Assessment 2: Services Audit

Disney Plus

3084 words
(3084/3000 +/- 10%)

James D’Arcy-Miles
N11412178
James D’Arcy-Miles N11412178 AMB340 Services Marketing A2

1.0 Introduction ………………………………………………………………………………….3

2.0 Service Marketing Mix Analysis …………………………………………………………3
2.1 Service Product and Positioning ……………………………………………………….3
2.2 Pricing, Productive Capacity and Demand ……………………………………………4
2.3 Physical and Electronic Distribution ………………………………………………….4
2.4 Integrated Service Marketing Communication ……………………………………….5
2.5 Service Process ……………………………………………………………………………6
2.6 Managing People …………………………………………………………………………..8
2.7 Servicescape and Physical Evidence ………………………………………………….8
3.0 Recommendations ………………………………………………………………………….9
3.1 Recommendation 1 ………………………………………………………………………..9
3.2 Recommendation 2 ……………………………………………………………………….10
3.3 Recommendation 3 ……………………………………………………………………….11
4.0 References …………………………………………………………………………………..12
5.0 Appendices ………………………………………………………………………………….15
5.1 Appendix 1 …………………………………………………………………………………16
5.2 Appendix 2 …………………………………………………………………………………17
5.3 Appendix 3 …………………………………………………………………………………18
5.4 Appendix 4 …………………………………………………………………………………19
5.5 Appendix 5 …………………………………………………………………………………20
5.6 Appendix 6 …………………………………………………………………………………21

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1.0 Introduction

In the age of digital innovation, entertainment companies face the challenges of mobile and
at-home content consumption. Disney+ is one of the fastest-growing subscription
entertainment services of today, offering exclusive access to some of the best and most
beloved movies in cinema history. As a subscription video on demand (SVOD) business,
Disney+ provides a wide range of content, including TV shows, movies, and documentaries
from iconic Disney-owned brands such as Pixar, Marvel, National Geographic, and Star
Wars. Its versatile business model allows users to consume content on a variety of
platforms, including smartphones, tablets, smart TVs, streaming devices, and gaming
consoles. Disney+ also has a wide customer base, ranging from young children and
teenagers to adults. This market base facilitates some unique positioning for the company,
enabling it to differentiate its content production and Disney+ exclusives to tailor to each
audience. When using Lovelock’s (1983) classification of services framework in appendix 1,
Disney+ is deemed to be mental stimulus processing, meaning stimuli takes the form of
mind-delivery for customer consumption.

This marketing services audit is optimised to investigate the service offerings of Disney+ and
evaluate its effectiveness, analysing aspects of its services that could be improved with
reference to guiding theory and peer-reviewed secondary qualitative research. It also
includes recommendations intended to align Disney+ to a more effective set of service
process objectives that ultimately improve the customer experience.

2.0 Services Marketing Mix Analysis

This section of the paper will unpack each service aspect that Disney+ utilises to create a
foundation for the recommendations.

2.1 Service Product and Positioning

The focus strategy of Disney+ is predominantly service-focused, offering a select

number of limited services to a large and diverse target market, as described by
Johnson (1996). The subscription video on demand service focuses on providing and
producing original and pre-produced box-office movies, TV shows, and G/PG-rated
documentaries to families and family-oriented households, while catering to young
and teenage audiences with blockbuster movies and several MA15+ franchises, as

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well as adult and elderly audiences wanting a more relaxed M-rated movie viewing
experience.

Disney+'s positioning is robust and uniquely differentiates it from other streaming

services. However, it risks limiting itself by not producing enough original content and
having an uncompetitive library size. Disney+ could open opportunities for stronger
partnerships and acquisitions by improving customer service, expanding its library,
offering more competitive pricing options, and creating a more immersive, AI- and
algorithmic-based customisable experience for users. This would improve customer
satisfaction and create a stronger target market to focus on. As described by
Johnson et al. (2008), for the best opportunity of success, Disney+ needs to
formulate a more specific customer value proposition,

2.2 Pricing, Productive Capacity & Demand

Pricing strategies used in a business, either for a service or a product, are essential
to the success of that business, and are therefore an integral aspect of the marketing
framework (Lu, et al., 2023). Disney+ makes use of both a penetration pricing model,
and a tiered pricing model which are both value-based. Tiered pricing includes
offering a standard tier with ads and a payed-for tier without ads, while penetration
pricing establishes their foot in the door, as they began their market entrance with the
challenge of threats from well-established competition such as Netflix, and needed a
way to attract customers. This pricing strategy has ultimately retained more
customers for Disney+ over the long-run, as their subscription is cheap but also has
some great exclusives with a convenient all-in-one Disney experience, including a
monthly subscription, annual subscription, bundled subscription including ESPN+
and Hulu, as-well as a free trial. They also offer student, military and Verizon member
discounts (Abellan Guzman & Cortes Quesada, 2022).
Some of the negatives that pertain to the current pricing strategy of Disney+ include
not giving customers enough flexibility with regards to how they prefer to consumer
content. Having a flexible pricing option like a pay-per-view or weekly subscription
model could facilitate this flexibility for customers who are in different financial
situations. Not doing this is potentially loosing the company revenue. With this more
flexible pricing model, Disney+ could further offer targeted discounts to individuals
who have a particular interest in specific content, ie blockbuster movies, comedy or
animation, ultimately increasing demand for content that would otherwise be less

