1. Connor Bogin, Linda Li, Derrick Nation & Beth Richard

6. Agenda
Situation
Short-Term
Long-Term
Recommendations
Implementation
Financials
Situation Short Term Long Term Recommendations Implementation Financials

7. Background
• Extreme uniqueness
• Sustainable
competitive advantage
– Creative independent
cells
• Strong partnerships
• Near perfect record
Situation Short Term Long Term Recommendations Implementation Financials

8. 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

9. 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

10. Strategy
Strategy
Long-Term Short-Term
Situation Short Term Long Term Recommendations Implementation Financials

11. Short Term
Navigating the Recession
Situation Short Term Long Term Recommendations Implementation Financials

12. 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

13. 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

14. 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

15. 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

16. Long Term
The Road to Recovery
Situation Short Term Long Term Recommendations Implementation Financials

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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

28. Sales Projection
Situation Short Term Long Term Recommendations Implementation Financials

29. Revenue Contributions
Situation Short Term Long Term Recommendations Implementation Financials

30. 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

31. 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

32. Connor Bogin, Linda Li, Derrick Nation & Beth Richard

33. 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

34. 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

35. 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

36. 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

37. 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

38. 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

39. 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

40. 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

41. 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

42. 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

43. 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

44. 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

45. 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

46. 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

47. 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

48. Porter`s 5 Forces
Situation Short Term Long Term Recommendations Implementation Financials

49. Social Networking
Situation Short Term Long Term Recommendations Implementation Financials