Grou

Cineplex Entertainment:The Loyalty Program Group4

S a r a n g B a n u b a k d e & M a n p r e e t S i n g h

Page 1

Grou

Cineplex Entertainment:The Loyalty Program Group4

S a r a n g B a n u b a k d e & M a n p r e e t S i n g h

Page 2

Cineplex Entertainment was founded in 1979 as small chain of movie theater under the Cineplex

Odeon name. Cineplex merged with Galaxy Entertainment Inc. It acquired its largest competitor,

Famous Players and became Cineplex Entertainment. With a box office market share of 64%, the

chain enjoyed approx. 40 million visits per year under the Cineplex Odeon, Galaxy, Famous

player and Cinema City brand.

Their corporate mission focused on offering movies goers “an exceptional entertainment

experience”. In 2005 they extended their strategy to focus on developing new markets, using the

theaters, major sport events, wrestling matches and Metropolitan opera, all to increase revenue

per guest (RPG).

Cineplex executive were able to distinguish the group of customers that were particularly

valuable, but failed to perform optimum segmentation, as they lack the data & analytics due to it.

Sarah Lewtwait marketing director for Cineplex entertainment was approached to design

customer loyalty program to gain over customers and get data to perform analytics thus resulting

in optimum segmentation and defined targeting.

Currently their most profitable segments were teenagers, young adults and young working who

were in age range of age 16-35 years old and with good spending habits. Even with 65% of

market share they need to struggle to bring customer to theaters due to ongoing film piracy,

rental movies, concerts and sport events, combined with inconsistent revenue on box-office were

main hurdles.

In 2004, a steering committee composed of different departments discovered need of CRM

opportunity for Cineplex. Senior managers had several concerns primarily regarding data control

and ownership which would be relevant if program gets disbanded. Another criterion concerned

was resource requirement , as program of this size would be costly. They had a option to partner

with Scotiobank or Flight Miles for this program.

Now it the herculean job for Lewthwaite to identify appropriate partner or to go alone. Need to

design a marketing strategy for launch of the loyalty program. Need to consider various mode of

marketing and promotions. She need to prove that it will be worth the financial investment.

Grou

Cineplex Entertainment:The Loyalty Program Group4

S a r a n g B a n u b a k d e & M a n p r e e t S i n g h

Page 3

Having more comprehensive understanding of customer behavior and demographics was

important in improving Cineplex’s success, but could loyalty program be implemented in

such a way to fit senior management criterion?

If recommended going ahead with program, which loyalty partner should be used?

How would the reward be structured and promoted?

What would be the promotional campaign entail, and how should the launch take place?

Current market share is 64%

40 million visits per year

Box office RPG is $7.73( 49% margin: Exhibit 2)

Concession RPG is $3.44(65% margin)

High growth opportunity in loyalty card program, as primary research said people want to

engage in such programs

Expected footfall in 2006 is 61 million(Echibit 2)

If loyalty card is implemented, expected footfall adjusted to cannibalization will be 55.7

million(25% cannibalization)

Estimated cost for loyalty program for first year is $5.5 million with diminishing cost in

subsequent years.

They have partnership proposal from Flight Miles (72% Canadian household are active

members)

Scotiabank also have partnership proposal for them.

Need to design IMC campaign for launch with budget of $300,000.

Currently have 3 choices for selecting database vendor Alpha, Kappa and Gamma, each

one has responded with unique proposal for the project.

Grou

Cineplex Entertainment:The Loyalty Program Group4

S a r a n g B a n u b a k d e & M a n p r e e t S i n g h

Page 4

From all exhibit analysis and case facts we recommend following:-

Go with option 3 of preliminary reward stricture option as it is the least expensive and

generate high future growth. It will result in concession RPG growth to 15% amounting

to $4 per transaction, generating revenue of $35299625.

For partnership go with Scotiabank proposal because Cineplex had no visibility into who

its customers were and wanted to get a full view of them. Scotiabank lacked a strategy to

acquire young bank customers. Scotiabank also offered 50-50 cost sharing. So they will

have mutual requirement fulfilling capabilities.

For vendor selection they should go with Kappa , although their one time fees is high, but

there is no monthly cost involved. They are majorly focused on creating youth driven

brand identity, which their main target segment.

Promotional activity they should concentrate more on social media marketing. They

could have an IMC campaign where entitle for loyalty program and share your

experience in video on youtube and winning video will get 1 movie ticket free every

week for six month. It would account for only $96. this would create huge buzz among

market.