A PROJECT REPORT ON
“PVR CINEMAS: MARKETING STRATEGY”
SUBMITTED BY: SATISH SINGH )
The present work is an effort to throw some light on “PVR Cinemas: Marketing Strategy” . 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 received by …………..who helped and supported me during the course, for completion of my thesis.
Entertainment Industry Overview……………………………...3 a. Film and Exhibition Industry Overview…………………….4 b. PEST Analysis……………………………………………….10
PVR Cinemas: About the Company…………………………..19
Porter’s Five Forces Model ……………………………………27
VII. STP Analysis……………………………………………………40
VIII. Marketing Mix: 7 P’s………………………………………….44
Over the last decade, India has registered the fastest growth among major democracies and is now the fourth largest economy in terms of ‘‘purchasing power parity’’. Over 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 decade. The Indian Entertainment Industry is expected to significantly benefit from this fast economic growth, as this cyclically sensitive industry grows faster when the economy is expanding. When incomes rise, proportionately more resources get spent on leisure and entertainment than on necessities.
Indian Film and Exhibition Industry Overview
The Indian film industry is the largest film industry in the world in terms of the number of films produced and admissions each year. The Indian film industry revenue 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 industry 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.
Although over 90 years old, the Indian film industry was only accorded the status of an industry in 2000. Consequently, it is only during the last five years that the Indian film industry has been able to attract financing from banks, financial 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 cinemas in India were 3,100 million. The second largest number of admissions is in the United States, which had 1,500 million admissions in 2004.
The film industry comprises three sub sectors:
• Film production, which involves the making of movies; Over 900 Indian produced films were released in 2004. Hindi films constituted the bulk of films produced in India closely followed by regional films in Telugu, Tamil, Kannada and Malyalam. Hindi films are 7
the most popular films in India and account for over 40% of the total revenues of the Indian film industry. The majority of Hindi films are made in Mumbai, popularly 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 the distribution of movies to cinemas, television and video stores; The film distribution system in India is territory-based. The country is geographically divided 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 territory having 50-75 distributors, while 810 distributors operate on an all India basis. A distributor generally sells its rights to sub distributors who cover certain sections in a territory Film distribution sector characteristics and trends • In the recent past, some of the larger producers have vertically integrated into 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 for theatrical exploitation. • New films are being released across a larger number of theaters with a large number of prints in order to maximize theatrical revenues in the shortest time period. • New distribution formats, like digital distribution through DVD, are being implemented. • The increasing size of the home video market is also expected to provide growth for the distribution sector. As of the end of 2004, over five million Indian households had a VHS or DVD player, an increase of 50% compared with the end of 2003. Increasing wealth should result in more Indian households owning a VHS or DVD player and expand the home viewing market.
• Film exhibition, which involves the exhibiting of movies in cinemas. The Indian film exhibition sector can be divided into two segments: single and double-screen cinemas and multiplex cinemas, i.e., a cinema complex with three screens or more. 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 The 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 revenue is significantly lower in India compared with the United States. This is primarily due to the fact that ticket prices are much lower in India, with an average of Rs. 15 . The lower ticket prices in India are due to lower income levels, especially in rural and semi urban parts of the country, and the lack of good quality cinemas. The average price of a ticket for a multiplex cinema is Rs. 75 - 85 but the number of screens in multiplexes represented only 2.3% of total screens 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 for the industry. The total reported box office revenue in India is also lower because 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 population is just 12 whereas the average in western countries is approximately 40.
Concentration of Cinemas in Southern India Southern India accounts for a majority of the cinemas in India. Andhra Pradesh has the most number of cinemas in India followed by Tamil Nadu, Kerala and Karnataka. Whilst Southern India accounts for 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
Indian Film Industry
Players Zee Telefilms Adlabs Films AVM Productions Mukta Arts Rajshri Productions Shringar Group PVR Cinemas Pritish Nandy Communications
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
The Indian Entertainment Industry is one of the fastest growing sectors of the Indian economy riding on the economic growth and rising income levels that India has been experiencing in the past few years. The entertainment industry is expected to grow faster than GDP growth and consequently more spend is expected on leisure 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 segment. There are 73 multiplexes in India, with 276 screens and about 89,470 seats. The numbers are expected to increase to 135 multiplexes with more than 160,000 seats by the end of 2006. In India the multiplex business is modeled to the ones in developed countries. The main revenue stream is box-office collections from movies. Other revenue streams include rent from display systems, restaurant rentals, food and beverage collections, product launch rentals and promotions by companies. In several cases the other revenue streams are often larger than box-office collections, but movies are the main pull of such complexes.
