Disney Cruise Case Study

Table of contents

Disney Cruise Line has been running since 1988 and was successful in the past 24 years. In this report, the situation analysis of the company will be provided separately into internal analysis, which includes organization analysis, SWOT analysis, and target market analysis, and external situation, which includes Porter’s five forces, PESTE analysis, and competitor analysis. By viewing the situation analysis, it is clear that Disney Cruise Line has a disadvantage on the scale of business and a strong advantage on its brand and the loyalty of its customers.

Last but not least, three marketing strategies, which are product/service strategy, distribution strategy, and communication strategy for next 12 months have been developed at the end of the project in order to give the direction to the company’s yearly marketing plan in 2013.


Disney Cruise Line was founded in 1988 with its first ship, Disney Dream, follow by Disney Wonder in the next summer. After enter the cruise line industry for decades, Disney Cruise Line now became one of the most famous cruise line companies in the world. Now, Disney has four ships on line and serves travelers to several destinations around the world.

In 2012, it is estimated Disney Cruise Lines will own nearly 3% share of the worldwide cruise market (2012 World Wide Market Share, 2011). Disney Cruise Line has position itself as a head in the cruise line industry, providing a place as Disney theme parks, where families can spend their time together and every member can have fun. 2. 0 Situational Analysis The purpose of this situational analysis is to understand Disney Cruise Line’s external and internal situation, including the customer, the market environment, and the firm’s own capabilities.

The situational analysis will forecast current and future trends in the dynamic environment in which the Disney Cruise Line organization operates. 2. 1 Internal The conduction of the internal analysis will portray how the organization itself operates. This internal analysis will include decision-making within Disney Cruise Line, promotional programs, the image of the organization, and an assessment of the key internal strengths and weaknesses of the organization. 2. 1. 1 Organization Analysis Disney Cruise Line is one of the new businesses from the Walt Disney Company; ther Disney companies are in the film industry (1928) and the Disney theme parks (1955). The first ship, Disney Magic was launched in 1998 and then Disney Wonder joined the fleet in 1999, the next year. Those were the only two ships that the Disney Company had for the last 13 years until Disney Dream was launched in 2011. Disney Cruise Line has now established itself as a leader in the cruise industry, providing a setting where families can reconnect, adults can recharge and kids can immerse themselves in a world only Disney can create (Disney Cruise Line, 2012).

Disney Cruise Line continues to expand its blueprint for family cruising with its fourth ship, Disney Fantasy, scheduled to make its maiden voyage in 2012 (Disney Cruise Line). 2. 1. 2 SWOT Analysis In order to satisfy customer needs and have the greatest opportunity to reach its full potential, the Disney Cruise company must understand its external and internal situation, including its customer, the market environment, and the firm’s own capabilities. In doing so, a SWOT analysis was conducted in order to point out the company’s internal strengths and weaknesses, as well as external opportunities and threats.

Appendix A shows the SWOT analysis conducted for Disney Cruise Lines. In conducting a SWOT analysis many trends in within the organization as well as in the surrounding environment were identified. With our own analysis, we found key strengths in the organization essential to the success of Disney Cruise Lines. Disney Cruise lines is owned and operated by the largest media and entertainment company in the world (Cruz, 2011). This strength provides customers with a product and service marked by the excellence of the Walt Disney organization. Also you can read about .

Disney Cruise Lines currently employs over 150,000 people with an average turnover rate of eight years. This shows us that employees are satisfied with their employer, and will in return portray this to the customers. Disney Cruise Lines are continuing to introduce new innovative products to the market. Disney’s new “first of it’s kind” 4,000 passenger ship brings with her even more features and a wave of innovation (Young, 2011). This ship is the first cruise vessel to be equipped with an onboard water rollercoaster.

Disney’s Fantasy, which will premiere in April, will also carry new ground breaking features only available from Disney companies. Along with the introduction of two new ships, Disney Cruise Lines are expanding their ports to three new cities. New to 2012, Disney Cruise Lines will be sailing from New York City, Seattle, and Galveston, Texas (Weissman, 2011). The addition of these new ports will allow customers from even wider geographical regions to enjoy the unique Disney experience on the sea. Through conducting the SWOT analysis a number of weaknesses were also able to be identified.

A major trend in customer’s perception shows that the Disney name only appeals to family’s seeking a vacation (Mena, 2011). There is currently little marketing or promotion being conducted in order to appeal to different groups of customers. It is commonly perceived that Disney only offers family fun, and does not interest customers seeking a more multi-dimensional experience (Archer, 2011). Also, the Disney Cruise Lines demand nothing but excellence from their employees while on board the ship. However, it will take a vast amount of resources to continually train the staff in order to upkeep the superior service.

