Evolution of Circus Industry

Cirque du Soleil very successfully entered a structurally unattractive circus industry. It was
able to reinvent the industry and created a new market space by challenging the conventional
assumptions about how to compete. It value innovated by shifting the buyer group from
children (end-users of the traditional circus) to adults (purchasers of the traditional circus),
drawing upon the distinctive strengths of other alternative industries, such as the theatre,
Broadway shows and the opera, to offer a totally new set of utilities to more mature and
higher spending customers. At the same time it reduced its cost structure by eliminating
costly elements of circus, achieving both differentiation and low cost.
Cirque du Soleil was created in 1984 by a group of street performers. Despite a long-term
decline in the circus industry, Cirque du Soleil profitably increased revenue twenty-two-fold
over the last 10 years by reinventing the circus. Rather than competing within the confines of
the existing industry or trying to steal customers from rivals, Cirque developed uncontested
market space that made the competition irrelevant. Cirque created what the authors call a blue
ocean–a previously unknown market space. In blue oceans, demand is created rather than
fought over. There is ample opportunity for growth that is both profitable and rapid. In red
oceans–that is, in all the industries already existing–companies compete by grabbing for a
greater share of limited demand. As the market space gets more crowded, prospects for
profits and growth decline. Products turn into commodities, and increasing competition turns
the water bloody. In less than 20 years Cirque du Soleil has achieved a level of revenues that
took Ringling Bros. and Barnum & Bailey, the global champion in circus industry –more than
one hundred years to attain.
The most remarkable thing was that it was achieved in an unattractive industry where
alternative forms of entertainment ranging from various kinds of urban live entertainment to
sporting events to home entertainment was easily available. Another important reason for its
success was that it did not win by taking customers from already shrinking circus industry or
by competing with its competitors but by creating an uncontested new market space for itself.
It appealed to a whole group of audience including children, adults and corporate clients.
At the time of its debut, other circuses focussed on benchmarking one another and
maximising their share of already shrinking demand by tweaking traditional circus acts. This
included securing more clowns and lion tamers which resulted in increasing cost without
changing the circus experience.
These efforts were made irrelevant when Cirque du Soleil appeared. Neither an ordinary
circus nor a classic theatre production, it did not follow a conventional logic but believed in
creating a circus with even greater fun and thrills. It sought to offer people the fun and thrill
of the circus and the intellectual sophistication and artistic music and dance of the theatre at
the same time. Cirque du Soleil gained a new understanding not only of circus customers but
also of circus noncustomers. This created a whole new circus concept that broke the value
cost trade-off and created a new market space. The other circuses focussed on offering animal
shows, hiring star performers, presenting multiple show arenas in the form of three rings, and
pushing aisle concession sales whereas Cirque du Soleil did not believe in all these factors as
it thought that these events are taken for granted in a circus show. However, animals act
started creating public discomfort and were the most expensive ones. When the circus
industry focussed on featuring stars on the shows it did not clicked in the minds of public
whereas the whole arrangement started creating angst among the spectators. The aisle
concession sales appeared to be a good way to generate revenue but the high prices
discouraged the audience made them feel cheated.
At the end traditional circus came down to only 3 factors: the tent, the clowns, and the classic
acrobatic acts such as wheelman and short stunts. So, Cirque du Soleil kept the clown for
enchanting humour, glamorised the tent, change the design of the circus symbol with a
glorious external finish and a higher level of comfort in the tents. Unlike other circus shows
where the events are unrelated Cirque du Soleil had a theme and story line. It borrowed ideas
from Broadway shows like featuring multiple productions and giving people a reason to
come to the circus more frequently. Thus it created demand for the circus industry.