Cinepolis India

I n d i a n I n s t i t u t e o f

M a n a g e m e n t , B a n g a l o r e

C u s t o m e r R e l a t i o n s h i p

M a n a g e m e n t , T e r m 4

Group 02

Ambarish K. Sharma 1411213

Sambit Rath 1411262

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Contents The purpose of Study .............................................................................................................................. 1

Methodology adopted.............................................................................................................................. 2

Multiplex Industry in India & Cinépolis ..................................................................................................... 2

Cinepolis - from a business perspective .................................................................................................. 2

Challenges faced by the multiplex Industry ............................................................................................. 3

Strategy Followed By Cinépolis India ...................................................................................................... 3

Cinépolis Customer Loyalty Program(Club Cinépolis) ............................................................................. 4

Insights from the Interviews conducted ................................................................................................... 5

Our Recommendations ........................................................................................................................... 6

Website Improvement .......................................................................................................................... 6

Loyalty points on buying Food & Beverages ........................................................................................ 6

Targeting the Correct Customer Category ........................................................................................... 6

Promotions via Personalized Interactions ............................................................................................ 7

Personal Message & Emails ............................................................................................................ 7

Personalized Offers ......................................................................................................................... 8

Mascot ................................................................................................................................................. 8

Increasing Food and Beverage Sales .................................................................................................. 8

Creating a Mobile app for ordering food ........................................................................................... 8

Pre-Ordering of Food while Booking Ticket ...................................................................................... 8

Selling Food based on Movie Themes ............................................................................................. 8

Offering Meals ................................................................................................................................. 9

Solving Employee Problems ................................................................................................................ 9

Rewarding Employees ..................................................................................................................... 9

Incentives......................................................................................................................................... 9

Growth Opportunities ....................................................................................................................... 9

Appendix-1 ............................................................................................................................................ 10

The purpose of Study The purpose of our study is to get insightful understanding about business proposition of Cinepolis

Multiplexes and the effectiveness of CRM initiatives in increasing the profits as well as the revenue of the

business.

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Methodology adopted To understand the booming multiplex industry in India, a secondary data research was undertaken. Due

to the paucity of reliable sources and sufficient data, we also conducted a primary research which

involved an interview with the Unit Head, Cinepolis. Meenakshi Mall Bangalore and 16 Nos of Customers

who were waiting to watch movie at Cinepolis.

Multiplex Industry in India & Cinépolis India boasts of being the world’s largest film entertainment market in terms of annual releases which

remains as high as 1500 on an average and has around 3 billion (30 Crores) patrons. The movie industry

has been forecasted to grow up to 138 Billion INC which comes around $2.28 Billion. However according

to one study based on industry data, India is a theatre deficient country which has only 10 screens per

million of people in contrast to USA‘s 120 screens.1

Moreover, the share of multiplexes in total revenue collection is one-third despite of the fact that

multiplex screens form a mere eight percent of the single screen cinema halls. KPMG forecasts that the

overall film industry revenue to grow by 10.8 percent a year by 2017.

It is a clear indication of huge potential that the multiplex business can tap. The industry is marked with

intense competition with the fat four which included PVR, INOX, BIGCinemas and Cinepolis are constantly

vying to capture a big slice of the market share.

Being a customer driven business the success of any firm would depend upon how it manages its

customers and the steps it takes to build relationship with customers. It leaves a vast opportunity and a

challenge to effectively implement Customer Relationship Management policies which can give a boost

to a more predictive business.

Cinepolis is global player and stands fourth largest with more than 400 cinemas serving over 3500

screens in 11 countries catering to more than 200 Million patrons annually. Being an innovative company

as far as customer segmentation is concerned, Cinepolis is the first cinema to implement concept of

premium movie theatre via its Cinépolis VIP brand.

It operates 200 screens in India under two distinct brands Cinepolis and Cinepolis VIP. The company has

aggressive plans of expanding their operations to 400 screens by 2017 across 40 cities.

Cinepolis - from a business perspective Cinepolis made its first acquisition by buying out Fun Cinemas and that makes it the third largest cinema

chain in the country in terms of revenue. The acquisition has a strategic significance and is in sync with

1 http://www.koimoi.com/bollywood-popular/india-needs-more-movie-screens-to-break-the-500-crore-revenue-

ceiling/

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the corporate philosophy and vision of the group to roll out 400 screens in India by 2017.2 According to

the Managing Director, Cinepolis, the mergers and acquisitions bring in synergies and widen the reach of

the company.3 4 Although the business is lucrative especially during the current times when annual

income of average household is peaking north yet the longevity and constancy of success of cinepolis

would depend upon its ability to distinguish itself among the generally loyalty neutral customers by

providing them an experience to cherish.

