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Nine Dragon Theme Park: marketing strategy in China.

CASE DESCRIPTION

The primary subject matter of this case concerns the destination marketing strategies used for a Chinese amusement theme park. The case follows the theme park from its inception and discovers how the changing tourism environment in China affected the success of the theme park.

CASE SYNOPSIS

This case examines the development and role of destination marketing in the China tourism industry in general and in the theme park in particular. A case study of Nine Dragon Theme Park in Beijing, China is demonstrated to explore the detonation marketing development. The China tourism industry has effectively merged its service with that from local attractions to the development of global and modern theme parks. This study provides a comprehensive viewpoint for China destination marketing development and strategies.

INTRODUCTION

In the past 20 years, tourism has had rapid growth and has become a new and prosperous industry in China. At the first stage in the early 1980s, the tourism destinations were famous landscapes, historical sites and big cities. Tourists wanted to travel around, but they had little traveling experience and had few choices of where to go and what to see. The first generation of artificial landscape destination such as theme parks came to the public before and after the year 1990, attracting a lot of tourists because of the high quality and renovation of attractions. The Chinese tourists then were a little more experienced and wanted new and exciting amusement. This kind of destination met their desire and was therefore very successful. With time, however, the taste of the tourists changed away from the artificial attractions back to enjoying nature and selecting a well-organized trip from a lot of choices, including travel abroad.

In the process of the Chinese tourism industry development, the theme park experienced a fluctuation of ups and downs. From the first welcome in early 1990 to the following dislike around 1995, to the severe competition afterwards, the theme park has not reached its peaks in China. In fact, any assumed theme park in China can have any chance in competing with Disney, the pioneer and symbol of theme parks.

The Nine Dragon Amusement Park Company (NDA) is one of the first joint ventures established in the Chinese tourism industry. This amusement concept was originally influenced by the Disney company, especially Tokyo Disney World. NDA combined this theme park example with China culture and specific environment and was referred to as the irst Disneyland-like amusement in China. But the finished amusement park does not have the whole theme park design because of the policy restrictions and insufficient capital. The experience of NDA shows to some extent the first generation of joint venture in China.

NINE DRAGON AMUSEMENT PARK

NDA was founded in 1985 as a Sino-Japan joint venture. The Chinese investor is BMTR (Beijing Ming Tombs Reservoir development Company), which is a state-owned enterprise under BWCB (Beijing Water Conservancy Bureau) of Beijing Municipal Government. The Japanese investor is a construction company XGZ, which is among the first foreign companies come to the China market.

During the development process, three questions had been discussed before it became a specific cooperative project that could be presented to prospective investors. These questions are: program decision, location selection, and product attractions.

The idea of establishing a Theme Park is given birth and encouraged by the success of Tokyo Disney. The Tokyo Disney Park was opened to the public in 1985 and had great success in Japan, more than its effect in the U.S.A, This conveyed a clear message that amusement theme parks would be welcomed and have a large market in Asia. At the same time, there is no Theme Park; even the concept of Theme Park is new in China. So, it is a potential opportunity to develop a theme park in China. In fact, NDA is only one of the two amusement theme parks that the Japanese investor planned to establish in Beijing.

Another idea of Theme Park is consistent to the forecast of the Chinese tourism industry development. A Theme Park would be the next popular concept.

Beijing Water Conservancy Bureau is the administrator of water resources in Beijing district, including the prevention and diminishment of flood, drought and water pollution, as well as distribution of water resources. In the early 1980s, with the support of the Beijing Government, this bureau practiced a series of new policies among its approximately 20 management offices. These policies encouraged the subordinates to transfer to market, which resulted in a positive effect both in terms of economy and society. This gave the bureau confidence in a market economy, and made good use of water resources. Ming Tombs Reservoir has the following exclusive advantages in tourism development and was selected as the location of the proposed amusement park.

Ming Tombs Reservoir is attractive for tourists in such areas as having a famous history, beautiful scenery, and a favorable location. First of all, it is located in the Ming tombs tourism district and on the way to the Great Wall and Ming Tombs Museum, which are among the most frequently visited tourism sites in Beijing. Secondly, Ming Tombs Reservoir itself is also world-famous because of its construction history. It a man-made reservoir in a valley between mountains. All of the leaders of the young People Republic of China including Chairman Mao, many officers and staff members in the foreign embassy then in China, many famous Chinese people together with Chinese laborers took part in this construction. There is a memorial with the four most respected leaders inscriptions, a museum with precious photos and items. The dam is still inlaid with the Chairman Mao inscription of ing Tombs Reservoir. The Chinese laborers then still had great respect for Chainman Mao and his colleagues. Thirdly, Ming Tombs Reservoir is the only water scenery around this area and the nearest one from Beijing city, with its clear water against the green mountains, white clouds and blue sky, the reservoir is very scenic in this royal mausoleum area. In summary, Ming Tombs Reservoir has an image mixed with imperatorial mystery and revolutionary worship, combining natural scenery with human creation.

