Exporting Event Cinemas to South Africa - Case Study Example

Contents 3. Situation Analysis 2 3.1 Market segment structure / evaluation / analysis 2 3.1.1 Segment the market (you are exporting to) 2 3.1.2 Segment Size of each (approx.’) 2 3.1.3 Segment Buyer Criteria / Hierarchy of each (assessed or researched) 4 3.1.4 Key Segment Trends / forecasts 5 3.1.5 Identify Key Competitors and assessment of how they compete 6 3.1.6 Evaluate each segment “indicative profitability” (high, medium, and low) 8 3.1.7 Identify (and so validate) the “target market segment(s)” for the plan 9 3.2 Firm Capabilities, Experience and Expertise “Gap” Analysis 9 3.2.1 Define and quantify current firm capabilities, experience and expertise 9 3.2.2 Define required capabilities, experience and expertise to make the project successful 10 3.2.3 Evaluate any ‘gaps’ and discuss how they should / could be resolved / when 10 4. SWOT Analysis 11 4.1 Weighted SWOT (list names, titles of executives interviewed) 11 4.2 Implications of analysis 13 5. Competitive Advantage / Strategy Evaluation 13 5.1 Positioning analysis (use perceptual maps) - and recommendation 13 5.2 What competitive capabilities / characteristics will the firm need to be successful? 14 5.3 How will it create / build these in the international market? Analyze and discuss 15 5. 4 What Strategy will the firm enact in its target market segments (attack / defend)? 16 5.5 Risk Management Analysis (use a value chain to identify key issues, risk profiles and potential impacts) 18 3. Situation Analysis 3.1 Market segment structure / evaluation / analysis 3.1.1 Segment the market (you are exporting to) Event Cinemas will be classified under clustered category on the basis of customer preferences. This is because it will define its target audience clearly from the entire masses. It will target the premium movie-goers and on an age-related scheme which follows U, PG, 12, 15 and 18, as the certification categories of film: By Age- Teens and young adults By Genre- Comedy, adventure, action, thriller, drama, romantic comedy and musical By Movie Rating- PG-13 and PG movies 3.1.2 Segment Size of each (approx.’) South Africa has about 30 million movie goers The segment market is as follows: Segment Size by Genre Segment Size by Age Movie Rating- PG-13 and PG movies 3.1.3 Segment Buyer Criteria / Hierarchy of each (assessed or researched) a. Demographics Event Cinemas will target movie-goers who live in urban areas (69%), both male (45%) and female (55%). The target market will be the middle-class and the upper class earning over 55K. 85% are aged between 5 and 49. b. Operating variables The movie goers of Event Cinemas are individuals who can be termed us ‘experiencers’, have high resources and seek entertainment and variety. They spend averagely high promotion of their income on socializing, entertainment and fashion. They have the following tendencies: Seek entertainment outside their homes Participate in active lifestyles such as sports Heavy internet users and hard to reach though traditional media Receptive to movie thereafter advertising as part of their experience c. Purchasing approaches Event Cinemas will target those who go for a movie at least one or more times a month. They buy also buy tickets in bulk for family and friends and enjoy good beverages, food and variety of movies d. Situational factors Event Cinema will also cater for customers who urgently need to purchase movie tickets or want it “express”, and willing to pay extra amount of money. e. Personal characteristics. Event Cinemas will target decision makers as they are the ones with purchasing power and who actually pay for the movies. 3.1.4 Key Segment Trends / forecasts The middle class people will have supreme economic power- Income of households per month range from R3, 800-R13, 700. The upper end of middle class with have high levels of education, they seek value and are more than ever spending on shopping. The target market will be more informed on the latest movie blockbusters and best cinema operators- Customers will only ‘Google’ to find information in depth and seek opinions from a wide range of brand detractors and brand advocates. Consumers will want apps that save effort and time - Recently about 17% of people with smartphones have downloaded an App, with most popular ones being entertainment related. Those who have notice mobile advertising on search engines are about 84%. Those that took an action after seeing an ad on a mobile are almost 70%. When shopping about 28% use smartphone to compare product information and prices. 25% do physical shopping using their smartphones. In the past month, about 47% have shopped directly using a smartphone. Consumers will seek more value for their money. Consumers will actively be involved in shaping brands-They will be seeking brands that are well known and disloyal to one brand. As different segments make decisions, a critical role will be played in those decisions and as drivers of engagement will be the influencers. 