Cineplex Entertainment The Loyalty Program

Group No.12Harshitha | DM15217Gaurav Dutta| DM15219Rohit Rakshit| DM15247Keerthi .P| DM15267R.S.Pavithra| DM15134Session 1808Fall

Situation Analysis:

Sarah Lewthwaite, Marketing Director, Cineplex Entertainment, was approached by CEO, Ellis Jacob for the development of a loyalty program As the CHAIR of the Loyalty Steering Committee, Lewthwaite is supposed to present her recommendations to the committee USP of Cineplex: Offered An exceptional entertainment experience E.g. Food Counters, Arcade Focused on developing NEW MARKETS To showcase live events Operas, Sports etc. The timeline of Cineplex to the current year:

Problem Statement: To explore ways to increase the market share To explore new ways to attract the 13 24 segmentThe company had to make a decision from the following options:

Analysis:Customer Relationship Management: The following aspects triggered the need for CRM-

Apart from those mentioned above, the following aspects troubled the company too:1. Revenue: Inconsistency in the revenue generated Sharp dip in Net Income

2. Weak Box Office Attendance: Weak attendance through out industry Cineplex faced various attendance levels based on the genre of new movies3. No Central Database: No central database for better customer service and retentionProgram Partner Choice:

PARAMETERSINTERNAL DEVELOPMENTFLIGHT MILESSCOTIABANK

COST$5.5mn + Diminishing costs in subsequent years$5 mn + $0.09 /transaction+ data access cost$3mn + $1.7mn + $1.9mn

CUSTOMER REACH5.3 million unique visitors7 million6.8 million customers

OWNERSHIPCompleteNone None

PROS1. Unlimited data access and control2. Would know ones brand the best1. Immediate entrance to data of 7 mn people and other Flight Miles partners2. Offer of $250000 by Flight Miles towards marketing campaign3. Easy reach to large number of Canadians already widespread awareness built(exhibit 4)4. No need to carry multiple cards1. One of the BIG FIVE banks in Canada 2. 50 50 COST SHARING would reduce associated RISKS3. Leverage on earlier corporate sponsorships4. Prior experience with data management companies Gold Card5. No requirement to open bank accounts but each debit/credit card holder issued Cineplex loyalty card6. No CONTRACTUAL EXIT BARRIERS

CONS1. Financial risk of unredeemed points2. Difficult to divest the program3. New department and database required 4. Development timeframe1. Lengthy commitment of 3 yrs2. No easy exit option3. Would lose all access to accumulated data on exiting4. Extra cost incurred in accessing database and to issue points1. Naming rights on 3 major theaters2. Exclusive agreements on bank machines in all theaters3. Customers wouldnt like carrying multiple cards4. Constrained decision making power5. No access to individual level banking information

Reward Structure:

ParameterOption 1Option 2Option 3Option 4

Sign up points5001000250

Points per movie transaction1001000100

Membership fee0One time $2Annually $50

Permanent concession discounts010%15%0

Value benefits on reaching highest point$51.77 on reaching 1500 points$68.37 on reaching 2500 pointsNil$62.22 on reaching 2000 points

Value benefit per movie transaction3.45=51.77/152.73=68.37/2503.11=62.22/20

Cost to company $59.94$99.91-$79.92

Most attractive option considering all available attributesNoNoNoYes

Database Vendor:

AlphaKappaGamma

Leading marketing firm, specializing in LOYALTY PROGRAMS, In Canadian market since 1980 Clients like American Express, Coca Cola, Microsoft Held Focus Groups -> Site features (Site, Navigation, Up-to-date) ->Used info in conjunction with specs to PROPOSE COST - $500,000 (One time) + $40,000 / month (for website upkeep)

One of the largest global marketing agencies, known for managing data for Royal Bank of Canada Undisputed industry leader in MOBILE MARKETING, which links strongly to Cineplexs target market High standards in DATA PRIVACY and DATA SECURITY. Also had entertainment industry experience Two Sites Member Acquisition and Member Retention COST - $1,000,000

Competitor in Canadian marketplace for 4 years, developed CRM for CITI Financial, Kaplan University etc Special marketing platform that supported all aspects of email management and e communication campaigns Track members on an ongoing basis through different promotional mediums, such as web advertisements and respond immediately to members through messaging for those leaving the site FIXED PRICE, FIXED TIME MODEL , but unable to provide costs for data management Preliminary planning and design costs estimated at around $200,000

Marketing Communications: The company had a budget constraint of $300,000.

MODECOSTSALIENT POINTSCOURSE OF ACTION

IN THEATRE ADVERTISINGNone No costs associated Excellent way to reach the in house audience Hosted 5.3mn guest annually Could reach ONLY EXISTING CUSTOMERSPromotion Options Presented during pre-show Point of purchase displays Backlit posters Websites

NEWSPAPER Avg. Weekly Cost for Half Page Print Adds I. Medium Markets - $1200II. Large Markets - $3600+ Development cost - $850/add National newspaper didnt have the reach to markets where Cineplex operated Through regional newspapers, several more markets can be reached Regional newspapers would incur more costs In which newspapers to advertise The message and frequency of the insertions

RADIO 30 sec commercial / WeekI. Small and Medium - $160II. Large - $225 Development of radio adds - $1100/ city Could achieve significant coverage in key markets Already used this medium in rural theater markets Lethwaite confident to negotiate for FREE ADVERTISEMENT SPACE

ONLINE ADVERTISINGVariable costs according to format and size Cineplex Website Google, Muchmusic.ca, MTV.ca etc

GRASS ROOT INITIATIVESUnsure of the cost Word of Mouth publicity Promotions in college and highly visited areas Corporate Sponsorships

Launch: Regional launch Would be less riskier Would give Cineplex an opportunity to resolve problems before full implementation It would be more expensive, but would allow Cineplex to stretch funds over a longer period National Launch Cost Efficient Partnership with Scotiabank reduces financial risk and increase coverage Can accrue revenue faster POS platform rollout Supported national Rollout

Recommendation:Program Partner: Scotia BankReward Structure: Option 4Marketing Communication: Radio, Online, grassroot initiativesLaunch: National Launch