Challenges faced by the multiplex Industry The industry faces a lot of issues such as:

1. Movie Piracy

2. Box office revenue is not consistent as high earning movies are less in number.

3. Faces competition from events like IPL, music concerts

4. Attrition rate of employees is very high.

Strategy Followed By Cinépolis India Cinépolis as a firm always tries to differentiate itself and is very much concerned with the local tastes and

choice of consumers. From our interview with Mr Devender Paul, unit head, Cinepolis Meenakshi mall

Bangalore, we got to know that Cinépolis, when it entered South Indian market, aimed towards catering

to South Indian cinema. This is because it realized that South Indian Film industry was a growing field and

250 Tamil movies alone are released per annum5. Hence, the number of movie theatres catering to south

indian movies were somewhat inadequate. Also, tamil and telugu movies were in demand and movie

goers were ready to pay for watching the movies in a multiplex owing to increasing incomes and

economic growth. Family outing and watching movies had become a new trend now.

As per our interview with Mr Paul, we came to know that Cinépolis has had digitized its theatres much

before any other indian multiplex.Even the market leader PVR could do it only by 2012. Digitization

helped Cinépolis to get rid of the usage of Physical Prints, and hence reducing the time used for

transporting the physical prints. This helped them to screen the movies all over India at the same time

and provide services to customers irrespective of the places they came from i.e. People at indore, a

second tier city could see the same movie as could the people in Bangalore, a metro.

Cinépolis is very much concerned regarding to the services it provided to customers. Comfort of

customer is of paramount importance. The screen size is larger that of that of its competitors. The 3D

screens have a separate layer of coating on them which reduces the eye strain of the viewers. Cinépolis

2 http://www.thehindubusinessline.com/companies/cinepolis-india-acquires-fun-cinemas/article6830181.ece

3 http://www.business-standard.com/article/companies/coming-soon-multiplex-boom-across-india-

115021101507_1.html 4 http://in.reuters.com/article/2013/11/20/multiplex-india-idINDEE9AI0FP20131120

5 http://www.business-standard.com/article/companies/south-india-dominates-regional-language-film-industry-report-114040201268_1.html

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also provides latest and best 3D glasses and uses a sophisticated air conditioning system. It maintains

adequate leg space between seats to enhance customer experience. Also, the number of seats in an

Cinépolis theatre is nearly 10% less than that of its competitors so that customers can be comfortable

while sitting and eating.

from our interview we were informed that , Cinépolis uses a ticket management software Vista , which it

had updated from Showbiz budgeting and entertainment software. It regularly updates it from time to

time. It also uses ZenDesk along with Salesforce CRM software for its customer relationship management

activities6.

Cinépolis is also involved in a lot of promotional activities. It had started a campaign “Buy ten and get one

ticket free” offer and “111 Wednesday” offer to attract customers. Cinépolis maintains its own website

for ticket booking and also allows customers to book tickets via third party websites e.g.

bookMyshow.com. But convenience charge of 15/- is charged if the ticket is booked via

www.cinepolis.com while for others the convenience charge in 30/-.

Cinépolis Customer Loyalty Program(Club Cinépolis) Club Cinépolis, the customer loyalty program of Cinépolis , started in 2003 and many customers have

opted for it. From our interview with Mr Karim Ullah, the Territory Sales head of Cinépolis, around 3 lakhs

members are enrolled in Bangalore area alone. This is a free membership and no fee is charged. It is

basically a point based reward system, where a customer is rewarded loyalty points, as when helike buys

tickets. The points get accumulated over a period of time, and can be redeemed to buy tickets in future.

But, no points are given on foods and beverage purchases. Also, points cannot be redeemed to buy foods

and beverages as well.

Cinépolis collects customer data i.e. name, DOB, address, marital status, spouse name, number of

children, date of anniversary, email Id etc. Number of transactions are recorded in the database following

each visit and loyalty points are calculated for the same.

When customers book tickets via third party websites such as Bookmyshow, no loyalty points are

awarded to them. The loyalty points are only awarded if the ticket is booked from the Cinépolis’ own

website.

For catering upper class customers, Cinépolis has a separate theatre called Cinépolis VIP. Here, the

offerings are inline with the status of the people, high class lounge, separate catering service, digitized

menu to order food etc. Customers have the freedom to order food while watching movies.The seats are

luxurious & customized and the price per ticket is generally 3-4 times than that of the general ones. Here,

the customers get more loyalty points and and top customers are specially invited for movie premieres.

