HARVARD BUSINESS CASE REVIEW IIM LUCKNOW PROF SAMEER MATHUR'S SUMMER INTERNSHIP

1. DISNEY CONSUMER PRODUCTS:
MARKETING NUTRITIONTO
CHILDREN !

2. WHAT IS
DISNEY ??

4. WHO ARE THE MAIN
PLAYERS ??

5. HARRY DOLMAN : EXECUTIVE VICE PRESIDENT ,DCP
HERMANKAY KAMEN: LICENSING REP , DCP
ANDY MONNEY : PRESIDENT FOR DCP
REID LESLIE: DIRECTOR FOR FOOD AND BEHAVIOUR , DCP
GOODWIN : CEO FOR IMAGINATION FARMS
JOHN HONECK: TEAM LEADER FOR DCP’S GROCERY
BUSINESS

6. WHAT IS THE PRESENT
SITUATION ?

7. SITUATION ANALYSIS :
Synonymous to FUN and MAGIC
Children associated to FOOD
TREATSStuck in a MALESTORM !!!
Government , activists and parents believedthat it
contributedto GROWING OBESITY EPIDEMIC !!!

8. In 2004, health experts estimated that more
than 30% of American children between the ages
of 5 and 9 years were overweight and 14% were
obese.
In Europe, childhood obesity rates in developed
countries doubled from 1973 to 2003 with Italy,
Spain, the Netherlands and the United Kingdom
all reporting 10% or more children aged 5 to 9
years were obese

9. WHAT IS THE
PROBLEM ?

10. • SOFTLINES
• HARDLINES
• HOME AND INFANT
• BUENA VISTA GAMES
• PUBLISHING
• TOYS
DISNSEY CONSUMER PRODUCTS(DCP)

11. The Disney brothers hired Herman “Kay” Kamen as the company’s sole
licensing representative;
Kamen’s company had licensed Mickey Mouse and other characters to appear on products
such as candy, cookies, and toothpaste, and in ad campaigns for bread, milk , orange juice ,
ice cream and breakfast cereal. —
particularly food manufacturers , paid handsomely for the right to feature Disney characters
on their packaging.
in 1934, General Foods paid $1 million to feature Mickey Mouse cutouts
In 1948, the company reported licensing income of over $1 million and retail sales of $100
million
In 1954, Disney capitalized on the persuasive power of television when the company sold
$300million in coonskin caps and other merchandise
By the mid-1970s, collectors traded Disney memorabilia, leading to the first Sotheby’s auction
for “Disneyana” merchandise
1996, DCP signed an exclusive, 10-year, $2 billion licensing deal with McDonald’s

12. The PROBLEM :
After enjoying decades of 25% annual
growth, in 1998 and 1999, DCP
experienced 10-15% declines in sales

13. STRATEGY:
THEN :
“To co-brand with
manufacturers, premium price
and passively license products,”
NOW :
“Tofocus on the brand and we
need a model that will support
this goal.”

14. TWO OTHER MODELS :
SOURCING:
Contract manufacturing,where products were created
and designedby Disney and featuredthe Disney brand,
butthe licenseewouldhandle manufacturing, sales
and marketing.
DTR (DIRECT TO RETAIL) :
Entailedpartneringdirectlywith retailerswhowere, in
DCP’s estimation,
“winnersin their channel/marketplace.”

15. HYPOTHESIS!

16. DCP had been a long-time licensor of
packaged foods, though the portfolio
had consisted largely
of candy and ice cream
In 2004, DCP estimated that its
branded food products accounted for
less
than 1% of the children’s food
market.

17. And with the alarming rates of obesity in the
country , DISNEY , decided it to be the right time
to start a wholenew line offoodproducts and
BROADEN its PRODUCT OFFEREINGS .

18. To interest both the mothers and kids , DCP manager-
LESLIE, decided that to be successful,a newlinewould
needto be moderately priced andbe positioned as a fun
lineof products developed
specificallyfor childrenand should containnutritionas
well!

19. Factors for obesity rise :
*Consuming largerportion of food than
required.
*Television advertising is a primary factor. A study of
children’sabilityto recalladvertised products andexpress
product preferences found that advertising was highly
effectivein persuading childrento request products.

20. IOM recommendedthat food andbeverage companies:
1. Actively promote healthfuldiets for children.
2. Create or reformulate children’sproductsto reduce
calories,fat, saltand addedsugar while
improving nutrientcontent.
3. Develop an “empiricallyvalidatedindustry-widerating
system” for labelingand advertising
thatappealedto childrenand conveyed nutritional
information.

21. 4. Enforce strict marketingstandards and adhere to self-
regulatory guidelines for traditionaladvertising as well as
“evolving vehicles” such as theInternetand “averages.”
5. Avoid linking“nutritionallyquestionable”products to admired
celebrities, sports figures, or cartoon characters (includingthe
cross-promotion of food with branded children’s programming).