Increase in disposable income in the hands of an ever expanding Indian middle class Multiplex Cinemas generally cater to middle and high income households. The emergence of the Indian middle class with greater earning power and a higher disposable income is one of the key factors that will drive the growth of the Multiplex Cinema segment. The table below shows the growth in the number of middle and high income households in India. Because of India’s status as a good IT hub for outsourcing by U.S. companies, young Indians between 20 to 24 years old, who ordinarily wouldn’t be able to find work easily, are finding jobs with call centers straight out of college. Now they have disposable income that’s totally discretionary and about 20 to 30% higher than prevailing wages, which they are spending on books, movies, music, cell phones, food and brand-name clothes”
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 availability of quality real estate and significant investments in malls are expected to result 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 anchor tenants in large format malls, as their presence increases footfalls by approximately 40-50%. The expected organized retail boom should result in a significant increase in the number of Multiplex Cinemas.
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 beyond 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 enjoying movies. Higher consumption spending and consequent changes in lifestyle are also spurring the growth of the Indian Entertainment sector. Since the late 90’s 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 number 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 generally driven by both its critical reviews and word of mouth from patrons. An increase in the average quantity of high grade Hindi films released per week should 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% in the number of releases per week for high grade Hindi films.
Increasing corporatisation of the film production sector should result in an increase 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 expected to increase.
The year 2004 also witnessed a change in the political scenario of the country with 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 favoured by all. Several state governments provided incentives to encourage the growth 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 multiplexes, which were essentially in metropolitan cities, but the concession has been 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-conditions. Entertainment tax benefits In the late 1980s various state governments imposed steep increases in entertainment taxes, which lead to a decrease in the profitability of cinemas. This adversely affected investment in cinemas and maintenance standards as cinema owners tried to reduce their costs, which lead to a fall in the ambience of cinemas and a decrease in the quality of audio and visual standards. The fall in cinema standards coupled with the availability of watching movies on videocassette players lead to a decline in cinema patronage. Most cinemas were during that time, and still are, run as small business and these businesses 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 Cinema in India in Saket, Delhi. Since the beginning of 2001, several state governments unveiled tax incentives (by way of complete or partial waiver of entertainment tax in the initial five years of operation) to attract new investments in the film exhibition business. The tax incentives coupled with falling interest rates made investment in cinemas more attractive and led to old cinemas being 15
converted into Multiplexes and new Multiplexes being established as part of shopping complexes (or malls). State entertainment taxes in India are among the highest 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 single 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 states is set forth below:
In order to encourage investment in the film exhibition sector, many state governments have announced policies offering entertainment tax benefits. This has encouraged the growth of Multiplex Cinemas and also encouraged single-screen theaters to convert into Multiplexes. The quantum of entertainment tax benefit which may be available in each state is different and the availability of these exemptions would be dependant on compliance
with certain conditions specified by the relevant state. A synopsis of the key elements of the entertainment tax exemptions which may be available in the following states is given below:
Film Distribution Holdups One of the main features of the Indian film industry that differentiates it from those in western countries is the limited initial release of films. Due to the high print costs for films (approximately Rs. 70,000 per print) as a
percentage of the average ticket price in India, distributors have adopted a policy 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 movies are released with 300 – 400 prints to satisfy a potential market of 12,000 cinemas. The practice of rotating prints and the resultant delay of the release of 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 available by the time the film is released in B and C class centers, which reduces demand; • If the film was not a hit on its initial release in the A-class centers it is unlikely to do well on its delayed release; and • The quality of the celluloid film print is negatively affected each time it is played, so poor picture quality is also an issue - often the dark and scratchy print is hardly visible on the screen. The above factors result in the box office potential of movies not being realized. Many cinemas in B and C class centers operate on a 7% to 8% occupancy 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-class centres in India and movies are being released in those cinemas at the same time as movies are released in the A-class centers. Digital copies of films cost significantly 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 used in India is also significantly less than that of film projection equipment (approximately Rs. 800,000 for digital compared with Rs. 1.5 million for film). The significant reduction in the cost of digital cinema compared with celluloid film makes an India-wide simultaneous release of a movie economic. As of March 2005, 100 digital cinemas had been opened in India, of which an estimated 65 were in 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 problems faced by B and C-grade cinemas. First, digitalized motion pictures are not required to be transmitted through physical media. This means digitalized motion pictures can be distributed to more B and C-grade 18
cinemas within the first weeks of their release without incurring additional costs to produce additional prints. Secondly, digitalized motion pictures maintain consistent and identical picture quality that is not compromised by use, time, and transmission. Thirdly, reducing the time between the release of a motion picture 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 picture'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: • increased number of screens on which newly released movies are shown, without incurring additional production costs; • Improved and consistent picture quality without regard to the location of the cinema; and • Satisfaction of cinema patrons' demands at the time when the demand for screening of a movie is at its highest, which should reduce the loss of demand caused by the availability of movies on pirated 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 produce a picture quality as good as the picture in A-grade cinemas, where celluloid film is used. In order to have a digital picture quality as good as the current 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-gradation will be required in the A-grade cinemas in India, the issue of financing of such equipment will need to be addressed. In the United States, digital projection equipment is being financed by Hollywood production houses rather than the film exhibitors, as the production houses get substantial savings from not having to produce celluloid prints.
