Improving marketing strategies for Hong Kong Disneyland domestic tourism

Disneyland Hong Kong

Opened on September 12, 2005, Disneyland Hong Kong initially failed to meet the expectations of Walt Disney Company's executives and planners for visitor counts and profitability. The park occupies just 55 acres compared to Disneyland's 160 acres and the entire Disneyland Resort in Anaheim, California encompassing 500 acres that includes California Adventure, Downtown Disney and two hotels. Disneyland Hong Kong therefore failed to literally measure up to the expectations of Hong Kong residents as a replacement to the original Disneyland (Marr, Fowler, 2006). With just four lands compared eight at Disneyland and just 26 rides compared to 55, Disneyland Hong Kong also failed to meet the minimum expectations of the cities' residents who sought a comparable experience to visiting the original in California. Much for fundamental than these factors is the fact that the multi-channel marketing that is so successful in the U.S. And increasingly in Europe is non-existent with many of the Asian, specifically Hong Kong guests to the park (Balfour, Einhorn, 2009). Visitors to the park have no frame of reference of what the rides or characters represent, and do not know how to enjoy the park for fun (Marr, Fowler, 2006). Companies who excel at service marketing are capable of setting and exceeding customers' expectations on a consistent basis, regardless of the variation in individual expectations there are (Bosque, San Martin, Collado, Salmones, 2009). From a services marketing standpoint this is the greatest challenge for Disneyland Hong Kong as there are inaccurate, incomplete expectations today.

1.0 Introduction

At the center of any successful services marketing strategy is the defining of accurate expectations and their fulfillment through the consistent and thorough execution of guest-facing strategies (Bosque, San Martin, Collado, Salmones, 2009). The concepts of mass customization when applied to services indicate that guests of entertainment events and venues are more interested in the experience and the totality of the event and less in any specific aspect such as entertainment or food (Morgan, Elbe, Curiel, 2009). What makes services marketing so difficult in an entertainment context is the wide variation in expectations customers have, even from within the same metro or urban area (Freire, 2009). For amusement companies who enter foreign, unfamiliar markets as Disney did in Europe with Euro-Disney and also in Hong Kong, the need for having service recovery strategies in place is critically important. A service recovery strategy is defined as the series of processes, procedures and steps used for transforming customers' negative service experiences into a positive ones (Swanson, Hsu, 2009). The use of service recovery strategies in theme parks has proven to be very effective in minimizing customer defections and churn and also enabling greater brand stability over the long-term (Lewis, Clacher, 2001). From the initial faux pas of serving shark fin soup, which angered environmentalists to the lack of frame of reference for Chinese children visiting the park from Hong Kong, Disney has had to redefine their service recovery strategies from an Asian mindset as a result of their initial struggles with Disneyland Hong Kong (Marr, Fowler, 2006). The intent of this analysis is to evaluate the target market for Disneyland Hong Kong locally in addition to evaluating the marketing mix and making recommendations as a result of the analysis.

2.0 Target Market of Hong Kong Disneyland

When the target market for Hong Kong Disneyland is analyzed within the region of the amusement park using data from the Census and Statistics Department, Government of Hong Kong the following demographic segmentation is generated. The following data was originally collected during the 2006 census. The largest potential demographic target markets are males and females 18 -- 44 with males and females below 18 being the secondary market segment. This is consistent with what Disney is finding in other parks, and also consistent with their multichannel marketing communication strategies of concentrating on young families as well (Fowler, Marr, 2006). The results of this analysis are shown in Figure 1: Hong Kong Age Demographics, 2009. When combined with Figure 2: Domestic Households by Monthly Household Income, 2006, the attractiveness of Hong Kong as a market to Disney is evident. Young, wealthy families are what Disney most likely based their expansion decision on.

Figure 1: Hong Kong Age Demographics, 2009

Market Segment

Share

Males 18-44

29.0%

Females 18-44

28.0%

Males

Females

Males >45

6.0%

Females >45

2.0%

Source: Census and Statistics Department, Government of Hong Kong (2009)

Figure 2: Domestic Households by Monthly Household Income, 2006

3.0-7 Ps of Marketing

For a marketing strategy to be effective, it must encompass seven specific areas or attributes which are often referred to as the 7 Ps of marketing. These include the product itself, price, place or distribution, promotional strategy, people involved in creating, distributing and purchasing the product or service and the processes involved in delivering the products or services as well. In addition to these, marketing strategies need to take into account the experience of using the product or service, often called the physical attributes. Each of the 7 Ps also contributes to the positioning or branding of a product or company, as taken together they communicate the market position and unique value proposition of the product or service as well. Each of these 7 Ps of marketing are defined within each of the following sections of this analysis, followed by their implications for Hong Kong Disneyland.

