Repositioning of Vue Cinemas in the UK market by Tadej Mursic

Repositioning of Vue Cinemas in the UK market Final edition

Presented by: Tadej Mursic (11600130)

Integrated marketing communications thesis

Submitted to: Ms. Anne Barker

University of Westminster Westminster Business School 29th January 2009

To everyone, who inspired me, shared positive energy and embraced failure!

Thank you!

“It’s not the strongest species that survives nor the most intelligent, but the ones most responsive to change.” Charles Darwin, 1859

“The men who are going to be in business tomorrow, are the men who understand that the future, as always, belongs to the brave.” Bill Bernbach, 1966

“Innovation distinguishes between a leader and a follower.” Steve Jobs, 2007

Index PART 1 Introduction PART 2 1. Macro (external) Analysis 1.1 STEPE Analysis – present (2008) and future (2013) 1.3 Market Life Cycle 1.4 Forces that shape the cinema market 1.5 Competitor Analysis 1.6 Porter's Five Forces

2. Micro (internal) Analysis 2.1 The 7 P's 2.2 Financial performance 2.3 Boston Matrix

3. Strategic resources and competitive advantage 3.1 SWOT Analysis

4. Marketing objectives 5. A way forward – Strategic context 5.1 The way forward – “free” 5.2 The new model 5.3 Ansoff's Matrix 5.4 Porter's Generic Strategies 5.5 Market Entry 4

6. Proofing the stability of the model â&#x20AC;&#x201C; financial analysis and primary research results 6.1 Financial Analysis Summary 6.2 Primary Research Summary 6.3 Final solution

PART 3 7. Role of IMC in marketing management process

8. IMC Performance Objectives

9. Target Market

10. Consumer profiles 10.1 A typical consumer profile 10.2 A consumer profile Thesaurus 10.3 Cinema viewer profiles 10.4 The Means-end chain 10.5 The Attitude formation model 10.6 The Decision making processes

11. Branding issues 11.1 Brand aura 11.2 Positioning

12. Communications and Campaign Strategy 12.1 What is the message to be communicated? 12.2 Which are the appropriate IMC tools and why? 12.2.1 Advertising 5

12.2.2 Public relations 12.2.3 Digital and Interactive 12.2.4 Direct Marketing 12.2.5 Sales Promotion 12.2.6 Personal selling 12.3 Micro needs 12.4 Macro needs 12.4.1 Push strategies (sell-in) 12.4.2 Pull strategies (sell-out)

13. The Campaign Delivery Recommendations 13.1 Creative solution 13.2 Schedule - activities by month, spending plans

14. Budget 14.1 Budget Philosophy 12.2 Actual Budget

15. Performance Outcomes 15.1 Vertical integration 15.2 Horizontal synergy 15.3 Evaluation

16. Appendix 17. References

Introduction The following dissertation establishes a concept for the Integrated Marketing Communications (IMC) project. The report will focus on the repositioning transition of the Vue Entertainment brand within the UK. This process will be tightly interlaced with structural changes of the movie industry as a whole. The basic business objective is to achieve growth by repositioning and reinventing Vue. In order to do that, we need to adjust Vue’s strategic marketing activities to the changes in the micro and macro environment. Once developed and rationalized, we will launch this new change and present/support it with an integrated marketing communications (IMC) campaign. The media landscape is becoming more heterogeneous faster than ever before. Mass-availability and accessibility of the Internet and new technologies redefined the whole media ecosystem. Once consisting of largely independent mass media, today it is facing a deeper fragmentation of audience, cross-editorial convergence and revolutionary technological and conceptual innovation. The threat of rivalry between competitors is high, therefore business model experiments are being proposed to fight for consumers share of attention. The movie industry is no exception. Once famous as the Hollywood money making machinery, the industry is now facing macro environmental changes, alongside new media consumption trends and threats from the imminent entertainment industries all competing for the consumers money spent for their leisure time/activities. The movie industry is shaped by several factors. Since the number of households having access to broadband internet increased the movie industry increasingly suffers from piracy. The industry has to tolerate the decline of millions of admission and advertising pounds – an interchangeably destructive cause – because the government had not yet generated an acceptable regulative/legislative solution. On the other hand, the same factors are changing consumer perceptions and attitudes. Free seems to be the “new”, seemingly only mass accepted currency in the media content world. Numerous business models have been adopted, yet none have proven an industry-transforming potential. Despite numerous blockbuster hits and the fact that the summer of 2007 was the best UK box office in the last 40 years (Hirschkorn, 2008: 43) last latest admission rates are still unstable. After all, consumers like movies and one of the reasons for theatre audience decrease is the change in the way/pattern the content is consumed. Cinemas, which make their profits out of ticket admissions, snacks and beverages sales and advertising revenue, are having one main objective: fill as much seats per screening as possible. They targeting the whole population of United Kingdom; mostly focusing on urban areas. There is fierce competition in the cinema exhibitors market, yet the service they offer is basically the same – a (blockbuster) movie within a comfortable movie theater. Therefore most cinemas compete 7

geographical location and ticket prices; nevertheless they try to avoid price competition by experimental “product” innovating.

Total admissions 1997-2007 (millions) 200 180 160 140 120 100 80 60 40 20 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total admissions (millions)

Graph 1: Total cinema admissions in the UK form 1997 to 2007 in millions (CAA 2007, Mediatel.co.uk)

Vue entertainment was established in 2003 when it acquired 36 cinemas from Warner Village. It is fast growing business with a market share of more than 20% (Hirschkorn, 2008: 43). Its circuit is 62 cinemas (607 screens; 134,413 seats). The audience turn around per annum is 32 million. 90% of the Vue cinemas have modern stadium seating and all of the cinemas are fully equipped with the most up-to-date projection and audiovisual-technologies (Corporate Vue, 2007). The brand is positioned as an innovative high standard movie experience within a great environment (Vue, 2008). As many competitors are trying to gain share through “niche” innovation, the movie entertainment is consolidating; with acquisition and rebranding among the leading exhibitors (Mintel, 2006). Although the number of screens is predicted to grow, so the market is in prosper, all the players are mainly trying to keep their share and no brand truly differentiates. Finally, the IMC project will try to reposition the Vue brand in order to become a market leader within the highly competitive movie entertainment market. We need to break new ground and reach a new “tipping-point” in order to transform the brand within the context of the whole movie industry.

1. Macro (external) Analysis First, it is crucial to paint a detailed picture in the current market sector. This will be established through the analysis of the current trends â&#x20AC;&#x201C; and future trend predictions â&#x20AC;&#x201C; in the macro environment and a current overall market diagnosis. To determine a punctual market insight key players will be evaluated and compared based on their positioning, strategy and competitive advantage. At last, market forces will be carefully considered.

1.1 STEPE Analysis â&#x20AC;&#x201C; present (2008) and future (2013)

Table 1: STEPE Analysis â&#x20AC;&#x201C; Present and future

1.3 Market Life Cycle The movie industry is at a turning point. The Studios are ever improving their product quality – the movies are epochal; the directing, costume design, movie scores, film and sound editing and the visual effects are raising the bar with each new movie release … On the other side the information era evolved the consumer to a status where they can easily, but illegally erode the profit of the complete industry (piracy). Nothing really spectacular happened with the middleman – the cinema exhibitor. Through segmentation some successful new product development has been introduced into the market – e.g. parent and baby screenings in the forenoon. Partner connections have been established with several similar and connecting markets – e.g. music/movie/games/merchandise selling outlets. The business model has been extended to reach maximum profitability by extending advertising options and integral sponsorship opportunities. The entertainment market is gaining strong competition from “newborn” entertainment markets – the gaming market, social networking services, online streaming, video content etc. The vast opportunities enable an even greater satisfying of the ever more fragmented taste.

Figure 1: Market Life Cycle – position of the cinema industry

Introduced at the beginning of the previous century, cinema quickly gained popularity. It represented a fresh alternative medium to radio and the printed press. Moving images were soon accompanied by sound. In 1935 (UK) the number of admissions was slightly about 900 million people per year. There were practically no relevant or comparable entertainment substitutes to that medium. And in post-war 1946 the UK admissions number peaked at 1.64 billion admissions per annum. As the cinema markets main competitor was born – TV – the admission numbers started to decline. With an all-time low of 54 million admissions per year the market seemed in a decline. But multiplexes contributed to a major admission boost in the beginning of the 90’s. In the last 10 years the UK admissions were varying between 110 and 170 million per annum (CAA, 2008a). Finally, the UK cinema industry is a mature market. But recently, the movie entertainment market of the »oligarchy of the moguls [big Hollywood studios] is falling to the democracy of the consumers” (Deutschman, 2005). With respect to the new technology, and the empowerment of the atomized user the movie industry is a market in transition; waiting to be transformed by a bold new player who will bypass the competition with an innovative product or a new business model. Despite stable admission numbers, box office takings are still rising (due to higher ticket prices) 1 . The F

movie market is not dying. On the contrary, cinema is still a popular way of spending leisure time, hence still an attractive market. But surrounded with fresh, creative opportunities it needs a new inspirational direction that could reposition “cinema going” as a social event and breathe in new dimensions of the “old” experience.

1.4 Forces that shape the cinema market The success of cinema is swinging on several factors: •

Cinema revenue still largely depends on the number of charismatic blockbusters being released (Mintel, 2008). Strong line-ups that are evenly spread out during the year are a major contributor to box office success.

•

Unpredictable factors – like the weather or the failure of the England football team to qualify for Euro2008 – influence the cinema season. The wet summer of 2007 caused a rise in admissions by 3.7%, and the box office to rise for 7,7% to £904 million (Allen, 2008:5).

•

Another reason why cinema is currently going upwards in the UK is the growing British movie presence on the cinema screen (British productions, actors, stories) (Allen, 2008:5).

Market health is further examined in chapter 1 of the appendix.

•

The fact that cinema tries to reinvent itself by adding new technology and experimenting with it attracts new audiences and maintains old audience – full-digital multiplexes, 3D cinema, blue screen (Mintel, 2008e).

•

In the times of an economic downturn, cinema chains are likely to benefit from it; because of the cinema counting as low-cost entertainment that offers an escape (from financial problems)(Gibson, 2008: 10). This could give the cinemas resilience into more profitable times 2 . F

1.5 Competitor Analysis Competition in this market must be analysed in two segments. The first segment consists of primary competitors – popular cinema(s). This represents direct competition who are competing for shares on the same market. This includes: •

All UK based major cinema chains (Odeon, Cineworld, Vue) who operate mostly on well-equiped multiplexes with several screens (10+);

•

The followers (Showcase, Picturehouse, Apollo, etc.) with medium size multiplexes (5+ screens) and smaller sites;

•

All the small one-screen-per-site players (1-3 screens) who mostly lack of high-tech equipment, but use the advantage based on their location – nearness to the unpretentious consumer. The more exquisite arthouse cinemas are not really significant competitors as they focus on a completely different non-mainstream public – a minority with a more sophisticated taste.

Despite fierce competition Vue is among the three top players in the UK. Because the product of the cinemas is perceived as a movie – and a movie is the “same” in Odeon as it is in Picture House – cinemas can hardly differentiate. Therefore, loyalty can be a fragile concept when it comes to the

When the economic slump hit in 2008 consumers began trading holidays for staying at home and engaging in cheaper experiences – e.g. like cinema going. June box-office intake figures were up for 17% in comparison with the same period last year. Moreover, industry experts were asserting the cinema industry as a recessionprone business, claiming that people in those times are in need of escapism and that cinema provides a relatively affordable and fun alternative to other types of entertainment (Woods, 2008). Summer box-office set records this year, being the highest in number of admissions in UK cinemas in the last 40 years – thanks to super hits like Batman:The Dark Knight and Mamma Mia!, bad, unpredictable summer weather and holiday cancelations due to the financial crunch (CEA, 2008a). But the picture might be distorted. As the economic downturn hits even harder consumer behaviour patterns are starting to shift. According to a YouGov poll of the nations’ spending habits – dated September 2008 – almost one in three people gave up their holiday plans this year and more than half of the population has abandoned treats like going to the cinema to the punch of the credit crunch (Rayner, 2008).

cinema market. Nevertheless, thorough branding and product/service innovation they are trying to maintain distinctive positions in the mind of the consumer.

A detailed analysis of the primary competition with an emphasis on the “big three performers” can be found in the following table. The price comparison for the key players as well as a comparison of the site-presence in the 20 biggest UK settlements can be found in the appendix (2.1 and 2.2). The secondary competition is indirect competition and consists of spare time activities that can substitute cinema going. These competitors do not fight for shares of the same market, but compete for the “same” time/money consumers spent on different kinds of entertainment. Among this are: •

TV (regular, digital, pay-channel and DVD) – is the main indirect competitor as it still represents a similar, but less superior experience. Nevertheless, new series seasons are starting with a trilling production similarity to the best produced movies and reality TV is trying to achieve its second boost by applying fresh twists to the familiar concepts and extending successful franchises.

•

DVR’s (digital video recorder) are adding another dimension to TV. Because they allow timeshifted digital viewing they are now occupying consumer’s free time that would be otherwise intended for something else.

•

VOD (video on demand) – online video portals (YouTube) and TV-on-demand simulacrums (Joost) have been a popular spare time activities, but streaming services like the BBC’s iPlayer are due to their user friendly interface and simplicity in usage gaining momentum among all age groups;

•

Social networking – Social networking sites (Facebook, mySpace, Bebo) are proven to be very popular among younger generations. Especially among girls and women who can now chit-chat, gossip, take quizzes and voyeuristically enjoy watching personal photos, videos, comments and twit’s of friends and “friends” without leaving home. Of course this does not replace the

•

Gaming – games have always been a popular spare time activity amongst males, but with new games (The Sims, Spore) and new gaming styles (Nintendo Wii) that have been introduced into the market recently gaming is opening up for the female game player as well as an interactive entertaining activity for the whole family. Despite games being much more expensive than cinema they still represent a good value for money when compared the time being amused by each activity. Fighting for the sane disposable money of the young, studios avoid big releases on popular game release dates in order to avoid loss (Johnson, 2008: 8).

Vue

Odeon

Cineworld

Local screens / small chains

Art cinema

(Showcase, Empire, Picturehouse, Apollo)

(e.g. BFI, etc.)

Nr. of UK sites /(%)**

60 (7,7%)

108 (13,9%)

72 (9,3%)

Nr. of UK screens / (%)**

584 (16,2 %)

837 (23,3%)

744 (20,7%)

1435 (39,8%) (est.)

Perceived as cinema for everyone (for the family, the youth and the expert moviegoer) enjoys a good reputation among audiences and promises fun. The Odeon brand is perceived as trustful due to constant and consistent branding in comparison with the relatively freshly rebranded competition. The brand is not perceived as distinctive but is becoming innovative (NPD).

The “fair Odeon alternative”, but with modern venues and a higher quality; less innovative but nevertheless offers a pleasant movie going experience and good-value. Suitable for viewers of all ages, but perceived as having less momentum than their competitors.

“No one does cinema like Vue.

“Fanatical About Film”

“See the world, Cineworld.”

*Senior Vue – Monday afternoon screenings with coffee, tea and biscuits for a special low price *Kids AM – Saturday and Sunday morning screenings for Kids for a bargain price (one accompanying adults goes free). * Extra cosy leather seats and additional leg room on selected locations for additional £1. *Vue Evolution Screens - bean bags and sofa pods (for 2 or 4) seating for additional £1. *Cinema and Eating out – a special service that offers to book restaurants close the selected cinemas and provides meal deals. *Vue Larger than Live – satellite streaming of live music, sports and comedy events. * Periodical Bollywood screenings. *Exclusive screening previews for members. *Vue before they go service – online reminder for films that are about to finish based on geographical location. * Vue Shop – online music, DVD, books and games shop. * Full digital multiplexes (showing also 3D).

*OdeonDirect –online video rentals (flat rate, no late fees) * OdeonPlus – simulcasts on the big screen e.g. sports (Formula1), music (live concerts, operas, ballets ), games, TV broadcast (season opening and finale) * Renting screens for conferences, events, private … * Odeon Senior Screenings - mid-morning screenings for elderly guest; a mixture of recent and classical movies with free coffee and tea. * Odeon Kids – screening of movies that were carefully selected for kids and are available for pocket money prices on Saturday, Sunday and during school holidays mornings. With every child comes one free adult ticket. * Odeon Newbies – blockbusters for parents (pay) with newborn babies (free). Weekday morning screenings slightly adjusted to the accompanying of a baby (light is raised, slightly quieter). Adults pay, baby goes free. * Odeon Director’s Chair – art-house, foreign language, independent movie screenings aimed at movie experts. Only one evening every week (filling a niche). * Odeon Digital – fully digital multiplexes with digital projection that has a vastly improved picture quality for a comparable price. Showing also 3D movies) *Odeon Bollywood – the best bollywood releases.

*Unlimited Cineworld – a flat rate offer which provides unlimited monthly viewing at any site in UK (except the London West End area) for £ 11.99 a month. Includes exclusive advanced screenings, exclusive competitions, periodic offer of food and drinks, restaurant discounts. *Family Films for a small price throughout the whole week a selection of violence free family movies. *In addition to the Hollywood cinema and European productions a big selection Bollywood movie releases. Screenings of live events (opera in HD, concerts, comedy) and old classics at selected sites. *VIP, deluxe and private screen hire and corporate events options in venues. * Digital screens (showing also 3D movies).

*Daily primetime popcorn-free (!) screenings (Picturehouse Cinemas) *Kids Club’ – creative activities, fun and games in addition to a kids movie screenin on Saturdays and Sundays mornings. Adults go free. (Picturehouse) *Kids and Family weekend low price offers on selected movies (Empire) *Parent and baby weekday morning screenings. Babies go free. * Afternoon 60+ screenings with refreshments. * Free screenings for loyal members on some Sundays for non-blockbusters that need “worthof-mouth” promotion. Tickets can not be guaranteed – first come first served basis. (Picturehouse) * Pre-premiere special events (actor, director interviews, etc.) * Screen renting for events, conferences, meetings, celebrations etc. * Digital screens (showing also 3D).

Positioning ***

Slogan New product development / New market development / Diversification

High-quality theatres in terms of projection and sound with premium interiors perceived as the stylish, young and fresh trying to offer an excellent movie experience. Vue is also perceived as innovative and inspiring cinema with an distinctive image and a feeling of great momentum behind the brand.

Porter’s generic strategy Market position Tactic

Threat Level (to Vue)

Socioeconomic charactheristics Targeting

Relatively indistinctive positioning offering a relatively pleasant experience for the average audience offering value for money or satisfying a niche due to a favourable geographical location, special screening programme or premium position ( e.g. Empire).

Challenger * Trying to expand their share through higher theater experience quality *Price promotions (money-off coupons for a visit within a short period of time) * Acquiring new users due to new locations and rising the bar in service quality

Market leader *Acquiring new users due to new locations *Trying to expand their share through new product/service development * Heavily promote through print advertising for major film releases * Quickly copy successful NP (counter-offensive tactic)

Very high

Challenger * Providing a discount on price * Trying to improve the service * Quickly copy successful new products – counter-offensive tactic

High

Positioned – almost sub culturally – as the alternative to the Hollywood mass production aiming at the movie guru and movie expert.

/ Offering a variety of movie genres from the world productions Providing the cinema interior environment for movie connoisseurs

Followers and nichers

Nicher

* Benefits of location (mostly lack of distinctive branding). * Imitate the main players and adapt their product ideas, but are also copied quickly by them so they are unable to truly differentiate.

* Bypassing the mentioned players due to a different movie range

Medium / High

Very low

(due to geographical location)

ABC1C2

ABC1C2D

BC1C2DE

Various - Empire AB, Showcase C1C2DE, Picturehouse ABC1C2D …

ABC1

kids, tweens, teens, students, dinkies, family, grey market; urban; heavy/medium users;

kids, tweens, teens, students, dinkies, family, grey market; urban; heavy/medium/light users;

kids, tweens, teens students, dinks, family; urban; medium-light users;

kids, tweens, teens, students, dinkies, family, grey market; urban/rural; medium-light users;

Student, artists, elderly; urban; heavy-medium users;

Promotion

Website,podcasts, competition; price promotions (money-off coupons for a visit within a short period of time); prevue magazine; weekly schedule leaflets, premieres, promo offers.

Odeon Filmcast – video podcast about newest releases, behind the scenes footage, weekly newsletter, Odeon magazine, Competitions, blockbuster advertising, weekly schedule leaflets, premieres, film festival sponsoring, discount voucher codes.

Competitions, weekly schedule leaflets, Showcase magazine, events

Competitions, newsletters, events (screen talks), premieres, weekly schedule leaflets, magazines

Partners

HMV (online store),Waterstones (online store) TimeOut (joint podcast producing); Ben & Jerry's (exclusive ice cream on sites)

Lovefilm.com (for video renting), various film festivals for screenings.

New York’s Metropolitan Opera House (for exclusive live screenings)

Various Film Festival for screenings

Newsletters, weekly schedule leaflets.

1.6 Porter's five forces

Threat of new entrants There is a low probability that one relevant competitor would enter the market and disrupt the current players’ positioning. Building a chain of multiplexes takes time and the investment capital connected to it (land, building, equipment, etc.) are extremely high. This sets the entry barriers for newcomers very high; despite that the switching costs for the consumer are null. Considering the smaller one-screen-entrants their barriers are in comparison to the big players relatively low. This makes entry considerably easier and can at the same time – in case of a strategic geographic location – be a significant threat even to a big player. On the other hand, the small entrants don’t represent a significant decrease in market share for any multiplex chain and are per se not that dangerous. Based on the above the threat of new entrants entering the market in the medium and the long run is moderate. Bargaining Power of Suppliers The cinema exhibitor is mostly movie studios dependent; but the studios are also heavily experimenting with their business models – e.g. experimenting with movie release strategies 3 . Some F

of these completely surpasses the cinemas and allow the studios to monetarise them through new advertising-driven business models. Because these business models are still in their “beta versions” this represents a low threat. However, the all-in-one-media-player-internet-gaming-devices gadget market is booming and video migrations to new media platforms will slowly become a threat from the studios to the cinema exhibitor in the future. Illegal movie sharing lowers the incomes of the studios and the cinema chains. Studios therefore negotiate better deals and cinemas must patch up their profits from snacks and sponsorships as not every movie becomes profitable. Despite the bold options the studios (will) have, their main objective is still unchanged: make revenues from theatre releases. That makes the relationship between the cinema and the studio mutually dependent and therefore represents a moderate bargaining power for the supplier. 3

Cult director Steven Soderbergh released his movie Bubble simultaneously through all channels (theatre, DVD, high-definition cable TV) on the movie’s opening day – claiming that piracy is doing it anyway (Jardin, 2005). Independent producers who failed in the fight for a distribution release are putting their movies straight on the internet chraging a minimum to see it and surpassing cinemas completely (Allen, 2007). Another example is Paramount Pictures who are going to produce feature-length films that will be distributed online and through other digital media (Brodesser-Akner, 2008).

Threat of substitute products/services Only the sensitive consumer might be willing to go further the perfect movie experience into a wellequipped superior cinema. Because the products in the cinema industry (movies) are treated as absolute substitutes and the switching costs are extremely low the threat of substitute products in this industry is very high. Bargaining Power of Buyers The ticket buyers are keeping a tight rein on the cinemas for a number of reasons: because the movies are not differentiated products and the theatre projection quality is perceived as almost equally high; they have a low switching cost when just choosing another venue to go to; the threat that they will download the movie illegally and watch it at home. These reasons make the industry participants playing off against one another; ergo taking value out of the market.

Figure 2: Porterâ&#x20AC;&#x2122;s Five Forces that shape the cinema industry competition

Rivalry among existing competitors The main three players have almost the same amount of power. Combined they control almost two thirds (60,2%) of the market share in a slow-growing (!) market. While the big players are trying to also compete on brand image the small industry participants compete solely on location and occasionally on price. Nevertheless, all players basically compete on the same dimension – location. This drives down profitability. Based on the above the rivalry among the existing competitors is considered as high.

Five Forces - Sum up Not a single force in this industry is benign, with the majority of them high and the rest of them moderate. Intense forces are a sign of a relative non-profitability for all the competitors. Every single player within the industry holds the other player in a “checkmate” position, meaning that there is no significant return of investment for any of them. To sum up, it is crucial that we find a solution that can pull us out of this status quo position. We need to achieve a strategic positioning that we can preserve and that will not be easy and quickly to copy by the competitors. To lower the rivalry among the competitors we will: •

Come up with a unique and distinctive offer that will rank above the competitors products; in terms that our product won’t be perceived as a substitute anymore, but as a market differentiator. We want to create an “iPhone” within the existing market of copycats!

•

Consecutive we want to lower the bargaining power of buyers in such a manner that we will be the first and the only one who can supply them with a product/service like this. We will need to create rational or highly emotional value in order to do so.

•

As our relationship with the suppliers is interdependent – their bargaining power at the moment is mediocre – we will try to establish a way through which we will lay out a new collaboration roadmap. This new strategy would create shared value for both sides and therefore increase profitability for both. Thus transforming supplier into our partners.