With the opening up of Chinese policy in the early 1980s, the international and domestic tourism industry had rapid growth. As per conservative estimates, there are approximately 3,000,000 visitors to this area, including 300,000 from abroad who used this golden tourism line to visit The Great Wall and the Ming Tombs Museum in 1983. Some of them also visited the Ming Tombs Reservoir. In fact, the staff of the Office of the Ming Tombs Reservoir made good use of these advantages and got into the tourism business, first by serving the thirsty tourists with tea water.

So, the Ming Tombs Reservoir had the basic and necessary elements needed to develop a thriving tourism industry.

In Chinese legend, a dragon is a miraculous monster that controls water and water creatures, in determining whether to rain or not. King Dragons always are very old, having many prince and princess dragons, and the whole dragon family has magnificent palaces underwater. The dragon is also the symbol of the Chinese imperialist. The stories about dragons are always among the most popular because they are full of mystery and wonder.

The originally proposed attractions of NDA included an Underwater Dragon Palace Tour, Northern Border Restaurant of about 5400 square meters and Nine Dragon Hotel of 350 rooms in the original Feasibility Report. Because of policy restrictions and insufficient capital investment, the restaurant and hotel had to be canceled. The Underwater Dragon Palace Tour was designed to include a Palace, an aquarium, a panoramic movie and a show room. The finished Dragon Palace Tour only has a long corridor decorated with a view from the seashore to deep sea, a Dragon Palace with scenes of the aquatic animal waiters and waitresses, the distinguished members in the dragon family, such as king and queen dragon, fire dragon, and water dragon. Transported by motorized vehicles along this corridor, visitors can reach the magnificent Palace and then exit from the tunnel. They can also walk around on the island

above the water. By using modern technology, this Dragon Palace Tour built an elaborate world of underwater attractions, so, it was referred to as the irst Disneyland-like amusement in China

The underwater Dragon Palace Tour was once the major and most successful attraction of this amusement park. The computer simulation ride is another successful attraction. Dragon-boat Racing and winter-swimming are two special attractions offered in the summer and winter respectively. The other attractions include an aquarium, a water ramp, a Kids City, an F-1 racing ride, holiday cabins, motorboat racing. This is all in addition to the Ming Tombs Reservoir Memorial park and museum. The park also has a restaurant, gift shop, passenger cars, and a travel agency.

DESTINATION MARKETING APPROACH FROM 1990 TO 1995

Destination marketing is designed to identify the target market by the way to collect information about its visitor as well as to audit the destination attractions and select segment that might logically have an interest in them (Kotler, Bowen & Makens, 2003). The objective is to create a brand image for tourism destination that highlights the attractions best features, provides an economic impact to the destination. One of main destination marketing mix to implement is building a new destination. Theme park is a new tourism product under destination marketing approach. The 1970s steered in an era of theme park led by Disneyland and Walk Disney World. More than 100 theme parks have since opened in the United States. Given Walt Disney Company success, many places have sought replication on a smaller scale. Tokyo Disneyland has been success, and a $4.4 billion Disneyland opened 20 miles outside of Paris in 1992. The same concept of destination marketing has been merged into China tourism market.

This first period of increase from 1990 to 1995 benefited from the favorable macro environment, the prosperous tourism market, the exciting and attractive programs and the effective management including a successful marketing approach.

After 10 years of China open policy and the first step toward a market model, the Chinese people became more open-minded. They also had more disposable income and travel time. Because of this, travel around the country became more fashionable, which boosted the first golden time of the Chinese tourism industry. Big cities, famous historic places, and scenic tourism areas are the favorite destinations of most tourists in China. As the capital of the current government and six Dynasties, Beijing has combined a long history of modern development, political idealism, and contemporary civilization. Beijing is definitely the priority for most tourists who visit China. On the other hand, the tourism product is very simple. The top tourism destinations in Beijing are Imperial remnants such as The Great Wall, the Forbidden City, and political memorials such as Tian Anmen Square. Sightseeing is the overwhelming model within a tourist travel itinerary.

At this time, since it is a seller market and the amusement attractions are highly sought after, selling an idea is simple. Even with the ease with which they attracted tourists, NDA still utilized some successful marketing practices.