3.1 Product- Definition and application to tourism operation

In the context of the 7 Ps, the product can be either a product or service, with the only requirement being that it delivers values to the customer. Products are often services or the implied commitment to deliver services or an experience. The defining, managing and fulfillment of expectations around products is one aspect of exceptional marketing as well.

As with services businesses, Hong Kong Disneyland's products are actually its four lands of Adventureland, Fantasyland, Tomorrowland and Main Street U.S.A., in addition to its restaurants and shops that together form a compete entertainment experience. The levels of customer service delivered and satisfaction with the actual total experience of an amusement park is more important to long-term profitability of any entertainment business than the incidental products sold or incremental margin gained from ancillary services, the experience is the product (Milman, 2009). This is especially true in amusement parks where patrons often rate as much higher the experiences that can be personalized, therefore consistent with mass customization of the experience, than in the en mass, undifferentiated experiences theme parks provide (Thach, Axinn, 1994). This area of the differentiated experience is where Disney has traditionally excelled, yet as is evident from an analysis of the Disneyland Hong Kong, this is not the case in the new park (Balfour, Einhorn, 2009). The Walt Disney Company's initial efforts to define food and entertainment specific to Hong Kong did not reflect the preferences of the audience in this metro and urban area originally, hence the lower-than-expected attendance rates and lack of planning and anticipation fro Chinese-specific holidays that did sell out the park yet were completely unanticipated (Marr, Fowler, 2006).

3.2 Place - Definition and application to tourism operation

The second P. In the 7 Ps is place or distribution. This P. specifically refers to the place where customers come to buy products or obtain services. From a marketers' perspective this also refers to the channels of distribution used for selling their products or services. Multichannel management strategies seek to manage distribution strategies through several different channels including the Internet, retailers and wholesalers.

Integral to any amusement parks' value proposition is its location or place. Consider the location of Walt Disney World in the middle of an expanse of land in the middle of Florida near Orlando, or what was a once a large orange grove in Anaheim, California which is today Disneyland. Place or location is key to the success or failure of any amusement park or large entertainment venue. The selection of Lantau Island as the site and the reclamation of a section of Penny's Bay may the location of Disneyland Hong Kong made the park accessible via the public transportation system for the city, in addition to be accessible via mass transportation from the Hong Kong International Airport. The many cultural lessons learned Disney had in creating, launching and running Euro-Disney were relied on in the planning, building and operating of Disneyland Hong Kong as well. Disney designers worked to ensure the metrics of key buildings had 888 square meters in size, as 8 is a revered number in Chinese culture that is often associated with good fortune. The company also worked to respect the fact that the number four is considered bad luck in Chinese culture and designed buildings so this number could be ignored in numbering floors. Finally feng shui consultants were brought in also design the park's entry and position so that it would be consistent with the local environment (Marr, Fowler, 2006). Disney project managers also had the land blessed and incense burned at the culmination of building activities as well (Schuman, Ressner, 2005). All of these steps were completed in order for Disney to respect and honor local customs and keep consistent with local values.

3.3 Promotion - Definition and application to tourism operation

One of the more multi-faceted of the 7 Ps, promotion encompasses public relations, analyst relations with the investment community especially for those companies who have publicly-traded stocks or securities, and also includes managing a company's reputation online with social networks. Public relations is responsible for making sure potential customers know what a company has to offer, in addition to keeping stakeholders in the company informed about new product and service developments.

Initial promotions of Disneyland Hong Kong were heavily focused on television throughout the Hong Kong region (Landreth, 2005). These initial advertisements attempted to evoke the same aspirational selling of the original Disneyland, not mentioned that only 22 of the 65 rides were included and only half of the lands were as well. Initial perceptions of the park was that it was much smaller than the first visitors expected it to be (Marr, Fowler, 2006) and it did not have enough interesting or thrill-seeking rides (Balfour, Einhorn, 2009). Most important however was the lacking support for the broader marketing that other Disney theme parks thrived on, and that were the movies, digital media online, electronic games and toys. There had been no comparable execution of a thoroughly defined and developed integrated marketing communications (IMC) strategy that had been the case in the U.S. For example. The most common reaction therefore on the part of consumers visiting the part has been confusion about how it is supposed to be fun (Marr, Fowler, 2006). Ironically this lack of awareness of the stories and scenarios behind the characters shows how exceptional the marketing of Disney is in other regions including the U.S. where there is ready identification of each ride and character with the visitors attending parks (Balfour, Einhorn, 2009). The lack of promotion of the entire Disney brand then forced the promotional teams of Disneyland Hong Kong to concentrate on creating awareness of the significance of each ride and four lands that comprised the park, including the development of guidebooks for Chinese-speaking students (Fowler, Marr, 2006).

