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A look at key trends and entertainment motivation for guests of Cirque du Soleil.

A look at key trends and entertainment motivation for guests of Cirque du Soleil.

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  • 1. Scott Reina ∙ Sjr05d@gmail.comCIRQUE DU SOLEIL: A CLOSER LOOK By Scott Reina
  • 2. Scott Reina ∙ Sjr05d@gmail.comIntroductionCirque du Soleil is a powerhouse global brand and a juggernaut within the entertainment industry. Theirshows have been attended by upward of 100 million guests in nearly 300 cities all over the globe. Thepurpose of this paper is not to critique or give outlandish suggestions regarding Cirque du Soleil but toshowcase critical thinking skills. Survey analysis only provided insights from an external point of viewand much of the data has many possible conclusions.I will be completing the Masters of Business Administration (MBA) program this December. My goal isto join the Cirque du Soleil team and to be part of the “talent behind the talent.” In addition to having astrong business background, I spent five years performing with Florida State University’s Flying HighCircus and have worked as a high and ground rigger for the last two years at the Tallahassee LeonCounty Civic Center. Beyond these skills, I have a strong passion for the performing arts. Cirque duSoleil would greatly benefit from my passion, analytical skills, and intimate understanding of circus.Both a resume and references are available upon request.
  • 3. Scott Reina ∙ Sjr05d@gmail.comTable of ContentsExecutive Summary....................................................................................................................................... 1Research Overview ....................................................................................................................................... 2Methodology................................................................................................................................................. 2Survey Demographics ................................................................................................................................... 2Entertainment Motivation ............................................................................................................................ 3Entertainment Market .................................................................................................................................. 5Current Business Environment ..................................................................................................................... 7Why People Have Attended a Cirque du Soleil Show ................................................................................... 9Disney World and Las Vegas ....................................................................................................................... 10Core Business .............................................................................................................................................. 12Repeat Guests ............................................................................................................................................. 13Lifetime Value of Guests ............................................................................................................................. 16Expansion .................................................................................................................................................... 18 High End Restaurant/Lounge .................................................................................................................. 18 New Permanent Location ....................................................................................................................... 20Branding and Competition .......................................................................................................................... 22Why People Have Not Attended a Cirque du Soleil Show .......................................................................... 24Recommendations ...................................................................................................................................... 27
  • 4. Scott Reina ∙ Sjr05d@gmail.comExecutive SummaryThe current business environment for Cirque du Soleil appears to be very different from thesurroundings that paved the way for much of the past company success. Guests that have attended aCirque du Soleil show, on average, earn and spend more money on entertainment; however, Cirque duSoleil’s guests report that they have decreased their spending on entertainment more than theircounterparts due to the recent recession. In addition, other external factors may pose a potential risk toCirque du Soleil, such as the possibility of a second recession or direct competitors imitating the Cirquedu Soleil business model.Cirque du Soleil’s CEO and founder, Guy Laliberté said, “We’ve gone through three recessions in Cirquehistory, and they were all growth periods for us.” To continue the pattern of recession growth Cirque duSoleil needs to focus on several key areas. Two of those areas include the 30 year old age segment andpeople who are motivated by thrill seeking when pursuing entertainment.Thrill seekers represent the largest group of repeat guests to attend a Cirque du Soleil show, animportant statistic considering there are numerous substitutes and competitors for Cirque du Soleil.The largest age group to identify themselves as thrill seekers is 30 year olds. Coincidentally, this is alsothe largest age group to visit Las Vegas. Utilizing deal-of-the-day coupons should prove to be aneffective tool to attract 30 year olds to attend their first Cirque du Soleil show. The 30 year old segmenttends to be more familiar with the technology associated with the coupons and represents a group thatwould more readily use the coupon specifically for a Cirque du Soleil show.The survey also indicates that more repeat guests have attended a permanent show as opposed to atraveling show. For expansion, guests identified New Orleans as a city that would have a strongpotential for success to house a new permanent