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Daniela Lamacchia, Joshua Favaro, Paul Lopez
CRM (MKTG20480) – Karen Booth
September 29, 2015
ASSIGNMENT #1:
RELATIONSHIP MARKETING
1
Contents
1. Executive Summary ............................................................................................................... 2
2. Overview of the Company...................................................................................................... 2
a) Background........................................................................................................................ 2
b) History................................................................................................................................ 3
c) Sales .................................................................................................................................. 4
d) Demographics.................................................................................................................... 5
3. Competitor Overview:............................................................................................................. 6
Direct Competitors.................................................................................................................. 6
a) Cinemas Guzzo Inc .................................................................................................. 6
b) Magic Lantern Theatres Ltd...................................................................................... 6
c) Collective efforts of independent, local movie theatres throughout Canada.............. 7
Indirect Competitor ................................................................................................................. 7
Netflix/Online streaming services ........................................................................................ 7
4. Defensive and Offensive Marketing................................................................................. 8
Offensive Marketing Example:................................................................................................ 8
Defensive Marketing Examples .............................................................................................. 8
a) SCENE card promotions .......................................................................................... 8
b) SCENEtourage promotion ........................................................................................ 9
5. Touch Points.........................................................................................................................11
a) Overview ..........................................................................................................................11
b) Definitions ........................................................................................................................12
c) Interaction Questions........................................................................................................13
6. Based on the Three Levels of Relationship Marketing...........................................................14
a) Pricing Incentive:............................................................................................................14
b) Social Bond: ...................................................................................................................16
c) Structural Solution:.........................................................................................................18
6. One-to-One Relationships.....................................................................................................20
a) Emails ............................................................................................................................20
b) TimePlay ........................................................................................................................21
7. Summary of Findings ............................................................................................................22
8. References ...........................................................................................................................23
2
1. Executive Summary
The objective of this report is to analyze Cineplex’s relationship marketing in all aspects of their business
and determine the effectiveness of their existing CRM strategies, based on class understanding of these
concepts.
The report will initially outline some relevant background information about the company as well as
highlight some key trends in the industry. There is an analysis of Cineplex’s competitive environment
and how they compare to some direct and indirect competition, along with the future outlook on the
market. The focus of the report will then shift to Cineplex’s CRM strategies. First, there is an
examination of the company’s offensive and defensive marketing strategies to determine whether or
not Cineplex concentrates its efforts on acquiring customers or retaining their loyal target audience.
A detailed consideration of Cineplex’s touch points will help emphasize the different ways the
organization adds value to the customer and creates an opportunity for a positive experience with each
person. A customer experience at a local Cineplex location will be analyzed from a marketing
perspective, which will provide insight into how the company’s CRM is structured to create the ideal
customer experience.
Further promotional examples will be discussed along with screenshots of emails and advertisements, in
order to prove that Cineplex meets all three levels of relationship marketing. Finally, analysis will be
provided on how the company uses those promotions to build a one-on-one relationship with each
consumer.
All this research will be summarized, reviewing the many examples provided, to prove that Cineplex is a
customer-oriented organization and structures its marketing activities to develop consumer
relationships to build brand loyalty.
2. Overview of the Company
a) Background
Cineplex Incorporated, or as it is more commonly known “Cineplex”, is a very well-known brand in
Canada. Cineplex provides Theatrical Exhibition, Food Services, Gaming, and Online Products/Services.
At over 100 years old, it is Canada’s largest motion picture theatre chain. Cineplex operates 162 theatres
in Canada as of December 31st, 2014, and its head office is in Toronto, Canada. According to the
Cineplex 2014 Annual Report, the company served approximately 74 million guests in the corresponding
year. Cineplex currently employs 11,000 staff members. (Cineplex, 2014)
3
b) History
Cineplex as a brand can be traced back over a century:
· Founded 1912 by Adolph Zukors as Famous Players Film Corp. (Cineplex, 2015)
· Acquired Paramount Theatre in 1920. (Cineplex, 2015)
· Opens first Cineplex theatre in 1979 in Toronto Eaton Centre. (Cineplex, 2015)
· Former Cineplex executives Ellis Jacob and Steve Brown leave and create Galaxy Entertainment.
(Cineplex, 2015)
· Cineplex files for bankruptcy in 2001. (Cineplex, 2015)
· In 2003, Cineplex merges with Galaxy Entertainment creating Cineplex-Galaxy Trust. (Cineplex, 2015)
· In 2005 Cineplex-Galaxy acquires Famous Players from Viacom and doubles in size as a result. (Cineplex,
2015)
· In 2006 Cineplex-Galaxy is renamed Cineplex Entertainment. (Cineplex, 2015)
· In 2007 SCENE entertainment rewards program is launched in partnership with Scotiabank. SCENE is
Canada’s only and largest entertainment loyalty rewards program. (SCENE, 2015)
· In 2011 Cineplex Entertainment is renamed Cineplex Incorporated. (Cineplex, 2015)
· Cineplex Inc. acquires Empire Theatres in 2013. (Cineplex, 2015)
· Cineplex as of 2015 operates 162 theatres, with Ellis Jacob as President and CEO. Cineplex has 62.9% of
the market share in Canada in its industry. (Cineplex, 2015)
(IBISWorld, 2015)
Being a Canada wide brand, Cineplex has a variety of locations across the country. However 67% of
these locations are serving the provinces of Ontario, Quebec, and British Columbia. (Cineplex, 2015)
Here is an overview of Cineplex’s presence in the Canadian landscape:
4
(Cineplex, 2014)
c) Sales
Cineplex Inc. is in the Digital Advertising and Film Exhibitor industry. As such, Cineplex has a wide range
of channels for revenue. Some of these would include: Theatrical Exhibition, Food Services, Gaming, and
Online Products/Services. Cineplex reported earnings of $1.2 billion in revenue in 2014. In the year of
2012, 70 million tickets were sold accounting for 38% of their total revenue. (Euromonitor International,
2013) Concession revenue accounted for 29% of total revenue. (Cineplex, 2013) Business-to-business
sales accounts for 7% of the company’s revenue. (Euromonitor International, 2013). All of these areas
experienced gradual growth in the past five years.
(Cineplex, 2015)
5
d) Demographics
Households are a major customer segment for this industry, accounting for 70% of the total market.