2. Micro (internal) Analysis 2.1 The 7 P's

Product Although it may seem misleading to the consumer that the main â&#x20AC;&#x153;productâ&#x20AC;? is the movie watched, the actual Vues product is the service it provides to the movie goers - the 360 degrees around the movie. This includes the quality of their venues and the cinematic experience they can offer. The state-of-art multiplexes have a trendy interior and exterior design and where ever possible free parking is provided. The venues are in good conditions, appear clean and tidy. More than 90% of their venues have stadium seating which guarantees a great view for every viewer (CorporateVue, 2008). Comfortable seats with extra leg room are a standard, with new venues providing also sofa pods and bean bag seating alternatives. Tickets can be bought online, on the quick self-service machines and over the counter. Seats are usually not reserved (except prime locations) and the seating is arranged on a first come first go basis. Snacks and refreshments can be bought at the same counter as tickets thus saving time. Vue promises huge screen sizes. In addition, their projection techniques and sound quality have been always updated to the latest industry standards. End of 2007 Vue has built its first full digital multiplex; being second to Odeon. Digital projection introduces even higher picture and sound quality standards. This milestone in the cinema experience allows digital screening on the big screen and enables watching 3D movies. Because this technology is expensive it is to expect that this standard will be introduced relatively slowly into the market. One can conclude that Vue delivers the highest standard of service in the market; which is also reflected in their brand image.

Price Vues pricing is competitively positioned. Ticket prices differ from venue to venue. They depend on their micro and macro geographical location â&#x20AC;&#x201C; e.g. different prices can be found in London and Birmingham as well as in London zone 1 and in zone 2. Prices also differ according to life stage. Children, teens, students and seniors can regularly buy discounted tickets.

Table 2: Vue prices comparison – differences among UK cities city, city zones, digital cinema and premium offers. Source: Vue,2008

Nevertheless, there are some ongoing promotions which are stimulating viewers to visit more frequently – money-off coupons for a visit within a limited time span (10 days). Also special price discounts are available for certain age groups on chosen hours – kids weekend forenoon; seniors weekday’s morning.

Table 2: Vue prices – special offers, promotions Source: Vue,2008

Place In the UK the Vue circuit operates 63 sites which encompass 615 screens and 136,111 seats (Corporate Vue, 2008). Venues are dispersed through the whole country and cover 7,7% of the market (Mintel, 2008a); with larger cities (London, Edinburgh, Leeds) having multiple multiplexes. Despite having plenty of locations Vue is still missing in some notable UK cities (Glasgow, Liverpool, Manchester) 4 . F

Sites are strategically placed on locations that are sparsely populated and easy to access. This gives them the advantage to gain those consumers that preference cinema solely on the nearness of their location; in a time-poor society therefore place is of vital importance. If the site is located in the

Presence of Vue cinemas in the 20 largest UK settlements (by population) can be seen in table 2.2 in the appendix.

outer part of the city Vue enriches the convenience and provides free parking. This is convenient for customers who need to drive to the venue in any way.

Promotion The promotion of the movies is mostly in studios’ hands. Cinemas rarely co-promote a movie release. They lack the budget for it 5 . What they do actively is that they show trailers for future releases F

before every single movie. Vue engages their consumers with money-off coupons that give a discount when used in a short time span. Regular online competitions can be found on their website as well as a regular movie podcast (jointly produced with the entertainment-info-guide TimeOut). On site, a compact monthly promo magazine – Prevue – is available; covering current movies, competitions and movies soon to be released. Vue’s main promotional tool is their website. Its user friendliness allows the consumer to navigate through films and film-times, the latest news, special offers and competitions quick and easy. Finally, Vue’s brand is consistent, well-developed and attention-grabbing. It represents a solid basis for the development of their corporate identity. Every movie nowadays is a small brand and the studios don’t have a lot of time to develop it 6 . They F

must shoot the magic bullet fast, aim precise and have a good timing before another movie-brand starts to fight for that audience. A movie’s promotion largely depends on the audience that it is targeted to. A successful recipe can be seen in the table below.

Nevertheless, Vue has heavily promoted its new brand when introduced to the market (2003) – spending a record million pounds on promotion. Being the advertising top-sender from 2003-2005, Vue is now third according to the advertising budget spent in 2007, spending £ 270 thousand (Mintel, 2008a). A comparison between the top three players ad-spent can be found in the Appendix, graph 2.3. 6 If a movie becomes successful at the box-office, soon a sequel/prequel is released. The advantage of them is that they have a built-in awareness. For this reason the Hollywood industry keeps on borrowing successful titles/ franchises from other industries – comics, books and lately sitcoms, with an existing fanbase and global awareness. Nevertheless, awareness is not a guarantee for success.

Table 3: A template for blockbuster promotion

People In this type of service the consumers are in direct contact with the workers only at the counter, where service efficiency – politeness, speed and a proper attitude – is required. Proper training of people behind the counter is important, because they can motivate the consumer to purchase related products by their recommendations and hints and thus add value to the offer – e.g by combining certain snacks and drinks, ordering a larger menu, propose add-on’s. Stuff trying to add extra pounds on each consumer can massively amplify the income of the cinema; keeping in mind that Vue attracts over 32 million customers per annum (CorporateVue, 2008). Everything else happens indirectly in relation to the consumer. Besides cleaning, the sites need little maintenance. The only skilled people have to be the technicians of the projection team who play the movies, but they are in no direct relationship with the consumer.

Process The process of delivering the service at Vue is short. The counter for tickets and snacks has been aggregated into one line, so that the consumers don’t need to wait twice in order to get a ticket and grab a snack. Nevertheless, through uniting the standing time for this queue is now longer and that may annoy consumers who bought their tickets online/self-help automats. Especially as people do arrive late and they don’t want to miss more of the movie by standing in the line and waiting for

tickets. It is crucial to reduce the waiting times and to add speed, flexibility and support so that the process of buying tickets/snacks is shorter. When going in the restricted halls that lead to the screens, the ticket attendants are checking for tickets and in addition also pointing out the direction of the screen. Once inside the screening room, rows can be quickly recognised by a dimming light number on the floor; the seats are still harder to find. Keeping in mind that most of the screenings are free the experience here can blush into an disappointment, because of the best seats occupied (in a case of a fully booked screening) or end up in a good flow, because of the possibility of fast and easy selection of the free seats (in case of a moderately booked screening).

Physical evidence Despite the intangibility of the service with Vue cinema consumers can know what level of service quality there are getting into. Through Vue’s avant-garde interiors the consumers can feel that they will be part of an experience of high standards. Their assumption is later confirmed as they engage in a high-quality projection experience that allows the viewers to perfectly escape the reality and enjoy the movie in style. Vue’s website is consistent to the brand – it’s user-friendly, to the point, and has the internal logical it needs for quick navigation.

Sum-up Vue’s delivers a good “product” within well-equipped theatres. The people deliver a relatively efficient service during a smoothly running process. The availability of service is fairly dispersed, but leaves some open locations that require covering. Due to budget limitations Vue’s promotion is strategic, targeted and brand consistent – user-focused website, podcast coproduction and stimulating price promotions. All the 7 P’s are synchronised except for the price. Despite offering a service considered closer to premium Vue has to keep its prices more-or-less aligned with the prices of competition7 . Consumer F

price sensitivity and a perception of this service as a full substitute make it harder to charge premiums. Nevertheless, their price is above the price of smaller one-site competitors. As the whole is more than the sum of its parts, it can be summarized that the 7 P’s are intact, not isolated, but complement each other.

Price comparisons between the three major players in the market for several cities can be found in the Appendix – Table 2.1.

2.2 Financial performance

Key fanacial for Vue entertainment in the year 2007

Table3: Key financials for Vue entertainment in the year 2007; Source: Mintel, 2008b.

2.3 Boston Matrix Vue is the youngest brand in the cinema market. Nevertheless, today it is the third largest competitor in the UK with a relatively high market share of 7,7% in number of sites and a market share of 16,2 % in number of screens within the UK (Mintel, 2008a). Considering all the small market followers and atomized one-screen-competitors and in comparison with the market leader Odeon – which has 23,3 % of screens in the UK – Vue’s share in this mature market is still high. Vue surpassed the “dog phase” when it gained share as it acquired 36 multiplex cinemas form Warner Village right after the brand was newly established in 2003 (Corporate Vue, 2008). As in UK the “cinema audiences have remained static for the last five years, at about 170 million admissions a year (Hill, 2008: 13)” the market is growing very slowly. Attempts have been made to expand the market and try to attract new users through segmentation (the grey market, babies & parents in the morning, kids & family during the weekends) with considerable success; but still the market per se is not growing faster also due to a vast amount of available entertainment options. This leads to a conclusion that Vue can be defined as a “cash cow” – with a high relative market share in a slow-growing industry. Once a multiplex is built it requires a relatively small amount of maintenance. Then each site with an turnover that is above the fixed and opportunity costs represents a constant cash flow with little or no additional investment required. Nevertheless, this does not guarantee high profits. 25

Figure 3: Vue positioned on a Boston Matrix

3. Strategic resources and competitive advantage 3.1 SWOT Analysis

The SWOT analysis will enable us to connect the current trends (and trend projections) in the industry with the strengths and weaknesses of our brand. Analyzing it, we will be able to clarify: which strengths will we use to capitalise on our opportunities and which to minimize the potential impact of the threats; which threats will we be able convert into opportunities and some of which we will have to avoid.

Table4: Strengths and Weaknesses - Vue

Table5: Opportunities and threats in the market

Based on the SWOT analysis we can derive the following objectives which will enable a sustainable way forward: •

The threat of secondary competition eroding our market (with free content and media) we will try to convert into an opportunity by reinventing our business model, become free, and if necessary repositioning Vue according to the demands of it. We will try to become the first free cinema in UK.

•

The rising piracy threat of piracy – which delivers movies in low picture and sound quality within on a small screen – we will try to fight with our strength of delivering the perfect cinema experience with the best available projection techniques and the above fact of offering free cinema and thus erasing the primary drive for piracy. 28

•

The threat of the ageing population and the reduction of tweens and teens market groups we will convert into an opportunity by focusing on a special demographic segment and become a leader for that special demography.

•

We will try to convert the threat of recession into an opportunity – offering the escape needed even in the hardest times. By becoming free we are prone to times of recession as well as prone to favourable times. Focusing on a certain demographic we will be facing a loss of other markets in that time.

•

Technology is becoming ever cheaper. This is an opportunity we want to capture. In order to maintain our strength of a high brand value and good reputation we will built sites and renew old ones with the newest technology. We will also try to be the first to introduce new improvements into the market.

•

The weakness – lack of an extensive network of sites locations – we will try to overcome by building new sites on niche locations throughout the UK and fight for market share on established positions by emphasizing on our experience quality and price leadership

•

We will try to fit the opportunity of rising celebrity popularity by hosting more premiers in our mothership location in London West-End and thus make advantage of our strength.

•

The opportunity to join legal efforts to suppress piracy and increase the pressure on Internet service providers – whose broadband popularity has been ascribed to piracy – is not perceived as a true opportunity. In the long term this could position us as contra consumers which could degrade and damage the brand. So we are regarding this opportunity as a threat to the reputation strengths of our company.

Through these objectives we will gain competitive advantage and improve our position in the market.

4. Marketing Objectives General marketing objective: •

To change the current business model by developing the key product free cinema and accordingly adjust activities to it

Marketing objectives related to the consumer market: •

To enter the student market, capture it fully, and abandon other markets.

•

To enlarge the size of the current cinema consumer market by 1,7 times; making it grow from 162 million to 277 million admissions per year.

•

Achieving the previous objective by enlarging the market of our target segment (students) for 3,1 times within the whole UK within a year; making it grow from 53 million to 168 million admissions per year.

•

Transform from a market challenger to a market leader by by-passing the competition and becoming the absolute market leader, thus increasing the market share to 60,6% of all cinema viewers within UK within the first year of the free cinema establishment.

•

Fill at least 67% of our yearly capacities – occupying 168 million seats – in the first year.

•

To fully establish the free cinema product as market leader by the end of the year 2009.

•

To become the number one entertainment medium for films for youth in the UK (beating TV programme, home cinema watching and internet on-demand video viewing) according to time devoted to the medium by average user.

Marketing objectives related to the business market: •

Raise the price of the screen advertising we offer due to fuller screening rooms by 20%.

•

To increase share of advertisers’ general advertising expenditure (according to medium) for cinema from 1,4% of the average campaign budget to 3% within 1 year.

•

To capture around 70% of the advertising expenditure budgets devoted to the medium of cinema within the first year.

•

Attract 3 corporate advertisers that would be willing to integrate their brands in higher ways with the cinema chain (e.g. Orange – a premium informative ads right before a movie starts) within 1 year.

5. A way forward – Strategic context 5.1 The way forward – “free”

It’s a time where when consumers' buying behaviour, entertainment trends, advances in technology and market forces are changing. The Hollywood industry will have to think harder about how to influence the areas they can control and how to mobilize power where they can't. An integral and synchronised roadmap is needed between the complementary partners in this sector of the entertainment industry – producers, studios, distributors, cinema screens … A long-term shared benefit model has to be invented which guarantees higher profits to all the players; nevertheless the only optimal outcome from the consumer standpoint is a known variable – they want content, be it the movie or the music, for free. It’s crucially to search for strong strategic capabilities, a higher consumer behaviour patterns understanding and considering the trends in the media landscape and the day-to-day consumer environment. Looking at the model of the music industry, from the consumers standpoint, the movie business has limited options and a really clearly statement from consumer groups. According to Deutschman (2005): if the consumers can't get it how they want it and when they want it for a reasonable (small) price, they will take it anyway; even for a compromise in the quality of the movie experience. From this premise one can conclude that if the consumer would get it for a »fair« price they would not bother to illegally steal it, but rather enjoy the full quality of the product as it intended to be. The challenge in the new model was therefore to achieve a balance between a convenient cinematic experience and the “demanded” price. The “free” business model phenomenon, its evolution, and the effects it has on the consumer is further explored in the appendix 4.1.

5.2 The new model

Based on our elaboration on the SWOT analysis and the objectives that are laying the groundwork for further strategy we need to define the reinvention process. The main questions that were driving the transformation of the traditional cinema model into a free model were:

1. Which activities will we start to do differently in order to achieve a unique strategic position? 2. How will we be able to preserve our position?

In order to be truly unique we will have to reconsider our situation from a new angle and reposition ourselves so that we will not be an all-things-to-all-customers brand. Through demographic and psychographic segmentation we need to find a segment for which we want to become the milestone choice – because of the new activities that we will perform. The premise is: if in the long term all the players within the market find a unique position that they can maintain and be superior at it, than all the competitors within this market will coexists in equilibrium – without being direct competition to one another. In the short term moving into a “blue ocean” will mostly benefit us. As Porter (2008: 86) states it: “Rivalry can be a positive sum, or actually increase the average profitability of an industry, when each competitor aims to serve the needs of different customer segments, with different mixes of price, products, services, features or brand identities”. Now, can we develop a marketing strategy that will cause the metamorphose of the whole industry by performing a new, different set of activities, and leverage our brand into the market leading position?

Free model - presumptions The free student cinema model implies three general presumptions: 1. If the cinema would be free extensively more consumers would it (in comparison with the current visitor status) 8 . F

2. The fact advertisers are willing to pay for audiences they want to reach. 3. Giving away the ticket entices consumer to pay for something else, later in the process – a crosssubsidies from the primary product (ticket) to the secondary product (snacks, drinks). Solutions and obstacles The Free model has a major disadvantage. When being free for everyone that means unconditional admissions. Therefore homeless people or beggars could settle down in the cinema rather than stay on the street, which would be a major drawback for the other audience. Within the segmentation process we found a proper solution to that problem. In order to become a “blue ocean” leader we have to focus only on one segment; which also enables us to give us the selecting criteria for 8

The half-year results of 2008 are showing a 1% increase in box office takings, but on the contrary a 4,8 % fall in the number of admissions – ticket prices rose for 6% to an average of £4.34 (Sibun and Mason, 2008). 32

admissions and it gives our advertisers an even purer audience in terms of age demographics. Our decision to focus on the student market (16+; college, undergraduates, postgraduates) only, will allow us exactly this. While we will be sovereign and focusing for the market above (in cities we operate), hence occupy a new position, other players will be left with a target market from which this particular group (students) would be extracted. The second argument for selecting only students is because they are amongst the largest cinema going audiences – »The cinema audience for the top 20 films in 2007 was predominantly young, with the 7-34 age group (40% of the population) making up 66% of the audience(UK Film Council, 2008).« Which is 2 % more than in 2006 (UK Film Council, 2007). The attitude towards cinema is extremely positive. 7-19 years old, of them 81,4% females and 75% of males, love to go to the cinema; in fact – independent from gender – 36% like the ads shown at the cinema (Mintel, 2008c). 38% of cinema visitors and 30% of non-visitors (aged 16+) believe the cinema is overpriced and 31% of cinema visitors would like to go to the movies more often (Mintel, 2008c). The average moviegoer is willing to pay £4.50 for the snack (popcorn, fast-food), which means that he almost doubles the price he paid for the ticket (Hill, 2008: 13). The most profitable product a cinema sells is pop-corn. Depending on the price of a box, it can yield more than 90p on every £1 sold (Hill, 2008: 13). Moreover, popcorn makes viewers thirsty. And the audience knows it, so they are very likely to also spend on drinks. A major viability factor for the cinema exhibitor therefore remains popcorn - with its 2,000 % margin (York, 2008: 1) – and other junk food. Popcorn is perceived as a part of the cinema experience by 19% of the cinema visitors (Mintel, 2008c), but 45% of the cinema going public (aged 16+) drinks and eats at the cinema (Mintel, 2008d). Making entry free it is assumed to increase the amount of money spent on snacks. The advantage of this income is that it “stays” within the cinema – does not have to be split with any other major party (distributors).

Table 6: Strengths and Weaknesses of the new business model

Detailed market segmentation and the targeting groups of the new business model can be seen in the appendix (3.3 demographics, 3.4 psychographics, 3.5 behavioural segmentation). A demonstrative example, of how the free model affects the obstacle of location (based on London), is depicted in the appendix 5. The new â&#x20AC;&#x153;freeâ&#x20AC;? business model and the shift in the activities performed can be seen in the table below.

Table7: The New Model â&#x20AC;&#x201C; different activities and activities performed differently

5.3 Ansoff's Matrix

The cinema exhibitors have two major income sources – the consumers who buy tickets and the advertisers who buy ad-time. Therefore, new product development is considered from both of the two customers’ standpoints. A conclusion based on mutual strategic growth – within the consumer and business market – will determine the optimal way forward.

Consolidation: Despite the introduction of the digital cinema into the market our strategy was based on consolidation – trying to penetrate our existing market with our current service. Nevertheless, as the market is growing slowly we are in need for same value-based change in order to tear us out of the competitors’ chains. While trying to secure our position with money-off promotions we could be quickly surpassed by a leap-frog entry in to the market based on a new daring strategy or an improved business model.

New market development: •

Sites expansion – entry into previously untapped markets by filling the ”missing” cities/regions with new venues.

•

Segmentation – looking carefully at the new demographics and psychographics and trying to satisfy niches is the way to reach the communities and »tribes« that compensate cinema with other activities. Slicing the populations into smaller fragments

enables

better

targeting.

Assigning

certain

movies/content to even more audiences’ results higher reach per screening. •

Segmentation – looking at audiences that are alienated from the cinema medium and finding ways to attract them.

New product development– business-to-consumer: •

Introducing new premium categories – “the lovers lodge” – a separated comfortable extensible couch on which you can partially lie would allow an even more cosy experience.

•

Introduce new snacks and new fast food – e.g. pancakes and popcorn varieties (spicy/sweet popcorn) that would allow charging a slightly premium. Also appetizer varieties should be introduced according to international cuisine in order to persuade the cinema goers to buy before going to the cinema. Healthy options should be considered too.

•

Introduce movie merchandise/memorabilia shops on site – selling only movie related products from new releases through the classic hardcore fan stuff. Having merchandise on site would higher the intent to buy merchandise on spot – right after the beloved movie because of a strong emotional after screening influence; thus extending the cinematic experience.

•

Despite the positioning as a free student cinema we can also introduce products like Free Family Cinema on weekend mornings. We would thus be “stealing” other demographics on that time slot from other cinemas. This demographic would also be a new product for the advertisers.

•

Vue Education – Bringing nature, science and history to big screen. Forming partnerships with Discovery Channel, History Channel, Animal Planet and National Geographic for joint productions of exclusive cinematic documentaries that would be introduce this topics in funny and interesting ways. This would attract new demographics – potential for educational school visits and family weekends – in case we decide to make the new product – morning weekend screenings for the whole family. Documentaries are compared to a Hollywood production less profitable, but are also much cheaper to produce and therefore less risky to invest into. The documentaries would be exclusive to Vue.

New product development – business-to-business: •

Introducing scented advertising – adding the smell sense into advertising could increase impact. Most of the advertisements stimulate one sense only – e.g. print stimulates only visual and radio only aural. The TV and cinema medium interact with both. It has been proven that if brands touch two of our senses the impact rises by 30%; but if brands can find an additional way to engage with our senses –meaning a 3-way-stimulation – the impact grows to 70% (Beale, 2008: 1). As images and sounds evoke certain appealing moods, so do smells. In the print sector some perfume ads are already featuring a scented bended stripe. Cinema could add to that experience and use sensory marketing tactics in its advantage. 37

•

Creating new sponsorship opportunities for advertisers – giving them the option for providing an integrated experience with several more touch points – e.g. outside the cinema, in the foyer of the cinema, in the showroom like movie sponsoring, screen sponsoring, etc.

•

New advertising/promotions options - foyer installations, in-screen sampling, etc.

•

Interactive advertising with Bluetooth/Wireless engagement – within the foyer e.g. free downloads, e-vouchers, after movie quiz competitions, selling mobile content thematically connected to the movie right after movie e.g. ringtones, wallpapers, games etc. Use of the theatre- exit-space for promotions

•

Filling in a system of rank and recommendation (derived from the online world) and apply it for the movies.

•

Creating a stronger online presence in the social communities (Facebook, mySpace, Bebo) – develop free online/mobile applications and content that will indirectly promote the cinema, but be perceived as a useful tool for the consumer (e.g. Find appropriate movie for every occasion; Facebook applications that find you a movie partner based on your description and movie interest). Enabling the movie fans to connect on a multimedia platform.

Diversification: •

Turning the cinema into an entertainment venue – developing new concepts of gaming and using the new digital high resolution screens for massive multiplayer gaming on this big screen (also in 3D). Providing each seat with an interactive controller and a mini-display. Creating various gaming genres could be again a huge opportunity for gaining several segmented publics into the cinema and offering new advertising options and content integrations.

•

Building gaming centres within cinemas – next to cinema foyers with a wide range of entertainment from video games to state-of-art multiplayer games.

Sum-up: In the long run Vue has to go to differentiation and turn its cinema into an entertainment venue. As the free model is surely a risky choice, Vue has to be creative when introducing new products and find a sustainable position. “Lure them in for the movie, make them stay for the fun of it” should be the key premise. 38

Vue has to innovate and introduce new “cash-cow” products as well as for advertisers as for the consumers. New snacks and drinks have to be added for sure – finding the most profitable and later adding on varieties. For the advertisers, scented advertising, interactive Bluetooth engagement options and varieties of sponsoring should be introduced in order to be unique in our integrated offer. Once established Vue should continue to apply digital technology and replace its current projection technology in all the sites in order to keep their quality edge. Once the free model is up and running plans should be made for diversification into a cult entertainment venue. We need to be ready to extend our cinema service and become an entertainment hub for the youth (offering new services – such as be the first to offer massive multiplayer cinema screen gaming). Finally, our brand and its products have to create a culture of belonging. It has to be a contribution to society – not where people can hang out to kill time, but a place where people want to be.

5.4 Porter's Generic Strategies Vue is a high-value brand. The company owns the highest projection quality on the market and their state-of-art-facilities are excellent-designed and maintain a good atmosphere. Vue’s company history cannot praise with longevity, but they are demonstrating clear service leadership. At the heart of Vue’s strategy is the viewer, therefore a high importance is given to the user-friendliness of the process. Consequentially, Vue enjoys a unique position in the mind of the consumer – 19% associate Vue with the word friendly, 18% with accessible, 14% with fun, and 8% with stylish (Mintel, 2008b). According to Porter’s generic strategy Vue can be defined as a differentiator.

Figure 4: Porter's generic strategy – positioning of Vue

The path of differentiation continues, as Vue becoming free in this next step. Vue will offer its top service, but give it away for free to a special target group. Ensuring they will take this consumerfriendly position first, will make them know as innovators in the market and increase Vue’s reputation. Openness, accessibility and intellectual sharing are great values within this new target market and in the free-driven—consumer-culture. Congruency of this two concepts increases Vue’s likelihood to become an even more successful differentiating company. Differentiating, by following the latest trends will remain Vue’s competitive advantage.

