206 PART 3 | CONNECTING WITH CUSTOMERS

positioning is critical to marketing and that these marketing Marketing Discussion

programs are an attempt to be relevant to a certain con-
sumer group. What Are Your Mental Accounts?
Take a position: Targeting minorities is exploitive ver- What mental accounts do you have in your mind about
sus Targeting minorities is a sound business practice. purchasing products or services? Do you have any rules you
employ in spending money? Are they different from what
other people do? Do you follow Thaler’s four principles in
reacting to gains and losses?

Marketing Excellence Aladdin (1992), The Lion King (1994), Toy Story (with
Pixar, 1995), and Mulan (1998). In addition, the company
thought of creative new ways to target its core family-
>> Disney oriented consumers as well as expand into new areas to
Few companies have been able to connect with their reach an older audience. It launched the Disney Channel,
audience as well as Disney has. From its founding by Touchstone Pictures, and Touchstone Television. Disney
brothers Walt and Roy Disney in 1923, the Disney brand featured classic films during The Disney Sunday Night
has always been synonymous with trust, fun, and qual- Movie and sold its classic films on video at extremely low
ity entertainment for the entire family. Walt Disney once prices, reaching a whole new generation of children. It
stated, “I am interested in entertaining people, in bringing tapped into publishing, international theme parks, and
pleasure, particularly laughter, to others, rather than being theatrical productions that helped reach a variety of audi-
concerned with ‘expressing’ myself with obscure creative ences around the world.
impressions.” Today, Disney consists of five business segments:
The Walt Disney Company has grown into the world- Studio Entertainment, which creates films, recording la-
wide phenomenon that today includes theme parks, bels, and theatrical performances; Parks and Resorts,
feature films, television networks, theatre productions, which focuses on Disney’s 11 theme parks, cruise lines,
consumer products, and a growing online presence. In and other travel-related assets; Consumer Products,
its first two decades, however, it was a struggling cartoon which sells all Disney-branded products; Media Networks,
studio that introduced the world to Mickey Mouse, who which includes Disney’s television networks such as
went on to become its most famous character. ESPN, ABC, and the Disney Channel; and Interactive.
Few believed in Disney’s vision at the time, but the Disney’s greatest challenge today is keeping a
smashing success of cartoons with sound and of the 90-year-old brand relevant and current with its core au-
first full-length animated film, Snow White and the Seven dience while staying true to its heritage and core brand
Dwarfs, in 1937 led to other animated classics through- values. Disney’s CEO Bob Iger explained, “As a brand
out the 1940s, 1950s, and 1960s, including Pinocchio, that people seek out and trust, it opens doors to new
Bambi, Cinderella, and Peter Pan, live-action films such platforms and markets, and hence to new consumers.
as Mary Poppins and The Love Bug, and television series When you deal with a company that has a great legacy,
like Davy Crockett. you deal with decisions and conflicts that arise from the
When Walt Disney died in 1966, he was considered clash of heritage versus innovation versus relevance. I’m
the best-known person in the world. He had expanded the a big believer in respect for heritage, but I’m also a big
Disney brand into film, television, consumer products, and believer in the need to innovate and the need to balance
Disneyland in southern California, the company’s first theme that respect for heritage with a need to be relevant.”
park. After Walt’s death, Roy Disney took over as CEO and Internally, to achieve quality and recognition, Disney
realized his brother’s dream of opening the 24,000-acre has focused on the Disney Difference, which stems
Walt Disney World theme park in Florida. Roy died in 1971, from one of Walt Disney’s most recognizable quotes:
and the company stumbled for several years without the “Whatever you do, do it well. Do it so well that when peo-
leadership of its two founding brothers. It wasn’t until the ple see you do it they will want to come back and see you
late 1980s that the company reconnected with its audience do it again and they will want to bring others and show
and restored trust and interest in the Disney brand. them how well you do what you do.”
It all started with the release of The Little Mermaid, Disney works hard to connect with its customers
which turned an old fairy tale into a magical animated on many levels and through every single detail. For ex-
Broadway-style movie that won two Oscars. Between ample, at Disney World, “cast members” or employees
the late 1980s and 2000, Disney entered an era known are trained to be “assertively friendly” and greet visitors
as the Disney Renaissance as it released groundbreaking by waving big Mickey Mouse hands, hand out maps
animated films such as Beauty and the Beast (1991), to adults and stickers to kids, and clean up the park
 ANALYZING CONSUMER MARKETS | CHAPTER 6 207

