Marketing of Services

Sector Media &

Communication
Company - Cinepolis

Group 5, Section C:
Arpit Jain (140102031)
Rahul Jain (140101121)
Atul Gupta (140103040)
Vivek Nayar (140103090 )
Ashish Mishra (140101034)
Mayank Gupta (140103096)
Manthan Ajwalia
(140101095)
Kaushikan Rangrajan
(140103083)

Brief Overview Media and Communication

Industry
Spllit into 9 Major Segments
Segment
Television
Television

Print

Print

Gaming

Films

Animatio
n & VFX

Films
Entertainme
nt

OOH

Music

4.37
2.09
0.71

Animtion and
VFX

0.41

Radio
OOH

Digital
Advertisin
g

8.04

Digital
Advertising

Gaming
Radio

Value ($ Bn)

Music

0.39
0.29
0.36
0.17

Nature and Scope of the Industry

Highly fragmented industry. No single company has enough share to
influence the entire sector
High fixed costs and highly perishable products
High capital requirements
Access to distribution is difficult
Increasing number of content providers
Consumers loyalty towards one channel is less as a variety of alternate
sources are available

Global Context of the Industry

Third Largest TV
Market
168 Million TV Sets
$7.9 Bn revenue
(2014)

Among the largest

Broadcasting
Market

Fast Growing
Animation
Industry

800 satellite TV
Channels
242 FM Channels
10 Mn digital cable TV
connections

$744 Mn revenues in
2014
Expected to reach
$1.6 Bn by 2019

Rising No. of
subscriptions
Expected to reach 187
million subscriptions
by 2019
DTH subscriber base
to grow by 80% to 72
Mn by 2017

Industry Size & Projected Growth

Market Size USD Bn
35

32.7
29

30
25.5

25

22.2

20
15

14.4

12.7

13.7

FY'09

FY'10

16

17.5

16.9

17

FY'12

FY'13

FY'14

19.2

10
5
0

FY'08

FY'11

FY'15P

FY'16P

FY'17P

FY'18P

FY'19P

Industry is expected to grow at a CAGR of 13.98 per cent from 2014-2018 to reach
USD32.7 Billion in 2019
The next five years will see digital technologies increase their influence all across the
industry leading to a sea change in consumer behaviour across all segments

Market Share of Major Industry Segments in 2014

Size of major industry segments (2014)

Television, print and films together
2.11
2.31.7
2.4
4.2

12.3
47.3

25.7

TV
Print
Films
Digital Advertising
Animation & VFX
Gaming
Radio
OOH
Music

accounted for 84.3% market share

in 2014
Print media is the second largest
segment in the industry
Film industry holds the third spot
with 12.3% market share

Forecasted Market Segmentation in

2019
Television, print and films together
accounted for 84.3% market share
in 2014
Print media would be the second
largest

and

OOH,

Radio

and

Gaming is expected to contribute

2% to the entire industry by 2019
Television is expected to capture
more market share in the coming
years and exptected to contribute
half of the total market by 2019

Television Largest and Fastest Growing Segment

32.6

30.7

67.4

69.3

FY'14

FY'19F
Subscription Revenue

TV Advertising

With a growth rate of 15.8% in 2011, Indian television industry stood second when compared
with BRIC and other major developed economies
In 2014, India television industry derived its major revenues from subscription charges. The
trend is expected to remain the same through the next 5 years with minor variation

High Growth in Radio, Animation, Gaming and Digital

Advertising

During 2014-19, these segments are expected to increase at the

following levels:
Industry

Expected CAGR from 2014-19

Digital Advertising

30.28%

Gaming

14.38%

Radio

18.20%

Animation

16.40%

With increasing use of internet and other digital resources, Digital Advertising
is expected to grow at the fastest rate among peers like print media, radio
and outdoor advertising.