This will cost the organization a great amount of resources on an ongoing basis in order to properly train all of the staff. Superior service, however, is an absolute necessity within this industry as leading competitors such as Carnival Cruise lines have above average customer satisfactory ratings (Mena, 2011). A number of opportunities were also identified within our analysis that could assist in the achievements of the organization. Continuing the company’s expansion into new regions by increasing the ports from which the ship sails, will allow more customers to access the service both internationally and domestically.

The CLIA has reported an increase in cruise line passengers within the United States by 10. 3% from 2009-2010, proving an increase in domestic demand (Mena, 2011). Disney Cruise needs to continue to respond to this rising demand by opening new homeports throughout the country. In response to this rising demand, Disney is providing two new vessels to the fleet, from which it can market their services beginning in 2012. (Cruz, 2011) This provides the organization with opportunities to advertise this unique product and expand above the competition.

Disney’s newest ship, the Disney Fantasy, will debut in April of 2012. The addition of this much-anticipated vessel will provide the organization with an opportunity to market a product that will provide extensive customer appeal and attract new patrons. Some potential threats to the Disney Cruise line were also noted within the situational analysis. Perhaps the most important of all is the fact that demand will vary accordingly with its surrounding environment. For example, irregular weather patterns as well as natural disasters serve as a major threat to the wellbeing of the organization (Scull, 2011).

The fertility rate has also been decreasing since 2007 and is predicted to keep failing in the next few years (Brady, 2012) (refer to Figure 1). Figure 1: “Recent Trends in Births and Fertility Rates Through June 2011,” The trend identified in Figure 1 may potentially affect the entire organization as Disney Cruise markets specifically to families with young children. As a result, the demand for the product may decrease due to the decreased fertility rate. Another external threat to Disney Cruise is the overall customer’s perception of the safety of the cruise industry.

The recent sinking of the Costa Concordia cruise vessel on January 13, 2012 will impose personal fear of safety in potential customers (D’Emilio, 2012). Although the cruise industry is currently experiencing growth, on-shore resorts also pose a potential threat to the cruise industry. Another threat that may affect the company’s public perception are the social and ethnic groups who protest against by the Disney Company, including the Disney cruise ships as a result of alleged inappropriate activities and things such as damage caused to the local marine life by the ships.

This has brought about negative media attention, which may ultimately affect the customer’s view of the Company (Mena, 2011). This has the potential to directly put a damper on the entire Disney brand name. 2. 1. 3 Target Market Analysis In order to effectively find which consumers and markets the Disney Cruise line should be targeting, a target market analysis must be constructed. This analysis will allow the Company to view and analyze the current target market as well as decode other target markets that would be beneficial to the organization.

The target market of Disney Cruise Line is similar to Walt Disney theme parks that are directed towards families with young children. The cruise line is strongly supported by the Disney culture created by the Disney organization (Watts, 1995). Since the cost of taking a cruise is higher than going to the theme parks, families interested in taking a Disney Cruise must have high and stable incomes (Silverstein, 2010). Because the distance will influence the motivation of the tourists, the major target market should be the residents in the United States.

From the 2009 to 2010 primary vacation season, the amount of American tourists leaving from USA based ports increased by 3. 2% (Mena, 2011). To further identify the preferences of families when taking a Disney Cruise, a survey (see Appendix B) has be designed to gain better insight into their profile. The survey can be viewed in Appendix B in which we used to gather target market information. 2. 2 External Within the conduction of the situational analysis, an external analysis is conducted in order to analyze all of the forces outside of the organization.

This analysis includes competitor information, consumer information, industry information, and outside forces information. These external forces will assist in creating the best marketing decisions for Disney Cruise Line. 2. 2. 1 Porter’s Five Forces In order to better understand the business decisions that are needed to be made by Disney Cruise Line, the Porter’s Five Forces model presents the relative power that each of these forces has in the industry and their impact on the Disney Cruise Line.

By looking at the model portrayed in Appendix C, Disney Cruise Line will be able to identify the key forces influencing the industry. According to Porter’s five forces, it is clear that competitors and suppliers have more power than the Disney Cruise Line. Although Disney Cruise Line has its specific position in the cruise line market, other cruise line companies are older and bigger than Disney. (Clancy, 2008). Furthermore, the basic facilities that the other cruise lines offer are quite similar, such as providing rooms, restaurants, events and transportation to destinations.