5.5 Market Entry

Vue is among the top three players. With the shifted model it is expected to grow even faster and maybe closer to overtake leadership. To challenge the market leader Vue is applying now the following tactic:

•

Unbeatable price offer for the student demographic, despite the trade-off’s for all the other demographics.

•

Bringing a new innovative product for the advertiser onto the market – giving them more eyeballs and an even more detailed segment to target. Gaining youth at this stage means wining them for life.

•

Reducing the cost with different performance of activities (online booking and automatic on-site booking only; sparing labour costs) and a creative offer for the advertisers (refurbishing cinemas with corporate identity of the advertiser; sparing refurbishment costs).

•

We will also start with some promotional activities in order to get the new message out and to get repositioned in the head of the consumer.

By being the first to strike in the market with “free” student cinema Vue will bypass Odeon and Cineworld - avoid direct competition and move ahead. With an extensive integrated marketing campaign we will try to concrete this innovative image and gain a better position in the market.

6. Proofing the stability of the new business model – financial analysis and primary research results 6.1 Financial Analysis Summary First we aimed to proof the stability of our new business model on a financial basis. In order to do this we have: calculated the cinema capacity throughout the UK; market size assumptions of our target audience and the expected market share to be captured after implementing the free model; projected visiting frequencies and snacks and drinks expenditures; calculated the advertising revenue and made a projection of the advertising revenue for new audience quantities; calculated the limit where the free model truly becomes profitable; found the optimum balance of the relationship between the cinema and the distributor; predicted the total revenue; and concluded with the stability and sense analysis that, at last, resulted in a visionary proof of our idea. Finally, according to our analysis and projections, implementing the model is a reasonable and desirable action. Before proceeding with the primary research summary it is necessary to carefully examine the complete financial analysis (Chapter 6 in the appendix) that has lead us to this conclusion.

6.2 Primary Research Summary To examine the new business model from a user’s perspective and predict the behavioural changes of our target viewer group we needed to conduct primary research. Using a quantitative method we captured the opinion of 218 respondents by conducting an online questionnaire. Our research proved that the free cinema offer is: •

stimulating enough to induce a behavioural change in visiting frequency

•

attractive enough to change their location preferences

•

a slight trigger of DVD (media) sales

Before proceeding with the concluding analysis in the next chapter it is necessary to carefully examine the primary research results (Chapter 7 in the appendix) that have lead us to this conclusions.

6.3 Final solution

In order to proof stability we have done three projections. In each we came closer to the ideal solution. The final proof is the last (third) projection.

a) Free cinema admissions for our age target group based on Vue’s 100% coverage of UK – ideal case

The following table presents an ideal case projection; assuming that Vue’s is capable of reaching the complete youth target audience (11 million) within the UK.

Shares of visiting by our target group (in %)* Several times a week (2 times/week) Once a week Several times a month (2 times/month) Once a month Once every two months Several times a year (3 times/year)

Total

Scaled on the whole target population (in millions)

19,8 26,7 26,3 12,4 8,3 6,5 100%

Number of admissions/per person/year**

2,1 2,9 2,8 1,3 0,9 0,7

Number of admissions (in million) / year ***

108 53 34 12 6 3

11 million /

226,8 153,7 95,2 15,6 5,4 2,1

498,8

Table 8: Projection of yearly admissions based on expected cinema visiting frequency; assuming we are capturing the complete youth target market (16-29) within the UK

* data gathered through primary research **based on the projected visiting share of our target audience gained through primary research (column 1) *** data scaled to total age target market population (11 million)

Clearly, if Vue would be free and 100% accessible to the youth target audience it would be able to generate 498,8 million admissions per year. According to our financial calculations this ideal case is way above the breakeven point which shows great model stability. At the same we have to acknowledge that Vue does not have not the presence nor the capacity to cover such huge number of demand.

b) Free cinema admissions for our student target group based on Vue’s 100% reach of students within the UK

The following table presents a projection; assuming that Vue’s is capable of reaching all the students within our target age (5,6 million) range within the UK. Shares of visiting by our target group (in %)* Several times a week (2 times/week) Once a week Several times a month (2 times/month) Once a month Once every two months Several times a year (3 times/year)

Total

Scaled on the whole target population (in millions)

Number of admissions/per person/year** (in millions)

Number of admissions / year*** (in millions)

19,8 26,7 26,3 12,4 8,3 6,5

1,1 1,5 1,5 0,7 0,5 0,4

108 53 34 12 6 3

119,8 79,2 50,1 8,3 2,8 1,1

100%

5,6 million

261,3

Table 9: Projection of yearly admissions based on expected cinema visiting frequency; assuming we are capturing the complete student target market within the UK

* data gathered through primary research **based on the projected visiting share of our target audience gained through primary research (column 1) *** data scaled to total student target market within the UK (5,6 million)

If Vue would be free and 100% accessible to all the student audience within the UK it would be able to generate 261,3 million admissions per year. According to our financial calculations this case too is way above the breakeven point which shows great model stability. At the same we have to acknowledge that Vue does not have a network extended enough to cover such huge number of demand.

c) Reality projection - free cinema admissions for our student target group based on Vue’s limited reach within the UK

The following table presents a projection; assuming that Vue’s is capable of reaching approximately 64,2% of the student market within the UK, which represent a third (33%) of 16-29 years olds within the UK. This equals 3,6 million people.

Total

Scaled on the whole target population (in millions)

Number of admissions/per person/year** (in millions)

Number of admissions / year*** (in millions)

19,8 26,7 26,3 12,4 8,3 6,5

0,7 1,0 0,9 0,4 0,3 0,2

108,0 53,0 34,0 12,0 6,0 3,0

77,0 50,9 32,2 5,4 1,8 0,7

100%

3,6 million

167,97

Table 10: Projection of yearly admissions based on expected cinema visiting frequency; assuming we are capturing the complete 64,2% of the student target market within the UK

* data gathered through primary research **based on the projected visiting share of our target audience gained through primary research (column 1) *** data scaled to a third of the youth population within the UK; which represents 64,2% of our student target market within and equals 3,6 million people

If we manage to capture a third of our 16-29 years old audience – which represents 64,2% of UK’s student population, and equals 3,6 million people – we would generate 167,97 admissions per year. Unfortunately, we have an almost ideally similar situation in our financial predictions, where we operated with the estimated number of 168 million admissions per year. As proven with the financial calculations this proves extremely valuable and definitely speaks in favour of the adoption of the free cinema business model.

7. Role of IMC in marketing management process In 2004 the average Western consumer was bombarded with approximately 3000 advertising messages per day (Epiphany, Lehane in Silvester, 2005: 5). Selective perception (subconsciously) classifies most of the advertising messages as irrelevant; the battle for attention becomes ever harder to win. Synchronization, integration and convergence are therefore becoming an essential part of effective marketing management processes. Kitchen and De Pelsmacker (2004: 18) define the Integrated Marketing Communications (IMC) concept as “integration of communication [...] attempts to combine, integrate, and synergize different elements of the promotional mix, so to consumers, messages through a variety of different mechanisms look, sound, and feel alike”. In order to achieve this all promotional mix elements have to be “well-integrated, synergetic and interactive” (De Pelsmacker et al., 2007: 4) and “integrated into a unified whole” (Pickton and Broderick: 2005: 22). The presumption of the integrated concept is that the whole is more than the sum of its parts. Typically this means that if we combine advertising with several other communication tools such as public relations, direct marketing, sponsorship, sales promotion, product placements, digital activities, etc. and if our message through all of these elements is consistent, the probability of achieving better results is higher. From a company’s perspective integration can go beyond the promotional mix. For groundbreaking marketing success it is of great importance that the marketing mix – product, price, place (distribution) and promotion – are “designed in such a way that the effects of the tools are mutually reinforcing (De Pelsmacker et al., 2007: 4).” The synergy of integration can go an even long way. It is best when it starts within the company by clearly setting the corporate business mission and values, establishing a corporate culture that is congruent with the brand, training and cultivation of employees. Moreover, these values must be reflected in the brand but also ubiquitous in the product/service. If in IMC one side of the coin represents the brand, the other side surely represent the customer. The relationship between them could be defined as an ongoing two-way interaction. As a result, brand values must be incorporated within every touch point it has with the consumer. Likewise, Michael Eisner, Disney’s ex-CEO, points out, that a brand from the consumers perspective is a »living entity [that] is enriched or undermined cumulatively over time; the product of a thousand small gestures” (Bedbury, Fenichell, 2002: 52). In order to make the IMC architecture flawless we, therefore, need to look closely at the consumer – his needs, wants, attitudes, behaviours and motivators. It is merely not enough to just observe the customer. We need to understand him as an individual and we need 45

to understand him within the context of social and cultural psychology. Nevertheless, “people are driven by a complex web of underlying hopes, fears and desires; and human behaviour is surprisingly malleable, readily influenced by outer stimuli. (Wright, 2005: 21)”. With every new technology introduced the consumer gains greater power. A brand has to permanently communicate with this new customer. Interaction is being updated with engagement, as the customer is “always on” – meaning that a brand is constantly developing (or not developing) in his mind – collecting brand impressions through more channels than ever. Consumers want to try, experience, be part and co-shape in an active two-way-interactive communication process. In exchange for their loyalty, they want a proactive brand relationship!

Figure 5: The result of integrated marketing communication – an organic relationship between the consumer and the brand

Discussing integration, we cannot forget about the core that is being communicated – the message. Today the range of integration goes deeper than ever and trust is ever harder to build. In fact, trust cannot be built with the magic bullet theory, it develops organically. Messages that evoke emotion 46

and are emphatic enough to build trust will therefore still be the core connector between the brand and the consumer within IMC. Nevertheless, â&#x20AC;&#x153;emotion is the greatest form of interactionâ&#x20AC;? (Huntington, 2007). Finally, only after systematic and strategic reinforcement of the right message through integrated marketing communications, a brand can become stably and coherently positioned within the mind of the consumer. Vue has a consistent and well developed brand. As cinemas usually do not engage in big cross media campaigns, most of the promotion happens within their sites (promotional leaflets, monthly magazine). The website represents a key touch point for communicating with the audience â&#x20AC;&#x201C; it is not solely used for informational purposes, moreover, it is used as a tool for selling tickets. They permanently take advantage of the in-house opportunity to communicate to their customers via their own channel (the silver screen). This has the disadvantage of addressing only audiences who are already using our product (retention), but not the ones we would like to capture (acquisition). The Vue brand works its way up. The corporate values and the mission reflect the fresh and young spirit of the brand, but also signify quality. The same can be said for promotional material as well as their interior design on sites. The user experience is smooth and fun. The energetic tone and feelgood factor are reflected throughout all the IMC variables.

8. IMC Performance Objectives IMC performance objectives represent an intermediary stage in achieving our marketing objectives (defined in chapter 4).In order to support the new free cinema model that we are going to introduce we need to achieve the following IMC performance objectives within our business-to-customer and business-to-business market:

IMC performance objectives related to the consumer market:

•

Increase brand awareness by 65% (unaided spontaneous recall) within our student target market.

•

Change perceptions about Vue cinema its new position and mission – Vue is becoming a free cinema chain aiming to target students only – within 80% of our consumer target market.

•

Develop brand comprehension/knowledge by informing the students that Vue brand will still offer a great premium experience for their customers, that there are no hidden costs or tricks in the free concept – same movies, same projection quality, and same amount of advertising before a movie.

•

Develop a positive brand attitude within our student market (80%) and a neutral brand attitude within the rest of the market which we intentionally left.

•

Encourage trial of 92% of the student target market; (of those living in the cities where Vue sites are present).

•

Facilitate repeat visit by 85% of our consumer target market; (of those living in the cities where Vue sites are present).

•

Develop brand loyalty with 65% of our student target market; (of those living in the cities where Vue sites are present).

IMC performance objectives related to the business market: •

Increase awareness (unaided spontaneous recall) of the Vue brand within our business-tobusiness market by 80%.

•

Modify perception about Vue cinema – its new position, and the consequences for the business – within 70% of our business target market.

•

To raise comprehension and brand knowledge of our new business model and the opportunities brought to the market within 65% of our business target market. 48

•

Establish a positive, innovative and bold brand attitude – with a greater value perception in the cinematographic industry –by 65% of our business-to-business market.

•

Enhance purchase intention and facilitate purchase within 60% of the business target market.

•

Encourage trial for 55% of the businesses/advertisers targeting the student market

•

Encourage repeat purchases by 90% of the businesses engaged in the trial.

•

Develop a strong rational and emotional loyalty within 30% of our business target market (assuming the product satisfaction was above 90%).

9. Target Market For a better understanding of our target market we need to segment it – divide it by its demographic, psychographic and behavioural characteristics. Parting consumers into smaller meaningful subgroups, that share common characteristics, enables us to hit our target more clearly and precisely later. Furthermore, this allows us later to efficiently allocate our resources by reaching for the appropriate communication channels – for each meaningful segment – and tailor the message communicated according to people’s needs and wants. In our example already the new free business model dictates the nature of our main segment that we are going to target. Limiting the cinema entry to students (full-time and part-time) makes them automatically our main target market. This also partially defines the age interval. Our primary target group are students aged from 15-24 years, our secondary target group are also those aged from 25 to 29. Nevertheless, in the secondary age interval, there will be significantly less students than in the primary interval.

Figure 6: Our target population - students divided by age into primary (narrow) and secondary (broad) target population

The primary, 15-24 year old, target group is highly diverse group of individuals, fragmented into several subcultures with a variety of amorphous stylistic combinations and their a plethora of intercrossings between them. This group grew up by the end of the 80’s and in the 90’ties. They consumes a vast amount of media. They are technology literate and born with multi-tasking in their DNA; their multiple-media consumption overlaps with several other activities, their attention is always dispersed and can be hardly captured fully. They use media primarily for entertainment. At the same time the educational process of socialization is taking place – resulting in them taking cues and observing peer behaviour and reasoning. 50

In terms of ethnicity this group is extremely diverse (13% are from ethnic minorities). Within this group 83% are single and only 10% live with a partner. They are taking education more seriously than any generation before. At the same time this is the group successfully broke the taboos of sex and drugs – 86% of this age group support legalisation of cannabis and 20% of men and 15% of women have had 10 or more sexual partners. They are used to greater consumer choice, are more demanding and have a sharply defined taste. They are the trendsetters who develop and seed trends into the population (BBC, 2006). The secondary, 25 -29 years old, target group is the transitional group between independence and commitment. Several lifestyles – singles, co-habitators, married – can be recognised here. There amount of students in this group is much lower compared to the primary group. They grew up in the 80’s and are also slightly less technology literate than their younger groups. Some are starting to develop their daily routine in several dimensions of their lives. Nevertheless, some are extending their student years in order to put off marriage and children until later. Co-habitating is still a preferred option for those under 30, although many will start to struggle for independence and soon become self-reliant. Their world spins around them, with the majority of their income spending on themselves (BBC, 2006). Age segment

Approximate nr. of people

Share of total UK population

15 – 19 years old

3,6 million

20 – 24 years old

3,5 million

5,8 %

25 – 29 years old

3,8 million

6,3%

Table 11: Approximate number of people in particular age segments (source: National Statistics UK, 2001).

Looking at the table above we see that in our primary age segment (15-24) there are around 7,1 million people while there are an estimated 3,8 million people in our secondary age segment (25-29). Giving us a combined total target population of ca. 11 million; this represents approximately 18% of the UK population. Age % of visitors

7-14

15-24

25-34

35 - 44

45 - 55

55+

Table 12: % of cinema visitors divided into age groups (for UK); (source: UK Film Council).

Graph 1: Cinema visiting quantities divided by age groups and the segment we are targeting

The audience we are trying to capture is already the most loyal cinema visitor in the UK. This gives us a head start in our admittance expectations. Furthermore, it is also crucial to attract this under 30 (years) audience, because the audience is beloved by the advertisers. However, there are still two limitations when trying to define the exact number of our population. Firstly, not all youth within this age interval has a student status and secondly, not all the people have access to one of Vue cinemas (location problem).

Men

Full time

16-17 years 555

% 93

18-24 years 783

% 78

25-59 years 176

% 18

Total 1514

% 58

Part time

220

820

1084

598

100

1003

100

996

100

2598

100

583

785

204

1572

Men total Woman

Full time

218

1270

1521

Woman total

Part time

616

100

1002

100

1474

100

3093

100

Total

1215

100

2005

100

2471

100

5690

100

Table 13: Students within the UK segmented by gender, age and course type (in thousands). Source: National Statistics UK; (Tyrrell, 2003).

In order to study, students have to come to urban centres where the universities are located. We will assume that all of these cities have a Vue cinema. Therefore our operating number of our vital target group consists of 5,6 million students; this represents 8,8 % of the UK population.

Graph 2: A comparison of socio-economics for cinema goers and the whole population (15+); Source: Pearl & Dean, 2009a.

In terms of socio-economic classification we are primary aiming to target C1 C2 D and E. According to the socio-economic statistics there is a clear market opportunity for capturing these audiences. Nevertheless, as our product is free and our cinema is fairly high quality we can also expect to capture a lot of A and B students who may just want to join their (lower-grade) friends or simply engage in the free opportunity; as we know free is extremely persuasive (see appendix 4.1). Furthermore, we know that students have a lower income than their intent to spend. They would rather use the money and spend it on other stuff (fashion, accessories, gadgets, personal care, entertainment) â&#x20AC;&#x201C; and this concept may lure in even a wealthier student. Finally, students can be in generally defined as a money-conscious consumer group social class in our case is extremely relative. According to the ACORN (Anon., 2007) classification we could define our target group within the segment of urban prosperity. Within the subsegment educated urbanities we aim to target: prosperous young professionals (0,9%), who have probably just finished their bachelor or are aiming to pursue a masters degree as a young working part-time student. It makes sense to also target the aspiring singles segment (3,9%) which consists of student flats and cosmopolitan sharers, singles and sharers, low income singles and student terraces. Within the comfortably off segment and the starting out subsegment we could target the young couples (1%) which. The visualisation of market segmentation and targeting for the present business model can be seen in the appendix 3.1 (demographics) and 3.2 (psychographics); while the visualisation of demographic, psychographic and behavioural segmentation can be seen in parts 3.3, 3.4 and 3.5 of the appendix. Based on the above, our positioning will be derived more strictly and will be more focused with the development of the new free model. 53

10. Consumer profiles In order to define a typical consumer of our target group we will, firstly, paint a portrait of a potential consumer; trying to define who she is by what she does. Secondly we are going to infer about the consumers profile based on his brand preferences in a consumer profile thesaurus. Thirdly, we will try to make a distinction between the hard core movie viewers, called the film fanatics, and the lighter movie viewer, characterised as blockbuster buzzers.

10.1 A typical consumer profile Sarah lives in London and is 18 years old. She wants to study medicine and become a paediatrician. She is a very social person and one of her most “important” activities is talking/gossiping with her girlfriends. When the big story breaks she has to pick up a copy of The Sun, but is a regular subscriber of Cosmopolitan where she picks up the latest trends. She is a bit overweight and currently beating an inner confidence “battle”. She is obsessed with style and beauty. She adores brands that are celebrity endorsed. She usually dresses in Kate Moss’s Top Shop clothes, wears a Christina Aguilera fragrance and uses the pink Motorla mobile phone that is adored by Paris Hilton. Her most treasured possession is an overpriced Gucci bag. She is very pro-environmental and tries to be socially responsible. That is why she never uses anything but The Body Shop cosmetics and prefers to purchase products with the Fairtrade sign. This gives her a warm feeling and strengthens her believe that she can change the world one day. She tries to eat healthy and stick to organic, but too often she treats herself in Pizza Hut. She drinks Evian and cannot separate from the childhood habit of having Kellogg’s in the morning. The fashionrexia trend seems to impact her, as she prefers to save money for fancy club-night dresses, by trying to skip a meal instead. Her pocket money is on a constant low, but on a Friday night, she can afford to let it go at the Fabric Club. Sadly, most of the time she stays at home, that is why she recently applied for a basic Lovefilm.com subscription. Sometimes she is killing time by playing the Sims; she regularly updates her Facebook profile and adds photos, videos and posts on a daily basis. She used to have a blog filled with love poems, but as it got boring she has abandoned it. Now she is constantly posting messages on Twitter instead. She has never missed an episode of the X-factor, where she always votes for her favourite boy-star. The songs sang there are amongst the most played on her iPod. She wants to become independent as soon as possible, but because she is soon going to have a drivers licence she dreams of a sporty Mini Cooper. 54

10.2 A consumer profile Thesaurus

Figure 7: A consumer profile thesaurus showing preferred brands for several consuming categories

10.3 Cinema viewer profiles In the following table two different types of cinema viewers are presented. Their attitudes, behaviours, behavioural motivators and habits are compared within the context of movie entertainment.

10.4 The Means-end chain

Figure 8: The means-end chain

The Means End Chain Concrete attributes Sites (with several screening rooms), projecting equipment, large silver screen, surround sound, large seats with a lot of leg space, opportunity to purchase snacks and drinks Abstract attributes Trendy ambience, pleasant atmosphere, high quality sound and picture allow a better quality of experiencing movie more lively and, comfortable seats. Functional consequences Promises fun, enjoyment, relaxation or engaging drama; forgetting about day-to-day trouble for the time of the movie; identify with the movie characters and emphatically project the on-screen emotions to oneself. Psychosocial consequences [type of viewer dependent]: Makes me a sociable person who likes to enjoy the movies; makes me trendy and upto-date or shows that I have passion for quality cinematography, being a fine tuned movie connoisseur, reflecting a selective taste and an art side of the personality. Instrumental Values Not applicable for Vue. Terminal Values Not applicable for Vue. Table 14: The means-end chain for Vue

10.5 The Attitude formation model

Figure 9: Positioning of Vue on the Foot-Cone-Belding (FCB) Grid

Deciding to go to the cinema is a low involvement process. It does not require extensive elaboration when reaching a decision. At the same time the risk of reaching a bad decision (choosing a low quality cinema/picking out a bad movie) is minimised by the fact that it is a low-cost entertainment option that does not cause any major consequences. The decision is reached mostly on an affective base. Factors influencing it may include: quality of a particular cinema, convenient experience, actors playing in it, interest awakened by promotion etc. Nevertheless, a slight cognitive component could be acknowledged to the process influencing the choice of location

10.6 The Decision making processes

The decision making process for selecting a cinema/movie to go to is a limited problem-solving process and can be categorised as routine response behaviour.

Figure 10: The decision making process framework

a) Problem recognition At this stage the consumer recognizes the gap between the actual and the desired state hence recognizes a problem. In our example, the user realizes that he is bored or just wants to be entertained. In order to satisfy his want he decides to go for cinema.

b) Information search When reaching a wrong decision when going for a cinema/movie the risk of general damage is low â&#x20AC;&#x201C; low ticket price and perish ability of the service make it a thing of lesser concern. Therefore, search for information is a low involvement process. Consumers search for information will be very limited, merely a routine. Most probably they will pick out their usual cinema, go to their website to check the movie times and the movies playing. Than they might engage in information search for a longer time (e.g. by reading the synopsis of a movie or watching the trailer or even visit a particular movie website) or reach a rapid decision (e.g. see a beloved actor and decide to go for the movie; almost merging the stage of information search and evaluation of alternatives). Other options for gathering information also have to be considered â&#x20AC;&#x201C; e.g. reading/hearing a good review in the media, seeing an advertisement for a movie, having a movie recommended by a friend or family. Especially the last option is extremely powerful and reduces a great amount of time that would be instead devoted to information search. 59

c) Evaluation of alternatives Evaluating alternatives might be an extremely complex process. In this process several characteristics are compared in order that an optimal decision can be made later. Consumers have to reduce their choice to a limited number and range the variables according to their preferences. In our example, the consumers could struggle for a selection while evaluating several criteria: nearness or quality of a cinema, screening times, movie cast, director, screenplay, genre even length of the movie.

d) Product choice In the end, the consumer will reach a common denominator of benefits and reach final a choice. While this might take a relatively longer time it can be also done on impulse.

e) Outcome The consumer will finally go and see the movie he has chosen. After consuming the product (movie) he will measure his satisfaction by comparing the performance of the reached decision to his expectations. This will affect his post-purchase behaviour and consciously or subconsciously influence his next decision making cycle.

Figure 11: Several “micro” decision making processes (choosing a free time activity, the cinema to go to and the movie to watch) that can occur before acting – reaching a final outcome

Nevertheless, there could be several complex decision making processes in order to reach one simple out come. By the same problem recognition – as in our case – the consumer can repeat the decision making process several times on different levels. For example, if bored he might first on the first level consider the plethora of activities he might engage in (going out, clubbing, cinema, gaming, reading etc.) in order to solve his problem and become entertained/relaxed. Then he might repeat the decision making process on the second (lower) level where he might choose the cinema to go to, and yet again, on the third level, for the movie he wants to see. As in our example he might coordinate all the three processes with the decision making process of selecting a friend or many friends with whom he wants to engage in a particular activity/meet up at a certain cinema/ pick a certain movie.

