MKT210 - Hong Kong Disneyland Case Study: Factors Analysis

This report is a comprehensive case study analyzing Hong Kong Disneyland's performance, focusing on the microenvironmental and macroenvironmental factors that have shaped its operations since its opening. The report delves into the internal environment, suppliers, marketing intermediaries, competitors, publics, and customers as microenvironmental factors, highlighting their impact on the theme park's strategies and decision-making. Furthermore, the report explores macroenvironmental factors, including the demographic and economic environments, and the natural environment, particularly the impact of the COVID-19 outbreak. The analysis provides insights into how these factors have influenced visitor numbers, marketing strategies, and overall business performance. The report also includes recommendations based on the analysis, offering strategies for improvement and future growth. The report uses the APA referencing style.

COMPANY CASE DISNEYLAND: NOT THE HAPPIEST PLACE IN HONG KONG
INDIVIDUAL ASSIGNMENT SUBMITTED
TO
MR. LOO CHUNG KING
IN PARTIAL FULFILLMENT OF MKT210
10TH MARCH 2020
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Introduction…………………………….
Main Argument
Microenvironmental factors………………………
Macroenvironmental factors………………………
Recommendations…………………………….
Conclusion (Personal Reflection) …………………………
References (APA)………………………………………
Appendixes……………………………………
Pg 3
Pg 4 - 9
Pg 4 - 6
Pg 7 - 9
Pg 10 - 12
Pg 13
Pg 14 - 15
Pg 16 - 17
TABLE OF CONTENTS
1.0 INTRODUCTION
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Hong Kong Disneyland is a theme park located at Penny’s Bay, Lantau Island, Hong Kong. It
is Hong Kong’s largest theme park, dethroning the iconic Ocean Park ever since it’s grand
opening on 12 September 2005. It is only the second Disney resort in Asia after Tokyo
Disneyland, serving as an important gateway for Disney to the Asian market. Although it is
Disney’s smallest park with a size of approximately 100 acres, the renowned theme park is
still dubbed as the “the happiest place on earth” by many. With an average daily capacity of
34,000 visitors (The Standard, n.d.), the park managed to attract and host a total of 5.2
million visitors in the first year and a total of 25 million visitors since it’s opening (The Wall
Street Journal, 2011).
As a distinguished international landmark, there are many factors which will affect the
business and its operations as a whole, namely the microenvironmental and
macroenvironmental factors. These factors certainly have a great impact in the business
especially in influencing the decision-making process and affecting the performance and
strategies of the theme park.With these factors coming into place, it helps with the
development of long-term business strategies for the company.
Word Count: 205
2.0 MAIN ARGUMENTS
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2.1 Explain the microenvironmental factors that have affected Hong Kong Disneyland
since it opened for business.
2.1.1 The Company- Internal Environment
The Hong Kong Disneyland Resort (HKD) is managed and operated by the Hong Kong
International Theme Parks Limited (HKITP), which is jointly owned by both the Hong Kong
Government and The Walt Disney Company. As of2017, the Hong Kong Government owns
53 per cent of the shares in the company and The Walt Disney Company own 47 per cent.
There is a total membership of 11 directors in the Board of HKTIP, which 5 directors are
appointed by the Hong Kong SAR Government, 4 directors are appointed by The Walt
Disney Company (TWDC) and two independent non-executive directors are jointly appointed
by both the Hong Kong Government and TWDC.In every organization, the company itself
plays a vital role in determining the success or failure of the business. In this case, the
internal environment, which comprises variousdepartments, have to work together as a team
to understand the customers’ needs and to create the customer lifetime value by using the
right marketing strategies in order to bring unforgettable moments and experiences for guests
of all ages and nationalities (Corporate Information & Board of Directors, n.d.).
2.1.2 Suppliers
As a theme park operator, it will need supplies to run the daily operations from food and
beverages to technicians for its rides and attractions. Therefore, suppliers are also another
major factor contributing to the business. Suppliers may not directly affect the business of the
theme park as it is replaceable (Hong Kong Theme Park Analysis, 2020) but the effect is
justifiable to a certain extent. The Walt Disney Company is a big family and they usually
source their suppliers for all the business units in the US, Europe and even Asia and HKD are
part of it. By being part of this prominent international company, the theme park does not
need to find their own sourcing company and all goods and services received are approved by
the parent company following the criteria. Therefore, HKD has an advantage at this factor
since the parent company’s sourcing and procurement works with all business units and their
suppliers across the globe to establish the best value for the whole company (The Walt
Disney Company, 2014).