Advertising Revenues

Sales
Total spending on advertising across all
5

media stood at $ 6.9 Bn which is

4.1

expected to touch $ 7.9 Bn in FY15

15.4
39

Print
TV
Digital Advertising
OOH
Radio

Print is the largest, accounting for 42.6%

of the advertising share in 2014 and is
projected to be 39% in FY16
Advertising revenue is expected to touch

36.5

$13.6 Bn by 2019 at a CAGR of 12.6%

between 2013 19P

Demand Drivers

Rising Income Levels

& Increased Internet
Usage
Evolving Lifestyles
leading to a higher
demand of aspirational
products
Increased usage of 3G,4G
and portable devices

Increasing
Investments
Higher FDI Inflows
Increasing M&A activity
Entry of big players
across all segment of the
industry

Policy Support
Increasing FDI limits
Digitization of cable
distribution
Increasing liberalization
and tax relaxation

Bottlenecks in Entertainment Industry

Piracy
Poor Bandwidth
Lack of Digital
Payment Gateways
(Pay per view)
High Tax Incidence

India is only second to China in the Asia Pacific region in

terms of users accessing pirated content online
Lack of proper legal framework to deal with copyright
infringement
India with 2.0 Mbps average connection speed of 2
Mbps is ranked among the lowest in the world in
connection speeds
Difficult for comapanies to publish media online for
customers
Lack of robust payment mechanisms to make content
accessible on the internet
Pirated content easily available on the internet
Rise in the number of serious gamers due to launch of
premium consoles
Difficult for companies to make it accesible to more
customers

Government Initiatives

Digitizing the cable distribution sector to attract greater institutional funding

FDI limit from 74 per cent to 100 per cent in cable and DTH satellite platforms

Granting industry status to the film industry for easy access to institutional
finance

Phase III auction of 839 radio channels in 294 cities Radio Industry

Recently, the Indian and Canadian governments have signed an audio-visual

co-production deal that would help producers from both countries to explore
their technical, creative, artistic, financial and marketing resources

Development/Investments

Cinepolis India Private Limited, the Indian movie exhibition arm of Mexican
chain Cinepolis, has plans to add 60 screens to take its total count to over 250
screens by the end of 2015

STAR India, a unit of 21st Century Fox, acquired the entire broadcast business
of MAA Television Network

Netflix, one of the leading on-demand internet streaming media companies in

the world, has firmed up its plans to enter Indian market by 2016

Carnival Films Private Limited acquired Stargaze Entertainment Private

Limited, a multiplex company, from a unit of Mukesh Ambani-controlled
Network18 Media and Investments Limited.

Skill Development

Employment in Media and

Employment 2013 (100% = 0.4mn)

communication industry 0.4mn

Projected to grow at a CAGR of 13%

Lack of job security, use of

freelancers, unattractive entry

5 5
40
15
35

Animation,
VFX and
Gaming
Television

Radio

Cinema

salaries at entry levels are the

reasons for people not applying for
the jobs

Source: Media & Entertainment NSDC skill study 2015

Print

Investment in the Sector

Breakdown of Deals in 2014 (By Value/Sector (%))

3 9

79

Trends of Investment (Volume and Value)

New Media
Cinema
TV
VFX, Radio,
OOH and
Print

Film Industry Performance

Cinepolis in India

1st International Multiplex chain, established through a 100%

FDI route
Opened 1st cinema in Amritsar in 2009
Acquired FUN Cinemas in 2014
3rd largest player (BO collection, Attendance)
4th largest in India (Screen Count)
Only operator of 2 megaplexes in India (as of May 2015)

Cinepolis in India

SWOT Analysis Of
Cinepolis
STRENGTH
1) World's 4th largest multiplex chain, with
operations in 12 countries
2) Largest operator of luxury cinema globally
3) In house gourmet food expertise
4) Strategic tie ups with Rentrak, Real-D
systems and IMAX in India
5) Can tie up with movie producers for film
promotions in Latin America