(Euromonitor International, 2013) Despite the growing trend of online downloading and streaming,
attendance has risen from about 68,000 in 2012 to 73,000 in 2014. (Cineplex 2015) Attending a movie
theatre is a leisure activity, which depends on local household disposable income. This is affected by the
state of the economy, employment rates and taxes. A consumer is most likely not to attend the movies
without enough disposable income. Age of attendees vary as some younger consumers may be more
attracted to a Disney movie rather than a non-animated film. Adolescents aged 19 and younger
contribute to 25% of the industry revenue. (IBISWorld, 2015).
6
3. Competitor Overview:
The direct competition is not very overwhelming as Cineplex outlasted or simply acquired competing
movie theatres. The following section will outline three direct competitors who are not major threats to
Cineplex. However, there are some indirect competitors who are contributing to new trends that could
cause movie theatre revenues to decline.
Direct Competitors
a) Cinemas Guzzo Inc
Profile
· 3.9% market share in 2010. (Euromonitor International, 2013)
· 151 cinema screens; 12 theatres. (Cinemas Guzzo, 2015)
· Locations in Quebec. (Cinemas Guzzo, 2015)
Cinemas Guzzo is the major theatre operator in Quebec and follows a similar marketing plan as
Cineplex. Cinemas Guzzo is focused on the overall entertainment experience for its customers. For a
higher end price, Cinemas Guzzo offers superior entertainment in terms of comfortable seating, screen
quality and a variety of projector options like IMAX and UltraAVX. (Cinemas Guzzo, 2015) The company
is definitely focused on customer relationship management by emphasizing their Guzzo Fidelity card,
which acts like the Cineplex SCENE card.
Despite the theatre’s success in Quebec, there does not seem to be any plan for Guzzo Cinemas to
expand past the province. Essentially, Cinemas Guzzo is more of a Canadian niche operator that focuses
on dominating the Quebec market. This chain is not large or competitive enough for Cineplex to focus
their resources on stopping Cinemas Guzzo. Losing a small portion of the Canadian customer base to this
isolated movie theatre operator is not the biggest current issue for Cineplex.
b) Magic Lantern Theatres Ltd
Profile
· 2.8% market share in 2010. (Euromonitor International, 2013)
· 90 cinema screens; 17 theatres plus 8 Rainbow Cinema locations. (Magic Lantern Theatres, 2015)
· Locations throughout Canada. (Magic Lantern Theatres, 2015)
Magic Lantern Theatres (including Rainbow Cinema) is a chain that is spread thin across Canada. While
Cinemas Guzzo controls a specific market in Canada (Quebec), Magic Lantern Theatres has remained in
the industry by means of a minor competitive advantage. This chain’s business model involves offering
cheaper ticket sales for audiences to watch either new releases, movies after their first run, or a few
classics scheduled on specific days throughout the year.
While this model has allowed Magic Lantern Theatres to operate across Canada, their potential is
severely limited by Cineplex’s presence. Cineplex continues to grow by means of acquisition and
innovation, but Magic Lantern Theatres has been unable to match the leading movie theatre operator in
Canada. Therefore, Magic Lantern Theatres is not a threat to Cineplex and will have to innovate in order
to remain a competitor in this industry moving forward.
7
c) Collective efforts of independent, local movie theatres throughout Canada
Profile
· Collective 46.6% market share in 2010. (Euromonitor International, 2013)
Every region in Canada has its own local movie theatre that has been a primary entertainment spot for
long-time residents in that area. Although having few locations, the advantage these theatres have is
the loyalty of customers who have been attending that cinema for years. The issue for these smaller
theatres becomes trying to acquire new customers. First time users of movie theatres would likely try
Cineplex before the independent, local cinemas because the larger chains are the organizations that
have the money and resources to create and distribute appealing promotions.
The lack of barriers to entry years ago allowed for cinemas to open up throughout Canada. However, the
industry has changed and the Canadian market has become more of a monopoly, led by Cineplex. With
that being said, all of these local cinemas collected together take away a portion of the Canadian
audience, thus, slightly handicapping Cineplex’s profit potential. In the end, Cineplex will acquire some
of these local theatres and continue to grow, but there is still a piece of the market share that is held by
numerous small cinemas.
Indirect Competitor
Netflix/Online streaming services
The last several years have seen a change in customer preference when it comes to movie
entertainment. Online streaming has grown in popularity and Netflix’s business model, which effectively
utilizes streaming a variety of movies and shows, has created a niche market. While illegal downloads
have provided users with a way to avoid movie costs altogether, Netflix and other legal on-line
streaming services are still cost effective options.
This trend has negatively affected the entire Digital Advertising and Film Exhibitor industry in Canada
and this development could continue, unless customers see the value in attending more movies in
theatres. This does not suggest however that theatres will be empty anytime soon. This analysis does
imply though, that Netflix and other online streaming services has developed and sustained a loyal
customer base in the movie entertainment services market. (Smith, 2014)
Movie theatres are losing a portion of their loyal consumers because the competitive advantage of
cinemas is decreasing. The ability to create a theatre-like environment at home has become more
common and affordable. (Smith, 2014) Add to that the ability to stream a variety of movies and shows
through an online streaming service and now a customer does not need to go to the movie theatres.
(Smith, 2014) This trend requires movie theatres, especially Cineplex, to strengthen their loyalty
programs and emphasize their competitive advantage, which is that movies are first available exclusively
in theatres. This is essential in order to help consumers see the value in watching new movies at
cinemas instead of at home.
8
4. Defensive and Offensive Marketing
Offensive Marketing Example:
Cineplex has always used discounted ticket prices on Tuesdays to draw new customers into their
theatres. However, the company has taken this offensive strategy to the next level by offering the
promotion described in the screenshot below:
(redkulat, 2015)
This is an excellent offering that definitely attracts new customers who either prefer another local
cinema or rather watch a movie at home than go to the theatre. If a customer feels that Cineplex’s
tickets are overpriced, this promotion will motivate some to take advantage of this incentive.
This is an offensive promotion because the purpose of this strategy is to acquire new customers by
means of lower prices, not only on Tuesdays, but for an entire week.
