CRM CASE ANALYSIS: CINEPLEX ENTERTAINMENT: THE LOYALTY PROGRAM

VIDISHA MOHAPATRA PGP/15/123 Customer relationship management

DECISIONS TO BE TAKEN • Recommendations for Loyalty Program Development – Reward structure – Tie-in partner • Flight Miles • Scotia bank – Type of promotional campaign • • • • In-theater advertising Newspaper/Radio advertising Online advertising Grass root initiatives – Whether to roll-out the program regionally or nationally .

TRIGGERS • Inconsistent revenue yield per year – Variable attendance dependant on movie genre • Weak box office attendance(2005) – Sharp drop in Net operating Income • How to link individual customers to targeted movies and concession purchases? – No reliable database yet of customer preferences • Aggressive contention for customer box office retention even after 65% market share – Ongoing film piracy – Rental movies – Concerts and sorting events .

CINEPLEX CORPORATE STRATEGY AND RESULTS • Chain of movie theaters – Mergers and acquisitions • Galaxy Entertainment Inc.Famous players(2005) • Conglomeration of various brands – – – – Cineplex Odeon Galaxy Famous Players Cinema City • USP – Offer movie-goers ‘an exceptional entertainment experience’ – Focused on developing new markets • Showcasing live and sporting events – Explore new ways of enhancing share of wallet with lucrative 16-24 segment .

STRATEGY FOR THE REWARD PROGRAM • Regarding the loyalty program – Data control and ownership – Resource requirements • Cost and labor – Length if time to establish the database • Min 500000 members – Robust execution – Firm’s image – Value to customer .

1.EVALUATION OF POTENTIAL PARTNER .

sadvantages 1.87%(7 mn database) None 1.Lenghthy time of development 1.No need to carry multiple cards Near about $6.Ready to share Cineplex’s financial risk.Unlimited data access and control 2.Face financial risk of unredeemed points 2.Easy reach to large number of Canadians – already widespread awareness built(exhibit 3) 4.Prior experience with data management companies 5.8 mn customers served) None netration Rate ta Ownership vantages 1.Naming rights on 3 major theaters 2.51 mn 21.Leverage on earlier corpor sponsorships 2.Lenghthy commitment of 3 yrs 2.25%(6.9 /transaction+ data access cost 21.New department and database required 4.One of the ‘Big 5’ banks in Canada 3.Difficult to divest the program 3.No access to individual lev .Extra cost incurred in accessing database and to issue points 1.5mn and diminishing thereafter 16.Would know one’s brand the best $15 mn + $0.proposed to share 50-50 cost 4.No easy exit option 3.Constrained decision mak power 5.Immediate entrance to data of 7 mn people and other Flight Miles partners 2.56% (5.3 mn unique visitors) Complete 1.Would lose all access to accumulated data on exiting 4.No requirement to open bank accounts but each debit/credit card holder issu Cineplex loyalty card.Offer of $250000 by Flight Miles towards marketing campaign 3.RAMETERS NO –PARTNER INTERNAL DEVELOPMENT FLIGHT MILES SCOTIABANK st incurred $5.Customers wouldn’t like carrying multiple cards 4.Exlusitivity agreements on bank machines in all theater 3.

aim to gather customer preferences via advanced technology at PoS .RECOMMENDATION: • Opt for partnership with Scotia bank • Advantages: – Cheapest and easiest way for Cineplex to grow its customer base – benefit from dual strategy – Financial and data management risks would be shared – No barriers for contractual exits • Modifications: – Execute a single card/cardless strategy – Equal decision making powers – In long term.

22 – good enough benefits for customers and none too costly for company $32.1 free child admission OPTION 2 1 time membership fee of just $2 – very low but still questionable 10% – customers tempted to join 100 – too low points.2.too high discount .37 – moderate value at 2500 points but still prove to be costly $36.97 – lowest but not justified at no membership fee Yes $68.costly for the company None – customers not tempted to join OPTION 4 None– incentive enough for customers to join 10% – customers tempted to join 250 – adequate points to tempt customers to join.14 – moderate cost for the company Yes Concession discounts Sign up points Value sum of benefits on reaching highest point level $51.56 – highest but justification questionable Yes/Might be No benefits – no incentive for customer to join Value per point /Will it be too costly for the company? Will it appeal to customers? 0 – no cost at all but no customer gained at all No .77 – too high a value for benefits. costly to support for company $28. no incentive yet but motivation exists $62.EVALUATION OF POINTS SCHEME OPTION 1 Membership fee None– incentive enough for customers to join None – no incentive for customers 500 – too many points. might not be attractive enough OPTION 3 Annual fee of $5 – customers might be deterred from joining 15% .

RECOMMENDATION: Choose option 4 as the suitable reward structure • Moderate cost for the company • Attractive enough for customers – No upfront membership fee – Adequate sign up points(250) – no incentive yet but motivates customers to earn more points – Permanent discount for concessions • Enhance share-of-wallet for Cineplex (reference link) • But at higher level of points (2500-3000).introduce still attractive incentive schemes – Free concert/live event tickets – Anniversary celebrations – free concessions combo – Sweepstakes program .

SELECTING THE MARKETING COMMUNICATION CAMPAIGN OBJECTIVE: Reach 500000 customers per year for 1st 3 years with a budget constraint of $300000 By partnering with Scotiabank. Develop more promotional campaigns for universities and more in campus offers for special events. Helpful in targeting the young segment(16-24) Low advertisement costs per thousand impressions(25 Canadian dollars) Rather than relying on just traditional advertisement media .ca as well as Google could be done.increase the customer reach while decreasing cost with dual strategy. Free advertisement space on many radio stations’ websites. . Target young working adults too by corporate sponsorships.3. NEWSPAPERS National newspapers don’t have reach to every targeted segment.look out for more cost effective and non traditional . GRASS ROOT INITIATIVES Engage in WOM publicity in a big way for young audience. Low advertisement and development costs.ca and muchmusic. Engage in mobile advertisement and couponing to target young Smartphone users.mobile and online media that can enhance reach. Regional newspapers do have reach but they are very costly to insert In and develop ads. ONLINE ADS To target the young audience (16-24) online advertisements especially on music websites like mtv. Rather than relying on newspaper ads. look out for other media . RADIO Significant overage in key markets.

– Lowest initial investment costs .$200000 – Vast experience in IT strategy and in developing CRM programs for leading organizations Program proposals • Manage marketing platform and all aspects of ecommunications • Track members on -going basis through different promotional media • Appealing fixed price.WEBSITE VENDOR SELECTION • Opt for Gamma company. fixed time model .4.

.5.NATIONAL OR REGIONAL ROLLOUT • Opt for a national rollout – Having partnership with one of Canada’s important national bank would help in • Sharing financial risk • Boost cost efficiency • Increase program coverage via branches – Accrue revenues faster – 2006’s new PoS installation had the technical capability of supporting the national roll out.

DECISION SNAPSHOT • Opt for partnership with Scotia bank • Opt for option 4 in reward program • Opt for online. radio and non traditional media to target the youth segment • Opt for a national roll out in partnership with Scotia bank. .

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