Can it’s ‘MAGIC’ still work?

DISNEY CONSUMER PRODUCTS

A BRIEF HISTORY

Walter Elias Disney and his brother, Roy, founded Disney Brothers Cartoon Studio

In 1923 the debut of Mickey Mouse in Steamboat Willie, the first cartoon with synchronized sound.

Later came • Snow White• Pinocchio• Fantasia• Bambi

In 1954, Disney debuted in its first television program, continued making hit shows like The Mickey Mouse Club.

In 1955, Disneyland, an amusement park featuring characters from Disney’s films and television shows, opened in California. More amusement parks eventually came up

By 2006, Walt Disney Company was comprised of four major business segments: Media Networks, Parks and Resorts, Studio Entertainment and DCP

DCP was a global product organization comprised of six lines of business: • softlines (apparel, footwear and

accessories)• Buena Vista Games• home & infant• hardlines (food, health & beauty, electronics, and stationery)• publishing • toys

SHIFTING THE FOCUS TO DCP…

Disney hired Andy Mooney, as DCP president. Three ways of licensing followed:1.Traditional licensing model 2.Sourcing model 3.Direct-to-retail (DTR)

Seizing of the opportunity DCP estimated that its branded food products accounted for less than 1% of the children’s food market. Using focus groups, group sessions and shopping trips with mothers of children ages 2 to 13 years old, DCP set out to learn which product categories the market would support.

Findings1. Mothers perceived Disney products with high

quality, trustworthy and familiar to line of food and beverages.

2. They associated Disney with “Magic”

3. Peer pressure and advertisement influences children’s preferences.

4. Children influence purchase decisions

The Blame Game! Experts were noting alarming trends in childhood obesity. From 1975 to 2005, the rates of overweight and obesity in children had skyrocketed: from 5% to 14% among 2-5 year olds, from 4%-19% for 6-11 year olds and from 5%-17% for 12-19 year olds.

Some industry experts pointed to progressive increases in portion sizes as a reason, others decried television advertising as a primary factor.

How is Dcp affected?DCP had been a long-time licensor of packaged foods, though the portfolio had consisted largely of candy and ice cream.

• Disney is being held responsible for rising obesity epidemic!

• It is facing pressure from activists, parents , government to check their offerings and advertisement activities.

The problem definitionCan Disney’s ‘magic’ work and promote a healthier diet among the children?

Rules it needs to comply to• Creating foods that met

tough USDA nutritional guidelines was only half the battle!

• The foods had to appeal to children and deliver on the brand’s promise of Disney magic.

Shaping of new strategy With changing licensing models, retail industry consolidation and the obesity epidemic, DCP sees this as an opportunity to broaden and rationalize its product offerings.

• Control levels of added sugar • Contain no trans or hydrogenated fats • Promote fibre and calcium • Minimize the use of additive• Prefer to use whole foods that are intrinsically

dense in nutrients

BETTER FOR YOU GUIDELINES

Disney’s goal was to balance its portfolio so that 85% of its products could be classified as main meal, side dish, snack or beverage and only 15% could be categorized as treats. Before officially implementing its nutrition guidelines, DCP audited 2,100 of its food products , and the results are as follows:

Improving the product line…• Offer products that already had

broad appeal such as milk or peanut butter. “The challenge is how do you make the products they already love healthier?”

• Take products that were already healthy and make them more “fun.” Eg: whole wheat pasta and different shapes.

• Use packaging to inspire product sampling, such as making water bottles in the shape of characters.

Successful licensing In pursuit of increasing it’s market share and better produce, it’s major alignments with 1. Imagination Farms2. Kroger SupermarketsWere a huge success

Imagination FarmsThree-pronged product development strategy:• differentiate commodity produce

through promotion• create value-added products through

product preparation or packaging• develop exclusive produce varieties

that would yield more child-friendly foods.

• By June 2006, Imagination Farms was distributing peaches with Daisy Duck and Goofy stickers and table grapes displayed in Mickey and Minnie Mouse grower’s boxes; Disney apples and citrus were in stores five months later.

Kroger supermarkets• The companies were committed to

ensuring that the Disney-branded products would fit Disney’s emerging “good for you” nutrition guidelines.

• The Disney Magic Selections line was created.

• Kroger had a 12% share of the U.S. grocery market, which fit with global food distribution strategy

Swot analysis• Brand recognition • Creative process• Strong diversification• Cooperate with big retailers like Kroger • Responsiveness to market

• Large R&D costs • High risk factor • Does not have own

manufacturing for • DCP

•  Mother’s positive perception of the Disney brand • Disney character’s popularity 

• Competitors • Differentiation form natural produce products • Pricing competition

strengths• Brand recognition

• Cooperate with big retailers :

opportunities• Disney character popularity:

threats• Competition

Challenges faced• Pricing & Value : conditioned the

market to expect premium pricing from Disney and a marketing challenge , to go out with lower pricing

• Legacy: Though they were confident that the products would be healthful, child-friendly and fun, they had been subject to vocal criticism in the past and expected to encounter some skepticism as a result.

• Differentiation & Competition:

Nickelodeon packaged products had been on the shelves since the mid-1990s .Expected broad product line, wide distribution and the Disney brand would win over Moms

• Growth and distribution : Disney wanted to license or develop additional lines. DCP managers believed that the company could differentiate additional lines using characters, brand and price.

recommendations• Create new Disney Characters.• Improve the reach by targeting at the

micro level like schools and malls where there are a lot of children and parents

• Maintain the quality and standards by choosing trustworthy franchises and keeping a check on the products being sold.

• Propagate Corporate social responsibility to maintain and develop the brand image.

"These slides were created by T.Amulya Shruthi as part of an internship done under the guidance of Prof. Sameer Mathur, IIM Lucknow”