Daniela Lamacchia, Joshua Favaro, Paul Lopez

CRM (MKTG20480) – Karen Booth

September 29, 2015

ASSIGNMENT #1: RELATIONSHIP MARKETING

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Contents 1. Executive Summary ............................................................................................................... 2

2. Overview of the Company ...................................................................................................... 2

a) Background ........................................................................................................................ 2

b) History ................................................................................................................................ 3

c) Sales .................................................................................................................................. 4

d) Demographics .................................................................................................................... 5

3. Competitor Overview: ............................................................................................................. 6

Direct Competitors .................................................................................................................. 6

a) Cinemas Guzzo Inc .................................................................................................. 6

b) Magic Lantern Theatres Ltd ...................................................................................... 6

c) Collective efforts of independent, local movie theatres throughout Canada .............. 7

Indirect Competitor ................................................................................................................. 7

Netflix/Online streaming services ........................................................................................ 7

4. Defensive and Offensive Marketing ................................................................................. 8

Offensive Marketing Example: ................................................................................................ 8

Defensive Marketing Examples .............................................................................................. 8

a) SCENE card promotions .......................................................................................... 8

b) SCENEtourage promotion ........................................................................................ 9

5. Touch Points .........................................................................................................................11

a) Overview ..........................................................................................................................11

b) Definitions ........................................................................................................................12

c) Interaction Questions ........................................................................................................13

6. Based on the Three Levels of Relationship Marketing ...........................................................14

a) Pricing Incentive: ............................................................................................................14

b) Social Bond: ...................................................................................................................16

c) Structural Solution: .........................................................................................................18

6. One-to-One Relationships .....................................................................................................20

a) Emails ............................................................................................................................20

b) TimePlay ........................................................................................................................21

7. Summary of Findings ............................................................................................................22

8. References ...........................................................................................................................23

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1. Executive Summary

The objective of this report is to analyze Cineplex’s relationship marketing in all aspects of their business

and determine the effectiveness of their existing CRM strategies, based on class understanding of these

concepts.

The report will initially outline some relevant background information about the company as well as

highlight some key trends in the industry. There is an analysis of Cineplex’s competitive environment

and how they compare to some direct and indirect competition, along with the future outlook on the

market. The focus of the report will then shift to Cineplex’s CRM strategies. First, there is an

examination of the company’s offensive and defensive marketing strategies to determine whether or

not Cineplex concentrates its efforts on acquiring customers or retaining their loyal target audience.

A detailed consideration of Cineplex’s touch points will help emphasize the different ways the

organization adds value to the customer and creates an opportunity for a positive experience with each

person. A customer experience at a local Cineplex location will be analyzed from a marketing

perspective, which will provide insight into how the company’s CRM is structured to create the ideal

customer experience.

Further promotional examples will be discussed along with screenshots of emails and advertisements, in

order to prove that Cineplex meets all three levels of relationship marketing. Finally, analysis will be

provided on how the company uses those promotions to build a one-on-one relationship with each

consumer.

All this research will be summarized, reviewing the many examples provided, to prove that Cineplex is a

customer-oriented organization and structures its marketing activities to develop consumer

relationships to build brand loyalty.

2. Overview of the Company

a) Background

Cineplex Incorporated, or as it is more commonly known “Cineplex”, is a very well-known brand in

Canada. Cineplex provides Theatrical Exhibition, Food Services, Gaming, and Online Products/Services.

At over 100 years old, it is Canada’s largest motion picture theatre chain. Cineplex operates 162 theatres

in Canada as of December 31st, 2014, and its head office is in Toronto, Canada. According to the

Cineplex 2014 Annual Report, the company served approximately 74 million guests in the corresponding

year. Cineplex currently employs 11,000 staff members. (Cineplex, 2014)

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b) History

Cineplex as a brand can be traced back over a century:

· Founded 1912 by Adolph Zukors as Famous Players Film Corp. (Cineplex, 2015)

· Acquired Paramount Theatre in 1920. (Cineplex, 2015)

· Opens first Cineplex theatre in 1979 in Toronto Eaton Centre. (Cineplex, 2015)

· Former Cineplex executives Ellis Jacob and Steve Brown leave and create Galaxy Entertainment.