* It is among the pioneer companies making advertisements in the weather report program of the CCTV, one of the highest audience-rated programs in the dominating television in China. This advertisement brought NDA a nation-wide reputation, hence attracting many visitors outside of Beijing.

* It worked hard to become one stop on the ive stops a day bus tour system by its public relationship with government, transport department and numerous bus operators. Since some first class tourism sites are located 50 miles away from Beijing, they are not easily accessible by public transportation. The ive stops a day tour system was established to meet the needs of tourists visiting the world famous sites in China: The Great Wall and Ming Tombs Museum in the northern suburb of Beijing. By being one member of this ive stops one day tour system, visitors from the country poured in every day.

* It managed to get in the government support tourism destination lists, participating in the official promotion activities, showing up in the official tourism guides, brochures and handbooks that are distributed in hotels. This gave NDA high visibility and a good reputation.

* It made full use of the support, influence and favorable policy from its investors: the government background from the Chinese investor and the joint venture background from the Japanese investor, which supplied NDA with a more favorable and free environment in the Chinese plan economy.

* It set up a travel agency and a passenger car group in Beijing City to attract more customers and supply group visitors with more convenience. The company name and logo painted on the cars body is a good moving advertisement of itself.

* It also launched some influential activities, such as hosting the annual dragon-boat races in this reservoir every summer. The newspaper reported this sport, commenting that NDA lost money but gained a good reputation. This successful annual boat racing made Ming Tombs Reservoir the site of dragon boat racing in northern China until now.

* There are many new activities in addition to the fixed attractions: from the New Year winter swimming (January 1) in the reservoir to the dragon-boat racing in the summer (Lunar year May 5, about June or July) to the fireworks show on the National Day (October 1), and the Entertainment Show on every Sunday during the summer.

* It arranged ample budget and capable employees to accomplish its well-organized marketing strategy and plan by using media, newspaper, advertisement and all resources.

Meanwhile, some new amusement attractions were launched afterward. They included:

* The once first class aquarium in the Beijing area was finished in 1993.

* The computer simulation ride is another successful attraction, especially among the young people. This Hollywood-like ride lasted only about ten minutes, but was full of exciting and unexpected experiences. It was also one of the first of its kind in China.

* Ming Tombs Reservoir Memorial Park and Memorial was included as a part of the tourist activities of NDA.

With a series of powerful marketing campaigns and new products, the Nine Dragon Palace Tour was so successful that there were always a lot of tourists standing in line about two or three hours for this 20-minute tour. Over two million tourists visited NDA in the consecutive three years prior to 1995.

The brand-new model of amusement program was in the right location, and had the help of good management and sufficient advertisement. NDA achieved great success and profit in the first five years of its existence.

DESTINATION MARKETING APPROACH FROM 1996

The turn of business from 1996 was mainly due to policy change. The Beijing Municipal government decided to cancel the tour system of ive stops a day and replaced it with a suburban public system. This ive stops a day tour system was very welcomed at its first introduction, but was receiving more and more complaints from customers about cheating and bad service.

At the same time, with more tourism destinations coming to the market, the Chinese tourism market is getting more mature and more competitive. Tourists had more choices and higher and more diverse demands. So, after a decade of fast growth from the 1980s, the Chinese domestic tourism industry moved to a new stage of stable development. The needs of customers changed from sightseeing anything to selecting things and places worth seeing and participating in. The customers now, unlike the first stage, had a choice.

In order to improve its image and meet the new development of the tourism industry, Beijing Municipal government ordered the cancellation of the ive stops a day tour system. In this new public system, there are bus routes from Beijing city to some famous tourism destinations, giving tourists more choices. In the beginning, there were only a few main bus routes covering the most famous destinations, such as the Great Wall and Ming Tombs Reservoir. NDA became a bus stop on a single public line, and it took two hours to arrive. This became very negative to prospective visitors.

This change was a definite business setback to NDA. The inconvenient traffic was the bottleneck, spending three or four hours in transit just to have a 20 minute tour is far less attractive for Beijing residents and nearly impossible for tourists outside of Beijing. The once crowded theme park became silent, with only one million visitors to NDA during the year.

The reaction of the NDA is direct and simple: it made its best effort trying to convince the government to change this new policy and resume the ive stops a day tour system. The normal marketing was affected.

DESTINATION MARKETING APPROACH FROM 1997

A continued decrease period from 1997 resulted from the mature and competitive tourism market, the poor marketing strategy, and the operation of NDA.

Additionally, around the Ming Tombs Reservoir district, more competitors were encouraged by the success of NDA and built their own visitor sites. Apart from the Dingling, more Ming Tombs and other attractions became tourism sites. Even The Great Wall has its competitor: another part of the great wall relic opened to the public in another district. Some of the major competitors were ini Old Beijing City and axwork Museum of the Emperors of the Ming. These new destinations attracted more tourists and gave them more choices.