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 peak cinema has now been rejuvenated with the latest international trends in cinema exhibition reaching India’s shores swiftly with the arrival of satellite TV. The capitals cosmopolitan audience is becoming increasingly aware of the advanced cinematic technology that enhances the movie going experience and this has whetted their appetite for watching movies on the “big screen “. To cater to the increasingly sophisticated tastes of the audience Priya exhibitor Pvt Ltd. totally refurbished the existing cinema in June 1991 including installation of a Dolby stereo sound system. They also gained exclusive rights to screen blockbusters from major distributors mainly Warner brothers, 20th century fox, united international pictures, small wonder then that the cinema has become the focal point for entertainment 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 first week of screening at PVR (the highest ever for an English film), which is remarkable considering the relatively low price of a cinema ticket in India. Buoyed by the overwhelming success of the cinema after upgrading, Priya exhibitors ltd have taken he next initial step for setting up the first multiplex in the country in a joint venture with Village Roadshow Ltd, Australia’s leading entertainment corporation. PVR is a brand name synonymous with state-of-the-art cinema exhibition in India. PVR specializes in developing and operating state-of-the-art Multiplexes. PVR Cinemas are the leading cinemas in the country with an emphasis on design, technology and service. Over the last three years, PVR has established itself as a very strong brand associated with movies, quality exhibition and youth-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 India’s first multiplex PVR Anupam4 at Saket in city of Delhi. The company has since grown to become the largest cinema exhibition player in the country and has 5 theatres with 19 screens in city of Delhi/Gurgaon under its operation. 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 complex 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 Cineplex in Delhi, was completely renovated and brought into the fold of PVR in January 2000. PVR Priya boasts of the highest box office collections in the city of Delhi 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 Delhi in 2001 with the launch of two new multiplexes -- PVR Naraina, and PVR Vikaspuri. 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 has 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 refurbished 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 technologies of today. The most recent addition to the chain is PVR EDM, this three-screen multiplex, located in the popular East Delhi Mall, is equipped with the stateof-the-art technology and is one of its' kind in the vicinity. The three-screen multiplex has a total seating capacity of 723 seats. It is equipped with the latest 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. The 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 offers a seating capacity of 1300 seats. Two luxurious auditoriums called ‘Cinema Europa' have been custom built with vibrant red, plush reclining seats, double armrests and ample legroom offering patrons a comfortable and relaxed cinema viewing environment. The choice of movies played at the Europa are an eclectic mix of tastefully chosen niche Indian films, internationally acclaimed as well as Oscar 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 franchised 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) in 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 seating capacity of 2019 seats. This multiplex includes two ultra premium cinemas known as the Gold Class and two luxurious auditoriums called Cinema Europa in addition to seven Classic auditoriums.
• • • • • • • • • • •
First to launch a multiplex in India - PVR Anupam Saket, Delhi First to launch India'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 First to introduce Gold Class Cinemas in India at PVR, Bangalore First to form a foreign joint venture with Village Roadshow, Australia First to receive institutional funding in the cinema industry - from ICICI Venture First to offer computerised & online ticketing First to accept credit cards in cinemas First to introduce mobile based information & ticketing service First to launch a loyalty program for movie-goers in India First to launch 'Movies First' - a monthly magazine that 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 Pictures, a fully-owned subsidiary of PVR Ltd. PVR Pictures specialises in acquisition and local distribution of films. ACCOLADES
Ajjay Bijli, Managing Director, PVR Limited, was conferred ‘The Theatre World Newsmaker 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 exhibition company in the country today. PVR Gurgaon was nominated for an award in the “Best Retail Environment” category at the “Annual Design Week” awards. Ajjay Bijli was also honoured with a special award at CineAsia 2004 for his significant contribution 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 2005. MISSION “A commitment to deliver the best quality cinema viewing Every where, Every time.”
