A PROJECT REPORT ON PVR CINEMAS: MARKETING STRATEGY SUBMITTED BY: SATISH SINGH ) SESSION: 2007-2010 1

ACKNOWLEDGEMENT The present work is an effort to throw some light on PVR Cinemas: Marketing Strat egy . The work would not have been possible to come to the present shape without the able guidance, supervision and help to me by number of people. With deep sense of gratitude I acknowledge the encouragement and guidance receiv ed by ..who helped and supported me during the course, for completion of my thesis. SATISH SINGH 2

CHAPTERS: I. Acknowledgement..2 II.

Entertainment Industry Overview...3 a. Film and Exhibition Industry Overview III. PVR Cinemas: About the Company..19 IV. SWOT Analysis26 V. Porters Five Forces Model 27 VI. Ansoff Matrix..36 VII. STP Analysis40 VIII. Marketing Mix: 7 Ps.44 IX. BCG Matrix60 X. Recommendations.61 3

ENTERTAINMENT INDUSTRY Over the last decade, India has registered the fastest growth among major democr acies and is now the fourth largest economy in terms of purchasing power parity. Ove r the years, spending power has been steadily increasing in India. On an average , 30-40 million people are joining the middle class every year. The consumption spending is rising due to increasing disposable incomes on account of sustained growth in income levels and reduction in personal income tax over the last decad e. The Indian Entertainment Industry is expected to significantly benefit from t his fast economic growth, as this cyclically sensitive industry grows faster whe n the economy is expanding. When incomes rise, proportionately more resources ge t spent on leisure and entertainment than on necessities. 4

Indian Film and Exhibition Industry Overview The Indian film industry is the largest film industry in the world in terms of t he number of films produced and admissions each year. The Indian film industry r evenue for 2004 was estimated at Rs. 59 billion (US$1.3 billion), which was less than 1% of global film industry revenue and a fraction of the U.S. film industr y revenue, which was US$9.49 Billion in 2003. The pie chart below sets forth the percentage contribution of various revenue sources to the total revenue of the Indian film industry in 2004. 5

Although over 90 years old, the Indian film industry was only accorded the statu s of an industry in 2000. Consequently, it is only during the last five years th at the Indian film industry has been able to attract financing from banks, finan cial institutions, private equity investors and corporations. Prior to 2000, the industry was almost solely reliant on private and largely individual financing. Although corporatisation of the film industry has started, the film industry is currently largely unorganized and fragmented. Going to the cinema is one of the most popular entertainment options in India. In 2004, the total admissions in c inemas in India were 3,100 million. The second largest number of admissions is i n the United States, which had 1,500 million admissions in 2004. 6

The film industry comprises three sub sectors: Film production, which involves the making of movies; Over 900 Indian produced f ilms were released in 2004. Hindi films constituted the bulk of films produced i n India closely followed by regional films in Telugu, Tamil, Kannada and Malyala m. Hindi films are 7

the most popular films in India and account for over 40% of the total revenues o f the Indian film industry. The majority of Hindi films are made in Mumbai, popu larly referred to as "Bollywood". Around 30% of the films made in India generate 90% of the Indian film industry s revenue. Film distribution, which involves th e distribution of movies to cinemas, television and video stores; The film distr ibution system in India is territory-based. The country is geographically divide d into 14 distribution territories and film producers tend to sell distribution rights for each territory. Most film distributors in India are small businesses. This has resulted in the film industry being highly fragmented, with each terri tory having 50-75 distributors, while 810 distributors operate on an all India b asis. A distributor generally sells its rights to sub distributors who cover cer tain sections in a territory Film distribution sector characteristics and trends In the recent past, some of the larger producers have vertically integrated int o distribution, especially into overseas markets. A number of new entrants have entered the distribution business, resulting in an increase in acquisition cost for distributors. Distributors are trying to lock in the content at a very early stage by financing film producers. Distributors are playing an increasing role in marketing of films. New films are being released in satellite/ video formats within a shorter period after theatrical release, thereby reducing the window fo r theatrical exploitation. New films are being released across a larger number o f theaters with a large number of prints in order to maximize theatrical revenue s in the shortest time period. New distribution formats, like digital distributi on through DVD, are being implemented. The increasing size of the home video mar ket is also expected to provide growth for the distribution sector. As of the en d of 2004, over five million Indian households had a VHS or DVD player, an incre ase of 50% compared with the end of 2003. Increasing wealth should result in mor e Indian households owning a VHS or DVD player and expand the home viewing marke t. 8

 Film exhibition, which involves the exhibiting of movies in cinemas. The Indian film exhibition sector can be divided into two segments: single and double-scree n cinemas and multiplex cinemas, i.e., a cinema complex with three screens or mo re. As of March 2005, there were approximately 12,000 cinemas in India of which 73 were multiplexes with a total of 276 screens. Indian Film Exhibition Sector T he Indian film exhibition sector had revenues of Rs. 34 billion in 2004. Despite the higher number of tickets sold in India, the total reported box office reven ue is significantly lower in India compared with the United States. This is prim arily due to the fact that ticket prices are much lower in India, with an averag e of Rs. 15 . The lower ticket prices in India are due to lower income levels, e specially in rural and semi urban parts of the country, and the lack of good qua lity cinemas. The average price of a ticket for a multiplex cinema is Rs. 75 - 8 5 but the number of screens in multiplexes represented only 2.3% of total screen s in India as of March 2005. (Source: Yes Bank Report) An increase in the number of Multiplex screens should result in an increase in film exhibition revenues, so the opening of new Multiplexes represents a significant growth opportunity fo r the industry. The total reported box office revenue in India is also lower bec ause the amount of revenue collected at the box office is under reported due to the fragmented and non-transparent nature of the film exhibition sector. Inadequate Number of Screens In India, the number of screens per million of popu lation is just 12 whereas the average in western countries is approximately 40. 9

Concentration of Cinemas in Southern India Southern India accounts for a majorit y of the cinemas in India. Andhra Pradesh has the most number of cinemas in Indi a followed by Tamil Nadu, Kerala and Karnataka. Whilst Southern India accounts f or the majority of all cinemas in India, as of March 31, 2005, only five out of 73 multiplex cinemas in India were in Southern India. Major Players in Indian Film Industry 10

Indian Film Industry Players Zee Telefilms Adlabs Films AVM Productions Mukta Arts Rajshri Production s Shringar Group PVR Cinemas Pritish Nandy Communications July 2005 a X Present Not present Production Distribution Exhibition a a a a a X X a a a a a a a a a a a a X X a a X PEST ANALYSIS 11

Economic The Indian Entertainment Industry is one of the fastest growing sectors of the I ndian economy riding on the economic growth and rising income levels that India has been experiencing in the past few years. The entertainment industry is expec ted to grow faster than GDP growth and consequently more spend is expected on le isure and entertainment. The film segment will ride on the growth of multiplexes and digital distribution formats. 18% year-on-year growth is expected in this s egment. There are 73 multiplexes in India, with 276 screens and about 89,470 sea ts. The numbers are expected to increase to 135 multiplexes with more than 160,0 00 seats by the end of 2006. In India the multiplex business is modeled to the o nes in developed countries. The main revenue stream is box-office collections fr om movies. Other revenue streams include rent from display systems, restaurant r entals, food and beverage collections, product launch rentals and promotions by companies. In several cases the other revenue streams are often larger than boxoffice collections, but movies are the main pull of such complexes. Increase in disposable income in the hands of an ever expanding Indian middle cl ass Multiplex Cinemas generally cater to middle and high income households. The emergence of the Indian middle class with greater earning power and a higher dis posable income is one of the key factors that will drive the growth of the Multi plex Cinema segment. The table below shows the growth in the number of middle an d high income households in India. Because of Indias status as a good IT hub for outsourcing by U.S. companies, young Indians between 20 to 24 years old, who ord inarily wouldnt be able to find work easily, are finding jobs with call centers s traight out of college. Now they have disposable income thats totally discretiona ry and about 20 to 30% higher than prevailing wages, which they are spending on books, movies, music, cell phones, food and brand-name clothes 12

