{"id":10191,"date":"2009-05-04T14:50:47","date_gmt":"2009-05-04T13:50:47","guid":{"rendered":"http:\/\/www.corporate-eye.com\/blog\/?p=10191"},"modified":"2009-05-04T14:50:47","modified_gmt":"2009-05-04T13:50:47","slug":"disneys-discount-slight-of-hand","status":"publish","type":"post","link":"https:\/\/www.corporate-eye.com\/main\/disneys-discount-slight-of-hand\/","title":{"rendered":"Disney’s Discount Slight of Hand"},"content":{"rendered":"

\"cinderella-castle-disney-world\"I’m a big Disney<\/a> fan.\u00a0 I moved from the hustle and bustle of the New York City metropolitan area to live in Central Florida for both better weather and to be able to go to Walt Disney World whenever I want.\u00a0 My family has lived here for 4 years, and we still visit Disney World at least once a week.\u00a0 Until recently, I’ve had just a handful of negative things to say about the Disney theme park experience.\u00a0 With the recession, my perception has changed quite a bit.<\/p>\n

Let me preface this by saying most people who visit Walt Disney World would never notice the little price increases here and there that Disney has implemented at its theme parks over the past few years, but since I’m there so often, I notice.\u00a0 For example, the price of drinks and snacks sold at the multitude of carts and kiosks around the parks went up first by a quarter and then by another quarter.\u00a0 Next, the food portions at restaurants became noticeably smaller while prices stayed the same or increased.\u00a0 When I moved here in 2005, the price to park each day was $3 less than it is now, and a new array of park ticket packages make the short-term visitors pay a lot more than anyone can truly afford even in the best of economic times.\u00a0 Luckily, I’m a Florida resident so my annual pass is a decent value given how often we visit a Disney theme park (and parking is free), but it kills me to have to pay over $300 for each of my 4-year old triplets’ annual passes.<\/p>\n

These are just a couple of examples of the little price hikes that Disney has implemented over the course of the past year or two to make up for attendance losses.\u00a0 At the same time, the company has been discounting hotel rooms and packaging in their dining plan to resort bookings.\u00a0 For example, a current promotion allowed families to stay for 7-nights but only pay for 4.\u00a0 There is no doubt these discounts are working to boost attendance.\u00a0 I have never seen the Disney parks so crowded at all<\/em> times throughout the year as I have over the past year or so.\u00a0 There simply isn’t a “down time” anymore.\u00a0 I’m constantly amazed by how busy the parks are!<\/p>\n

So what does this have to do with corporate branding?<\/p>\n

Simple, according to an article in the Orlando Sentinel<\/a>, Disney is reporting losses despite its aggressive hotel room discounting strategy (although Disney’s losses are considerably less than its competitors such as Universal).\u00a0 Disney’s spokesperson stated in the article that the discounting strategy is meant to expose more people to the Disney brand in the hopes of turning them into repeat customers in the future.<\/p>\n

Here is my argument against that strategy:<\/p>\n

We all know the 80-20 rule (20% of your customers are responsible for 80% of your sales\/profits).\u00a0 Disney’s discounting strategy runs counter to that rule.\u00a0 Rather than trying to rewards its best and most loyal customers, Disney is hurting them by boosting prices on the items those loyal customers buy.\u00a0 Instead, Disney is rewarding the masses who are less likely to become repeat customers.\u00a0 Why are these people unlikely to become repeat Disney World visitors?\u00a0 Simple — the prices for all of the ancillary items people have to purchase are so high that when the hotel price goes up again (and you know they will), the perception for those customers will be that a Disney vacation is simply not in their budgets.\u00a0 The brand loyalty isn’t there, so this audience is unlikely to forego other purchases in order to take a Disney vacation.\u00a0<\/p>\n

Disney is one of the rare yet admired brands that can truly be called a relationship brand that loyal consumers have a strong emotional attachment to.\u00a0 Those loyal customers are the best brand advocates.\u00a0 They’ll defend the brand, spread the word about the brand, and influence others about the brand.\u00a0 Trading a brand’s focus on loyal customers for short term profits from that 80% of customers who are responsible for 20% of sales is a long term strategic error.\u00a0 While most brands try desperately to get the emotional attachment that relationship brands like Disney or Apple have, Disney is forgetting their core audience and doing exactly the opposite.\u00a0 It seems to run counter to fundamental marketing and branding theory, and it will be interesting to see how this strategy fares in the future.<\/p>\n

What do you think?<\/p>\n

Image: <\/em>Flickr<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

I’m a big Disney fan.\u00a0 I moved from the hustle and bustle of the New York City metropolitan area to live in Central Florida for both better weather and to be able to go to Walt Disney World whenever I want.\u00a0 My family has lived here for 4 years, and we still visit Disney World […]<\/p>\n","protected":false},"author":4,"featured_media":10201,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[95],"tags":[2451,212,100,110,106,2421,211,2441,2431],"class_list":{"0":"post-10191","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-brand","8":"tag-80-20-rule","9":"tag-brand-loyalty","10":"tag-brand-strategy","11":"tag-corporate-branding","12":"tag-disney","13":"tag-disney-discounts","14":"tag-emotional-branding","15":"tag-relationship-brands","16":"tag-walt-disney-world-vacation","17":"entry"},"yoast_head":"\nDisney's Discount Slight of Hand<\/title>\n<meta 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