3.4 Price - Definition and application to tourism operation

The most critical of the 7 Ps is price, as it has a direct impact on the overall profitability of products and also is the quickest path to communicating the market positioning of a product as well. Pricing's impact on services is to accentuate expectations of performance for a higher price point or alternatively send the message that the service purchased is going to lack differentiation and quality. Pricing communicates the price/quality relationship of a product or service faster than any other attribute of the 7 Ps as well.

By Hong Kong standards the pricing for Disneyland Hong Kong was high. At $350 (HK) for an adult ticket and $250 (HK) for a day ticket for a child, the costs could rapidly escalate for a family of four for example. With food, souvenirs and special events the total cost for a day at the park for a family of four could easily reach $2,000 (HK). This is considered exceptionally expensive compared to the costs for Ocean Park, which charges $25 (HK) per day and $12 (HK) for children. Pricing at Disneyland Hong Kong is clearly aimed at the young, wealthy parents that Hong Kong demographics analysis showed earlier in this report. A premium full year pass with no blackout dates for an adult is $1,800 (HK) and $1,250 (HK) for children between 3 and 11. Again taking the family of four with two small children as an example, a yearly premium pass would cost $6,100 (HK). As a result the company has attained a reputation for being the most expensive theme park in the Hong Kong area with fewer thrill-seeking rides than its primary competitor, Ocean Park (Leung, Nicholson, 2009). Pricing within amusement parks is used as a means to differentiate and connote greater value, with Disney often using a price premium approach to imply a price-value relationship of their brands to others (Song, Yang, Huang, 2009). This is the strategy at Disneyland Hong Kong with the pricing defining the premium market positioning of the park.

3.5 People - Definition and application to tourism operation

The people component of the 7 Ps encompass only prospects, but customers and the many people involved in the value chain of delivering the product or service. The people component of the 7 Ps is by far the most challenging in terms of making lasting change take place. People's ownership of tasks and the need attain mastery of those tasks is critical for any marketing strategy to be successful over time.

Often for multinational corporations creating entirely new ventures in foreign nations, the ability to recruit and retain the best possible staff can be problematic. Disney faced labor unions of France in staffing Euro-Disney and sought to initially train and create more job opportunities for Hong Kong employees based on the lessons learned in Paris. The Disney culture is heavily focused on education and training over time. In staffing Disneyland Hong Kong the company concentrated on hiring locally yet bringing in trainers from Disneyland Tokyo, Disneyland in Anaheim and Disney headquarters in Burbank, California. The concentrated on local employees is often used as a means to alleviate cultural distance between a business' employees and the public they serve (Freire, 2009). Disney did do this well and also sought to gain insights from these employees on how best to manage service recovery programs in the various languages and dialects spoken throughout the Hong Kong area. The net result was that by concentrating on hiring the best possible employees with cultural awareness and knowledge, the development of service recovery strategies was attained. The development of service recovery programs is critical for any business to excel and sustain its brand reputation and value over time (Swanson, Hsu, 2009). The hiring of local employees and the development of service recovery strategies with them was a major improvement over previous Disney parks in foreign locations.

3.6 Process - Definition and application to tourism operation

The process attribute of the 7 Ps refers to the many interconnected methods, programs and procedures relied on for developing, introducing, selling and servicing products and services. These processes have a wide variation in them, from the initial process steps to validate a new product idea to the development of entirely new channels of distribution, process-centric focus on the part of marketing strategies is critical for the customer to be at the center of all strategies and programs.

The processes within Disneyland Hong Kong were unlike any other throughout the Disney network of properties and therefore caused much confusion and initial customer dissatisfaction as a result (Marr, Fowler, 2006). Yet the best performing services businesses in fact focus on how to continually improve each customer-facing process, from taking the initial tickets from customers through the development, building and continual improvement of rides and attractions (Thach, Axinn, 1994). The use of Business process Management (BPM) and Business Process Improvement (BPI) based approaches for gaining greater process efficiency is also extensive in the Disney networks is evident in the development of the Fast Pass in Disneyland for example. The processes that are customer-facing and the most critical however for Disneyland Hong Kong have been undefined or at best, inaccurate, leading to significant frustration on the par of park visitors during sold-out days (Fowler, Marr, 2006). The lack of process consistency on the part of the Disneyland Hong Kong Park is what initially made the park falter, and impacted its reputation with customers (Balfour, Einhorn, 2009). The processes that are all customer-facing need to be more finely tuned and culturally acclimated than any other to ensure that a consistently high degree of customer experiences are delivered reliably over time (Milman, 2009).

3.7 Physical evidence - Definition and application to tourism operation

The physical evidence of a product or service is the experience customers have using it. This is the actual experience of hiring a service, the experience of attending an event, or the experience of using a new product. Physical evidence is essential for the 7 Ps to be all encompassing for the customer and for their expectations to be met.