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http://webcache.googleusercontent.com/search?q=cache:DHd1mxb6o1EJ:https://www.cinepolisindia.com/movies_details.aspx%3FMid%3D10197%26RevId%3D16927%26view%3Dfullrev+&cd=6&hl=en&ct=clnk&gl=in

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Insights from the Interviews conducted Our primary study was composed of depth interviews with Mr Devender Paul, Unit head of Cinépolis ,

Meenakshi Mall, Bangalore and with Mr Karim Ullah, Marketing & Sales head of Cinépolis, Bangalore

territory.

Also, we conducted depth interviews of 16 movie enthusiasts. The sample consisted of people mainly

from Bilekahalli and BTM layout regions as they frequently watched movies in Gopalan Cinemas,

Cinépolis and PVR theatres. We obtained the following insights from the surveys conducted.

1) Cinépolis as a brand is well known, i.e. a strong brand awareness is present among the respondents.

Nearly all of them have visited the theatre and most of them have enjoyed their outings in Cinépolis.

Many want to revisit the place in near future.

2) Most customers raised concerns about the time taken to buy Food and beverages from the stores

operating in the premises of Cinépolis. According to them, the queues are long and they wasted a lot of

time in buying food from counters during the interval time. Sometimes they missed the starting part of

the second half of the movie. Hence, customers wanted some kind of a quick service.

3) Also, the price of the food and beverages sold in the multiplex was significantly high, as pointed out by

some of the respondents. Since they bought food at such high prices it was natural to ask for a better

quick service.

4) One of the main discoveries from our surveys was that the customers were unaware of the Cinépolis

loyalty program. Most of them did not purchase tickets from Cinépolis website and all referred to third

party sites such as bookmyshow.

5) Those who were aware of the loyalty programs pointed out that the website of Cinépolis india was not

user friendly and was very slow.

6) After interacting with Mr Devender Paul, we also came to know that the attrition rate of Cinépolis

employees was very high, and many employees left their jobs within 6-8 months. Though there was a

growth plan in place, it was difficult to retain the employees.

7) When Cinépolis sends messages, emails etc. to loyal customers asking for feedback, most of the times

the customers do not respond. So, it is very difficult to know the demands and expectations of the

customers.

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Our Recommendations We studied the multiplex transactions and revenues for one week (appendix 1) and observed that the

sales rose during Wednesday when tickets were sold at an average price of 100/-. The contribution

percentage on Wednesdays remained higher than other days. This is because there is higher food and

beverage consumption during the Wednesdays. On the basis of our interviews and surveys conducted,

we came up with the following recommendations.

Website Improvement

The website of Cinépolis, India looks outdated and unpolished. It has to be redesigned and

properly marketed. The customers must be redirected to the website whenever possible and must be

exposed to the loyalty program. This is important as customer info is not available when customer books

from a third party site.

Loyalty points on buying Food & Beverages

Since, loyalty program doesn’t include food and beverages category, this can be applied to incentivize the

customers. Also, as F&B forms the major chunk of the revenue of multiplex, studying it would help us to

realize the real profitability of customer.

Targeting the Correct Customer Category

The customers can be based on different categories based on their Food & beverage purchases &

frequency of visits. A matrix can be created for the same.

FREQUENCY OF BOX OFFICE VISIT Low High

Low

SALES FROM FOOD &

BEVERAGE High

No Targeting

Offer more Varieties of

Beverages

Give Discounts on Movie Tickets

Give Gifts on social Occasions

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The four categories shown can be described as follows

i) Customers having high visit frequency & High Purchase of Food & Beverages

These customers are the most profitable ones and should be awarded more loyalty points and

discounts. It is important to retain such customers. Cinépolis should send gifts, cards etc. on festivals,

anniversaries and birthdays to build a better relationship.

ii) Customers having low visit frequency but High Purchase of Food & Beverages

These customers have to be targeted in order to increase their frequencies. They needed to be

offered discounts, special offers etc.

iii) Customers having high visit frequency but low Purchase of Food & Beverages

These customers have to be targeted for spending more. They want things at a cheaper rate. So,

food has to be bundled along with the ticket. Combo offers have to be given.

iv) Customers having low visit frequency and low Purchase of Food & Beverages

These customers are given low priority and not given any preference.

Promotions via Personalized Interactions

Since most of the multiplexes do not differ much in ambience, services and hygiene & state of the art

factors like halls, seats, screens, sound etc. it is very difficult to draw and retain customers. But some

factors do matter while differentiating multiplexes.

i) The type of movies running in the multiplexes i.e. content

ii) Scheduling of movies to accommodate needs of customer i.e. programming

iii) Customer Loyalty strategies followed to retain customers i.e. Retention

The first two factors i.e. content & programming cannot create any substantial difference in because

these factors are nearly equal in all theatres. Customer Retention is the major differentiating factor here.