From 1999 to 2003, the average Indian household increased its spending on movies and theatre as a percentage of its disposable income from 1% to 4.6%. Organised retail boom A growth in consumption levels, changing lifestyles, the availabili ty of quality real estate and significant investments in malls are expected to r esult in an increase in the size of the organized retail business in India. The organized retail market in India is expected to increase its share of the total retail market from 2% as of 2004 to reach 5-6% by the 2007. The number of malls in India is expected to increase from approximately 50 as of the end of 2004 to around 250 by the end of 2006. One of the key elements for the success of a mall is its ability to drive footfalls consistently. Multiplexes are one of the anch or tenants in large format malls, as their presence increases footfalls by appro ximately 40-50%. The expected organized retail boom should result in a significa nt increase in the number of Multiplex Cinemas. Social Movie watching is becoming an experience more than just a casual outing with the family. The lines are blurring between watching a movie for 13

entertainment and watching a movie for leisure. The movie experience goes much b eyond just watching a film. The encouraging growth in the number of multiplexes is making the movie goers, especially in urban India, experience a new way of en joying movies. Higher consumption spending and consequent changes in lifestyle a re also spurring the growth of the Indian Entertainment sector. Since the late 9 0s distribution has become equally as important as production to the Indian movie industry. Multiplexes were the natural choice for distributing movies in large cities. Space was at a premium and several movies were competing for limited num ber of screens. Multiplexes not only increased the number of available screens, but also provided them with excellent acoustics and enhanced picture display. Increase in Number of High Grade Hindi Films Demand for a particular movie is ge nerally driven by both its critical reviews and word of mouth from patrons. An i ncrease in the average quantity of high grade Hindi films released per week shou ld increase the total demand for movies, as these movies tend to be more popular . As shown in the table below, from 2001 until 2004, there was an increase 48% i n the number of releases per week for high grade Hindi films. Increasing corporatisation of the film production sector should result in an inc rease in the number of high quality films produced, which should increase demand for movies. In an increasingly corporate environment, unviable movies with weak scripts should find it difficult to garner funding. Consequently, although the average number of films produced annually in India is expected to fall from over 900 in 2004 to around 600 by 2010, the quality of the movies produced is expect ed to increase. 14

Political The year 2004 also witnessed a change in the political scenario of the country w ith a positive impact on the regulatory scenario. A new set of policy makers are looking at this segment with a fresh perspective, which is a positive sign. On the other hand this does give rise to delayed policy decisions, a fact not favou red by all. Several state governments provided incentives to encourage the growt h of multiplexes. A positive concession given to the cinema theatre industry in 2002/03 was the deduction of 50 to 100% of the profit earned by multiplexes that came to them in the next two to five years. The waiver was restricted to multip lexes, which were essentially in metropolitan cities, but the concession has bee n extended to smaller cities too. To boost the sector, the government has opened large parts of the sector to foreign direct investment (FDI). It allows 100 per cent FDI on automatic basis in the film industry with no entry level pre-condit ions. Entertainment tax benefits In the late 1980s various state governments imp osed steep increases in entertainment taxes, which lead to a decrease in the pro fitability of cinemas. This adversely affected investment in cinemas and mainten ance standards as cinema owners tried to reduce their costs, which lead to a fal l in the ambience of cinemas and a decrease in the quality of audio and visual s tandards. The fall in cinema standards coupled with the availability of watching movies on videocassette players lead to a decline in cinema patronage. Most cin emas were during that time, and still are, run as small business and these busin esses did not have access to capital to improve the cinema ambience and quality to arrest the declining patronage. In June 1997, we opened the first Multiplex C inema in India in Saket, Delhi. Since the beginning of 2001, several state gover nments unveiled tax incentives (by way of complete or partial waiver of entertai nment tax in the initial five years of operation) to attract new investments in the film exhibition business. The tax incentives coupled with falling interest r ates made investment in cinemas more attractive and led to old cinemas being 15

converted into Multiplexes and new Multiplexes being established as part of shop ping complexes (or malls). State entertainment taxes in India are among the high est in Asia. This has resulted in pressure on the profitability for a number of players in the exhibition business. As a result, exhibitors (especially the sing le screen owners) have not been able to maintain and/or upgrade their cinemas. A worsening quality of cinemas resulted in a lower number of patrons, which put a further strain on profitability. The entertainment tax percentage in certain st ates is set forth below: In order to encourage investment in the film exhibition sector, many state gover nments have announced policies offering entertainment tax benefits. This has enc ouraged the growth of Multiplex Cinemas and also encouraged single-screen theate rs to convert into Multiplexes. The quantum of entertainment tax benefit which m ay be available in each state is different and the availability of these exempti ons would be dependant on compliance 16

with certain conditions specified by the relevant state. A synopsis of the key e lements of the entertainment tax exemptions which may be available in the follow ing states is given below: Technological Film Distribution Holdups One of the main features of the Indian film industry t hat differentiates it from those in western countries is the limited initial rel ease of films. Due to the high print costs for films (approximately Rs. 70,000 p er print) as a 17

percentage of the average ticket price in India, distributors have adopted a pol icy of releasing a limited number of prints in each territory and rotating them in the territory, starting with A-grade cinemas in A-class centers. The bigger m ovies are released with 300 400 prints to satisfy a potential market of 12,000 c inemas. The practice of rotating prints and the resultant delay of the release o f films in B and C-class centers create three major problems for film exhibitors in B and C-class centers: Pirated DVD/VCD copies of the film are generally avai lable by the time the film is released in B and C class centers, which reduces d emand; If the film was not a hit on its initial release in the A-class centers i t is unlikely to do well on its delayed release; and The quality of the celluloi d film print is negatively affected each time it is played, so poor picture qual ity is also an issue - often the dark and scratchy print is hardly visible on th e screen. The above factors result in the box office potential of movies not bei ng realized. Many cinemas in B and C class centers operate on a 7% to 8% occupan cy ratio. Impact of Digital Technology on Cinemas in India To counter this issue of low first instance release, digital cinemas are being opened in B and C-clas s centres in India and movies are being released in those cinemas at the same ti me as movies are released in the A-class centers. Digital copies of films cost s ignificantly less than film copies (approximately Rs. 3,000 for digital compared with Rs. 70,000 for film) and the cost of digital projection equipment being us ed in India is also significantly less than that of film projection equipment (a pproximately Rs. 800,000 for digital compared with Rs. 1.5 million for film). Th e significant reduction in the cost of digital cinema compared with celluloid fi lm makes an India-wide simultaneous release of a movie economic. As of March 200 5, 100 digital cinemas had been opened in India, of which an estimated 65 were i n operation. As of March 2005, 100 digital cinemas had been opened in India, of which an estimated 65 were in operation. Digital technology helps overcome the p roblems faced by B and C-grade cinemas. First, digitalized motion pictures are n ot required to be transmitted through physical media. This means digitalized mot ion pictures can be distributed to more B and C-grade 18

cinemas within the first weeks of their release without incurring additional cos ts to produce additional prints. Secondly, digitalized motion pictures maintain consistent and identical picture quality that is not compromised by use, time, a nd transmission. Thirdly, reducing the time between the release of a motion pict ure and its screening in multiple cinemas helps take advantage of the heightened demands of cinema patrons during the initial five to eight weeks of a motion pi cture s release. This helps to combat the market for pirated motion pictures and helps increase attendance rates at B and C-grade cinemas. Implementing digital technology in cinemas in India should expand the market for B-grade and C-grade cinema owners and operators and thereby increase their profitability through: in creased number of screens on which newly released movies are shown, without incu rring additional production costs; Improved and consistent picture quality witho ut regard to the location of the cinema; and Satisfaction of cinema patrons dem ands at the time when the demand for screening of a movie is at its highest, whi ch should reduce the loss of demand caused by the availability of movies on pira ted DVDs/VCDs. Challenges Faced by Transition to Digital Cinema in India The digital projection technology currently being used in India (mostly in Bclass and C-class centers) satisfies the requirements of the B and C-grade cinemas in India but does not p roduce a picture quality as good as the picture in A-grade cinemas, where cellul oid film is used. In order to have a digital picture quality as good as the curr ent celluloid film quality in A-grade cinemas, as well as to meet Digital Cinema Initiative standards, we need to use at least projectors, which cost between Rs . 4-5 million (US$ 90,000110,000), which is significantly more than the cost of celluloid film projectors. As and when the digital projection technology up-grad ation will be required in the A-grade cinemas in India, the issue of financing o f such equipment will need to be addressed. In the United States, digital projec tion equipment is being financed by Hollywood production houses rather than the film exhibitors, as the production houses get substantial savings from not havin g to produce celluloid prints. 19