11. Branding issues 11.1 Brand aura Physical appearance – How do I see it? The Vue brand represents a cinema chain that is delivering the highest quality cinematic experience on the market. The state-of-art multiplexes are equipped with the latest projection and audiovisual technologies. As consumer comfort is our priority we provide cosy chairs with a lot of legroom and a viewing angle allowing anyone to see the full screen.

Functional attributes – What does it deliver and what can it do for me? Vue cinemas deliver an excellent consumer experience. I can enjoy an engaging sharp picture, superior sound effects and comfortable stadium seating. I don’t only see and hear a movie; I feel it with all of my senses and experience it to the fullest.

Brand personality – How does it fit with me and what I want? How does it satisfy and attract me? The personality of this brand is young, playful, fresh, energetic, imaginative and creative. Vue is movie magic par excellence. It represents a rollercoaster of stories, feelings and possibilities that I want to experience over and over again – bigger, better and longer. It can keep me simply happy or give me the thrill. It satisfies my hunger for entertainment. Reflected Values – What does it say about me? How does it make me feel? It says about me that I am an imaginative sensation-seeker, looking for great fun and endless entertainment. This is a brand that opens the door to powerful emotions. It can make me laugh and it can make me cry. It can make me feel ecstatic or eccentric. It can give me energy or it can leave me breathless. However, it never fails to enchant me. It allows me to escape – if only for a little – to a world beyond imagination. For the time being, it can invite me into a perfect world or show me the cruel reality. Finally, it allows me to participate! The happening might be fake, but the emotions are real.

The brand essence – What does it promise? It promises me a grand theatrical experience that I can enjoy in style. It will entertain me with the best stories ever told in the most realistic way ever imagined. It will always open a new mysterious 62

door and offer me to a ride to the unexpected. It won’t ever fail to excite me or delight me. The Vue experience will move me and inspire me.

11.2 Positioning Despite being a young brand (established in 2003), Vue has managed to developed a clear image. The Vue brand is currently trying to position itself as a young, witty and fresh brand. It has a slight touch of elegance – due to high quality and the innovative movie experience it can provide. This image is also very consistently reflected in their corporate design (logotype, promotional materials …). Despite we are repositioning Vue cinemas within the UK we don't want to drastically change Vue's current positioning. We want to stay congruent with the current positioning assets while extend it to a new level. At its heart, we still want the Vue brand to represent a relationship between the consumer and his love for the movies – be a springboard that allows him to escape the everyday and jump into a world of fantasy. In terms of positioning we need to change:

1. The price perception component of the current high-quality perceived brand. Here we have the challenge of breaking a common market stereotype – that something cheap (free) cannot be of high quality. This prejudice is almost hard-wired into the mind of the consumer. Because of that, we need to attack it and show that we can do it differently. We need to keep our quality ranking (!) and show that the new low-cost price dimension is a consequence of our fresh innovative potential and new creative momentum.

2. Add wittiness and fun to the brand as a result of a sharply defined target audience – students. A narrower positioning in terms of a high focus on one precisely defined target audience is highly unlikely for any of our competitors. Their main goal will still be to lure in as much of a heterogeneous audience as possible. That is why they will maintain occupying the fit-them-all positioning/mentality. This could be perceived as a general advantage while trying to capture the vast capacity of the market, but it definitely is a disadvantage in positioning. Not only can we afford to adapt our new brand positioning closer to our target group, it’s our opportunity to turn this weakness into strength.

Vue’s positioning statement according to Ries and Trout’s formula Present Vue offers everyone who wants to be entertained the highest quality theatrical experience, which compared to its competitors – Odeon, Cineworld, Showcase, local cinema – provides the highest standards of audiovisual projection technology and viewer comfort in a great environment.

Wanted Vue offers students who want to be entertained, a high quality theatrical experience, which compared to its competitors – Odeon, Cineworld, Showcase, local cinema –provides the highest standards of audiovisual projection technology and viewer comfort in a great environment for free (!).

Table 15: Present and wanted positiong statement for Vue cinemas

Finally, we want to show the customers that we are on our way to go beyond entertainment (preparing for our future new product development propositions). We are a brand who is not afraid to cope with innovation, experimentation and creativity. Moreover, this flexibility is exactly what makes us young, energized and fresh – just like our life-full young and playful audience. Brands that move towards the price edge usually win because of the fact that they don't create the belly emotions – build a highly emotional connection on various levels – but are a consequence of a rational choice influenced by the »cheap« imperative. We don't want to sacrifice brand value for a price leadership, but differentiate. Our model gives us a rare opportunity to do both. We will stay a diverse brand of high quality, provide that high quality (projection, environment, comfort) and strengthen the relationship between the brand and the customer by developing a closer and more open connection with them. We want to be the Google of entertainment. We don’t want to mirror the pop culture any more – we want to help create it.

12. Communications and Campaign Strategy In our communications campaign we need to address both types of Vue’s audience – the consumer (the cinema goer) and the advertisers (companies targeting our cinema-going audience). Both of them are mutually connected to Vue’s market success.

Agency Brief Business-2-Consumer

Business-2-Business Brand background

Vue is a young brand (2001), but recognisable brand, occupying a challenger position in the market. We have a substantial network of cinemas within the UK and are offering one of the best and most innovative cinema experiences within the market.

What is the campaign trying to achieve? We want to tell the general public that we are going to

Strengthen Vue’s position as a bold, innovative and

be repositioned as a students only cinema chain. We need to establish a closer connection to the students and tell them about the free cinema opportunity we are generating for them. At the same time we need to tell them that there are no tricks in this offer and no hidden costs or potential traps. It simply is free! Moreover, Vue will continue to offer the same high standard cinematic experience that it offered before. Vue is not going to make any trade-off’s in the quality of the experience (e.g. more expansive snacks and drinks or longer advertising blocks before the start of a movie), just because we have slashed the entry charges.

creative brand that is constantly re-inventing their business in order to fit the changes within the media landscape and adapt to the new consumer. We are in the entertainment business that goes beyond classical cinema viewing, constantly looking for opportunities that could benefit our consumers and our advertisers at the same time. We need tell the advertisers that we are implementing a new business model – that will represent a resurrection of the cinema medium. This medium will gain new momentum and offer them: 1. vastly more audience at the cinema 2. better segmented audience

Who are we talking to? Demographics: • male and female students; • primary target 15-24 years, (extended 25-29 years); • C1 C2 D E (mostly); Psychographics: [see 3.4 consumer profile description]

1. Marketing/advertising departments of major advertisers themselves; companies that are with their products and services aiming at our 15-24/29 audience; 2. Media buying agencies who are executing media planning for the above companies.

Real World Insights Home cinema is a great alternative – there is no need to go anywhere to pick up the movies as they come per post and there aren’t any late fees – which makes it an even more convenient process. Broadband enables piracy of the latest films. Free seems to be a good value, even the quality is a bit lower.

Within the 16-24 year target group multitasking is a daily routine. Advertisers/media agencies have the problem of dispersed attention by their users; hence messages are even less efficient. Advertisers need touchpoints where they can tell the story they want to tell to their audience with no disturbance.

What is the opportunity? Consumers increasingly perceive content (music and movies) as free, leaning towards the home cinema viewing style and engaging in other types of entertainment. Being recognised as a brand close to their wishes, we want to tell them that we finally have an appropriate solution for them. We want to reach for the student market and tell them that they can enjoy an unparalleled movie experience –newest movies within the best environment – for free.

We are opening a new door within the media landscape – generating new opportunities to advertisers. Through us, they will be able to reach a greater share of their audience within a more persuasive and least disrupted environment (cinema); where the audience is most likely to embrace the message communicated and remember the brand advertised.

How do we want the consumer to feel? We want the consumer to feel that Vue is on their side and that Vue understands their wants and dreams. We want them to think of Vue as a pal, that they simply like to be around. With Vue they can carelessly enjoy their beloved movie experience; have fun in style, while being relaxed.

We want the consumer (media agency / marketing department of an advertiser) to feel valuable because they have fresh and valuable media information and can suggest the advertiser a great “new” channel that will leverage the efficiency of the budget used for advertising.

What is the one thing that we should tell them? Vue is here for you! We are giving away the magic of cinema to the most innovative of audiences. “Vue will entertain you with the movies you love and inspire you

This is the renaissance of the cinema medium, be the first to capture the opportunity and get maximum reach and achieve optimal campaign efficiency!

with new ideas!”

Reason to believe No tricks and no small print! The reason to believe is because there is no reason to disbelief that cinema can be free. We can get free TV, radio, newspapers ... the time has come for cinema to take this step.

The media landscape is changing faster than ever, we need to be updated and see the “niche” opportunities and take advantage of them by established, yet innovative, players like Vue.

Tone of voice & personality of the ad Young, playful, witty, edgy, spontaneous and engaging tone that attracts attention and lays-off any suspicion of a deception or fraud. It should celebrate the new opportunity by showing Vue’s openness for creativity. A friendly personality that will communicate the feeling that we are on their side.

Confident, positive tone that shares the enthusiastic character of this new opportunity. The ad should be logical and truthful, because it needs to allay fears of this risky change and answer the questions that will pop-up in the mind of the experienced advertiser/media-buyer.

Requirements /mandatory’s Integrated advertising campaign; no celebrity endorsement

Integrated advertising campaign; no celebrity endorsement

Budget (estimate): £ 2,3 million pounds for both audiences £ 2,000,000

£ 300,000 Table 16: Agency brief

The third audience that is significant to our model are the studios/distributors. With this audience a partner relationship is already established. Their cooperation is a necessity in order to change our business model. That is why we need to address them prior the release of our campaign for consumers and advertisers. As there is an extremely small amount of these players on the market – which makes each one of them even more valuable – a campaign is not to be executed. In order to achieve an agreement, each one of them will rather be approached, personally. This will give us the opportunity to explain this new mutually-profitable idea and the functional efficiency of the new business model in greater detail. Furthermore, negotiations and persuasion will be supported by strategic lobbying.

As we are implementing a high-risk but high-reward marketing strategy, we want the same braveness also to be reflected in our integrated campaign. The campaign shall therefore be edgy, provocative and create a lot of buzz within our target consumer group. Furthermore, it should spread enough buzz to: 1. open up a general discussion in the public about the free business models and the benefits that the consumer gain from it. 66

2. sparking-up a deep discussion within the media industry and the business marketing sphere.

Creatively we have to go beyond advertising. We need to develop a concept – executable above and below the line – that will actually be useful, but at the same time creative enough to quickly infiltrate into popular culture or, furthermore, help to create it. We need an agency partner that is going to inject a cultural momentum, and develop an idea that is more provocative than pleasant. Although, we understand what is on stake, we have to be prepared to intentionally take more risks with our brand communications. In order to achieve that we will be searching for an smaller/medium type of an advertising agency – a creative “hot shop” – which are more flexible and struggle for more creative excess than the safeplaying global networks. Top UK advertising agencies will be invited to pitch for Vue’s account: 1. Fallon London 2. Weiden & Kennedy London 3. Beattie McGuinness Bungay (BMB) 4. Bartle Bogle Hegarty (BBH)

12.1 What is the message to be communicated? When currently promoting a message, none of the players within the cinema industry, could develop a truly unique point of difference that would be based on their different activities or activities preformed in a different way. Largely the quality of equipment was of equivalent standard and the movies playing in each of them were the same (due to distributers’ objective to open on as much screens as possible in order to sell as much tickets as possible). Differentiation that could be communicated within a campaign was possible only on the level of product development (e.g. baby and parents screening), but this could be easily copied and the competitive advantage was quickly lost again. In short, “when the differences between brands are marginal or non-existent, and the brands on the beam-balance of choice weight equal, it takes only a feather to swing the balance (Southerland and Sylvester, 2000: 88)”. Different audiences need different messages stated and communicated in different ways. As we are limiting our target to youth, our messages can become more specific and more congruent with the mind state of our target customers. Finally, this change gives as the opportunity to clearly expose our point of difference and become a differentiator in comparison to our competitors. Our message will not have to rely only on the entertainment aspect of a creative solution in order to differentiate. Moreover, it will be backed-up by a solid and stable change in our way of “doing cinema”. A better 67

cognitive response is to expect to messages that will reposition our brand – making it swim to the “blue ocean”.

Yet interest into a message is not created by the information being communicated, but in the entertainment factor they provide. While, the information represents the core of the message, it can be argued that the creative part represents the framework of it. The message has to persuade; it has to be powerful enough to be implemented into individuals’ cognitive schemes. Stored and recall later when needed – especially now, when we are living in the age of casual consideration. The consumer is “always on”. He is collecting, evaluating and ranking brand information – on several occasions through several channels – for the use in a later time. And only messages that are able to create creative excess are attractive enough to capture the attention of the consumers. This is why messages rely on storytelling in order to generate emotion, powerful enough to be remembered, preferred, come to the evoked set of brands, and finally, to reach the first place in spontaneous topof-mind awareness. “Learning does not happen by way of someone sending a clearly elaborated message (Sutherland and Sylvester,2008: 58).” For more than two millennia, Plato’s premise still holds true: “all learning has an emotional base”. Being the most persuasive form of communication, emotion, can efficiently burst by persuasive and engaging storytelling. In this process, the message has to implicitly position the brand within one of consumers’ relevant associative chains (horizontally) and positive belief structures (vertically) in order to achieve persistence and sustainability within his mind. Hence, we will try to wrap the message in a non-linear, interactive story, where the consumer plays an active part in it; causing incidental learning through engagement.

a) Message for Consumers The message targeted at the consumers has to persuade the devotion to the student market and generate The message: Vue is here for you! We are giving away the magic of cinema to the most innovative of audiences; Vue will entertain you with the movies you love and inspire you with new ideas!

Strapline: Vue. Inspiring you!

We will communicate this message in two steps. In the first step we will announce that Vue is becoming a student cinema chain. This announcement will be communicated in the teaser phase, ca. one week before the launch of the main campaign. In the second step we will anchor attention to the second part of our message – our key second differentiating point (the free entrance) – that will come as an addition to the message communicated in the teaser phase. By revealing our main surprise element, with the start of the main campaign, we will imply a positive shock to the consumer. This message of immediate great value is then expected to have a wildfire word-of-mouth effect within the target audience. Laying-off the revealing of the new free model for as long as possible will also tactically outplay our competition; blocking them to damage our campaign with a quick reaction (rapid promotion or new model implementation). The new strapline is an extension of our slogan: “No one does cinema like Vue!”. b) Message for Advertisers/Media Agencies The message aimed at advertisers/media agencies has to generate interest into the “new” cinema concept and clearly communicate the benefits they can get in this shift.

The message: Vue is becoming free to students, hence becoming market leading specialists for the 15-24(/29) audience. Vue will offer more of the relevant audience and offer it better segmented; hence your targeting efficiency will be greater. Stapline: Engaging youth through emotion.

Our message has to redefine the issue on campaign budget spent on cinema. The message should be persuasive enough to induce further interest into the concept in detail (which will be precisely explained online).

12.2 Which are the appropriate IMC tools and why? Still, a brilliant communication idea with an extraordinary message at its heart can fail if it doesn’t use appropriate IMC tools and the optimum channels for communicating to their target group. Synergizing the promotional tools is a “coordination of all seller-initiated efforts to set up channel of information and persuasion in order to sell goods and services to promote an idea (Belch and Belch, 2007: 15).” A properly executed integrated campaign uses the promotional mix (advertising, public 69

relations, direct marketing, sales promotion, personal selling and interactive to create several touch points between the brand and the consumer. Multi-step campaigns communicate one creative and consistent idea by using various IMC tools through different promotional channels. An appropriate media mix, that we plan to use, will be assigned to each particular IMC tool.

12.2.1 Advertising

Advertising is the most widely used form of promotion. It attracts attention, develops interest and desire. Due to its visual/aural (or both) appeal it is particularly useful for generating brand awareness (recognition and recall). It is expensive, but still relatively cost effective as it can reach a critical mass. Despite its nonpersonal nature, it is can build brand equity as well as inform and influence people. This tool is used â&#x20AC;&#x153;to create favourable and unique images and associations for a brand; which can be very important to for companies selling products or services that are difficult to differentiate on the basis of functional attributesâ&#x20AC;? (Belch and Belch, 2007: 18).

A table of most common and specifically selected media is presented with their advantages and disadvantages. Their usage is sometimes overlapped by several promotional tools (e.g. TV can be used for regular advertising as well as for direct advertising, which is part of direct marketing). Nevertheless, some specific media forms are to be discussed in addition (under each particular promotional tool).

Media TV

Radio

Magazines

Advantages Effective for building and maintaining brand awareness; captive message (visual and aural), opportunities for creative expression; flexibility; product/service demonstration potential, broad coverage, selectivity of targeting by programme. Appropriate for brand recall; low cost (media and production) and efficiency; selectivity of particular programmes according to a well-segmented audience; local/national. Extended selectivity of target segment according to their special interest; reproduction quality (high quality glossy paper, vivid colour reproduction); strong visual element; creative flexibility; permanence (long-time span e.g. a month and are picked up several times).

Newspapers High coverage, low costs, ads segmented based on Out-ofhome Direct Mail

Interactive media Cinema

section of interest; timely. Quickly noticed, high frequency in terms of repetition). High selectivity, personalization and customization of message according to audience, high information content, opportunities for repeat exposure; precise measurement (quantifiable); control and reactivity options. User attention and involvement, interactive relationship, flexible message creativity, measurability, Great exposure, great recall, advertising perceived as part of the cinema experience; lack of clutter; size of the ad seen on big screen generates bigger impact; isolated environment (greater attention).

Disadvantages High cost (media spent and ad production); relatively fleeting message; limiting viewer attention (programme ratings don’t reflect ad block ratings); clutter (oversaturation makes it hard for a message to be noticed and impactful => decline in effectiveness. Not appropriate for brand recognition (aural only); limited research data; limited (low) listener attention; clutter; high audience fragmentation. Limited reach and frequency, visual only; clutter (may be even too intrusive)

Poor print reproduction quality; short life span; selective reader exposure; clutter Short exposure time (limited communication); Expensive list rental; relatively low response rate; can degrade the brand (if perceived as junk mail).

Access limitations, limited reach.

High cost (media and production); short message life.

Table 17: Mass media their advantages and disadvantages with the context of advertising and promotion (Belch and Belch, 2007: 338 – 341; 362 – 367; 377 – 404; 329).

12.2.2 Public relations (PR) When an “organization systematically plans and distributes information in attempt to control and manage its [public] image and the nature of the publicity it receives” (Belch and Belch, 2007: 23), we claim it is using public relations to manage its reputation. We are in front of a huge PR challenge. We are taking the risk of focusing on the audience of the students and by doing so we have to dismiss the rest of our current public. The PR department’s task is therefore to some extent paradoxical. They should exhilarate the students while at the same time 71

not exasperate the general public. Of course, while aiming for huge coverage. Manipulating public opinion in this way will be hard, that is why we will be – especially in the launch phase – monitoring public attitudes to this particular issue and trying to align it with the marketing goals of our company in order to maintain(/gain) a positive reputation with all of our stakeholders (public, employees, media, NGO’s, shareholders, etc …).

Figure 12: Vue’s Stakeholders

The strategic role of PR cannot be underestimated. As ambivalent responses are expected, we also need to prepare several scenarios for likely public reactions, and have a crisis management plan prepared. We need to be sure that this will not be the most over-hyped and under-delivered launch; risking another potential PR disaster (like BA’s Terminal5). If done properly the PR campaign will achieve the talkability effect – being recent, hot, new, previously unheard and fresh information for the public it certainly has the newsworthy status – and make a large part of a big media spent redundant. Beneficial information (for the students and 72

advertisers) as the launch of this invention is, we expect the word-of-mouth spread within the target consumer and business market, to be tremendous. The value of this type of information sharing – believed to be credible and reliable by the recipient – is simply priceless. Our PR will in particular target (consumer and trade) media, but also go digital by targeting influential bloggers, spreading the word on forums, user groups, social networks and interesting individuals who use Twitter.

12.2.3 Digital and Interactive New digital platforms and interactive tools can enable us to engage the target markets online according to their needs. The two-way communication process enables the users to participate and co-modify the content and create or even distribute the (tailored) promotional message. This of course can be tailored. Digital options go way beyond advertising. Internet is currently one of the most multifaceted and influencing marketing communication tools. Moreover, it allows us to execute all the other elements of the promotional mix by using it as a channel of a platform. New levels of measurability and monitoring behaviour and monitoring are dictating the ways companies interact with their consumers, while at contrary Internet is a medium hugely controlled by the user. The user being in charge, Internet develops its full potential of being the intermediate of trustworthy personal suggestions (ranks and recommendations) of co-users aggregated within social networks. Suggestive patterns according to previous digital/footprints seem to be the next buzzing digital concept. •

Viral Video Viral videos need to have extremely high shock-value, above allowed fun-factor or a mysteryinterest- trigger in order to be passed on. While production costs of a viral video are usually smaller than for a TV ad (intentional “amateur” style), it cannot be guaranteed that the viral will actually take-off and reach the epidemic effect, because its success is entirely reliant on the audience passing it forward. Besides a creative and genuinely entertaining idea, a good seeding strategy has to be implemented; although natural spontaneous seeding works best. In case the viral video becomes a hit, it can drive huge amounts of traffic to a website. As we are targeting today’s most savvy technology/web audience, a “cool” viral video has great potential to become one of the parade horses of generating web traffic. Giving our brand a young, playful, provocative and witty tone this will also create considerable goodwill towards it. Sites to be used for seeding: YouTube, BeBo, Vimeo, Facebook, mySpace, Google Video, etc. 73

•

Facebook Text & Image Advertising Facebook ads can be highly targeted based on geodemographic (regions, cities, parts of cities, etc), demographics (specific age group, gender, educational background, and status), psychographics (interests, hobbies, activities and other leisure time preferences like favourite TV Shows, Movies, Books …). This allows us to develop various ads (copy and image) and target them to an audience which will classify them as relevant. The advantage of matching the content of a Facebook ad to selected user profile characteristics and improving the response rate, hence saving advertising budget, goes hand in hand with the advantage of inexpensive ad production. Improving, testing and changing several messages is therefore easy and welcome. Finally, Facebook has more than 6 million active daily users aged form 18 to 25 (December 2008) – who log-on, interact, share (pictures, videos) and use applications several times a day – within the UK (AllFacebook, 2009a).

•

Facebook Application Facebook applications are currently extremely popular. They are relatively easy to develop (onetime costs) and can attract up to 16 million active users a month (AllFacebook, 2009b). If done successfully the application is simple, easy-to-use and useful, has a fun factor and has shareability potential. Users must be motivated to use it and voluntarily spread it within their own social groups; therefore the application must be interesting, engage various users to participate and be entertaining at the same time.

•

Google’s AdWords / Ad Sense Google’s AdWords and AdSense programmes target consumers based on their search preferences. If the user searches for a keyword that we connects to one of our desired keywords (this must be predefined) Google will display a relevant ad right next to the search. In addition to this advantage Google operates also on a cost-per-click basis, charging us only for the users who actually clicked on the text ad.

•

Mobile Application Mobile phones are the most personal digital medium. For our “always-on” multi-tasking target group it is an ultimate gadget. Using them for providing a useful and/or fun platform can promote the brand while at the same time entertain the user. The grey area between engaging entertainment and brand promotion can be so subtle that the user actually does not notice it. Hence, the brand subconscious improves its (recall) position within the mind of the consumer. 74

12.2.4 Direct Marketing When using direct marketing organizations aim to communicate directly with the carefully selected target audience in order to generate better response. The advantage of this tool is personalization and customization of messages as well as clear measurability of the effects, directly resulting in responses/sales. While this tool can be used for acquisition it is also an extremely useful approach to retain existing customers (e.g. loyalty programs). Direct marketing includes a variety of options from direct mail, e-mail to direct response advertising, direct selling and telemarketing.

12.2.5 Sales Promotion Sales promotion can be defined as “marketing tactics that provide extra value or incentives to the sales force, the distributors, or the ultimate consumer and can stimulate immediate sales” (Belch and Belch, 2007: 23). The practice of “offering temporary additional value to a brand (Brown, 1993: 14)” influences buying decisions and can help us achieve short-term sales goals. On the other hand research has proven damaging effects on some brands when price promotion is overused and not supported with adequate amount of advertising or other brand building (Elyatt, 1999). As our consumer aimed-products are free and a brand being a true differentiator, we currently won’t engage in any sales promotion. Nevertheless, for our business-to-business consumers promotional discount offer will be available for those deciding to go for our advertising offer first.