Defensive Marketing Examples
a) SCENE card promotions
Cineplex has unleashed several marketing promotions using their SCENE card, which builds loyalty
among existing Cineplex customers. This loyalty card along with the discounts associated with the SCENE
card are all designed to get customers to return to Cineplex theatres and come often in order to take full
advantage of these offers. The main goal for consumers with a SCENE card is to earn enough points to
receive a free movie. The following screenshot will describe some of the promotions that result from
possessing and using a SCENE card.
9
(Cineplex, 2015)
b) SCENEtourage promotion
The SCENEtourage offering allows a group of 3-10 SCENE members to earn extra points by going to the
theatres. This marketing activity takes this overall CRM defensive strategy to a more intense level. First,
Cineplex draws existing customers into possessing a SCENE card and purchasing more movies to collect
points and receive special deals with the loyalty card. Now, the SCENEtourage promotion moves
customers, who are already loyal members, to go to the movies with a group to earn more points. Also,
with the SCENEtourage promotion, those SCENE groups compete against each other to win more points.
10
These two promotional activities are defensive strategies because the purposes of these offers are to
retain existing customers, encouraging them to use Cineplex services more often.
Cineplex definitely focuses more of their efforts on retaining customers by means of defensive
marketing activities as opposed to using offensive strategies to acquire greater market share. Cineplex
understands the value of CRM and uses its various SCENE promotions to appeal to their customer base.
Their goal is to use these loyalty programs to give customers greater incentives to attend their cinemas
more often.
11
5. Touch Points
a) Overview
Touch points are any point of contact a customer or potential consumer has with a company or
seller. Touch point management is an important mission to all successful companies, such as
Cineplex. Companies like Cineplex obtain information and use touch points to create the ideal
customer experience. This allows for companies like Cineplex to analyze the journey consumers
have to get from promotion to loyalty, and execute a strategy to better acquire and retain
those customers.
12
b) Definitions
Promotion Definitions
· PR: Public Relation provides
accessible information about Cineplex to the
public.
· Email: Promotional emails sent via
Cineplex or partners to prospective
customer.
· Radio/TV: Commercials about
Cineplex, partners (SCENE), or events.
· Word of Mouth: Peer to peer
interaction and sharing of an experience with
Cineplex.
· Social Media/Online Ads:
Promotions about upcoming movies or
Cineplex.
· Flyers/Direct Mail: Promotions and
coupons with partnering restaurants or
with Cineplex.
Consideration Definitions
· Social Ads: Postings and online
version of word of mouth.
· Reviews: Peer reviews or review
websites that measure quality of movies.
· Blog: Followers on social media
channels who will trust an online figure’s
opinion on a particular movie.
· SEO: Search engine optimization for
specific genre seeking prospects. E.g. “Horror
Movies coming soon”.
· Media: Media reports about box
office hype, record sales, and actors.
· Movie Trailers: A preview for an
upcoming film with highlight clips.
Purchase Definitions
· Sales: A discount or promotion on a
Cineplex product.
· App: Movies purchased using the
Cineplex App. Also allows phone to be scanned
for entry.
· In-Store: Products and tickets
purchased in person at a Cineplex location.
· Website: Tickets and Products
purchased online through Cineplex.com or
resellers.
· Self-Serve Kiosk: Machines available
at Cineplex locations to buy tickets and
concessions.
· Self-Print: Tickets purchased online or
through app send to email to print copy of
ticket for entry.
13
Retention Definitions
· Discounts: Promotional discounts on
certain days, and to SCENE members.
· Emails: Congratulatory emails for
watching a movie or redeeming SCENE points
· Coupons: Discounts offered at
Cineplex partners. E.g. 1000 points for any 20$
purchase at Sport Chek.
· Events: Midnight Movie release
events, seasonal events, community events
such as “Community Day – Free Movies”.
· Loyalty Program: SCENE program that
offers points, and discounts for attendees.
· Contests: Cineplex and SCENE
contests offered to SCENE members to
promote exclusivity.
Loyalty Definitions
· Data-Mining & Surveys: Survey
invitations on movie tickets with chance to win
free movies for a year.
· Customer Satisfaction: Strength of
relationship moves from Acquaintance towards
Partner.
· Customer-Centric Focus: Cineplex
strengthens profitable relationships through
use of customer information.
· Multi-Channel Marketing: Cineplex
includes locations, kiosks, website, email etc.
· One-to-One Marketing: Cineplex
through CRM techniques strengthens bonds
with customers’ information.
· Defensive Marketing: Cineplex aims
to retain and service loyal customers through
incentives and a rewards program.
c) Interaction Questions
Self-Serve Kiosk
What was the interaction? Explain what you did.
The interaction consisted of myself purchasing a ticket for a movie that I had considered to watch after
viewing a trailer online. I interactively had chosen my preferred movie on the touch screen kiosk. I
decided to use my SCENE points and declined concessions.
Was the experience a positive one? Why or why not?
The experience was positive because I did not have to wait in line, and did not have to use any
disposable income. The process took me 2-3mins to complete, which was very efficient. The concession
choices however were lacking and limited to popcorn combos.
14
Was any data collected during your interaction? If yes describe what was collected, was there an
opportunity to collect data? Provide an example.
The data collected from me was my SCENE card information and points balance. Swiping my SCENE card
provided the kiosk with my name as it welcomed me by name and displayed my balance. Cineplex has
an opportunity to collect data on my preferred genre of movie and offer different food choices since I
have never purchased any of their displayed combos. This could provide potential revenue for health
conscious consumers as well as target lineup reduction by allowing variety before customers enter.
Do you think this organization is interested in establishing a relationship with their customers as
opposed to merely selling you a product or service in a single transaction? Explain why or why not.
What did they do to support your answer?
I believe this organization is interested in establishing a relationship with their customers because of
their CRM practices. Welcoming me by name and providing my points balance showed customer centric
focus while using their loyalty program to purchase my ticket. On my printed ticket there was an online
survey displayed, which asked me to give feedback on my experience for the chance to win free movies
for a year as an incentive. Examples of defensive marketing were the email to congratulate me for
redeeming a movie as well another telling me how many points I earned during my visit and my new
balance. Cineplex satisfies consumers with multi-channel marketing, by providing so many channels for
customers, including the kiosk where I made my transaction.
6. Based on the Three Levels of Relationship Marketing
Cineplex, in combination with the SCENE program, certainly follows the three levels of relationship
marketing.
a) Pricing Incentive:
Cineplex attracts customers with a pricing incentive by featuring “Half-Priced Tuesdays”, where
admission is half price. This attracts a large amount of customers to come to the theatres in the middle
of the week aside from premiere nights.
