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Experiential Exercise 8ADeveloping a Product-Positioning Map for Walt Disney

Product Positioning

Product positioning is closely related to market segment focus. Product positioning involves creating a unique, consistent, and recognized customer perception about a firm'soffering and image. A product or service may be positioned on the basis of an attitude or benefit, use or application, user, class, price, or level of quality. It targets a product for specific market segments and product needs at specific prices. The same product can be positioned in many different ways.

The illustration below shows an example taken from Philip Kotler's book, Marketing Management published by Prentice Hall. This two-dimensional perception map shows how Kotler analyses the positioning of an instant breakfast drink relative to variables of the price of the product and speed of preparation.

Another common framework for product positioning is taken from a series of questions. You can position a product using a positioning statement that answers these important questions:

• For who is the product designed? • What kind of product is it? • What is the single most important benefit it offers? • What is its most important competitor? • How is your product different from that competitor? • What is the significant customer benefit of that difference?

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For example, the following are positioning statements used by Palo Alto Software to focus marketing for two new products introduced in late 1994:

• Business Plan ProFor the businessperson who is starting a new company, launching new products or seeking funding or partners, Business Plan Pro is software that produces professional business plans quickly and easily. Unlike (deleted), Business Plan Pro is a stand-alone product, and requires no other programs to buy or learn.

• Marketing Plan ProFor business owners and managers who oversee their company's marketing programs, Marketing Plan Pro is software that creates and helps manage professional marketing plans. Unlike our most aggressive competitor, Marketing Plan Pro provides a system for scheduling and tracking the entire marketing process from plan to action.

And the following steps are required in product positioning are:

1. Select key criteria that effectively differentiate products or services in the industry.2. Diagram a two-dimensional product-positioning map with specific criteria on each

axis.3. Plot major competitors’ products or services in the resultant four-quadrant matrix.4. Identify areas in the positioning map where the company product or services could be

most competitive in the given target market. Look for vacant areas (niches).5. Develop a marketing plan to position the company’s products or services

appropriately.

Some positioning strategies will work better than others. The best positioning plays to your company's strengths and the product's strengths, and away from weaknesses. Position your product to reach the buyers whose profiles most closely match needs you serve, in the channels you can reach, at the prices you set.

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For this exercise, we are developing a product-positioning map for 3 companies that are for Walt Disney, Time Warner, and News Corporation. We will built four map that is representative of 4 market segments; consumer products, studio entertainment, parks and resorts, and media networks broadcasting.

A. PRODUCT-POSITIONING MAP FOR CONSUMER PRODUCTS

Popular Brand Name

High Variety of Product Low Variety of Product and Services and Services

Unpopular Brand Name

From this positioning-map, we can see that product or services by Walt Disney was being in good position than the other two competitors, which are Timer Warner and News Corporation. Disney was competes in its character merchandising and other licensing, publishing, interactive, and retail activities with other licensors, publishers, and retailers of character, brand, and celebrity names. Disney is also the largest worldwide licensor of character-based merchandise and producer/distributors of children’s film-related products based on retail sales. And their consumers’ goods such as straight-to-video movies, books, apparel, toys, video games, and other tangible goods account for 10% of revenue. It is also because of their brand name. Walt Disney’s brand name alone is one of the most recognized and prized in the world at 9th according to Interbrand. Like was saying by Roy Disney, that was believes that the brand name of Disney is very important stating “It is often said that our company's most valuable asset is the Disney name. You'll get no argument from me. I kind of like the name myself. But, in recent times, there's been a tendency to refer to it as the "Disney brand." To me, this degrades Disney into a "thing" to be bureaucratically managed, rather than a "name" to be creatively championed. But, Disney no need to be proud forever with their positions now, they have to always come out with the new strategy that can make them stay in now positions. Maybe they can implement the market development strategy, by introducing their consumer products or services into new geographic area. Example like in India or Russian, maybe Walt Disney can come out with the toy that wearing their traditional cloth likes Sarees’ for Indian.

Russian traditional cloth

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Comparing to the Time Warner and News Corporation, Time Warner was being in low variety of product and services and was in moderate based on their popular brand name level. It is because, Time Warner also not just focusing or knowing in AOL, Cabel, Filmed Entertainments, and Networks, but also involve in produce the consumer products that are based on publishing thing. But, Time Warner’s publishing unit has not been faring well. Downturn in print advertising and readership has made the company restructures its operations in America in order to align new entertainment and lifestyle publications. The company has also shifted focus from print advertising and readership to online content.As a result, Warner should make a product development strategy by attempting to capitalize on the increase in advertisers’ interest in interactive and digital media. And for News Corporation, they actually are directly compete with the Walt Disney Company in the Media Network segment, but are not rivals in the Consumer Products and Parks and Resort segments. Their brand name also not really known by the public, just certain people who are alert about the media industry, comparing to the Walt Disney name. Then, what should News Corporation do to make their name being known by all the people? The answer is easy, expanded their operation activities, not only focus on media thing, but make an unrelated diversification strategy like trying to enter service sector like opening an educational institution that provide a subject about media; like film learning, reporter learning, etc.