(Cineplex, 2015)

· Cineplex files for bankruptcy in 2001. (Cineplex, 2015)

· In 2003, Cineplex merges with Galaxy Entertainment creating Cineplex-Galaxy Trust. (Cineplex, 2015)

· In 2005 Cineplex-Galaxy acquires Famous Players from Viacom and doubles in size as a result. (Cineplex,

2015)

· In 2006 Cineplex-Galaxy is renamed Cineplex Entertainment. (Cineplex, 2015)

· In 2007 SCENE entertainment rewards program is launched in partnership with Scotiabank. SCENE is

Canada’s only and largest entertainment loyalty rewards program. (SCENE, 2015)

· In 2011 Cineplex Entertainment is renamed Cineplex Incorporated. (Cineplex, 2015)

· Cineplex Inc. acquires Empire Theatres in 2013. (Cineplex, 2015)

· Cineplex as of 2015 operates 162 theatres, with Ellis Jacob as President and CEO. Cineplex has 62.9% of

the market share in Canada in its industry. (Cineplex, 2015)

(IBISWorld, 2015)

Being a Canada wide brand, Cineplex has a variety of locations across the country. However 67% of

these locations are serving the provinces of Ontario, Quebec, and British Columbia. (Cineplex, 2015)

Here is an overview of Cineplex’s presence in the Canadian landscape:

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(Cineplex, 2014)

c) Sales

Cineplex Inc. is in the Digital Advertising and Film Exhibitor industry. As such, Cineplex has a wide range

of channels for revenue. Some of these would include: Theatrical Exhibition, Food Services, Gaming, and

Online Products/Services. Cineplex reported earnings of $1.2 billion in revenue in 2014. In the year of

2012, 70 million tickets were sold accounting for 38% of their total revenue. (Euromonitor International,

2013) Concession revenue accounted for 29% of total revenue. (Cineplex, 2013) Business-to-business

sales accounts for 7% of the company’s revenue. (Euromonitor International, 2013). All of these areas

experienced gradual growth in the past five years.

(Cineplex, 2015)

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d) Demographics

Households are a major customer segment for this industry, accounting for 70% of the total market.

(Euromonitor International, 2013) Despite the growing trend of online downloading and streaming,

attendance has risen from about 68,000 in 2012 to 73,000 in 2014. (Cineplex 2015) Attending a movie

theatre is a leisure activity, which depends on local household disposable income. This is affected by the

state of the economy, employment rates and taxes. A consumer is most likely not to attend the movies

without enough disposable income. Age of attendees vary as some younger consumers may be more

attracted to a Disney movie rather than a non-animated film. Adolescents aged 19 and younger

contribute to 25% of the industry revenue. (IBISWorld, 2015).

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3. Competitor Overview: The direct competition is not very overwhelming as Cineplex outlasted or simply acquired competing

movie theatres. The following section will outline three direct competitors who are not major threats to

Cineplex. However, there are some indirect competitors who are contributing to new trends that could

cause movie theatre revenues to decline.

Direct Competitors

a) Cinemas Guzzo Inc

Profile

· 3.9% market share in 2010. (Euromonitor International, 2013)

· 151 cinema screens; 12 theatres. (Cinemas Guzzo, 2015)

· Locations in Quebec. (Cinemas Guzzo, 2015)

Cinemas Guzzo is the major theatre operator in Quebec and follows a similar marketing plan as

Cineplex. Cinemas Guzzo is focused on the overall entertainment experience for its customers. For a

higher end price, Cinemas Guzzo offers superior entertainment in terms of comfortable seating, screen

quality and a variety of projector options like IMAX and UltraAVX. (Cinemas Guzzo, 2015) The company

is definitely focused on customer relationship management by emphasizing their Guzzo Fidelity card,

which acts like the Cineplex SCENE card.