12.2.6 Personal selling

Personal selling is used to sell to smaller audience that need greater devotion (several attempts) in order to purchase a product/service. This particular involves cognitive high-involvement purchase decisions that represent risk and need a greater extent of thinking in order to be reached. Professionally educated sales force is used to explain products in greater detail help to analyze, find and tailor solutions, to a customer’s problem or need. As the contact is direct the intrapersonal communication allows greater flexibility. This means that strategic persuasion can adapt to buyers reactions and perceived wants, hence modify the message communicated. Receiving Instant feedback (gestures, posture of a client) allows real-time evaluation, (renewed) problem recognition, message reformulation and another try for potential sale. Finally, the personal customer approach is a very effective form of selling that is at the same time very expensive. 75

12.3 Micro needs Micro needs will be approached on two levels. On the first level we will need to increase the number of stuff per cinema, because a larger demand for snacks and drinks is expected at the counter. When selecting new human capital special implications will be put on candidates’ general friendliness, positive attitude, relaxed personality, openness and mental closeness to the target market. Old and new stuff will also undergo a professional re-training programme where they will learn how to handle the customers even better. We need to improve the service efficiency by improving the speed of service, friendliness of the people behind the counter and prepare them to tolerate the silly jokes of teenager and twentysomething’s behaviour. We will be serving student and we need to deliver them the promised movie experience our brand stands for. Showing them that Vue cinema is one of them and on their side, not only by providing them free entrance, but also by treating them respectfully and in fashion, is the best way for maintaining a good image through word-of-mouth. On the second level we will recruit highly motivated, professional sales teams that will promote our new advertising opportunities to potential medium and big advertisers as well as introduce, provide advice consulting and media solutions to media buying agencies. This we will execute in conjunction with our ad-time selling partner Pearl & Dean. They will be equipped with promotional material (a brochure that will explain the new model and introduce additional new advertising opportunities / products and stand-alone rate cards for practical use and ad-time cost calculation). This team of sales professionals will be extremely active in their sales activities. 2 weeks prior the official campaign launch they will approach key media agencies, with which we already have excellent partnership relations. They will offer them these new opportunities prior to others, while asking in return to keep the not official information under embargo. Shortly before the teaser campaign ends and the main campaign breaks, our personal selling team will devote all its resources to predispose the clients budgets towards a greater cinema spending (due to the new opportunity) as well as on finding new clients.

12.4 Macro needs Programs to motivate the channel members are “designed to persuade the trade to stock, merchandise, and promote manufacturer’s products are part of a push strategy” (Belch and Belch, 2007: 63) – convincing sellers that they can make profit on selling a manufacturer’s product when pushing it to their customers. When channel members are resistant, promotional pull strategies are 76

to be considered – spending money on advertising, PR and sales promotion directed towards the end-consumer.

12.4.1 Push strategies (sell-in) The Vue’s interior design speaks already in our favour. It’s already fresh and young yet cinematically reserved. In addition, we will try to add the youth-factor into our venue design. The design should fit all types of youth subcultures. It shall reflect urban trends, but not be too closely defined. At the same time it must be inviting enough to appeal the blockbuster buzzer audience type as well as not disturb the movie obsessed critic type of our audience. In a typical cinema site we have three separate sections – the main foyer, the restricted area leading to the screens and the screening rooms – according to which we are going to apply our design upgrades. The main foyer represents a large open space where people can easily move around before entering the restricted area of screening. The design there shall reflect a mix of trendy and futuristic yet aesthetic style. It shall celebrate the playfulness of the young generation and mediate a positive, warm and energetic feeling. The flooring is usually carpeted in a warm colour tone, with a witty, yet unobtrusive style. In newer venues we will try to set the colour of our floorings to ruby red. This will reflect Vue’s respectful attitude towards movies and at the same time give the audience the exciting “hollywood-red-carpet-effect” – building up anticipation and adding value to the movie experience. Current combined ticket and snacks counters will serve to provide drinks and snacks only (as entrance is free). Furthermore, as we are offering the option to book seats online and we are also adding the online snacks ordering option – we will be able to separate the rows before the counter in the foyer. One row for visitors who will pay for snacks and refreshments at the counter and the other quick row – fast-track line – for those who ordered online and just need to redeem the coupon printed in order to get pre-prepared snacks and quickly go to the screening room. Before the students enter the restricted area leading to the screens we will need to add entrance-restricting doors and card-swipe automates in front of them. This will limit the entry to only viewers who poses a valid student ID card. Restricted area interior needs to stay strictly cinema thematic. This is the bridge (a kind of preparation for the main experience of movie watching) between the relentless youth fun forum (main foyer) and the fascinating big screens that will create the simulacrum of reality. These passages will therefore remain much darker, with some mysterious dimmed corner spotlights. The last will serve as subtle direction marks for easier orientation. On the plain dark corridor walls additional 77

lighting will be provided through the illuminated movie posters. This will emphasize what we appreciate and believe in – the divinity of the movie and the magic of the accompanying experience. This space leaves the trendy flashiness of the foyer behind and appeals more to the cinema enthusiasts who share a passion the perfect personal cinema-going experience. Music is an important part of our consumer-experience. In the pre-movie foyer, where people gather, chat, purchase snacks and drinks, before going to cinema, popular chart music will be played. The music should add be trendy, entertaining and fun in order to reinforce our new youth oriented image. When passing the registering point the music will change into classical instrumental music. These will be consisting of the most famous movie themes in the film history. As this space has a transformational purpose the music will fill them in into the proper and exciting movie mood. Screening rooms will be left untouched. Although, one of our new products is offering corporate advertisers to become screen sponsors. They can do so by applying their corporate identity (logotype, unique brand colours) to all the seats (design their coverage) within a particular screening room. An additional point-of-purchase opportunity will be added after the film ends and viewers leave the cinema. We attempt to open up a small multimedia store in the exiting corridor that will be offering merchandise strictly limited to the movies currently playing in theatres – for example offering, soundtracks, books, posters, other movie merchandise and memorabilia. We believe this is a great opportunity as the emotional affect on the consumer is highest right after seeing a film that he has been impressed by. Judgement being highly influenced by emotion, we believe that this is a good niche for selling selected movie memorabilia. As we are already partnering with HMV in our online shop, we will also try to partner up with them for this particular addition. Bigger crowds and more popcorn will also worsen the air quality within screening rooms. We need to adjust to these conditions and also increase the air exchange rate in each screening room. This are small, yet notable, improvements that builds-up the movie magic feeling and upgrade the user experience. We have to keep in mind that we are not only competing with other cinemas for the audience, but also with the home cinema concept. Adjusting these small details can lure in the homecinema-experience-preferring consumers by showing them that a theatrical experience is still a more “royal” type of entertainment.

12.4.2 Pull strategies (sell-out) The following pull strategies / promotional tools will be used in Vue’s promotional campaign:

IMC Tools – Pull strategies Business-2-Consumer

Business-2-Business Advertising

• Press: Newspapers: The Sun, TheLondonPaper, London Lite Magazines: ShortList, Total Film, Empire Magazine, Cosmopolitan, FHM, Maxim • Out-of-home: Tube stations: Digital Escalator Panels, Platform billboards Busses Student Union Venues and Music Venues • Radio: Capital FM + Hit Music Network, Xfm, Galaxy • Cinema: (in-house opportunity) • New (experimental) media

• Press: Newspapers: Guardian (Media Guardian section) Magazines: Media Week, Marketing, Marketing Week, Campaign, The Marketer

Public Relations • • •

• • •

Press conference (joint with trade press) Press releases PR Stunt (option)

Press conference (joint with consumer press) Press releases Launch Event

Digital/Interactive • • • •

• •

Microsite development (aiming consumers) Contextual advertising: Google AdWords & AdSense, Facebook Ads Banners (Cosmopolitan.co.uk) Widget, Facebook and Mobile application

Microsite development (aiming businesses) Banners (Guardian.co.uk – media section)

Direct Marketing • • •

E-mail Viral Video Door hangers in student dorms (guerrilla tactic)

•

E-mail

Sales promotion /

•

Promotional discount offer’s for advertisers that sign-up first (offer by the personal sales force)

Table 18: IMC tools assorted to specified media channels planed to be used and the concrete media propositions for the consumer and business market

13. The Campaign Delivery Recommendations 13.1 Creative solution

Considering the timing – an all time low recession and a depressive collective mentality – it is the right point to hit the audience with a campaign that will give them a reason to be cheerful. While consumer confidence is weakened, Vue has the ultimate product that it can introduce to the market, gain the largest market share and carve out its position. Andy Nairn, an industry practitioner, emphasizes that “clients tend to shy away from segmenting their markets in favour of fighting for central ground with increasingly effective but undifferentiated products means; as a consequence brands tend to take a more emotional approach (Beandy, 2008: 22).” This is the exact opposite of our intention. With the new implementation we have a different product that our competition. We have a rational unique selling point and a lot to say about the product. The final equation for the campaign delivery recommendation, being: •

Target consumers choice to prefer visiting Vue is reached on a purely rational basis (money saving opportunity) – informational message factor;

•

While the IMC campaign will strengthen the emotional connection to the brand (playful, witty, daring, young appeal) – entertaining message factor.

This culminates in an attractive – optimally cognitively and affectively balanced – brand. Our concept has to show cognitive consonance (logical, pragmatic choice) wrapped up by an execution that aims to make people feel a certain way. Contrary from the previous slogan/positioning (“No one does cinema like Vue.”) and our competitors slogans/positioning (e.g. Odeon: “Fanatical about film.” and Cineworld: “See the world, Cineworld!”), our creative solution wants to move away from this generalization. We have a clearly defined segment and we want to fully engage with them by creatively tailoring the message to their style.

The concept: Vue’s changed model is at the heart of the concept, but it is not this that is important. For us the important thing is what is the youth going to do about it / about this new opportunity. And what does it enable them to do? What did we contribute to UK’s youth? How do we make them feel? We need to tell them that: We [Vue] understand[-s] you: 80

“We don’t judge you because you copy movies, we don’t want to repress your creativity, we don’t want to limit you, and we don’t want to change you. We want to inspire you, let your imagination fly! That is why we are letting you in free.” Finally this concept can be summed up with our strap line: “Vue. Inspiring you!”. We are going to show our creativeness and playfulness around the new model we introduced in order to get their “creative juices” running. This premise has a great storytelling potential and can be reflected in an entertaining kaleidoscope of sound and vision.

Figure13: Campaign Concept

Tone and Nature of the campaign: The campaign shall have a witty, edgy, playful and slightly provocative tone. All-in-all, it should be a feel-good campaign that communicates with a friendly and open nature. A conceptual mood board has been prepared in order to easily recognise the feeling that our campaign wants to connotate (see appendix 8.1).

In today's tech-savvy world, the brand is no longer in control. Since the beginning of the 90’s we considered that a brand is positioned within the mind of the consumer. Today, at the break of the millennium, new technology enables the user to hijack a brand and modify it with his creativity, to his personal visions. To adapt to this changes, marketing has to ditch the hard sell preference and opt for a more conversational, engaging approach. Surely we can’t forget that, storytelling should be the alfa concern of the creative executions.

Some creative solutions that fit in the concept and follow the above stated premises: •

Product integration/brand placement into E4’s hit series Skins (only one episode). The brand (and the new cinema concept that we introduce) would be closely tied in to the Skins script (e.g. part of the story happens at a Vue cinema). Despite this great opportunity we have to be careful in order not to be to obtrusive or overexpose Vue’s logotype; nevertheless, we aim for a believable and portrait of our brand. This creative solution would subtly position Vue as a “cool” and desirable place-to-be. While this placement seems fleeting, it has to be acknowledged that Channel 4’s content is available for watching 1 month after it was first live broadcasted.

•

Experimental (new) media/PR Stunt. We will adopt the famous Hollywood sign in Los Angeles and change it into Hollyvued. The famous Hollywood landmark from Los Angeles was put up to celebrate a new era – the one of movies and cinema. Now Vue is the synonym for cinema rebirth, cinema renaissance. Therefore it is time to put up a new sign - Hollyvued! The optional locations would be Greenwich Hill or Hampstead Heat Hill in London. It is to expect that this witty idea would generate enormous press coverage (see appendix 8.2).

•

The Facebook/mobile application and the widget shall all have the same retentive purpose. While they are promoting the brand, they are introducing new levels of interactivity and socialising. These applications will have the option to arrange a date based on profile matching (personality characteristics, hobbies, interests, movie taste) within a social network, and find people who also want to see a particular movie, at a certain time and place. As well as the option to invite friends, look at the newest trailers and play competitions. For an executed example see appendix 8.3, 8.4, 8.5.

We need to create impact and that will endure into people’s minds. That will deliver to our shortterm goals and contribute to our mosaic of long-term success. This is why we need simply big, creative ideas that will contribute to these goals.

Our business-to-business campaign will communicate the message “Engaging youth through emotion” in a professional businesslike manner. We will communicate in a positive tone that shares the enthusiastic character of this new opportunity. The concept should be very basic, simple, logical and truthful. It needs to allay fears of this risky change and answer the questions that will pop-up in the mind of the experienced advertiser/media-buyer. At the heart of the concept is the renaissance of the cinema medium (the rationality), while the overt message should direct the customers to capture this new exciting opportunity (the emotionality) in order to have sustainable campaign efficiency! 82

13.2 Schedule - activities by month, spending plans When preparing the campaign schedule and planning the monthly activities it was crucially important to get the optimal ratio between reach and frequency. While a broader reach covers a wider span of the target audience, it mediates the message to the audience less frequently. Meaning although we captured a large (nationwide) crowd, we didn’t expose/reinforce our message frequent enough in order to get the results wanted. On the other hand when increasing the frequency – the number of times a target person is confronted with the message through various media – in favour of reach, we can cover a smaller audience, but persuade them more efficiently by reinforcing our message several times. The problem with this is that, while we might elevate the audience targeted several times, we won’t have the proper reach in order to achieve the critical mass. A multi-step campaign is therefore necessary to drive awareness; by simultaneously covering an optimal share of our relevant target market. Our campaign message is simple. The information we want to communicate lies in the new positioning, that is based on differently preformed activates on a corporate level; meaning it is not purely artificial – a distinction achieved by strategic branding only – but underpinned with benefits that ultimately serve the target consumer. Because this represents great value – an opportunity not to be dismissed – for all the consumers’ cross-market we strongly believe in the contagious potential of our message. The word-of-mouth factor being backed-up by the benefiting consequences is crucial for the extension of the reach of campaign. Students are namely most likely to go to the cinema with friends; hence if one of them knows about this opportunity he will pass it on to the other in order they can benefit both. Our premise is that if we managed to plant the message strong and pompous enough in the beginning – with a high frequency – we can become the immediate category preference within the mind of our target consumer. If a trial is reached within the duration of the campaign and a repeated “purchase”/visit shortly after that, we have great feasibility to create a regular behavioural habit. This would be most beneficial to our key IMC performance objective (to develop brand loyalty). Our main consumer campaign will last for two months. Starting with a one week teaser phase, a big boom during week two and three and slowly fade away by week nine. A short (one week) reminder campaign will run in the middle of September (strategically after the end of student vacation/beginning of school). The main business campaign will also run for approximately two months. Nevertheless, our personal selling force will remain active for several months. A detailed campaign spreadsheet is attached. 83

Furthermore, it is necessary to see our campaign contextual. We have to take in the effect of movie promotions by their studios. Once we seeded the rational fact of cinema choice, we indirectly benefit from every single movie campaign. Several major releases are planned for 2009. Their extensive promotion will certainly help our audience admissions to take off.

2nd half of 2009

1st half of 2009

Movie Watchmen Monsters Vs. Aliens 50 Dead Men Walking Fast and Furious X-Men Origins: Wolverine Star Trek XI Angels and Demons Bruno Terminator Salvation Night at the Museum 2 Transformers: Revenge of the Fallen Ice Age III: Dawn of the Dinosaurs Harry Potter 6 G.I. Joe Inglorious Basterds Toy Story 3D Up 3D Shutter Island Taking Woodstock Avatar

Primary target Male 15-24 Family Culture 25+ Focus 15-24 Focus 15-24 blockbuster blockbuster Focus 15-24 Male 15-24 Focus 15-24 Focus 15-24 Family Family Focus 15-24 Focus 15-24 Family Family Focus 15-24 Focus 15-24 Male 15-24

Table 19: Major releases and their primary target market for 2009 (Pearl & Dean, 2009b)

Campaign Plan Business‐2‐Consumer Campaign Public Relations Press Advertising Newspapers Monthly Magazines Out‐of‐home Advertising rockBoxes Tube Stations Buses Radio Advertising Cinema Advertising Online Advertising Direct Marketing E‐mail Viral video Doorhangers in student dorms Facebook, Mobile, Widget App. Microsite Business‐2‐Business Campaign Public Relations Press Advertising Newspapers Weekly magazines Monthly Magazines Direct Marketing E‐mail Microsite Online Advertising Personal Selling

March

April

May

x x x x

June

July

August

September October November December x

x(t) x x x x x x x* x x x x* x x x

Januar x

Februar x

x x

x(t) x x x x x x(t) x x x x x x x x x x x x x x x x

x(t)x(t) x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x(t) x x* x x x x x

x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x

March

April

May

June

x x x x

July

August x

September October November December x

Januar

Februar

x x x x x x x x x x x x* x x x x* x x x x* x x x x(t) x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x

x x x x x x x x x x x x x x x x

x x x x x x x x x x x x

14. Budget 14.1 Budget Philosophy

Especially in times of financial uncertainty brands are striving for maximum returns of their advertising budgets. Campaigns are therefore being even more carefully planned and media more thoughtfully chosen. There is no perfect formula for setting a budget. Best decisions come from professional experience. Judging the amount devoted to a campaign budget is therefore a balance process between the marketing and communication objectives on one side and the financial feasibility of a company on the other side. In addition, it is necessary also to incorporate the projected long- and short-term effects of communication efforts that will be reflected on future sales and profit. After all, knowledge of past budgets and their effectiveness seem as an educated guideline for setting the correct budgets (De Pelsmacker et al., 2007: 173). There are several methods for planning the budget (De Pelsmacker et al., 2007: 176-183): •

Marginal Analysis – investing resources for as long as they are compensated by higher returns (marginal revenue exceeds the marginal communication costs);

•

Inertia – keeping a fixed constant budget year on year regardless of market forces, competitive action and market opportunities;

•

Arbitrary allocation – a perhaps non-strategic, subjective decision by the above management;

•

Affordability method – when all input costs are offset, the remaining resources are invested into communication – investing without a strategic plan;

•

Percentage of sales – the budget is defined based on a percentage of or the past years sales or the next year’s sales projections;

•

Competitive parity – companies trying to guess the amount of money spent on budget by their competition and trying to match it, theoretically never destabilize the market;

•

Objective and tasks method – allocating the resources to previously defined communication objectives in order to reach them.

Marginal analysis is a largely theoretical approach to budget determination. As inertia and arbitrary methods seem too passive, unresponsive and non-strategic to the various micro and macro variables they will not be used for our budget estimate. The affordability method looks at the communication budget as pure costs and not an investment; hence in not congruent with our strategic plan that 86

needs to be executed. Like the affordability method, this method is also based on the premise that the cost of the communication budget won’t threaten the profit. The major disadvantage being overspending when and where not needed or on the other hand under investing when and where absolutely needed. As admissions have been good in the last year (2008), but unstable in the previous years, this may not be a smart guideline of planning the budget – engaging into a spiral of decline when business is already bad. We will reject this method, because of our belief that “budgets should not be the result of sales but rather should create demand and this push up sales (De Pelsmacker et al., 2007: 178)”. Using the method of the competitive party leads us to a potential misjudgement that the competitors’ budget was set correctly and that our company’s resources, objectives and performing activities equal those of the competitor. The objective and task method is superior to other methods as it approaches the problem of budgeting strategic – taking in several variables and observations. For optimal performance strategic planning and investments must be analyzed on a yearly basis. From this we can develop proportional expectations between the size of the budget and the effectiveness of this particular amount. This can furthermore help us predicting better estimations for future budgets. With analysis and consideration we will apply this method for the purpose of setting our actual budget.

14.2 Actual Budget

The business to consumer campaign has nationwide coverage, with a special focus on London as there are 5 sites in inner and an additional 9 sites in the greater London. This accounts for 23% of Vue’s total sites. Greater spent is devoted into amplifying other national locations (towns) where Vue’s cinema is already present. Nevertheless, we have proceeded strategically and focused nationally in order to have a basic ensured recall of the brand. This might be of use in particular for Vue’s future locations. Namely, if our strategy is successful, Vue will aim to expand its network quick and search for best locations and build new sites. This is where previously built awareness is of benefit. The limited budget of the campaign targeted at advertisers is based on highly targeted touchpoints between the specific trade press and their business interest. Personal selling to advertisers will be executed through our advertising-selling partner Pearl & Dean. Considering the economical slowdown and the fact that we are in process of opening up ten completely new venues (with the latest audiovisual technologies in an enjoyable ambient) within the next 2-3 years within UK (Corpoate Vue, 2008), makes devoting a larger budget for our new launch impossible. One would assume, that looking at the potential gains of new model implementation can 87

allow us to set an extremely high budget. Exactly the opposite, we have to bear in mind the human factor. We are namely setting our expectations towards massive behavioural changes; which were confirmed by the research, but still may be shattered by the behaviour of people within the natural environment. Incidentally, Vue falls into the media category sector. Hence we can try to gain advantage by trying to compensate a part of the sum devoted of the campaign. In return for their ad space/ad time we can offer other ad time for their self promotion. This seems reasonable as such cross promotion is mutually beneficial. We will try to find a partner in each media category and aim to offset 80% of our potential spent (on them) by compensating ad time.

Graph 3: Top three UK cinema advertisers (according to £ spent); Source: Mintel, 2008.

Briefly looking at the media spent of the three main competitors we can see that Vue spent a £1 million on the communications campaign when it entered the market in 2003 and approximately half of this sum in the following two years later. The average yearly spent of the competitors was somewhere between 190 thousand and 320 thousand. However, we will set our budget according to reach the communication objectives we want to achieve. Before reaching the exact campaign budget sum our assumption is that the estimated amount planned to be spent is somewhere on the interval between £ 1,9 million (minimum budget) and £ 2,3 million (maximum budget). Surely the investment in our campaign won’t come cheap, but the returns will justify the expense.

According to the resources given we have the maximum limitation of spending approximately £2,3 million for the both campaigns. This being further divided into approximately £2 million for the business to consumer campaign and £300 thousand being allocated to the business to business campaign. The actual budget for the campaign – broken down by specific media, their costs for each particular advertising format and rates, as well as the total budget of the consumers and advertisers’ campaign – can be seen in the following spreadsheets.