ABOUT THE COMPANY Priya Exhibitors (p) ltd is a part of the diversified Bijili Group, which has interests in transport, finance and construction sectors all over India. After a downturn in the industry in late 80s when the onslaught of video wars at its pe ak cinema has now been rejuvenated with the latest international trends in cinem a exhibition reaching Indias shores swiftly with the arrival of satellite TV. The capitals cosmopolitan audience is becoming increasingly aware of the advanced c inematic technology that enhances the movie going experience and this has whette d their appetite for watching movies on the big screen . To cater to the increasin gly sophisticated tastes of the audience Priya exhibitor Pvt Ltd. totally refurb ished the existing cinema in June 1991 including installation of a Dolby stereo sound system. They also gained exclusive rights to screen blockbusters from majo r distributors mainly Warner brothers, 20th century fox, united international pi ctures, small wonder then that the cinema has become the focal point for enterta inment in the capital for both the young and old attracting over 30,000 patrons a week. Infact, Speed set a national box office world record of Rs.785000 in its f irst week of screening at PVR (the highest ever for an English film), which is r emarkable considering the relatively low price of a cinema ticket in India. Buoy ed by the overwhelming success of the cinema after upgrading, Priya exhibitors l td have taken he next initial step for setting up the first multiplex in the cou ntry in a joint venture with Village Roadshow Ltd, Australias leading entertainme nt corporation. PVR is a brand name synonymous with state-of-the-art cinema exhi bition in India. PVR specializes in developing and operating state-of-the-art Mu ltiplexes. PVR Cinemas are the leading cinemas in the country with an emphasis o n design, technology and service. Over the last three years, PVR has established itself as a very strong brand associated with movies, quality exhibition and yo uth-targeted promotions. 20

The company was conceived as a Joint Venture between the Bijli family, headed by Mr. Ajjay Bijli as Indian Promoters and Village Roadshow Limited of Australia, one of the largest multiplex operators in the world with more than 1500 screens under operation. PVR IN DELHI PVR has been a pioneer in multiplex development by setting up Indias first multiplex PVR Anupam4 at Saket in city of Delhi. The com pany has since grown to become the largest cinema exhibition player in the count ry and has 5 theatres with 19 screens in city of Delhi/Gurgaon under its operati on. The Cinema can boast of the highest box office collections in India for five consecutive years since its opening. Located around the Cinema in the same comp lex are a number of up-market restaurants, pubs and fast-food eateries that make it a popular youth hangout place and indeed an entertainment experience for the entire family. PVR Priya, a 25-year-old cinema still considered the best Cinepl ex in Delhi, was completely renovated and brought into the fold of PVR in Januar y 2000. PVR Priya boasts of the highest box office collections in the city of De lhi after PVR Saket. It also has the distinction of having the widest screen in India. Following the tremendous success in South Delhi, PVR expanded to West Del hi in 2001 with the launch of two new multiplexes -- PVR Naraina, and PVR Vikasp uri. PVR Naraina, with four screens and 830 seats, was launched in August 2001. PVR Vikaspuri (3 screens, 921 seats) was launched in November 2001. PVR Group ha s re-opened one of Delhi s oldest and most popular cinema hall, Plaza; now known as PVR Plaza. With a seating capacity 21

of 300 seats, the all new single screen auditorium has been renovated and refurb ished to bring back its former glory. The cinema, unique in its nature, combines the look and feel of the 50s with the state-of-the-art cinema viewing technolog ies of today. The most recent addition to the chain is PVR EDM, this three-scree n multiplex, located in the popular East Delhi Mall, is equipped with the stateo f-the-art technology and is one of its kind in the vicinity. The three-screen m ultiplex has a total seating capacity of 723 seats. It is equipped with the late st THX-approved three-way surround sound system with real life sound effects and state-of-the-art projection facility with the latest Xenon-based technology. Th e stadium seating arrangement ensures unobstructed viewing from anywhere in the auditorium. PVR IN GURGAON In May 2003, PVR Cinemas opened North India s largest multiplex- a 7-screen cinema in Gurgaon. Built over an area of 55000sq ft, this multiplex has an avant-garde lobby with studio effect interiors and currently o ffers a seating capacity of 1300 seats. Two luxurious auditoriums called Cinema E uropa have been custom built with vibrant red, plush reclining seats, double ar mrests and ample legroom offering patrons a comfortable and relaxed cinema viewi ng environment. The choice of movies played at the Europa are an eclectic mix of tastefully chosen niche Indian films, internationally acclaimed as well as Osca r winning Hollywood films. PVR IN FARIDABAD In May 2004, the company inaugurated its sixth multiplex, PVR Faridabad. Located at the popular Ansal Crown Plaza in Faridabad, this two-screen multiplex has a total seating capacity of 522 seats. It is the first of its kind in Faridabad. PVR launched its first ever franchise d CinemaPVR SRS in Faridabad. PVR SRS is a 3-screen multiplex that opened to the public on 12th November, 2004. It has a total capacity of 776 seats.. 22

PVR IN BANGALORE PVR Cinemas has opened India s biggest multiplex (11 screens) i n Bangalore. Built over 1,20,000 sq ft of space, this state-of-the-art multiplex is located in the heart of Bangalore at the Forum Mall in Koramangla with a sea ting capacity of 2019 seats. This multiplex includes two ultra premium cinemas k nown as the Gold Class and two luxurious auditoriums called Cinema Europa in add ition to seven Classic auditoriums. PVR FIRSTS First to launch a multiplex in India - PVR Anupam Saket, Delhi First to launch I ndia s biggest 11 screen multiplex - PVR, Bangalore First to bring premier movie viewing to India with the exclusive Europa Cinema and Lounge at PVR Gurgaon Fir st to introduce Gold Class Cinemas in India at PVR, Bangalore First to form a fo reign joint venture with Village Roadshow, Australia First to receive institutio nal funding in the cinema industry - from ICICI Venture First to offer computeri sed & online ticketing First to accept credit cards in cinemas First to introduc e mobile based information & ticketing service First to launch a loyalty program for movie-goers in India First to launch Movies First - a monthly magazine th at updates the movie lovers on the latest happenings in Bollywood and Hollywood. PVR has also ventured into the business of film distribution and set up PVR Pict ures, a fully-owned subsidiary of PVR Ltd. PVR Pictures specialises in acquisiti on and local distribution of films. ACCOLADES 23

Ajjay Bijli, Managing Director, PVR Limited, was conferred The Theatre World News maker of the Year Award for 2003 . It is his vision and outstanding contribution to the cinema exhibition industry that has made PVR the largest cinema exhibiti on company in the country today. PVR Gurgaon was nominated for an award in the Be st Retail Environment category at the Annual Design Week awards. Ajjay Bijli was al so honoured with a special award at CineAsia 2004 for his significant contributi on to the multiplex industry of India. For the first time, CineAsia honoured an Indian exhibitor. He has also been chosen as Signature Youth Icon for the year 2 005. MISSION A commitment to deliver the best quality cinema viewing Every where, Every time. 24

PVR AS A BRAND PVR has successfully assimilated the Standard operating business and operational practices of Village Roadshow and set new standards in the quali ty of exhibition in India. The quality of cinema viewing has made the PVR brand synonymous with high quality cinema viewing in the country. This has enabled the m to enter into strong corporate alliance partnerships and co-marketing exercise s with leading brands like Pepsi, Evian, Samsung, Whirlpool, Hero Honda, Bharti, American Express, Master Card, Pizza Hut, Cadburys etc. This has generated addi tional steady stream of revenues for the company. BU S IN E S S M OD E L Hedged on Real Estate Anchor Tenant in FECs Widened basket of revenue Streams Service Model No Real Estate Investments Rentals: Lower fixed rentals, due to ad vantage of anchor tenancy in a Mall and in a few cases revenue linked variable r ental Better Lease terms due to recognition as anchor tenancy Enhanced Footfalls Ticket Sales Candy Sales Corporate Alliances, Sale of Media spaces 25