Despite the theatre’s success in Quebec, there does not seem to be any plan for Guzzo Cinemas to

expand past the province. Essentially, Cinemas Guzzo is more of a Canadian niche operator that focuses

on dominating the Quebec market. This chain is not large or competitive enough for Cineplex to focus

their resources on stopping Cinemas Guzzo. Losing a small portion of the Canadian customer base to this

isolated movie theatre operator is not the biggest current issue for Cineplex.

b) Magic Lantern Theatres Ltd

Profile

· 2.8% market share in 2010. (Euromonitor International, 2013)

· 90 cinema screens; 17 theatres plus 8 Rainbow Cinema locations. (Magic Lantern Theatres, 2015)

· Locations throughout Canada. (Magic Lantern Theatres, 2015)

Magic Lantern Theatres (including Rainbow Cinema) is a chain that is spread thin across Canada. While

Cinemas Guzzo controls a specific market in Canada (Quebec), Magic Lantern Theatres has remained in

the industry by means of a minor competitive advantage. This chain’s business model involves offering

cheaper ticket sales for audiences to watch either new releases, movies after their first run, or a few

classics scheduled on specific days throughout the year.

While this model has allowed Magic Lantern Theatres to operate across Canada, their potential is

severely limited by Cineplex’s presence. Cineplex continues to grow by means of acquisition and

innovation, but Magic Lantern Theatres has been unable to match the leading movie theatre operator in

Canada. Therefore, Magic Lantern Theatres is not a threat to Cineplex and will have to innovate in order

to remain a competitor in this industry moving forward.

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c) Collective efforts of independent, local movie theatres throughout Canada

Profile

· Collective 46.6% market share in 2010. (Euromonitor International, 2013)

Every region in Canada has its own local movie theatre that has been a primary entertainment spot for

long-time residents in that area. Although having few locations, the advantage these theatres have is

the loyalty of customers who have been attending that cinema for years. The issue for these smaller

theatres becomes trying to acquire new customers. First time users of movie theatres would likely try

Cineplex before the independent, local cinemas because the larger chains are the organizations that

have the money and resources to create and distribute appealing promotions.

The lack of barriers to entry years ago allowed for cinemas to open up throughout Canada. However, the

industry has changed and the Canadian market has become more of a monopoly, led by Cineplex. With

that being said, all of these local cinemas collected together take away a portion of the Canadian

audience, thus, slightly handicapping Cineplex’s profit potential. In the end, Cineplex will acquire some

of these local theatres and continue to grow, but there is still a piece of the market share that is held by

numerous small cinemas.

Indirect Competitor

Netflix/Online streaming services

The last several years have seen a change in customer preference when it comes to movie

entertainment. Online streaming has grown in popularity and Netflix’s business model, which effectively

utilizes streaming a variety of movies and shows, has created a niche market. While illegal downloads

have provided users with a way to avoid movie costs altogether, Netflix and other legal on-line

streaming services are still cost effective options.

This trend has negatively affected the entire Digital Advertising and Film Exhibitor industry in Canada

and this development could continue, unless customers see the value in attending more movies in

theatres. This does not suggest however that theatres will be empty anytime soon. This analysis does

imply though, that Netflix and other online streaming services has developed and sustained a loyal

customer base in the movie entertainment services market. (Smith, 2014)

Movie theatres are losing a portion of their loyal consumers because the competitive advantage of

cinemas is decreasing. The ability to create a theatre-like environment at home has become more

common and affordable. (Smith, 2014) Add to that the ability to stream a variety of movies and shows

through an online streaming service and now a customer does not need to go to the movie theatres.

(Smith, 2014) This trend requires movie theatres, especially Cineplex, to strengthen their loyalty

programs and emphasize their competitive advantage, which is that movies are first available exclusively

in theatres. This is essential in order to help consumers see the value in watching new movies at

cinemas instead of at home.

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4. Defensive and Offensive Marketing

Offensive Marketing Example:

Cineplex has always used discounted ticket prices on Tuesdays to draw new customers into their

theatres. However, the company has taken this offensive strategy to the next level by offering the

promotion described in the screenshot below:

(redkulat, 2015)

This is an excellent offering that definitely attracts new customers who either prefer another local

cinema or rather watch a movie at home than go to the theatre. If a customer feels that Cineplex’s

tickets are overpriced, this promotion will motivate some to take advantage of this incentive.

This is an offensive promotion because the purpose of this strategy is to acquire new customers by

means of lower prices, not only on Tuesdays, but for an entire week.

Defensive Marketing Examples

a) SCENE card promotions

Cineplex has unleashed several marketing promotions using their SCENE card, which builds loyalty

among existing Cineplex customers. This loyalty card along with the discounts associated with the SCENE

card are all designed to get customers to return to Cineplex theatres and come often in order to take full

advantage of these offers. The main goal for consumers with a SCENE card is to earn enough points to

receive a free movie. The following screenshot will describe some of the promotions that result from

possessing and using a SCENE card.