Cirque du Soleil show. In addition, there are otheravenues for company expansion such as a greater presence in the high-end restaurant or loungebusiness. Expanding into a completely new market would require a great deal of planning to achieve astrategic fit of Cirque du Soleil’s core values but guests who have attended a show indicate a strongdesire to frequent such a restaurant or lounge.Upon departure, a quarter of the survey respondents could not remember the name of the show theyhad seen. Thus, branding, as a facet of marketing, seems to be a very important tool that could befurther utilized. Guests of a traveling show have a stronger tendency to be unable to recall the name ofthe show attended. Furthermore, inability to remember the name of the show is characteristic of guestswho never return to see another Cirque du Soleil performance. An equally important issue to address iswhy the potential guest did not attend a show in the first place. The data suggests the most commonreason a person has not attended a show is an innate misconception of Cirque du Soleil. Understandingguests’ motivations and attitudes are crucial to formulating an effective marketing strategy. 1
  • 5. Scott Reina ∙ Sjr05d@gmail.comResearch OverviewCirque du Soleil (CDS) is beginning to encounter direct competition in regards to their business model, asign of the maturity stage of the product life cycle. In the maturity stage, it becomes increasinglydifficult to grow sales. Thus, a lifestyle study of current and potential guests is crucial. Furthermore, thedevelopment of a guest retention strategy is needed. Identifying key consumer groups and assessingtheir attitudes and behaviors can help re-position and brand Cirque du Soleil in an even more attractiveway in order to gain the largest possible market share.In order to better understand the trends of both current and future Cirque du Soleil guests a cross-sectional, descriptive study was utilized. Data collection was completed via survey. The survey wascompleted by 514 different individuals from all over the United States.MethodologyDue to personal financial limitations, a non-probability sample was used for the survey. The primarymethod of survey distribution was snowballing through email. One of the disadvantages of snowballingis that extrapolating population preferences from the sample results has some inherent risk. The surveypopulation is 211,750,000, which represents a rough approximation of the United States’ populationaged 25 and above. Based on a sample size of 514 and a confidence level of 95% the confidence intervalfor the survey is 4.32%. Survey construction was completed using the web-based software programQualtrics.Survey DemographicsPrior to analyzing the results of the survey, it is crucial to understand the survey demographics. It isimportant to note that the two questions pertaining to income were optional and all of the other surveyquestions were required. Several of the demographic categories are more represented than others, butthis is to be expected for any survey; according to Dr. William Smith of San José State University, “Moreeducated and more affluent people are more likely to participate in surveys than less educated and lessaffluent people, women are more likely to participate than men, and white people are more likely toparticipate than non-white people.” Below are the survey demographics: Gender Age Marital Status Answer Response % Answer Response % Answer Response % Male 176 34% 20s 128 25% Single 159 31% Female 338 66% 30s 123 24% Married 305 59% Total 514 100% 40s 81 16% Separated 4 1% 50s 122 24% Divorced 41 8% 60s 51 10% Widowed 5 1% 70s + 9 2% Total 514 100% Total 514 100% 2
  • 6. Scott Reina ∙ Sjr05d@gmail.com Individual Income Total Household Income Answer Response % Answer Response % < $30,000 87 23% < $30,000 41 11% $30,000-$39,000 45 12% $30,000-$39,000 24 7% $40,000-$49,000 56 15% $40,000-$49,000 31 9% $50,000-$59,000 39 10% $50,000-$59,000 23 6% $60,000-$69,000 39 10% $60,000-$69,000 28 8% $70,000-$79,000 20 5% $70,000-$79,000 22 6% $80,000-$89,000 15 4% $80,000-$89,000 26 7% $90,000-$99,000 14 4% $90,000-$99,000 18 5% $100,000-150,000 36 10% $100,000-$150,000 82 23% $150,000 & above 27 10% $150,000 & above 68 19% Total 378 100% Total 363 100% Race Answer Response % White 445 87% African American 16 3% Hispanic 41 8% Asian or Pacific Islander 9 2% Native American 3 1% Total 514 100%State of Residence32 of the 50 states were represented in the survey. Florida received the largest representation carrying66% of total survey responses.Entertainment MotivationBeyond simple demographic data a better understanding of motivations for entertainment is helpfulwhen uncovering the reasons an individual has attended a Cirque du Soleil show. In attempt to captureentertainment motivation quantitatively, the survey asked the respondent to pick one of three optionsas their primary motivation for entertainment. These motivation options were previously identified byresearcher Jason Sit of the University of Southern Queensland. Sit utilized three primary categories forentertainment motivation in his study. Below are the three motivation options with a simple definitionwhich were provided in this survey. 3
  • 7. Scott Reina ∙ Sjr05d@gmail.com Figure 1 Thrill Seeking Socializing Escapism • To have fun • To be with people who • To give your mind a • To have excitement are interested in the rest • To be amused same things as you • To reduce stress • To have a great time • To be with people who • To get away from enjoy the same things as daily duties you Survey Responses for Entertainment Motivation Figure 2 Entertainment Motivation Response % Escapism 182 35% Socializing 171 33% Thrill Seeking 161 31%The survey responses for entertainment motivation were split relatively evenly among the threeoptions. However, when comparing the motivations for entertainment to Cirque du Soleil showattendance, a trend becomes apparent. The biggest entertainment motivation to attend a show isescapism. This trend would make sense as Cirque du Soleil works hard to develop a unique, chimericatmosphere for each show. Figure 3 Entertainment Motivation 38% 36% Escapism 34% Socializing 32% Thrill Seeking 30% Attended CDS Not Attended CDS Show Show 4