WEAKNESS
1) Lack of 1st mover advantage
2) Distributor share pretty high, nearing to
47%
3) Low social media presence
4) Improvement can be done in Staf

SWO
T

OPPORTUNIT
THREA
IES
TS
1) Low multiplex screen penetration, 1.6 per 1) Rising internet penetration, VOD, online content
million
2) Increase in discretionary spending due to
rapid urbanization and aspirational young
population
3) GST Reforms
4) Can promote its Cofee Tree as a brand like
MacDonald's, Starbucks and others.

watching and Piracy

2) Delay in shopping mall construction activities,
delay in getting NOCs
3) Reduction in theatrical release window, High
distributor share
4) Potential delay in GST implementation and
Uncertainty over government intervention in ticket
prices and taxes
5) Substitute entertainment form like - IPL,
Videogames, Development of technologies like 3D
TV, Home theater systems and others

Cinema Screen Penetration (Global)

140
125
120
100
85

82

80
Screens per million people
60

61

57

40
26
20
0

13

US

France

Spain

UK

Germany

Japan

China

7
India

Countries

Compared with major world economies, screen penetration in India is low.

With approx. 2000 multiplex screens presently, actual multiplex screen
penetration is around 1.6 screens per million (2014)

Source: FICCI KPMG Report 2015

Screens in India
12000
9588
10000

9600

8000
8700

8600

9350

8100

9150

9450

9500

9552

9623

7700

7700

7469

7244

7027

6000
screen count
4000
2000
888

1000

1250

CAGR Total Screens = 0.07%

CAGR Multiplex screens =
13.13%
CAGR9685
Single 9761
Screens9713
= -3.00%
9670

1450

1750

2031

2308

2596

6815

6610

6412

6219

2870

3151

3301

3451

Multiplex Screen

Single Screen
year

%age
2010 2011 2012 2013 2014
change
Multiplex 12.6 25.0 16.0 20.7 16.1
screen
%
%
%
%
%
Single
-5.8%
0.0%
Screen 1.1%
4.9%
3.0%
Total screen 0.1% -2.6%
3.3% 0.5%
2.1%

Total Screens in India

2015 2016 2017 2018 2019 2020

[P]
[P]
[P]
[P]
[P]
[P]
13.6 12.5 10.6
9.8% 4.8% 4.5%
%
%
%
-3.0% -3.0% -3.0% -3.0%
-3.0%
3.0%
0.5% 0.7% 0.6% 0.8%
-0.4%
0.5%

With multiplex screens gradually increasing, and single screens declining, overall screen
penetration is supposed to remain same at 7 screens per million, but multiplex screen
penetration is expected to increase from 1.6 screens/million to around 2.5 per million (by 2020)
Source: Source: Screens in India Money Control, Emkay
Research

Market Competition

Major Multiplex screens in India (2014)

Total = 686

800
700
600
500

7
38

400
Total =
300
465
Screens count 200

135

100
0

Total =
330
372

Legend
PVR Organic setup
Cinemax
Inox Organic setup

10
30
95
Total = 315
232

686
250
25

83

Fame Cinemas
Satyam Cinemas

Total = 193
110

CCPL
Carnival Organic
Setup
BIG Cinemas

Multiplex Players in India

Glitz Cinemas
As of 2014, India had 2000 multiplex screens
HDIL Broadway
Only 4 multiplex chains (PVR, INOX, Carnival and Cinepolis) have PAN India presence
PVR, INOX, Carnival and Cinepolis together account for 66.22% of total multiplex screens in
Cinepolis Organic
India
Source:
FICCI KPMG Report 2015
Setup
FUN Cinemas

Screen Count and Locations of Major Players

Major Multiplex players

Screen count
(2014)

Major Location

PVR Cinemas (listed)

465

Inox Leisure (listed)

