There are 5.2 million Netflix users in Canada (Zadikian, 2018). This has taken away significantly from businesses in the entertainment industry. Because of easy access to movies at home, Cineplex Inc. has suffered losses in revenue (Annual Report, 2018). Netflix allows users to access movies and shows for a cheaper price from the comfort of their own homes. Cineplex, which holds 80% of the market share for movie theaters in Canada, is a leading form of entertainment for all target audiences (Afxentious, 2018). They have created a significant presence as a physical facility, but they have struggles within the e-tail section (Annual Report, 2018). Netflix, which is their main competitor, has been established as a comfortable, convenient, and cheap alternative which is why they have a large population of customers.
Target Market Section:
Cineplex is dependent on movies for drawing audiences. Each movie will target a different a different psychographic and behavioral demographic as a result of its content. However, Cineplex theaters only exist in areas with larger populations. Cineplex’s primary buyer group is anyone living in a large town or city looking for entertainment with some amount of disposable income (Cineplex Company Profile, 2018). People struggling with finances will not see a movie ticket as a worthy investment of their time.
Cineplex has taken steps to appeal to groups which will spend the most in Cineplex. This can be broken down into people who have more disposable income, free time or are simply looking for a good deal. Each buyer type is described in more detail within Appendix A.
The entertainment industry is absolutely huge, with a wide variety of entertainment groups. The competitors of Cineplex include Netflix, AMC Entertainment Holdings, Inc., and Empire Company Limited. Cineplex Inc. competes online and as theaters with physical facilities as well. The competition is fierce and relentless in their approach to gain loyal customers, Netflix for example, has adjusted their prices multiple times to gain the right amount of praise from their customers as well as maximum profit (Annual Report, 2018). In a retail versus e-tail perspective the online audience is steadily increasing and reaching older and younger audiences causing us to believe that e-tail is a more popular form of entertainment (Afxentious, 2018). In Canada, the general economy health is currently at a decline and Cineplex is doing fairly well despite this setback (Cineplex Company Profile, 2018). We can look under Porter’s Six Forces to see the establishing threats. Threats of new entrants and substitutes will lead to much damage to the company as a whole, unless they start to undertake a wider role online. New entrants have a sense of what people are looking for in regards to video streaming and access, they can easily create sites that can attract audiences. Threats of substitutes includes any form of entertainment that can be done instead of going to the movies. This would include Netflix, Hulu or other streaming services. Substitutes would also entail places like Vimeo or YouTube. Substitutes such as YouTube have been adding newer features and options that have made watching movies and shows easier, also they have YouTube Red which has videos that can legally only appear on YouTube and not anywhere else.
Cineplex is suffering due to stiff competition in its retail and e-tail markets. By using its strengths and opportunities Cineplex can market itself as the premier entertainment company. Cineplex’s largest weakness is its inefficiency and pricing while its largest threat is other substitutes. In the retail market, Cineplex is heavily dependent on its employees, resulting in inconsistency in service and more customer frustration (Cineplex Inc. Management’s Discussion and Analysis, 2018). E-tail competition such as Netflix, does not have problems in regards to consumer-employee relationships. Pricing of online streaming services is also much more appealing than Cineplex’s current pricing (Cineplex.com, 2018). Because of this, Cineplex introduced its online store (Cineplex Inc. Management’s Discussion and Analysis, 2018). The online store is a fairly new diversification which Cineplex is trying to grow into a major competing streaming service. More details about Cineplex’s strengths, weaknesses, opportunities and threats can be found within the SWOT analysis located under Appendix B.
Retail and E-tail:
There are many services which could easily replace components of Cineplex’s retail and e-tail environment. Refer to Appendix C for the major struggles which Cineplex faces in its retail and e-tail environment.
In order to solve problems regarding its retail environment, Cineplex can use relationship marketing and bundle pricing to its advantage. Because of the Scene Points program, customers are able to gain points for all the money they spend at Cineplex (Cineplex Company Profile, 2018). This helps draw customers back to Cineplex time after time as they can see benefits in purchasing movie tickets multiple times in order to gain a free movie. Cineplex can use the SCENE card program to collect information about customer preferences in order to create a better experience for customers. For example, employees can address customers by name or offer suggestions based on previous purchases. Cineplex can also use bundle pricing to their advantage. They could price tickets and food together in a cheaper package which would encourage more customers to go to the movies. Relationship marketing and price bundling could help make Cineplex a more profitable company.
Cineplex can change its approach to its e-tail components in order to be a more successful company. We believe by using market penetration pricing they could secure a spot for themselves in the streaming services industry. By having a pricier option to see movies in theaters and a cheaper option to see movies online, Cineplex will truly diversify its services. By setting its e-tail prices lower than the competition’s, Cineplex will be able to break into the market. Since Cineplex releases new movies quicker onto its online store, they can market themselves a cheaper option with better movie options (Cineplex Store, 2018). By using marketing penetration pricing, Cineplex can popularize their online store and find a position in the market.
Conclusions and Recommendations:
We believe that Cineplex can improve all their strategies by implementing marketing concepts and creating a bigger presence online. We think that they should keep their current product categories and not overwhelm themselves and their customers. Cineplex can use different pricing strategies and the SCENE points program to draw in more customers and build a relationship with them. This will increase their profits as more customers will be drawn to the movie-going experience as well as the cheaper online movie watching options.
...(download the rest of the essay above)