  • 8. Scott Reina ∙ Sjr05d@gmail.comFigure 4 breaks down entertainment motivation by age, and Figure 5 shows the dominant motivation ineach age segment. It is important to note that the 30’s age segment displays the highest overallrepresentation for thrill seeking. Figure 4 Entertainment Motivation 45% 40% 35% Escapism 30% Socializing 25% Thrill Seeking 20% 20s 30s 40s 50s 60s & Above Age Figure 5 Age Dominant Motivation for Entertainment 20’s Socializing 30’s Escapism, but the highest segment for Thrill Seeking 40’s Escapism 50’s Escapism 60’s and Above SocializingBased on the above figures, the 30’s age segment appears to be of importance. Escapism, the highestentertainment motivation category of an individual that has attended a Cirque du Soleil show, decreasesby age starting with this segment. While socializing, the highest entertainment motivation category ofan individual that has not attended a Cirque du Soleil show increases by age—also starting at the 30’sage segment. Understanding motivation for entertainment could prove to be very useful whenformulating a marketing strategy for Cirque du Soleil.Entertainment MarketIn the broadest of terms, Cirque du Soleil competes in what can be described as the “adults who go out”market. To better understand the competition within this market the survey asked the respondent,“Which event do you prefer for entertainment purposes?” The figure below shows the responses fromthis question. 5
  • 9. Scott Reina ∙ Sjr05d@gmail.com Figure 6 Entertainment Event Response % Sporting Event 199 39% Theatre Performance 143 28% Music Concert 100 19% Comedy Show 50 10% Magic Show 10 2% Symphony 10 2% Opera 2 0% Total 514 100% Figure 7 Entertainment Event 50% 40% 30% Attended CDS show 20% Not attended CDS show 10% Difference (Attended-Not 0% attended) -10%Based on figures 6 and 7, attending a sporting event was the most popular category for entertainmentevents and has the largest negative difference with respect to Cirque du Soleil attendance. Certainly,large growth potential for Cirque du Soleil lies within the sporting event category. This data supportsthe decision Cirque du Soleil made to throw out the first pitch at the Kansas City Royals-San DiegoPadres game on June 27th and the Tampa Bay Rays-Boston Red Sox game on July 17th. Beyond thepositive publicity for Cirque du Soleil, the unique and memorable first pitch ceremonies should prove tobe a successful marketing tool to reach a large untapped demographic.Below, figure 8 displays entertainment motivation for the four most popular event choices from thesurvey. 6
  • 10. Scott Reina ∙ Sjr05d@gmail.com Figure 8 Event Type by Entertainment Motivation 45% 40% 35% Escapism 30% Socializing Thrill Seeking 25% Theatre Sporting Concert Comedy Performance Event EventSporting events have the lowest percentage of patrons seeking escapism for entertainment. Thus, itappears other entertainment events may host individuals with a higher predisposition to attend a Cirquedu Soleil show based on entertainment motivation. Individuals from these other events may be morereadily persuaded to attend a Cirque du Soleil show. More thrill seekers attend concerts which, as thepaper later discusses, are a very important segment for Cirque du Soleil. With this in mind, perhapsCirque du Soleil could partner with various musicians to provide additional entertainment to concertguests in a similar manner to the baseball first pitch ceremonies. An ideal musician to partner withcould be Elton John, given that Cirque du Soleil has previously worked with him in composing theoriginal music score for the new Cirque du Soleil show, Zarkana.Current Business EnvironmentThe downturn of the economy has adversely impacted the spending trends of Americans. Looking at theBloomberg Consumer Confidence Index helps put the American sentiment in context. The most recentnumber released as of 8/25/2011 is -47, which is down from the number of -44 a year ago. The currentindex number appears to have stabilized near the record low of -54 dating back to January 2009. Theindex uses a scale of -100 to +100 and measures people’s willingness to spend. Generally, a low numbersuggests a contracting economy due to the decline in individual spending. In addition, economistssurveyed by CNNMoney are raising their recession risk estimates. In August, the CNNMoney survey ofeconomists found the average chance of a new recession to be about 25%, up from a 15% chance onlythree months ago. The main reasons for the increased chance of another recession are the recent slideand volatility in the U.S. stocks and S&P’s downgrade of the U.S. credit rating. 7
  • 11. Scott Reina ∙ Sjr05d@gmail.comWith consumer confidence down, discretionary spending on entertainment would likely be adverselyimpacted as well. Below, Figure 9 displays how survey respondents spend their money onentertainment. Figure 9 Income Spent on Entertainment 22 22 21 21 20 19 19 % 18 Mean 17 16 Median 15 14 Survey Total Attended Not Attended CDS Show CDS ShowIt is clear from the figure that people who have attended a Cirque du Soleil show spend more money onentertainment. However, if consumer confidence remains low, then a continued downward shift inentertainment spending is likely.Individuals who have attended a Cirque du Soleil show spend a greater percent of disposable income onentertainment and on average have a higher household income. Attend CDS Show Not Attend CDS ShowAverage Household Income Upper half of $70,000 bracket Upper half of $60,000Although Cirque du Soleil guests may have a higher household income and spend more money onentertainment they are not recession proof. In fact, Figure 10 indicates people who have attended aCirque du Soleil show agree, on some level, that they are now spending less on entertainment due tothe recent recession than their counterparts who have not attended a show. 8