372

Carnival Cinemas

315

Cinepolis
SRS (listed)
Sathyam Cinemas (SPI
Cinemas)
Wave
DT Cinemas
Movietime
Citypride
E Square
Others

193
48

PAN India (West: 48%, North: 30%, South: 18%, East:

5%)
PAN India (West: 32%, North: 23%, South: 21%, East:
18%)
PAN India (BIG + Kerala, Karnataka, Tamil Nadu,
Maharashtra, Madhya Pradesh, Uttar Pradesh and
West Bengal)
PAN India (Punjab, Maharashtra, Andhra Pradesh,
Karnataka, Gujarat, Bihar, Madhya Pradesh)
NCR, UP, Punjab, Himachal Pradesh

39

Tamil Nadu

Total SCREENS

Major acquisitions till

now

Source: FICCI KPMG Report 2015

39
Punjab, UP, NCR
30
NCR, Chandigarh
27
Mumbai, NCR, Karnal, Amritsar
23
Pune
20
Maharashtra
460
Local
players
at city/state
level
Combined
cost
of these
acquisitions
is approximately
INR 2100 crores
or2031
USD 337 million. Total screens acquired in these acquisitions were
651
Average cost of screen acquisition in 2014 came around INR 5.52
crores/screen or USD 0.88 million/screen
Average EV/EBITDA for Multiplex hovers around 10-11.

Competitive Profile Matrix (CPM )

PVR

Carnival
Cinemas

Cinepolis

18%

11%

340

415

445

2473

2262

2320

163

150

168

INOX Leisure

Critical Success Factor

Data
Screen Share
Screen in Pipeline
Avg. Weekly Admits/Screen

27%
450
2721

Average Ticket Price

22%

179
Innovations

Innovations: New variety of products and services

introduced
Cinepolis - Introduced 4DX, VIP Concept, and Stadium style
PVR - Introduced 1st multiplex, online ticketing, Playhouse
seating
concept in India

Cinepolis experience

Best
Cinema
Experien
ce - Just
3 clicks
away
Easiest
booking
process

Largest
legroom
in town

Incredibl
e 3D
experien
ce

Best
Sound
Quality

Stadium style
seating

Real D
Technology

Only Cinema
with 100%
digital Sound

Cofee
Tree

Open for all

Book & Pay at

Cinema

Android and
iOS apps
available

Free Wi-Fi

Crunchy
Popcorn
s and
Best
nachos
Largest
portion size

Best
Custom
er
service
100%
satisfaction
guaranteed

International
quality corn
Most
comfortable
seats

Light weight
3D glasses

Dolby 7.1
surround
sound

Exciting
Variety

Seats with
movable
armrests

Brightest 3D
image

High fidelity
at high
volume

Luxurious
waiting
lounge

Unlimited
Sals and
Mayonnaised
dip

Jalapeno
flavored

Service on
seat

Cinema
manager
always
available

Segmentation , Targeting & Positioning for Cinepolis

Experience

Brand Elements

Brand Name

Cinepolis Spanish name meaning City of Cinema

Directly communicates what the brand ofers

Suggestive indicator of the country of origin

Logo/Symbol

Four pieces of roll film arranged to form a star

Name written next to it, with an emphasis on e for the right pronunciation
Combination of yellow and blue to convey that the brand stands for happiness and fun

URL

cinepolis.com and cinepolisindia.com

Parent companys URL carries the name alone, a good way to show authenticity and uniqueness

Indian operations carry india along with actual name, an indicator that the Indian operations are independent

Brand Elements (contd.)

