The movie rental business can be further characterized by selection and rental turnover. If a store offers a good selection and has a large number of rental turnovers, then it is likely going to be successful. This is the gorilla's strategy. They support this strategy even more by selling some of their rentals as they become less popular to be able to reinvest the money into the newest releases. This last strategy only works with the mainstream market and not CCD FLICKS's market because the mainstream market is attracted to what is new, the current releases.
Once something has been out for a while, interest wanes. With CCD FLICKS customers, the age of the Video CD is irrelevant, it is the thematic quality, irrespective of popularity and newness that dictates acceptance.
There are two major chains, Speedy and Hollywood Video CD that are expanding throughout Selangor, often at the expense of the "mom and pop" outfits who are unable to compete against the giants. Typically the giants will enter a town and over time drive the local, independently owned shops out of business because of their large selection and commercialization that people favor. Speedy and Hollywood Video CD however only address one segment (albeit the major one) of the population, the segment that prefers commercial releases.
2.1.4 Market Growth
In 2000, the Video CD rental industry had revenues exceeding $7.3 billion dollars. The industry is forecasted to grow at 9% for the next several years. One major reason for this growth is the increasing costs of seeing movies out in theatres. It can cost upwards of $20-$25 for two people to see a movie in the theatre. These rising costs have driven demand for the Video CD rental industry, which offers far more reasonable rates and a wider selection, although not as cutting edge.
2.2 SWOT Analysis
The following SWOT analysis captures the key strengths and weaknesses within the company, and describes opportunities and threats that CCD FLICKS faces.
2.2.1 Strengths
- Strong relationships with distributors.
- Excellent staff who are well informed and customer attentive.
- A centrally located storefront.
- An unmatched selection.
2.2.2 Weaknesses
- The struggle to raise brand awareness.
- A limited budget to acquire customers.
- Not having the buying power that the giants have, increasing acquisition costs.
2.2.3 Opportunities
- A growing rift in the market between artsy and commercial films and the corresponding viewers.
- The opportunity to decrease customer acquisition costs over time as more customers are acquired through referrals.
- The ability to leverage the fact that the "giants" ignore the majority of the alternative/intellectual population segment.
2.2.4 Threats
- Competition from the giants if they decide to change their course and address the alternative crowd.
- A significant increase in movie theatre technology that makes the in-the-movie experience more difficult to replicate at home.
- Increased popularity of independent and foreign films, ensuring that the giants carry these titles.
2.3 Competition and Buying Patterns
Currently in Cyberjaya there are two different types of competitors:
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The industry gorillas: This refers Speedy and Hollywood VCD. For all intent and purposes these two are indistinguishable. Both are large and very corporate in the sense that every store is the same, just like a McDonalds. Both stores compete on location, there is little that differentiates them. One guarantees that new releases will always be in stock, but you only get them for a two-day rental. The other does not guarantee them in stock, but you get them for five days. For the gorillas, they concentrate the most energy on the new releases, this is what their customers seem to want.
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Local Video CD rentals: These stores are small, locally owned companies that typically cater to a neighborhood. Generally, they do not specialize in any one thing; they usually have a wide range of offerings and the bulk of their customers live within blocks of the store. Cyberjaya has several of these.
People make Video CD rental decisions based on a few factors, typically selection and convenience. If they want selection of the latest and most popular movies they go to the gorillas. If they do not rent movies that often and are more interested in convenience then they might visit the local Video CD store.
2.4 Services
CCD FLICKS will provide Cyberjaya with an alternative movie rental store, a service that is not yet offered in Cyberjaya. The current offerings of typical rental stores are based on popular, commercial releases. There is a market for alternative releases, evidenced by the popularity of the Cyberjaya Arts Cinema, which shows this exact genre of movies in a first run movie theatre format. In essence, CCD FLICKS will be the home extension of the Cyberjaya Arts Cinema.
2.5 Keys to Success
- Creative selection.
- Passionate employees.
- Professionalism.
- Customer centric business model.