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B. PRODUCT-POSITIONING MAP FOR MEDIA NETWORK/ BROADCASTING

High Variety of Station

High Average of Low Average of

Audience Audience

Low Variety of Station

For this positioning map, we can see that News Corp. being a leader in this industry rather than Walt Disney and Time Warner. News Corp operates in eight industry segment: Filmed Entertainment, Television, Cable Network Programming, Direct Broadcast Satellite Television, Magazines and Inserts, Newspapers, Book Publishing, and other. For Walt Disney, they have been operates in five industry segment there are Disney-ABC Television, ESPN Inc., Walt Disney Internet Group, ABC Owned Television Stations and ABC Radio. Time Warner’s media and entertainment have segments own AOL, Cable, Filmed Entertainment, Networks, and Publishing. News Corp. and Walt Disney stay at a good position in with the high variety of product and high average of audience but for the Time Warner there have a high variety of station but low average of audience.

News Corp. has high revenue on their segment. The company has been moving aggressively toward digital technologies such as broadband, mobility, storage and wireless. In 2005, News Corp. acquired MySpace.com, the Internet’s most popular social networking site, and IGN.com (gaming and entertainment site). The company has reported an increase in traffic at most of their pre-existing sites such as newspaper, cable networks and local TV stations. In June 2007, Fox TV, owned by News Corp. had the most popular shows on television with and average audience of 6.7 million every night, followed by CBS with 7.6 million viewers during each prime time, Walt Disney Company’s ABC with 5.4 million viewers per night, and finally NBC with 4.8 million viewers during each prime time period.

Walt Disney increase their revenue in this segment that was primarily due to growth form cable and satellite operators, which is generally derived from fees charged on a per-subscriber basis, contractual rate increases, and higher advertising rate at ESPN. In 2006, Disney and Citadel Broadcasting Corporation announced an agreement to merge the ABC Radio business, which consists of 22 of Disney’s company-owned radio stations and the ABC Radio Network, with Citadel. While advertising in the network is a source of additional revenue for the broadcasters, it requires selectivity for charging for each episode. Video on demand is a major industry and growing rapidly, expected to be a 3.9 billion dollar industry in 2010.

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Time Warner’s media and entertainment has been improving their revenue because of their company have high variety of stations but low average of audience. Time Warner just acquired Adelphia for $8.9 billion in cash to improve this segment of their business. Its Films Entertainment segment produces and distributes theatrical motions pictures and television shows. The Network segment consists of HBO and Cinemax pay television programming services. The Publishing segment publishes magazines and Web sites in a variety of areas and has a strategic alliance with Google.

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C. PRODUCT-POSITIONING MAP FOR PARKS AND RESORT

FIRM 1

FIRM 2

FIRM 3

WALT DISNEY

(FIRM 1)

TIME WARNER

(FIRM 2)

NEWS CORPORATION

(FIRM 3)

GOOD CUSTOMER SERVICES AND

HIGH CONVENIENCE

Good customer services and high convenience

because Walt Disney have many park and resort on

the world.

- -

BAD CUSTOMER SERVICES AND LOW

CONVENIENCE-

Time Warner doesn’t have a park and resort because their company just focuses on cable.

News corporation just compete with Walt

Disney in media network. Their company

doesn’t have park and resort.

HIGH CONVENIENCE

LOW CONVENIENCE

GOOD CUSTOMER SERVICES

BAD CUSTOMER SERVICES

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WALT DISNEY

Disney World is a phenomenon that has made an indelible mark on travel and tourism and changed the very notion of what it means to take a vacation and be entertained. It can be a wonderful source of pleasure and a great way to gather with friends and family for treasured, shared moments. Disney World is much too big now for vacationers to do it all.

Improvement: Add more park and resort in the country that far away from Walt Disney. This is can make customer always with them.

Strategy: Customers are the important issues in the business. Walt Disney should make their happy with make the discounts card for them. The Walt Disney Company's customer service strategies involve no magic, but they do follow a success formula for staff training, standards, and implementation that can be adapted to any work environment. During Friday's breakfast, customer will hear from a Walt Disney Company professional and learn how to take these proven strategies back to their staff and their organization to enhance the service provide.