PVR AS A BRAND PVR has successfully assimilated the Standard operating business and operational practices of Village Roadshow and set new standards in the quality 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 them to enter into strong corporate alliance partnerships and co-marketing exercises with leading brands like Pepsi, Evian, Samsung, Whirlpool, Hero Honda, Bharti, American Express, Master Card, Pizza Hut, Cadburys etc. This has generated additional 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 advantage of anchor tenancy in a Mall and in a few cases revenue linked variable rental Better Lease terms due to recognition as anchor tenancy Enhanced Footfalls Ticket Sales Candy Sales Corporate Alliances, Sale of Media spaces
Minimizing real estate risk and Maximizing services
RELATIONSHIP WITH VILLAGE ROADSHOW In 2002, Village Roadshow was undergoing a strategic and business restructuring worldwide. As part of their worldwide strategy, they decided to concentrate on the Production business and on Exhibition business only in those territories where they have majority control and have the critical mass of screens. In line with this strategy they exited from almost 20 countries worldwide, including India.
Village Road show’s inability to support the growth plans of PVR, the Indian promoters offered to buy out the Village stake and the joint venture was mutually decided to be terminated in June 2002. However, though Village Road show exited as a joint venture partner, the excellent relationship between both companies continues and is reflected by the fact that PVR continues to have an exclusive long term 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 exposed to best business and operational practices in the Cinema Exhibition industry and was able to revolutionize the way to go to cinemas.
First mover advantage in the multiplex business in India Updated technology Premium positioning Plays Hindi, English, Regional & foreign movies Locational strength Ambience Started the concept of ‘a complete movie going experience’ Market leader Very strong brand equity TOM recall ‘Original’ multiplex Blend of retail & entertainment
High cost perceptions T.A very specific (not mass service) Disjointed images for all PVR properties Customer retention Parking problems
First mover advantage Growing family spendings on entertainment Large film industry – over 200 hindi films every year PVR loyalists
Competition blooming large Government’s interference Entertainment Tax Other Multiplexs as competition Other ways of entertaingment Accused of increased crime rate PiracyNo control over surroundings eg. West Delhi Movies becoming bigger than the brand
THREAT OF COMPETITORS PVR Cinema currently faces competition from other companies in the Indian film exhibition sector. Some of their competitors have greater financial 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 developments in the start-up stage. In the future, they may also face competition from global entertainment companies if and when such companies make their foray into the Indian exhibition sector. There are currently seven major competitors in the film exhibition industry: PVR Cinemas; Inox Leisure Limited; Adlabs Films Limited; Shrinagar Cinemas Limited; E City Entertainment; Wave Cinemas; and DT Cinemas. The tables below show the number of screens operated by each of those companies and the number of cinemas operated by each of those companies.
COMPANY PVR Inox Liesure Adlabs Films Srinagar Cinema Wave Cinema E City Entertainment 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%
Major Competitors • DT CINEMAS The DLF group, one of the largest real estate co’s with 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 feet on mg road, city center is Gurgaon’s first multiplex, covering 48000 sq ft, hosts 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 facility 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 the Superior Group. The Superior Group has interests in Garment, Candles, Handicrafts, Film Distribution and Cineplexes. Satyam complexes with its state of the art cinemas has brought to India, for the first time, the best in class cinema entertainment that the world has to offer. With the launch of the Satyam Cineplex in Patel Nagar and two cineplexes at Janak Place and Nehru Place currently under construction, Satyam Cineplex is poised to become a leading Multiplex operator in India with a capacity of 5000 seats. Satyam CEO Deven Chachra: ‘‘We plan to develop a The group currently owns 3 prime sites in New Delhi namely Janak Place, Patel 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 focus would be to consolidate in Delhi, Chandigarh and Uttar Pradesh to leverage Satyam’s distribution edge.’’ The new expansion project follows from the finalizing of the Rs 82-crore project, which includes revamp of an existing cinema hall (already 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 Place, in Delhi
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 savour a whole host of privileges. To begin with, any guest whose bill in any of the 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 presents 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, provided 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 audiences) of Satyam who will be entitled to have this buffet at Cooks Cafe at a discounted 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 Wheels’. This scheme is valid for evening shows only and under this scheme cine-goers can 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 family returns home after watching the movie. This meal costs RS. 150 per person. 31
Café Coffee Day, a leading national retail chain of cafés, as part of its 2nd anniversary 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 Café where the prize distribution was held. Satyam cineplexes launch party at cinemas rock music performance by Black Slade. • 3C’s The Rs 450-crore Competent Group of Companies, engaged in the business of automobile dealership, construction and film distribution, decided to diversify into the development of a chain of cinema theatres under the brand name 3C’s (implying Competent Cine Court). Beginning with Delhi, the company will set up 3C’s in Lucknow and Amritsar in the short term. The cineplexes come under the brand name 3C’S, which stands for ‘Competent Cine Court’. The first 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. It’s 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. 3C’s six food 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 director Raj Chopra: ‘‘3C’s proposition is to offer a combination of good food and good entertainment under one roof. The Food Court concept allows different members of family to opt for different kind of food from the best brands under one common dining space The Group now plans to set up more such cineplexes cum food courts at Ludhiana, Jalandar, Amritsar and Chandigarh over the next 2 years.
