3. Competitor Overview
Distribution of films for cinema exhibition in Australia is dominated by four large firms. These are Roadshow Distributors (Roadshow), United International Pictures (UIP), Columbia Tristar Film Distributors (Columbia) and Twentieth Century Fox Film Distributors (Fox).
Roadshow is 50% owned by the Village cinema group and 50% by Greater Union and has agreements with two of the major US studios, Warner Bros and Disney to distribute their films theatrically in Australia. Under these arrangements all Warner Bros and Disney titles to be distributed in Australia will be handled by Roadshow.
Film distribution is highly concentrated. The four largest distributors, UIP, Roadshow, Columbia, Tristar and Twentieth Century Fox, generally hold in excess of 90% of the Australian market. Enquiries have also revealed that there are several potential barriers to the entry of new film distributors. The most important are access to product and access to finance.
According to Squire J(2004) pointed out, the owner has specific exhibition vision for a cinema, they renting or buying property for building a movie cinema which could be regarded as one kind of independent cinema(Squire J, 2004, p.165). Being an independent starting film exhibitor, the potential risks of running the Specialty Movie Cinema may be faced with challenges in the following areas:
- Their inability to negotiate film hire terms;
- The terms for second run films, in particular the fact that they are obliged to pay a higher percentage than first release cinemas at that stage while the earning capacity of the film has been severely reduced;
Also they have known as local brand: Village cinema, Hoyts, and Greater Union.
4. Macro Environmental Analysis
4.1 Why it is important
The macro environmental analysis basically includes analyzing all factors that may influence the decision making by a company. (Pride et al. 2007). An accurate analysis outcome may decrease risk and avoid threats. Both market micro and macro environment is continuously changing, and the company must be able to adapt, there may be aggressive competition or rivalries in a market (Grafton Milne, 2008). There are totally 6 macro environment factors which are demographic, economic, natural, new technology, political and cultural. However, some of them are not suitable for this particular case, so I will analysis the factor with matters.
4.2 Macro-environment analysis
The following table will show the relevant opportunities and threads may happen to cinema industry under macro-environment influence:
5. Consumer Behavior Analysis
There are five steps to analysis consumer’s behavior. (Kotler et al., 1997) In the customer’s buying process, first, customers should recognize a problem or needs. When a customer finds out a need, she/he will be going to search any relevant information. There are 2 types of information search: internal and external. After customers identify the potential choices, they tend to find out which one is most valuable one and can bring maximum benefits. After buying a service, the consumer would like to compares it with their expectations to see whether satisfied or not. This may affects repeat-purchase behaviour and consumer value perceptions.
The following table shows the DMP analysis
6. Recommended Marketing Research
Marketing research is an information report that identifies marketing opportunities. Evaluate marketing actions and monitor marketing performance. There are four steps in marketing Research Process (Assael et al,. 1995). In the first step is defining the problem and research objectives. It let us to realize the situation what we have at the moment and set the goals. The second step is developing the research plan for collecting information. After the decision of problem and set the goals, marketers must decide which information they exactly want, give a plan that effectively collect the information. The graph below shows the statistics of age group of cinema audiences:
In this particular case, I recommend you focus on the demographic dimensions, particular in the age group. I will explain in the following paragraph.
7. Justification for Choice of Segmentation Base
Market segmentation is dividing market into groups with different needs, characteristics or behaviors. (Lamb et al. 1998). Different consumers expect different benefit combination from different type products. A small company can not attract all market customers. Competitive with other competitors it not a good option rather than focus on certain segmentation market, cause focus on certain market maybe brings more benefit. Four dimensions used to segment the market “demographic, geographic, psychographic and behavioral”. I use demographic segmentation because calculate and statistics in demographic dimensions is easier than any other dimensions. There are three factors in demographic segmentation: age and life-cycle segmentation, gender segmentation and income segmentation. The “age” is the best base to use to group people rather than “income” because the pricing of movie ticket most of the people can afford at the moment, the “income” only affect a little bit on people’s going cinema ratio. But which movie is showing are the most attractive factors for the last 10 years.