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2.1.3 Marketing Intermediaries
Marketing intermediaries is also another factor which will affect the theme park’s business as
a whole. In every organization, there has to be marketing intermediaries to run promotions
and exposure branding to help improve the brand and in turn, improve the business as a
whole. For example, HKD had plans to capitalize on the mega transportation infrastructure
which is the Guangzhou-Shenzhen-Hong Kong Express Rail Link (“XRL”) which provides
visitors an enhanced convenience and shortened travelling time to both Hong Kong and of
course, HKD. The theme park partnered with the travel trade to stage more than 20 road
shows and shopping mall events in key cities in Mainland China to increase the awareness.
And also opened the “Magic Gateway '' guest service centre at the West Kowloon station of
XRL to deliver enhanced customer services and experiences to visitors arriving in Hong
Kong when the railway commenced its services (Annual Business Review, 2018).
2.1.4 Competitors
Competitors are also one of the main factors that affects a company’s performance. In every
business, competitiveness lays a great impact to further improve andbe at the top of the
industry. The competitiveness in Hong Kong’s theme park industry is fragmented, as there is
only one direct competitor in the country, which is the Hong Kong Ocean Park. One of the
examples for HKD to compete for more customers is by launching special themed
celebrations such as Halloween and Christmas parties and this helps to differentiate them
from their competitors (Market Situation and Competitive Analysis, 2016). The theme park
has its expansion plan in place, which is scheduled to be completed in 2023 (Cheung, 2016).
The competition is also heating up with at least 10 theme parks scheduled to open in the
region between 2017 and 2020. “There are too many choices for theme parks” quoted CLSA
senior analyst Mariana Kou. Based on her comments, it would be much harder for HKD to
attract tourists now even with the new offerings compared to 10 years ago when the mainland
China citizens had limited choice (Cheung, 2016). In order to maintain its status as the best,
there must be a significant increase in investment in several new attractions aimed at drawing
more visitors to the park, said Hong Kong Tourist Board Managing Director, Andrew Kam.
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2.1.5 Publics
The public is also another microenvironmental factor that has affected the HKD business.
Since Disney is a representative of American culture, there were plenty of sceptics when
HKD first opened for business with the Mainland Chinese population as their main target
market. True enough, HKD did not attract the hordes of people they had anticipated, mainly
due to the fact that most locals were not familiar with the American culture and characters.
It’s safe to say that HKD’s effort to introduce pop culture to the Mainland Chinese fell short.
Thus, Disney was left with a mountain of challenges to try and merge these two diverse
cultures together. For example, Mickey Mouse had to acclimatize to the new environment.
Disney also had to take the initiative to converse in the local language of Cantonese and
Mandarin and include subtitles for shows and performances so that the locals could
understand. Other than the language barrier and unfamiliar characters, the Chinese tourists
were also not used to long queues for the rides, leading them to be unhappy with their
experience there. This signifies that HKD severely lacked cultural relevance; therefore,
causing them to be unappealing to the target market.
2.1.6 Customers
As published by CNN Travel, HKD is the emptiest Disneyland on Earth (Yeung, 2019); this
is due to the customer factor, which affects the theme park’s business at a very significant
level. Customers play a very vital role in one’s business especially for a theme park industry,
which is why it’s no surprise when HKD’s main goal is to satisfy its customer needs and
wants. This can be done by providing the best valued product and services to its customers at
an affordable price which the customers feel comfortable paying. With this, the customers
will feel that their experience is worth the money they are paying. This will create a positive
impact towards the customers who in return will form loyalty towards the company.
According to a report, the attendance at HKD from 2009 till 2018 has an average of 6.31
million visitors yearly with the highest attendance at 7.5 million visitors in 2014. Despite
showing positive growth from 2009 to 2014, the attendance dropped from 2015 till 2017 with
a slight positive growth in 2018 at 6.7 million visitors (Statista Research Department, 2020).
The attendance increased by 8% from 6.2 million in 2017 to 6.7 million in 2018. (refer to
appendix). This shows that HKD’s marketing strategy may not have worked between 2015 to
2017 but was revised well enough to attract both new and returning customers in 2018.
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Word Count: 1170
2.2 Justify the macroenvironmental factors that have affected Hong Kong Disneyland
since its opening
2.2.1 Demographic Environment
A demographic environment is a set of factors such as total population, age, gender and
location. These demographic factors are widely used by organisations to identify target
markets for their products or services. By having this data, the organisation is able to curate
out the right products and the right promotions which complements their target market. Hong
Kong has approximately 7.4 million citizens as of March 2020 (Worldometer, 2020) with
estimated 22.27% are children ranging from ages 0 to 24 years old as of year 2019 (Index
Mundi, 2019). HKD has studied and analysed the data available and came up with plans to
develop and design its theme park to attract the right target market, especially the younger
generation. The plan was to roll out over six years from 2018 through 2023 with an
expansion that will include new attractions and entertainment options, many which are
unique to Hong Kong (Cripss K, 2018). With this, they have taken a large step towards
meeting the expectations of a theme park as remarkable as Disneyland.
