The Walt Disney Company was established in 1923 and is now a $32 billion mass media and entertainment conglomerate. In 2005, Disney generated $2.5 billion in net income. Disney Consumer Products (DCP) licenses Disney characters for use on food and other merchandise. In response to criticism over marketing unhealthy foods to children, DCP reformulated products to be more nutritious and launched partnerships with grocery retailers like Kroger to market healthier Disney-branded foods using characters like Chef Mickey.

1. HARVARD BUSINESS SCHOOL CASE

2. The Walt Disney Company was
established in 1923, by brothers
Roy and Walter Elias Disney.
The American multinational
mass media and entertainment
conglomerate is valued at $32
Billion, with a net income of
$2.5 Billion.
(as of 2005)

3. ( 1 9 0 1 - 1 9 6 6 )

4. Media
Network
Parks &
Resorts
Studio
Entertainment
Disney
Consumer
Products

6. Income Statement, Walt Disney Company and Disney
Consumer Products, fiscal 2003–2005 ($ millions)
(1/4)

7. Consumer Time Investment in Disney-Related
Entertainment Activities
(2/4)

8. Top-Earning Fictional Characters, 2003 to 2004 ($ billions) (3/4)

9. Character Awareness by Key Disney Franchise, among
Children Ages 2–11 Years
(4/4)

11. Which Include:

12. However, in 2004, Disney was subject to growing criticism in the wake of
increasing childhood obesity.
A primary reason was that the company was attributed with the sale of
high-calorie foods and beverages.

13. This, however, was seen
as an opportunity by DCP
to reconsider its entire
range of food products.

14. Right now, kids eat the wrong
foods — and too much of the
wrong foods. The solution is to
promote healthier categories.
“
”
EMBOLA NDI
Vice-President, Product Development

15. Merchandise Licensing
Disney at the Supermarket
Nutrition, Obesity and the American Diet
Disney Nutritional Guidelines
The Competition
Disney and Kroger

16. Merchandise Licensing

17. Softlines (apparel, footwear and accessories)
Buena Vista Games
Home & Infant
Hardlines (food, health & beauty, electronics, and stationery)
Publishing
Toys
6 Lines of Business DCP is Involved with:

18. Licensing Models:
1. Traditional Licensing Model
• Licensees handle product innovation and manufacaturing.
2. Sourcing Model
• Licensee would sales and marketing, while Disney manufactured the product.
3. Direct-to-Retail (DTR) Model
• Selling brand and character rights directly to retailers.

19. Leading Licensors of Character-Driven
Entertainment Brands, 2005

20. Disney At The Supermarket

21. Kids want fun graphics and
shapes, good taste, and great
fun. The products need to make
them feel special and must be
non-patronizing and Mom-approved.
“
”
REID LESLIE
Director, Food & Beverage

22. Research showed mothers transferred their perceptions of the Disney brand as
high quality, trustworthy and familiar to a line of food and beverages.
Thus, to balance out the need of the mother, and demand of the child,
DCP determined that key product categories were water, fresh food, frozen
foods, juice, pasta, soup, cereal, baked goods and dairy/milk.

23. Nutrition, Obesity and the American Diet

24. 65%
More than sixty-five percent of the U.S. adult population was
classified as overweight or obese.
40,000
Number of commercials an average child watched annually—
50% of which were for high calorie, high fat foods and beverages
such as candy, fast food, snack foods, soft drinks, and sweetened
breakfast cereals.

25. Actively promote healthful
diets for children.
Create or reformulate
children’s products to
reduce calories & fat.
Develop an empirically
validated industry-wide
rating system.
Enforce strict marketing
standards.
Avoid linking “nutritionally questionable” products
to admired celebrities, sports figures, or cartoon
characters
Institute of Medicine (IOM) Recommendations:

26. Disney Nutritional Guidelines

27. DCP’s internal nomenclature for its evolving
healthier product line:
Products would be
minimally processed
Control levels of added
sugar
Contain no trans or
hydrogenated fats
Adjusting a food
product’s portion
size
Prefer to use whole
foods that are
intrinsically dense in
nutrients

28. Recommendations for Disney-branded Foods
after Nutritional Audit

29. We know that to be appealing to
children, the products need to
integrate their favourite characters
and the aura and magic of Disney into
the package design. All together, these
elements can encourage children to
try the products.
“
”EMBOLA NDI
Vice-President, Product Development

30. Approaches undertaken by DCP:
The third was to
use packaging to inspire
product sampling, such as
making water bottles in
the shape of characters.
The second was to
take products that
were already healthy
and make them more “fun.”
First, DCP would offer
products that already
had broad appeal such
as milk or peanut butter.