so diligently that it’s difficult to find a piece of garbage shows as well as to post news about its products and
anywhere. interviews with Disney’s employees, staff, and park of-
Every detail matters, right down to the behavior of ficials. Disney’s Web site provides insight into its movie
custodial workers who are trained by Disney’s anima- trailers, television clips, Broadway shows, and virtual
tors to take their simple broom and bucket of water and theme park experiences.
quietly “paint” a Goofy or Mickey Mouse in water on the Disney’s marketing campaign in recent years has
pavement. It’s a moment of magic for guests that lasts focused on how it helps make unforgettable family mem-
just a minute before it evaporates in the hot sun. ories. The campaign, “Let the Memories Begin,” fea-
Disney’s broad range of businesses allows the com- tures real guests throughout Disney enjoying different
pany to connect with its audience in multiple ways, ef- rides and magical experiences. Leslie Ferraro, executive
ficiently and economically. Hannah Montana provides an vice president of global marketing, Disney Destinations,
excellent example. The company took a tween-targeted elaborated, “The inspiration for this effort came from our
television show and moved it across several divisions to guests. Each and every day people are making memories
become a significant franchise for the company, includ- at our parks, posting them online and sharing them with
ing millions of CD sales, video games, popular consumer friends and family.”
products, box office movies, concerts around the world, According to internal studies, Disney estimates that
and ongoing live performances at international Disneyland consumers spend 13 billion hours “immersed” with the
resorts in Hong Kong, India, and Russia. Disney brand each year. Consumers around the world
Recently, Disney acquired three huge brands: Pixar, spend 10 billion hours watching programs on the Disney
Marvel, and LucasFilms. The company has started to Channel, 800 million hours at Disney’s resorts and theme
leverage these properties, which include the Star Wars parks, and 1.2 billion hours watching a Disney movie—at
brand and superheroes such as Spiderman, Iron Man, home, in the theater, or on their computer. Today, Disney
and the Hulk, across many of its businesses in order to is the 13th most powerful brand in the world, and its rev-
create sustainable character brands and new growth op- enues topped $45 billion in 2013.
portunities for the company.
Perhaps the most anticipated new product of 2013 Questions
was the Disney Infinity gaming platform, which crossed all 1. What does Disney do best to connect with its core
Disney boundaries. Disney Infinity allowed consumers to consumers?
play with many of the Disney characters at the same time,
interacting and working together on different adventures. 2. What are the risks and benefits of expanding the
For example, Andy from Toy Story might join forces with Disney brand in new ways, such as video games or
Captain Jack Sparrow from Pirates of the Caribbean and superheroes?
several monsters from Monsters, Inc. to fight villains from Sources: “Company History,” Disney.com; “Annual Reports,” Disney.com; Richard Siklosc, “The
outer space. Iger Difference,” Fortune, April 11, 2008; Brooks Barnes, “After Mickey’s Makeover; Less Mr. Nice
With so many brands, characters, and businesses, Guy,” New York Times, November 4, 2009; “World’s Most Powerful Brands,” Forbes, April 2012;
Dorothy Pomerantz, “Five Lessons in Success from Disney’s $40 Million CEO,” Forbes, January
Disney uses technology to ensure that a customer’s ex- 23, 2013; “Disney Launches Infinity Video Game That Costs More Than an iPad Mini,” Daily Mail,
perience is consistent across every platform. The com- January 16, 2013; Carmine Gallo, “Customer Service the Disney Way,” Forbes, April 14, 2011;
pany connects with its consumers in innovative ways Hugo Martin, “Disney’s 2011 Marketing Campaign Centers on Family Memories,” LA Times,
September 23, 2010; Elena Malydhina, “Disney Parks Campaign Borrows Family Memories,”
through e-mail, blogs, and its Web site. It was one of the Adweek, September 23, 2010; Disney Annual Report 2013.
first companies to begin regular podcasts of its television

Marketing Excellence a retail titan in home furnishings and a global cultural phe-
nomenon, inspiring BusinessWeek to call it a “one-stop
sanctuary for coolness” and “the quintessential cult brand.”
>> IKEA IKEA inspires remarkable levels of interest and devo-
IKEA was founded in 1943 by a 17-year-old Swede named tion from its customers. Each year more than 650 million
Ingvar Kamprad who sold pens, Christmas cards, and visitors walk through its stores all over the world. Most
seeds out of a shed on his family’s farm. The name IKEA need to drive 50 miles round-trip but happily make the
was derived from Kamprad’s initials (IK) and the first letters effort in order to experience IKEA’s unique value proposi-
of the Elmtaryd farm and the village of Agunnaryd where tion: leading-edge design and functional home furnish-
he grew up (EA). Over the years, the company grew into ings at extremely low prices.
208 PART 3 | CONNECTING WITH CUSTOMERS