The domestic Beijing tourism market changed and had some new characteristics; however, the strategy of NDA remained the same. The management did not even realize this change was a trend in China. Instead of adapting strategies and practices to deal with this unfavorable situation, the NDA management focused on persuading the government to change its mind and resume the ive stops one day tour system. Three years were wasted, and NDA missed the opportunity to survive.

With the severe competition coming after 1996, the customer dropped to one-third of the level at its peak time; the financial situation kept getting worse; and the morale decreased. Still, the new management kept blaming the unfavorable environment for its failure. They had no more effective marketing strategy than just following the former procedure and did not initiate any new creative efforts. During this period, NDA has to give up its fruitless effort in changing the policy.

At this time, a lot of things changed. The biggest problem it met then is its once successful attractions are no longer attractive to the customers as they were before. The new attractions are not as good as it expected. The worst thing is that it has no money to renew its products because both of the investors refused to invest again.

* The once successful underwater Dragon Palace Tour was now outdated as the artificial landscape fashion died away. It is also old in decoration and was not maintained well or renew during these years.

* The computer simulation ride is still good, but the film has not been changed annually and hence loses the novelty.

* The aquarium has no competitive advantage with the two new aquariums in Beijing city in either location or size.

* The water ramp, Kids City, F-1 racing ride and motorboat racing are not special from those of the same kind of park.

* The holiday cabins in the Ming Tombs Reservoir Memorial park are simple and tough in accommodation and service, and they cannot provide the basic demands for meetings.

* The other activities have been canceled year by year. The Dragon-boat Racing and winter-swimming are the only two special activities that are offered in the summer and winter respectively. Even these are now very routine, and the NDA itself has no interest to continue these activities.

* The restaurant, gift shop, passenger cars and travel agency also are operating at a loss due to an insufficient number of customers.

From the perspective of the management, the most important task is to keep costs low and earn more revenue. So, the marketing strategy and approach of NDA is practiced as follows:

* It gave a limited budget and no overall plan in marketing. It gave up any kind of cheap advertising and promotions; it occasionally uses the popular media like TV, youth newspaper.

* It raised their entrance fees to each attraction and added a new entrance fee at the main gate; it tried to improve its financial situation by getting more revenue, which drove away some prospective visitors and worsened its reputation.

* It determined that its major customers were groups such as school students and staffs in offices and companies, and travel tours from outside Beijing. So, it made a great effort to develop relationships with travel agencies and transport department and car drivers with commission. This partnership would result in the end customers paying more and getting less than they expected.

* It managed to receive from the government the title of ducation Base for Patriotism and ducation Base for Science Knowledge in the name of Ming Tombs Reservoir. In order to get the student visitors, it collected about 10 girls to do personal selling targeting to the middle schools in Beijing cities. Because these girls are less trained and work without other kinds of support from the company; they did not achieve the expected results. In addition, the student customers are also less profitable because of the commissions.

* It decided to only launch new attractions at low cost or just keep it running. For example, it insisted on using the same film for the computer simulation ride, and replaced the film with another dull one after several years. This strategy made this exciting computer simulation attraction very disappointing. All of the newly launched attractions have the same characters of low cost and low popularity, opposite the spirit of attractions for the theme park.

* As the only two remaining activities, The Annual Dragon-boat Racing sometimes combined with the sport game, such as he Minority Sport Game of China and he Oversees Chinese Dragon-boat Racing. Even with the support from these games, the Dragon-boat Racing still could not get the same publicity as it had in the former years. It certainly could not attract visitors in today innovative advertising world. Winter-Swimming in Ming Tombs Reservoir fell to an activity involving several participators for several hours.

DISCUSSION QUESTIONS

1. Identify the destination marketing strategies that apply in each of the three periods in the NDA case.

2. What specific suggestions would you make to NDA for a new marketing strategy, taking into consideration their limited revenue and investor funding?

3. What did you learn from this case regarding the tourism industry in China using a destination marketing approach?

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Jindong Zhang, Tourism Bureau of Dongcheng District, Beijing

Kuan-Chou Chen, Purdue University Calumet

Keh-Wen arin Chuang, Purdue University North Central

Denise M. Woods, Purdue University Calumet
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Article Details
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Title Annotation:CASES
Author:Zhang, Jindong; Chen, Kuan-Chou; Chuang, Keh-Wen Arin; Woods, Denise M.
Publication:Journal of the International Academy for Case Studies
Article Type:Case study
Geographic Code:9CHIN
Date:May 1, 2008
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