Graph 4: Campaign budget allocation for the business-to-consumer campaign (by media)

Graph 5: Campaign budget allocation for the business-to-business campaign (by media)

Campaign Plan - Activities, Media, Budget, Schedule - Business-2-Consumer Format

Info Costs

Rate

Frequency

March

Time

April

May

W1 W2 W3 W4 W5 W6 W7 W8 W9 W10 W11 W12

Public Relations

September W25 W26 W27 W28 W29

Press conference for consumer (B-2-C) media; (incl. brunch, press kit, gimmicks, short entertainment programme) Press Releases (in-house PR team)

18000 0

x x

203900 419625 70596 85500 113100 11550

x(t)

18175 19990 6468 4620 5590 7705 3853 18296 20400 21000 21000 6600

Press Advertising Newspapers The Sun The Sun London Lite London Lite TheLondonPaper TheLondonPaper

days full page, full color 1/2 page, full color full page, full color 1/2 page, full color full page, full color 1/2 page, full color

£50,975/ad £27,975/ad £17,640/ad £9,500/ad £18,850/ad £10,050/ad

50975 27975 17649 9500 18850 1050

1 1 1 1 1 1

Monthly Magazines ShortList ShortList Total Film Total Film Total Film Empire Magazine Empire Magazine Cosmopolitan Cosmopolitan FHM FHM Maxim

4 15 4 9 6 11

x(t)

x x

months full page, full color 1/2 page, full color back cover, full color full page, full color 1/2 page, full color full page, full color 1/2 page, full color full page, full color 1/2 page, full color full page, full color 1/2 page, full color full page, full color

£18,175/ad £9,995/ad £6,468/ad £4,620/ad £2,795/ad £7,705/ad £3,853/ad £18,296/ad £10,200/ad £21,000/ad £10,500/ad £3,300/ad

18175 9995 6468 4620 2795 7705 3853 18296 10200 21000 10500 3300

1 1 1 1 1 1 1 1 1 1 1 1

1 2 1 1 2 1 1 1 2 1 2 2

x* x* x*

x x x x

x x x

x x x x*

x x

x* x*

x x

126000 63000

x(t)

x x

114000 32000 127500

x(t)

Out-of-home Advertising rockBoxes

(national coverage)

Student Unoins Music Venues

6 sheets 6 sheets

Tube Stations

(London)

DEP (Digital Escalator Panel) DEP Platforms

Buses Bus SuperSide

Radio Advertising Capital FM + Hit Music Network Xfm Galaxy

Cinema Advertising Vue

10'' sec ads 10'' sec ads 16 sheets

weeks £219/panel/week £219/panel/week

200 locations 100 locations

2 1

weeks £ 57.000/fortnight £ 32.000/fortnight £ 127,050/fortnight

12 stations 6 stations 350 locations

2 1 1

(national coverage) 1 full bus side

£ 156,000/fortnight 325 buses (150 London)

156000

weeks £53.5/ad £48/ad £56/ad

3000 1344 3136

8 ads/day 4 ads/day 8 ads/day

5 5 5

15000 6720 15680

x x x

x x

x x x

x x

weeks free (in-house)

584 screens

Online Advertising Google AdWords & AdSense Facebook Ads Cosmopolitan.co.uk

1 (pack)

(national coverage) 30'' ads (telops)

2 2 4

weeks

(national coverage) 20'' sec ads 20'' sec ads 20'' sec ads

4 4

all-screnings

0 x(t) x(t)

weeks text ads simple (text and image) banner

CPM=POA £0,01/click (CPC) £20 (CPM)

age + location targeted

3 8 4

20000 82000 40000

Direct Marketing

days

E-mail / free existing customer database Viral video - teaser (creative and seeding) Doorhangers in student dorms (distribution - top 20 UK University cities with Vue presence) Facebook Application (creative, programing, seeding) Mobile Application - Smartphone & iPhone Compatible (creative and programing) Microsite (creative, user experience architecture, optimizing, programing) Widget for PC and Mac (creative and programing)

7 / 5 / / / /

0 12000 (add. costs) 16000 15000 17000 13000

45000 10000

x(t) x

x x x x x x x

x x

x x x x

Below the line E4 - hit series Skins - branded entertainment (product/brand placement) New (experiemntal) media - (could be defined as PR stunt) - "Hollywood Logo" (use + production)

Additional Costs Doorhangers (Distribution) Doorhangers (Production) Creative development

days 5 minxes/city; 20 cities; 5 days 200000 pcs. £ 0.09/doorhanger

Total Costs Promotional costs for The Sun, Total Film, FHM, Cosmopolitan, Cosmopolitan.co.uk Compensated amount (80%) for The Sun, Total Film, FHM, Cosmopolitan, Cosmopolitan.co.uk Payable amount (20%) for The Sun, Total Film, FHM, Cosmopolitan, Cosmopolitan.co.uk

Total Costs (minus compensation)

x = launch - main campaign x(t) = teaser launch x* = launch beginning x = afterlaunch presence

x x

£ 40/minx/day 200000

/ / /

5 / /

20000 18000 50000

2089868

760899 522738 130695

1567130

L*= launch week **= bound inserts can also be considered as part of the direct marketing campaign CPC = cost per click

CPM = cost per thousand (millenia)

POA = prices on application

Campaign Plan ‐ Activities, Media, Budget, Schedule ‐ Business‐2‐Business Format

Info Costs

Rate

Frequency

March

Time

April

May

W1 W2 W3 W4 W5 W6 W7 W8 W9 W10 W11 W12 W13

Public Relations

Press conference for trade (B‐2‐B) media; (incl. brunch, press kit, gimmicks, short entertainment programme) Event for media buying agencies and advertisers; (incl. catering, gimmicks, event design, entertainment programme) Press Releases (in‐house PR team)

18000 27000 0

x x x

22736 9412

Press Advertising Newspapers Guardian (Media Guardian) Guardian (Media Guardian)

days 2/3 pg, full c., fixed pos. 1/6 pg, full c., fixed pos.

£11,368/ad £4,706/ad

11368 4706

1 1

Weekly Magazines Media Week Media Week** Marketing Marketing Marketing Week Marketing Week Campaign Campaign**

weeks £6,278/ad £8,041/edition £10,765/ad £6,750/ad £10,080/ad £3,600/ad £7,067/ad £8,246/edition

back cover, full color bound insert back cover, full color full page, full color full page, full color 1/2 page, full color full page, full color bound insert

6278 8041 10765 6750 10080 3600 7067 8246

1 1 1 1 1 1 1 1

Monthly Magazines y g The Marketer The Marketer

2 2 3 1 1 4 1 3 2 1

18834 8041 10765 27000 10080 10800 14134 8246

x x x

x x

months full page, full color 1/2 page, full color

£4,300/ad £2,255/ad

Skyscaper (120 x 600px)

£45/CPM free

4300 2255

1 2

1 1

4300 4510

1.000.000 impressions

5 weeks

45000

existing customer database

x x*

Online Advertising Guardian.co.uk (media section)

x x

Direct Marketing E‐mail insight‐info‐newsletters Microsite (creative, user experience architecture, optimizing, programing)

0 12000

Personal Selling Personal sales force (in conjunction with our ad‐sales partner Pearl & Dean)

(in‐house stuff)

Additional Costs Loose inserts (production) Brochure (personal selling) Rate Card (personal selling) Creative development

pcs. creative, design, print. creative design, print. creative, design creative, design, print.

0,7p/insert 0.3p/borschure 0.05p/borschure

Total Costs x = launch ‐ main campaign x(t) = teaser launch x* = launch beginning x = afterlaunch presence

0,7 03 0,3 0,05 /

16000 10000 10000 /

11200 3000 500 10000

£ 275558 L*= launch week **= bound inserts can also be considered as part of the direct marketing campaign CPC = cost per click

CPM = cost per thousand (millenia)

POA = prices on application

15. Performance Outcomes 15.1 Vertical integration Analyzing the whole project we can say that it is very consistent. The convergence between each of the steps fits with one another and is up-and-down compatible. The business objectives underpin the business long term vision to grow. We annotated great importance to the micro and macro environment by: analysing the current (and predicted the future) environment and industry trends; overviewed the competitors and their market performance; observed the market forces. A SWOT analysis gave us the implications for the way forward. In order to achieve that we have set detailed and specific marketing objectives that are ambitious, but still realistic. Considering the previous analysis we decided to implement a structural change of the current business model. Inventing a completely unique solution we had to execute several financial calculations and conducted a survey (primary research). This gave us first-hand feedback and enabled to set more realistic IMC performance objectives. Upon segmenting the market in order to derive our target market and a new positioning, we have carefully chosen the optimal marketing mix, media mix and promotional mix. The marketing plan is strategically up-and-down compatible with the promotional plan. We can say that our campaign strategy communicates the appropriate message that will achieve maximum impact with both of our two audiences. Finally, the layers between the departments are synchronised, the tasks for each team are clearly defined. The business plan has a funnel shape flow and shall be achievable on every executive level within the time limits set.

15.2 Horizontal synergy Bearing in mind that the whole is more than the sum of its parts, we integrated our promotional activities into a coherent synergetic network that provides several brand touch-points throughout the campaign. Our IMC campaign begins with a viral advertisement that with the goal to seed general curiosity. The prologue into the main campaign will be a PR stunt (new experimental medium) that will support our PR incentives and make the broad market aware of our intentions for the first time. Correctly timed, a nationwide advertising campaign will introduce the changes to the market through several channels. This will ensure that each targeted subject is exposed to the message on several occasions 92

through a variety of mass media – press (daily, monthly), radio (local, national), cinema, online and out-of-home advertising. By using some below-the-line channels – such as brand placement – we wanted to subconsciously influence our customer base and reach for the crucially important acceptance within their cool-defining ambitions. Through this, habitual changes will be easier to achieve. In addition, direct marketing tactics support our efforts. This will enable us to personally reach the audience and tailor our messages according to their profile preferences. By monitoring their cinema going behaviour (previous movie choices, visiting time …) we will be able to develop a cheap and efficient customer retention strategy. Our current customer database will be expanded with every new trial. The business-to-business campaign relies mainly on a personal selling strategy. Nevertheless our professional sales force will have the advantage of being supported by advertising in trade press, direct marketing tools and a specially tailored extensive PR campaign. Not only are the campaign tools mutually aligned to support each other, also both of the campaigns (the business and the consumer campaign) support each other. The business target audience will also notice the buzz about the consumer campaign through other channels. Which will in end-effect benefit the company and derive additional credibility and liability to our brand.

15.3 Evaluation In order to evaluate our performance and monitor our in-market progress we will use methods that will allow us to evaluate the effectiveness of our IMC programme, promotional and media activities, user experience and response to customer satisfaction. In order to have a clear picture of our performance in terms of reaching our IMC objectives we will be periodically measuring brand awareness, brand comprehension (procedure comprehension), the attitude towards the brand, visiting intention (!) and actual visiting, brand satisfaction and, finally, brand loyalty. As »brand loyalty is a highly emotional, largely irrational matter (Wright, 2005: 20)”, we will try to identify where are our consumers on their journey to their loyalty and how well our brand is performing in terms of wining it. Finally, we will try to identify our brands potential for future growth (Millward Brown, 2009). In order to optimize our communications throughout the development process we need to measure it on several stages in order to improve the near-finish execution. The IMC campaign message and creative executions will be tested prelaunch and post campaign; in order to optimize a potential new campaign. Direct marketing will be measured according to known industry standards (response rate and conversion rate); several messages will be pre tested and the most efficient one will be chosne 93

for the actual campaign. The effectiveness and generated-value of PR will be evaluated according to the media space/time captured in ratio to the value of the same amount of space/time by theoretically spent on advertising. Consumer experience will be monitored regularly in order to gain feedback on the implemented changes. The advantage of the free model is also that we can easily capture consumer data. In order to get into the cinema a card-swipe with the student ID will be necessary. Of course every card must be (free) pre-registered online. According to this a user profile form has to be completed. Through this we will be able to capture, who sees what, how often, when does he come to view it, with who he enters, if he purchases any snacks or drinks (online), etc. Applying this data to particular profiles will give us behavioural patterns and enable us to even better target specially developed â&#x20AC;&#x153;productsâ&#x20AC;? to our target market. These insights will be core also for later retention tactics (e.g. weekly e-mail with a tailored message based on the aggregation of the profile and personal cinema usage patterns) and customer management improvement.

16. Appendix Appendix Index

1. UK cinema market sector statistics 1.1 Total number of Admissions in UK from 1998 to 2007 1.2 Gross box office takings in UK from 1998 to 2007 1.3 Revenue per admission in UK from 1998 to 2007 1.4 Revenue per screen in UK from 1998 to 2007 1.5 Industry relations 1.6 Advertising expenditure by medium (UK)

2. Competitors comparison 2.1 Comparisons in ticket prices for different UK locations between the three major players for the movie »Mamma Mia!« on 20 September 2008 2.2 Comparison of presence of the three major competitors in 20 UK biggest settlements according to population 2.3 Comparison of advertising £ spent between the three major competitors 2.4 Two competitive experiences – Cinema Vs. Home Theatre

3. Segmentation 3.1 Demographic segmentation 3.2 Psychographic segmentation 3.3 Demographic segmentation – the new business model 3.4 Psychographic segmentation – the new business model 3.5 Behavioural segmentation – the new business model

4. The New Business Model 4.1 The concept behind Free 4.2 Free cinema – a means to an end 4.3 Seth Godin's reach and frequency metaphor applied to the free models’ effect on advertisers' targeting

5. Location 6. Financial analysis - proofing the stability of the free cinema model 6.1 Vue’s Capacity 95

6.2 Target population 6.3 Admission numbers 6.4 Vue’s current ticket revenue 6.5 Vue’s current advertising revenue 6.6 Assumptions in number of admissions (yearly) for the free cinema model; based on the 15-24 age segment 6.7 Assumptions in advertising revenue (yearly) for the free cinema model; based on the 15-24 age segment 6.8 Estimation of snacks and drinks income 6.9 Total Revenue 6.10 Distributor/Studio Charges 6.11 Analysis – a visionary conclusion

7. Primary Research 7.1 Research objectives 7.2 Methodology 7.3 Research Results 7.4 Research Summary 7.5 Questionnaire Example

8. Executed Creative Solutions 8.1 Mood board 8.2 New media/experimental media 8.3 Mobile Application (example) 8.4 Widget Example 8.5 Facebook Application (example)

1. UK cinema market sector statistics 1.1 Total number of Admissions in UK from 1998 to 2007 (in millions)

Source: Cinema Advertising Association / Gallup / Nielsen EDI (CEA, 2008b)

1.2 Gross box office takings in UK from 1998 to 2007 (in ÂŁmillions)

Source: Cinema Advertising Association / Gallup / Nielsen EDI (CEA, 2008b)

1.3 Revenue per admission in UK from 1998 to 2007 (in ÂŁ)

Source: Cinema Advertising Association / Gallup / Nielsen EDI (CEA, 2008b)

1.4 Revenue per screen in UK from 1998 to 2007 (in ÂŁ thousands)

Source: Cinema Advertising Association / Gallup / Nielsen EDI (CEA, 2008b)

1.5 Industry relations

1.6 Advertising expenditure by medium (UK)

Source: Campaign: EMEA Media, 2008

100

2. Competitiors comparison 2.1 Comparisons in ticket prices for different UK locations between the three major players for the movie »Mamma Mia!« on 20 September 2008 (in £)

Sources: www.myvue.com, www.odeon.com, www.cineworld.co.uk.

101

2.2 Comparison of presence of the three major competitors in 20 UK biggest settlements according to population

Sources: • CorporateVue. 2008a. Cinemas: Locations. [Online]. Available at: http://www.myvue.com/corporate/cinem as.asp?SessionID=235FB89B72F64050BFD1CFB82C5F9987&cn=1&ln=1 / [Accessed on: 1 October 2008]. • Cineworld. 2008. Cineworld cinemas Online. Available at: http://www.cineworld.co.uk/reservation/ChoixResa.jgi? RAZ_REGION='O‘ [Accessed on: 1 October 2008]. • Odeon. 2008. Cinema finder. [Online]. Available at: http://www.odeon.co.uk/fanatic/cinema_finder/ [Accessed on: 1 October 2008]. • Wikipedia.org. 2008. List of largest United Kingdom settlements by population. [Online]. Available at: http://en. wikipedia.org/wiki/List_of_largest_United_Kingdom_settlements_by_population [Accessed on: 1 October 2008].

102

2.3 Comparison of advertising ÂŁ spent between the three major competitors

103

2.4 Two competitive experiences â&#x20AC;&#x201C; Cinema Vs. Home Theatre The following comparison shall provide an additional insight into consumer behaviour regarding the two different types of movie consumption.

104

3. Segmentation 3.1 Demographics

105

3.2 Psycographics

106

3.3 Demographics â&#x20AC;&#x201C; The New Business Model

107

3.4 Psychographics â&#x20AC;&#x201C; The New Business Model

108

3.5 Behavioural â&#x20AC;&#x201C; The New Business Model

109

4. The New Model 4.1 The concept behind Free

Tendencies towards free were visible in several industries in the last decades by giving away the primary product at a lower price and charging more for a disposable sub-product that needed to be bought on a periodical basis. E.g. sell the vacuum cleaner cheap and have a constant income on bags; lower the price of the gaming console and generate revenue with the games; sell cheap mobile phones – or give them away for free! – and profit on the monthly plan. Shifting on costs from on product to another is a known marketing model. But as potential revenue from many products is falling companies need to turn their model upside-down and look for additional sources of income they can rely on in order to still generate profit from a that product. If that sum/profit for a product sold gets close to zero and the revenue from “selling” to customers us almost null might as well go over to the new alternative source of revenue. The first shift happened in the online world. Google offered Gmail – web-based e-mail service with a giant free storage; gaining revenue on advertising only. Tons of social networking/video/gaming services (mySpace, YouTube, Flickr, Facebook) that provide junk entertainment are also free for the end-user; profiting by the ad-revenue model. Today, the online world seems free by default. The user is used to the idea that the content they can get online should be free. Piracy confirms it. Furthermore, productivity software (e.g. Skype) is becoming free and importantly eroding established markets in the offline world (the phone market). “The dominant business model on the internet today is making money by giving things away (Anderson, 2008a)”. All the daily quality press gives away content for free online. Moreover, free is finding its way into the old offline world. Yellow press (Metro, TheLondonPaper) are freely distributed on a weekday basis living from advertiser £. Complete (e-)books are given away online to read for free in order to stimulate the sales of the hard copy. Acknowledge music artists give away free original records/downloads – regarding CD’s as a promotional tool they gaining the revenue through touring. Nevertheless, radio and commercial television have been driven by the exact same advertising model and has been free since ever. As it turns out, using free content and build-up audiences and later “offering” them to the advertisers is nothing radically new in some traditional media, but the transformation into new – previously unthinkable – industries is. Ryanair CEO, O’Leary, is among the bold who are trying to do it. He already revolutionized the business model by offering low-cost flights, but now he plans to twist the model even further – by offering free passenger flights in less than a decade (Jeffries, 2008). These models are based on the three-party system, where “a third party pays to participate in a market created by a free exchange between the first two parties” (Anderson, 2008b: 147). The third 110

party here is being the advertiser to whom the eyeballs are being sold. On the whole, »by charging one set of customers [viewers] little or nothing, the business will attract the critical mass of them required to draw large numbers of another set of customers [advertisers], and income generated by the latter will handsomely exceed the cost of acquiring and serving the former«(Gupta and Mela, 2008: 104). More relevant: this models all work – generate profits and are already beyond the stage of an experimental ground1. Today the disrupter’s motto is pointing at the companies, appealing that they should “be the first to give away what others charge for (Anderson, 2008a)”. But what revolutionizes the free model is the behavioural economy of the consumer behind it. “Free” feels good. In sales promotions, “free” encourages the (seemingly) rational above the emotional – meaning it degrades the brand value and higher the choice for the provided (savings) opportunity of another brand. Nevertheless, “free” can be a deceptive concept. The economist Ariely describes “zero, [as] an emotional hot button – a source of irrational excitement (Tugend, 2008).” In his experiment he offered a choice between chocolate truffles (for 15 cents) and less expensive and apparently less tasty chocolate kisses (for 1 cent). When confronted with the choice, consumers subconsciously compared the quality and the price of the two products. 73% of them decided to go with the truffles and 27% chose the kiss. In a the second experiment the price of the same two products got reduced by 1 cent – making the truffles cost 14 cents and kisses available for free. Despite the relative price difference unchanged, the percentage of those choosing the kisses jumped to 69 % and those choosing the truffles turned out to be 31% only. A drastic behavioural difference due to the price reduction; which – according to the standard economic theory of cost-benefit – shouldn't have happened (Tugend, 2008). This trend of “free” consumer culture, the bold recreation of the business models and the effect on the consumer behaviour was inspiring to think in new directions and to change the standard model of the cinema.

4.2 Free cinema – a means to an end The cinema admissions figures are unstable in the last five years. Currently, approximately 1/3 of the studios revenue is coming in from ticket sales, 1/3 from DVD rentals and sales, and 1/3 from merchandise and memorabilia. Movies are being increasingly threaded as brands. In addition to this, studios play safe and box-office successes immediately receive a sequel/prequel (High school musical 1,2,3; Matrix 1,2,3; Shrek 1,2,3; 1

For example the free weekday paper market in the UK is already crowded; therefore segmenting its target audience. Metro is the morning “substitute” for the quality press, TheLondonPaper and London Lite are the yellow press afternoon alternatives for the home-going crowds; while City A.M. aims for the business people mornings.

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Star Wars 1,2,3,4,5,6; James Bond 1-23). As the movie-brand is established this represents a safety net

–

basis

for

additional

income

infrastructure:

e.g.

various

DVD

(special/limited/collectors/widescreen/director’s cut) editions and a great variety of merchandise sales. These income extensions are more than welcome as some movies may completely flop and have to be compensated by the success of the cash-cow movie brands (e.g. Spiderman). Moreover, home theatre is becoming more affordable and the high quality of the cinematic experience it delivers comes closer to the actual cinema than ever. In some aspects not leaving the comfort zone and staying on a cosy homely couch even beats the struggle of driving to the cinema, finding a parking, tolerating a neighbour’s loud laugh or smelling the popcorn all-over the hall. Nevertheless, cinema has something unique to offer: the oversized screen, the blasting sound effects, the darkness ... On the other hand it is also an opportunity for socializing and escaping the four walls. It is can be a routine, but it can as well be an enjoyable “ceremony”. Certain viewers might delighted during the whole “process”: ticket buying, arming with popcorn, drinks and snacks for the time of the movie, going to the toilet before a movie starts in order not fully feel the uninterrupted movie magic, coming in early in order to get the middle seats with the perfect distance to the screen, watching the trailers for movies that are about to hit the screen, the movie itself and even watching the credits roll sway at the end. Definitely, an evening at the movies can be an extremely pleasant experience. But different profiles have different attitudes towards this routine. For someone it is coming in late in order to skip as much advertising as possible, writing SMS during the movie and rushing away right after the credits start to roll. With the general availability of the home theatre, the behavioural patterns are changing – all of a sudden the individual can relatively easy choose about the place (location) of the movie consumed. Although he has to wait for the movie to be released on DVD – in order to watch it home – he might be willing to do that in order to stay with the private comfort zone. On the other hand he might want to be among the first to see it – eagerly anticipate a new title and willing (or happy!) to go through the cinema experience. All in all, this is another example of technology putting the decisive power into the hand of the consumer (luring it subtly away from the supplier). In order to sustain and to grow studios have to be smart and look at other possibilities of incomes. Creative solutions are considered in order to “workaround” the consumers mind – not changing this new viewing experience but to occupy a complimentary attitude towards it. The practice of studios shifting their income is nothing new. Nowadays it even happens with the medium the content is released on. A recently introduce high definition standard (Blu-ray) is rising the price – based on higher picture and sound quality – for exactly the same content that is available on a £10 cheaper DVD.

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As piracy is an increased threat to the movie industry, DVD figures are decreasing. Consumer behaviour logic tells that people are unlikely to buy a movie (brand) they have not seen it and are not sure whether they will love it or hate it. The price/performance ratio for impulse – “judging by cover” – buying fails. Fact is, if buying for themselves, people are going to choose a movie they have seen before and adored. It has to represent good value for them and build up the emotions of desire that they want to own it – they want to have it at home in case they will ever want to immediately rewatch it. Emotions erupting while watching the movie are the main sales force behind the later movie media (DVD, Blu-Ray or digital download) purchase. Unarguably, it is hard to like a movie if someone has never seen or heard of before. Will Gillette give away free razors in order to maintain its market leading position and try to generate greater income on disposable blades? It does not sound irrational. With the special Gillette jag, working only for Gillette blades it may be a way to reach exclusivity and become a market monopolist by smartly bypassing the competitors.

Table X: Comparison of movie prices in different media – cinema, DVD, Blu-Ray disc (Source: HMV.co.uk)

This simple procedure of switching cost can be scaled to bigger (more costly) proportions – applied to the cinema model. It may sound daring but one option to increase the income of the studios can be the free cinema model. Free cinema could drive DVD sales – representing the stimuli for later purchase – shifting the income from the tickets sold at the counter to the point they are bought on the medium. Nevertheless, a current cinema ticket is 4 times cheaper than a fully priced DVD, and 6 times cheaper than a fully priced Blu-Ray disc. By simply generating more DVD and merchandise sales, the free cinema model could be more profitable for the studios even in this post-cinemarelease dimension. New market development (people willing to purchase a movie) by giving away a consolidated product (movie in theatres) in order to sell an old product (DVDs) and new products (more and different merchandise). Exactly this is starting to happen in the publishing business. Bold authors are publishing exact replicas – full content copies – of their books online. Although not a practice yet, this has proven to be an efficient driver of paper-cover book sales. This builds on the behavioural premise that, if a book’s content is truly good, the reader will: 113

•

stop torturing his eyes by reading it from his computer screen

•

develop the desire to own a really good book – to poses the original paper-based copy and read it in the convenient offline style.

But this only happens if a book “survives” the online reading trail. Consumer getting something in advance for free and later being the judge and refusing or proceeding with the purchase later is a fresh, not yet established, practise of a new business models. And exactly because it seems so uncommon and risky, it is extremely relevant to observe it and further develop it by variations of innovations. It’s a new way of building trust. Feedback becomes secondary, feed-forward a crucial motivator. Finally, “new media phenomena always come in phases, sliding in almost unannounced. Initially, even recognition of their existence is hard to establish. Only later do they become accepted, even universal, before fading away to be replaced by a newcomer (Billett, 2009: 18)”.

4.4 Seth Godin's reach and frequency metaphor applied to the free models’ effect on advertisers' targeting In order to clearly demonstrate the new advantage that we are going to offer to our business audience we will used the simple flower analogy (Godin,2002).

a) Audience picture for the current cinema model. The cinema attracts a limited amount of audience with a proportion of various age groups. Different colours of flowers represent different age groups. When targeting the 16-24 age cluster (29%) – the white flowers – around 70% of the media budget is wasted.

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b) Audience picture for the free cinema model. It is to expect that the cinema model would change audience behaviour; hence increase visiting frequency. Seen absolutely, advertisers would be offered larger audiences and logically would need to pay more for them; but relatively the share of wasted amount of the media budget while targeting a specific cluster, e.g. 16-24 year olds, would be the same – 70%. In this case 70% of a much larger media budget.

c) Audience picture for the free cinema model limited by the 16-24 (student) age interval By limiting our free offer to the 16-24 segment, we are losing 70% of other audience, but from an advertisers' perspective we are: (1) Delivering more of the audience (because the entry is free); (2) Delivering a more homogenous and relevant audience (due to our allowed age interval). This represents better targeting and targeting more of the wanted audeience. In Newtonian terms we manage to »escape velocity« and spent the budget more efficiently – »recycling« the (theoretical) 70% budget waste.