Minimizing real estate risk and Maximizing services RELATIONSHIP WITH VILLAGE ROADSHOW In 2002, Village Roadshow was undergoing a st rategic and business restructuring worldwide. As part of their worldwide strateg y, they decided to concentrate on the Production business and on Exhibition busi ness only in those territories where they have majority control and have the cri tical mass of screens. In line with this strategy they exited from almost 20 cou ntries worldwide, including India. Village Road shows inability to support the growth plans of PVR, the Indian promo ters offered to buy out the Village stake and the joint venture was mutually dec ided to be terminated in June 2002. However, though Village Road show exited as a joint venture partner, the excellent relationship between both companies conti nues and is reflected by the fact that PVR continues to have an exclusive long t erm technical and marketing services arrangement with its erstwhile partners on a long term basis. During the 5 years of joint venture with Village, PVR was exp osed to best business and operational practices in the Cinema Exhibition industr y and was able to revolutionize the way to go to cinemas. 26

SWOT ANALYSIS STRENGHTS First mover advantage in the multiplex business in India Updated technology Prem ium positioning Plays Hindi, English, Regional & foreign movies Locational stren gth Ambience Started the concept of a complete movie going experience Market leade r Very strong brand equity TOM recall Original multiplex Blend of retail & enterta inment WEAKNESSES High cost perceptions T.A very specific (not mass service) Disjointed images for all PVR properties Customer retention Parking problems OPPORTUNITIES First mover advantage Growing family spendings on entertainment Large film indus try over 200 hindi films every year PVR loyalists THREATS Competition blooming large Governments interference Entertainment Tax Other Multi plexs as competition Other ways of entertaingment Accused of increased crime rat e PiracyNo control over surroundings eg. West Delhi Movies becoming bigger than the brand 27

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THREAT OF COMPETITORS PVR Cinema currently faces competition from other companie s in the Indian film exhibition sector. Some of their competitors have greater f inancial resources than them and therefore they may be in a better position than PVR to invest in Multiplex Cinema projects or to sustain losses from such devel opments in the start-up stage. In the future, they may also face competition fro m global entertainment companies if and when such companies make their foray int o the Indian exhibition sector. There are currently seven major competitors in t he film exhibition industry: PVR Cinemas; Inox Leisure Limited; Adlabs Films Lim ited; Shrinagar Cinemas Limited; E City Entertainment; Wave Cinemas; and DT Cine mas. The tables below show the number of screens operated by each of those compa nies and the number of cinemas operated by each of those companies. COMPANY PVR Inox Liesure Adlabs Films Srinagar Cinema Wave Cinema E City Enterta inment Total % Of all India Multiplexes No. Of Properties 7 5 4 3 3 3 25 34% No. of screens 34 25 14 14 13 14 114 41% No. Of seats 7,333 7,344 5,666 4,588 4,380 3,952 33,263 37% 29

Major Competitors DT CINEMAS The DLF group, one of the largest real estate cos wi th a turnover of Rs.1000 crores. DT cinemas are set with its first multiplex at the DLF city center in Gurgaon started on 7 mar 2003. Spread over 3 lac square f eet on mg road, city center is Gurgaons first multiplex, covering 48000 sq ft, ho sts 3 screens and can seat upto 1100 people Has imported state of art projection systems in the world Offers telephone, net and SMS booking home delivery facili ty 2 Gurgaon, Delhi and other NCR regions. DT Cinemas has also tied up with Wow, a telemarketing outfit for phone bookings and almost 5 per cent of their total bookings come through the phone. DT Cinemas is planning to add a creche facility to its Gurgaon premises soon. SATYAM CINEPLEXES Satyam Cineplexes is part of th e Superior Group. The Superior Group has interests in Garment, Candles, Handicra fts, Film Distribution and Cineplexes. Satyam complexes with its state of the ar t cinemas has brought to India, for the first time, the best in class cinema ent ertainment that the world has to offer. With the launch of the Satyam Cineplex i n Patel Nagar and two cineplexes at Janak Place and Nehru Place currently under construction, Satyam Cineplex is poised to become a leading Multiplex operator i n India with a capacity of 5000 seats. Satyam CEO Deven Chachra: We plan to develo p a The group currently owns 3 prime sites in New Delhi namely Janak Place, Pate l Nagar and Nehru Place with many more prime sites under negotiation. The group has a 30

plan to add at least 2-3 sites every year on a rolling programme. By March 2004 Satyam will be running 16 screens at 4 sites with a total of more than national chain of multiplexes. We will develop properties in Mumbai and Pune in the next 18-24 months. Bangalore and Hyderabad will be covered in 2005. Initially, our fo cus would be to consolidate in Delhi, Chandigarh and Uttar Pradesh to leverage S atyams distribution edge. The new expansion project follows from the finalizing of the Rs 82-crore project, which includes revamp of an existing cinema hall (alrea dy operational) in Delhi, and development of two more multiplexes in the Capital . In total Satyam has three cineplexes in Patel Nagar, Janak Place and Nehru Pla ce, in Delhi PROMOTIONS Recently, Jaypee Siddharth tied up with Satyam Cineplexes with an aim to provide some exciting and innovative packages. Under this scheme, guests can enjoy and sa vour a whole host of privileges. To begin with, any guest whose bill in any of t he restaurants of Jaypee Siddharth is Rs 2,000 and above will be entitled to two tickets at Satyam. Further, this promotion works both ways. If any guest who pr esents a ticket stub of Satyam Cineplex (the ticket stub should not be very old) at Cooks Cafe at Jaypee Siddharth will be entitled to a soup and dessert, provi ded the guest in question buys a full meal at the outlet. On weekends, there is a special buffet spread for ticket stub holders (afternoon and evening show audi ences) of Satyam who will be entitled to have this buffet at Cooks Cafe at a dis counted rate of Rs 500 for a couple. The normal buffet price at the hotel is Rs 469 per person, plus taxes. Another unique promotion is titled Siddharth on Wheel s. This scheme is valid for evening shows only and under this scheme cine-goers c an order for food at Jaypee Siddharth before they go to Satyam to watch the 6 pm show. Mr. Kapila assures us that hot meals would be at the doorstep when the fa mily returns home after watching the movie. This meal costs RS. 150 per person. 31

Caf Coffee Day, a leading national retail chain of cafs, as part of its 2nd annive rsary celebrations in New Delhi kicked off a car grand rally in association with Satyam Cineplex and others. The rally ended at 11am at Satyam Cineplex Caf where the prize distribution was held. Satyam cineplexes launch party at cinemas rock music performance by Black Slade. 3Cs The Rs 450-crore Competent Group of Compan ies, engaged in the business of automobile dealership, construction and film dis tribution, decided to diversify into the development of a chain of cinema theatr es under the brand name 3Cs (implying Competent Cine Court). Beginning with Delhi , the company will set up 3Cs in Lucknow and Amritsar in the short term. The cine plexes come under the brand name 3CS, which stands for Competent Cine Court. The fi rst of these cineplexes cum food plaza is already operational at Lajpat Nagar in Delhi since October 2002 and the group has invested nearly Rs 20 crore in this project. Its a 325-seater, single-screen cinema hall with a six-brand food court. The project is said to have been financed by group internal accruals. 3Cs six fo od retailing brands (roped in through strategic alliance) in the Food Court are: McDonalds, Barista, Chopsticks Express, Diva Cafe, TikkA-Wrap (London) and Dosa Express (Sri Lanka). Competent Group of Companies chairman and managing directo r Raj Chopra: 3Cs proposition is to offer a combination of good food and good enter tainment under one roof. The Food Court concept allows different members of fami ly to opt for different kind of food from the best brands under one common dinin g space The Group now plans to set up more such cineplexes cum food courts at Lu dhiana, Jalandar, Amritsar and Chandigarh over the next 2 years. 32