Thus, competitors become one of the most important threats to the company. Also, the suppliers in cruise line companies have high bargaining power. They are companies such as shipyards which include large companies that provide unique products, i. e. the cruise ships themselves, and which contribute to their high bargaining power. Another example is the petroleum companies which provide one of the most important sources in the cruise industry, oil. The price of oil cannot be control by one or few companies and is related to the international situation existing at the time.

On the other hand, one of the more unique features in the cruise line industry is economies of scale. The cruise line companies provide many different destinations, a large number of ships and build the loyalty of their brand to increase the barriers to entry in the market by others (Huxley, 2008). This causes a low threat of new entrants. Moreover, the bargaining power of buyers in the industry is also low. According to the report from Cruise Line International Association (CLIA), the number of customers in the cruise line industry is increasing (Scull, 2012).

Another reason for optimism toward the Disney Cruise Line is the high degree of loyalty to the Disney brand. The Walt Disney Company has created a magical world that cannot be replaced easily (Johnson, 1981). This is why although the price of Disney Cruise Line is very high, there are still many people wanting to take a cruise on the Disney Cruise Line rather than other cruise lines. Therefore, the bargaining power of buyers can be considered low. Last but not least, the potential substitutes for the Disney Cruise Line are Walt Disney Resorts, other family resorts, and package tours which include flight ticket and hotels.

However, in addition to providing a Disney experience, the cruise provides travelers the opportunity to travel between ports. As the result, the threat of substitutes in the cruise industry is considered to be low. 2. 2. 2 PESTE Analysis The PESTE analysis is a framework used by business strategists to identify those factors operating in the ‘outer’ (macro) environment of a firm which impinge upon its activities and profitability in addition to factors affecting its immediate product markets. PESTE has five elements: political; economic; social; technological and environmental (PEST, 2006).

These factors play an important role in the cruise line industry. However, they are usually outside the control of the corporation and must be considered as either threats or opportunities. The PESTE analysis diagram for Disney Cruise Lines can be viewed in Appendix D. In order to get a more complete view of the company’s current and future environment, the PESTE analysis has been conducted to assess the market from the standpoint of Disney Cruise Lines. Information gathered will help identify how external factors affect arketing situations and how they might influence future marketing activities. The PESTE diagram in appendix D illustrates the PESTE analysis conducted for Disney Cruise Lines. In conducting the PESTE analysis, it presents the factors in the political environment that affect Disney Cruise Lines in the positive ways and those which provide opportunities to the organization. For example, the U. S. government is expanding the Global Entry Program to make it easier for frequent tourists to visit the United States (Bart, n. d. ).

Such a policy brings more tourists into the U. S. and has the potential to increase the demand for the Disney Cruise Line. Furthermore, the technological environment creates exciting new opportunities for the cruise line industry. Cutting edge technology has been added to many cruise lines in the market in 2012 allowing them to utilize new and ever expanding technology (Archer, 2012). For example, it is now more convenient than ever for customers to plan and book a cruise vacation online with the do-it-yourself travel agent option, acquired by Disney (Pike, 2012).

The Disney Cruise Line can use these new technologies to develop new service, such as incorporating a “Virtual Porthole”, a service provided on the new Disney Dream. These portholes offer a real-time view outside the ship via live video provided by high-definition cameras placed on the exterior of the ship (Cruz, 2012). On the other hand, the factors in the social environment today show the negative impact to the industry. Religious welfare groups who protest Disney for what they deem as offensive material will have an impact on the company and the marketing decisions the company makes.

There are also groups that claim cruise ships are harming the environment. These trends will affect consumers and particularly when customers are making decisions of choosing either an onshore resort vacation, or an open sea cruise vacation. Recent events have also highlighted the potential dangers and safety factors of the cruise line industry. The recent Costa Concordia cruise ship that has sunk has attracted media attention and will alter the markets perspective on the safety of open sea vacations (D’Emilio, 2012).

If consumers are concerned about the safety of cruising, they may choose an onshore resort vacation instead of the cruise Last but not least, current economic and environmental factors do not appear to be having a real significant impact in the cruise line industry. Although the industry is still trying to survive from an extremely difficult economic period from 2008- 2010, the demand on the wave season in 2012 is still high (Mena, 2011; Yong, 2012). The wave season is the cruise industry’s peak sales period of the year, typically running from January to March for most lines.

