Products and Services for Consumers

Global Perspective  

CHINA DISNEY ROLLS THE DICE AGAIN 

With the opening of Disneyland in Anaheim in 1955, the notion of the modern theme park was born. The combination of the rides, various other attractions, and the Disney characters has remained irresistible. Tokyo Disneyland has also proved to be a success, making modest money for  Disney through licensing and major money for its Japanese partners. Three-fourths of the visitors at the Tokyo park are repeat visitors, the best kind.

Then came EuroDisney. Dissatisfi ed with the ownership arrangements at the Tokyo park, the EuroDisney deal was structured very differently. Disney negotiated a much greater ownership stake in the park and adjacent hotel and restaurant facilities. Along with the greater control and potential profi ts came a higher level of risk. 

Even before the park’s grand opening ceremony in 1992, protestors decried Disney’s “assault” on the French culture. The location was also a mistake the Mediterranean climate of the alternative Barcelona site seemed much more attractive on chilly winter days in France. Managing both a multicultural workforce and clientele proved daunting. For example, what language was most appropriate for the Pirates of the Caribbean attraction—French or English? Neither attendance nor consumer purchases targets were achieved during the early years: Both were off by about 10 percent. By the summer of 1994, EuroDisney had lost some $900 million. Real consideration was given to closing the park.

Saudi prince provided a crucial cash injection that allowed for a temporary fi nancial restructuring and a general reorganization, including a new French CEO and a new name, Paris Disneyland. The Paris park returned to profi tability, and attendance increased. However, the temporary  holiday on royalties, management fees, and leases is now expired, and profi ts are dipping again. Disney’s response was to expand with a second “Disney Studios” theme park and an adjacent retail and offi ce complex at the Paris location. Again in 2005, the Saudi prince injected another $33 million into the park. 

Global Marketing Management

PLANNING AND ORGANIZATION 

Global Perspective  

THE BRITISH SELL ANOTHER TREASURE 

The mating dance has been unusually long, but then again, the deal was unusually large. Kraft fi rst proposed to purchase the British institution Cadbury for a price of almost $17 billion in early September. Then it had until November 9 to make a formal offer or give up the fi ght. The courtship unleashed a barrage of bad puns (e.g., “Cadbury gags on Kraft bid”). It also stirred up atavistic fears across Britain of a faceless American conglomerate wrecking a great British institution and forcing Britons to give up Dairy Milk chocolate and Creme Eggs in favor of Cheez Whiz and Jell O. 

A succession of studies has shown that three-quarters of mergers and acquisitions fail to produce any benefi ts for shareholders, and more than half actually destroy shareholder value (e.g., Quaker and Snapple, Daimler-Benz and Chrysler, Time Warner and AOL). The danger is particularly pronounced in hostile bids that cross borders and involve much loved brands.

Kraft Cadbury deal sounds designed for failure. Todd Stitzer, Cadbury’s boss, argues that his fi rm is an embodiment of a distinctive style of “principled capitalism” that was inspired by its Quaker founders nearly two centuries ago and has been woven into its fabric ever since. Destroy that tradition and “you risk destroying what makes Cadbury a great company.” 

The Asia Pacific Region

Global Perspective  

WALMART, TIDE, AND THREE SNAKE WINE 

Developing markets are experiencing rapid industrialization, growing industrial and consumer markets, and new opportunities for foreign investment. Consider the following illustration: In China, it is just a few shopping days before the Lunar New Year, and the aisles at the local Walmart Supercenter are jammed with bargain hunters pushing carts loaded high with food, kitchen appliances, and clothing. It could be the preholiday shopping rush in any Walmart in Middle America, but the shoppers here are China’s nouveau riche. Superstores have proven popular with Chinese consumers, who devote a large part of their spending to food and daily necessities. Walmart has been able to tap into the Chinese sense of social status by offering membership cards that confer not only eligibility for special discounts but social status as well.  

Europe, Africa, and the Middle East

Economic Development and the Americas

DESYNCHRONOSIS? SOMETHING GEORGE CLOONEY CAUGHT  UP IN THE AIR? 

