Case Analysis

CINEPLEX ENTERTAINMENT: THE LOYALTY PROGRAM

Group 5 Abhinandan Narayan Hemlata Meena Tarun Gupta Neha Upadhye

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CRM TRIGGERS

AGENDA

PROGRAM PARTNER

REWARD STRUCTURE

DATABASE VENDOR

MARKETING COM

LAUNCH

PROTAGONIST
Sarah Lewthwaite || Marketing Director, Cineplex Entertainment

SITUATION
Lewthwaite approached by CEO, Ellis Jacob for the development of a loyalty program As the CHAIR of the Loyalty Steering Committee, Lewthwaite was supposed to present her recommendations to the committee

CINEPLEX: Timeline
2005 2003 Onex Corporation (major ownership claim in Cineplex) merged with Galaxy Entertainment Inc Ellis Jacob New CEO

USP
Offered An exceptional entertainment experience E.g. Food Counters, Arcade Focused on developing NEW MARKETS To showcase live events Operas, Sports etc

Acquired its largest competitor FAMOUS PLAYERS

Became CINEPLEX ENTERTAINMENT 64 % market share 40 mln visits/year

1979 Founded Cineplex Odeon A small chain of movie theatres

TARGET
To explore ways to increase the market share To explore new ways to attract the 13 24 segment

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CRM TRIGGERS

AGENDA

PROGRAM PARTNER

REWARD STRUCTURE

DATABASE VENDOR

MARKETING COM

LAUNCH

REVENUE
Inconsistency in the revenue generated Sharp dip in Net Income
600000 500000

BENEFITS
Develop targeted campaigns to increase marketing effectiveness, such as restructuring of products and services Share valuable information with concession suppliers and movie distributors Reduce cost in marketing communications and customer retention

Total Revenue Cost of Operations Gross Income

2003 2004 2005

Canadian $

400000 300000 200000 100000 0

Net Income

THREATS
Film Piracy Movie Rentals Concerts and sports events

Weak Box Office Attendance

Weak attendance through out industry Cineplex faced various attendance levels based the GENRE of new movies

CHALLENGES
Data control and ownership Resource Requirements Monetary and human Time frame Length of time required (conclusive info only from a minimum 500000 members)

No Central Database
No central database for better customer service and retention

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CRM TRIGGERS

AGENDA

PROGRAM PARTNER

REWARD STRUCTURE

DATABASE VENDOR

MARKETING COM

LAUNCH

PROGRAM PARTNER
I. II. III. Internal Development Flight Miles Scotia Bank

REWARD STRUCTURE FOUR Options DATABASE VENDOR I. II. III. Alpha Kappa Gamma

MARKETING COMMUNICATION In Theatre Advertising || Newspaper || Radio || Online || Grass Roots LAUNCH National || Regional

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PROGRAM PARTNER

REWARD STRUCTURE
FLIGHT MILES

DATABASE VENDOR

MARKETING COM
SCOTIABANK $3mn + $1.7mn + $1.9mn 6.8 million customers None

LAUNCH

PARAMETERS COST CUSTOMER REACH OWNERSHIP

INTERNAL DEVELOPMENT $5.5mn + Diminishing costs in subsequent years 5.3 million unique visitors Complete

$5 mn + $0.09 /transaction+ data access cost 7 million None

PROS

1. Unlimited data access and control 2. Would know ones brand the best

1. Immediate entrance to data of 7 mn people and other Flight Miles partners 2. Offer of $250000 by Flight Miles towards marketing campaign 3. Easy reach to large number of Canadians already widespread awareness built(exhibit 4) 4. No need to carry multiple cards

1. One of the BIG FIVE banks in Canada 2. 50 50 COST SHARING would reduce associated RISKS 3. Leverage on earlier corporate sponsorships 4. Prior experience with data management companies Gold Card 5. No requirement to open bank accounts but each debit/credit card holder issued Cineplex loyalty card 6. No CONTRACTUAL EXIT BARRIERS
1. Naming rights on 3 major theaters 2. Exclusive agreements on bank machines in all theaters 3. Customers wouldnt like carrying multiple cards 4. Constrained decision making power 5. No access to individual level banking information

CONS

1. Financial risk of unredeemed points 2. Difficult to divest the program 3. New department and database required 4. Development timeframe