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popular. This would further create a self-balancing distribution of demand across the
entire Disney+ platform and library. In-turn, this demand strategy could minimise
profit losses and create a more satisfying experience for each customer (Priem,
Wenzel & Koch, 2018).

2.3 Place, Physical & Electronic Distribution

There are four prominent categories within an effective distribution strategy. These
include ‘how’, ‘where’, ‘what’ and ‘when’ (Lovelock, 2018). Firstly, when analysing the
‘what’ in the distribution strategy, a three-part breakdown is required. Disney+ has
every aspect of its operation, promotion flow and distribution processing established
almost 100% electronically. This includes their landing website, all their social media
pages, and the inclusion of all advertisements and promotions that are paid-for
across every social media platform. Although, there are also a handful of billboard
and occasional bus-stop banner advertisements seen in major metropolitan regions
across Australia and the world. Illustrated through the second category, negotiation
flow, Disney+ contains all sign-up and membership login pages as-well as payment
pagers on their website, and it is left up to the customer to interact with this. For the
final breakdown, product flow, Disney+ is a business that provides a product along
with supplementary services. The business operates almost entirely on a self-service
model, meaning the customer interacts with computer systems to access the service.
Almost all streaming services fall under this category. This is evident in the main
channel, whereby customers interact with the UI of the Disney+ Home Page after
sign-up, as the sign-up process is also an entirely self-service interface through the
Disney+ sign-up page, whereby customers pay for their subscription online (Bhatt,
2022). The ‘where’ and the ‘how’ of Disney+ is simple. The services provided by the
company reside entirely online and are therefore accessible to anyone at any time
anywhere in the world. They are not fixed to one location. The nature of having a
service that operates entirely through an application and website means that as long
as the computer hosting servers are running at Disney+ headquarters, anybody can
interact and use the service anywhere that there is internet access, having access to
a large library of 24/7 contents, which is optimal, and necessary for a streaming
service. Furthermore, the ‘when’ of this service is firstly not limited by business
operating hours, allowing anytime access, but moreover, the recommendation
algorithms of Disney+ will change what type of content is pushed to the main pages
at certain times of the day, eg. Recommending blockbuster movies at 8pm on a
Friday night for a family audience. The ‘when’ is also determined by the customer

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profile Disney+ has built on you and the type of content you watch, changing what
type of content is recommended to you. This increases viewing hours from
customers, therefore increasing enjoyment and customer loyalty to Disney+, in-turn
driving revenue for the movie producers and Disney as a company.

2.4 Promotion and Integrated Service Marketing Communication

Disney’s Disney+ primarily implemented and activated their marketing

communications mix to their target audiences and stakeholders via various platforms
including social media, such as TikTok, Snapchat, Instagram, Facebook and
YouTube, as-well as cinema advertising, billboard and bus advertisements, and
finally word-of-mouth avenues and collaborations with other brands.

When utilising the service marketing triangle (Thomas, 1972) (appendix 2), the
marketing communication strategies for Disney+ can be thoroughly examined. Within
the services marketing triangle, there is the facilitation of a ‘guaranteed customer
experience’, or otherwise known as ‘promises’ to customers (Gronroos, 2009). These
guarantees to the customer are solely in the hands of the parties and programmers
involved in curating the Disney+ experience and are predominantly internal. The
marketing activities that are traditional and external include the promotion of the
service, the pricing of the service, and the preparation of the user experience. These
external factors are representative of what customers expect and what Disney
‘guarantees’ or promises to new and existing customers (Vlassis, 2021). As seen in
Appendix 3, Disney+ has a very large social media following. They use their social
media to produce the large majority of their marketing and public reach. With their
instagram page alone having over 5 million followers (appendix 3), Disney+ has very
good engagement and interaction with any and all content posted on their platforms.
However, Disney+’s engagement is not proportional to its number of followers. This
could be improved through external marketing strategies across all social media,
such as giveaways and limited-time offers. Internally, Disney+ uses a variety of
marketing strategies to encourage employees to achieve KPIs and company
objectives, which helps to maintain company goals, customer promises, and
guarantees, and stay ahead of the competition. This strategy views employees as
internal customers, which enables the production of high-quality content and provides
them with a great work environment and bonus structures (Yao, Qiu & Wei, 2019).
Disney+ should ultimately maintain energy and effort towards their current external
marketing strategies to drive profit, revenue and content production. Although, the

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internal marketing of the company could also be improved to cultivate a more

effective company work environment, increasing productivity, which in-turn builds
stronger satisfaction in the customer, creating a higher quality service, and ultimately
maintaining strong customer loyalty (Wu & Li, 2018).