The physical appearance of the Disneyland Hong Kong Park is also exceptional in its replication of previous parks in Anaheim, Orlando and outside of Paris. Disney well understands that its iconic image of the castle is as much a part of its brand as the face of Mickey Mouse for example (Echtner, Ritchie, 1991). The physical evidence of a brand is meant to evoke the emotions the brand aligns itself with. Disney's successful use of integrated marketing communication strategies to further support the physical branding of more mature and established parks is evident in the attendance figures they generate yearly. It was a painful lesson for Disney to learn regarding just how critically important having a strong, stable integrated marketing communications strategy is for the brand impacts a new park's launch. The confusion over what the value proposition of the park was to early attendees and the eventual booklets explaining what a Disneyland is were necessary as a result (Marr, Fowler, 2006). Physical evidence supported by brands is essential for a company to attain its marketing, selling and customer loyalty objectives.

4.0 Three Recommendations of improvement of any how the 7Ps can be improved.

Based on an analysis of Disneyland Hong Kong, the recommendations are made to first create more rides that are age-appropriate for the target market. The 22 rides in place today are more attuned to very young children and not exciting or entertaining enough for the 18 -- 44 segment that is critical for the park's growth. These rides need to also be along more traditional lines, not necessarily state-of-the-art like SPACE is in Epcot Center for example. The company is not making use of the Bay at all for any actual submarine rides, a natural extension using the Finding Nemo characters for. Fundamental to this first point is the fact there is very little innovation in the area of new ride development at the Hong Kong park. This needs to change and there needs to be a steady stream of new, entertaining rides for the target demographic markets. For Hong Kong Disneyland to be successful in attracting the 18 -- 44 segment they must also seek to balance the Leisure Constraints Model (McDonald, Murphy, 2008). This model specifically focuses on integrating the intrapersonal, structural facilitators and constraints, and interpersonal facilitators as part of the entire in-park experience. This is discussed in greater depth in the following section of this report as well. Second, Disneyland Hong Kong does not adequately use the total available set of tools found in social networking (Bernoff, Li, 2008) and Web 2.0 technologies (Cowlett, 2009) for attaining their marketing, public relations, and promotional strategies. These social networking strategies are shown in the Appendix of this analysis. What Disneyland Hong Kong needs to do is create a more efficient customer listening system that can capture the unmet needs and preferences of its Hong Kong customers and change to be responsive to them. (Balfour, Einhorn, 2009). Third, Disney needs to consider creating characters entirely based in Asia (besides Mulan) and creating more feature motion pictures to further support and strengthen their integrated marketing communications strategies. This strategy will support and strengthen their messaging from a leisure constraints model standpoint (McDonald, Murphy, 2008) and also effectively turn the in-park experience into an essential part of the marketing strategy itself (Echtner, Ritchie, 1991). Disney needs to specifically focus on Asian-inspired characters to better transform the experience of visiting the park into an indispensible part of the entire marketing experience for Hong Kong Disneyland.

5.0 Literature justification for the recommendation

All three recommendations, including the creation of entirely new and more exciting rides, to the development of more effective customer listening systems through the use of Web 2.0 and social networking technologies, to the development of better integrated marketing communications strategies based on characters created from regional insight and humor, would significantly help the park grow in attendance and relevance. Any successful branding exercise evokes the emotions it represents, and to do this the use of the leisure constraints model shown in Figure 3 is needed as a planning foundation.

Figure 3: Leisure Constraints Model

Source: (McDonald, Murphy, 2008)

The leisure constraints model is predicated in the fact that structural facilitators, interpersonal facilitators and constraints and intrapersonal facilitators and constraints all need to be congruent with each other to ensure satisfaction with the leisure experience. Through the use of rides to change the experience, more effective use of Web 2.0 and social networking technologies to listen to customers, and the development of more characters and content specific to the Hong Kong region, the park will become more relevant and visited over time. Without these modifications it will continue to be viewed as an import best only slightly modified to reflect the market needs of the Hong Kong community.

6.0 Conclusion

Disneyland Hong Kong has continually struggled to gain credibility and customers over time (Balfour, Einhorn, 2009). That's because many of its core concepts are imports, not indigenous and reflecting the specific values and humor of the region. What Disney needs to do is create more opportunities for innovation in its rides, yet not veer into the overtly high tech, more in the classical ride sense. This is because it must stay connected to its integrated marketing communications strategies to stay relevant. Second, through the use of social networking technologies the company needs to concentrate more on listening to customers and understanding what their needs are. It is not doing this today and as a result the park has been slow to change. Third, creating characters and investing in integrated marketing communications plans that support their promotion will over time also make the Disneyland Hong Kong Park more relevant as well.