  • 12. Scott Reina ∙ Sjr05d@gmail.com Figure 10 Entertainment Spending Declined Due to Recession 62% 63% 65% 57% 55% 45% Agree on some level 35% 29% 29% 30% Disagree on some 25% level Survey Total Attended Not CDS Show Attended CDS ShowWhy People Have Attended a Cirque du Soleil ShowFor a better understanding of why an individual has attended a Cirque du Soleil show a multipleregression analysis was conducted using some of the demographic data along with the followinginformation: 1. Whether or not the individual has visited Las Vegas or Disney World in the last 15 years 2. Whether the individual’s spending on entertainment has declined due to the recent recession 3. The percentage of income the individual spends on entertainment 4. Entertainment motivation 5. Entertainment event type The R square of the multiple regression was 0.09, which means the x-variables only explained 9% of the variance for attending a Cirque du Soleil production. Clearly, other variables impact an individual’s decision to attend a show, but the survey was not able to capture these variables. Examples of other variables such as mood or attitude of the individual could prove difficult to capture quantitatively. Below, figure 11 shows how much each variable contributed towards the explained variance. The larger the T-score, the more significant the x-variable is for the regression. 9
  • 13. Scott Reina ∙ Sjr05d@gmail.com Figure 11 X-Variables Regression T-Score Coefficient Entertainment event -0.001439824 0.104928 Decline of entertainment spending due to recession -0.008588127 0.548694 Household income -0.007788088 0.644619 Percent of income spent on entertainment -0.001308934 0.808608 Individual income -0.013108759 1.029792 Marital status -0.043962663 1.217637 Age 0.032253948 1.419954 Entertainment motivation 0.055496287 1.76514 Visited Disney World, last 15 years 0.166914257 2.916201 Visited Las Vegas, last 15 years 0.162973107 3.048874Important note: Dependent Variable= Yes/No Attend Cirque du SoleilFigure 11 shows the importance of visiting Las Vegas or Disney World on the consumer’s decision toattend a Cirque du Soleil show. This should not come as a surprise because between the two locationsthere are 8 permanent shows. Entertainment motivation and age, the two variables with the nexthighest T-scores, should prove to be more insightful for understanding characteristics of individualsattending a show. In addition, entertainment motivation and age should help explain why individualstravel to these locations. Due to this reasoning, entertainment motivation and age will be usedfrequently throughout the rest of the paper in cross tabulations.Disney World and Las VegasDisney World and Las Vegas, as noted from the multiple regression analysis, play an important role forCirque du Soleil. Figure 12 and 13 show the entertainment motivation and age, respectively, of theindividuals who have visited Las Vegas or Disney World in the last 15 years. 10
  • 14. Scott Reina ∙ Sjr05d@gmail.com Figure 12 Figure 13 Entertainment Age Motivation 30% 37% 25% 36% 35% 20% Visit Las Vegas, 34% Visit Las last 15 years Vegas, last 15 15% 33% 32% years 10% 31% Visit Disney 30% Visit Disney 5% World, last 15 World, last 15 years yearsThere are different primary entertainment motivations when visiting the two locations. The largestgroup to have visited Disney World is escapism while the largest group to visit Las Vegas is socializing.Below are findings relating to Disney World: • 73% of the survey respondents have visited Disney World at least once in the last 15 years. • 42% of the survey respondents have visited Disney World more than five times in the last 15 years. • 79% of the people that have visited Disney World in the last 15 years have also visited Downtown Disney Marketplace. • 60% of the people that have visited Downtown Disney in the last 15 years have attended La Nouba. • 45% of the Florida residents that have attended a CDS show have not attended La Nouba. • 47% of Florida residents are unaware that La Nouba is located in Orlando.There is strong potential for more Florida residents to attend La Nouba if they were made aware of theshow.Las Vegas is truly an anchor point for Cirque du Soleil as it currently houses seven permanent shows. • 51% of the survey respondents have visited Las Vegas in the last 15 years. • 56% of the survey respondents who have visited Las Vegas have visited more than once.Respondents who had visited Las Vegas were asked to identify themselves as one of the followingcategories: 1. Visited Las Vegas strictly for business 2. Visited Las Vegas for business but had time for pleasure as well 3. Visited Las Vegas strictly for pleasure 11
  • 15. Scott Reina ∙ Sjr05d@gmail.comFigure 14 breaks down the Las Vegas visitors by category and frequency of visits. Figure 14 Visit Las Vegas, Last 15 Years 80% 60% Strictly buisness 40% 20% Business but had 0% time for pleasure One Time More Than Strictly pleasure Once # of visitsWhile most visitors of Las Vegas visit strictly for pleasure, business visitors play an important role aswell. • There is a 16% increase among “business but had time for pleasure” visitors when visiting Las Vegas more than once. • There is a 14% decrease of “strictly pleasure” visitors when visiting Las Vegas more than once. • Zumanity, with 33% of the survey respondents, has more business visitors attending the show compared to the other Las Vegas shows.Core BusinessFor Cirque du Soleil the shows bring in about 60% of the revenue. Thus, it is apparent that the corebusiness for Cirque du Soleil is the show itself, but how do the permanent shows differ from thetraveling shows? At the time the survey was distributed there were 10 permanent and 9 travelingshows. Iris, Zarkana, and Michael Jackson: The Immortal World Tour were not open to the generalpublic yet. The survey, which only looked at shows in the U.S., attempted to identify which show modelhas a greater impact on revenue. Below, figure 15 demonstrates, by percentage, the show model withthe greatest number of repeat guests. 12