• WAVE CINEMAS Wave cinemas were launched on the 27th September 2003. Wave is located 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 costs 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 Seating capacity of 250 seats per screen; hence at any point of time 2000 people can watch the movie. The seats are very comfortable and have a larger leg space than any other cinema hall. Wave Shipra (NOIDA) even has a platinum lounge for which 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 seats 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, PVR faces competition from other forms of entertainment including, television, film DVDs, newspapers, magazines, radio, internet and theatre and advances in technology 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 certain 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 operations 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 patrons. On account of inadequate enforcement of anti-piracy laws in India, and on account of increasing homeviewing options, the number of cinema patrons may reduce in the future, which may have a material adverse effect on the company’s revenues and results of operations. Television is expected to grow at a faster pace than 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.
But owners are now realising that if done right, a stripped down multiplex can be 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 realized that cutting down on the ‘fancy stuff’ could bring down costs by half’. DT Cinemas 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 hence 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 screen and the front row seats, which distances were set based on large screens used in single-screen cinemas and not the smaller screens used at most Multiplex Cinemas. 2. The permissible pressure at which the electrical current may be supplied to a projector, which provision does not reflect the technological advances in respect of Multiplex Cinemas. 3. The reservation of playing times for a scientific film, educational film, news reel or documentary. 4. Restrictions on ticket 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 results may be adversely affected. The film exhibition industry in India relies on distributors to obtain films for exhibition. For hiring a film, the distributor’s share is normally a percentage of ticket receipts (net of entertainment taxes) and the applicable percentage
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 films. Competitive pressures may result in increasing the cost at which we acquire the rights to exhibit films. If PVR is unable to recover such increased costs through higher box office collections or other forms of revenue generation, our results 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 kind 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 premium service. Though other multiplexes like Satyam, 3 C’s, DT cinemas, Waves etc. have 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 Class’ experience has complete redefined the movie watching experience.
PVR cinemas is trying to penetrate into existing markets. It is also expanding its reach across new markets. PVR has diversified into ‘film distribution and set up’ business and came out with their own film magazine.
MARKET PENETRATION AND DEVELOPMENT
Beyond the existing markets, PVR is contemplating implementing new multiplex projects in Delhi, NCR, Mumbai, Hyderabad, Bangalore and Indore. Upcoming locations
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 specialises 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 Pictures has successfully released films produced by US-based production house Miramax such as Chicago . PVR Pictures has also signed a 50:50 joint venture with Ram Gopal Verma's Verma Corporation Limited/ K Sera Sera's production company ‘Factory'. 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 magazine. PVR Movies First, as the magazine is called is the latest addition to PVR's big bouquet of offerings in the movie entertainment business. It is a monthly magazine and is expected to fulfill the information needs of the die-hard movie fans. Beginning with New Delhi, the magazine will be available in all multiplexes and cineplexes operated and managed by PVR across the country. The editorial content of the magazine is being managed by the India Today Group, which publishes magazines like Business Today, India Today, India Today Plus and also the Indian edition of the Cosmopolitan.
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 they have clearly defined their target audience and aim to cater to them. Also, PVR is a Concentrated
Market because they only cater to the premium movie-going audience i.e. SEC A and 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 degrees or higher
Consumer Psychographic Segmentation PVR Movie Goers are people with high resources and can be classified as “Experiencers” who seek variety and entertainment. Spend a comparatively high proportion of income on fashion, entertainment, and socializing. “PVR Movie Buffs” generally have the following major tendencies:-Go outside the home for entertainment -Participate in sports and other active lifestyles -Hard 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 rate: 1/3 of the population attends the movies one or more times per month.
1. 2. 3. 4. 5.
WHAT? What benefits that the customer seeks? – Complete moviegoing experience. Factors influence PVR’s 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 service, premium positioning, status symbol. What risks does the customer perceives – risk of being overcharged, risk of being in an emergency like fire at the theater.
HOW? 1. How does customer buy the product? – Online / Telebooking / In person 2. How long does the buying process take? – Simple and prompt 3. How do the various marketing mix elements influence the customer at each stage of buying? – (Explained later in the report) 4. How does product fit in to their lifestyle? – Entertainment product for the premium. 5. How much would they be willing to spend? – PVR had started with tickets being priced at Rs 125 with special counters available for tickets worth Rs 7. Even when all tickets are now priced at Rs 145, there is no change 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 than 1 ticket. Depends upon the person, movie playing.