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(Cineplex, 2015)

b) SCENEtourage promotion

The SCENEtourage offering allows a group of 3-10 SCENE members to earn extra points by going to the

theatres. This marketing activity takes this overall CRM defensive strategy to a more intense level. First,

Cineplex draws existing customers into possessing a SCENE card and purchasing more movies to collect

points and receive special deals with the loyalty card. Now, the SCENEtourage promotion moves

customers, who are already loyal members, to go to the movies with a group to earn more points. Also,

with the SCENEtourage promotion, those SCENE groups compete against each other to win more points.

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These two promotional activities are defensive strategies because the purposes of these offers are to

retain existing customers, encouraging them to use Cineplex services more often.

Cineplex definitely focuses more of their efforts on retaining customers by means of defensive

marketing activities as opposed to using offensive strategies to acquire greater market share. Cineplex

understands the value of CRM and uses its various SCENE promotions to appeal to their customer base.

Their goal is to use these loyalty programs to give customers greater incentives to attend their cinemas

more often.

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5. Touch Points

a) Overview

Touch points are any point of contact a customer or potential consumer has with a company or

seller. Touch point management is an important mission to all successful companies, such as

Cineplex. Companies like Cineplex obtain information and use touch points to create the ideal

customer experience. This allows for companies like Cineplex to analyze the journey consumers

have to get from promotion to loyalty, and execute a strategy to better acquire and retain

those customers.

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b) Definitions

Promotion Definitions

· PR: Public Relation provides

accessible information about Cineplex to the

public.

· Email: Promotional emails sent via

Cineplex or partners to prospective

customer.

· Radio/TV: Commercials about

Cineplex, partners (SCENE), or events.

· Word of Mouth: Peer to peer

interaction and sharing of an experience with

Cineplex.

· Social Media/Online Ads:

Promotions about upcoming movies or

Cineplex.

· Flyers/Direct Mail: Promotions and

coupons with partnering restaurants or

with Cineplex.

Consideration Definitions

· Social Ads: Postings and online

version of word of mouth.

· Reviews: Peer reviews or review

websites that measure quality of movies.

· Blog: Followers on social media

channels who will trust an online figure’s

opinion on a particular movie.

· SEO: Search engine optimization for

specific genre seeking prospects. E.g. “Horror

Movies coming soon”.

· Media: Media reports about box

office hype, record sales, and actors.

· Movie Trailers: A preview for an

upcoming film with highlight clips.

Purchase Definitions

· Sales: A discount or promotion on a

Cineplex product.

· App: Movies purchased using the

Cineplex App. Also allows phone to be scanned

for entry.

· In-Store: Products and tickets

purchased in person at a Cineplex location.

· Website: Tickets and Products

purchased online through Cineplex.com or

resellers.

· Self-Serve Kiosk: Machines available

at Cineplex locations to buy tickets and

concessions.

· Self-Print: Tickets purchased online or

through app send to email to print copy of

ticket for entry.

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Retention Definitions

· Discounts: Promotional discounts on

certain days, and to SCENE members.

· Emails: Congratulatory emails for

watching a movie or redeeming SCENE points

· Coupons: Discounts offered at

Cineplex partners. E.g. 1000 points for any 20$

purchase at Sport Chek.

· Events: Midnight Movie release

events, seasonal events, community events

such as “Community Day – Free Movies”.

· Loyalty Program: SCENE program that

offers points, and discounts for attendees.

· Contests: Cineplex and SCENE

contests offered to SCENE members to

promote exclusivity.

Loyalty Definitions

· Data-Mining & Surveys: Survey

invitations on movie tickets with chance to win

free movies for a year.

· Customer Satisfaction: Strength of

relationship moves from Acquaintance towards

Partner.

· Customer-Centric Focus: Cineplex

strengthens profitable relationships through

use of customer information.

· Multi-Channel Marketing: Cineplex

includes locations, kiosks, website, email etc.

· One-to-One Marketing: Cineplex

through CRM techniques strengthens bonds

with customers’ information.