 WAVE CINEMAS Wave cinemas were launched on the 27th September 2003. Wave is loca ted at KAUSHAMBI (U.P.) East End Mall and NOIDA (U.P.) Sec-18 Center Stage Mall, known as Wave Shipra Ticket rates are For KAUSHAMBI weekday ticket costs Rs.100 and weekend costs Rs.120 For NOIDA weekday ticket costs Rs.120 and weekend cost s Rs.140 KAUSHAMBI wave plays only Hindi movies, whereas the one in NOIDA plays all Hindi and English movies. The two wave cinemas have 4 screens each with a Se ating capacity of 250 seats per screen; hence at any point of time 2000 people c an watch the movie. The seats are very comfortable and have a larger leg space t han any other cinema hall. Wave Shipra (NOIDA) even has a platinum lounge for wh ich the rate per seat is Rs. 500, in which eatables and beverages worth Rs. 200 is served free. There are 34 seats providing this platinum experience. It has se ats like any comfortable sofa at your home. It has a very good ambience attached to it. THREAT OF SUBSTITUTES Threat from other sources of entertainment In addition, PV R faces competition from other forms of entertainment including, television, fil m DVDs, newspapers, magazines, radio, internet and theatre and advances in techn ology related to entertainment, such as MP3 and multimedia messaging etc. These other forms of entertainment compete with cinemas for the discretionary spending of patrons and for the ad-spend of advertisers. Accordingly, PVR cannot be cert ain that they will not lose 33

some of our cinema audiences to these competitors or lose advertising revenue to them. If they are not able to compete effectively, their business, results of o perations and financial condition could be adversely affected. Films constitute 28% of the total entertainment industry of Rs. 20000 crores in India. Television forms a major 65%. Piracy and home-viewing may reduce the number of cinema patr ons. On account of inadequate enforcement of anti-piracy laws in India, and on a ccount of increasing homeviewing options, the number of cinema patrons may reduc e in the future, which may have a material adverse effect on the companys revenue s and results of operations. Television is expected to grow at a faster pace tha n cinema. THREAT OF NEW ENTRANTS Costs of setting up a multiplex in India are coming down It can takes around Rs 40-50 crores to set up a premium five-screen multiplex in a metro while the same in a smaller town costs between Rs 1015 crore. 34

But owners are now realising that if done right, a stripped down multiplex can b e set up much cheaper. Typically, fit-out costs (cost of doing up the interiors) range anywhere between Rs 2 crore to Rs 2.75 crore per screen. Owners have real ized that cutting down on the fancy stuff could bring down costs by half. DT Cinema s is toying with the idea of setting up lowcost variants in smaller cities, like Nagpur or Nashik. Though regulations maintain pressure on the compliance costs The Indian film exhibition sector is currently regulated by a numerous laws some of which were written at a time when Multiplex Cinemas were not common and henc e these laws may not necessarily be relevant for Multiplex Cinemas. Some of the provisions of these laws include: 1. Requiring a minimum distance between the sc reen and the front row seats, which distances were set based on large screens us ed in single-screen cinemas and not the smaller screens used at most Multiplex C inemas. 2. The permissible pressure at which the electrical current may be suppl ied to a projector, which provision does not reflect the technological advances in respect of Multiplex Cinemas. 3. The reservation of playing times for a scien tific film, educational film, news reel or documentary. 4. Restrictions on ticke t prices in certain states. SUPPLIER POWER The cost of exhibition of a film varies across films and cinemas and if PVR is unable to obtain films on competitive terms its operational result s may be adversely affected. The film exhibition industry in India relies on dis tributors to obtain films for exhibition. For hiring a film, the distributors sha re is normally a percentage of ticket receipts (net of entertainment taxes) and the applicable percentage 35

is negotiated on a film to film basis in respect of movies produced in India and periodically for film releases by international studios. Distributors work on a non-exclusive basis and there is competition between exhibitors to acquire film s. Competitive pressures may result in increasing the cost at which we acquire t he rights to exhibit films. If PVR is unable to recover such increased costs thr ough higher box office collections or other forms of revenue generation, our res ults of operations would be adversely affected. PVR has itself diversified into film distribution and hedged this risk partially. BUYER POWER PVR was the first to open a multiplex in India. It was one of its ki nd and due to lack of similar cineplexes around, PVR had an upper edge as far as buyers were concerned. It charged a high price and positioned itself as a premi um service. Though other multiplexes like Satyam, 3 Cs, DT cinemas, Waves etc. ha ve come up, PVR still enjoys a strong position. It has further strengthened its premium position by launching luxury cinema at select locations. Europa and Gold Cl ass experience has complete redefined the movie watching experience. 36

PVR cinemas is trying to penetrate into existing markets. It is also expanding i ts reach across new markets. PVR has diversified into film distribution and set u p business and came out with their own film magazine. MARKET PENETRATION AND DEVELOPMENT 37

Beyond the existing markets, PVR is contemplating implementing new multiplex pro jects in Delhi, NCR, Mumbai, Hyderabad, Bangalore and Indore. Upcoming locations 38

DIVERSIFICATION PVR has also ventured into the business of film distribution and set up PVR Pictures, a fully-owned subsidiary of PVR Ltd. PVR Pictures speciali ses in acquisition and local distribution of films. This is a strategic business unit aimed at solidifying PVR s exhibition growth and strength. To date, PVR Pi ctures has successfully released films produced by US-based production house Mir amax such as Chicago . PVR Pictures has also signed a 50:50 joint venture with R am Gopal Verma s Verma Corporation Limited/ K Sera Sera s production company Fact ory . The new venture, titled PVR/Factory 39

operates under the PVR Pictures entity and has exclusive distribution rights in Delhi, Uttar Pradesh and Uttranchal. PVR Cinemas has also come out with a film m agazine. PVR Movies First, as the magazine is called is the latest addition to P VR s big bouquet of offerings in the movie entertainment business. It is a month ly magazine and is expected to fulfill the information needs of the die-hard mov ie fans. Beginning with New Delhi, the magazine will be available in all multipl exes and cineplexes operated and managed by PVR across the country. The editoria l content of the magazine is being managed by the India Today Group, which publi shes magazines like Business Today, India Today, India Today Plus and also the I ndian edition of the Cosmopolitan. 40

Segmentation, Targeting and Positioning Segmentation On the basis of customer preferences, we may classify PVR under the Clustered category. This is owing to the fact, that out of the entire masses th ey have clearly defined their target audience and aim to cater to them. Also, PV R is a Concentrated 41

Market because they only cater to the premium movie-going audience i.e. SEC A an d SEC B. PVR Cinemas has approx. 22 million movie goers per month Consumer Demographic Segmentation Age: 61% between 18 and 49 Gender: 47% Males / 53% Female Income: 61% have income over 50K Education: 55% of adult movie-going audience has attended/graduated college*. Of these adults, 37% have college deg rees or higher Consumer Psychographic Segmentation PVR Movie Goers are people with high resourc es and can be classified as Experiencers who seek variety and entertainment. Spend a comparatively high proportion of income on fashion, entertainment, and social izing. PVR Movie Buffs generally have the following major tendencies:-Go outside t he home for entertainment -Participate in sports and other active lifestyles -Ha rd to reach through other traditional media -lighter television and radio users, but heavy internet users -Receptive to advertising in movie theatres, consider as part of their movie going experience Consumer Behavioral Segmentation Usage r ate: 1/3 of the population attends the movies one or more times per month. 42

1. 2. 3. 4. 5. WHAT? What benefits that the customer seeks? Complete moviegoing experience. Fac tors influence PVRs demand? Price, movie, day, time of the day, day of the week, month etc. What function can the product perform for the customer? Entertainment . What are the important buying criteria? Price, ambience, placement, quality se rvice, premium positioning, status symbol. What risks does the customer perceive s risk of being overcharged, risk of being in an emergency like fire at the thea ter. HOW? 1. How does customer buy the product? Online / Telebooking / In person 2. H ow long does the buying process take? Simple and prompt 3. How do the various ma rketing mix elements influence the customer at each stage of buying? (Explained later in the report) 4. How does product fit in to their lifestyle? Entertainmen t product for the premium. 5. How much would they be willing to spend? PVR had s tarted with tickets being priced at Rs 125 with special counters available for t ickets worth Rs 7. Even when all tickets are now priced at Rs 145, there is no c hange in the amount of customers that PVR receives, which means that people are willing to pay. 6. How much do they buy in one transaction? Almost always more t han 1 ticket. Depends upon the person, movie playing. 43