Targeting PVR being the first of its kind has always been a market leader and therefore 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 experience of Luxury Cinema. PVR uses the concentrated method as they have target a much focused audience out of he entire masses. PVR witnessed tremendous success Europa Lounge in Delhi. PVR Cinemas has also recently introduced the concept of luxury 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 excellent pre cinema experience with scrumptious food and beverages PVR Priya of PVR’s chain use Differentiation method for pricing. It practices different price slabs for different target audience. For instance, they have tickets ranging from Rs 45 (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 positioning affects the customers perceptual positioning. Therefore, they decided on their 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 that 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 comes across as a superior brand in terms of cinema viewing as well as the experience. It’s positioning is evident in its mission statement also which says “A commitment 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 case of services, on the contrary, the tangible component is nil or minimal. In services, there is no or very little tangible element because of which they are considered 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 for 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 customers 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 PVR’s 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 tremendous 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, 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 excellent pre cinema experience with scrumptious food and beverages. Bulk Bookings There are special arrangements for bulk bookings (of twenty or more tickets) done by corporates. Details can be filled online and PVR executives themselves get in touch with the concerned people.
E-booking and tele-booking PVR also provides the factility of e-booking, which was 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 in planning birthday/kitty parties at PVR. They have made PVR a wholesome entertainment experience than just a movie watching spree.
Movie newsletter and magazine To keep its customers hooked on to movies and to PVR, it has also come out with an online newsletter called ‘PVR Wire’ is directly mailed 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. Many 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.
The following options are available in Delhi/NCR The Delhi PVR Movie Money Voucher 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 Vouchers cost Rs 160/The following options are available in Bangalore Classic Mon -Thur : 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 auxiliary/peripheral/facilitator. It is important to note that facilitating 3services ate mandatory and if these are left out, the entire service would collapse. Yet another type called supporting services, don’t facilitate the consumption of core services but are used to increase the value and thus differentiate from the competition. Quality Assessment through RATER in case of PVR Focused on developing a procedure for quantifying customer’s service quality can be measured in following 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 elements involved. Hence, it is very much capable of good delivery of the
service it provides. There is no flaw in the quality of the service and is always delivered on time. Assurance – Knowledge and courtesy of employees and their ability to convey truth and confidence. Since PVR is a high contact organization, the employees are well trained in all areas regarding customer interaction and courtesy. 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 trained and are definitely able to convey the confidence that the brand name represents. Tangibility – Appearance of physical facilities, equipment, personnel etc PVR movies have a lot of tangible elements present like the employees (staff), the movie halls, the candy bars, rest rooms etc, all of which are highly maintained and well kept. Empathy – Caring, individualized attention to the customer. Even though in a service like this customization is not possible, the employees of PVR 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 employee that guides customers to their respective seats in the cinema hall, all employees deliver a very helpful attitude towards the target audience. Responsiveness – 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 inconvenience as possible to the customers. If a customer places an order via telebooking / online reservation etc, the delivery of the tickets is made well before the show timing at the customer’s doorstep. The employees are well trained.
To many customers, high price means high quality. Services pricing follows the price and practices of pricing of goods and therefore are either cost based or market based. Within these, categories of price may be profit oriented, government controlled, competition or customer oriented. But the characteristics of services do influence the pricing and therefore different methods of pricing are followed in their case. 48
PVR when started off had a huge advantage of being the only one of its kind in Delhi to begin with. Therefore, they could charge a higher amount to its target audience, 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 perceptual 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 pays 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 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 comes across as a superior brand in terms of cinema viewing as well as the experience. The movie theatres market is a Free Market, even though the government in the past regulated it. This allows PVR as the market leader to set its own prices. Prices that had originally started from Rs 125 (for evening shows) and Rs 90 (for morning shows and weekday plans) have increased to a high of Rs 150 and the lowest is Rs 100. The high 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 PVR’s break-even points. PVR Priya has a slightly different pricing system, which varies from 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 one 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 etc in the sum.
PLACE / DISTRIBUTION
Services are generally created and delivered to the buyer at the same time, therefore creation of time and place utilities is a vital function in services marketing. Irrespective of middlemen or direct sales channel, the factor of
location keeping in view the potential markets is the most significant in channel 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 always well situated and are well linked. PVR does not have any other channel of distribution, 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 Distribution of Hollywood film titles in the country through its 100% subsidiary, PVR Pictures. By virtue of its strong brand equity and partnerships with major independent Hollywood studios like Miramax, Newline Cinemas etc. that are not represented 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 country, the company sees a great opportunity to fill up these upcoming multiplex screens with Hollywood titles. The company has successfully distributed major Hollywood titles like Rush Hour 2 , Wedding Planner , Chicago , Choclat , Spy Kids 2 , Makdee etc.