31. Imagination Farms

32. DCP embraced a “whole foods first” philosophy and as a result, marketed fresh
fruits and vegetables in addition to its package products.
Disney began licensing its characters to Imagination Farms, a national fresh
produce marketing company founded specifically to serve as a licensee to DCP.

33. DCP and Imagination Farms used a three-pronged product
development strategy:
Differentiate commodity produce through promotion
Create value-added products through product preparation or
packaging
Develop exclusive produce varieties that would yield more child-
friendly foods

34. The Competition

35. The top rated U.S. basic cable
network since 1996.
Unit sales of Darling clementines
increased by almost 25% after
the Dora and SpongeBob
characters were added to the
product packaging.
“My goal is to have every fruit a
kid would want to eat with a
Nickelodeon character.”
- Sherice Torres
Licensing Vice-President

36. Signed a licensing deal with
Del Monte Foods, a $3 Billion
US company,
in 2006.
Pre-schoolers' consumption of
broccoli increased by 28%
when the vegetable was
branded with a Sesame Street
character.
“If anyone can encourage
children to eat their fruits and
vegetables…it’s Elmo, along
with his friends Cookie
Monster and Grover.”
- Apu Mody
Managing Director

37. Ready Pac planned to feature
Warner’s Bugs Bunny, Tweety
and Tasmanian Devil characters
on its Cool Cuts Ready Snax
single-serving packages of fruit.
2-ouce packets of fruits were
promoted as lunchbox
alternative to cookies, chips
and candy.

38. Disney and Kroger

39. Ten Largest U.S. Supermarket Companies, 2006

40. Kroger Supermarkets
• The largest pure grocery retailer in
the United States.
• Fiscal year 2005 sales of $60.6
Billion.
• The retailer operated 3,700 stores
in 30 states.
• Together, Disney and Kroger sized
the opportunity at $250 million in
annual revenue

41. Launching Disney Magic Selections
• Disney Magic Selections officially
launched on September 10, 2006.
• Kroger had exclusive U.S. use of two
food-specific character personas:
Chef Mickey and Farmer Mickey.
• Kroger invested significantly in
marketing the Disney Magic
Selections line.

42. We wanted to use Disney’s storytelling
and characters to help kids understand
and internalize information—to
communicate to kids in a fun, Disney way
“
”John Honeck
Team Leader for DCP’s Grocery and Drug
Business

43. • New products met
with scepticism by
media and the
public.
• Competition and
Channel Friction
due to rival firms.
• Products have to
be affordable
without
compromising
brand image.
• The company could
differentiate
additional lines
using characters,
brand and price. Growth
&
Distribu
tion
Pricing
& Value
Legacy
Differen
tiation &
Competi
tion

44. Capitalize on the
existing brand
value.
Disney products are
stand-out in the
market,
synonymous with
quality and
reliability
Advocate
responsible
marketing.
Incorporating
healthy food
products into TV
shows breed parent
satisfaction and
promotes healthy
consumption
Chart out a
comprehensible plan
for launching new
products.
Disney has to make
sure that the
product will be
accepted by the
public before
investing in it
Maintain a healthy
relationship with
retail giants, as they
provide the main
source of outlet for
DCP’s goods
Launch new
characters as per
requirement, and
establish a wide-
distribution network
for each.
Each character has its
own brand value
which needs to be
maintained

46. THANK YOU

47. DISCLAIMER
Created by Sumiran Mittal, BITS Hyderabad, during a marketing internship under
Prof. Sameer Mathur, IIM Lucknow