3.1.5 Identify Key Competitors and assessment of how they compete The major competitors in South Africa for Event Cinemas are Ster-Kinekor, Nu Metro Cinemas, and CineCentre. Ster-Kinekor Ste-Kinekor has been in existence in South Africa since 1969 (over 40 years). Being the one of the oldest cinema company gives it stability in the market and gains trust from customers. It has positioned itself in the market that such that when a customer thinks of the word ‘movies”, what comes to his or her mind is Ste-Kinekor. It is has the largest market share in South Africa. It delivers a world-class experience at the movies to its customers through self-service terminals, state of the art technology, sound systems and digital projection. Ster-Kinekor boast of over 60,000 seats, more than 450 screens, over 50 movie complexes, 60 state of the art 3D Cinemas and has the largest 3D footprint. It was the first cinema company to introduce Cine Prestige which is a business class cinema experience, and Cinema Nouveau, an art-house multiplex circuit. It will take great event from Event Cinemas to break through the ‘Ste-Kinekor tradition’ to gain market share and outdo it in the long run. Ster-Kinekor has self-booking options like cellphone applications to cut up queuing for tickets. Nu Metro Cinemas Nu Metro Cinemas is a South African cinema company operating 17 cineplexes in South Africa. Ste-Kinekor Theatres is the largest Cinema operator followed by Nu Metro Cinemas as the second. It opened all-digital cinema complex which was Africa’s first, with 6 screens and 3D cinemas. CineCentre CineCentre is the oldest of all cinemas companies in South Africa which has been in existence for the past 70 years. Its uninterrupted relationship with 20th Century Fox beyond 70 years has earned it as the largest in the World Record. CineCentre brings the very best and latest Bollywood and Hollywood block busters. It features state of the art projection and sound technology, and audience comfort. 3.1.6 Evaluate each segment “indicative profitability” (high, medium, and low) Market competitiveness Market access Expected growth Profitability By age High marketing saturation Low entry barriers Various product substitutes High buyer purchase power Easy Medium Medium By Genre High Low entry barriers Various product substitutes Low buyer purchase power Easy Medium High By Rating Low market saturation Low entry barriers Various product substitutes Low buyer purchase power Easy High High 3.1.7 Identify (and so validate) the “target market segment(s)” for the plan Below is the identification and validation of target market segments of Event Cinemas By age By genre By Rating Differentiation sustainability over future competitors Medium Medium High Market familiarity and its issues Medium Medium High Size of growth potential and opportunity Medium Medium High Easy auctioning and identification of decision-makers High High High Market leverageable success in relation to other future segments High High High Apparent value proposition compellingness Medium High High Overall attractiveness Medium High High 3.2 Firm Capabilities, Experience and Expertise “Gap” Analysis 3.2.1 Define and quantify current firm capabilities, experience and expertise Currently, Event Cinemas has the following capabilities, experience and expertise a. Valuable physical assets- The company has state-of-the-art equipment and facilities such as Vmax and Gold class with huge 20 metre digital screens and hearing loops and neck loops for physically impaired and attractive venues. b. Valuable intangible assets- Event Cinemas has strong buyer loyalty and a powerful brand in Australia. c. Intellectual capital and human assets- The workforce is capable and experienced employees and talented in key areas like customer service, programming, management, marketing, accounts, and so on. d. Specialized expertise- The Company has expertise in getting new movies quickly to the market, providing excellent good customer service in a consistent manner, low cost operations skills, creating and introducing new products and facilities. 3.2.2 Define required capabilities, experience and expertise to make the project successful For the Event Cinemas project to succeed it should have the following capabilities, experience and expertise a. Experience: Employees need to have experience working in the cinema industry, with in-depth knowledge of operators, suppliers, technologies, related organisations and customers. The company should also have knowledge of the target market. b. Specialised expertise: Customers are always looking out for new movies and will go to associate themselves with a cinema that introduces those new movies quickly. c. Powerful brand- Customers buy brands and only strong brands will gain market customer loyalty. d. Valuable facilities- As the competition rises, a cinema with differentiated service or product in terms of facilities and equipment will have a high leverage. 3.2.3 Evaluate any ‘gaps’ and discuss how they should / could be resolved / when There are gaps in Event Cinemas’ capabilities, Experience and expertise. a. Experience- Although Event Cinemas has experience in the cinema industry it does not have any in South Africa. This may prevent customers from trusting its stability. However, through advertising Event Cinemas will leverage on its experience in its home country and in the industry. b. Powerful Brand- Event Cinemas is a powerful brand in Australia but is at its introduction stage in South Africa. It therefore will build its brand through advertising and promotional materials. 4. SWOT Analysis 4.1 Weighted SWOT (list names, titles of executives interviewed) SWOT analysis audits the organization and its environment. SWOT stands for strengths, weaknesses, opportunities (internal factors) and threats (external factors). The SWOT analysis of Event Cinemas is as follows: Strengths Their state-of-the-art facilities allow anyone to access and enjoy a good movie including the hearing impaired, visually impaired and mobility impaired. Those with difficulties in hearing can use the available captions to read what they can’t hear. Each of the cinemas consists of infrared transmitters which carry sound to receive that the customers wear. Hearing aid loops are also provided for those with hearing impairment. The visually impaired customers wear are provided with a neck loop or headsets to listen to audio described movies for them to hear with spoken commentary what they find difficulty to see. The mobility impaired are provide with wheelchair