IKEA’s Scandinavian-designed products are well Year of the Rooster, IKEA stocked 250,000 plastic place-
made and appeal to the masses. To stay relevant and mats with rooster themes, which quickly sold out. When
fashionable, the company replaces approximately one- employees realized U.S. shoppers were buying vases
third of its product lines each year. Most have Swedish as drinking glasses because they considered IKEA’s
names, such as HEKTAR lamps, BILLY bookcases, and regular glasses too small, the company developed larger
LACK side tables. Kamprad, who was dyslexic, believed glasses for the U.S. market. After IKEA managers vis-
it was easier to remember product names rather than ited European and U.S. consumers in their homes, they
codes or numbers. learned that Europeans generally hang their clothes,
Besides featuring fashionable and good-quality prod- whereas U.S. shoppers prefer to store them folded. As a
ucts, IKEA stands out in the industry because of its bar- result, IKEA designed wardrobes for the U.S. market with
gain prices. The company’s vision is and always has been deeper drawers.
“to create a better everyday life for the many people.” As Showrooms in each country or region vary as well.
Kamprad said, “People have very thin wallets. We should For example, managers learned that many U.S. con-
take care of their interests.” A high percentage of its cus- sumers thought IKEA sold only European-size beds.
tomers are college students and families with children. Beds are very important to U.S. consumers, so IKEA
IKEA continuously seeks out new ways to run its quickly changed its U.S. showrooms to feature king
businesses more efficiently and pass those cost savings beds and a wide range of styles. After visiting Hispanic
on to the customer. In fact, it reduces prices across its households in California, IKEA added more seating and
products by 1 percent to 3 percent annually. How can dining space to its California stores, as well as brighter
it do so? For starters, IKEA engages the consumer on color palettes and more picture frames on the show-
many levels, including having the customer do all the room walls. In China, IKEA set up its showrooms in small
shopping, shipping, and assembly. spaces to accurately reflect the small size of apartments
IKEA’s floor plan is designed in a winding, one- in that country.
way format featuring different inspirational room settings, As the company expands globally, it is learning that
so consumers experience the entire store. Next, they attitudes towards its core DIY (do it yourself) delivery
can grab a shopping cart, pay for the items, visit the and assembly business model vary. In China, for ex-
warehouse, and pick up their purchases in flat boxes. ample, consumers do not want to assemble products
Consumers load the items in their car, take them home, themselves and will pay a significant amount for home
and completely assemble the products themselves. This delivery and assembly. As a result, IKEA has added these
strategy makes storage and transportation easier and services, and sales in Asia have taken off. The company
cheaper for the store. plans to implement the same strategy in India, where DIY
IKEA has also implemented several company-wide is also less common.
strategies to keep operational costs low. The company IKEA is known for its quirky marketing campaigns,
buys in bulk, controls the supply chain, uses lighter pack- which help generate excitement and awareness of its
aging materials, and saves on electricity through solar stores and brand. It ran a campaign inviting customers
panels, low-wattage light bulbs, and energy from its own to be the “Ambassador of Kul” (Swedish for “fun”), but in
wind farms in six different countries. Its stores are located order to collect the prize, the contestants had to live in an
a good distance from most city centers, which helps IKEA store for three full days before it opened, which they
keep land costs down and taxes low. happily did.
When IKEA develops new products, its designers Thousands of people will line up for a chance to win
and product developers start with a low price tag first prizes and IKEA furniture. In Sweden, IKEA launched a
and then work with one of their 1,350 suppliers around Facebook page for the manager of a new store. Anyone
the world to develop the product within that price range. who could tag his or her name to an IKEA product on
Designs are efficient, and waste is kept to a minimum. the profile page won that item. The promotion generated
Most stores resemble a large box with few windows and thousands of tags.
doors and are painted bright yellow and blue—Sweden’s IKEA has evolved into the largest furniture retailer in
national colors. the world, with approximately 350 stores in 43 countries
Many of IKEA’s products are sold uniformly through- and revenues topping €27.9 billion, or $36 billion, in
out the world, but the company also caters to local 2013. The majority of sales still come from Europe, but
and regional tastes. For example, stores in China stock the company has aggressive plans to expand the $11 bil-
specific items for each New Year. During the Chinese lion brand further into Asia, India, and the United States.
 ANALYZING CONSUMER MARKETS | CHAPTER 6 209

Questions Sources: Kerry Capell, “IKEA: How the Swedish Retailer Became a Global Cult Brand,”
BusinessWeek, November 14, 2005, p. 96; “Need a Home to Go with That Sofa?,” BusinessWeek,
1. What are some of the things IKEA is doing well to November 14, 2005, p. 106; Ellen Ruppel Shell, “Buy to Last,” Atlantic, July/August 2009;
reach consumers in different markets? What else Jon Henley, “Do You Speak IKEA?,” Guardian, February 4, 2008; “Innovative Retailers: IKEA,”
Retailinsider.com/PCMS, March 29, 2012; Jenna Goudreau, “How IKEA Leveraged the Art of
could it be doing? Listening to Global Dominance,” Forbes, January 30, 2013; IKEA, www.ikea.com.

2. IKEA has essentially changed the way people shop for

furniture. Discuss the pros and cons of this strategy,
especially as the company plans to continue to ex-
pand in places like Asia and India.