Targeting PVR being the first of its kind has always been a market leader and th erefore its offering to the customer is Innovative. PVR has premium pricing and they target mainly SEC A and SEC B. PVR has brought to its customers the experie nce of Luxury Cinema. PVR uses the concentrated method as they have target a muc h focused audience out of he entire masses. PVR witnessed tremendous success Eur opa Lounge in Delhi. PVR Cinemas has also recently introduced the concept of lux ury viewing to Bangalore. Gold Class Cinemas have been introduced for the first time in India, are two ultra luxurious exclusive auditoriums, each equipped with 32 plush and fully reclining seats and generous legroom. Patrons can also enjoy star like treatment at the exclusive Gold Class lounge which provides an excell ent pre cinema experience with scrumptious food and beverages PVR Priya of PVRs c hain use Differentiation method for pricing. It practices different price slabs for different target audience. For instance, they have tickets ranging from Rs 4 5 (for the youth) to Rs 140 (for the upper class i.e. SEC A). Positioning PVR had, and still has a very well planned market position. Its premium position ing affects the customers perceptual positioning. Therefore, they decided on the ir marketing strategy and pricing, keeping the target market in mind. In case of PVR, they make use of all their tangible elements to prove to their customers t hat their movie tickets are worth the price they are paying. Also, since some of the other movie theatres (which are not multiplexes) are still offering movies at rates as low as Rs 35, it is the task of its marketer to ensure that PVR come s across as a superior brand in terms of cinema viewing as well as the experienc e. Its positioning is evident in its mission statement also which says A commitmen t to deliver the best quality cinema viewing Every where, Every time. 44

MARKETING MIX 7 Ps SERVICE PRODUCT/ SERVICE PACKAGE A product (in the marketing context) may be tangible, intangible or both. In cas e of services, on the contrary, the tangible component is nil or minimal. In ser vices, there is no or very little tangible element because of which they are con sidered as benefits, which are offered to the target market. First, a service is a bundle of features and secondly, there benefits and features have relevance f or a specific target market. Therefore while developing a service product, it is important that the package of benefits in the service offer must have a custome rs perspective. 5 product levels are as follows: Core Benefit is the MOVIES that the customer comes to a cinema hall for, along with the attendant experience of PVR. The expected product in PVRs case would be ambience, hygiene, good service, parking, candy bar etc. PVR has augmented its product offerings: Luxury cinema PVR has brought to its customers the experience of luxury cinema. After the trem endous success of Cinema Europa in Delhi, PVR Cinemas has introduced the concept of luxury viewing to Bangalore as well. Gold Class Cinemas have been introduced for the first time in India, are two ultra luxurious exclusive auditoriums, eac h equipped with 32 plush and fully reclining seats and generous legroom. Patrons can also enjoy star like treatment at the exclusive Gold Class lounge which pro vides an excellent pre cinema experience with scrumptious food and beverages. Bu lk Bookings There are special arrangements for bulk bookings (of twenty or more tickets) done by corporates. Details can be filled online and PVR executives the mselves get in touch with the concerned people. 45

E-booking and tele-booking PVR also provides the factility of e-booking, which w as first started by PVR, it has now been copied by Satyam cineplexes as well. It also offers telebooking Parties at PVR PVR has also started helping customers i n planning birthday/kitty parties at PVR. They have made PVR a wholesome enterta inment experience than just a movie watching spree. Movie newsletter and magazine To keep its customers hooked on to movies and to P VR, it has also come out with an online newsletter called PVR Wire is directly mai led to the subscribers and can also be downloaded from their website. They have also launched a movie magazine called Movies First. Movie vouchers They have also taken out the unique concept of movie vouchers which people can use as gifts. Ma ny corporates have also started using these as incentives and rewards for their employees. The vouchers are available in denominations of Rs 100 to Rs 350 and a minimum of 25 coupons needs to be purchased to avail of the offer. 46

The following options are available in Delhi/NCR The Delhi PVR Movie Money Vouch er costs Rs 150/- and is valid right through the week across all cinemas (except PVR Gurgaon - Cinema Europa) PVR Gurgaon (Cinema Europa) PVR Movie Money Vouche rs cost Rs 160/The following options are available in Bangalore Classic Mon -Thu r : Rs 100/All Week (including Weekends) : Rs 130/Europa Mon -Thur : Rs 130/All Week (including Weekends) : Rs 150/Gold Class All Week (including Weekends) : Rs 350/- + Rs150/- for food and beverages (optional) THE SERVICE PACKAGE The package concept of services product suggests that what you offer to the market is a bundle of different services, tangible and intangible, but there is a main or substantive or core service and around it are built the au xiliary/peripheral/facilitator. It is important to note that facilitating 3servi ces ate mandatory and if these are left out, the entire service would collapse. Yet another type called supporting services, dont facilitate the consumption of c ore services but are used to increase the value and thus differentiate from the competition. Quality Assessment through RATER in case of PVR Focused on developi ng a procedure for quantifying customers service quality can be measured in follo wing dimensions: Reliability Ability to perform promised service dependably and accurately. PVR is a very well established brand name, and the audience is given excellent experience of the basic product i.e. the movie as well as the other e lements involved. Hence, it is very much capable of good delivery of the 47

service it provides. There is no flaw in the quality of the service and is alway s delivered on time. Assurance Knowledge and courtesy of employees and their abi lity to convey truth and confidence. Since PVR is a high contact organization, t he employees are well trained in all areas regarding customer interaction and co urtesy. PVR movies being a service, heavily relies on its employees, as they are the only mode of direct communication made with the customers. They are well tr ained and are definitely able to convey the confidence that the brand name repre sents. Tangibility Appearance of physical facilities, equipment, personnel etc P VR movies have a lot of tangible elements present like the employees (staff), th e movie halls, the candy bars, rest rooms etc, all of which are highly maintaine d and well kept. Empathy Caring, individualized attention to the customer. Even though in a service like this customization is not possible, the employees of PV R Cinemas are always very helpful and provide the customers with good assistance whenever needed. From the employees made to sit at the ticket counter to the em ployee that guides customers to their respective seats in the cinema hall, all e mployees deliver a very helpful attitude towards the target audience. Responsive ness Willingness to help customer with prompt service. The employees of PVR are fast and prompt at delivering their service and are taught to cause as less inco nvenience as possible to the customers. If a customer places an order via telebo oking / online reservation etc, the delivery of the tickets is made well before the show timing at the customers doorstep. The employees are well trained. PRICE To many customers, high price means high quality. Services pricing follows the p rice and practices of pricing of goods and therefore are either cost based or ma rket based. Within these, categories of price may be profit oriented, government controlled, competition or customer oriented. But the characteristics of servic es do influence the pricing and therefore different methods of pricing are follo wed in their case. 48

PVR when started off had a huge advantage of being the only one of its kind in D elhi to begin with. Therefore, they could charge a higher amount to its target a udience, as they did not hesitate to pay the sum for the new concept. This high pricing helped them make maximum gains. Also, PVR had, and still has a very well planned market position. Its premium positioning affects the customers perceptu al positioning. Therefore, they decided on their marketing strategy and pricing, keeping the target market in mind. Hence, we may say that the pricing as well p ays a strategic role in their marketing plans. In case of PVR, they make use of all their tangible elements to prove to their customers that their movie tickets are worth the price they are paying. Also, since some of the other movie theatr es (which are not multiplexes) are still offering movies at rates as low as Rs 3 5, it is the task of its marketer to ensure that PVR comes across as a superior brand in terms of cinema viewing as well as the experience. The movie theatres m arket is a Free Market, even though the government in the past regulated it. Thi s allows PVR as the market leader to set its own prices. Prices that had origina lly started from Rs 125 (for evening shows) and Rs 90 (for morning shows and wee kday plans) have increased to a high of Rs 150 and the lowest is Rs 100. The hig h pricing however has not led to any change in the footfalls that PVR gets. Even in slighter crowded shows, the occupancy rates as low as 35% reaches PVRs breakeven points. PVR Priya has a slightly different pricing system, which varies fro m Rs 45 to Rs 150 for different slabs of consumers. This has been done to mainly attract the youth and to keep the concept of movie going still affordable at on e of its chains. The pricing at PVR Europa is Rs 160 and a Gold Class ticket is charged at Rs. 750. It offers superior ambience, environment, seating, viewing e tc in the sum. PLACE / DISTRIBUTION Services are generally created and delivered to the buyer at the same time, ther efore creation of time and place utilities is a vital function in services marke ting. Irrespective of middlemen or direct sales channel, the factor of 49

