MMICC 2010 - WSH

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MMICC 2010 - WSH

  1. 1. Connor Bogin, Linda Li, Derrick Nation & Beth Richard
  2. 2. Agenda Situation Short-Term Long-Term Recommendations Implementation Financials Situation Short Term Long Term Recommendations Implementation Financials
  3. 3. Background • Extreme uniqueness • Sustainable competitive advantage – Creative independent cells • Strong partnerships • Near perfect record Situation Short Term Long Term Recommendations Implementation Financials
  4. 4. Challenge To globally expand the Cirque du Soleil experience while maintaining a unique brand to draw loyal guests. Situation Short Term Long Term Recommendations Implementation Financials
  5. 5. Barriers to Goals • Global recession – Decreased ticket sales – Decline in luxury entertainment market • Specific target market – Business travelers – Sophisticated adults with disposable income Situation Short Term Long Term Recommendations Implementation Financials
  6. 6. Strategy Strategy Long-Term Short-Term Situation Short Term Long Term Recommendations Implementation Financials
  7. 7. Short Term Navigating the Recession Situation Short Term Long Term Recommendations Implementation Financials
  8. 8. Short-Term Situation Situation Criteria • Revenues at 15 year low • Return to circus nouveau roots • Hints of recovery from global • Maximize current show recession attendance • Luke-warm reception of newest • Minimal risk and expense show: Banana Schpeel • Position for long-term growth Situation Short Term Long Term Recommendations Implementation Financials
  9. 9. Short-Term Options Change Ticket Increase Develop New Offer Experience Prices Promotions Shows in New Places • Reduce ticket • New marketing • Resident show • Channels of prices to fill channels • Touring show delivery seats • New target • New show type • Expanding markets locations Situation Short Term Long Term Recommendations Implementation Financials
  10. 10. Short-Term Analysis Reduce New New New ticket promotion target promotion channels prices markets channels Return to circus nouveau roots New Minimal risk and expense New Expanding target resident locations Position for long-term growth markets show Maximize current offering attendance New New channel New New channel of show show touring of show delivery type show delivery Situation Short Term Long Term Recommendations Implementation Financials
  11. 11. Short-Term Recommendations New promotion Viral Marketing channels New target Abridged shows at markets performing arts festivals New channel Cirque du Soleil in IMAX 3D of show delivery Situation Short Term Long Term Recommendations Implementation Financials
  12. 12. Long Term The Road to Recovery Situation Short Term Long Term Recommendations Implementation Financials
  13. 13. Long-Term Situation ? Situation Criteria • Increasing recovery of North • Pursue profitable growth with America conservative risk • Uncertain pace of global • Leverage core competencies recovery • Use lessons from short term • Asian and European troubles strategy • Shift in global travel trends • Concentrate in North America where recovery is more certain Situation Short Term Long Term Recommendations Implementation Financials
  14. 14. Long-Term Options Change Ticket Increase Develop New Offer Experience Prices Promotions Shows in New Places • Reduce ticket • New marketing • Resident show • Channels of prices to fill channels • Touring show delivery seats • New target • New show type • Expanding markets locations Situation Short Term Long Term Recommendations Implementation Financials
  15. 15. Long-Term Analysis Reduce New New ticket resident target prices shows markets Pursue profitable growth with conservative risk New Leverage core competencies New channels Show of Use lessons from short term strategy Type delivery Concentrate in North America New New Expanding promotion locations touring channels show Situation Short Term Long Term Recommendations Implementation Financials
  16. 16. Long-Term Recommendations New resident New show in Most profitable model Resident North with lowest risk Shows America Criteria Possible • Previous success with touring Cirque du Locations Soleil Expanding • Chicago • High tourist traffic locations • New York • Probability of cannibalization • Austin • Economic stability • Honolulu Situation Short Term Long Term Recommendations Implementation Financials