2.6 Critical Issues
CCD FLICKS is still in the speculative stages as a retail establishment. Its critical issues are to continue to take a moderate fiscal approach; expand not for the sake of expansion but because it makes fiscal sense to.
3.0 Marketing Strategy
CCD FLICKS's marketing strategy will be based on generating visibility of CCD FLICKS with its targeted population segment. This will be achieved through a multi-faceted advertising campaign. The campaign will utilize advertisements in a local art/entertainment weekly guide, advertisements at the local artsy movie theatre, and promotional activities with a couple of local restaurants that have similar demographics.
3.1 Mission
CCD Flicks' mission is to provide the customer with independent, non-commercial movies. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers by allowing them to find films that they never expected to find at any Video CD store.
3.2 Marketing Objectives
- Increase repeat customers by 7% each quarter.
- Decrease customer acquisition costs by 8% per year.
- Increase brand equity, measured by the number of new customers that are already familiar with CCD FLICKS and their niche before arrival into the store.
3.3 Financial Objectives
- At least 10% growth rate after the second year of operation.
- A 5% decrease in overhead costs per year for the first three years.
- Profitability by 18 months.
3.4 Target Marketing
CCD FLICKS' s customers can be divided into two general groups that are differentiated by age, over 30 and under 30.
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Under 30: This market segment has a diverse interest that certainly overlaps with the over 30 crowd. The under 30 movies might have more of a concentration on action, violence, drugs, sex, etc. This is not to say that the movies are about these subjects solely, it is just that these topics might relate better to someone under 30 than over 30.
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Over 30: This market segment has a bit more mature tastes, the humor may be more sophisticated, they are more likely to enjoy a foreign film relative to the under 30 group. Generally, the topics of the movies will reflect issues that this group is most used to or closer to their experiences.
CCD FLICKS is focusing on these two groups because they are underserved in Cyberjaya. Currently, there are two large corporate rental chains, Hollywood Video CD and Speedy that hold the majority of the market. In order for them to be successful, they must concentrate on the middle of the market, the mean. This allows them to use economies of scale to drive down the costs of operating a movie rental business. While this works for the general population, it does not address the fringes at all. CCD FLICKS is addressing the fringe movie rental market.
Please note that while the term fringe market sounds almost derogatory, in Cyberjaya it really is not. The alternative market in Cyberjaya is thriving, particularly relative to most other cities. Cyberjaya, demographically, is a highly educated population when compared to most cities. Alternative movies generally appeal to a more educated crowd. The masses can have their commercialized movies, they generally appreciate movies where they can watch without thinking. This is evidenced by the general popularity of television, mindless entertainment of no real thematic value and little cultural value.
3.5 Positioning
CCD FLICKS will position themselves as an alternative to the large, sterile, commercial movie rental outlets. There is a large segment of Cyberjaya' s population that appreciates non-commercial, artsy films that are not offered by the chains.
CCD FLICKS' s positioning will leverage their competitive edge of their attention to the customers in Cyberjaya. Their product offering is based on a need of Cyberjaya that is currently unfulfilled. While this approach only works with small applications, meaning it is not the best for a countrywide implementation, it is also costly. Time must be spent doing marketing research to determine where the unmet need is. This strategy is unrealistic for a large corporate chain.
It is ideal for CCD FLICKS however. Cyberjaya has a large "arts" population that is currently not being addressed in the Video CD rental market. CCD FLICKS' s competitive advantage is creating a store that fills a need specifically in Cyberjaya, in contrast to opening a general store that will have broad, pedestrian appeal.
CCD FLICKS will meet this need by basing their selection of Video CDs that are in general hard to find in Cyberjaya. CCD FLICKS recognizes that by doing this they are decreasing the base of possible users. However, at the same time, they are developing loyalty among the smaller user base.
3.6 Strategy Pyramids
The marketing strategy will first seek to create customer awareness regarding the services offered, develop the customer base, and work toward building customer loyalty and referrals.