TIME WARNER

Time Warner’s media and entertainment segment in filmed entertainment, network and publishing. They don’t have any segment in the park and resort.

Improvement: Time Warner’s should make investment in park and resort so that their can compete with the Walt Disney in this segment.

Strategy: When Time Warner’s was investing in this segment they can advertise their park and resort use their own media and entertainment segment. This is more effective way because they don’t have use another media network to advertise their park and resort.

NEWS CORPORATION

News Corporation directly competes with Walt Disney in media network segment. News Corporation is a diversified international media and entertainment company in eight segments.

Improvement: News Corporation can make a huge improvement in their company such as make a park and resort of their own company. This is because they already have an eight industry segment. This is an advantage to the News Corporation because they have big customer in the world.

Strategy: News Corporation can attract customer with their eight media segment to go to their park and resort. This is more saving cost for their company because they already have advantage in the advertising.

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D. PRODUCT-POSITIONING MAP FOR MEDIA NETWORK/ BROADCASTING

High growth

Walt Disney News Corporation

Time Warner

High customer Low customer

Low Growth

The Walt Disney Company is a leading media and entertainment conglomerate. The company is divided into five major business segments: Media Networks (including the ABC network), Parks and Resorts, Studio Entertainment (including Pixar), Consumer Products and Interactive Media. Under the leadership of its new CEO, Bob Iger, Disney has renewed its emphasis on its core strategy of creating and distributing attractive content for children and syndicating this content through its various entertainment channels. For example, when Disney produces a new movie, it continues to capitalize on the characters in the movie long after it has left the box office. Before the movie leaves theatres, the company will have already released a line of complementary toys and action figures. This is followed by the release of the movie on DVD and depending on its popularity a presence in Disney's theme parks or its own television show.

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Studio Entertainment: Often regarded as Disney's most visible business, Studio Entertainment is actually subject to a great deal of variability in terms of both revenue and profit generation, as its performance is driven largely by Disney's ability to produce hit movies to be released in theatres, on television, and on home video. A flop, like the 2002 movie Treasure Planet, can be quite detrimental to the company's profits. On the other hand, a blockbuster hit, like the Pirates of the Caribbean series, can boost sales and profits substantially. In September 2009, Disney Studios Chairman Dick Cook was forced to resign at the request of CEO Robert Iger, who had been unhappy with the studio's direction and performance. In July 2010, the company announced it would be selling its independent film Miramax unit for $650 million to a group of investors including Ron Tutor, Colony Capital, James Robinson, and an unidentified Middle Eastern investor group. Disney reported $38 billion of revenue in fiscal 2010, up 5.3% from a year prior. Net income rose 19.8% to $3.96 billion. For the first quarter of fiscal 2011, Disney reported a 40% increase in profits to $2.2 billion from $1.57 billion a year earlier. Revenue rose 10% to $10.7 billion, up from $9.7 billion in the previous year. Cable and broadcast networks, which by far account for the largest slice of revenue, reported an 11% gain in revenue to $1.65 billion. Operating income surpassed analyst estimates in all segments. On a per share basis, net income was 68 cents per share, easily beating the 56-cent average analyst estimate. Studio Entertainment revenue came in at $1,932 million down from $1,935 million posted in the year-ago quarter, but operating income grew substantially by 54% to $375 million. The growth reflects rise in worldwide home entertainment and lower film cost write-downs.

Time Warner Cable Inc. is the second-largest cable operator in the U.S. and an industry leader in developing and launching innovative video, data and voice services. We deliver our services to customers over technologically-advanced, well-clustered cable systems that pass approximately 26 million homes. Leveraging our leadership in innovation, Time Warner Cable is at the forefront of delivering advanced products and services such as video-on-demand, high-definition television, digital video recorders, Enhanced TV features, high-speed data and Digital Phone.

Company Highlights

Time Warner Cable service passes more than 26 million U.S. homes, and serves 13.3 million basic video customers.

Time Warner Cable serves customers in the following 33 states: Alabama, Arizona, California, Colorado, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Maine, Michigan, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina Texas, Virginia, Washington, Wisconsin, West Virginia and Wyoming.

Time Warner Cable has more than 7.9 million digital video customers, reflecting high customer satisfaction with this popular service.

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Time Warner Inc. is a leading media and entertainment company, whose businesses include interactive services, filmed entertainment, television networks and publishing. Whether measured by quality, popularity or financial results, our divisions are at the top of their categories. Time Inc., Home Box Office, Turner Broadcasting System and Warner Bros. Entertainment maintain unrivalled reputations for creativity and excellence as they keep people informed, entertained and connected. Their enterprise is more than a collection of great brands that are owned under one roof. Time Warner’s businesses strive to gain competitive advantage from opportunities for constructive collaboration.