location keeping in view the potential markets is the most significant in channe l selection and distribution. The issue of location here plays a very important role, as all PVR Cinema Halls are stationed at good locations in the city, which gathers a large number of footfalls for them every day. PVRs usually open at an eventful yet untapped location, followed by which (as we saw in case of Anupam PVR Saket) other retail chains get opened around it as well. Their places are al ways well situated and are well linked. PVR does not have any other channel of d istribution, as their service is sold solely at their chains. They do not follow any franchisee outlets, even though they indulge in ticket sales online and via telebooking. The only intermediary involved for procuring movies are Indian as well as international movie distributors, by way of whom they acquire the movies . Distribution of Movies The Company has also recently forayed into the Distribu tion of Hollywood film titles in the country through its 100% subsidiary, PVR Pi ctures. By virtue of its strong brand equity and partnerships with major indepen dent Hollywood studios like Miramax, Newline Cinemas etc. that are not represent ed in India through their own offices, PVR has managed to procure and distribute titles in the country. With the advent of the multiplex revolution across the c ountry, the company sees a great opportunity to fill up these upcoming multiplex screens with Hollywood titles. The company has successfully distributed major H ollywood titles like Rush Hour 2 , Wedding Planner , Chicago , Choclat , Spy Kid s 2 , Makdee etc. PROMOTION Promotion is a very vital part of the marketing mix especially in the case of se rvices. The customer needs to trust or have belief in the service, as he has to pay for it pre-experience. Therefore, it is very important to sell the service i n the best possible way. Usually the objective of promoting a service may be to create a brand image, establish a personal relationship with the client and to c reate an impression of competence, honesty and sincerity to win the buyers confid ence in sellers abilities to deliver the service efficiently. To 50

promote these, the marketer generally employs indirect selling techniques, as it is usually not possible to use the conventional promotion tools like advertisin g. Promotion activities like community relations, event management, media blitz, corporate identity programs have relevance. 3rd parties like government, unions and interest groups are important, as they are capable of influencing market ac cess. PVR as a brand indulges into print advertisements on every Friday giving o ut the latest movie schedules. Any new developments are communicated to the audi ence via press releases. Hence there is a strong element of PR involved. Apart f rom that, they usually have contests pertaining to latest festivals like Valenti nes Day, New Years Eve, Oscar Movies Week etc. PVR also has a host of online pro motional contests associated with movies The latest one relates to the film King Kong. They are also in collaboration with cellular services like Airtel have SMSand-wi n contests and give out free tickets to the winners. Also, PVR attracts a lot of commercial shooting / media coverage via programmes etc which promotes it as a brand in a big way. Organizing Star Events on Premiers of movies like Kuch Kuch H ota Hai helps PVR relate better with its target audience i.e. the youth. The whol e PVR banner and its exterior environment including movie hoardings, banners etc help promote the concept of movie viewing as well as PVR as a strong and succes sful brand. 51

PVR also hosts premiere shows with leading movie stars visiting the various PVR cinemas. They also host numerous fun events for children while screening animati ons etc. Given below are a few such recent promotions: The star cast of Akbar Kh an s resplendent Taj Mahal visited PVR EDM, Naraina, Vikaspuri and Saket, beda zzling the audiences on 21st N ov 05. A funfilled afternoon was organised at PVR Saket on 3rd Nov 05 during the show o f animated movie Hanuman. Celebrities were invited with their kids. PVR organized a rendevous with French Cinema from 21st-27th October 2005. The gl itterati from the film fraternity including Salman Khan,Katrina Kaif and Nandita Das lit the star studded opening ceremony, along with others as PVR Gurgaon gea red up to host and experience the amalgamation of French movies with the multipl ex magic. 52

It also organizes socially responsive events. It organized a movie screening for the children of Kutumb Foundation on childrens day. PVR Plaza celebrated the Rose Day with cancer afflicted patients, on 22nd September 05. The event was held in alliance with Cancer Patients Aid Association (CPAA). Celebrities like Sushma S eth, Manpreet Brar, Anita Kaul Basu and Shivani Wazir Pasreecha and Mrs. Celina Bijli, wife of Mr. Ajjay Bijli-MD PVR Cinemas, were present to greet the childre n and grace the occasion." Other promotions: This was the challenge thrown at De lhites by PVR Cinemas, a pioneer in multiplex development and the largest cinema exhibition company in India, and Radio City 91 FM. The response was overwhelmin g, with over 5,000 Radio City 91 FM listeners responding to the Challenge. The P VR City Challenge contest, running on Radio City for two weeks now, dares listen ers to send in entries on the wackiest thing they would do to win a car (Maruti Alto). In collaboration with MSN, PVR had a contest for Bend It Like Beckham and g ave out 2 free tickets to winners for an entire week. PEOPLE EMPLOYEES, CUSTOMERS and OTHER CUSTOMERS Service must be fully developed and int ernally accepted before its launched. Attracting, developing, motivating, retain ing employees Measure & Reward Stress team play Leverage freedom factor Prepare to perform Offer a vision Compete in talent Know the customer 53

PVR indulges in the following for their EMPLOYEES: Complimentary ticket on payme nt of entertainment tax amount at any point of time (2 days in advance) to the e mployees, subject to availability. Tickets to employees are given for: o 1+1 one self and employees guest o 2 for immediate family i.e. parents, spouse etc. This has been done to encourage movie going among employees as well as customers. Gi ves 10 national holidays to employees Makes all employees train at different lev els from time to time Teaches employees to be helpful, polite, courteous to all patrons and co workers enthusiasm and cheerful Report customer grievances to man agers Strict on rules on no smoking, drinking on job etc. They are given persona lized badges symbolizes that the employees pride themselves on being a part of t he PVR family Very great importance is given to person hygiene and appearance cl ean uniform and shoes. Not allowed to make a gesture to ask for any sort of a ti p / gift from customers. Job performance evaluation at the completion of first 9 0 days of employment. They are evaluated once a year on their anniversary of dat e of joining by individual superiors and records regarding employees progress are evaluated. Given bright blue uniforms represents PVR. This is done to ensure un iformity of appearance and to project a well kept image. All employees are taugh t to deal with safety problems like accidents, fire, bomb threat, armed robbery etc. Certified first aid course given to all employees All trainees are made to train at all departments like ticket sales, computer ticketing, telebooking, sal es enquiries, customer service skills, cash handling sales, credit card sales et c. Special well kept rooms for the employees Lastly, it is made sure that all em ployees represent PVR in the best way possible and sell it as a strong and wellestablished brand. All 54

employees are given full details on what they are representing and informed all about PVR to make them a part of the family. On the occasion of Children s Day 2 005, PVR created a rememberance for children from PVR s Housekeeping Attendants, Projectionists, electricians, with the movie IQBAL.The children from the NGO "K utumb Foundation" also were an intrinsic part of the event, invited specially by PVR, to celebrate children s day. Management Team The company has a dedicated management team at the corporate lev el which looks after each area of its business i.e. programming, marketing & eve nt management, operations, business development, projects and finance. It has ab out 30 employees at the corporate level. At the cinema level the company has a s trong team at each of its cinemas, ably headed by a Cinema General Manager. He h as a team of 50-60 employees at each cinema. The total employee strength across all cinemas is about 300 employees. The company has had a good track record of b eing able to attract top class management talent. For the customers convenience, it is ensured by the organisation that there are no loopholes. In case of any cu stomer complaints, the employees are immediately directed to report the same to their managers. The nature of all employees is very friendly, informed, helpful, reliable, soothing, cheerful 55

and youth-like. Therefore, the audience can easily relate and communicate with t hem. PHYSICAL EVIDENCE Though customers cannot see a service, but they can definitely see various tangi ble clues of the service offer like facilities, communication, objectives, emplo yees, other customers, price etc. On basis of these, he forms his opinion as the y help us to tangibalise the service. . Therefore, it is essential to manage phy sical evidence. Atmosphere helps to shape opinions. The building, layout, colour s of interiors, tickets, labels, logo of the organisation etc help to formulate a good unified corporate image / identity. PHYSICAL ENVIRONMENT AMBIENT FACTORS Air quality Quality of scent Degree of circulation DESIGN FACTORS SOCIAL FACTORS Appearanc e, Beheviour and number of service personnel Quality & quantity of other customers Aesthetics Architecture, colour scheme, material etc) Functional dimensions of d esign in terms of layout, comfort etc 56