  • 16. Scott Reina ∙ Sjr05d@gmail.com Figure 15 Attended CDS Show More Than Once 90% 80% 70% 60% 50% Permanent Show Traveling Show Show TypeFigure 15 suggests that permanent shows, with respect to repeat guests, are the core business as morerepeat guests have attended a permanent show. One potential reason for the high number of repeatguests for permanent shows may be guest satisfaction. Guest satisfaction could be higher forpermanent shows as the venues are built specifically for the show which means rigging and othertransitions are seamless, while traveling shows are not afforded the luxury of seamless transitions.Another possible reason for more repeat guests of a permanent show could be the result of productdifferentiation. Oftentimes, Broadway shows have a touring version of the same show and this couldlead to confusion for Cirque du Soleil guests, particularly the guests of traveling shows. Perhaps, gueststhat have attended a permanent show realize that traveling shows are not the same show they havealready attended. However, if a guest has attended a traveling show, they may not attend anothershow because they assume that other Cirque du Soleil shows are identical due to the “Broadway”assumption. Thus, guests of permanent shows have a better understanding of the differentiationamong the shows than guests of traveling shows.Repeat GuestsRepeat guests are very important as they represent the core customers of Cirque du Soleil. Aspreviously identified, more repeat guests have seen a permanent show. However, to obtain a furtherunderstanding of some of the characteristics of repeat guests, a multiple regression analysis wasperformed. The same variables used in the first regression were used for the repeat guest regression.Overall, the variance explained by the variables was low as the R square value was .06. However, this isnot surprising as none of the regression variables explain guest satisfaction after attending their firstCirque du Soleil show. Below, figure 16 shows the T-score for each of the variables. Once again, thegreater the T-score the more significant the x-variable is for the regression. 13
  • 17. Scott Reina ∙ Sjr05d@gmail.com Figure 16 X-Variables Regression T-Score Coefficient Visit Disney World, last 15 years -0.025383267 0.297 Individual income -0.0076763 0.438 Entertainment event 0.011295058 0.623 Spending decline due to recession 0.017418332 0.817 Marital status 0.042634752 0.854 Visit Las Vegas, last 15 years -0.066617802 0.873 Age -0.028982275 0.926 Entertainment motivation 0.046806688 1.088 Total household income 0.037338161 2.207Important note: Dependent Variable= how many times an individual has attended a Cirque du Soleilshow.Total household income contributed the most towards the explained variance of the regression. Inorder to better understand how the other variables relate to total household income, a correlation wasperformed. Figure 17 Variable Correlation to Household Income Entertainment motivation 0.008 Visit Disney World, last 15 years 0.017 Entertainment event 0.087 Spending decline due to recession 0.141 Marital status 0.236 Visit Las Vegas, last 15 years 0.313 Age 0.424 Individual income 0.718Below are several suggestions from the correlation: • Household income has no relationship with entertainment motivation and entertainment event. o Suggestion: Individual’s motivation for entertainment and entertainment event is not influenced by income. • Household income has no relationship with whether or not the individual has visited Disney World. o Suggestion: Household income does not factor into the decision to visit Disney World. • There is a weak positive relationship between household income and visiting Las Vegas. o Suggestion: Income may factor into the decision process when deciding to visit Las Vegas as a greater household income has a greater tendency to visit Las Vegas. 14
  • 18. Scott Reina ∙ Sjr05d@gmail.com • There is a weak positive relationship between age and household income. o Suggestion: The older the individual, the higher the household income.The correlation between household income and visiting Disney World or Las Vegas is an importantrelationship to note. Even though both Disney World and Las Vegas are popular tourist destinations,there seems to be a different approach when deciding to visit each location.The regression analysis identified various variables related to repeat guests on an aggregate level, butlooking at repeat guests with respect to one variable should also be insightful. As identified in the firstregression, entertainment motivation is important as it attempts to uncover deeper reasons for seekingentertainment than demographic data alone. One should look at the entertainment motivations ofrepeat guests as it had the second highest T-score in the regression, as well. Below, figure 18 depictsthe various motivations for entertainment with respect to the number of Cirque du Soleil showsattended. Figure 18 Attended CDS Show 40% 35% 30% One time More than once 25% 20% Escapism Thrill Seeking SocializingFigure 18 is very important, as several suggestions can be drawn from the data. As noted earlier, moreescapism individuals have attended a Cirque du Soleil show and this holds true for individuals who haveonly attended one show, but this is not the case when guests have attended multiple shows. Thrillseeking, which represents the smallest percentage of one time guests, is the largest category for repeatguests. This data would suggest that while the original allure to attend a Cirque du Soleil show is thefantasy world portrayed in the production, it is the thrills of the show that keep the guests coming backto see another show, as evidenced by the number of thrill seekers who are repeat guests.Another possible suggestion when referencing figure 4 (which compared entertainment motivation byage) and figure 18, is marketing to the 20 and 60 plus age groups is not as effective because they areprimarily motivated by socializing when seeking entertainment. While individuals of the 20 and 60 plusage group may be interested in a Cirque du Soleil show, they are more likely to be a one-time guest. On 15