spaces with companion seating in theatres. Event Cinemas has the largest movie club in Australia called Cine Buzz Rewards that rewards their valued loyal customers. The club has a membership of over one million members made up VIP’s, kids, seniours and students. The website of the Event Cinemas is the top entertainment movie website in Australia. It also has a mobile site and smart phone app to make it easy for customers to book seats and buy tickets to see the latest blockbusters. It has state-of-art convenient venues that provide cinema experience with beverage and food. Each venue has bars, cafes with trained baristas and Scoop Alley for self service. Strong reputable parent company (Amalgamated Holdings Limited) Weaknesses Entering new market. High prices due to operation costs Opportunities South Africa has almost thirty million cinema-goers, which is a good number for Event Cinemas to have a market share. The scarcity of 35mm print film has led to increase of digital production of movies. This prevented some cinemas sites from screening the movies due to lack of digital technology. South Africa is Africa’s economic powerhouse and is part of BRICS group of countries (Brazil, Russia, India and China), has demographic profile that is favourable, with rapidly expanding middle class which has high spending power. Threats Existing cinema operators like Ster-Kinekor, Nu Metro Cinemas and Cine Centre are the Event Cinemas’ greatest threats. Movie piracy and DStv’s Box Office , as part of alternate source of entertainment Shortening of release window from film to DVD, and film delivery alternative methods like accessing content through internet can damage cinemas appeal. 4.2 Implications of analysis Since the movement from analogue platform to digital movie screening is in the process in South Africa, Event Cinemas will move in very fast with its state-of-the-art digital technology, to take advantage of the market the South African cinema giants are missing out due to the slow move. It will also use its ability to provide facilities to access movies to the hearing impaired, visually impaired, and mobility impaired to serve the ‘neglected’ market and to build reputation in the market as the ‘caring’ cinema operator. Though developments of movie piracy and alternative delivery methods pose a risk, Event cinema will create a high quality cinema experience that will create an appeal of the night and treat factor. With the state-of-the-art facilities that cannot be easily acquired or imitated by the strong competitors, Event managers will be able to penetrate through the market and present itself in a way that says that, even though they are new in the market they are experienced in creating an unforgettable cinema experiences to the customers. 5. Competitive Advantage / Strategy Evaluation 5.1 Positioning analysis (use perceptual maps) - and recommendation The potential customer of Event Cinemas are people who enjoy going to the cinemas; adults, young people, and children, most of which are located in urban areas. Relative competitors are Cine Centre, Nu-metro cinema, Ster-Kinekor and home DVDs. The above shows how customers and potential customers have positioned competitors. New product opportunity is caring and ultimate experience. Therefore, Event Cinemas brand positioning statement will be “The Event Cinemas provides ultimate movie experience and state of the art facilities for viewers in a caring manner” 5.2 What competitive capabilities / characteristics will the firm need to be successful? For Event Cinemas to be successful it will need to technical capability, entrepreneurial capability and managerial capability. Technical capability This deals with how customers are served through operating processes and processes. If the technical capability allows Event Cinemas to be quicker in responding to the needs of customer, high quality, flexible and efficient in its operation, then it will gain advantage. Technical capabilities include business-specific capabilities, core competencies and R& D strengths. It’s creative and R&D capability should enable it to design and develop quality products that suit the needs of customers. The company will be able to compete better by providing products and services efficiently, especially in instances where price and cost are the primary concern, products are standardized and there is less likelihood of product differentiation. For Event Cinema to gain competitive advantage it will need to be flexible and to the speed enough, to respond more quickly to the changing tastes and demands of customers by providing them with products that suit them. The ability to provide high quality products and services to customers will give a company a competitive edge. Entrepreneurial capability This is the ability for a company to align itself effectively with its environment and broaden its business territory. It is also the ability to forecasts its environment changes and trends accurately makes, good at selecting and targeting its customers, intimately knows its customer base and has knowledge on how to identify and create new market opportunities. Managerial capability This is a higher level capability that enables a company to generate other capabilities and ensure that they are used productively. Multiple streams of competencies are built, coordinated, integrated, and reconfigured and strategically deployed to enable the company to exploit the changing opportunities in the market. 