Strategic in Theme Parks to Enhance Customer Satisfaction and Customer Loyalty
In the last 20 years, theme parks have evolved to become key sources of entertainment (Milman, 2001). In the US, the dominant players are Disneyland, Six Flags, Cedar Fair, Paramount Parks, and Anheuser Busch among the few. In the UK, some of the major theme parks are Woodlands, Pleasure Island, Oakwood Theme Park, Legoland, Flambards Village, Camelot Theme Park, Paulton Park and Alton Towers. In the US, theme parks estimated revenues of 8.3 billion dollars in 2002. In 2006, there were about 335 million visitors to US amusement parks and 50% of these planned to visit again next year (International Association of Amusement Parks & Attractions, 2007). The overall industry has been growing steadily at an average of 3% every year since 1999 (O’Brien 1999). The popularity of the industry and the prevailing competition shows the need to maximise customer satisfaction and achieve greater customer loyalty (Lavery and Stevens, 1990; McCarville, 2009; Hallowell, 1996).
This report focuses on Walt Disney’s Disneyland theme parks and the aim of the study is to investigate how it has used its information systems strategically to maximise customer satisfaction and loyalty and thus gain a competitive advantage over its rivals.
Disneyland became the pioneer in the theme parks industry after its first opening in 1955 in California, and has subsequently been diversifying worldwide through its opening of Disneyland in Paris and Hong Kong. For decades, Disneyland did not face much competition and monopolised the US market and gained large-scale customer satisfaction and loyalty. However, the current scenario of prevailing competition has made business tougher for Disneyland, despite its strong brand name and popularity among families and children, established through its cartoon characters in television shows. In order to sustain competitive advantage, Disneyland has used its information systems not only as a supporting role, which consists of improved integration of internal processes – co-ordination, consistency, re-engineering of operations; but also focused externally, which links to customers and suppliers; and thus to align with business strategy initiatives.
Theme parks consist of a variety of activities (see appendix 1) and it is important for the IS to integrate these activities. Customer satisfaction in theme parks depends on a variety of factors such as price of tickets, opportunity to get information about the different activities available in the theme park, chose among them, and be informed about the current status of events taking place, so that they can get the best out of the experience. Customers also need to know about options to get there, parking facilities, etc. Additionally other factors involving customer satisfaction are safety of customers and their belongings, dining and living experience, convenient hours of operation etc. (Hall et al, 2009). Also, continuous customer engagement is important to understand consumer behaviour and to gain customer loyalty (Accenture, 2008). It is an important issue for strategic information systems to use data from various interlinked systems to enhance customer satisfaction through reduced prices, better entertainment environment, professional staff and such other factors.
In this report, a case study of Disneyland has been conducted to study how such individual information systems are integrated to align with the business objective of gaining customer satisfaction and loyalty. For this purpose, the data collected about Disneyland has been analysed using Porter’s Value Chain and Porter’s 5 Forces models. Walt Disney can use the Balanced Scorecard in the future for better alignment of its theme park systems with business strategy and thus align its customer focus initiatives with other business perspectives such as financial, internal operations and innovation and learning. It is proposed that this will in turn help achieve greater customer satisfaction and loyalty.
The methodology used for the report is a case study of Disneyland achieved through qualitative methods using secondary sources of data such as content from the Disneyland websites, Walt Disney’s annual reports, information systems reports, other reliable websites, articles from academic journals such as Strategic Information Systems Management, practitioner journals such as Harvard Business Review, books suggested in the reading materials and news articles from reliable sources such as BBC news, Financial Times, The Economist etc. The use of qualitative methodology is justified due to the focus on intangible aspects such as customer satisfaction and loyalty, which is difficult to be measured quantitatively. Hence, a case study of Disneyland has been conducted by applying Disneyland related materials to Porter’s Value Chain model and 5 forces model of competitive advantage. Since the focus of this report is on how information systems can be integrated towards maximising customer satisfaction, which is key to achieving competitive advantage, Porter’s 5 forces model clearly focuses on how information systems can be used with the aim of “(1) Reducing the threat of potential new entrants (2) Reducing the bargaining power of suppliers (3) Reducing the bargaining power of customers (4) Reducing the threat of substitutes (5) Keeping up with competitive rivalry” (Porter, 1998). Application of the Value Chain model is justified because it focuses on the overall value chain, which consists a variety of actors such as end customers, distributors, suppliers of commodities (see appendix 1), and employees within the theme park, local communities, environmental agencies and government. The value chain is managed by theme park’s various business functions such as strategy, marketing, finance, human resource management and operations.