  • 19. Scott Reina ∙ Sjr05d@gmail.comthe other hand, marketing to the other age groups (30’s, 40’s and 50’s) is more cost effective based ontheir propensity to become a repeat guest. Figure 19 Difference More than one time One Time (repeat – one time guests) Escapism 36% 40% -4% Thrill Seeking 37% 23% 14% Socializing 27% 37% -10%Figure 19 indicates socializing has the largest negative difference for attending a show. For the survey,socializing was defined as being with other people who are interested or enjoy the same things as you.Perhaps, to increase the percentage of repeat guests who prefer to socialize, a more enticing group ratecould be offered to guests who have already attended at least one show.It would be interesting to look at the number of repeat guests for the music themed Cirque du Soleilshows (Viva Elvis, Love, Michael Jackson: The Immortal World Tour) compared to the other shows sincemore thrill seekers, the largest group of repeat guests, prefer to attend concerts than the otherentertainment events (figure 18).Lifetime Value of GuestsAs earlier discussed, repeat guests is an important segment for Cirque du Soleil. Over a lifetime, asatisfied guest will continually contribute towards company revenue and further reinforce Cirque duSoleil’s positive reputation. To capture the lifetime value of a guest it is important to reach out to youngindividuals who have the highest predisposition to become a repeat guest. As previously identified,thrill seekers have the highest propensity to become repeat guests, and 30 year olds are the highestpercentage of thrill seekers.The concept of the deal-of-the-day coupon has taken the internet by storm. Groupon, the leading deal-of-the-day site was called the “fastest growing company ever” by Forbes magazine. The deal-of-the-daycoupons are popular because they are an effective means of attracting new customers. Figure 20identifies survey respondents who have used a deal-of-the-day coupon by age. 16
  • 20. Scott Reina ∙ Sjr05d@gmail.com Figure 20 Used a Deal-of-the-day Coupon, by Age 6% 20s 30s 22% 32% 40s 14% 50s 26% 60s & AboveThe 30 year olds are the second largest group to have used deal-of-the-day coupons. Figure 21illustrates which age groups are “very familiar with deal-of-the-day coupons” and “very likely to use adeal-of-the-day coupon specifically for Cirque du Soleil.” In both categories, the 30 year olds are againthe second highest group only surpassed by the 20 year olds. Figure 21 Deal-of-the-day Coupons 40% 35% 30% Very Familiar with 25% Deal-of-the-day 20% coupons 15% Very likely use Deal-of- 10% the-day coupon for 5% CDS 0% 20s 30s 40s 50s 60s & AboveFigure 21 shows a decline by age until the 50 year old group, at which point there is an increase in bothfamiliarity and likeliness to use the coupons for Cirque du Soleil. The 50 year old age group alsorepresents the second highest group to visit Las Vegas (behind 30 year olds). 17
  • 21. Scott Reina ∙ Sjr05d@gmail.com Figure 22 Very familiar w/ deal-of- Very likely to use a deal-of- Difference Age the-day coupons the-day coupon for CDS (Familiar –Use) 20’s 37% 37% 0% 30’s 26% 28% -2% 40’s 14% 9% 5% 50’s 19% 20% -1% 60’s & Above 4% 5% -1%Based on the percent difference of the two categories the 30 year old age segment has the potential tohave a high conversion rate from coupon familiarity to using the coupons for Cirque du Soleil. Thisindicates that these coupons could be successful in capturing a very important age segment.ExpansionHigh End Restaurant/LoungeCirque du Soleil has recently been marked by company growth as several new shows have opened eachyear. Cirque’s president and COO Daniel Lamarre said, “We like to take risks. It’s part of who we are.Every time we are in a comfort zone, we will find a way to get out, because being comfortable in ourbusiness is very, very dangerous.” In agreement with this statement, Cirque du Soleil could positionitself to move further into other forms of entertainment such as the high end restaurant or loungebusiness. Currently, Cirque du Soleil is involved with two lounges in Las Vegas: Revolution and Gold.Figure 23 illustrates how likely the survey respondents would dine at a high end Cirque du Soleilrestaurant or lounge. 18
  • 22. Scott Reina ∙ Sjr05d@gmail.com Figure 23 Dine at High End CDS Restaurant or Lounge 40% 30% 20% 10% Attended CDS show 0% Not attended CDS show • 67% of guests who have attended a show would also be likely, at some level, to dine at a Cirque du Soleil high end restaurant or lounge. • 56% of guests who have not attended a show would be likely, at some level, to dine at a Cirque du Soleil high end restaurant or lounge.Figure 24 graphs the percentage of one time and repeat guests who would likely dine at a Cirque duSoleil high end restaurant or lounge. Figure 24 Dine at a High End CDS Restaurant or Lounge 40% 30% 20% 10% Attended CDS show once 0% Attended CDS show more than once 19
  • 23. Scott Reina ∙ Sjr05d@gmail.com67% of both groups indicate they would likely dine at such a venue on some level. Furthermore, therepeat guests reflected a slightly higher percentage of patrons who would be very likely to dine at one ofthese high end venues, 15% compared to 11%.Figure 25 graphs an individuals’ likeliness to dine at a high end Cirque du Soleil restaurant or loungebased on entertainment motivation. Figure 25 Very Likely Dine at High End CDS Restaurant or Lounge 60% 50% 40% Attended CDS show 30% 20% Not attended CDS 10% show Escapism Socializing Thrill Seeking Entertainment MotivationAdditionally, the lounge or restaurant could be an effective means of reaching an audience that isunfamiliar with Cirque du Soleil. Based on Figure 25, thrill seekers would be very likely to dine at aCirque du Soleil restaurant or lounge regardless if they have attended a show. Thrill seekers are initiallymore reluctant to attend a Cirque du Soleil show (Figure 18). Introducing this population to the Cirquedu Soleil brand through a restaurant/lounge is a viable promotional option.One option to consider is placing the restaurants or lounges in locations that do not have permanentshows. The Gold and Revolution lounges are primarily used to compliment the respective Cirque duSoleil shows in Las Vegas, and having a lounge in another location could increase Cirque du Soleilawareness of a segment that otherwise would not be enticed to attend a show.New Permanent LocationAlready identified as the core business, permanent shows represent a way to continually expand Cirquedu Soleil. Cirque du Soleil is currently looking for a location in England for a new permanent site.However, in the midst of the global economic downturn, the British economy is weaker than the UnitedStates’ based on the most recent GDP reports. The second quarter 2011 GDP numbers for the UnitedStates and Britain were 1.28% and 0.8%, respectively. Considering the United States appears to housegreater economic potential for a permanent show, the survey attempted to identify the most promisinglocation in the U.S. 20