Promotion is a very vital part of the marketing mix especially in the case of services. 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 in 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 create an impression of competence, honesty and sincerity to win the buyers’ confidence in sellers’ abilities to deliver the service efficiently. To
promote these, the marketer generally employs indirect selling techniques, as it is usually not possible to use the conventional promotion tools like advertising. 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 access. PVR as a brand indulges into print advertisements on every Friday giving out the latest movie schedules. Any new developments are communicated to the audience via press releases. Hence there is a strong element of PR involved. Apart from that, they usually have contests pertaining to latest festivals like Valentines Day, New Years Eve, Oscar Movies Week etc. PVR also has a host of online promotional 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-win 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 Hota Hai’ helps PVR relate better with its target audience i.e. the youth. The whole 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 successful 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 animations etc. Given below are a few such recent promotions: The star cast of Akbar Khan's resplendent 'Taj Mahal' visited PVR EDM, Naraina, Vikaspuri and Saket, bedazzling the audiences on 21st N ov'05.
A funfilled afternoon was organised at PVR Saket on 3rd Nov'05 during the show of animated movie ‘Hanuman’. Celebrities were invited with their kids.
PVR organized a rendevous with French Cinema from 21st-27th October 2005. The glitterati from the film fraternity including Salman Khan,Katrina Kaif and Nandita Das lit the star studded opening ceremony, along with others as PVR Gurgaon geared up to host and experience the amalgamation of French movies with the multiplex magic. 52
It also organizes socially responsive events. It organized a movie screening for the children of ‘Kutumb Foundation’ on children’s 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 Seth, 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 children and grace the occasion." Other promotions: This was the challenge thrown at Delhites by PVR Cinemas, a pioneer in multiplex development and the largest cinema exhibition company in India, and Radio City 91 FM. The response was overwhelming, with over 5,000 Radio City 91 FM listeners responding to the Challenge. The PVR City Challenge contest, running on Radio City for two weeks now, dares listeners 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 gave out 2 free tickets to winners for an entire week.
EMPLOYEES, CUSTOMERS and OTHER CUSTOMERS Service must be fully developed and internally accepted before its launched. Attracting, developing, motivating, retaining 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 payment of entertainment tax amount at any point of time (2 days in advance) to the employees, subject to availability. • Tickets to employees are given for: o 1+1 oneself 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. • Gives 10 national holidays to employees • Makes all employees train at different levels from time to time • Teaches employees to be helpful, polite, courteous to all patrons and co workers – enthusiasm and cheerful • Report customer grievances to managers • Strict on rules on no smoking, drinking on job etc. • They are given personalized badges – symbolizes that the employees pride themselves on being a part of the PVR family • Very great importance is given to person hygiene and appearance – clean uniform and shoes. • Not allowed to make a gesture to ask for any sort of a tip / gift from customers. • Job performance evaluation at the completion of first 90 days of employment. They are evaluated once a year on their anniversary of date of joining by individual superiors and records regarding employees’ progress are evaluated. • Given bright blue uniforms – represents PVR. This is done to ensure uniformity of appearance and to project a well kept image. • All employees are taught 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, sales enquiries, customer service skills, cash handling sales, credit card sales etc. • Special well kept rooms for the employees • Lastly, it is made sure that all employees represent PVR in the best way possible and sell it as a strong and well-established 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 2005, PVR created a rememberance for children from PVR's Housekeeping Attendants, Projectionists, electricians, with the movie IQBAL.The children from the NGO "Kutumb 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 level which looks after each area of its business i.e. programming, marketing & event management, operations, business development, projects and finance. It has about 30 employees at the corporate level. At the cinema level the company has a strong team at each of its cinemas, ably headed by a Cinema General Manager. He has 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 being 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 customer 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
and youth-like. Therefore, the audience can easily relate and communicate with them.
Though customers cannot see a service, but they can definitely see various tangible clues of the service offer like facilities, communication, objectives, employees, other customers, price etc. On basis of these, he forms his opinion as they help us to tangibalise the service. . Therefore, it is essential to manage physical evidence. Atmosphere – helps to shape opinions. The building, layout, colours of interiors, tickets, labels, logo of the organisation etc help to formulate a good unified corporate image / identity.