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5. Location As location is one of the crucial factors for cinema selection, we decided to examine the location situation between the three major competitors (Vue, Odeon, Cineworld) in London. We mapped the particular multiplex sites and depicted a projection of what might happen if location becomes a lesser of an obstacle; because of the free model implementation. The following descriptions match to the accompanying London maps attached below 1. Current presence of Vue in London (9 cinemas) 2. Current presence of Odeon in London (18 cinemas) 3. Current presence of Cineworld in London (8 cinemas) 4. Current presence for Vue, Odeon and Cineworld in London (35 cinemas combined) 5. Because Vue is offering free cinema – eliminating the variable of costs – the willingness to go to another location (that is further away for the usual cinema of choice) increases. Because these two variables are inversely proportioned, the audience radius of each particular Vue site increases! Differently put, the motivation to capture the free opportunity is bigger than the inconvenience of location. The increase is depictured symbolically – twice the reach of the previous range. 6. When comparing the new Vue reach with the current reach of Cineworld we can see that on most of the locations we clearly outperform them. Our offer is despite the greater distance more attractive than the offer of our competitor. 7. When comparing the new Vue reach with the current reach of Odeon we see that we improved our absolute position. While Odeon still remains a sole competitor on some sites further away, we clearly outperform them in city center.

As mentioned this analysis is demonstrative only, as the size of the circles does not necessary reflect the exact proportion of the distance that people would be willing to travel from their usual cinema of choice. Nevertheless, it helps us to illustrate the free cinema effect on the toleration of further location and the consequence of outperforming our two major competitors by “virtually” increasing the radius of reach.

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Legend:

6. Financial analysis - proofing the stability of the free cinema model 6.1 Vue’s Capacity Option A: we can have 4 screenings a day per screen room on a daily basis. This makes an average of 4 screenings per day. Time 11.20 14.20 17.20 20.20 23.20 02.20

Monday

Tuesday

Wednesday

Thursday

Friday

Saturday

Sunday

x x x x

X X X X

x x x x

Table 1: Weekly screenings schedule – screening times per day plan – Option A

Option B: we can have 4 screenings from Monday to Wednesday, 5 on Thursday and 6 from Friday to Sunday per screen room. This makes an average of 5 screenings per day. Time 11.20 14.20 17.20 20.20 23.20 02.20

Monday

Tuesday

Wednesday

Thursday

x x x x

x x x x x

Friday x x x x x x

Saturday x x x x x x

Sunday x x x x x x

Table 2: Weekly screenings schedule – screening times per day plan – Option B

Vue Capacity Vue’s number of seats (whole UK) Options

137340 seats Turnover capacity per year

Option A – fill the whole capacity 4 times a day for a year Option B – fill the whole capacity 5 times a day for a year

200, 5 million seats 250, 6 million seats

Table 3: Vue’s capacity for screening schedule option A and B

Vue’s current capacity – 137340 seats – is spread through 582 screens within 60 sites throughout the UK. According to an official statement from the management Vue will open 10 new sites within the next 2-3 years (Corporate Vue, 2008); from this three being already opened in winter 2008. As there is no data how many screens will be on each site or the capacity of seats that will be available, we will not take this future projection in our current calculation. Nevertheless, it is not to undermine that this fact speaks in favour of our proposed model – widens the location network and increases the capacity of admissions possible.

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6.2. Target population Age 7-14 19

% of visitors

15-24 29

25-34 17

35 - 44 18

45 - 55 10

55+ 9

Table 4: % of cinema visitors divided into age groups (for UK); source: UK Film Council (CEA, 2008e)

Graph 1: % of cinema visitors divided into age groups and the segment we target

6.3 Admission numbers

UK’s yearly admission (2007): 162,45 million viewers (CEA, 2008c) Vue’s yearly admission (2007): 32 million viewers (Corporate Vue, 2008)

Vue’s current share based on number of admissions (2007): 19,6% The 15-24 age segment (29% of visits) represent: 47,1 million yearly admissions

6.4 Vue’s current ticket revenue Average UK ticket price: Vue’s yearly ticket income(for 32 million yearly admissions):

£5 (CEA, 2008d) £160 million (est.)

Table 5: Estimation of Vue’s ticket income based on the average UK ticket price

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6.5 Vue’s current advertising revenue UK cinema industry yearly advertising revenue:

£188 million (Mediatel.co.uk, 2008)

Vue's advertising revenue (based on their admission share)

£37 million (est.)

Table 6: Estimation of Vue’s advertising revenue (based on their admission share) deducted from the total UK cinema industry advertising revenue

Vue’s potential advertising revenue if Vue would be able to capture the whole current 15-24 age segment (we would expect that Vue will capture the complete segment if entry is free) Market expansion – by luring in audiences which previously didn’t visit the cinema

£54,5 million ??? ???

Increasing market share – by increasing the frequency of current and future cinema visitors Table 7: Unknown income variables missing in the model

Behavioural changes are hard to predict. They simply cannot be estimated and, therefore, have to be proven by primary research.

6.6 Assumptions in number of admissions (yearly) for the free cinema model; based on the 15-24 age segment Number of people representing the target audience aged 16-24 (within the UK):

7 million viewers (11% of UK population)

Assumption option A: (1) We will be able to capture the complete 15-24 age segment in UK and (2) each one of them will visit the cinema once a month: Assumption option B: (1) We will be able to capture the complete 15-24 age segment in UK and (2) each one of them will visit the cinema twice a month:

84 million admissions 168 million admissions

Table 8: Size of the 16-24 age segment within UK and two visitor predicting assumptions

Bias has to be acknowledged (in the negative) as not the complete 16-24 year segment of the UK audience has access to a Vue cinema. Vue is present in major cities, but still misses out some key locations (e.g. see appendix point 2.2 - Comparison of presence of the three major competitors in 20 UK biggest settlements according to population). Nevertheless, the Vue chain consists of total 60 sites – 584 screens (Corporate Vue, 2008). Trying to outbalance this bias we have set the visiting number frequency for a free cinema relatively modest. In assumption A the visiting frequency is once a month; while in assumption B the visiting frequency is twice a month. Whereas, there is also a hardcore base of people who (will) visit the cinema several times a week, there are much more viewers who visit the cinema several times a month. This unconsidered “bonus” visits (which will become partially quantifiable, but for sure more transparent, after we have conducted primary research) could be therefore smoothed away by the fact that we have taken the whole UK segment of 15-24 years old into our calculations. 126

Vue’s total capacity (filling the whole capacity 5 x a day for a year) Assumption A Assumption B Capacity “buffer” for option A Capacity “buffer” for option B

Number of admissions 250 million (max.) 84 million 168 million

Capacity share (%) 100% 33,6% 67,2%

166 million 82 million

66,4% 32,8%

Table 9: Size of the 16-24 age segment within UK and two visitor predicting assumptions

Both of our assumptions still leave open capacities. Even if the demand for tickers becomes greater due to higher visiting frequency there is still a 32,8% capacity “buffer” (Option B). This reduces the fear of supply not being able to serve the demand for the tickets.

6.7 Assumptions in advertising revenue (yearly) for the free cinema model; based on the 15-24 age segment

Options Current Assumption A Assumption B

Number of yearly admissions 32 million 84 million 168 million

generate

Ad revenue

Factor

£37 million £97 million £194 million

/ 2,6 5,25

Table 10: Vue’s current advertising revenue and advertising revenue projections for the previous two assumptions in increase in admissions

Also here bias has to be acknowledged (in the positive) as we would – with more admission per movie – increase advertising prices. Fuller screens would allow us to rebalance the convergence point between greater demand and supply and set higher prices for advertising time before each screening. This could allow us to increase current advertising prices by 20% (est.). This increase has not been taken in consideration in our previous calculations. Taking the 20% increase of advertising time into consideration we would have generated an even larger income; certainly we don’t want to show the new model in a hyper profitable light and will proceed with previous advertising revenue calculations. Nevertheless, finding the right balance and increasing advertising prices can be set upon later when the real demand variable is known. Options Current Assumption A Assumption B

Number of yearly admissions 32 million 84 million 168 million

generate

Ad revenue

Factor

£37 million £116 million £232million

/ 3,1 6,2

Table 11: Vue’s current advertising revenue and advertising revenue projections for the previous two assumptions in increase in admissions with 20% rise of advertising time price taken into consideration.

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6.8 Estimation of snacks and drinks income Popcorn

Hotdog

Nachos

Coke

(small)

(regular)

(large)

(regular)

(large)

(small)

(regular)

(large)

£3,85

£4,25

£4,35

£3,89

£4,25

£2,5

£2,79

£2,99

Table 12: Vue’s snacks and drinks Prices (December 2008).

Estimations Every third person buys popcorn (regular) Every fifth person buys a drink (regular) Every tenth person buys a snack (regular) Total

Current (32 million adm.)

Assumption A (84 million adm.)

Assumption B (168 million adm.)

£45,3 million £17,8 million £12,4 million £75,6 million

£119 million £46,8 million £32,6 million £198,5 million

£238 million £93,7 million £65,3 million £397 million

Table 13: Assumption of current snacks and drinks income and predicted snacks and drinks income for assumption A and assumption B; based on Vue’s snacks and drinks prices.

6.9 Total Revenue

Ticket revenue Advertising revenue Snacks and drinks revenue Total Revenue

Current (32 million adm.)

Assumption A (84 million adm.)

Assumption B (168 million adm.)

£160 million £37 million £75,6 million £272,6 million

£0 £97,1 million £198,5 million £295,6 million

£0 £194,2 million £397 million £591,3 million

Table 14: Total revenue for Vue’s current business model and Vue’s projected total revenue for the new free cinema model for admission assumption A and admission assumption B

6.10 Distributor/Studio Charges Current (32 million adm.)

Assumption A (84 million adm.)

Assumption B (168 million adm.)

Total Revenue

£272 million

£295 million

£591 million

Ticket revenue (real + projection)

£160 million

(£420 million)

(£840 million)

(proj.)

£80 million £192 million

£210 million £85 million†

£420 million £171 million†

(£53,3 million) (£218,6 million)

£140 million £155 million†

£280 million £311 million**

(£40 million) (£232 million)

£105 million £190 million*

£210 million £381 million**

Currently: 50% of ticket income goes to the distributor Total revenue minus distributors charges Future option 1: 33% of ticket income goes to the distributor Total revenue minus distributors charges Future option 2: 25% of ticket income goes to the distributor Total revenue minus distributors charges

Table 15: Distributors revenue subtracted from the total cinema revenue – current and projections according to negotiations with distributors.

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† the current business model outperforms the free business model. * the free business model almost breaks even with the current business model. ** the free business model outperforms the current business model.

6.11 Analysis – a visionary conclusion However, this framework works under one condition: a lower distributers charge per admission. If the distributor agrees on lower charges – 33% or 25% instead of 50% – than we can both gain greater revenues.; making it a win-win situation. If for example we assume that we are able to negotiate a 25% distributor charge and we manage to get in 168 million people (which equals covering of 67,2 % of our current yearly capacity) we can almost double (factor 1,9) our income – generating £381 million instead of £192 million. At the same time this means greater revenue for the distributor/studio. Instead of gaining £80 million by charging us 50% per every ticket sold, they would now get £210 million by charging us 25% per every ticket “sold”. Which represents a 2,6 factor increase. Furthermore, this model vertically improves the whole industry. The free cinema model therefore benefits: 1. The student audience by giving them free entry 2. The advertisers by giving them a larger audience, more precisely segmented (allowing them more hits per ad) 3. The cinema exhibitor (Vue) by generating more income through advertising and snacks and drinks sale 4. The studio/distributor by generating more income per movie as a result of lowering the movie distributor charges allowing more audience to see it

Finally, the new business model for improving the situation of the whole cinema industry seems a bold idea; as it depends on several factors that have to be synchronized and balanced. In practice several variables would have to be tuned more precisely.

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Figure 1: The relations within the win-win-win-win combination between the audience, the advertisers, the cinema and the studio/distributor

Why the challenging potential of this idea makes it seem as a revolution, we believe it is merely a new step in the evolution of the industry. Furthermore, what makes this idea even more interesting is the collaborative factor that produces the massive change – leading to the cross-industry opportunity for all the involved parties (audience, advertiser, cinema, and studio/distributor). If the model is not understood and implemented by all the four mutually-dependent parties, than the greater gain is not possible for anyone within the co-dependent chain. But if all the partied manage to collaborate in sync, there is a greater benefit for each one of them. To conclude, the future of business lies in collaboration. In order to visualise this collaborative paradigm we can scale it to the prisoner’s dilemma. We will explain the outcomes of the prisoner’s dilemma by using the Boston matrix output system (star, cash cow, dog, question mark). In the Prisoner’s dilemma table “Yes” means that a player (cinema or studio) agrees to implement the new business model, while “No” means that a player (cinema or studio) does not agree to implement the new business model.

Studio – Yes Studio – No

Cinema - Yes Larger profits – both (future) st nd Cinema dies 1 , Studio dies 2

Cinema - No Studio dies 1st, cinema 2nd Larger profits – both (future)

Table 16: The prisoner’s dilemma applied to the cinema and studio

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Figure 2: The prisoner’s dilemma (for cinema and studio) applied to the Boston Matrix – Pareto’s suboptimal

In theory, in the short term each player is better off when he does not collaborate and implement the new business model, while the other opponent does! He quickly becomes a cash cow; while his opponent would rise to the bottom and become a question mark. From this strategic perspective no single player would want to make the first move. From the other perspective, each player would hold the other in check – holding him at bay – preventing the model of being ever implemented at all. This would mean relative improvement for no one and both players can stay dogs – striving not to become question marks and trying to somehow become a cash cow; while hardly never becoming a star.

Figure 3: The prisoner’s dilemma (for cinema and studio) applied to the Boston Matrix – Nash’s perfect equilibrium

In the long run the greatest risk is potentially not taking any risk at all. Clearly, in the long term (theoretically infinite) both entities can gain relevant benefits from collaboration or suffer from staying individualistic – by rejecting to cooperate within the new business model structure. As unstable viewership figures, piracy and other factors within the macro environment endangers the existence of studios and cinemas – and both players know that – reaching an agreement seems the most rational idea. Thus, simultaneously implementing the new business model strategy, vertically, throughout the whole cinema industry (by reaching a compromise and collaborating) is improving the relative position of both of our players; allowing them to become both stars. 131

7. Primary research In order to confirm our theoretical assumptions, primary research had to be conducted. Although behavioural predictions don’t necessary reflect actual behaviour, due to some unpredictable factors increasing consumer actions, they will help us determine if we can expect the business model to work in practice – remain financially stable and generate a larger profit than the current model.

7.1 Research objectives 1. Is free a stimulus powerful enough to induce a drastic behavioural change – in cinema visiting frequency and in luring in consumers that previously didn’t rely on this type of entertainment? 2. Is the free concept attractive enough to our demographic that they would be willing to change their location preferences? 3. Can the free cinema model become a trigger for increasing DVD (media!) sales – can the costs of free entry be additionally shifted to a major increase in DVD sales, which could become a far greater stream of revenue for the studios – thus rationalizing the free model by creating a win-win situation for the studios and the cinema exhibitor?

7.2 Methodology In order to proof our hypothesis we needed to conduct primary research. As our main task is to notice a behavioural shift, not gather deep insight, we need to quantify data in order to be representative.

Therefore, a quantitative research methodology is appropriate. Our target

population are students aged from 16 to 29 years. They are internet savvy and can fully build-up a representative online demographic, therefore an online survey has been chosen as the research method – aiming at a sample size with at least 200 responses. In order to reach that number, a

link

that

particular

online

questionnaire has been sent by the University

Westminster

student

information office to all undergraduate and

Graph 1: Students divided by age into primary (narrow) and secondary (broad) target population

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postgrad duate studen nts. Google’s free online software package Google Docs w was used in order to design th he online questionnaire, while the reesults were aanalysed with h SPSS. w fully an nonymous, and it tookk the respon ndents abou ut three minutes to The queestionnaire was complete. It consistted of 27 questions – mostly of th hem were closed c type of question ns – with multiple answers; neevertheless some open ended quesstions were included i in o order to gain deeper An example of the wholee questionnaaire can be fo ound in the aappendix. insight. A m 28.11.2008 8 to 5.12.2008. In that period 218 questionnaires were Responsses were acccepted from filled outt (a very low w response raate), with thee majority co ollected in th he first two d days.

Table 1: Sam mple size and response rate

Bias has to be ackno owledged ass only studen nts of the given Universsity were app proached. M Moreover, question nnaires weree only filled o out by the po opulation liviing in London – the media and enterttainment hyper‐ricch capital – w while studen nts from otheer UK cities aand rural pop pulation werre left out.

7.3 Resu ults

7.3.1 Baasic demographic dataa

Gender G

Stattus 6 6%

38% 62%

Maale

Student

Feemale

Non‐Studentt 94%

Graph h 2: Gender

Graph 3: Sttatus

Among the 218 uniits approach hed, there were w 62 % female f and 28 % male respondentts; which represen nts a partially unbalancced sample according to t gender. The T link po ointing at th he online

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research form was sent by the university to students only, but in order to reassure that the respondents were truly students, a status variable was included. The following showed that 94% of the respondents were actually students while, the other 6 % (13 people) were not students. A reasonable explanation for this could be that this people just finished their courses (that is why they could have still received the university mail) and classified themselves as non‐students or maybe the mail was also sent to the lecturers of the university. This would also explain the 3,2 % of the non‐ student respondents aged 30 years or above. Looking at the age variable we can determine that around half of the respondents represent the narrow target group – students aged from 19 to 25 years. 81,2 % represent the broad target group according to age (15 ‐29 years). While the primary target group is well represented – with 46,8 % of those aged between 20 and 24 years –, it has to be noted that the younger age group (15 ‐ 19 years) is with 6,9% underrepresented.

Age (in %) 50,0 46,8

40,0 30,0

27,5

20,0 10,0 0,0

6,9 15 ‐ 19 years

20 ‐ 24 years

25 ‐ 29 years

11,5

7,3

30 ‐ 34 years

above 35

Graph 4: Age

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7.3.2 Convenience and user‐experience preferences – the way of watching movies Most convenient way of watching movies:

4% 26%

Home Cinema Other 70%

Graph 5: Most convenient way of watching movies

For more than two thirds of respondents (70%) the most convenient way to watch movies is at home. When asked why afterwards (in an open ended question), people respond with various explanations. There are those who can replicate the cinema experience at home: “Have a big screen projector at home« (female, 25‐29)”, “I have a big screen, it costs me less money and I can do it whenever I want; I like cinema though, but only for movies with special effects” (female, 25‐29)”. Inevitably a pattern emerges of those for whom it is “much more comfortable and convenient (female, 20‐24)”. Responses in this category would also include: »I can smoke! (female, above 35)”, “it’s comfortable and everything I need is in my reach (female, 15‐19)”. Some responses were pointing at the convenience of the location by saying: “don’t have to travel (male, 20‐24)” or “don’t have to leave your house (female, 20‐24)” and “you don't need to spent time on arriving to the cinema (female, 25‐29)” Many respondents agree it is “much cheaper” watching it at home, making it a price issue, because some of them probably regard movies as freebies on the internet, such as a respondent mentioning: “Torrents [illegal downloading]... too expensive cinema tickets (male, 25‐ 29)”, “it’s free!” or “you don’t have to pay and you can pause the movie if you need to (female, 20‐ 24)”. As the last respondent indicated some also have concerns about pausing and time‐shifting to their exact wants of watching a movie, also this respondent by saying: »when I want, how I want (female, 20‐24)”; “I’m in charge of my own time – can watch it when it suits me (female, 20‐24)”or “more privacy and you can pause it whenever you go to the toilet” (female, 25‐29)”. In addition some respondents mind the interruption caused by others in the cinema and therefore prefer to watch it home: »I can pause the movie whenever I want, I don't have any noise from the other people who are 135

also there (female, 20‐24)” and » … some people often keep their mobiles on and the food chewing sound makes me mad :) (male, 20‐24)”. On the other hand for some it is important that they can“ … talk with friends/ eat/ start‐stop the DVD whenever I want (male, 20‐24)”. Only a good quarter (26%) stated cinema as a more convenient way of watching a movie. Answers pro cinema experience were mostly stressing the advantage of the screen size with arguments like: “better view (male, 20‐24)”; “fun large screen (male, 20‐24)”; “I love the big screen (male, 15‐19)” etc. Some answers reflected the commitment to the cinema experience as a whole e.g. “I prefer the traditional way of enjoying a movie – with nachos and popcorn (female, 15‐19)”; “big screen, popcorn, social outing (female, above 35)”,”the movie magic comes across better (male, 25‐29)”; “I am dedicated to the cinema experience (male, 20‐24)”; “more entertaining, sound & food (male, 20‐ 24)” … Yet other answers clearly portrait cinema as an enjoyable social activity: “ice cream and sociable experience (female, 20‐24)”; “you are not watching it alone (male, 30‐34)”; “nice way to spend the evening (female, 15‐19)”. A girl describes the cinema experience in particular interesting, saying that, “going to cinema is like going to the restaurant ‐ it doesn't mean that the food is better than at home, but you just go there for the atmosphere!« Nevertheless, 4% answered with other. Some of them equally preferred both experiences ‐ both ways of enjoying a movie ‐ , but were specifying the occasion: “cinema for blockbusters and hits; home for movies I would like to watch, but not pay for (male, 20‐24)” or “home is more convenient, but cinema is more enjoyable (female, 20‐24)”. A respondent was also completely insensitive of a preferred way of watching a movie, saying “movies are a great social activity which I enjoy no matter where (male, 20‐24)”.

7.3.3 Movie watching behaviour and motivation – current (overall and in the cinema) and expected (free cinema) In order to analyse the shifts in movie viewing behaviour we compared: a) The current movie‐watching frequency cross‐media (TV, cinema, PC, mobile device, etc.) b) The current cinema visiting frequency (this equals the number of movies seen in the cinema) c) The projected behaviour of the expected cinema visiting frequency if cinema would be completely free of charge. For the purpose of comparison, of the three above stated variables, same answer options were implemented. Respondents had to indicate the approximate frequency of movie watching ranging from several [movies] a week to a couple [of movies] a year.

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How many movies do you watch?

How often do you visit the cinema?

(in %)

A couple a year

3,7

+22,6%

A couple a year

One every two months

4,6

+18%

One every two months

One a month

+12,5%

15,1

Several a month

20,2

One a week

‐5 % 26,6

Several a week

29,8 0,0

10,0

20,0

30,0

26,3 22,6

One a month

27,6

Several a month

‐19,7 %

One a week

‐28,4 %

Several a week

40,0

15,2 6,9 1,4 0,0

5,0 10,0 15,0 20,0 25,0 30,0

Graph 6, 7: A comparisons between the movies watched across all media versus the amount of movies seen in the cinema

The majority of the respondents (29,8 %) watches several movies a week, while more than a quarter of them (26,6 %) watches at least one movie per week. On the contrary, an extremely low amount of people (1,4%) are going to the cinema several times a week. The number of people visiting it at least once a week is not significantly higher (6,9 %). While the curve of movies watched in general is dropping the longer the interval between the movies watched; the cinema‐visiting curve is growing, the longer the interval between movies watched – with the majority (27,6 %) going to the cinema once a month and the second largest group goes (26,3 %) going to the cinema only a couple of times a year. From the 29,8% of viewers watching several movies a week, only 1,4% watch them in the cinema. This means that 28,4% respondents who watch several movies a week– this hard‐core movie loving base –, consume this amount of movies through another medium. And while there is only 3,7 % of the people who only see a couple of movies a year, there is more than a quarter of those who visit the cinema only a couple of times a year. Based on the above comparison it can hardly be determined how many people of this large group, who visit the cinema only a couple a times a year, would like to see movies in the cinema more often as they do.

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Intent to visit the cinema (in %)

62,1 35,5 Some movies are out of the cinema before I manage to see them

2,3

I see exactly as many movies in the cinema as I plan

I already see too much movies in the cinema

Graph 8: Intent to visit the cinema.

Certainly the intent of watching more movies in the cinema – as the audience manages to see – exists by almost two thirds of the respondents. At the same time, for this 62,1 % of the people who would want to see the desired movie while on big screen the opportunity is lost! This means that the wish of satisfying this want was/is apparently not strong enough. The indecision could come from several factors (lack of time, ticket price, location, etc.) which could subconsciously cause an intensive cognitive dissonance and therefore lead the not‐so‐passionate viewer to “miss” (!) the opportunity of seeing the movie on big screen. Based on the above result, we could conclude that the motivation to go to the cinema – when faced with the choice of other free‐time entertainment activities – is ambivalent, but in the end less persuasive.