· Defensive Marketing: Cineplex aims

to retain and service loyal customers through

incentives and a rewards program.

c) Interaction Questions

Self-Serve Kiosk

What was the interaction? Explain what you did.

The interaction consisted of myself purchasing a ticket for a movie that I had considered to watch after

viewing a trailer online. I interactively had chosen my preferred movie on the touch screen kiosk. I

decided to use my SCENE points and declined concessions.

Was the experience a positive one? Why or why not?

The experience was positive because I did not have to wait in line, and did not have to use any

disposable income. The process took me 2-3mins to complete, which was very efficient. The concession

choices however were lacking and limited to popcorn combos.

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Was any data collected during your interaction? If yes describe what was collected, was there an

opportunity to collect data? Provide an example.

The data collected from me was my SCENE card information and points balance. Swiping my SCENE card

provided the kiosk with my name as it welcomed me by name and displayed my balance. Cineplex has

an opportunity to collect data on my preferred genre of movie and offer different food choices since I

have never purchased any of their displayed combos. This could provide potential revenue for health

conscious consumers as well as target lineup reduction by allowing variety before customers enter.

Do you think this organization is interested in establishing a relationship with their customers as

opposed to merely selling you a product or service in a single transaction? Explain why or why not.

What did they do to support your answer?

I believe this organization is interested in establishing a relationship with their customers because of

their CRM practices. Welcoming me by name and providing my points balance showed customer centric

focus while using their loyalty program to purchase my ticket. On my printed ticket there was an online

survey displayed, which asked me to give feedback on my experience for the chance to win free movies

for a year as an incentive. Examples of defensive marketing were the email to congratulate me for

redeeming a movie as well another telling me how many points I earned during my visit and my new

balance. Cineplex satisfies consumers with multi-channel marketing, by providing so many channels for

customers, including the kiosk where I made my transaction.

6. Based on the Three Levels of Relationship Marketing

Cineplex, in combination with the SCENE program, certainly follows the three levels of relationship

marketing.

a) Pricing Incentive:

Cineplex attracts customers with a pricing incentive by featuring “Half-Priced Tuesdays”, where

admission is half price. This attracts a large amount of customers to come to the theatres in the middle

of the week aside from premiere nights.

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Another pricing incentive is the SCENE program. With the SCENE card, you earn points that you can

redeem to watch movies; every 1000 points gets you one free movie. You can earn points by presenting

it when making purchases at the movie theatre and participating retailers (example: Sport Chek, Marks

Work Warehouse, etc). SCENE card also offers 10% off all concession purchases.

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b) Social Bond:

Cineplex issues emails and content based on consumer personalization. When a customer signs

up for Cineplex, he or she receive emails with newsletters and promotions catering to them. For

example, what’s new and hot, what movies will be released that month, and any other special

offers. SCENE members receive emails on special promotions, what movies are being released

and how many points that customer has accumulated. SCENE members customize these emails

by going to Email Settings and selecting which emails they prefer to receive so they are not

faced with messages that are not of interest to that specific customer.

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Another way Cineplex establishes a social bond and individualizes each email is by reminding

SCENE members of how many points they have accumulated and how close someone is to

receiving a free movie.

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c) Structural Solution:

Cineplex allows customers to put their SCENE card on their phone to make it easier for people

to earn scene points. Someone can download the Cineplex app from the AppStore and the

GooglePlay store, thus making it easily accessible on one’s smartphone. On the Cineplex app

customers are able to view accumulated points, watch trailers, find theatres, show times and

pricing.

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Cineplex applies gamification to their loyalty program by means of the TimePlay app. Users can

easily download this app and become more involved in the Cineplex experience and earn more

SCENE points. Before the movie begins, there is a mini-game involving a series of questions that

can earn customers extra SCENE points. Users simply have to download the app and they are

able to play along.

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6. One-to-One Relationships

a) Emails

Cineplex creates a one-to-one relationship by giving customers the option to sign up for emails

and the SCENE program to be more involved. In these emails, Cineplex addresses each

individual customer, in order to enhance the one-to-one relationship experience.

When looking at this email, a customer is able to see their name mentioned, some restaurants

that may interest that customer, and the member’s current SCENE points balance. By doing

this, they are building on the one-to-one relationship with each individual customer.