15
Another pricing incentive is the SCENE program. With the SCENE card, you earn points that you can
redeem to watch movies; every 1000 points gets you one free movie. You can earn points by presenting
it when making purchases at the movie theatre and participating retailers (example: Sport Chek, Marks
Work Warehouse, etc). SCENE card also offers 10% off all concession purchases.
16
b) Social Bond:
Cineplex issues emails and content based on consumer personalization. When a customer signs
up for Cineplex, he or she receive emails with newsletters and promotions catering to them. For
example, what’s new and hot, what movies will be released that month, and any other special
offers. SCENE members receive emails on special promotions, what movies are being released
and how many points that customer has accumulated. SCENE members customize these emails
by going to Email Settings and selecting which emails they prefer to receive so they are not
faced with messages that are not of interest to that specific customer.
17
Another way Cineplex establishes a social bond and individualizes each email is by reminding
SCENE members of how many points they have accumulated and how close someone is to
receiving a free movie.
18
c) Structural Solution:
Cineplex allows customers to put their SCENE card on their phone to make it easier for people
to earn scene points. Someone can download the Cineplex app from the AppStore and the
GooglePlay store, thus making it easily accessible on one’s smartphone. On the Cineplex app
customers are able to view accumulated points, watch trailers, find theatres, show times and
pricing.
19
Cineplex applies gamification to their loyalty program by means of the TimePlay app. Users can
easily download this app and become more involved in the Cineplex experience and earn more
SCENE points. Before the movie begins, there is a mini-game involving a series of questions that
can earn customers extra SCENE points. Users simply have to download the app and they are
able to play along.
20
6. One-to-One Relationships
a) Emails
Cineplex creates a one-to-one relationship by giving customers the option to sign up for emails
and the SCENE program to be more involved. In these emails, Cineplex addresses each
individual customer, in order to enhance the one-to-one relationship experience.
When looking at this email, a customer is able to see their name mentioned, some restaurants
that may interest that customer, and the member’s current SCENE points balance. By doing
this, they are building on the one-to-one relationship with each individual customer.
21
b) TimePlay
Cineplex created this very interactive app that allows moviegoers to become more involved in
the Cineplex experience. With TimePlay, it allows the guests in the theatre to follow along with
the onscreen questions and play interactive games. This can all be done by launching the app,
selecting a username, and following the prompts to enable one to answer the questions. The
more questions someone answers correctly, the more SCENE points that person earns. All the
participants are included on a leader board to promote competition amongst members. This
creates a one-to-one relationship by letting the user choose to take part in the game and be
able to create their own username to make it unique.
(TimePlay, 2013)
22
7. Summary of Findings
The objective of this report is to analyze Cineplex’s relationship marketing in all aspects of their business
and determine the effectiveness of their existing CRM strategies, based on class understanding of these
concepts.
The research on this assignment proves that Cineplex focuses a majority of their efforts on defensive
marketing strategies as they try to retain their customer base by means of loyalty programs such as their
SCENE card. It was determined that Cineplex devotes more time and resources on SCENE promotions as
opposed to special pricing offers to attract a new audience to their theatres.
Cineplex uses a variety of touchpoints to move customers from first-time users to loyal brand
enthusiasts. Touch points may vary from social media ads to gain presence as a brand, to Cineplex
contests and surveys which aim at retaining customers as well as better understanding their target
audience’s preferences. Cineplex makes a customer’s experience so much more convenient by means of
their multi-channel marketing system, providing someone with different ways to complete a
transaction.
Also, there are many examples which identify Cineplex as a company focusing on establishing social
bonds with their customer base at a one-on-one level, while developing structural solutions for their
target audience as well. Cineplex’s individualized emails, offering customizable settings and further
SCENE promotions were highlighted throughout the report because these examples show how this
organization attempts to connect with every customer individually and establish a bond that could result
in increased loyalty by means of their promotions.
For example, Cineplex emails each SCENE member to remind them of their points total and how close
that customer is to a free movie. This strategy is an excellent model of establishing a social bond
because it motivates a customer to have another interaction with the brand as soon as possible to take
advantage of the company’s free movie promotion. This marketing activity is also a way to develop that
one-to-one relationship with that specific customer because the email is customized for them
personally. At the same time, these emails might provide a structural solution for the customer by
reminding him or her of their current point total and how they can acquire more points. Those type of
CRM strategies are excellent because they achieve multiple purposes with one promotional activity.
Therefore, the numerous promotional examples emphatically prove that Cineplex is focused on building
strong customer relationships to establish a loyal target audience, which has allowed them to dominate
the Digital Advertising and Film Exhibitor industry in Canada.
23
8. References
Cineplex. (2015). Scene - earn points. Retrieved from Earning scene points:
https://www.scene.ca/programearning.aspx
Cinemas Guzzo. (2015). About Guzzo Cinemas. Retrieved from Cinemas Guzzo:
http://www.cinemasguzzo.com/about-us.html
Cineplex Incorporated. (2015). Cineplex.com Information. Retrieved from Cineplex Inc. Web site:
http://www.cineplex.com/Corporate/Information#corporateHistory
Euromonitor International. (2013, April 9). Movie Theatres in Canada: ISIC 9212. Retrieved from
Euromonitor International - Analysis:
http://www.portal.euromonitor.com.library.sheridanc.on.ca/portal/analysis/tab
IBISWorld. (2015). Industry Report 51213CA. Movie Theatres in Canada. Retrieved from IBISWorld:
http://clients1.ibisworld.com.library.sheridanc.on.ca/reports/ca/industry/default.aspx?entid=12
44
Magic Lantern Theatres. (2015). Corporate Info. Retrieved from Magic Lantern Theatres:
http://www.rainbowcinemas.ca/A/corporate.php?theatre=Carlton
redkulat. (2015, August 26). Cineplex: Get Tuesday Pricing for All Movies from August 31 Through
September 4! Retrieved from Red flag deals:
http://www.redflagdeals.com/deal/entertainment/cineplex-get-tuesday-pricing-for-all-movies-
from-august-31-through-september-4/
Smith, K. (2014, October 17). Netflix Is Taking The Movie Theatre Industry Head On, And It Will Win.
