S e r v i c e s M a r k e t i n g C a s e A n a l y s i s

Cineplex Entertainment The Loyalty

Program
Group No.12
Harshitha | DM15217
Gaurav Dutta | DM15219
Rohit Rakshit | DM15247
Keerthi .P | DM15267
R.S.Pavithra | DM15134
Session
18
08
Fall
Situation Analysis:

Sarah Lewthwaite, Marketing Director, Cineplex Entertainment, was approached
by CEO, Ellis Jacob for the development of a loyalty program
As the CHAIR of the Loyalty Steering Committee, Lewthwaite is supposed to
present her recommendations to the committee
USP of Cineplex:
Offered An exceptional entertainment experience E.g. Food Counters,
Arcade
Focused on developing NEW MARKETS
o To showcase live events
o Operas, Sports etc.
The timeline of Cineplex to the current year:




















Problem Statement:
To explore ways to increase the market share
To explore new ways to attract the 13 24 segment
The company had to make a decision from the following options:





Program
Partner:
Internal
Development
Flight Miles
Scotia Bank
Reward
Structure:
Options 1-4
Database
Vendor:
Alpha
Kappa
Gamma
Marketing
Communication:
In-theatre
advertising
Newspaper
Radio
Online
Grassroots
Launch
Regional
National
1979
Founded Cineplex
Odeon
A small chain of
movie theatres
2003
Onex Corporation
(major ownership
claim in Cineplex)
merged with Galaxy
Entertainment Inc

Ellis Jacob New
CEO
2005
Acquired its largest
competitor
FAMOUS PLAYERS

Became CINEPLEX
ENTERTAINMENT

64 % market share
40 mln visits/year
Analysis:
Customer Relationship Management:
The following aspects triggered the need for CRM-



Apart from those mentioned above, the following aspects troubled the company too:
1. Revenue:
Inconsistency in the revenue generated
Sharp dip in Net Income

2. Weak Box Office Attendance:
Weak attendance through out industry
Cineplex faced various attendance levels based on the genre of new movies
3. No Central Database:
No central database for better customer service and retention
Program Partner Choice:

PARAMETERS INTERNAL
DEVELOPMENT
FLIGHT MILES SCOTIABANK
COST $5.5mn + Diminishing
costs in subsequent
years
$5 mn + $0.09
/transaction+ data access
cost
$3mn + $1.7mn + $1.9mn
CUSTOMER
REACH
5.3 million unique
visitors
7 million 6.8 million customers
OWNERSHIP Complete None None
BENEFITS
Develop targeted campaigns
to increase marketing
effectiveness, such as
restructuring of products and
services
Share valuable information
with concession suppliers
and movie distributors
Reduce cost in marketing
communications and
customer retention
THREATS
Film Piracy
Movie Rentals
Concerts and sports events
CHALLENGES
Data control and ownership
Resource Requirements
Monetary and human
Time frame Length of time
required (conclusive info
only from a minimum
500000 members)
0
100000
200000
300000
400000
500000
600000
2003 2004 2005
C
a
n
a
d
i
a
n

$

Total
Revenue
Cost of
Operations
Gross
Income
Net Income
PROS 1. Unlimited data
access and control
2. Would know ones
brand the best
1. Immediate entrance to
data of 7 mn people and
other Flight Miles
partners
2. Offer of $250000 by
Flight Miles towards
marketing campaign
3. Easy reach to large
number of Canadians
already widespread
awareness built(exhibit
4)
4. No need to carry
multiple cards
1. One of the BIG FIVE banks in
Canada
2. 50 50 COST SHARING
would reduce associated RISKS
3. Leverage on earlier
corporate sponsorships
4. Prior experience with data
management companies Gold
Card
5. No requirement to open bank
accounts but each debit/credit
card holder issued Cineplex
loyalty card
6. No CONTRACTUAL EXIT
BARRIERS
CONS 1. Financial risk of
unredeemed points
2. Difficult to divest the
program
3. New department
and database required
4. Development
timeframe
1. Lengthy commitment of
3 yrs
2. No easy exit option
3. Would lose all access to
accumulated data on
exiting
4. Extra cost incurred in
accessing database and to
issue points
1. Naming rights on 3 major
theaters
2. Exclusive agreements on
bank machines in all theaters
3. Customers wouldnt like
carrying multiple cards
4. Constrained decision making
power
5. No access to individual level
banking information