AMBIENT FACTORS Air quality Quality of scent Degree of circulation
SOCIAL FACTORS Appearanc e, Beheviour and number of service personnel Quality & quantity of other customers
Aesthetics Architecture, colour scheme, material etc) Functional dimensions of design in terms of layout, comfort etc
Ambient factors relate to background condition, deign factors, on the contrary are visual stimuli and social factors relate to interactive environment. The service factor has an impact on not only the customers, but the employees as well. The 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, staircases, walls, projector room, basement area – all coordinated and hygienically maintained. Both the external and internal ambience is very important and is maintained excellently, as it is important to appeal to existing and even to the potential customers. At PVR, it is equally important to keep employees happy. Therefore, even the employee’s workplaces in the premises are coordinated with the whole hall’s ambience and are lively. Exterior – the movie hoardings, movie schedules, computerized service, glass entrance, PVR banner, deign of PVR building, parking etc all contribute to the external environment Interior – Seats, color coordination and combination (blue in case of PVR), hygienic wash rooms, candy bars, corridors, 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 experience is evident from the unique seating arrangement that ensures unobstructed viewing from anywhere in the auditorium. Plush, ergonomically designed seats have been installed to provide flexibility and ultimate comfort to guests. Convenient cup holders have also been installed on every armrest. Edge to edge screens and digital sound will contribute in creating the ultimate movie going experience. The multiplex has an avant-garde lobby with studio effect interiors. Station concession counters which offer customers a wide selection of the traditional movie 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 – Those that cannot be possessed. e.g. The experience of the movie
It was the first cinema company to introduce computerized ticketing through use of international box office software in its cinemas; first cinema to accept credit cards in India against tickets; and the first to offer cinema tickets on Internet with online payment gateway for payment. The company had a turnover of Rs 41 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 projection technology.
SERVICE BLUEPRINTING Service design is a complex task that can benefit from a more sophisticated version of flowcharting known as blueprinting. Developing a service blueprint requires identifying all the key activities involved in service delivery and production and specifying the linkages between these activities. A central aspect of service blueprinting is to distinguish between what the customer experiences front stage and the activities of employees and support process backstage, 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 should be based on good understanding of customer expectations. Below the line of visibility, the
blueprint identifies key actions to ensure that each front stage step is performed in a manner that meets or exceeds those expectations. Service blueprints clarify the interactions between customers and employees and how these are supported by additional activities and system backstage. Because blueprints show the inter relationships between employee roles, operational process, information technology, customer interactions, they can facilitate the integration of marketing, operations, and human resource management within a firm Blueprinting also gives managers the opportunity to identify potential fail points in the process that pose a significant risk of things going wrong and diminishing service quality. Blueprinting the PVR experience To illustrate blueprinting of high contact, people processing pvr service, we examine the experience of watching a movie in pvr that enhances its core movie service with variety of other supplementary services. The 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 visibility 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 product. Because service delivery takes place over time, there is also the possibility of delays between specific actions, requiring the customer to wait. A W within a triangle identifies common locations for such waits. Excessive waits will annoy customers. Blueprint of PVR is divided into three “acts” representing activities 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: Before the core product is encountered In this particular act, the first act begins 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 called as arm’s length interaction. If tickets are booked according to first two procedures then impression is created on the evidence of respondent’s voice, speed of response, and style of the conversation and if booked online then impression is made by the outlook of website and how easy it is to book a ticket online. The act concludes with customer entering the respective auditorium and being seated. These six steps constitute our customer’s initial experience of pvr, with almost each involving an interaction with an employee. By the time customers reach the auditorium; they have been exposed to several supplementary services, including booking, eating counter, seating. They have also seen sizable cast of characters, including contact personnel and many other customers. ACT 2: Delivery of core product In this act, our customers are finally about to experience the core product they came for, that is to watch a movie. As the customer enters the auditorium it’s important how the employee interacts and guides the way to the customer’s respective seats. Light and sound effects of theater are one of the most important aspects of good movie experience. Also interval time of the movie is important time period to provide service. Because generally during interval time people either go out to eat something or goes to washroom or both. So if they go to eat then 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 food 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 backstage 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 should be short. The action in each of remaining scenes should 60
move smoothly, quickly, and pleasantly with no shocking surprises in the end.
When PVR came into being it was at the forefront of the technology involved in the 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 foray 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 prices 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 charged 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 counter 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 the rows is less and it makes the audience uncomfortable after sometime. We as a group also feel that introduction of a food court that has a variety of offerings, not just snacks but wholesome meals as well would greatly
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.
Once a movie is past its prime and running in the second or third week where sales 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 experience, especially those that are inhibited by high prices. For eg. Special promotional campaigns for students for instance could help in attracting the vast price sensitive student audience. Such promotions could happen once or twice a month without diluting the superior brand image.
Riding high on sports…
Cricket is an obsession in India. PVR could capitalize the same by screening ‘hot’ matches 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 excitement they could couple this with cricket contests and give prizes like paraphernalia with autographs of eminent sportspersons.