Retrieved from Elite Daily: http://elitedaily.com/money/netflix-taking-movie-theatre-industry-
head-will-win/788686/
TimePlay. (2013). TimePlay. Retrieved from TimePlay: http://timeplay.com

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Customer Relationship Management - Cineplex

  • 1. Daniela Lamacchia, Joshua Favaro, Paul Lopez CRM (MKTG20480) – Karen Booth September 29, 2015 ASSIGNMENT #1: RELATIONSHIP MARKETING
  • 2. 1 Contents 1. Executive Summary ............................................................................................................... 2 2. Overview of the Company...................................................................................................... 2 a) Background........................................................................................................................ 2 b) History................................................................................................................................ 3 c) Sales .................................................................................................................................. 4 d) Demographics.................................................................................................................... 5 3. Competitor Overview:............................................................................................................. 6 Direct Competitors.................................................................................................................. 6 a) Cinemas Guzzo Inc .................................................................................................. 6 b) Magic Lantern Theatres Ltd...................................................................................... 6 c) Collective efforts of independent, local movie theatres throughout Canada.............. 7 Indirect Competitor ................................................................................................................. 7 Netflix/Online streaming services ........................................................................................ 7 4. Defensive and Offensive Marketing................................................................................. 8 Offensive Marketing Example:................................................................................................ 8 Defensive Marketing Examples .............................................................................................. 8 a) SCENE card promotions .......................................................................................... 8 b) SCENEtourage promotion ........................................................................................ 9 5. Touch Points.........................................................................................................................11 a) Overview ..........................................................................................................................11 b) Definitions ........................................................................................................................12 c) Interaction Questions........................................................................................................13 6. Based on the Three Levels of Relationship Marketing...........................................................14 a) Pricing Incentive:............................................................................................................14 b) Social Bond: ...................................................................................................................16 c) Structural Solution:.........................................................................................................18 6. One-to-One Relationships.....................................................................................................20 a) Emails ............................................................................................................................20 b) TimePlay ........................................................................................................................21 7. Summary of Findings ............................................................................................................22 8. References ...........................................................................................................................23
  • 3. 2 1. Executive Summary The objective of this report is to analyze Cineplex’s relationship marketing in all aspects of their business and determine the effectiveness of their existing CRM strategies, based on class understanding of these concepts. The report will initially outline some relevant background information about the company as well as highlight some key trends in the industry. There is an analysis of Cineplex’s competitive environment and how they compare to some direct and indirect competition, along with the future outlook on the market. The focus of the report will then shift to Cineplex’s CRM strategies. First, there is an examination of the company’s offensive and defensive marketing strategies to determine whether or not Cineplex concentrates its efforts on acquiring customers or retaining their loyal target audience. A detailed consideration of Cineplex’s touch points will help emphasize the different ways the organization adds value to the customer and creates an opportunity for a positive experience with each person. A customer experience at a local Cineplex location will be analyzed from a marketing perspective, which will provide insight into how the company’s CRM is structured to create the ideal customer experience. Further promotional examples will be discussed along with screenshots of emails and advertisements, in order to prove that Cineplex meets all three levels of relationship marketing. Finally, analysis will be provided on how the company uses those promotions to build a one-on-one relationship with each consumer. All this research will be summarized, reviewing the many examples provided, to prove that Cineplex is a customer-oriented organization and structures its marketing activities to develop consumer relationships to build brand loyalty. 2. Overview of the Company a) Background Cineplex Incorporated, or as it is more commonly known “Cineplex”, is a very well-known brand in Canada. Cineplex provides Theatrical Exhibition, Food Services, Gaming, and Online Products/Services. At over 100 years old, it is Canada’s largest motion picture theatre chain. Cineplex operates 162 theatres in Canada as of December 31st, 2014, and its head office is in Toronto, Canada. According to the Cineplex 2014 Annual Report, the company served approximately 74 million guests in the corresponding year. Cineplex currently employs 11,000 staff members. (Cineplex, 2014)
  • 4. 3 b) History Cineplex as a brand can be traced back over a century: · Founded 1912 by Adolph Zukors as Famous Players Film Corp. (Cineplex, 2015) · Acquired Paramount Theatre in 1920. (Cineplex, 2015) · Opens first Cineplex theatre in 1979 in Toronto Eaton Centre. (Cineplex, 2015) · Former Cineplex executives Ellis Jacob and Steve Brown leave and create Galaxy Entertainment. (Cineplex, 2015) · Cineplex files for bankruptcy in 2001. (Cineplex, 2015) · In 2003, Cineplex merges with Galaxy Entertainment creating Cineplex-Galaxy Trust. (Cineplex, 2015) · In 2005 Cineplex-Galaxy acquires Famous Players from Viacom and doubles in size as a result. (Cineplex, 2015) · In 2006 Cineplex-Galaxy is renamed Cineplex Entertainment. (Cineplex, 2015) · In 2007 SCENE entertainment rewards program is launched in partnership with Scotiabank. SCENE is Canada’s only and largest entertainment loyalty rewards program. (SCENE, 2015) · In 2011 Cineplex Entertainment is renamed Cineplex Incorporated. (Cineplex, 2015) · Cineplex Inc. acquires Empire Theatres in 2013. (Cineplex, 2015) · Cineplex as of 2015 operates 162 theatres, with Ellis Jacob as President and CEO. Cineplex has 62.9% of the market share in Canada in its industry. (Cineplex, 2015) (IBISWorld, 2015) Being a Canada wide brand, Cineplex has a variety of locations across the country. However 67% of these locations are serving the provinces of Ontario, Quebec, and British Columbia. (Cineplex, 2015) Here is an overview of Cineplex’s presence in the Canadian landscape:
  • 5. 4 (Cineplex, 2014) c) Sales Cineplex Inc. is in the Digital Advertising and Film Exhibitor industry. As such, Cineplex has a wide range of channels for revenue. Some of these would include: Theatrical Exhibition, Food Services, Gaming, and Online Products/Services. Cineplex reported earnings of $1.2 billion in revenue in 2014. In the year of 2012, 70 million tickets were sold accounting for 38% of their total revenue. (Euromonitor International, 2013) Concession revenue accounted for 29% of total revenue. (Cineplex, 2013) Business-to-business sales accounts for 7% of the company’s revenue. (Euromonitor International, 2013). All of these areas experienced gradual growth in the past five years. (Cineplex, 2015)
  • 6. 5 d) Demographics Households are a major customer segment for this industry, accounting for 70% of the total market. (Euromonitor International, 2013) Despite the growing trend of online downloading and streaming, attendance has risen from about 68,000 in 2012 to 73,000 in 2014. (Cineplex 2015) Attending a movie theatre is a leisure activity, which depends on local household disposable income. This is affected by the state of the economy, employment rates and taxes. A consumer is most likely not to attend the movies without enough disposable income. Age of attendees vary as some younger consumers may be more attracted to a Disney movie rather than a non-animated film. Adolescents aged 19 and younger contribute to 25% of the industry revenue. (IBISWorld, 2015).
