Disney consumer products harvard business case analysis.

1. DISNEY CONSUMER PRODUCTS: MARKETING
NUTRITION TO CHILDREN
created by:
Mehul Soni
IIT Madras

2. SITUATION(1/3)
• Growing criticism —> due to growing obesity epidemic
• 2004 estimates suggested that 30% of American children aged
between 5-9 years were overweight and 14% were obese
• Europe: childhood obesity rates in developed countries doubled
from 1973 to 2003
• USDA(U.S. Department of Agriculture) issued “Dietary Guidelines
for Americans” suggesting to adopt a “balanced eating pattern”
• Institute of Medicine(IOM) specifically recommended avoiding
linking of “nutritionally questionable” products to cartoon
characters

3. SITUATION(2/3)
THREATS
•Disney’s portfolio has mostly been sweets and treats. Increasing obesity poses a threat to the
company to consider the nutritional value of its own food products
• The food and grocery division of DCP, due to dietary guidelines from government like USDA,
IOM might contribute negatively to the brand as a whole
• Increasing competition from many sources, including commodity produce products, major
brands such as Dole, Green Giant and Fresh Express and within the children’s segment, other
entertainment brands such as Nickelodeon, Sesame Workshop, Warner Bros
• The company would need to establish credibility with the U.S. government, parents and
nutritionists

4. DIETARY GUIDELINES FOR DISNEY CONSUMER PRODUCTS

5. OPPORTUNITIES
• It could be seen as an opportunity to simultaneously broaden and rationalize its
product offerings
• The statistics showing increasing revenue from the Food and Grocery division
of DCP provides increasing opportunities to the company to grow in this area
SITUATION(3/3)

7. DISNEY’S FOUR MAJOR DIVISIONS

8. QUESTIONS
1. How can Disney protect its highly valuable brand from
potential negative rub off due to association with mostly
“sweets and treats” kind of foods?
2. Could Disney provide leadership for the rest of the food
industry and use its brand strength to reach
children?Could the company use its “magic” to get
children to switch from sugary, processed foods and
become lifelong converts to a more nutritious diet?
3. Could (and should) Disney use this opportunity to create a
strong and profitable food oriented business within its
Consumer products portfolio?

9. Why did Disney partner with Kroger and not Wal-mart?
Disney should also approach bigger supermarkets
like Wal-mart

10. HYPOTHESIS
It would be difficult for the company to find profitable
results from its Food and Grocery Division

11. PROOF AND ACTION

12. Food is small business for Disney
1. According to the 2005 statistics, the retail sales of DCP-licensed food
products was $1.5 billion out of a total retail sales of $23 billion.
2. As visible from exhibit1, the revenue generation out of this total sale value
was nearly $2.1 billion
3. Additionally, the contribution of Food and Grocery division is even
smaller, the number being only $69 million which is barely 3% of DCP
and 0.2% of Disney revenues.

13. Risks associated with a food business
1. New product launches are highly risky: studies suggest
that more than 14,000 new food and beverage products
entered the U.S. marketplace each year but less than 6%
were effective
2. Strong competition: it has a risk of huge competition from
many sources including major brands such as Dole, Green
Giant and Fresh Express and also other entertainment
brands such as Nickelodeon and Warner Bros.
3. Legacy: Disney has been subject to vocal criticism in the
past and expected to encounter some skepticism as a
result.

14. Risks associated with a food business(contd.)
4. Pricing and value: food has been a lower margin
business for Disney. Products have to be
affordable yet high quality to represent the brand
creating pressure on margins.
Yr 2005
Merchandised
value
Revenue Percentage(%)
All DCP $23 bn $2.2 bn 9.5
Food only $1.5 bn $69 mn 4.5

15. ACTIONS
1. Disney should incorporate “healthy food” through
fruit shops and cafes in its amusement parks which
receive a huge footfall. Doing so, the consumers
would be able to correlate healthy food at Disney
parks to the brand itself.
2. Additionally, it should proactively shift towards
advertising of healthy food on its TV channels.

16. ACTIONS
3.Healthy food campaigns for parents: Parents
must also tell their children about the advantages of
healthy foods and give the children healthy food in
right proportions which can be achieved through
Disney’s healthy products campaign.
4. It can associate healthy food products with its
cartoon characters

17. DISNEY’S FAVORITE CHARACTERS