it knew best was demonstrated by its much-trumpeted ban on alcohol in the park. (Insensitive to the local culture, because the French are the world’s biggest consumers of wine.)

• It also had to relax its rules on personal grooming of the projected 12,000 cast members, the park employees. Women were allowed to wear redder nail polish than in the United States, but the taboo on men’s facial hair was maintained. ( Step to good adaptation)

• The thought of leaving a pet at home during vacation is considered irrational by many French people. (Missed point through initial const4uction by EuroDisney management Special kennels were built to house visitors’ animals.)

• Plans for further development of EuroDisney after 1992 were ambitious. The initial number of hotel rooms was planned to be 5,200, more than in the entire city of Cannes on the Côte d’Azur. Also planned were shopping malls, apartments, golf courses, and vacation homes. (Expansion decision isn't justified by the real situation. They must find the best adaption promotion mix for the available park and then start to think for expansion) (product, price, promotion and adaptation problems).

• EuroDisney would design and build everything itself. (Lack of the integration between all parts in the park to contribute in the enforcement of the brand image & equity).

• Said a former Disney executive “Disney management was a tendency to believe that everything they touched would be perfect because booming in revenues to $8.5 billion, mainly through internal growth. (lack of the management's international orientation and it has to adopt one of the three approaches to be Global awareness management)

• Mistaken assumptions by the Disney management team affected construction design, marketing and pricing policies, and park management, as well as initial financing.

• Disney executives had been erroneously informed that Europeans don’t eat breakfast. Restaurant breakfast service was downsized accordingly. (customs and culture conflicts)

• In contrast to Disney’s American parks, where visitors typically stay at least three days, EuroDisney is at most a two-day visit or less and stay only one night in the hotel.

• Vacation customs of Europeans were not taken into consideration. Disney executives had optimistically expected that the arrival of their new theme park would cause French parents to take their children out of school in mid-session for a short break.

• Disney expected that the American-style short but more frequent family trips would displace the European tradition of a one-month family vacation, usually taken in August. (SRC & Ethnocentrism)

• In promoting the new park to visitors, Disney did not stress the entertainment value of a visit to the new theme park; the emphasis was on the size of the park, which “ruined the magic.” ( bad ads as they didn't analyze the customer perception and behavior)

• To counter this, ads were changed to feature Zorro, a French favorite, Mary Poppins, and Aladdin. A print ad campaign at that time featured Aladdin, Cinderella’s castle, and a little girl being invited to enjoy a “magic vacation” at the kingdom where “all dreams come true. (good step in adaptation)

• Six new attractions were added in 1994, including the Temple of Peril, Story book Land, and the Nautilus attraction. (Good steps to adaptation)

• Frenchman Philippe Bourguignon took over at EuroDisney as CEO in 1993 and was able to navigate the theme park back to profitability. (excellent as golcal system)

• Perhaps more important to the long-run success of the venture were his changes in marketing. The pan-European approach to marketing was dumped, and national markets were targeted separately. This new localization took into account the differing tourists’ habits around the continent. Separate marketing offices were opened in London, Frankfurt, Milan, Brussels, Amsterdam, and Madrid, and each was charged with tailoring advertising and packages to its own market. Prices were cut by 20 percent for park admission and 30 percent for some hotel room rates. Special promotions were also run for the winter months. (Customize offers to response positively to customers' needs)

• He changed the name to Disneyland Resort Paris (good adaptation)

• In 2001 Walt Disney Studios Theme Park was added to Disneyland Paris.

• Small details reflect the cultural lessons learned. “We made sure that all our food venues have covered seating,” recalling that, when EuroDisney first opened, the open-air restaurants offered no protection from the rainy weather that assails the park for long stretches of the year. (strong adaptation)

• On the food front, EuroDisney offered only a French sausage, drawing complaints from the English, Germans, Italians, and everyone else about why their local sausages weren’t available. This time around, the park caters to the multiple indigenous cultures throughout Europe—which includes a wider selection of sausages. (strong adaptation)

• Unlike Disney’s attitude with their first park in France, “Now we realize that our guests need to be welcomed on the basis of their own culture and travel habits,” says Disneyland Paris Chief Executive. (strong adaptation)

• The root of Disney’s problems in EuroDisney may be found in the tremendous success of Japan’s Disneyland and Disney took the entire U.S. theme park and transplanted it in Japan. (Disney management has a product myopia)

• “Armageddon—Special Effects” guests said it lacked attractions to justify the entrance price, and others complained it focused too much on American, rather than European, filmmaking.Disney blames other factors: the post-9/11 tourism slump, strikes in France, and a summer heat wave in 2003. (SRC & Ethnocentrism)

• The French government came to the aid of Disneyland Paris with a state-owned bank contribution of around $500 million to save the company from bankruptcy.