The message that CCD FLICKS will seek to communicate is that they offer a quality, independent, non-commercial alternative to the norm of Speedy and Hollywood Video CD. This message will be communicated through a variety of methods. The first is an advertising campaign in the Cyberjaya Weekly, an entertainment guide that serves the alternative crowd of Cyberjaya. This weekly has similar customer demographics as CCD FLICKS so it will be well targeted.
The second method of communication will be with advertisements at the Cyberjaya Arts Cinema, a local theatre that plays the same genre of films as CCD FLICKS. The advertisements will be in the form of visual posters in the cinema as well as advertising within the trailers of the films.
The last method of communication will take the form of strategic relationships with various restaurants that have similar customers. The alliances will often include some sort of promotion that combines the services of both the restaurant and CCD FLICKS.
3.7 Marketing Mix
CCD FLICKS' s marketing mix is comprised of the following approaches to pricing, distribution, advertising and promotion, and customer service.
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Pricing: CCD FLICKS' s pricing scheme will be based on maintaining a competitive price relative to the giants. In addition, the store will offer deep discounts for midweek rentals to increase demand during these times.
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Distribution: All of the services will be distributed through CCD FLICKS' s storefront.
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Advertising and Promotion: The most successful advertising will be advertisements in the local theatre and weekly art guides as well as strategic alliances with select restaurants.
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Customer Service: Obsessive customer is the mantra. This will be accomplished regardless of the short-term cost, recognizing a happy customer ensures long-term profits.
3.8 Marketing Research
During the initial phases of the marketing plan development, several focus groups were held to provide CCD FLICKS with insight into customer preferences. These focus groups provided CCD FLICKS with a wealth of information regarding the attributes of the most prized customers, and insight into their decision-making processes.
An additional source of market research is a survey that was placed at the Cyberjaya Arts Cinema capturing valuable feedback regarding questions of Video CD rentals. Theses surveys were completed by customers at the theatre and were developed in part by a mathematics graduate student at the Multimedia University. Leveraging the graduate student's help was instrumental in developing a statistically significant survey instrument.
4.0 Controls
The purpose of CCD FLICKS' s marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance:
- Revenue: monthly and annual.
- Expenses: monthly and annual.
- Repeat business.
- Customer satisfaction.
4.1 Implementation Milestones
The following milestones identify the key marketing programs. It is important to accomplish each one on time, and on budget.
4.2 Marketing Organization
The Marketing Manager will be responsible for all of the marketing activities that CCD FLICKS will undertake.
4.3 Contingency Planning
Difficulties and risks:
- Problems generating sufficient visibility.
- An overly aggressive entry into the artsy market by the corporate giants.
- Significant increases in costs for having to carry both VHS and DVD formats.
Worst-case risks include:
- Determining that the business cannot reach profitability.
- Having to liquidate equipment to cover liabilities.
1.0 Executive Summary Page 1
2.0 Situation Analysis Page 2
2.1 Market Summary Page 2
2.1.1 Market Demographics Page 3
2.1.2 Market Needs Page 3
2.1.3 The Market and Trends Page 4
2.1.4 Market Growth Page 5
2.2 SWOT Analysis Page 5
2.2.1 Strengths Page 5
2.2.2 Weaknesses Page 5
2.2.3 Opportunities Page 6
2.2.4 Threats Page 6
2.3 Competitions and Buying Patterns Page 6
2.4 Services Page 6
2.5 Keys to Success Page 7
2.6 Critical Issues Page 7
3.0 Marketing Strategy Page 7
3.1 Mission Page 7
3.2 Marketing Objectives Page 7
3.3 Financial Objectives Page 7
3.4 Target Marketing Page 8
3.5 Positioning Page 9
3.6 Strategy Pyramids Page 9
3.7 Marketing Mix page 9
3.8 Marketing Research Page 9
4.0 Controls Page 10
4.1 Implementation Milestones Page 11
4.2 Marketing Organization Page 11
4.3 Contingency Planning Page 11