The cruise line industry usually uses this to predict the demand for the following quarter in the year. (Yong, 2012) In conclusion, the political environment and technological environment have positive impacts and provide encouraging opportunities to the cruise line industry. On the other hand, the current social environment can be the threat to the industry. Additionally, while the economic environment does not appear to significantly influence the cruise line industry at this time, the organization should still be aware of its potential impact. . 2. 3 Competitor Analysis The competitor analysis plays an important role in marketing plan. It not only shows the position of the organization in the market but also presents both the advantages and disadvantages of the organization compared to its competitors. By looking at the competitor analysis, the organization can correct the marketing direction and clear its position in the industry. Furthermore, the organization can ensure that the product is superior so as to satisfy the customers, especially the customers in the target market.

The direct competitors of Disney Cruise Line are other cruise line companies, including those with different types of marketing positions. The figure shown in Appendix E uses the two factors, price and the level of family orientated packages provided to identify the position of all the competitors. By looking at Appendix E, it presents that the Disney Cruise Line, Royal Caribbean, Norwegian and Carnival are in the same position group which are highly family-oriented. Furthermore, Disney is the only company which provides true luxury cruise line products to the family market.

According to the figure portrayed in Appendix F, Royal Caribbean and Norwegian are the main competitors to Disney Cruise Line. All three companies provide special kids programs but using different names (Sloan, 2011). Another similarity between Disney and Norwegian is that both of them have their own fictional characters. Disney Cruise Line has Disney’s character such as Mickey Mouse and Toy Story. On the other hand, Norwegian has characters from Nickelodeon such as “Spongebob Squarepants”. Since there are more cartoon characters in the media today, Disney should be aware of he potential competition non-Disney characters play in consumer’s decision making. In addition, Disney and Royal Caribbean both provide unique cruising experiences but in different way. Royal Caribbean provides many adventure facilities on their ships, such as onboard rock climbing wall, ice skating rink, mini-golf course, surfing simulator, and boxing ring; these are very attractive to some family members, particularly teenagers. On the other hand, Disney is more focused on younger children and families as a whole.

By including in Disney’s special show the famous Disney characters and the “Magical moment”, it attempts to create the unique Disney experience for every family. Disney creates a moment that parents and children can experience together. The similarities between the Norwegian and Royal Caribbean cruise line are primary pricing and the diversity of destinations. The average per person price of Disney Cruise is over $250 per day while the other cruises are closer to $100 per day, significantly cheaper than Disney. The diversity of destinations is another difference between Disney and its two main competitors.

Since Disney has only 4 ships, it can only provide a few destinations to its customers. On the other hand, Norwegian and Royal Caribbean have 12 and 22 ships respectively. Based on the size of the company, they provide more choices of destinations than Disney, and this becomes another weakness to the Disney Cruise Line company. 2. 3 Summary Through conducting of the situational analysis, many reoccurring themes were highlighted which are important for making good marketing decisions for the Disney Cruise organization. It is evident that the Disney’s Cruise organization makes beneficial use of the Disney experience and theme.

As seen in the SWOT analysis, while Disney Cruise offers a unique experience attractive to families, the company is also not as established as its competitors within the industry. This also appears to be evident in Porter’s five forces when considering Disney’s position in the industry since its competitors have been in existence longer, are much larger, as well as competitor footprint. The targeted market analysis presents that the family consumer market is the targeted audience for Disney Cruise, but as was also shown in the SWOT and competitor analysis’s, packages and services are high priced and limited.

The analysis has shown that Disney Cruise offers a unique theme attractive to all family vacation seekers, but also shows the already established and large competition to the organization by the long stand cruise lines. 3. 0 Problem/opportunity Identification Through conducting the situational analysis, it is evident that the Disney Cruise organization is unable to compete with leading competitors due to their lack of size and ports. This problem is especially apparent in the organization’s competitor analysis where the small size of the organization relative to competitors within the industry is portrayed.

This is troublesome for the Disney Cruise Line as tourists usually select their cruise line based upon destination first and then look for accommodations that satisfy personal desires (Jenkins, 1978). Disney currently only provides a few destinations which are all located near the continental United States, such as Alaska, Hawaii, Canada, Mexico, Spain, and the Bahamas. In contrast, its competitor, Royal Caribbean, provides destinations all around the world, including various ports in South America, Europe, Africa, Australia, and Asia. This makes it impossible for Disney Cruise to compete based upon ports.

Expanding the size of the company is a strategy that would require significant resources and time. The Disney Cruise organization does however possess the opportunity to create a niche market targeted towards customers who remain loyal to the organization. It has been shown that customers in the cruise industry often show a high degree of loyalty to the organization which they choose (Sun, Jiao, & Tian, 2011). Through conducting an internal analysis, it is made clear that consumers who use Disney’s products and services often remain loyal to the organization and are likely to purchase from the Disney brand again.