• To make Disneyland Paris a cheaper vacation destination (new positioing), the new CEO lobbied the government to open up Charles de Gaulle airport to more low-cost airlines. (good competitive advantage)

• Disneyland Paris created its first original character tailored for a European audience: the Halloween-themed “L’HommeCitrouille,” or “Pumpkin Man.”  (strong adaptation)

• He has also introduced a one-day pass giving visitors access to both parks in place of two separate tickets. (strong adaptation)

Hong Kong Disneyland

• Disney took special steps to make Hong Kong Disneyland culturally acceptable. “Disney has learned that they can’t impose the American will—or Disney’s version of it—on another continent.” (good learning & make ethnocentrism is out)

• “They’ve bent over backward to make Hong Kong Disneyland blend in with the surroundings.” “We’ve come at it with an American sensibility, but we still appeal to local tastes,” says one of Hong Kong Disneyland’s landscape architects. ( good SRC & No American ethnocentrism)

• Desiring to bring Disneyland Hong Kong into harmony with local customs from the beginning, it was decided to observe fengshui in planning and construction(strong culture adaptation)

• He even chose the park’s “auspicious” opening date. New construction was often begun with a traditional good-luck ceremony featuring a carved suckling pig.(strong culture adaptation)

• Other feng shui influences include the park’s orientation to face water with mountains behind.(strong culture adaptation)

• Along with following feng shui principles, the park’s hotels have no floors that are designated as fourth floors, because 4 is considered an unlucky number in Chinese culture.(strong culture adaptation)
• The opening date was set for September 12, 2006, because it was listed as an auspicious date for opening a business in the Chinese almanac.(strong culture adaptation)
• The park received more than 5 million visitors in its first year but short of its targeted 5.6 million, and the second year was equally disappointing with attendance dropping nearly 30 percent below forecasts.
• Many of those who came complained that it was too small and had little to excite those unfamiliar with Disney’s cast of characters.
• The engineer brought his family to Disney’s new theme park in Hong Kong from the southern Chinese city of Guangzhou with high hopes, but by day’s end, he was less than spellbound. “I wanted to forget the world and feel like I was in a fairytale,” he says.

• Instead, he complains, “it’s just not big enough” and “not very different from the amusement parks we have” in China. (no differentiation and bad marketing strategy specially product performance)

• Only 16 attractions and only one a classic Disney thrill ride, Space Mountain, compared with 52 rides at Disneyland Paris.
• Guests’ lack of knowledge of Disney characters created a special hurdle in China. Until a few years ago, hardly anyone in mainland China knew Mickey Mouse and Donald Duck even existed.
• Disney characters were banned for nearly 40 years, so knowledge of Disney lore is limited.
• China was the first market where Disney opened a park in which there had been no long-term relationship with attendees.
• Chinese tourists unfamiliar with Disney’s traditional stories were sometimes left bewilderedby the Hong Kong Park’s attractions.
• To compensate for the lack of awareness of Disney characters and create the mystique of a Disney experience, Disney launched numerous marketing initiatives designed to familiarize guests with Disneyland. One of the first buildings upon entering the park exhibits artwork and film footage of Disney history, from the creation of Mickey Mouse through the construction of Hong Kong Disneyland. Tour groups are greeted by a Disney host who introduces them to Walt Disney, the park’s attractions, characters, and other background information.
• Even though there were complaints about the park size and the unfamiliarity of Disney characters, there were unique features built with the Asian guest in mind that have proved to be very popular. Fantasy Gardens, one of the park’s original features, was designed to appeal to guests from Hong Kong and mainland China who love to take pictures. At five gazebos, photo-happy tourists can always find Mickey, Minnie, and other popular characters that will sign autographs and pose for photos and videos. Mulan has her own pavilion in the garden, designed like a Chinese temple. Mickey even has a new red-and-gold Chinese suit to wear. Restaurants boast local fare, such as Indian curries, Japanese sushi, andChinese mango pudding, served in containers shaped like Mickey Mouse heads.

• Hong Kong Disney is Chinese throughout. It’s not so much an American theme park as Mickey Mouse coming to China. The atmosphere is uncomplicated and truly family oriented.

• Early advertising that featured the family missed its mark somewhat by featuring a family consisting of two kids and two parents, which did not have the impact it was supposed to have, because China’s government limits most couples to just one child. The error was quickly corrected in a new TV commercial, which the company says was designed to “forge a stronger emotional connection with Mickey.”

• Many other aspects of the park have been modified to better suit its Chinese visitors. The cast members are extremely diverse, understand various cultures, and, in many cases, speak three languages. Signs, audio-recorded messages, and attractions are also in several languages. For example, riders can choose from English, Mandarin, or Cantonese on the Jungle River Cruise.
• Disney runs promotions throughout the year. For example, the “Stay and Play for Two Days” promotion was created mainly to give mainland tourists a chance to experience the park for a longer period of time. Because many Chinese tourists cross into Hong Kong by bus, they arrive at Disneyland mid-day. With this promotion, if a guest stays at a Disneyland hotel and purchases a one-day ticket, the guest is given a second day at the park for free.

1. A- What factors contributed to EuroDisney’s poor performance during its first year of operation?

Theoretical Part

The uniqueness of foreign marketing comes from the range of unfamiliar problems and the variety of strategies necessary to cope with different levels of uncertainty encountered in foreign markets. Competition, legal restraints, government controls, weather, fickle consumers, and any number of other uncontrollable elements can, and frequently do, affect the profitable outcome of good, sound marketing plans.

Even though marketing principles and concepts are universally applicable, the environment within which the marketer must implement marketing plans can change dramatically from country to country or region to region. The difficulties created by different environments are the international marketer’s primary concern.