The Walt Disney Company is routinely recognized as having one of the strongest brands in the world. Much of its success lies in its flourishing television, movie, theme park, and other entertainment ventures. These different vehicles have created a host of well-loved characters and a reputation for quality entertainment. Disney promotes in name and its characters with Disney Consumer Products, a division comprising seven business areas that sell Disney-themed products through a variety of channels.
The Disney Store: Bringing the Disney magic to premium shopping centers in the United States and overseas
Merchandising licensing: Selectively authoring the use of Disney characters on high- quality merchandise
Publishing. Telling the Disney story in books, magazines, comics, and art
Music and audio: Playing favorite Disney songs and stories on tape and compact disc
Computer software. Programming Disney “fun” into home computers and computer game systems
Educational production: Casting the characters in award-winning films for schools and libraries
Catalog marketing: Offering Disney products via top catalogs
Disney licensed products are available at retail locations such as booksellers, music stores, newsstands, and grocery and convenience stores. Disney offers a vast range of items on its online shopping site, DisneyStore.com, and on many other e-commerce Web sites. Products can also be found at Disney Store locations and at gift shops in Disney theme parks. Numerous catalogs, for both home and education buyers, also sell Disney licensed products. The pervasiveness of the product offerings is staggering—all in all, there are over 3 billion entertainment-based impressions of Mickey Mouse received by children in total every year, equivalent to 10 million impressions a day.
Disney started licensing its characters for toys made by Mattel in the 1950s. Disney Licensing is now responsible for more than 3,000 contracts and for 16,000 products with top manufacturers worldwide. Disney licenses its standard characters (i.e., Mickey, Minnie, Donald, Goofy, and Pluto) and filmed entertainment (i.e., theatrical releases such as “Aladdin,” “Lion King,” and “Toy Story,” and TV properties such as “Duck Tales” and “Madeline”). To capitalize on the popularity of these characters, Disney developed a family of brands for Disney licensed products. Each brand was created for a specific age group and distribution channel. Baby Mickey & Co., targeting infants, and Mickey & Co., targeting kids and adults, are sold at department and specialty gift stores. Disney Babies, targeting infants, Mickey’s Stuff for Kids, targeting boys and girls, and Mickey Unlimited, targeting teens and adults, are sold through mass-market channels. Disney combined the names and characters into a specially designed logo. Each could be used in a wide range of product categories, including apparel and accessories, toys, home furnishings, social expressions and novelties, sporting goods, and gifts.
One of Disney’s most successful licensed characters is Winnie the Pooh. Pooh products, which existed since Disney’s 1966 animated short “Winnie the Pooh and the Honey Tree,” have recently become a virtual goldmine. Between 1995 and 1998, the total licensing market for Winnie the Pooh grew from $390 million to $3.3 billion. By 2000, Pooh products generated an estimated $6 billion in sales for Disney. By comparison, Disney’s other core characters—Mickey, Minnie, Goofy, Donald Duck, and Pluto—grew only 20 percent over the same period.
In 2000, retail sales for Disney licensed products totaled $13 billion, which amounted to 70 percent of revenue for Disney Consumer Products. Andrew P. Mooney, president of Disney Consumer Products, thinks this figure can eventually reach $75 billion, or 1 percent of the global retail market. A first step toward this goal was to partner with AmeriKid Foods to develop co-branded packaged goods products based on core Disney properties, rather than short-term promotions based around current movie releases. This partnership was designed to change the fact that as of 2001, Disney had no larger than a 3 percent share in any of the food and beverage categories in which it had licensed products. The addition of the AmeriKid Foods partnership gave Disney more products in the grocery and convenience channel.
Sources: Bruce Orwall. “Disney’s Magic Transformation?” Wall Street Journal, October 4, 2000, p. B1; Stephanie Thompson. “The Mouse in the Food Aisle.” Advertising Age, September 10, 2001, p. 71.
1. Are there any downside associations with the AmeriKids program? Is product licensing an unlimited situation? Can it be overdone?
2. Consider other products where the co-branding concept has a similar potential.
3. What marketing strategy changes should Disney consider andor make if it intends to reach the $75 billion level, given the fact that others are now moving into the arena? Is there evidence that Disney is reaching some branding and distribution limits?
1. Any brand that is well developed and controlled has to be careful that it does not overextend the brand franchise to the point that takes on a generic aura. To do so, especially in an era of fast paced competition and competitors, can be dangerous. Product licensing may be carried on indefinitely if the appeal is either universal or classic, and the image it presents keeps up with the times (Betty Crocker, Brawny, etc.). It can be overdone, however, if it spreads the name and image into products and/or services that seem to have no relationship.
2. There are many possible good answers here, but the best answers likely would emphasize products that present the highest potential in terms of carryover to and with children who can associate the value of one product with the other.
3. One meaningful strategy would be to seek out areas of activity that reinforce the current successes and bring in new demographic and psychographic targets. In addition, developing the international market, using the same proven strategies, adapted locally, would be useful.
Since 1996, Disney failed to match its stellar growth of the 1980s and early 1990s. During 2000 and 2001 advertising revenues in its TV operations, in particular its national network ABC, were hit, theme park attendance fell off, the line-up of movie releases was passable (though none did especially well) and Disney stores and retail sales were mediocre at best.
Disney closed more than 100 of the 400-odd Disney stores, applied shorter hours to the theme parks, laid-off 4,000 employees and conducted cost cutting in movie production. A near full-on retreat from the Internet also is underway. Finally, it has been clear to many in the media and elsewhere that with Disney’s almost monopoly position (brand image, not absolute economics), the goal is to dominate every market they have and charge the maximum price (according to Larry Gerbrandt, chief content officer at Kagan World Media, a media research and consulting firm, Associated Press, March 10, 2002).