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b) TimePlay

Cineplex created this very interactive app that allows moviegoers to become more involved in

the Cineplex experience. With TimePlay, it allows the guests in the theatre to follow along with

the onscreen questions and play interactive games. This can all be done by launching the app,

selecting a username, and following the prompts to enable one to answer the questions. The

more questions someone answers correctly, the more SCENE points that person earns. All the

participants are included on a leader board to promote competition amongst members. This

creates a one-to-one relationship by letting the user choose to take part in the game and be

able to create their own username to make it unique.

(TimePlay, 2013)

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7. Summary of Findings The objective of this report is to analyze Cineplex’s relationship marketing in all aspects of their business

and determine the effectiveness of their existing CRM strategies, based on class understanding of these

concepts.

The research on this assignment proves that Cineplex focuses a majority of their efforts on defensive

marketing strategies as they try to retain their customer base by means of loyalty programs such as their

SCENE card. It was determined that Cineplex devotes more time and resources on SCENE promotions as

opposed to special pricing offers to attract a new audience to their theatres.

Cineplex uses a variety of touchpoints to move customers from first-time users to loyal brand

enthusiasts. Touch points may vary from social media ads to gain presence as a brand, to Cineplex

contests and surveys which aim at retaining customers as well as better understanding their target

audience’s preferences. Cineplex makes a customer’s experience so much more convenient by means of

their multi-channel marketing system, providing someone with different ways to complete a

transaction.

Also, there are many examples which identify Cineplex as a company focusing on establishing social

bonds with their customer base at a one-on-one level, while developing structural solutions for their

target audience as well. Cineplex’s individualized emails, offering customizable settings and further

SCENE promotions were highlighted throughout the report because these examples show how this

organization attempts to connect with every customer individually and establish a bond that could result

in increased loyalty by means of their promotions.

For example, Cineplex emails each SCENE member to remind them of their points total and how close

that customer is to a free movie. This strategy is an excellent model of establishing a social bond

because it motivates a customer to have another interaction with the brand as soon as possible to take

advantage of the company’s free movie promotion. This marketing activity is also a way to develop that

one-to-one relationship with that specific customer because the email is customized for them

personally. At the same time, these emails might provide a structural solution for the customer by

reminding him or her of their current point total and how they can acquire more points. Those type of

CRM strategies are excellent because they achieve multiple purposes with one promotional activity.

Therefore, the numerous promotional examples emphatically prove that Cineplex is focused on building

strong customer relationships to establish a loyal target audience, which has allowed them to dominate

the Digital Advertising and Film Exhibitor industry in Canada.

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8. References

Cineplex. (2015). Scene - earn points. Retrieved from Earning scene points:

https://www.scene.ca/programearning.aspx

Cinemas Guzzo. (2015). About Guzzo Cinemas. Retrieved from Cinemas Guzzo:

http://www.cinemasguzzo.com/about-us.html

Cineplex Incorporated. (2015). Cineplex.com Information. Retrieved from Cineplex Inc. Web site:

http://www.cineplex.com/Corporate/Information#corporateHistory

Euromonitor International. (2013, April 9). Movie Theatres in Canada: ISIC 9212. Retrieved from

Euromonitor International - Analysis:

http://www.portal.euromonitor.com.library.sheridanc.on.ca/portal/analysis/tab

IBISWorld. (2015). Industry Report 51213CA. Movie Theatres in Canada. Retrieved from IBISWorld:

http://clients1.ibisworld.com.library.sheridanc.on.ca/reports/ca/industry/default.aspx?entid=12

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Magic Lantern Theatres. (2015). Corporate Info. Retrieved from Magic Lantern Theatres:

http://www.rainbowcinemas.ca/A/corporate.php?theatre=Carlton

redkulat. (2015, August 26). Cineplex: Get Tuesday Pricing for All Movies from August 31 Through

September 4! Retrieved from Red flag deals:

http://www.redflagdeals.com/deal/entertainment/cineplex-get-tuesday-pricing-for-all-movies-

from-august-31-through-september-4/

Smith, K. (2014, October 17). Netflix Is Taking The Movie Theatre Industry Head On, And It Will Win.

Retrieved from Elite Daily: http://elitedaily.com/money/netflix-taking-movie-theatre-industry-

head-will-win/788686/

TimePlay. (2013). TimePlay. Retrieved from TimePlay: http://timeplay.com