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, General Management, Strategy
Settings
China
Walt Disney Company
2006-2012
Available Languages
English
IMD case studies are distributed through case clearing houses. In order to browse the collection and purchase copies please visit the links below.
Copyright Information
IMD retains all proprietary interests in its case studies and notes. Without prior written permission, IMD cases and notes may not be reproduced, used, translated, included in books or other publications, distributed in any form or by any means, stored in a database or in other retrieval systems. For additional copyright information related to case studies, please contact Case Services.