News Corporation often abbreviated to News Corp., is the world's third-largest media conglomerate (behind The Walt Disney Company and Time Warner) as of 2008, and the world's third largest in entertainment as of 2009. The company's Chairman & Chief Executive Officer is Rupert Murdoch.

News Corporation is a publicly traded company listed on the NASDAQ, with secondary listings on the Australian Securities Exchange. Formerly incorporated in South Australia, the company was re-incorporated under Delaware General Corporation Law after a majority of shareholders approved the move on November 12, 2004. At present, News Corporation is headquartered at 1211 Avenue of the Americas (Sixth Ave.), in New York City, in the newer 1960s-1970s corridor of the Rockefeller Centre complex.

News Corporation’s motion picture and television programming operations bring the best in comedy and drama to audiences around the globe.

Fox Filmed Entertainment is a global leader in movie production and distribution. Twentieth Century Fox Film is responsible for some of the top grossing movies of all time, including history’s most successful movies, Avatar and Titanic.

In television production, Twentieth Century Fox Television, together with the Company’s other TV studios, produce and distribute some of the world’s most popular television programming. The Company’s TV studios are leaders in animated series and supply many of the most popular series to each of the major U.S. networks.

Strategy Walt Disney

Corporate strategies for Studio Entertainment segment -The Studio Entertainment segment have had volatile revenues through out the last many years. They are dependent on success of at least a few productions each year, and especially the Walt Disney Pictures productions will partly secure the next couple of years earnings before the effect of the product will wear of. According to Walt Disney Company (2006) the Studio Entertainment segment has a high focus improving their returns at the moment. They seek to decrease the volatility around their hit-driven productions. To do that, they want to control the overall spending on each movie, lowering productions per year, and have a larger focus on quality instead of quantity. They have a larger focus on analysing their past earnings to see where they did wrong and where they have the highest earnings. This has resulted in a larger focus on creating and maintaining Disney branded titles, which historically have given a higher ROI than live-action films have.

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The Disney branded titles have not only higher earnings, but the franchise potential gives large incentives towards this strategy. As an example can the Disney branded title of Hunchback of Notre Dame, which so far has earned $200 million in video sales, but also $160 million in merchandise earnings. The Studio Entertainment segment has furthermore begun to use external investors for their live-action film productions. They have begun so finance up to 40% of the production and marketing costs, and is mainly focused on financing the more volatile productions. Sequels to already produced products, as for instance The Chronicles of Narnia, will not be financed through this strategy, since they represent a less volatile investment.

This form of strategies makes it possible to integrate outside partners, which could be useful in production and distribution of the products, and furthermore is makes them able to considerably lower their risks, but it also makes a cut in possible rewards. When looking through Disney’s track records, then a thing about their way of expanding business and knowledge becomes apparent. They do it mainly through acquisition of other companies. Most up to date and significant is the acquisition of Pixar back in 2006. They needed the knowledge about 3D animation, since their core competencies only revolved around 2D animation. Another major company acquired for the Studio Entertainment is Miramax in 1996. Furthermore other segments of The Walt Disney Company have invested in computer, mobile, and TV game development companies, and other distribution and media channels around the world.

Furthermore there is a large focus on strategic alliances, and how they should keep the company flexible instead of tie them up for longer periods of time. An example could be the end of the 10 year agreement with McDonalds where they realised that the strategic alliance had kept them from exploiting their major brand franchise (Stanley 2005). They still form alliances with different companies, but not for longer periods of time, and normally no exclusivity agreements.

Strategy Time Warner

Design Store for Sales - Take advantage of cross-merchandising strategies and impulse sale opportunities. Use lighting techniques and creative displays to attract customers. Play videos for product education, customer entertainment and any other up sell or promotional tie-in.

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Strategy New Corporation Advertise More - Just when think it's time to cut back the marketing dollars, should probably be advertising more. It is wise to increase marketing efforts during slower sales periods because there is more competition and fewer consumer dollars. Consider newspaper ads, magazines, specialty publications and other forms of marketing.

Examine Your Pricing Strategy - When purchasing and pricing products, be sure considered the cost of goods and that your retail shop is able to make a profit at that price point. Your product price should be competitive, but still profitable. Ultimately, the right price is the price the customer is willing to pay for the product.

Connect With the Customer - Excellent customer service is the key to increasing sales. Listen to our customer to understand their needs and wants. Then educate him/her about the products. Finally, let the customer know we appreciate their business. Offer value-added services and products. Create a mailing list by asking for contact information from each customer.