22. Accordingto Ndi Embola , Vice Presidentof DCP
“Right now,
kids eat the wrong foods—andtoo much of the wrong
foods.”

23. DIET PLAN !!!!!
Disney’s portfolio:
Main meal,
Side dish,
Snacks,
Drinks and
Treats.

24. Table A Recommendations for Disney-branded Foods after
Nutritional Audit
% of
portfolio
Products met nutritional guidelines for category— no
changes required 41%
Products classified as occasional treats— exempted
from nutritional guidelines 15%
Products out of compliance but able to meet
guidelines after portion sizes adjusted 9%
Products out of compliance—to be reformulated 7%
Products out of compliance—to be phased out 28%
Total 100%

25. Disney adopted three approaches
toward creating Disney food
products.
*First,DCP would offer products that alreadyhad
broad appealand make the products they already
love healthier!
*The secondwas to take products that were already
healthy and makethem more“fun.”
*Thirdwas to use packagingto inspire product
sampling,such as makingwater bottles in the shape
of characters.

26. PROOFS/ACTION :

27. Accordingto Ndi‘s points,
Disneystarted to make deals and partnerships
with other brands to meet its requirements.
IMAGINATION FARM
PRODUCTS
KROGGER PRODUCTS

28. IMAGINATION FARMS AND DISNEY :
DCP Markets embraced a “wholefoods first” philosophy
andas a result, marketedfresh fruitsandvegetables in
addition to its package products.
They also worked withones whichproduce breeders to
identifyitems in their portfolios whichwere particularly
suited to children

29. Imaginationfarms products wereall childrenfriendly ,
with :
*All the nutrient values explainedin kid friendly way
*potatoesusuallyweigh 6-7 ounce are made into3-4
ounce whichis enough for the kid andsold, so making
sure only the required quantityfoodis in taken !!

30. KROGER AND DISNEY :
Along withFRESH PRODUCTS ,Disneywanted to make its
own line GROCERY STORES and thusmade deals with
KROGERthe largest pure grocery retailerin The United
States ( 12% share of the US grocery market )

31. *Together, Disney andKroger sized the opportunity at $250
millionin annualrevenue andused
focus groups andNielsen data to validate the categories and
products they had selected .
As wellas the brand name : Disney MagicSelections
*Kroger had exclusiveU.S. use of two food-specific
character personas:
Chef Mickey appearedon packagedfoods and
featured Mickeyoutfitted in a chef’s hat;
FarmerMickeyadorned fresh fruits and vegetables
and appearedin a farmer’shat !
*Together, Disney andKroger sized the opportunity at $250
millioninannualrevenue and used
focus groups and Nielsen data to validatethe categories and
products they had selected .
As wellas the brand name : Disney MagicSelections
*Kroger had exclusiveU.S. use of two food-specific
character personas:
Chef Mickeyappearedon packagedfoods and
featured Mickeyoutfitted in a chef’s hat;

32. DCP’s Foodand Beverage Categories
Healthy Categories Staples Treats
Water pasta Confections
Juice Soups Ice Cream
Milk Carbs/Breads Cookies
Fruit Yogurts
Vegetables Meats/Cheese

33. Exhibit 10 Private Label Opportunity by Category for “Better-for-You” Products, 2006
Kid-Driven Categories Private Label Share
of Mainstream Private Label Share
of “Better for You”
Bread 27% 0%
Carbonated Soft Drinks 11% 8%
Cheese 32% 19%
Chocolate Candy & Chewing Gum 2% 0%
Cookies 14% 2%
Crackers 11% 9%
Frozen, Hand-Held Entrees 5% 0%
Ice Cream/Novelties 21% 10%
Lunch Combos & Lunch Meats 9% 11%
Portable Breakfast & Snack Foods 10% 6%
Ready-To-Eat Cereal 10% 11%
Salty Snacks 5% 7%
Shelf-Stable Juice Drinks 19% 0%
Soup 12% 9%
Sport & Energy Drinks NA 1%
Yogurt & Yogurt Drinks 15% 19%

34. ALTERNATIVES :

35. Despite all thepositive points and strategies ,
There stillmightbe slight chances of failureof the strategies …
reasons could be :
*Serving SMALLERPORTION SIZESmay be
viewed by some private sector businesses as risks rather thanas
opportunities;
*COMPETITORS: NICKELODEON, SESAME WORKSHOP,
WARNER BROS. etc., who follow similar strategieslike thatof
DISNEY !

36. *PRICING AND VALUES : These commoditiesare priced
accordingto their competitors , butare stillhigh priced !
*LEGACY : if the public—andparticularlythe media—
would
embrace the new food products.Though they were
confidentthatthe products would be healthful,
child-friendlyand fun, they had been subject tovocal
criticismin thepast andexpected to encounter

37. DISCLAIMER:
Created by HASITHA RAMINI,NIT TRICHY, during a
MARKETING INTERNSHIP by Prof.SAMEER MATHUR,
IIM LUCKNOW.