Reward Structure:

Parameter Option 1 Option 2 Option 3 Option 4
Sign up points 500 100 0 250
Points per movie
transaction
100 100 0 100
Membership fee 0 One time $2 Annually $5 0
Permanent concession
discounts
0 10% 15% 0
Value benefits on
reaching highest point
$51.77 on
reaching 1500
points
$68.37 on
reaching 2500
points
Nil $62.22 on
reaching 2000
points
Value benefit per
movie transaction
3.45=51.77/15 2.73=68.37/25 0 3.11=62.22/20
Cost to company $59.94 $99.91 - $79.92
Most attractive option
considering all
available attributes
No No No Yes
Database Vendor:

Alpha Kappa Gamma
Leading marketing
firm, specializing in
LOYALTY
PROGRAMS, In
Canadian market
since 1980
Clients like
American Express,
Coca Cola,
Microsoft
Held Focus Groups
-> Site features
(Site, Navigation,
Up-to-date) ->Used
info in conjunction
with specs to
PROPOSE
COST - $500,000
(One time) +
$40,000 / month
(for website
upkeep)

One of the largest
global marketing
agencies, known for
managing data for
Royal Bank of Canada
Undisputed industry
leader in MOBILE
MARKETING, which
links strongly to
Cineplexs target
market
High standards in
DATA PRIVACY and
DATA SECURITY. Also
had entertainment
industry experience
Two Sites Member
Acquisition and
Member Retention
COST - $1,000,000

Competitor in Canadian
marketplace for 4 years,
developed CRM for CITI
Financial, Kaplan
University etc
Special marketing
platform that supported all
aspects of email
management and e
communication campaigns
Track members on an
ongoing basis through
different promotional
mediums, such as web
advertisements and
respond immediately to
members through
messaging for those leaving
the site
FIXED PRICE, FIXED TIME
MODEL , but unable to
provide costs for data
management
Preliminary planning and
design costs estimated at
around $200,000


Marketing Communications:
The company had a budget constraint of $300,000.

MODE COST SALIENT POINTS COURSE OF ACTION
IN THEATRE
ADVERTISING
None No costs associated
Excellent way to reach the
in house audience
Hosted 5.3mn guest
annually
Could reach ONLY
EXISTING CUSTOMERS
Promotion Options
Presented
during pre-
show
Point of
purchase
displays
Backlit
posters
Websites
NEWSPAPER Avg. Weekly Cost
for Half Page
Print Adds
I. Medium Markets
- $1200
II. Large Markets -
$3600
National newspaper
didnt have the reach to
markets where Cineplex
operated
Through regional
newspapers, several more
markets can be reached
In which
newspapers
to advertise
The message
and
frequency of
the insertions
+ Development cost -
$850/add
Regional newspapers
would incur more costs
RADIO 30 sec
commercial /
Week
I. Small and
Medium - $160
II. Large - $225
Development of
radio adds -
$1100/ city
Could achieve significant
coverage in key markets
Already used this medium
in rural theater markets
Lethwaite confident to
negotiate for FREE
ADVERTISEMENT SPACE

ONLINE
ADVERTISING
Variable costs according
to format and size
Cineplex Website
Google, Muchmusic.ca,
MTV.ca etc

GRASS ROOT
INITIATIVES
Unsure of the cost Word of Mouth publicity
Promotions in college and
highly visited areas
Corporate Sponsorships


Launch:
Regional launch
o Would be less riskier
o Would give Cineplex an opportunity to resolve problems before full
implementation
o It would be more expensive, but would allow Cineplex to stretch funds
over a longer period
National Launch
o Cost Efficient
o Partnership with Scotiabank reduces financial risk and increase
coverage
o Can accrue revenue faster
o POS platform rollout Supported national Rollout

Recommendation:
Program Partner: Scotia Bank
Reward Structure: Option 4
Marketing Communication: Radio, Online, grassroot initiatives
Launch: National Launch