1. Lengthy commitment of 3 yrs 2. No easy exit option 3. Would lose all access to accumulated data on exiting 4. Extra cost incurred in accessing database and to issue points

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CRM TRIGGERS

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PROGRAM PARTNER

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DATABASE VENDOR

MARKETING COM

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Parameter Sign up points

Option 1 500

Option 2 100

Option 3 0

Option 4 250

Points per movie transaction

Membership fee Permanent concession discounts Value benefits on reaching highest point

100
0 0 $51.77 on reaching 1500 points

100
One time $2 10% $68.37 on reaching 2500 points

0
Annually $5 15% Nil

100
0 0 $62.22 on reaching 2000 points

Value benefit per movie transaction Cost to company

3.45=51.77/15 $59.94

2.73=68.37/25 $99.91

0 -

3.11=62.22/20 $79.92

Most attractive option considering all available attributes

No

No

No

Yes

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CRM TRIGGERS

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PROGRAM PARTNER

REWARD STRUCTURE

DATABASE VENDOR

MARKETING COM

LAUNCH

ALPHA Leading marketing firm, specializing in LOYALTY PROGRAMS, In Canadian market since 1980 Clients like American Express, Coca Cola, Microsoft Held Focus Groups -> Site features (Site, Navigation, Up-to-date) ->Used info in conjunction with specs to PROPOSE COST - $500,000 (One time) + $40,000 / month (for website upkeep) KAPPA One of the largest global marketing agencies, known for managing data for Royal Bank of Canada Undisputed industry leader in MOBILE MARKETING, which links strongly to Cineplexs target market High standards in DATA PRIVACY and DATA SECURITY. Also had entertainment industry experience Two Sites Member Acquisition and Member Retention COST - $1,000,000 GAMMA Competitor in Canadian marketplace for 4 years, developed CRM for CITI Financial, Kaplan University etc Special marketing platform that supported all aspects of email management and e communication campaigns Track members on an ongoing basis through different promotional mediums, such as web advertisements and respond immediately to members through messaging for those leaving the site FIXED PRICE, FIXED TIME MODEL , but unable to provide costs for data management Preliminary planning and design costs estimated at around $200,000

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CRM TRIGGERS

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PROGRAM PARTNER

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DATABASE VENDOR

MARKETING COM

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BUDGET CONSTRAINT 0f $300,000

MARKETING COMMUNICATION IN THEATRE ADVERTISING COST None SALIENT POINTS No costs associated Excellent way to reach the in house audience Hosted 5.3mn guest annually Could reach ONLY EXISTING CUSTOMERS National newspaper didnt have the reach to markets where Cineplex operated Through regional newspapers, several more markets can be reached Regional newspapers would incur more costs Could achieve significant coverage in key markets Already used this medium in rural theater markets Lethwaite confident to negotiate for FREE ADVERTISEMENT SPACE Cineplex Website Google, Muchmusic.ca, MTV.ca etc Word of Mouth publicity Promotions in college and highly visited areas Corporate Sponsorships COURSE OF ACTION Promotion Options Presented during pre-show Point of purchase displays Backlit posters Websites In which newspapers to advertise The message and frequency of the insertions

NEWSPAPER

Avg. Weekly Cost for Half Page Print Adds I. Medium Markets - $1200 II. Large Markets - $3600 + Development cost - $850/add 30 sec commercial / Week I. Small and Medium - $160 II. Large - $225 Development of radio adds $1100/ city Variable costs according to format and size Unsure of the cost

RADIO

ONLINE ADVERTISING GRASS ROOT INITIATIVES

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CRM TRIGGERS

AGENDA

PROGRAM PARTNER

REWARD STRUCTURE

DATABASE VENDOR

MARKETING COM

LAUNCH

REGIONAL LAUNCH Regional launch would be LESS RISKIER Would give Cineplex an OPPORTUNITY TO RESOLVE PROBLEMS before FULL IMPLEMENTATION It would be more EXPENSIVE, but would allow Cineplex to stretch funds over a longer period

Cost Efficient

POS platform rollout Supported national Rollout

NATIONAL LAUNCH

Partnership with Scotiabank shall REDUCE FINANCIAL RISK and increase coverage

ACCRUE REVENUES faster

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