5.3 How will it create / build these in the international market? Analyze and discuss International market competition is become tougher and complicated than ever. Investing internationally has been shaped by reduction of trade barriers, transportation and communication costs. This competition is becoming complex and dynamic, creating new opportunities and threats. To gain competitive advantage in the international market Event Cinemas will focus on exploiting, enhancing and renewing its home-based advantage sources. It will build capabilities platform from innovation of unites, experiences and resources operating in various locations transfer those capabilities to international market. This will enable it to achieve a degree of success and international presence that is impressive with minimal regional adjustments. Event Cinemas is creative and innovative in its services and delights its customers with big movie experience such Vmax with a huge 20 metre digital screen, big sound and big seats, Gold class which is a luxury cinema and the largest movie club in Australia –Cine Buzz Rewards. It is also creative enough to ensure that everyone accesses a movie including the hearing impaired and the seeing impaired. Since these capabilities work well in Australia and give Event Cinema a competitive edge, it will transfer the same capabilities to the international market, and adjust where appropriately depending with the environment. 5. 4 What Strategy will the firm enact in its target market segments (attack / defend)? Event Cinemas will endorse a broad differentiation strategy an offensive strategy to attack the strong competition. It will capitalize on competitors’ weaknesses to gain market share. It will pay special attention to customer segments that rivals are weakly equipped to serve and neglected such as the physically impaired. Event cinemas will also introduce new product and service versions that will bridge the gap in the key rivals’ product lines, and go after rival customers whose products lack product performance, features and quality. Movie goers in the international market enjoy family -friend atmosphere, good food, a variety of movies and good beverages in a unique setting. When people go out to movies as a family or friends the hearing, visually and mobility impaired are left behind because there are no facilities in the cineplexes that can cater for needs. Event Cinemas will bridge this gap by providing state-of –the art facilities, such as infrared transmitters, hearing aid loops, headsets and neck loops and provide wheelchair spaces with companion seating in theatres so that anyone can access and enjoy a movie. Gold Class and Vmax will provide waiter services, intimate seating, and extra-large screens, all of which are missing in the international market of Event Cinemas. The top cinema operators in South Africa have no user-friendly website and only Ster-Kinekor has a mobile application that customers can use to buy tickets. Event Cinemas’ mobile application will allow customers to find it on any tablet or smartphone, anytime, anywhere. For customers who are not interested in apps, the mobile site has been enhanced to speed the buying of a movie ticket. Unlike Ste-Kinekor app that allows securely buying of tickets only, Event Cinema mobile app will enable customers to access Cine Buzz Rewards account, use the rewards membership account to access orders quickly, find cinemas near them, see upcoming and latest movie trailers and information, get parking tips and driving directions, and by use of cool colour coding be able to find Vmax and Gold Class sessions easily. Once a sufficient percentage of the target attach strongly to features, attributes and capabilities of the company, it will be able to command a premium price for its services and products, and gain customer loyalty. 5.5 Risk Management Analysis (use a value chain to identify key issues, risk profiles and potential impacts) The table below shows the value chain activities of Event Cinemas, key risks associated with them, likelihood of risk occurrence ( rare, likely, moderate and unlikely), the impact of the risk occurrence ( extreme, high, medium, low) and the risks will be managed. Value Chain Activity Key Risks Likelihood Impact Managing risks Inbound logistics  Delay in delivery of purchased supplies (movies) Moderate Extreme Provide with suppliers delivery period of 3weeks before the movie show date. Operations  Failure to offer customers movies advertised at the time Unlikely Extreme Schedule ahead the advertised movie alongside their show dates. Outbound logistics  Failing of website and mobile app that prevent customers from purchasing tickets online Rare High Engage high reputable website hosting companies, and google play for mobile app. Marketing and sales  Failing to show movie previews to customers a way of advertising Rare medium Schedule previews within the movie to ensure that they are advertised Service Complaints on poor customer service Unlikely high Conduct internal training on customer service delivery Procurement (purchasing)  Sourcing high priced quotations and poor vendors Unlikely medium Establish procurement procedures to include sourcing for at least four quotations per purchase Human resource management Recruiting incompetent personnel that becomes a cost to the company than an advantage moderate High mitigate Conduct job analysis and requirements and match with customers with the right skills. Technological development  Increasing information technology costs and lagging behind with technology advances moderate high Lookout for technological trends and respond accordingly. Infrastructure General management, administrative, legal and accounting may fail to support daily operations of the company Likely extreme Hold meetings to highly the importance of infrastructure to the whole company and follow up on the same. Reference List Devnomics 2015, Quantitative Research Report: Audience Research Project. Devnomics Reearch and Surveys. Event Cinemas. Accessed May 22, 2015 from http://www.eventcinemas.com.au/ Read More