What is the main reason you don't visit cinema more often? (in %) 40,0 35,0 30,0 25,0

37,0 31,0

20,0 18,5

15,0 10,0 5,0

1,9

8,3

3,2

0,0 High ticket price

Lack of free time

Lack of movies that would interest me

Distant / inconvenient location

Prefer other type of entertainment

Other

Graph 9: The main reason why people don’t visit cinema more often

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This argument could be also partially supported by the 37% of people whose main reason of not visiting the cinema more often is lack of free time. Nevertheless, the answer lack of free time could be based on two exclusive components which could be interpreted as whether (1) lack of free time (in terms of a lot of work and other obligatory activities) or (2) lack of additional free time in order to squeeze in the cinema (in terms of an individual’s preference other free time activities before cinema). On the other hand – dissuporting the upper assumption – 8,3 % clearly stated that they prefer other types of entertainment. High ticket price is the main obstacle for a little less than a third (31 %) of respondents. In contrast, the location inconvenience which was the answer with the least number of responses (1,9%). Apparently, London’s cinema‐rich‐environment and a well‐connected transport infrastructure allow accessing cinema with ease. This almost completely despises the location issue. For 18,5 % of respondents the main reason why they don’t visit cinema more frequently is the lack of movies that they would be interest in. As the youth is getting hyper‐technology‐literate faster and younger, this allows them to experience and investigate the subjects/groups they are interested in deeper and more intensive. Within its social network they play the roles they choose, develop relations and become parts of tribes based on their taste and preferences – this allows them to develop and customize their personal(‐ized) style. Consequentially, this also leads to a more fragmented taste and therefore narrows the selection of media content, which might explain this 18,5 % with ungratified movie content wants. When the subjects were confronted with the idea of free cinema, the opportunity that could be captured – a free movie to be experienced in a cinema – suddenly gained momentum.

If cinema would be completely free of charge I would visit it ... 2%

33%

More frequently About the same 65%

Less frequently

Graph 10: The main reason why people don’t visit cinema more often

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Absolutely eliminating the second largest cinema visiting barrier (high ticket price) distinctively affected the largest cinema visiting barrier (lack of free time), thus making cinema visiting a higher preference among the free time activities. Namely, 65% of the respondents would visit the cinema more frequently as they currently do, if cinema would be completely free of charge. The frequency of 33% of visitors would be about the same and 2% would visit it less frequently.

How often do you visit the cinema? (in %)

A couple a year

26,3

One every two months

22,6

One a month 15,2

One a week

Several a week

6,9 1,4 0,0

6,5 8,3

‐15,2%

One a month

+11,1 %

Several a month

26,3

+19,8 %

One a week

26,7

+18,4 %

A couple a year

‐14,3% One every two months 27,6

Several a month

‐19,8%

How often would you visit the cinema if the entry would be free of charge? (in %)

12,4

Several a week

19,8 0,0 5,0 10,0 15,0 20,0 25,0 30,0

5,0 10,0 15,0 20,0 25,0 30,0

Graph 11,12: A comparisons between the amount of movies seen currently in the cinema and the amount of movies that would be seen in the cinema, if cinema would be free of charge.

The change in frequency is indispensable. The 1,4 % of viewers who currently visit the cinema several times a week would rise by 18,4 %; resulting in 19,8 % of viewers who would visit the cinema several times a week when the entry would be free of charge. The greatest rise (+19,8 %) appears in the visitors who would visit the cinema once every week – from 6,9 % currently to 26,7 %. An 11,1% increase is also evident by the audience who used to see several movies a month. A logical consequence is therefore that the less frequent cinema visiting intervals (a couple a year, one every two months and one a month) all decreased. Most notable decrease (‐19,8%) is indicated by the group who visited the cinema only a couple of times a year. This means that the free model would elevate a previously almost non‐cinema going audience and make them start going to the cinema. As predicted the free cinema model is powerful enough to (1) effectively increase the frequency of cinema going by the established audience and also to (2) lure in new potential audiences (soft‐core viewers and opportunistic viewers) who could not be classified as a loyal cinema going audience before.

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Change in visiting frequency (in %)

30,0 26,7

25,0

26,3 22,6

20,0

19,8 15,2

15,0

5,0

0,0

Series1

12,4

10,0

27,6

26,3

Series2

8,3

6,9

6,5

1,4 Several a week

One a week

Several a One a month One every month two months

A couple a year

Graph 13: A comparisons in frequency change between the amount of movies seen currently in the cinema (series 2) and the amount of movies that would be seen in the cinema, if cinema would be free of charge (series 1).

Briefly looking at our core target group (according to age 20‐24 years) we can see that the visiting frequency is even higher compared to the responses of all students – in particular within for the groups who would see a movie several times a week or at least one a week.

Several

Once a

Several

Once a

Once

A couple

times a

week

times a

month

every 2

times a

months

year

week Movie watching frequency (cross all media) Cinema going frequency Projected cinema going frequency(free model)

month

30,4 %

29,4%

18,6 %

15,7 %

2 %

3,9%

2 %

10,8%

16,7 %

32,4 %

15,7 %

22,5 %

20,6 %

32,4 %

25,5 %

10,8 %

6,9 %

3,9 %

Table 2: A comparisons of the movie watching / cinema going frequencies for our narrow target group (20‐24 years)

Moreover – when comparing the means between the current cinema going frequency and the projected cinema going frequency – we can see that the gap between the average current cinema going frequency (which was between once a month and once every two months) and the projected free cinema visiting frequency increased for 1,6 ranks. According to this, the average respondent would visit the cinema several times a month with a leaning towards once a week.

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Mean

Amount of movies watched (cross all media)

2,49

Current cinema going frequency

4,42

Cinema going frequency if cinema would be completely free of charge

2,82

Relative improvement after the free model implementation

1,6

Table 3: A comparisons of means for cinema going frequencies

When briefly comparing the amount of movies currently watched across all media (TV, cinema, laptop, mobile device, etc.) and the amount of movies watched in the free cinema, cinema gained a relative advantage, notably outperforming other media. 19,8% would watch several movies a week in a cinema while currently 29,8% are watching several movies a week (across all media). Practically all occasional movie watchers would rather prefer to go to the cinema instead of consuming a movie through other media.

How many movies do you watch?

How often would you visit the cinema if the entry would be free of charge? (in %)

(in %)

A couple a year

3,7

+2,8%

A couple a year

One every two months

4,6

+3,7%

One every two months

‐2,7%

One a month

+6,1%

Several a month

26,3

+0,1 %

One a week

26,7

One a month

15,1

Several a month

20,2

One a week

26,6

Several a week

29,8 0,0

10,0

20,0

30,0

‐10 %

Several a week

40,0

6,5 8,3 12,4

19,8 0,0 5,0 10,0 15,0 20,0 25,0 30,0

Graph 14,15: A comparisons between the amount of movies seen (across all media) and the amount of movies that would be seen in the cinema, if cinema would be free of charge.

The comparison in the above paragraph is although extremely relative, a prediction only. While for sure it is to expect that cinema would outperform other media in terms of the share of time devoted to it; there is also to expect that there will be an absolute growth in the amount of time devoted to media consumption in general. What can be said for sure is that the movie format would regain its popularity and now more intensively compete with TV formats (TV series ‐ sitcoms, science‐fiction, drama, reality TV …) and the user and non‐user generated content available on the internet.

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Finally, we can conclude that the free cinema model is powerful enough to change the cinema visiting behaviour and sharply redefine the free time agenda of subjects. This shift could represent a renaissance of cinema – not the movie! – as a medium who was fit enough to survive by adapting to the social and cultural changes within the digital society. An old medium brought to life, again!

7.3.4 Consumer choice and flexibility Consumers have different choice preferences when going through the decission making process of selecting entertainment activities, let alone a cinemas. When asked for the single most important reason when in a process of selecting a cinema to go to, almost half (43,3 %) of the respondents stated location as the main factor that affects their decission. A close location is indeed an extremly important factor – as a lot of cinemas share (almost) equal screening standards and offer the same »product«. Differentiation through branding could be harder and still fail as it comes down to closeness of a particular (local or chain‐based) cinema . 23 % were primarly concerned with the quality of a particular cinema they choose to go. This group is clearly concerned with the authentic experience (sound, screen, confrot …) a cinema can offer them. What is the most important factor when choosing a cinema? (in %)

50,0

45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0

43,3

23,0 13,8

12,0 2,3

Location

Ticket price

Promotion

5,5 Quality of that particular cinema

Movie times

Other

Graph 16: The most important factor when choosing a cinema.

Ticket price was the most important factor when making a choice for 13,8% of the customers. As cinema chains, within a close distance, share almost the same pricing it can come to a hesitation between choosing a cinema from a well known chain or a local cinema exhibitor. The latest are usually priced a bit lower, but also do not provide the high projection standard and experience

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comfort. Movie times were the single most important factor for 12 % of the respondents, while promotions seem almost irrelevant.

Would you be prepared to go to a further location for free cinema?

Would you be prepared to accept a lower cinema quality for free cinema?

26%

Yes No

34% 66%

Yes No

74%

Graph 17: Willing to go to a further location for free cinema Graph 18: Willing to accept lower quality for free cinema

We anticipated the highly important role of location when selecting a cinema to go to. Therfore we wanted to find out if free is a stimulus powerful enough to overcome the locational barrier. As it turns out, two thirds of our respondents (66 %) would be prepared to go to a further location in order to get free cinema entrance. Wheras, asking about the accptability of a lower cinema quality 74% people weren't willing to compromise it for a free entry. As it seems, most of the people are willing to overcome the barrier of location when they get the rich cinematic experience for free. But when it comes to quality they they would be compromising on the same dimension as they would if they stay at home, illegaly – but free(!) – download a movie and watch it in lower quality (expereince, screen size and resolution or sound) on their PC. Going to a cinema with an acceptable projection quality standard and paying for it is still regarded as an different, extended experience of movie wathcing in compariosn with watching the movie at home. It can be predicted that the 26 % who would be willing to accept a lower projection quality could maybe defined as softcore movie viewers, maybe they are the ones who see cinema going as primary social entertainment and are less devoted to the actual movie story or maybe they are qualifay as one of the lower socio‐economic classes. On the other hand 34% of the people who would not be willing to go to another location (further away from their usual cinema) could belong to a higher socio‐economic class or prefer the home theater experience.

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Most important factor when choosing a cinema to go to Location

Ticket

Promotion

price

Cinema

Movie

Quality

times

Other

Accept further

Yes

58,1 %

83,3 %

100 %

66 %

69,2%

66,7 %

location

41,9 %

16,7%

0 %

34 %

30,8 %

33,3 %

Table 4: Cross tabulation between the variable most important factor when choosing a cinema to go to and the variable of accepting a further location of a cinema to go to (if entry would be free of charge)

If we examine the most sensitive group to location – the respondents who’s most important factor when choosing a cinema is location – we can observe that 58,1 % of them would be willing to go further away to a cinema which wouldn’t charge them an entry fee. Even though this is below the 66% of total respondents who would in general be prepared to travel to a more distant location, the difference (7,9%)is not a significant one. This proves that the free trigger is actually powerful enough to respectfully overcome the obstacle of location even for the most sensitive group. When it comes to ticket price the barrier of location becomes clearly even less relevant. 83,3% of those most sensitive of ticket prices are willing to travel a greater distance for a free cinema entry. Like the yield management models’ disperse the cost through other activities that are (sometimes) outside their range in order to make a better offer themselves– not necessarily improving the absolute costs for the consumer – this clearly is powerful and persuasive enough to shift consumer perceptions in a way that they are willing to sacrifice other resources (e.g. time) to catch the opportunity (free entry). For example, Ryanair does similarly, when flying from cheaper airports that are further away from the city centre in order to reduce their costs and offer better prices.

Most important factor when choosing a cinema to go to Location

Ticket

Promotion

price

Cinema

Movie

Quality

times

Other

Accept lower

Yes

28,7 %

27,6 %

60 %

18 %

26,9 %

16,7 %

project. quality

71,3 %

72,4 %

40 %

82 %

73,1 %

83,3 %

Table 5: Cross tabulation between the variable most important factor when choosing a cinema to go to and the variable of accepting a lower projection quality of a cinema to go to (if entry would be free of charge)

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On the other hand, 82% of the people, for whom the most important factor when choosing a cinema to go to is the quality (of that particular cinema), are not prepared to accept a lower projection quality even if entry to the cinema is free of charge. Still, more than a quarter (27,6 %) of price sensitive consumers are prepared to accept a lower cinema projection quality if there is no entrance fee.

7.3.5 Consumer habits As the free model also heavily relies on the increase in sales of snacks and beverages at the counter, we wanted to capture the current premovie snacks and drinks purchasing habits of our target customers. 61 % of the respondents prefer to buy snacks (popcron, sweets, drinks, etc.) at the counter of the cinema. This clearly is in favour of our new model. Nevertheless, it is also to expect that consumers' percpetion of a captured opportunity (free cinema entrance) will make them spend more generously on snacks and drinks. This could also potentialy affect the 16% who, now, bring their own snacks to the cinema. 15% of the respondents usually skipe the snack while watching. Moreover, 8 % are annoyed/distracted when people around them eat.

What are your cinema snack preferences?

I bring my own snacks to the cinema 16% I buy snacks at the counter of the cinema

15%

I usually skip the snack when watching 61%

It annoys / distracts me when people eat around me

Graph 19: Cinema snack preferences

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Types of viewers

43%

heavy viewer light viewer

57%

Graph 20: Viewer typology

Younger audiences represent the key cinema audiences. This is the life stage when there is a lot of free time to spend and a plethora of activities to engage in. Yet not all people perceive cinema similarly, nor do they prefer it as a medium. In Chapter 2 we developed two moviegoers’ profiles – the film fanatics and the blockbuster buzzers – which differ in perceptions, attitudes, behaviour and habits. According to these two profiles we selected five indicators (usually reading movie reviews, friends usually ask me to recommend a movie, watch movies till the credits stop rolling, anticipate movies long before they open in cinemas, owning a substantial collection of DVDs) with a binary response option (Yes/No), which we later computed into a single variable which showed us the tendencies towards a certain profile 1 . 43% of the respondents captured can be therefore classified as heavy cinema goers and suit the film fanatics profile and 57 % of the users suit the light viewer description and could be classified as the blockbuster buzzers according to their profile.

Cinema going frequency if cinema would be free Several

Once a

Several

Once

A couple

times a

week

times a

every 2

times a

month

months

year

33,7 %

27,2 %

3,3 %

6,5 %

3,3 %

22 %

25,2 %

19,5 %

8,9 %

26,7 %

26,3 %

12,4 %

8,3 %

6,5 %

week Type of viewer

Heavy viewer

26,1 %

Light viewer

15,4 %

Average (all respondents)

19,8 %

It has to be acknowledged that the indicators taken were not tested in any previous research. They were developed based on observations gained through secondary research and therefore might represent a bias. The variable computed based on these indicators therefore serves as a mere tendency – a leaning – towards a certain moviegoer profile.

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Table 6: Cinema going frequency if cinema would be free assigned to the type of viewer

Comparing the cinema going frequencies if cinema would be free to particular types of viewers (heavy and the light viewer) and comparing this with the average, we can clearly see that with our free cinema model we mostly elevate the heavy viewer base. The heavy viewers who already see a lot of movies will now even increase their cinema going frequency.

Type of viewer

Cinema snack preferences Bring my own

Buy snacks at the

Usually skip

It annoys me

snacks to the

counter of the

the snack

when people

cinema

cienma

Heavy viewer

15,2 %

64,1 %

9,8 %

10,9 %

Light viewer

16,4 %

59 %

19,7 %

4,9 %

around me eat

Table 7: Cinema snack preferences assigned to the type of viewer

Observing the snack preferences and assigning it to the types of viewers we can see that the experience of the hard core cinema enthusiasts clearly means having a box of popcorn while watching. 64,1 % of hard‐viewers usually buy snacks at the counter of the cinema. This also speaks for the favour of the free model as these are the types of viewers who will be visit the cinema most frequently. Nevertheless, it has to be acknowledged that 10,9 % of the hardcore viewers are annoyed or distracted when people around them eat snacks, whereas this could be said for only 4,9% of the light viewers.

7.3.6 Free cinema – a trigger for media sale In order to prove our last hypothesis – that people who have seen the movie are more likely to buy it later than the people who have not seen it – we captured the movie buying habits. Our linear assumption from this is namely that the more people see a particular movie, the greater the probability of post‐viewing media sales (DVD, Blu‐ray, digital download). When asked what is the key factor when buying a movie the majority (42%) responded that they buy a movie because they have seen it before and liked it. 23,9 % buy a movie because a friend recommended it to them, 14,4 % purchase a movie spontaneously (“judge by the cover”), while only 11 % seem to be price sensitive. For the 8,6 % which responded with other the most important factor to induce their movie purchase was a good review by a critic. Interestingly a respondent added that the most important factor for him is the “re‐watchability” of a particular movie – which is actually the

148

extension of the basic assumption that he has seen the movie and liked it. Finally, some respondent stated that they don’t purchase movies at all.

What is the most important factor when buying a movie? (in %) 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0

42,1

23,9 14,4

I liked the movie, because I have seen if before

A friends recommendation

Spontaneous purchase ("judge by cover")

11,0

Price promotion

8,6

Other

Graph 21: Key factor affecting buying of a movie on DVD, Blu‐Ray and digital download

We predicted that media content (CDs, DVDs …) is a huge gift market. As it turns out every fifth movie bought is meant to be given as a present. Still 81% of the purchases are made for individuals themselves. This is important because the decision making process for personal purchases and for gift purchases can have different motivations. For example, I can buy a movie for a friend and try to match it with his taste based on the knowledge of his preferences. This happens regardless of the fact if I have seen the movie before or not, neither if I liked the movie or not.

Most movies I buy are ...

19%

for me a gift for someone else

81%

Graph 22: Key factor affecting buying of a movie on DVD, Blu‐Ray and digital download

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In order to additionally prove that a seen movie is a greater inducer of media than an unseen movie we looked at the last media purchase and the most likely future media purchase. First we encouraged people to try to remember the last movie they bought. When asked if they have seen the movie before 51% responded positively. While this is shows a mild tendency towards our assumption, this does not represent significant majority. Secondly we encouraged the people to think of a movie that they are probably going to buy next and writing it down in a separate open question. This sole purpose of this was building generating empathy for the possible future situation of buying a particular title. Then we asked them if they have seen it before. The results again showed only a mere insignificant tendency, this time leaning into the negative. Nevertheless, it has to be noted that in particular this answer had a great number of missing values (82 missing responses, which equals 37,6 % of our sample). We assume that this questions has been wrongly interpreted by the respondents as some stated fresh movies and movies that were about to come to the cinema at the time when the questionnaire was executed. For a part of the answers it can be assumed that they thought of a movie that they would be seeing next in the cinema (buying the ticket). To fully embrace this result, the questionnaire would have to be redone stating the two questions – regarding the movie about to be bought in media – more explicitly and clearly. The last movie I bought, I ...

The movie I am most likely to buy next...

I have seen the movie before I bought it

49% 51%

I haven't seen the movie before I bought it

I have seen the movie before 49% 51%

I haven't seen the movie before

Graph 23: Viewing of the movie last bought Graph 24: Viewing of the movie to be bought

Finally, we asked respondents – who confirmed before that they have seen the last movie they bought – about where (which medium) they have seen it. 64,5 % stated cinema as the main indicator of purchases. Apparently, the power of the cinematic experience has greater persuasion power than movies seen on the PC. Only 18,2 % of the movies firstly watched on the PC have been converted into media purchases. While TV scored with only 18,2%.

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Where did you see the movie before? (in %) other

0,0

mobile device

0,0

18,2

17,3

cinema

64,5 0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

Graph 25: The medium where respondents have seen a movie prior buying it

Combining the results it can be finally said that cinema is at least a trigger which induces media purchases. After all, this part of the research would have needed a more detailed investigation and deeper insight which could easily be a start of a completely new research project.

7.4 Summary of the Results Primary research has helped us to proof the performance stability of our new business model by exploring the projected behavioural shifts. The results claim that the free cinema concept has the leverage to induce a drastic behavioural change, resulting in a vastly higher in cinema visiting frequency within our target group. Furthermore, it proofed powerful enough to lure in audience who previously didn’t consider cinema as their entertainment preference. This is a clear confirmation to our first testing objective. Looking closer at consumer choice and flexibility, we found that they are willing to compromise the distance to their usual cinema of choice, while the majority isn’t willing to sacrifice the quality of the experience. This trend, likewise, speaks in favour of our model by confirming our expectations. In addition we researched if the free cinema model can become a trigger for increasing media (DVD, Blu‐Ray or digiral download) sales. We researched this because it could become a key argument when persuading distributors/studios to participate in our free model by undergoing a major structural change themselves. Although positive tendencies are noticeable and confirming our premise, we would still need additional deeper research to clarify the exact relationship between cinema viewing and post festum media purchasing and confirm significant triggers. Nevertheless, the

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results regarding this research objective are rationalizing the free model by assuring a win‐win situation for the studios and the cinema exhibitors. Finally, while these results might be accurate, the human factor still needs to be considered within the context of real world situations. On the other hand, the positive preferable tendencies towards the success of the model are undeniable.

7.5 Questionnaire example

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Hello! My name is Tadej Mursic, I am a student of the University of Westminster. My final thesis is about the movies and requires me to conduct a survey. It would be of great help if you could fill out this questionnaire. The survey will take you about 3 minutes to complete. Thank you for your time! Gender: a) Male b) Female Age: a) Below 14 years d) 25 – 29 years b) 15 – 19 years e) 30 – 34 years c) 20 – 24 years f) Above 35 years Status: a) Student b) Non‐student How many movies do you watch (approximately)? a) Several a week d) One a month b) One a week e) One every two months c) Several a month f) A couple a year What is a more convenient way to watch movies for you? a) Home (cosy living room sofa, home cinema experience) b) Cinema (comfortable seats, big screen, popcorn, theatre experience) c) Other: _______________________________________________________ Why? ________________________________________________________________ ________________________________________________________________ How often do you visit the cinema (approximately)? a) Several times a week d) Once a month b) Once a week e) Once every two months c) Several times a month f) A couple of times a year

Which of the following statements apply for you? a) Some movies are out of the cinema before I manage to see them b) I see exactly as many movies in the cinema as I plan to c) I already see too much movies in the cinema What is the main reason you don’t visit cinema more often as you do? a) High ticket price b) Lack of free time c) Lack of movies that would interest me d) Distant/inconvenient location e) I prefer other type of entertainment/social activities f) Other: ________________________________________________________ If cinema would be completely free of charge, I would visit it … a) More frequently b) About the same c) Less frequently How often would you visit the cinema if the entry would be free of charge (approximately)? a) Several times a week d) Once a month b) Once a week e) Once every two months c) Several times a month f) A couple of times a year What is the most important factor when choosing a cinema to go to? a) Location b) Ticket price c) Promotion (money off vouchers, loyalty points, …) d) Quality of that particular cinema (comfortable seats, screen size, sound and projection quality) e) Movie times f) Other: __________________________________________________________ Turn ¨¨¨

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Would you be prepared to go to another location, which is further from your usual cinema of choice, for a cinema which offers entry free of charge? a)Yes b) No Would you be prepared to accept a lower cinema projection/sound quality for free entry? a)Yes b) No What are your cinema snack (popcorn, sweets, drinks, etc.) preferences? a) I bring my own snacks to the cinema b) I buy the snacks at the counter of the cinema c) I usually skip the snack/eating when watching d) It annoys/distracts me when people eat around me Who are you visiting the cinema with? a) Friends b) Family c) Partner (dating) d) Alone e) Other: __________________________________________________________ Habits regarding the movies: I usually read movie reviews: a) yes b) no Friends usually ask me to recommend a movie: a) yes b) no I watch movies till the end credits stop rolling a) yes b) no I anticipate movies long before they open in cinemas a) yes b) no I have a substantial collection of DVDs a) yes b) no What is the most important factor when buying a movie (on DVD, Blu‐ray or digital download)? a) I liked the movie, because I have seen it before b) A friends recommendation c) Spontaneous purchase (“judge by the cover”)

d) Price promotion e) Other: ___________________________________________ Most movies I buy are: a) for me b) a gift for someone else Try to remember the last movie (DVD, Blu‐ray or digital download) you bought. I … a) have seen the movie before I bought it b) haven’t seen the movie before I bought it If you answered the previous question with “a”, where did you see the movie before? (if you answerd the previous question with “b” please skip this question) a) cinema b) TV c) PC (laptop/desktop) d) mobile device e) Other: __________________________________________________________ Which movie are you most likely to buy next? Have you seen the movie before? a) Yes b) No

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8. Executed Creative Solutions 8.1 Mood board (please turn)

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8.2 New media/experimental media Example of the a new/experimental media installation (PR Stunt):

Los Angeles, 1923, the birth place of cinema

8.3 Mobile Application (example)

London, 2009, the re-birth of cinema

8.4 Widget (example)

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8.5 Facebook Application (example); (please turn)

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