  • 24. Scott Reina ∙ Sjr05d@gmail.comBased on tourism numbers, five cities were selected for survey respondents to rank as the city theywould most likely visit to attend a new permanent Cirque du Soleil show. Only guests who have alreadyattended a show were asked this question. Below are the five cities: 1. Chicago 2. Miami 3. New Orleans 4. New York City 5. San FranciscoOn June 29th New York City hosted a brand new show, Zarkana, in the Radio City Music Hall, butcurrently the show is only seasonal so the survey still listed New York City as an option for a full timepermanent location.Figure 26 shows the results for each city using a weighted point system. Figure 26 Percent st nd rd th th 1 2 3 4 5 Weighted point system Total of (Place Points leader votes) pointsNew Orleans 85 77 44 55 39 (85*5)+(77*4)+(44*3)+(55*2)+39 1,014 100%New York 85 82 25 44 14 930 92%City (85*5)+(82*4)+(25*3)+(44*2)+14Miami 65 60 34 58 83 (65*5)+(60*4)+(34*3)+(58*2)+83 866 85%Chicago 37 46 89 79 49 (37*5)+(46*4)+(89*3)+(79*2)+49 843 83%San Francisco 28 35 58 64 115 28*5)+(35*4)+(58*3)+(64*2)+115 697 69%It is clear that Cirque du Soleil wants to have a full time permanent show in New York City based on CEOGuy Laliberté’s quote, “We want something solid and permanent in the entertainment capital of theworld, and we are hoping to have a presence in New York for 12 months a year.” However New Orleans,based on this survey, also appears to have strong potential for a permanent Cirque du Soleil presence.Cirque du Soleil’s ability to reinvent the brand with each new production, combined with New Orleans’uniquely rich culture and history, would seem to lend itself well to a permanent show. It is important tonote that the majority of survey respondents are from the Southeast, which could have affected theoutcome for city selection.Figure 27 illustrates which city received the most first place votes by entertainment motivation. 21
  • 25. Scott Reina ∙ Sjr05d@gmail.com Figure 27 1st Place Votes by Entertainment Motivation 35% 25% Thrill Seeking 15% Escapism 5% Socializing New New York Chicago Miami San Orleans City Francisco CityBased on figures 18 and 27, New Orleans could have the highest number of first-time Cirque du Soleilguests and a high number of repeat guests. This furthers the suggestion that New Orleans has strongpotential to host a permanent Cirque du Soleil show. In addition: • Louisiana is a “Right to Work” state, while California, Illinois, and New York are “Forced- Unionism” states. • Louisiana is a leader in offering tax incentive programs to the entertainment industry. o The State Department of Economic Development for Louisiana is offering the nation’s first tax credits to concert and theatrical productions (35%), which will ultimately reduce production costs. • New Orleans has the lowest cost of living as compared to the other five cities: o New Orleans 97 o Miami 108 o Chicago 115 o San Francisco 164 o New York City 218According to Kilpinger’s Personal Finance, 100 is the national average for the cost of living index.Branding and CompetitionUnfortunately, a different business environment is on the horizon for Cirque du Soleil than theenvironment that paved the way for much of the company’s success. A major reason for the differenceis the increased competition. Cirque du Soleil has lost much of its uniqueness as many similar shows areimitating the business model. Some of the notable imitating competitors are La Rêve and 7 Fingers. 22
  • 26. Scott Reina ∙ Sjr05d@gmail.comBased out of Montreal, like Cirque du Soleil, 7 Fingers currently has 7 shows, all of which combineartistry and acrobatics. 7 Fingers is gaining national acclaim and it recently had its show Traces featuredon the hit TV show America’s Got Talent. La Rêve’s intimate imitation can be contributed to showcreator Franco Dragon, who also created several Cirque du Soleil shows. Comments on YouTube videosof La Rêve also show confusion as to whether or not La Rêve is a Cirque du Soleil show. In addition, LaRêve is located across the street from Mystère and competes directly with Cirque du Soleil on price.Several individuals cite the reason they did not attend a Cirque du Soleil show was because of thecheaper ticket price of La Rêve.The increased competition, along with the downturn of the economy, puts a stark focus on branding forCirque du Soleil as it is both imperative to retain current guests and to ensure new ones. Jessica Berlin,a social media manager for Cirque du Soleil said, “Our fans are an extension of our brand.” However, if aCirque du Soleil guest does not remember the name of the show they attended, the guest is unlikely toattend another show. 25% of survey respondents do not remember the name of the show theyattended. Figures 28 and 29 compare the number of repeat guests to whether or not they rememberedthe name of the show attended. Figure 28 Figure 29 Remember the Name Do Not Remember the of the Show Name of the Show Attended CDS Attended CDS show once show once 31% 33% Attended CDS Attended CDS 69% 67% show more show more than once than onceBased on the above figures, more repeat guests remember the names of the shows attended. A goal forcompany branding should involve having more guests identify and remember the name of the showsattended.Figure 30 shows which entertainment motivation group is least likely to remember the name of theCirque du Soleil show attended. 23
  • 27. Scott Reina ∙ Sjr05d@gmail.com Figure 30 Do Not Remember the Name of the CDS Show Attended 40% 30% 20% Escapism Socializing Thrill Seeking Entertainment MotivationEscapism represents the entertainment motivation group least likely to remember the name of theshow attended, which parallels the previously mentioned data indicating the escapism group has thesecond lowest percentage of repeat guests.Why People Have Not Attended a Cirque du Soleil ShowTo capture future guests it is helpful to identify why people have not attended a Cirque du Soleil show.The survey asked the respondent to pick the most contributing reason as to why he/she has notattended a show from the following three options: 1. Lack of interest in Cirque du Soleil 2. Not familiar with Cirque du Soleil 3. Ticket prices and other expenses to see a Cirque du Soleil show are too expensiveBelow, figure 31 shows the results. Figure 31 Reasons For Not Attending a CDS Show 70% 65% 60% 50% 40% 30% 17% 17% 20% 10% Lack of Interest Not Familiar w/ Ticket Prices and CDS Other Expenses Too Great 24
