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Case Study

Disney in China (A)

By Howard H. Yu, Stefan Michel and Claire Romera

12 pages

December 2012

Reference: IMD-3-2341

Disney faces a very tough strategic challenge in the Chinese market. By any measures, Disney is a content provider. At the heart of its sprawling business operations lies a film studio that continuously produces enduring characters with blockbuster animations such as The Little Mermaid, Aladdin and The Lion King. But in China, the problem of DVD piracy eliminates any meaningful differentiation that Disney could have. This is a market in which competitor’s products (in this case pirated DVDs) are exactly the same but with no cost of development. To make matters worse, the clearing process of film screening by the Chinese government can be complicated and time-consuming. At times, before the official movie is even released locally, pirated DVDs based on the international version have already flooded the market. In other words, not only do competitors not need to spend anything on R&D, but also their speed to market is better than Disney! How could Disney respond? Could Disney develop a local product that allows the firm to generate meaningful profits? The teaching note illustrates the unusual but effective solution Disney adopted to address this challenge, leveraging its brand equity in china.

Learning Objective

Participants learn how to think beyond traditional product categories. It is important to recognize that Disney did not just come up with the right product, it also moved de facto into a new product category altogether. To counter product commoditization, executives must first rethink what problems their organizations can potentially solve for a specific audience, then reintegrate the firm’s activities in a radically new way, and be prepared to go beyond traditional product categories in order to achieve profitable growth.

Keywords

Market Segmentation, Product Innovation, Diversification, Entertainment, Education

Settings

China
Walt Disney Company
2006-2012

Type

Published Sources

Available Languages

English

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