3. Disneyland’s Information systems applied to the Value Chain model
Fig. 1: Theme Park value chain (Source: Rajaram and Ahmadi, 2009)
Most ‘primary’ activities (as shown in the above figure) of Disneyland include new product development such as introduction of new themes, rides etc., marketing and sales, and distribution of tickets. Hasam (2010) suggests that these primary activities in Disneyland are managed through – (1) Ticketing systems designed to handle different types of tickets such as barcode, magnetic and paper tickets. (2) Membership management systems used to track customers such as a CRM database about registered members. (3) Reservation systems that can be handled via phone, web or email. (4) Finance management systems that can handle visitors accounts and process payments using different methods such as cash, credit/debit cards, etc. and link to different banks. (5) Point of sale terminals and payment counters. (6) Parking systems, Lockers management, Service management that links to parking lot, ticket box, phone booths, toilets, visitor centre, and tour bus service; and also to supporting facilities (7) Access control and security systems (such as CCTV), Reporting systems, Statistics and Staff management. (8) Extended functionalities such as mobile access, information kiosks, public information displays, building management, suppliers and workers management and third party integrations.
Disneyland uses a variety of front-end interfaces that can be used on multiple platforms such as Windows, Unix, Sun-Solaris, web-based interfaces etc. and thus can support almost all types of ticketing systems. Disneyland uses separately customized websites in the US, Europe and Hong Kong markets in order to cater to the local customer behavior (Wober et al, 2010).
Disneyland also uses a centralised ERP system to link the above primary activities in its value chain with other ‘support’ activities consisting of research and design operations, manufacturing and materials management, customer service, supplier base and various other functions. Among the ‘support’ activities, Disneyland’s ERP system plays a strategic role in organisational management activities such as theme park planning (Pollack, 2010). Computer aided design methodology such as plan-o-grams are used in planning of the Disney parks, and in deciding where different facilities can be located. The plan-o-grams use real-time information collected through CCTV. For instance, car-parking behaviour of customers is studied over a period of months to check if more space is needed. One Disneyland study suggests that travellers who come in their own vehicles tend to stay in the theme park facilities for 2-3 days. There is greater potential from these travellers to stay in accommodation facilities within the theme park. Those who use public transport or used hired vehicles tend to come only for one day. These have greater potential to use restaurants and bars in the theme park (Nunes, 2009). Using CCTV coverage, queues for rides and other activities are studied to plan how to develop queue lines to ensure that customers do not have to wait too long. Reports generated from EPoS and other online systems used in ticketing are used to identify seasonal variations of consumer behaviour. By looking at seasonal variations, Disneyland reduces or increase accommodation facilities, food services, etc. and also provides additional discounts e.g. in the winter months when guests are lesser. The information linked through these integrated systems also help Disneyland in managing resources dynamically – for instance, more personnel can be hired during peak seasons and labour and services can be cut during off-peak seasons. As the employees play an important role in customer satisfaction in the theme parks, human resource management activities such as recruiting better staff are managed.
The central ERP database also connects global customer service centers, technical support, billing offices, development centers, manufacturing units, testing units, logistics and top and middle level management such as accounting, finance, legal etc. Every Disneyland has an internal IS team that manages access to the system for existing permanent employees, contract workers, outsourced contractors and customer support groups.
The value chain analysis shows that Disneyland mainly manages its operational workflows between internal operations (support activities) and external (primary activities – marketing, new product development and ticketing) using efficient information systems and business processes. This has allowed them to reduce costs and eventually reduce ticket prices, which have attracted a good deal of customers. However, data seem to suggest that Disneyland’s information systems have not focused on the overall financial perspective and also on innovation and learning. While Disneyland has established operations and managed them in a variety of countries, the amount of co-ordination and collaboration achieved by the system is not sufficient. For instance, when the Hong Kong Disneyland was set up many Chinese customers were not familiar with the usual Disney characters such as Mickey Mouse. It took a lot of time for Disney to realise that and use dragon characters that were locally popular. During the opening of the Paris Disneyland also, it was realised that European people did not want to stay in the hotels as much as their American customers would and also demanded wine to be served in restaurants that usually would not serve wine. Thus, the value chain link between customer needs and fulfilment seemed weak, despite the strong linkages between Disneyland’s internal operations, especially while operating in a global environment.
4. Disneyland’s Information systems applied to the Porters 5 Forces model
Fig 2: Porter’s 5 Forces analysis for Disneyland IS
Disneyland uses its Information systems effectively to lock in customers via high switching costs, making it expensive for the customer to switch to a competitor. Customer opportunities are identified by collaborating with travel and tourism companies and websites; and providing special offers (Oi, 1971, Cooper, 2003). Customers that have registered through online ticketing systems are recorded into the CRM system using customers’ emails. The CRM system sends regular updates about new themes and products in Disneyland theme parks such as introduction of new characters. Repeat customers are also given discounts such as ‘2 for 1” and free Fastpass, which allow these customers to avoid long queues. Disney also introduced a Pal Mickey, which is a huge robotic Mickey Mouse that collects electronic information from CCTV and tells the visitors ‘on the fly’ about which sections in the theme park have long queues. This enhanced customer enhancement to a great extent. However, the Pal Mickey concept was also plagued with privacy concerns. Later, Disney also introduced the SMS service that personalises a member’s theme park interests and provides timely messages about queue status and special events while the visitor is in the theme park. Disney’s information systems across the parks are thus linked together to provide up-to-date information about consumer choices that give Disney the leading edge in customer satisfaction (Kelly, 2009)……………