8. Profile of Segments (table)
The table below shows the profile of segments. I would like to choose age as my segment factor:
9. Target Market Choice and Justification
The second part of market segmentation is target marketing. As seen on the table above, profile of segments told us the most valuable market for movie industry is teenagers. Base on that, we should choose the relativity strategies. Three criteria for evaluating is
1) Segment size and growth: According to data from Australian Film Commission (Australia's audiovisual markets 2004). Cinema-going remains most popular among people in the14–24 age-group, with 90 per cent going to the movies
in 2004, compared to 79 per cent of 25–34 year olds, 73 per cent of 35–49 year olds and 57 per cent of those aged 50 and over.
2) Segment structural attractiveness: by consider structural attractiveness, we should consider about potential competitors. As we think we will running a cinema in a abandoned warehouse, we are independents Exhibitor, there are totally 35% commercial screens by independent exhibitor in 2004,
Birch Carroll & Coyle 11%, Hoyts 19%, Greater Union12%, Village 12%. (Australia's audiovisual markets 2004). Therefore, independent exhibitor market had an attractive structural.
3) Marketing Organization Objectives and Resources: even we got good growth and size, structural attractiveness, objectives and resources and need to be considered as well. Because our cinema converts from an abandoned warehouse and we only got limited resources, so the concentrated marketing strategy would be the best for this situation.
10. Proposed Positioning Strategy
Proposed Positioning Strategy can be start with product position. Offer more value than other competitor gives us more competitive advantages (Aaker & Shansby 2000). Two Perceptual maps are representing in the below:
As we can see from above diagram, we do not have competitive advantage from pricing and environment compare with our competitors, but what we have is we showing some cartoons on big screen which regular cinema would not show, for example: “Transformer”, “Spiderman”…etc, also we showing cartoons in a series, like “NARUTO”, “One Piece”…etc. That will be our segmentation market and that difference give us unique selling proposition and therefore we can define ourselves as Cinema Cartoons and Comics (C’C&C). With the positioning statement, we can say that: To teenagers who need to watch latest cartoon and updating regularly, Cinema Cartoons and Comics is the cinema that allows you to watch latest and unique cartoons in front of big screen with low price and amazing qualities.
11. Marketing Objective
All businesses need to set a marketing objective for themselves or for the products or services they are launching. It will tell you what company, product or service hope to achieve. Setting objectives are important. Because it will guide company focus on specific aims over a period of time and can motivate staff to meet the objectives set.
S.M.A.R.T. stands for (Learning Marketing. net 2010):
1. Specific – Objectives should specify what they want to achieve.
2. Measurable – You should be able to measure whether you are meeting the objectives or not.
3. Achievable - Are the objectives you set, achievable and attainable?
4. Realistic – Can you realistically achieve the objectives with the resources you have?
5. Time – When do you want to achieve the set objectives?
For this case, the S.M.A.R.T objective could be:
- This Cartoons and Comics cinema should grow by 15% year on year for the next five years
- This Cartoons and Comics cinema maybe to increase sales 10% from 2011– 2014
12. Conclusion
In conclusion, doing business in exhibition industry is not easy especially for any independent exhibitor. Their Oligopoly environment creates lots of barrier to entry. More understanding and accurate analysis market environment is the first step to Target market opportunities analysis; work through Consumer Behavior Analysis is the second step for target market evaluation; and then, target market segmentation works out a clear idea which Target market should be our selection. In the end, if a company chooses to expand there familiarizing all ideas and resources is critical to the company’s success.
13. Reference List:
Australian Film Commission 2004, 2004 Australia's audiovisual markets, AFC, Sydney
Aaker & Shansby, “Positioning your product”, ibid ., pp.57-8
Assael, H., Reed, P. and Patton, M. (1995) Marketing: Principles and Strategy Harcourt-Brace, Sydney
Grafton Milne, 2008, The Macro-environment, http://www.marketing-plan-success.com/Articles/Macroenvironment/
Kotler, P., Adam, S., Denize, S and Armstrong, G. (2009) Principles of Marketing, 4th edition, Pearson Education, Sydney, Australia
Learning Marketing. net 2010 viewed 10 October <http://www.learnmarketing.net/smart.htm>
Lamb, W., Hair, J., McDaniel, C. (1998), Marketing, 4th edition, South-Western College Publishing, Cincinnati.
Pride, W., R Rundle-Thiele, S., Waller, D., Elliott, G., Paladino, A. and Ferrell, O. (2007), Marketing: Concept and Strategies, 12th edition, Houghton Mifflin, USA.
Squire, J 2004, the Movie Business Book, Fireside and Colophone, United States of America