  • 28. Scott Reina ∙ Sjr05d@gmail.comFrom figure 31 it is obvious that ticket prices and other expenses are the main deterrent for attending ashow. Prior to this question there were three scale questions asking the following: 1. On a scale of 1-7 (1 being very unfamiliar and 7 very familiar) how familiar are you with Cirque du Soleil? 2. On a scale of 1-7 (1 being very uninterested and 7 very interested) how interested are you in attending a Cirque du Soleil show? 3. On a scale of 1-7 (1 being strongly disagree and 7 strongly agree) do you agree it is too expensive to attend a Cirque du Soleil show?Using the answers to the scaled questions a multiple regression analysis was performed. The R squarefor the regression was 0.317. This means that 31.7% of the variance for not attending a Cirque du Soleilshow is explained by the three options. Figure 32 shows the T-scores for the multiple regression. Figure 32 X-Variables Regression T-Score Coefficient Unfamiliar with Cirque du Soleil 0.034132 0.990043 Too expensive 0.207444 5.421467 Not interested in Cirque du Soleil 0.188438 5.61571Important note: Dependent Variable= reason for not attending a Cirque du Soleil showBased on the T-scores, the most significant reason as to why someone has not attended a Cirque duSoleil show is not ticket prices but not being interested in attending a show. After the respondentidentified a reason for having not attended a show, he/she was exposed to Cirque du Soleil in the surveythrough a short video trailer of Totem. After the video trailer the respondents were required to givetheir impressions of Cirque du Soleil in a short, free-written response. Below are several of theresponses from respondents who identified themselves as not interested in Cirque du Soleil. • “Interesting. Not what I pictured when I thought of Cirque du Soleil.” • “Very spectacular” • “It looks very interesting and fun. Im intrigued by the ways that the human body can perform and act as art.” • “Interesting. Thought it was more of an old time circus, but this might be fun to go see.” • “Very unique mix of storyline, acrobatics and costumes.” • “Looks cool” • “It looks like fun and entertaining” • “Interesting” • “Exciting” • “Very colorful and exciting” • “Very enlightening and entertaining” • “Unique, athletic, magical” 25
  • 29. Scott Reina ∙ Sjr05d@gmail.com • “Concept performances. The performances look to be very exciting and would be fun to see in person. “ • “Well performed, great entertainment, huge talent, visual excellence”After reviewing the free-written responses, it appears that some of the “non-interested” respondentsenjoyed the video clip. Perhaps the lack of attendance does not reflect a lack of interest but rather aninaccurate notion of Cirque du Soleil. If more people were to be exposed to Cirque du Soleil, thenperhaps more people would be interested in attending a show. If attendance levels for a permanentshow were to drop below a pre-determined level over time, an increase in media marketing may keepshow attendance high even with intense competition and economic downturn.Figure 33 identifies individuals who cited a lack of interest to attend a Cirque du Soleil show byentertainment motivation. Thrill seeking is one of the highest groups to express a lack of interestregarding Cirque du Soleil. This further perpetuates the idea that a lack of understanding of the trueessence of Cirque du Soleil is a large barrier to attracting first time guests. Exposing thrill seekers to thethrills and excitement of a Cirque du Soleil show should be an effective marketing strategy. Figure 33 Lack of Interest to Attend CDS Show 35% 30% 25% Escapism Socializing Thrill Seeking Entertainment Motivation 26
  • 30. Scott Reina ∙ Sjr05d@gmail.comRecommendationsIt is not possible for Cirque du Soleil to appeal to everyone. With this in mind, Cirque du Soleil shouldonly target the various segments that have the highest predisposition to attend a show. Based on thesurvey data, Cirque du Soleil should refrain from targeting the 20 year old and 60 plus age segments.This strategy would not only increase marketing returns but also increase all business metrics.It is recommended that Cirque du Soleil utilizes deal-of-the-day coupons but in a strategic fashion.These coupons are loss leaders and should target individuals who have a strong chance of becoming arepeat guest and would otherwise not attend the show. Based on the data, 30 year olds should be thetarget of the deal-of-the-day coupons.From an outside perspective, it appears that Cirque du Soleil has traditionally relied on word of mouthas a primary means of marketing. The biggest advantage for using word of mouth advertising is costeffectiveness, but it has many downsides. It can be challenging to accurately portray a consistentmessage regarding the brand when relying on word of mouth, as evidenced by survey respondents priorto being exposed to a short clip of Totem. Expanding an effective marketing campaign for Cirque duSoleil during an economic downturn could prove to pay off in the long run.Ticket prices will always be a deterrent to attend a show. Other than strategically utilizing the deal-of-the-day coupons Cirque du Soleil should not drop ticket prices to attract a larger market share. Instead,Cirque du Soleil should rely on carefully crafting a marketing strategy to overcome other objections fornot attending a show, such as misconceived perceptions about the show.It is also recommended that Cirque du Soleil looks into the possibility of utilizing New Orleans as alocation for a new permanent show. For example, Zed could be re-branded as a new show located inNew Orleans as it is coming to a close in Japan at the end of this year. However, Cirque du Soleil needsto be mindful of over expansion as an over leveraging of resources during a contracting global economyhas significant risks. 27