2.5 Service Process

One of the most efficient and effective ways a company can determine the
effectiveness of their services, and ensuring the consumer remains central, is to
utilise a service blueprint (Patricio, Fisk & Falcao e Cunha, 2008). Using a service
blueprint can outline the points of significance for a service-based business, including
how to solve any ‘fail points’ that are apparent in day-to-day operation. A service
blueprint is different from service blueprinting, as the latter is for identifying any
potential ‘fail points’, whereas the former is intended to rectify or improve on current
operations (Patricio, Fisk & Falcao e Cunha, 2008).

As seen in figure 1, the service blueprint for Disney+ focuses on the user experience
within the app, which is consistent across all platforms. This focus aims to improve
the fail points in the sign-up process, where customers may not understand the terms
of service or how their personal data will be used. This issue is a common cause for
concern and is backed by Pangrazio and Selwyn (2019). Two other key fail points for
Disney+ are content acquisition and buffering. Disney+ may not be able to acquire
the legal rights to all of the content that customers want in a timely manner.
Additionally, Disney+ servers can become overloaded, leading to slow loading
speeds and buffering. This can frustrate customers, especially when support staff are
not able to assist them in a timely manner.

This paper recommends that the company analyse where they sit in the service
blueprint, and consider a redesign of their service to overcome any of these fail-
points.

(Service blueprint on next page)

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Figure 1.
Service Blueprint Disney+

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2.6 Managing People

Employees and workers in interconnected, consumer-centred jobs within a company

are imperative for the success of any business. Managing these people effectively,
efficiently and going the extra mile will often result in a competitive advantage that
the business can use to get ahead (Leroy, et al., 2018). Disney+ are on top of the
game when it comes to people management within their service-scape. The
company makes an effort to hire the right people, provide thorough training for these
people, and empowering their employees. This quality HR management is reflected
through customer reviews of the Disney+ service and customer support they receive
from employees. Using the theory of the cycle of success, the cycle of failure, and
the cycle of mediocrity, Disney’s people management process can be analysed.
Firstly, the cycle of mediocrity, a complacent middle ground within a company, is the
result of a business focussing too much on procedure and rules (Kumar &
Raghavendran, 2015), with a lack of attention to staff wellbeing. Secondly, the cycle
of failure, somewhere no business should be, results in high turnover of employees,
as a result of poorly designed and battery-style jobs (Kumar & Raghavendran, 2015).
Finally, the cycle of success is congruent with customer satisfaction and ultimately
larger profit margins (Kumar & Raghavendran, 2015). Disney, with their decades of
experience in building the largest and most successful entertainment brand and
parent company in the world has a very well-established cycle of success, and have
translated that into Disney+ and their people management strategies, reflected
through user reviews of the platform, as-well as the growing job roles and career
fulfilment experienced by employees and creatives that work with the company
(Carter, 1996).

2.7 Physical Evidence and Service-scape

When utilising the services-cape model (appendix 4), designed by Bitner (1992),
physical evidence in relation to customer satisfaction and intentions is well illustrated.
As seen in appendix 5, an example shows the various factors that influence a
service-scape, particularly that of Disney+. It includes the use of space, symbols and
signs, as-well as general UI/UX interfaces of the Disney+ application and pages. The
theme present in every page and the fluidity of the UI/UX is consistent with the
branding of Disney, stimulating positive consumer behaviour. Both the app and the
website use intuitive touch controls or scrolling/voice controls, with integrated

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algorithmic machine learning to recommend the user with relevant content. The
satisfaction of using the application is physical evidence that stimulates the user’s
dopamine and behavioural reactions, as seen in the Russell Model of Affect in
Appendix 6 (Russell, 1980), making them want to keep using the app (Wlomert &
Papies, 2016), utilising a curated arousal vs pleasure emotional environment for the
consumer browsing content. To build on this services-cape and the customer
experience, Disney+ should look towards creating a more holistic all-in-one Disney+
app that includes things like games and maybe an online marketplace, building on
physical evidence, and enhance the fluidity of the UI and recommendations for a
better browsing experience (Wlomert & Papies, 2016).

3.0 Recommendations

The recommendations section will utilise SMART goals to outline several short-term steps
for Disney+ to improve the effectiveness of their service and delivery.

