What Can Product Managers Learn From Disney About Pricing?

by drjim on October 3, 2016

Will Disney still have magical pricing if they make changes?

Will Disney still have magical pricing if they make changes?

Image Credit: Tallapragada sriram

Can you tell me where “… the most magical place on earth…” is? If you said “Disney”, then good news – roughly a billion dollars of advertising over the years has done its job in creating a solid product development definition. Going to a Disney theme park is the dream of many families. They may save for a long time, pack the family up, travel to the park, and then hope that the weather behaves itself so that they can create lasting family memories. However, Disney is thinking about making changes to how much creating these lasting family memories will cost. Is this a good idea?

The Problem With Success

Disney has a bit of a problem on their hands. Their theme parks are currently too popular. In the last 9 months, Disney’s parks and resorts brought in US$11.8 billion. Due to a number of very popular Disney movies including Frozen and Star Wars, more people than ever are visiting their parks. What this means is that on certain days, the parks are being filled to bursting levels and all of a sudden the most magical place on earth just becomes the land of virtually unending lines.

What Disney would desperately like to be able to do is to find a way to spread out the people who visit its parks over more days. As you can well imagine, major holidays cause attendance to shoot up. On days during the middle of winter, there are not nearly as many people attending the parks. What Disney would like to be able to do is to find a way to make sure that their parks are always full, but at the same time make sure that they are not “too full”.

What Disney has been doing over the years is steadily raising their price faster than inflation has been increasing. Currently a one day pass to attend one of their parks costs US$106. This approach has brought the company a great deal of money, but there is a limit to just how far they can go with it. What Disney needs to make sure that they do is to keep the cost of attending their parks well within the economic reach of their target customers: middle class families.

How Disney Is Thinking About Dealing With Success

Disney is a large company and they have a lot of very skilled and talented product managers. They realize that success is causing problems for their theme parks and they know that they are going to have to take steps in order to deal with this problem so that it does not negatively affect their product manager resume. They are currently looking a number of different things that they can do, but one idea is starting to look better and better to them: variable ticket pricing.

Under a variable ticket pricing scheme, the day that you wanted to visit a Disney Theme park would play a big role in how much you would end up paying. The thinking is that tickets would cost more on high demand days and would probably come with more restrictions on what could be done with them. On lower demand days the tickets would cost less and would have fewer restrictions. This type of ticket pricing would allow Disney to spread its attendance over more of the year and would allow them to avoid the problem of having overcrowded parks.

Motivating the product managers is that Disney really wants to maintain its image as the most magical place on earth. The surge in its theme park’s popularity has caused people to have to put up with long lines and in some cases gate closures. A perk that the company can offer to people who visit the parks on lower demand days is to allow them to use their ticket to gain access to multiple parks that are in the same location. It’s easy to imagine that if you wanted to visit a park on a holiday, you’d end up paying a lot more than if you wanted to visit a park on a normal Wednesday.

What All Of This Means For You

I’m pretty sure that we’d all like to have the type of product problems that the Disney product managers are facing: their theme parks are just too popular for their own good. If the Disney product managers are not able to solve this problem, then Disney risks losing their reputation as the “most magical place on earth” and they will not have fulfilled their product manager job description.

The problem stems from the fact that too many people like to go to Disney’s theme parks on the same day. This is often either a weekend or a major holiday. At the same time, there are other times of the year that the parks are lightly attended. What Disney would like to do is to find a way to smooth out their traffic. What the product managers are considering doing is introducing variable ticket pricing. This means that depending on what day you wanted to attend a park, your cost for a ticket could change dramatically.

I believe that the Disney product managers are headed in the right direction. Having overloaded parks is going to result in a backlash against the parks that will spread very quickly via today’s social media channels. Using ticket prices to drive customer behavior sounds like a very good idea. However, Disney is going to have to first check with their customers and make sure that they find a way to clearly communicate to them that how much they choose to pay to gain access to a park is firmly in their hands.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: How much do you think that Disney should start to charge if someone wants to come to a park on a popular day?

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What We’ll Be Talking About Next Time

How does a customer get their hands on your product? If it is like most products, your product development definition called for a middleman to be involved. You create your product and then provide it to some sort of a middleman who runs a store or a catalog. The customer determines that they would like to buy your product and so they get in contact with the middleman and they purchase it. This is all fine and good, but do you really think that the middleman is still necessary?

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