  • 7. 6 3. Competitor Overview: The direct competition is not very overwhelming as Cineplex outlasted or simply acquired competing movie theatres. The following section will outline three direct competitors who are not major threats to Cineplex. However, there are some indirect competitors who are contributing to new trends that could cause movie theatre revenues to decline. Direct Competitors a) Cinemas Guzzo Inc Profile · 3.9% market share in 2010. (Euromonitor International, 2013) · 151 cinema screens; 12 theatres. (Cinemas Guzzo, 2015) · Locations in Quebec. (Cinemas Guzzo, 2015) Cinemas Guzzo is the major theatre operator in Quebec and follows a similar marketing plan as Cineplex. Cinemas Guzzo is focused on the overall entertainment experience for its customers. For a higher end price, Cinemas Guzzo offers superior entertainment in terms of comfortable seating, screen quality and a variety of projector options like IMAX and UltraAVX. (Cinemas Guzzo, 2015) The company is definitely focused on customer relationship management by emphasizing their Guzzo Fidelity card, which acts like the Cineplex SCENE card. Despite the theatre’s success in Quebec, there does not seem to be any plan for Guzzo Cinemas to expand past the province. Essentially, Cinemas Guzzo is more of a Canadian niche operator that focuses on dominating the Quebec market. This chain is not large or competitive enough for Cineplex to focus their resources on stopping Cinemas Guzzo. Losing a small portion of the Canadian customer base to this isolated movie theatre operator is not the biggest current issue for Cineplex. b) Magic Lantern Theatres Ltd Profile · 2.8% market share in 2010. (Euromonitor International, 2013) · 90 cinema screens; 17 theatres plus 8 Rainbow Cinema locations. (Magic Lantern Theatres, 2015) · Locations throughout Canada. (Magic Lantern Theatres, 2015) Magic Lantern Theatres (including Rainbow Cinema) is a chain that is spread thin across Canada. While Cinemas Guzzo controls a specific market in Canada (Quebec), Magic Lantern Theatres has remained in the industry by means of a minor competitive advantage. This chain’s business model involves offering cheaper ticket sales for audiences to watch either new releases, movies after their first run, or a few classics scheduled on specific days throughout the year. While this model has allowed Magic Lantern Theatres to operate across Canada, their potential is severely limited by Cineplex’s presence. Cineplex continues to grow by means of acquisition and innovation, but Magic Lantern Theatres has been unable to match the leading movie theatre operator in Canada. Therefore, Magic Lantern Theatres is not a threat to Cineplex and will have to innovate in order to remain a competitor in this industry moving forward.
  • 8. 7 c) Collective efforts of independent, local movie theatres throughout Canada Profile · Collective 46.6% market share in 2010. (Euromonitor International, 2013) Every region in Canada has its own local movie theatre that has been a primary entertainment spot for long-time residents in that area. Although having few locations, the advantage these theatres have is the loyalty of customers who have been attending that cinema for years. The issue for these smaller theatres becomes trying to acquire new customers. First time users of movie theatres would likely try Cineplex before the independent, local cinemas because the larger chains are the organizations that have the money and resources to create and distribute appealing promotions. The lack of barriers to entry years ago allowed for cinemas to open up throughout Canada. However, the industry has changed and the Canadian market has become more of a monopoly, led by Cineplex. With that being said, all of these local cinemas collected together take away a portion of the Canadian audience, thus, slightly handicapping Cineplex’s profit potential. In the end, Cineplex will acquire some of these local theatres and continue to grow, but there is still a piece of the market share that is held by numerous small cinemas. Indirect Competitor Netflix/Online streaming services The last several years have seen a change in customer preference when it comes to movie entertainment. Online streaming has grown in popularity and Netflix’s business model, which effectively utilizes streaming a variety of movies and shows, has created a niche market. While illegal downloads have provided users with a way to avoid movie costs altogether, Netflix and other legal on-line streaming services are still cost effective options. This trend has negatively affected the entire Digital Advertising and Film Exhibitor industry in Canada and this development could continue, unless customers see the value in attending more movies in theatres. This does not suggest however that theatres will be empty anytime soon. This analysis does imply though, that Netflix and other online streaming services has developed and sustained a loyal customer base in the movie entertainment services market. (Smith, 2014) Movie theatres are losing a portion of their loyal consumers because the competitive advantage of cinemas is decreasing. The ability to create a theatre-like environment at home has become more common and affordable. (Smith, 2014) Add to that the ability to stream a variety of movies and shows through an online streaming service and now a customer does not need to go to the movie theatres. (Smith, 2014) This trend requires movie theatres, especially Cineplex, to strengthen their loyalty programs and emphasize their competitive advantage, which is that movies are first available exclusively in theatres. This is essential in order to help consumers see the value in watching new movies at cinemas instead of at home.
  • 9. 8 4. Defensive and Offensive Marketing Offensive Marketing Example: Cineplex has always used discounted ticket prices on Tuesdays to draw new customers into their theatres. However, the company has taken this offensive strategy to the next level by offering the promotion described in the screenshot below: (redkulat, 2015) This is an excellent offering that definitely attracts new customers who either prefer another local cinema or rather watch a movie at home than go to the theatre. If a customer feels that Cineplex’s tickets are overpriced, this promotion will motivate some to take advantage of this incentive. This is an offensive promotion because the purpose of this strategy is to acquire new customers by means of lower prices, not only on Tuesdays, but for an entire week. Defensive Marketing Examples a) SCENE card promotions Cineplex has unleashed several marketing promotions using their SCENE card, which builds loyalty among existing Cineplex customers. This loyalty card along with the discounts associated with the SCENE card are all designed to get customers to return to Cineplex theatres and come often in order to take full advantage of these offers. The main goal for consumers with a SCENE card is to earn enough points to receive a free movie. The following screenshot will describe some of the promotions that result from possessing and using a SCENE card.