2.2.2 Economic Environment
For any organization, the economy is one of the most impactful factors to its business. The
economy determines if the business is able to perform positively or negatively. As an
example, the Hong Kong economy was severely affected due to the pro-democracy protests
which were raging since June 2019, affecting the tourism, retail and hotel industries the most.
‘Every party is suffering,' said Paul Chan, Hong Kong’s financial secretary (HK Financial
Secretary Blog, 2019). In recent years, the Hong Kong tourism industry has suffered the
worst downturn in more than a decade. In August 2019, the tourist arrival to Hong Kong
dropped almost 40% compared to the same period in 2018 (refer to appendix). The drop was
the biggest year-on-year since 2003 which was during the SARS outbreak (Liu, 2019). This
has caused a significant drop in visitors visiting Hong Kong Disneyland, at about 90%
reduction in their weekday visitors since the protests began and visitors from Mainland China
now only make up an estimate of 5% of the weekday crowd versus at least half prior to the
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protests (Russolillo&Xie, 2019). With emerging concerns of the COVID-19 outbreak, experts
have deduced that HK’s economy will remain in a recession for the foreseeable future.
2.2.3 Natural Environment
The natural environment is a factor which cannot be controlled. This environment plays a
huge part in the performance of any business. For example, the latest Covid-19 Coronavirus
outbreak which has affected the world especially in the China region, closest to Hong Kong.
This pandemic has affected Hong Kong badly especially with the infection spreading widely
within the country. Hong Kong classified the outbreak as an "emergency", the city's highest
warning tier and announced ramped-up measures to reduce the risk of further infections.
From a business point of view, it definitely has a negative impact and due to this outbreak,
the Hong Kong Disneyland had to shut its doors on January 26, 2020 until further notice for
the health and safety of its staff and customers (Channel News Asia, 2020).
2.2.4 Technological Environment
Technology is a factor which needs to be taken into consideration because it is constantly
changing and organizations need to keep up with the change to improve. The Hong Kong
Disneyland has embarked on an innovation plan to adopt and implement new and latest
technology to its offerings and products. This improvement is to be up to date and in line with
the latest trends in order to keep up and attract the younger generation of customers to the
park. The theme park has introduced its first fully LED parade named “Disney Paint the
Night” and they are using over 740,000 LED lights with each costume having its own system
of lighting control. The park has also introduced new interactive technology merchandise to
its customers, giving them phenomenal experiences at the park. The technology
developments done by the park has had a huge advantage and can enhance its
competitiveness in the industry (Travel Daily News, 2014).
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2.2.5 Political and Social Environment
The political environment in any country determines the stability of the country and how well
is the country being managed by the government. A slight change involving politics will
cause instability to its businesses throughout. Hong Kong is a perfect example of how a
political-linked anti-government protests have taken the sparkle off Hong Kong’s magic
kingdom, with the city’s Disneyland estimating the civil unrest to cost its operations a total of
USD135 million in income by the end of the 2019 and significant full-year drop in income in
2020. “The political situation in Hong Kong has led to a significant decrease in tourism from
Mainland China and other parts of Asia”, said Walt Disney’s Chief Financial Officer
Christine McCarthy (Tsang, 2019).
2.2.6 Cultural Environment
HKD was built accustomed to traditional Chinese culture. The design of the park was built
with the consultation from experts in Chinese Feng Shui, using this traditional Chinese art of
building and placing elements to be in harmony with each other and nature to bring the most
good luck to the park. For example, Hong Kong Disneyland’s main gate was positioned in a
north south direction for good luck. In order for the good “Chi” energy to not flow into the
South China Sea, a bend was out in a walkway near the Hong Kong Disneyland Resort
entrance and large rocks are placed throughout the park because they represent stability in
Feng Shui (The Disneyland Report, 2006). The lucky colour red was also frequented around
the park. As Disneyland respects other cultures, some performances are being skewed
towards the local audience, for example by having the Disney characters dress in full Chinese
traditional gear to celebrate the Chinese New Year celebration (Hong Kong Traveller, 2020).
The Walt Disney Company has considered the cultural factor in their operations to suit the
beliefs and practices of the local culture in Hong Kong and China.
Word Count: 979
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3.0 RECOMMENDATIONS
3.1 What marketing strategies do you think Hong Kong Disneyland should engage to
strengthen its position?