  17. 17. Long-Term Recommendations Honolulu City Decision Criteria • Past Cirque du Soleil success • Tourist traffic • Massive success of shows at • Economic stability Neil S. Blaisdell Center • Experiencing tourism • Probability of growth cannibalization • 2010: 3% • 2011: 3.1% • Least hurt by economic downturn • International and domestic destination Situation Short Term Long Term Recommendations Implementation Financials
  18. 18. Recommendations Short-Term, Balancing • Viral Marketing • Target market expansion • Music festivals • IMAX 3D Long-Term, Building • New resident location in Hawaii Situation Short Term Long Term Recommendations Implementation Financials
  19. 19. ST – Viral Marketing Create new hype through: Seemingly impromptu acrobatics in public places (subways, malls, etc) • Generates extreme viral response – Word of mouth – Online social networks • Involves traditional media – Pre-event press alerts – Flyer distribution • Increases awareness and enthusiasm • Low cost and effective Situation Short Term Long Term Recommendations Implementation Financials
  20. 20. ST – Performing Arts Festivals Establish relationship with future target market through: Introduction of Cirque du Soleil experience at large arts festivals • Leverages brand to expose new audiences to the experience • Provides a sample of the Cirque • Potential Locations - Coachella, Los Angeles, California - Lollapalooza, Chicago, Illinois - Jazz Festival, Montreal, Quebec • Generates revenue and awareness Situation Short Term Long Term Recommendations Implementation Financials
  21. 21. ST – IMAX 3D Develop a new Cirque du Soleil 3D experience through: The creation of an IMAX 3D film of a soon-to-retire big top show • Generates immediate revenue – Outsourced producer pays royalty • Increases awareness in future target market • Creates a want to attend Cirque de Soleil in the future Situation Short Term Long Term Recommendations Implementation Financials
  22. 22. LT – Resident Development Build a new resident experience in Honolulu through: A new partnership • Apply existing partner framework to determine ideal candidates • Leverage brand and announce intentions to create a bidding situation • Minimizes costs by converting retired show to resident version Situation Short Term Long Term Recommendations Implementation Financials
  23. 23. Timeline 2010 2011 2012 2013 2014 •Viral Campaign •Resident Honolulu •New Shows •New Shows •New Shows •IMAX Project •Global Update •Global Update •Global Update •Global Update •Arts Festival s 2010 2014 2012 2013 2011 Launch Viral Campaign (trials) Launch Resident HonoluluRollout Continue Gradual Show Location Negotiate IMAX Project Respond To Global Economy Shift Obtain Global Recession Update Develop Arts Festival Performance Situation Short Term Long Term Recommendations Implementation Financials
  24. 24. Sales Projection Situation Short Term Long Term Recommendations Implementation Financials
  25. 25. Revenue Contributions Situation Short Term Long Term Recommendations Implementation Financials
  26. 26. NPV (in CAD$ million) 2010 2011 2012 2013 2014 Revenue tickets 530 580 630 690 710 IMAX 3-D creative royalty 5 5 5 0 0 merchandising 4 4.4 5 7 8 Total 539 589.4 640 697 718 Cost sales/operation cost 431.2 471.52 512 557.6 574.4 new shows upfront cost 20 21 22 0 0 Total 451.2 492.52 534 557.6 574.4 EBITDA 88 97 106 139 144 (investment) production 35.12 50 42.4 55.76 57.44 Cash Flow after Tax 42 38 51 67 69 NPV 20% $150.58 NPV 10% $196.04 NPV 8% $207.66 Situation Short Term Long Term Recommendations Implementation Financials
  27. 27. Conclusion Short-Term, Long-Term, Building Balancing • New resident location in • Viral Marketing Hawaii • Target market expansion • Music festivals • IMAX 3D Situation Short Term Long Term Recommendations Implementation Financials
  28. 28. Connor Bogin, Linda Li, Derrick Nation & Beth Richard
  29. 29. Appendix Background Viral Campaign Risks Challenge Festival Risks Barriers to Goals IMAX 3D Risks Strategy Honolulu Risks Short-Term Situation Mirage MGM Partnership Short-Term Options Defining Success Short-Term Analysis Global Expansion Conting Short-Term Recommendations Why Not China Long-Term Situation Generation Y Long-Term Options Selecting Partners Long-Term Analysis Successful Marketing Long-Term Recommendations Current Target Market Final Recommendations Viral Marketing Diagram ST – Viral Marketing Target Market Expansion Diagram ST – Performing Arts Festivals Porter`s 5 Forces ST – IMAX 3D Social Networking ST – Resident Development Timeline Situation Short Term Long Term Recommendations Implementation Financials