  • 10. 9 (Cineplex, 2015) b) SCENEtourage promotion The SCENEtourage offering allows a group of 3-10 SCENE members to earn extra points by going to the theatres. This marketing activity takes this overall CRM defensive strategy to a more intense level. First, Cineplex draws existing customers into possessing a SCENE card and purchasing more movies to collect points and receive special deals with the loyalty card. Now, the SCENEtourage promotion moves customers, who are already loyal members, to go to the movies with a group to earn more points. Also, with the SCENEtourage promotion, those SCENE groups compete against each other to win more points.
  • 11. 10 These two promotional activities are defensive strategies because the purposes of these offers are to retain existing customers, encouraging them to use Cineplex services more often. Cineplex definitely focuses more of their efforts on retaining customers by means of defensive marketing activities as opposed to using offensive strategies to acquire greater market share. Cineplex understands the value of CRM and uses its various SCENE promotions to appeal to their customer base. Their goal is to use these loyalty programs to give customers greater incentives to attend their cinemas more often.
  • 12. 11 5. Touch Points a) Overview Touch points are any point of contact a customer or potential consumer has with a company or seller. Touch point management is an important mission to all successful companies, such as Cineplex. Companies like Cineplex obtain information and use touch points to create the ideal customer experience. This allows for companies like Cineplex to analyze the journey consumers have to get from promotion to loyalty, and execute a strategy to better acquire and retain those customers.
  • 13. 12 b) Definitions Promotion Definitions · PR: Public Relation provides accessible information about Cineplex to the public. · Email: Promotional emails sent via Cineplex or partners to prospective customer. · Radio/TV: Commercials about Cineplex, partners (SCENE), or events. · Word of Mouth: Peer to peer interaction and sharing of an experience with Cineplex. · Social Media/Online Ads: Promotions about upcoming movies or Cineplex. · Flyers/Direct Mail: Promotions and coupons with partnering restaurants or with Cineplex. Consideration Definitions · Social Ads: Postings and online version of word of mouth. · Reviews: Peer reviews or review websites that measure quality of movies. · Blog: Followers on social media channels who will trust an online figure’s opinion on a particular movie. · SEO: Search engine optimization for specific genre seeking prospects. E.g. “Horror Movies coming soon”. · Media: Media reports about box office hype, record sales, and actors. · Movie Trailers: A preview for an upcoming film with highlight clips. Purchase Definitions · Sales: A discount or promotion on a Cineplex product. · App: Movies purchased using the Cineplex App. Also allows phone to be scanned for entry. · In-Store: Products and tickets purchased in person at a Cineplex location. · Website: Tickets and Products purchased online through Cineplex.com or resellers. · Self-Serve Kiosk: Machines available at Cineplex locations to buy tickets and concessions. · Self-Print: Tickets purchased online or through app send to email to print copy of ticket for entry.
  • 14. 13 Retention Definitions · Discounts: Promotional discounts on certain days, and to SCENE members. · Emails: Congratulatory emails for watching a movie or redeeming SCENE points · Coupons: Discounts offered at Cineplex partners. E.g. 1000 points for any 20$ purchase at Sport Chek. · Events: Midnight Movie release events, seasonal events, community events such as “Community Day – Free Movies”. · Loyalty Program: SCENE program that offers points, and discounts for attendees. · Contests: Cineplex and SCENE contests offered to SCENE members to promote exclusivity. Loyalty Definitions · Data-Mining & Surveys: Survey invitations on movie tickets with chance to win free movies for a year. · Customer Satisfaction: Strength of relationship moves from Acquaintance towards Partner. · Customer-Centric Focus: Cineplex strengthens profitable relationships through use of customer information. · Multi-Channel Marketing: Cineplex includes locations, kiosks, website, email etc. · One-to-One Marketing: Cineplex through CRM techniques strengthens bonds with customers’ information. · Defensive Marketing: Cineplex aims to retain and service loyal customers through incentives and a rewards program. c) Interaction Questions Self-Serve Kiosk What was the interaction? Explain what you did. The interaction consisted of myself purchasing a ticket for a movie that I had considered to watch after viewing a trailer online. I interactively had chosen my preferred movie on the touch screen kiosk. I decided to use my SCENE points and declined concessions. Was the experience a positive one? Why or why not? The experience was positive because I did not have to wait in line, and did not have to use any disposable income. The process took me 2-3mins to complete, which was very efficient. The concession choices however were lacking and limited to popcorn combos.
  • 15. 14 Was any data collected during your interaction? If yes describe what was collected, was there an opportunity to collect data? Provide an example. The data collected from me was my SCENE card information and points balance. Swiping my SCENE card provided the kiosk with my name as it welcomed me by name and displayed my balance. Cineplex has an opportunity to collect data on my preferred genre of movie and offer different food choices since I have never purchased any of their displayed combos. This could provide potential revenue for health conscious consumers as well as target lineup reduction by allowing variety before customers enter. Do you think this organization is interested in establishing a relationship with their customers as opposed to merely selling you a product or service in a single transaction? Explain why or why not. What did they do to support your answer? I believe this organization is interested in establishing a relationship with their customers because of their CRM practices. Welcoming me by name and providing my points balance showed customer centric focus while using their loyalty program to purchase my ticket. On my printed ticket there was an online survey displayed, which asked me to give feedback on my experience for the chance to win free movies for a year as an incentive. Examples of defensive marketing were the email to congratulate me for redeeming a movie as well another telling me how many points I earned during my visit and my new balance. Cineplex satisfies consumers with multi-channel marketing, by providing so many channels for customers, including the kiosk where I made my transaction. 6. Based on the Three Levels of Relationship Marketing Cineplex, in combination with the SCENE program, certainly follows the three levels of relationship marketing. a) Pricing Incentive: Cineplex attracts customers with a pricing incentive by featuring “Half-Priced Tuesdays”, where admission is half price. This attracts a large amount of customers to come to the theatres in the middle of the week aside from premiere nights.