3.1.1 Differentiation, Segmentation & Target Market
HKD has to differentiate themselves from other theme parks in order to be competitive and
still remain on top as the preferred holiday destination among the Asian countries. By
segmenting the customer data obtained over the years, the theme park is able to position
themselves to determine the brand’s position among its competitors. With the segmented
data, the park is able to target the right customer market and analyze their products and
services to suit their customer profiles.
3.1.2 Marketing Mix - Product
This comes to the marketing strategies, which the main focus is to manipulate the variables of
the marketing mix, that is, the product, price, place, promotion to achieve the objectives of
the organization. A good marketing strategy must outline the marketing mix objectives.
Firstly, it is the product strategy, for HKD, its product is the most important component to
satisfy the customer needs and wants. The theme park has to introduce exciting new rides and
attractions together with its merchandise to encourage new and returning customers to visit
the park and in return, buy the merchandise.
3.1.3 Marketing Mix - Price
The price is very important to the customers, as they are required to pay to enjoy the products
and services. In this case, Hong Kong Disneyland has to reduce its entrance ticket price in
order to be a preferred holiday destination for both the locals and tourists. This is because
HKD has been labelled as expensive compared to its peers, Tokyo and Shanghai Disneyland
(Abe S., 2017) and with the high-priced tickets, it is often overlooked a customer’s itinerary.
The price needs to be competitive to help in its positioning and branding among the target
market.
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3.1.4 Marketing Mix - Promotion
In any business, promotion is the tool that brings customers to the business. In this case,
Hong Kong Disneyland has to run promotions to attract customers to visit the theme park.
The promotion mix has to complement its target market and often it includes advertising and
sales promotions. For the theme park to be the preferred choice, it has to come up with
promotions such as an annual pass and rewards programme to retain their customers and
encourage them to continue to visit the theme park on a regular basis. Online advertising is
another platform, which the theme park can look into to reach out and connect with the
international customers, with the modern digital technology, digital advertising can be done
remotely from Hong Kong to reach the right target market from other countries.
3.1.5 Marketing Mix - Place
Hong Kong Disneyland is well located at Lantau Island with great accessibility and
convenience from the airport and the city via the modern public train system. The theme park
is able to capitalize on this and educate its customers from both regional and world travellers
that it is easy and convenient to visit the park without worries at any time of the year. It can
also brand them as the gateway to a magical world with its strategic location. By working
with the land and transport authority, the park is able to also further improve the
transportation to and from the resort to ease the customers’ experience.
3.1.6 Sustainable Marketing
Sustainable marketing is a vital component for all successful businesses. It is a marketing
strategy to focus on social and environmental investments. Customers these days are very
concerned about the environment and they hope that their preferred brand is also in line with
them to protect and save the environment for the future generations to come. As a “go green”
brand, the theme park, on top of recycling food and green waste (Environment, n.d.), they are
able to use recycled materials such as plates and cups for food and beverages, with the large
amount being used daily, it will definitely leave a positive impact making the brand even
more environmental friendly by reducing non-renewable energy consumption.
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3.1.7 Corporate Social Responsibility
Hong Kong Disneyland has shown responsibility to the community as well as the
environment. The theme park company is also very active in conducting corporate social
responsibilities; they have formed The Disney Children’s Fund in April 2008 (Community
Report, n.d.). They have been raising funds for those in need and giving back to the
community since then. With this platform, the theme park is able to look into helping those
out of Hong Kong, within Asia to show that the brand is not only a local but also an
international brand that is concerned for the children, who are their main target market. By
this, the brand will be seen even more responsible in the eyes of Hong Kong and other nearby
Asian countries.
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4.0 CONCLUSION (PERSONAL REFLECTION)
Based on my own experience, HKD has always been a holiday destination on my bucket list.
It is certainly worth a visit for those who are unable to reach the bigger parks in the United
States or Japan. The HKD park does provide the Disney experience any child or teenager will
look for as it does have the essential rides and attractions where every other Disneyland
offers and not to mention, they do have some attractions which are exclusive to HKD, and
that’s what makes the park special in the region.
HKD may not be the perfect Disneyland out there, but I believe with the right development
planning, marketing strategies and adopting the local culture into its rides and attractions, the
theme park is able to further improve and attract the main target market which is the
Mainland Chinese and the international visitors to continue to visit the park in the years to
come. To conclude, I agree with the Disneyland Resort President, Michael Colglazier’s quote
“The Disneyland Resort continues to bring favourite stories to life in an incredible way” and
hope that HKD will remain the ‘happiest place on earth’.
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