3.1 Recommendation 1

Improve streaming quality by reducing buffering

By focussing on reducing the average number of buffering incidents by roughly 20%
within the next month, Disney+ can improve customer satisfaction drastically, with a
high likelihood of reducing customer attrition, retaining more customers overall.
Because Disney+ is a video streaming service, the quality of the content experienced
should be the number one priority. By tracking the amount of buffering situations that
occur on Disney+ each day, the business will be able to compare this number to
previous weeks and months, quantifying the issue, which is the first step in mitigating
it. This can be done by optimising and investing in innovating streaming programming
and digital infrastructure, or by investing in existing technical infrastructure to improve
the service as a whole. Each month can have a new target for reducing buffering
incidents (Wlomert & Papies, 2016).

The streaming service as a whole is calibrated to reduce the quality of video

depending on the internet speed it detects. The company could potentially offer a
more premium subscription that streams with the highest speeds possible, or
potentially reduce the monthly subscription cost of those experiencing buffering
consistently to retain customers while they rectify the buffering issues. Once rectified,
to keep those customers who experienced consistent buffering, Disney+ could keep

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their lowered subscription price the same, and communicate each of these steps to
the customer as the process happens (Petrangeli, Wauters & Turck, 2018).

3.2 Recommendation 2

Redesigning of Service Blueprint

The second recommendation is for Disney+ to consider redesigning their service. A
thorough redesign will assist in providing a more efficient and effective service to
each customer, ultimately producing an improved service offering (Petrangeli,
Wauters & Turck, 2018). Redesigning the service blueprint will ultimately produce a
service delivery that is more fluid. Disney+ would have better customer retention if
their current fail-points were non-existent in the service redesign, as outlined in
section 2.5 of this paper. There should be a major focus on these fail points. To begin
with, ensuring that new sign-ups to Disney+ are thoroughly and comprehensively
aware of what happens with their data, and the terms of service for using the
application. Furthermore, content acquisition should be another focus, as dry and old
content was outlined to be another fail-point in customer retention and the service
delivery experience. Ensuring that Disney is consistently cycling through new and
original Disney content, along with brand-new partnerships with other brands will
nullify the frustrating experience of not having anything good to watch. Finally,
ensuring the load timing for the site, application and content is never lagging, by
investing in bigger and stronger servers to host Disney+, maximising the amount of
users that can be on the app without causing lag (Petrangeli, Wauters & Turck,
2018).

3.3 Recommendation 3

Focus on customer retention with content algorithm improvement

By Disney+ using an algorithmic recommendation system to suggest new content to
current users based on the content they’ve watched, there is both the advantage of
customers liking the new content more than other people might, convenience, and
the disadvantage of risking filter bubbles, whereby the customer is exposed only to
similar content they’ve already consumed which can cause them to leave, along with
privacy concerns (Petrangeli, Wauters & Turck, 2018).

If Disney+ were to invest in advancing their current recommendation programming by

implementing artificial neural networks, they could train these in-app AI programs to

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make more calculated and contextually relevant recommendations to each individual

user based on many influences, like the time of day, what kind of device, where they
are, what they search for and keep all this data entirely within an anonymously
encrypted databank, secure inside each persons downloaded version of the app, and
progressively, the neural model will learn to get better at recommending content the
user actually likes. This is similar to the advanced AI-assisted content
recommendation done by the Chinese social media giant TikTok, although the data
they collect is both sold to other companies, cross tracked across other applications
you use, tracking what words you type with your keyboard, and is further stored and
analysed by TikTok themselves so they can strategically advertise sponsored content
to all their users, with 25% of the US user-base being between the ages of 10 and 19
years old (Haenlein, et al., 2020). Disney+ would have the advantage of being able to
establish trust and transparency with their loyal fan-base regarding data collection,
before implementing the new and improved recommendation model, by
communicating to every user where their data is being stored and what it is and isn’t
being used for.

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Appendices

Appendix 1

Lovelock’s Service Classification

People Possessions
(Recipient) (Recipient)

Tangible Actions People processing Possession processing

(Nature of act) Directed at peoples bodies Directed at physical
- Face-painting possessions
- Hospital/Doctors - Petrol station
- Garbage disposal
Intangible Actions Mental stimulus processing Information processing
(Nature of act) Directed at peoples minds Directed at intangible assets
- Visual entertainment - Insurance
- Marketing - Financial Lawyer
Re-created from Lovelock (1986)

Appendix 2
Service Marketing Triangle

Re-created from Thomas (1978)

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Appendix 3
Social Media Following
Facebook:

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Instagram Followers + Interaction (Likes, comments)

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Appendix 4
Bitner’s Servicescape Model

Adapted from Bitner (1992).

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Appendix 5
Physical Evidence

Source: Disneyplus.com

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Appendix 6
Russell Model of Affect

Adapted from Russell (1980)

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