  30. 30. Viral Campaign Risks Relative ease of Internal implementation and resistance to option to outsource to an advertising new concept agency Viewed as Implement the “cookie cutter” campaign in a differentiated way approach Situation Short Term Long Term Recommendations Implementation Financials
  31. 31. Festival Risks Gen Y focus Option in future alienates Unique offering to create a to market is a Boomer separately “sample” generation targeted show Situation Short Term Long Term Recommendations Implementation Financials
  32. 32. IMAX 3D Risks Brand Offer to experience CdS in Prestige a new way. NOT a Dilution substitute. Situation Short Term Long Term Recommendations Implementation Financials
  33. 33. Honolulu Risks Show is not Partner shares in Option to pursue a phased approach financially return and downside risk with show beginning in a Big Top in successful Honolulu Unable to Awareness of CdS Leverage partnership find suitable will attract many qualified partners with MGM partner Situation Short Term Long Term Recommendations Implementation Financials
  34. 34. Mirage MGM Partnership • At this time, no issue exists with Las Vegas partnership • Key consideration will be to refrain expanding to point at which CdS becomes a commodity • Caution in further Vegas expansion to avoid market and creative saturation Situation Short Term Long Term Recommendations Implementation Financials
  35. 35. Defining Success • Observation of immediate climb in revenues as result of seat fill rate improvement • Return to pre-2007 revenue levels • Positive returns from Honolulu partnership without negative effects on existing shows • Financial success that empowers continued creative progress Situation Short Term Long Term Recommendations Implementation Financials
  36. 36. Global Expansion Contingencies • What if other international markets recover at an unexpected rate? – Cross reference gambling destinations, family resorts, and high GDP cities to determine key locations of resident shows Situation Short Term Long Term Recommendations Implementation Financials
  37. 37. Why Not China? • Existing Competition – Popular Chinese cultural performances – Acrobatics/circus style – Low cost • Economic Uncertainty – Popular expectation of double trough of recessions impacting entire Asian region • Price of CdS ticket exceeds average yearly income of Chinese citizen. • Danger of cannibalization. Currently, wealthy Chinese citizens travel to Macau for entertainment and gambling Situation Short Term Long Term Recommendations Implementation Financials
  38. 38. Generation Y • The “connected” generation • Aged 18-30 • Poised to become most powerful generation since Baby Boomers • Extremely high purchasing power due to exit of Boomers from work force • Early interest in luxury entertainment Situation Short Term Long Term Recommendations Implementation Financials
  39. 39. Selecting Partners • Insufficient data to recommend or select partner pool • Criteria – Creative challenge – Sustainability of partnership – Profitability – Partner’s adherence to social responsibility parameters Situation Short Term Long Term Recommendations Implementation Financials
  40. 40. Successful Marketing • Product – Quality service • Price – Broad price range with IMAX • Place – New strategic locations • Promotion – Viral marketing, music festivals & IMAX 3D Situation Short Term Long Term Recommendations Implementation Financials
  41. 41. Current Target Market • Businessmen & women who like to travel • Stray from the traditional family circus scene by being more risque, having no animals & with music scheme Situation Short Term Long Term Recommendations Implementation Financials
  42. 42. ST – Viral Marketing Stimuli Brand Image Target Market Intensity, Movement & Surprise Word of Mouth Hedonic & Utilitarian Reputation Value Cirque De Soleil Growth Attendance Return Situation Short Term Long Term Recommendations Implementation Financials
  43. 43. ST- Target Market Expansion Perceptual Map- Luxury Entertainment High Quality & Price Opera Yachting Cirque De Soleil Orchestra Skiing Musical Festival Adventure Relaxation Zoo IMAX Beach Resort Amusement Park Aquarium Theme Park Low Quality & Price Situation Short Term Long Term Recommendations Implementation Financials
  44. 44. Porter`s 5 Forces Situation Short Term Long Term Recommendations Implementation Financials
  45. 45. Social Networking Situation Short Term Long Term Recommendations Implementation Financials

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