Ambient factors relate to background condition, deign factors, on the contrary a re visual stimuli and social factors relate to interactive environment. The serv ice factor has an impact on not only the customers, but the employees as well. T he interior and exterior of the premises is such so as to project a hygienic and well-maintained image at all times. The administration offices, booking offices , candy bars, conference rooms, auditorium, foyers, corridors, wash rooms, stair cases, walls, projector room, basement area all coordinated and hygienically mai ntained. Both the external and internal ambience is very important and is mainta ined excellently, as it is important to appeal to existing and even to the poten tial customers. At PVR, it is equally important to keep employees happy. Therefo re, even the employees workplaces in the premises are coordinated with the whole halls ambience and are lively. Exterior the movie hoardings, movie schedules, com puterized service, glass entrance, PVR banner, deign of PVR building, parking et c all contribute to the external environment Interior Seats, color coordination and combination (blue in case of PVR), hygienic wash rooms, candy bars, corridor s, stairs, sound and visual equipment, design of the hall, ambience etc are all included here. Attention to detail and stress on high quality cinema viewing exp erience is evident from the unique seating arrangement that ensures unobstructed viewing from anywhere in the auditorium. Plush, ergonomically designed seats ha ve been installed to provide flexibility and ultimate comfort to guests. Conveni ent cup holders have also been installed on every armrest. Edge to edge screens and digital sound will contribute in creating the ultimate movie going experienc e. The multiplex has an avant-garde lobby with studio effect interiors. Station concession counters which offer customers a wide selection of the traditional mo vie going fare of sweet and salted popcorn, hotdogs and soft drinks, as well as candy, nachos, fruit juices and Mineral water. 57

Peripheral possessed as a part of service purchased e.g. Ticket, popcorn Core Th ose that cannot be possessed. e.g. The experience of the movie PROCESS It was the first cinema company to introduce computerized ticketing through use of international box office software in its cinemas; first cinema to accept cred it cards in India against tickets; and the first to offer cinema tickets on Inte rnet with online payment gateway for payment. The company had a turnover of Rs 4 1 Crores in 2001-02, which is expected to rise to about Rs 60 Crores in 2002-03, and with the growth envisaged, the turnover in the next 3 years is expected to be over Rs 250 Crores. PVR was the first to install surround sound and Dolby in Delhi. Gurgaon 7 screen megaplex is equipped with the latest THX approved sound system for the real life sound effects and the state of the art Xenon based proj ection technology. SERVICE BLUEPRINTING Service design is a complex task that can benefit from a mo re sophisticated version of flowcharting known as blueprinting. Developing a ser vice blueprint requires identifying all the key activities involved in service d elivery and production and specifying the linkages between these activities. A c entral aspect of service blueprinting is to distinguish between what the custome r experiences front stage and the activities of employees and support process ba ckstage, where the customer cannot see them. Between the two lies what is called the line of visibility. Standards can be set for each service activity but shou ld be based on good understanding of customer expectations. Below the line of vi sibility, the 58

blueprint identifies key actions to ensure that each front stage step is perform ed in a manner that meets or exceeds those expectations. Service blueprints clar ify the interactions between customers and employees and how these are supported by additional activities and system backstage. Because blueprints show the inte r relationships between employee roles, operational process, information technol ogy, customer interactions, they can facilitate the integration of marketing, op erations, and human resource management within a firm Blueprinting also gives ma nagers the opportunity to identify potential fail points in the process that pos e a significant risk of things going wrong and diminishing service quality. Blue printing the PVR experience To illustrate blueprinting of high contact, people p rocessing pvr service, we examine the experience of watching a movie in pvr that enhances its core movie service with variety of other supplementary services. T he key components that we will include in pvr experience blueprint: 1 Script for each front stage activity 2 Physical evidence for front stage activities 3 Line of interaction 4 Front stage actions by customer-contact personnel 5 Line of vi sibility 6 Backstage actions by customer contact personnel 7 Identifying failure points Identifying failure points Running a good movie experience is a complex business and much can go wrong. The most serious fail points, marked by small F in a circle, are those that will result in failure to access or enjoy the core p roduct. Because service delivery takes place over time, there is also the possib ility of delays between specific actions, requiring the customer to wait. A W wi thin a triangle identifies common locations for such waits. Excessive waits will annoy customers. Blueprint of PVR is divided into three acts representing activit ies that take place before the core product (movie) is encountered, delivery of core product, activities after core product is encountered. 59

The stage or service escape includes both interior and exterior of PVR ACT 1: Be fore the core product is encountered In this particular act, the first act begin s with making ticket booking or reservation- either by arriving at pvr in person or on telephone with an unseen employee. Also tickets can be booked online call ed as arms length interaction. If tickets are booked according to first two proce dures then impression is created on the evidence of respondents voice, speed of r esponse, and style of the conversation and if booked online then impression is m ade by the outlook of website and how easy it is to book a ticket online. The ac t concludes with customer entering the respective auditorium and being seated. T hese six steps constitute our customers initial experience of pvr, with almost ea ch involving an interaction with an employee. By the time customers reach the au ditorium; they have been exposed to several supplementary services, including bo oking, eating counter, seating. They have also seen sizable cast of characters, including contact personnel and many other customers. ACT 2: Delivery of core pr oduct In this act, our customers are finally about to experience the core produc t they came for, that is to watch a movie. As the customer enters the auditorium its important how the employee interacts and guides the way to the customers resp ective seats. Light and sound effects of theater are one of the most important a spects of good movie experience. Also interval time of the movie is important ti me period to provide service. Because generally during interval time people eith er go out to eat something or goes to washroom or both. So if they go to eat the n most important dimension is not only quality of food and drink, availability, pricing but also how promptly it is served and style of service. Here backstage activities plays really important role like to keep check on availability of foo d etc and if go to washroom then hygiene is the most important dimension. ACT 3: The movie may be over but much still is taking place both front stage and backs tage like getting ready for next show. The core service has now been delivered, and we will assume that our customers are happily moving out of pvr. Act 3 shoul d be short. The action in each of remaining scenes should 60

move smoothly, quickly, and pleasantly with no shocking surprises in the end. 61

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RECOMMENDATIONS Technological Innovation When PVR came into being it was at the forefront of the technology involved in t he Movie business but now much more has been done in this field and PVR needs to keep up. Like the IMAX theatre that Adlabs has introduced, PVR should also fora y into new technological advances in the entertainment business. Once inside...Service must match the price charged Many of the audiences feel that some of the services inside do not command the p rices that is charged for them, example, even the first two rows in the theatre command a price of Rs. 150/-. Most people feel that a lesser price should be cha rged as sitting too close to the screen is not as good an experience as sitting in one of the back rows. Also the prices charged at the food and beverage counte r are way above the MRP, which we feel is an undue premium that is being charged . A lot of audiences that were interviewed feel that the leg space in between th e rows is less and it makes the audience uncomfortable after sometime. We as a g roup also feel that introduction of a food court that has a variety of offerings , not just snacks but wholesome meals as well would greatly 63

improve the movie going experience as people would spend greater amount of time in the theatre and the food court could work as an ancillary to the theatre. Expanding reach Once a movie is past its prime and running in the second or third week where sal es are low, PVR could do promotional campaigns and reduce the prices marginally for one show a day. This would encourage more people to experience the PVR exper ience, especially those that are inhibited by high prices. For eg. Special promo tional campaigns for students for instance could help in attracting the vast pri ce sensitive student audience. Such promotions could happen once or twice a mont h without diluting the superior brand image. Riding high on sports Cricket is an obsession in India. PVR could capitalize the same by screening hot m atches live for eg. A crucial India Pakistan match, World cup semifinals/finals etc. The growing popularity of soccer and other sports can also be tapped. This would be an instant hit even at very high prices charged. To add on to the excit ement they could couple this with cricket contests and give prizes like parapher nalia with autographs of eminent sportspersons. 64