The medical term sounds much more ominous than mere jet lag. But whatever you call it, it’s still a powerful force. The Encyclopedia Britannica  tells us :

hysiological desynchronization is caused by transmeridian (east-west) travel between different time zones. The severity and extent of jet lag vary according to the number of time zones crossed as well as the direction of travel—most people fi nd it diffi cult to travel eastward (i.e., to adapt a shorter day as opposed to a longer one). The resulting symptoms include extreme fatigue, sleep disturbances, loss of concentration, disorientation, malaise, sluggishness, gastrointestinal upset, and loss of appetite.

Some international executives seem to handle it well though.

Raj Subramaniam, the Senior Vice President of International Marketing at FedEx has spent almost as much time overseas as he has at the company’s Memphis headquarters in the 18 years he has worked there. True, that includes two long-term postings in Hong Kong and Toronto. But even since Subramaniam returned to Tennessee in 2006, he has been logging major miles, visiting FedEx’s far-fl ung offi ces to oversee global marketing plans and customer service. It’s a schedule that suits him, and he takes the opportunity to drop in on old haunts and discover new cities. “The worst thing you can possibly do is stay in the hotel, drink the bottled water, and just look out the window,” says the seasoned traveler, who offers a few of his secrets for travelling successfully.

Developing a Global Vision through Marketing Research

 JAPAN—TEST MARKET FOR THE WORLD

It was 10:51 p.m. in Tokyo, and suddenly Google was hit with a two-minute spike in searches from Japanese mobile phones. “We were wondering: Was it spam? Was it a system error?” says Ken Tokusei, Google’s mobile chief in Japan. A quick call to carrier KDDI revealed that it was neither. Instead, millions of cell phone users had pulled up Google’s search box after a broadcaster offered free ringtone downloads of the theme song from  The Man Who Couldn’t Marry,  a popular TV show, but had only briefl y fl ashed the Web address where the tune was available.

The surge in traffi c came as a big surprise to Tokusei and his team. They had assumed that a person’s location was the key element of most mobile Internet searches, fi guring that users were primarily interested in maps of the part of town they happened to be, timetables for the train home, or the address of the closest yakitori restaurant. The data from KDDI indicated that many Japanese were just as likely to use Google’s mobile searches from the couch as from a Ginza street corner

Japan’s cell-phone-toting masses, it seems, have a lot to teach the Internet giant. The country has become a vast lab for Google as it tries to refi ne mobile search technology. That’s because Japan’s 100 million cell phone users represent the most diverse—and discriminating—pool of mobile subscribers on the planet. Although Google also does plenty of testing elsewhere, the Japanese are often more critical because they are as likely to tap into the Internet with a high-tech phone as a PC and can do so at speeds rivaling fi xed-line broadband. And because Japanese carriers have offered such services for years, plenty of Web sites are formatted for cell phones.

Tokyo’s armies of fashion-obsessed shopaholics have long made the city fi gure prominently on the map of W estern designers. Sure, the suit and tie remain the uniform of the salaryman, but for originality, nothing rivals Tokyo teenyboppers, who cycle in and out of fads faster than a schoolgirl can change out of her uniform and into Goth-Loli gear. (Think Little Bo Peep meets Sid Vicious.) For American and European brands, these young people are a wellspring of ideas that can be recycled for consumers back home.

but now, instead of just exporting Tokyo cool, some savvy foreign companies are starting to use Japan as a testing ground for new concepts. They’re offering products in Japan before they roll them out globally, and more Western retailers are opening new outlets in Tokyo to keep an eye on trends. Ohio-based Abercrombie & Fitch and Sweden’s H&M (Hennes & Mauritz) set up shop in Tokyo in 2008, and Spain’s Zara is expected to double its store count to 50 over the next three years. “Twenty-fi ve or 30 years ago, major brands tested their new products in New York,” says Mitsuru Sakuraba, who spent 20 years at French fashion house Charles Jourdan. “Now Japan has established a presence as a pilot market.”

some Western companies also have signed on with local partners who can better read the Japanese market. Gola, an English brand of athletic shoes and apparel, has teamed up with EuroPacifi c (Japan) Ltd., a Tokyo-based retailer of fashion footwear. EuroPacifi c tweaks Gola’s designs for the Japanese market and, a few years ago, came up with the idea of pitching shin-high boxing boots to women. They were a hit with Japanese teens and twenty somethings, prompting Gola to try offering them in other markets. “They’ve sold a hell of a lot in Europe,” says EuroPacifi c Director Steve Sneddon. 

 

The International Legal Environment : Playing by the Rules