Disney Cruise has the opportunity to specifically target Disney loyalists who are seeking a new form of the Disney experience. In doing so, the Disney Cruise organization must focus its marketing on the journey rather than the destination. The best opportunity for the organization is to develop a specific market in which the consumer will not be influenced by the amount of ports that are offered. In order to create a niche market, which is defined as targeting one segment of a market (McDaniel, Lamb & Hair, 2007), Disney Cruise Line must market itself to Disney loyalists.

The organization must implement and execute certain marketing strategies that target current and previous Disney customers. 4. 0 Marketing Strategy As seen in section 3. 0, the major weakness of Disney Cruise Line is the size of the organization. This causes a problem for the company because it cannot compete with its competitors on the quantity of service such as choices of destinations, date of departure, and the period aboard. In order to counteract this weakness, it is necessary to develop a marketing strategy for Disney Cruise Line.

Developing a marketing strategy will help the company to achieve its goal by defining a target market, setting marketing goals, and developing and maintaining a marketing mix (Shoemaker & Shaw, 2007). According to previous sections, Disney Cruise Line is unique in the cruise line market, due to the ability to create a unique “Disney experience” for its customers and attract tourists with its “Disney brand” (Watts, 1995; Pettigrew, 2011). Thus, the goal of the company should be to focus on a niche market. In this case, the niche market is visitors who have been to Disney theme parks and are highly loyal to the Disney Company.

In order to achieve this goal, Disney Cruise Line has to create a specific position which occupies a place in consumers’ minds that cannot be replaced by its competitors (McDaniel, Lamb & Hair, 2007). Furthermore, the functional strategy mix for Disney Cruise Line in the next 12 months is a product/service strategy, distribution strategy, and communication strategy. 4. 1 Product/service strategy Product and service are the basic items in a company. According to Shoemaker and Shaw, product/service mix is defined as the combination of products and services aimed at satisfying the needs of the target market (Shoemaker & Shaw, 2007).

In addition, since positioning is about designing product/service offering and accompanying image to occupy a unique place in customers’ minds, product and service play an important role in a positioning strategy (King, 2012). In order to segment the market, Disney Cruise Line has to develop a unique product which turns a cruise line experience into a “Disney experience”. As Disney has its characters, shows, and a private island, Castaway Key, Disney Cruise Line should position itself as a destination rather than just a travel mode. In addition, Disney Cruise Line should provide more package options which combine the existing travel resources, such as Disney resorts and Adventures by Disney, to offer more experiences to their customers. 4. 2 Distribution strategy The distribution mix is made up of all channels available between the firm and the target market that increase the probability of getting the product and the customer to each other (Shoemaker & Shaw, 2007). In other words, it is a mix of ways customers purchase the product. Thus, where to sell the product to customers has become the most important question in this strategy.

The target market of Disney Cruise Line is families which have been to Disney resorts and like the experiences. They usually have a high loyalty to the Disney Company. In this situation, direct marketing is the best strategy to use. Direct marketing refers to the techniques used to get costumers to make a purchase from home, office, or other nonretail setting (McDaniel, Lamb & Hair, 2007). This provides more opportunities for customers to purchase the product. In this case, Disney resorts and Disney theme parks can become channels through which Disney Cruise Line can sale its products.

Furthermore, Disney companies can share the customer information and send out e-mails directly to their potential customers to create the motivation of booking their next trip with Disney Cruise Line. 4. 3 Communication strategy One of the proposed strategies that will assist in the development of a niche market is to create a Disney loyalists rewards program. The development of a rewards program focuses on current customers rather than on potential customers or competition. This type of strategy is a form of relationship marketing, which is intended to establish, develop, and maintain successful relational exchanges (Morgan, 1994).

This promotion targeting frequent customers will create communications between the firm and the market that increase the tangibility of the product/service mix, monitor consumer expectations, and persuade customers to purchase (Shoemaker & Shaw, 2007). A rewards program for the frequent customers of Disney will influence these consumers towards future business with the organization, creating a niche market. 5. 0 Conclusion In conclusion, it was found through the conduction of the situational analysis that Disney Cruise Line could not successfully compete with its major competitors based upon size alone.

It is noted in the analysis that consumers within the cruise industry will often use ports as a deciding factor in determining their interests. Disney Cruise Line must counteract this problem by marketing to and creating a niche market for Disney loyalists. In doing so, the organization must focus on targeting previous Disney customers who are looking for another way to experience the Disney theme. This strategy is one that could be implemented within a 12 month time period, and serves as a strategic plan to counterbalance the lack of size and ports of the Disney Cruise organization.


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