Promotions are very important for multiplexes and Cinépolis, has followed many strategies like “buy 10

get one free” and “111 Wednesday” in the past. The cost based promotions may attract transaction

oriented customers but will not attract high value customers. To gain and retain customers, personalized

interaction is needed. Personalized interaction is a tool to attract customers, make them visit and spend

more again and again.

We suggested two ways to implement the Personalized interaction concept.

Personal Message & Emails

The CRM system must be able to trace the customers and send them personal alerts based on their

preferences. It must have the capability to send personal mails and Emails notifying customers about

their movie timings. Also, it must be able to trace the dormant customers and send them “We miss you”

type messages. Depending on the taste for movies, it must be able to suggest the customers about new

movies which are to be released. Depending on the pattern of visits, the customers can be suggested

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about the time at which the movies are to be watched and when the movies are being taken off

schedule. But again, customers should not be bombarded with SMS and should not be irritated.

Personalized Offers

Depending on the purchasing patterns, the customers can be given personal offers. Also, the most valued

customers can be given cards and offers on birthdays or anniversaries. For example, such as “Buy one,

get one free” and discounts on food & beverage can be considered.

Mascot

In order to attract & retain customers, and increase personal interactions it is suggested that Cinépolis

India should introduce a mascot like Cinépolis Mexico, which can attract young people. McDonalds and

RBC have their own mascots Ronald McDonald7 and Arbie8 respectively and have benefitted from the

same. Mascots can be a face of the company and gives human feel to the brand itself. Also, it helps

increase the brand image.

Increasing Food and Beverage Sales

Food & beverage sales are the next most important component of profit after movie tickets. From our depth interviews we came to know that the profit margins on F&B is around 70% which is greater than any other service provided in the premises of Cinépolis. Profit margin on ticket is around 50%. Hence, steps must be taken to increase F&B sales.

Creating a Mobile app for ordering food

During our depth interviews, we got responses from some regular visitors who wanted an app to place

orders regarding tickets and F&B, and they did not like to stand in a queue for a long time.

We suggest Cinépolis, to come up with its own mobile app so that the customers can place orders for

food while watching the movie as well. The app should allow the customers to book tickets and food

beforehand. This would reduce the wastage the time wastage by customers and Cinépolis staffs.

Pre-Ordering of Food while Booking Ticket

Cinépolis can enable ordering of food while booking ticket. These schemes are already implemented by

Indian Airlines and Indian Railways. The customer can opt for delivery during intermission or at the

beginning of the movie.

Selling Food based on Movie Themes

From our depth interviews of customers we found that most of them were unhappy with the Food &

Beverages sold at multiplexes which cost way lower outside and there is no difference in brand as

well. So, we suggest to implement the policies adopted by multiplexes in the western countries. They 7 http://mcdonalds.wikia.com/wiki/List_of_McDonald%27s_characters

8 http://www.manyhattyreturns.com/2010/04/19/royal-bank-of-canada-mascot-arbie/

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sell branded foods in the premises. We recommend them to sell food and drinks based on movie

themes such as, “Popcorn with Batman” or “Baahubali Cake”.

Movie themed merchandizes have been sold all across the world. Customers are likely to purchase

them because they can associate these with their favourite movie character. These merchandises do

not have a price point where customers can compare them. Multiplexes are better equipped to sell

such things as they have ample floor space .Many multiplexes all around the world have shops in

their premises as well.

Offering Meals

It has been seen that many customers who watch movies during lunch time or dinner time don’t order

food. Instead they wait for the movie to end and have lunch/dinner outside. Hence, Cinépolis

can see this as an opportunity and can provide combo-meals within its premises. They can bundle the

same with tickets.

Solving Employee Problems

From our interviews with manager of Cinépolis, we came to know that the attrition rate of Cinépolis is more than 75% and most employees leave work within a year. We conducted so. We interviewed four front level employees of Cinépolis and came up with the following recommendations. Cinépolis is new in India and is expanding. Hence, there are less Human resource policies prevalent.

Rewarding Employees

Employee reward programs can be used for motivating the employees. Awards like “Employee of the

week or month” can be constituted to increase moral of the employee. Many organisation have such

kind of schemes.

Incentives

Some kind of non-monetary incentives can be given to employees like, gift coupons, tickets for a movie

and birthday celebration cards to raise their moral.

Growth Opportunities

During the expansion Cinépolis would require more employees and it is better to have promotion policies

for the current employees, so that they can rise up in the ladder and prove their worth to the

organisation.

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Appendix-1 Questionnaire

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