  • 16. 15 Another pricing incentive is the SCENE program. With the SCENE card, you earn points that you can redeem to watch movies; every 1000 points gets you one free movie. You can earn points by presenting it when making purchases at the movie theatre and participating retailers (example: Sport Chek, Marks Work Warehouse, etc). SCENE card also offers 10% off all concession purchases.
  • 17. 16 b) Social Bond: Cineplex issues emails and content based on consumer personalization. When a customer signs up for Cineplex, he or she receive emails with newsletters and promotions catering to them. For example, what’s new and hot, what movies will be released that month, and any other special offers. SCENE members receive emails on special promotions, what movies are being released and how many points that customer has accumulated. SCENE members customize these emails by going to Email Settings and selecting which emails they prefer to receive so they are not faced with messages that are not of interest to that specific customer.
  • 18. 17 Another way Cineplex establishes a social bond and individualizes each email is by reminding SCENE members of how many points they have accumulated and how close someone is to receiving a free movie.
  • 19. 18 c) Structural Solution: Cineplex allows customers to put their SCENE card on their phone to make it easier for people to earn scene points. Someone can download the Cineplex app from the AppStore and the GooglePlay store, thus making it easily accessible on one’s smartphone. On the Cineplex app customers are able to view accumulated points, watch trailers, find theatres, show times and pricing.
  • 20. 19 Cineplex applies gamification to their loyalty program by means of the TimePlay app. Users can easily download this app and become more involved in the Cineplex experience and earn more SCENE points. Before the movie begins, there is a mini-game involving a series of questions that can earn customers extra SCENE points. Users simply have to download the app and they are able to play along.
  • 21. 20 6. One-to-One Relationships a) Emails Cineplex creates a one-to-one relationship by giving customers the option to sign up for emails and the SCENE program to be more involved. In these emails, Cineplex addresses each individual customer, in order to enhance the one-to-one relationship experience. When looking at this email, a customer is able to see their name mentioned, some restaurants that may interest that customer, and the member’s current SCENE points balance. By doing this, they are building on the one-to-one relationship with each individual customer.
  • 22. 21 b) TimePlay Cineplex created this very interactive app that allows moviegoers to become more involved in the Cineplex experience. With TimePlay, it allows the guests in the theatre to follow along with the onscreen questions and play interactive games. This can all be done by launching the app, selecting a username, and following the prompts to enable one to answer the questions. The more questions someone answers correctly, the more SCENE points that person earns. All the participants are included on a leader board to promote competition amongst members. This creates a one-to-one relationship by letting the user choose to take part in the game and be able to create their own username to make it unique. (TimePlay, 2013)
  • 23. 22 7. Summary of Findings The objective of this report is to analyze Cineplex’s relationship marketing in all aspects of their business and determine the effectiveness of their existing CRM strategies, based on class understanding of these concepts. The research on this assignment proves that Cineplex focuses a majority of their efforts on defensive marketing strategies as they try to retain their customer base by means of loyalty programs such as their SCENE card. It was determined that Cineplex devotes more time and resources on SCENE promotions as opposed to special pricing offers to attract a new audience to their theatres. Cineplex uses a variety of touchpoints to move customers from first-time users to loyal brand enthusiasts. Touch points may vary from social media ads to gain presence as a brand, to Cineplex contests and surveys which aim at retaining customers as well as better understanding their target audience’s preferences. Cineplex makes a customer’s experience so much more convenient by means of their multi-channel marketing system, providing someone with different ways to complete a transaction. Also, there are many examples which identify Cineplex as a company focusing on establishing social bonds with their customer base at a one-on-one level, while developing structural solutions for their target audience as well. Cineplex’s individualized emails, offering customizable settings and further SCENE promotions were highlighted throughout the report because these examples show how this organization attempts to connect with every customer individually and establish a bond that could result in increased loyalty by means of their promotions. For example, Cineplex emails each SCENE member to remind them of their points total and how close that customer is to a free movie. This strategy is an excellent model of establishing a social bond because it motivates a customer to have another interaction with the brand as soon as possible to take advantage of the company’s free movie promotion. This marketing activity is also a way to develop that one-to-one relationship with that specific customer because the email is customized for them personally. At the same time, these emails might provide a structural solution for the customer by reminding him or her of their current point total and how they can acquire more points. Those type of CRM strategies are excellent because they achieve multiple purposes with one promotional activity. Therefore, the numerous promotional examples emphatically prove that Cineplex is focused on building strong customer relationships to establish a loyal target audience, which has allowed them to dominate the Digital Advertising and Film Exhibitor industry in Canada.
  • 24. 23 8. References Cineplex. (2015). Scene - earn points. Retrieved from Earning scene points: https://www.scene.ca/programearning.aspx Cinemas Guzzo. (2015). About Guzzo Cinemas. Retrieved from Cinemas Guzzo: http://www.cinemasguzzo.com/about-us.html Cineplex Incorporated. (2015). Cineplex.com Information. Retrieved from Cineplex Inc. Web site: http://www.cineplex.com/Corporate/Information#corporateHistory Euromonitor International. (2013, April 9). Movie Theatres in Canada: ISIC 9212. Retrieved from Euromonitor International - Analysis: http://www.portal.euromonitor.com.library.sheridanc.on.ca/portal/analysis/tab IBISWorld. (2015). Industry Report 51213CA. Movie Theatres in Canada. Retrieved from IBISWorld: http://clients1.ibisworld.com.library.sheridanc.on.ca/reports/ca/industry/default.aspx?entid=12 44 Magic Lantern Theatres. (2015). Corporate Info. Retrieved from Magic Lantern Theatres: http://www.rainbowcinemas.ca/A/corporate.php?theatre=Carlton redkulat. (2015, August 26). Cineplex: Get Tuesday Pricing for All Movies from August 31 Through September 4! Retrieved from Red flag deals: http://www.redflagdeals.com/deal/entertainment/cineplex-get-tuesday-pricing-for-all-movies- from-august-31-through-september-4/ Smith, K. (2014, October 17). Netflix Is Taking The Movie Theatre Industry Head On, And It Will Win. Retrieved from Elite Daily: http://elitedaily.com/money/netflix-taking-movie-theatre-industry- head-will-win/788686/ TimePlay. (2013). TimePlay. Retrieved from TimePlay: http://timeplay.com