Character

No characters are used in the marketing communications

It is justified as the name stands for a place and not a character

Slogan

La Capital del Cine or Capital of Cinema

Retains the word cine from the name to emphasize on what the brand ofers

Shows the dominance of the brand in the industry with the word capital

Jingle

No jingles are used by Cinepolis or Cinepolis India

In line with companys advertising strategy
Parent company advertises in countries like Brazil, USA but doesnt use jingles

Packaging

Luxury cinema experience with in house gourmet food expertise

Ofers best luxury cinema experience in the world

Basic multiplex theatres are at par with the competitors

Cinepolis Ofers

Real
D
3D
Cine
polis
VIP

IMA
X

Dolb
y
Atm
os

4DX

Cof
ee
Tree

Service Line

Cinepolis

Basic multiplex with all the required facilities

Prices and facilities at par with major competitors

CinepolisVIP

Luxurious cinema watching experience

Best-in-Class seats and customer service

IMAX

Has the capacity to record and display images of far greater size and resolution than
conventional film systems

Cinepolis is one of the few multiplex chains to showcase movies in IMAX standards

Service Line (contd.)

4DX

A fully immersive movie experience with a real simulation of efects like motion seats, water,
wind,

scents

Indias first 4DX

Dolby Atmos

fog, lightening and

The first truly immersive surround sound theatre experience

RealD 3D

A digital stereoscopic projection technology made and sold by RealD

Currently the most widely used technology for watching3Dfilms in theatres.

CoffeeTree and Cinecafe

Exclusive gourmet food experience

Ofers more varieties than competitors

Pricing Strategy

Market Oriented Pricing

Marketers will set prices depending on competitors pricing and companys strategies

Prices starting from INR 70 and Average Ticket Price (ATP) is INR 160-170

Used for normal (non VIP) tickets

Premium Pricing

Price of service is kept high in order to encourage favourable perceptions among buyers, based
solely on the price

ATP is nearly INR 400

Used for VIP tickets

Communication Mix

Communication Mix

Communication Mix

Communication Mix

Future Marketing Strategy

Digital
Display Ads (Retargeting)
Website Takeovers
Eblasts and eNewsletters
Geo & Behavioral Targeting (Category,
abandoned cart)
Social Media (FB, Tw, Instagram)
Print
Major Newspapers
Community Newspapers
Lifestyle Magazines
Community Magazines
Geo Targeted Inserts

OOH
Billboards
Mobile Billboards
Bus Shelters
Bus Wraps
Direct Mail
Geo/Demo targeted high-end mailers
PR
Local Events
Sponsorships
Fundraisers & Donations

Revenue Management
Food and beverage operations in
house
Leases floor space on a rent plus
revenue sharing model
Box office collection
Bulk Sales
Theatre advertisements
Luxury cinema
Movie vouchers

Roadblocks in Revenue Management

Only 30% revenue comes from in house beverages
Online bookings contribute up to 30% of the revenue
Delay in Government approvals for establishing new cinema
hall
Government regulations in certain geographies leading to
revenue loss
Delay in handing over the premises of designated spaces
Piracy

Service Process

Bottlenecks in service process

Due to paucity of staf resource allocation at food counter and box
office counter poses a big challenge
Lack of technical of staf to support glitches encountered at kiosk
machines
Inconsistency in customer experience due to high demand at peak
hours

Demand and Supply

In sync with the industry average, the average occupancy rate per year is
close to 25-30%
There is a variation in the occupancy rate in each quarter
Quarter

Average Occupancy

1 (Jan-March)

16%

2 (April-June)

26%

3 (July-September)

32%

4 (October-December)

45%

The variation can be attributed to many factors like big releases towards the last 2
quarters (Eid, Diwali and Christmas) etc.
Generally, Supply (Box Office tickets) leads the Demand except for Big Ticket releases
and festive seasons

Demand and Supply (contd.)

In concessions department( Food and Beverages), the demand is close to or greater

than the supply as a good number of customers have to be served in the interval gap
which is an operational challenge
Companys focus is to keep demand and supply well balanced and on keeping
optimum capacity for major part

Demand Management Strategy:

There are two major demand management strategies : Match Demand to Capacity
and Matching Capacity to Demand
Cinepolis uses a mixed strategy, in lean periods focus is on increasing walk ins which
is facilitated by special ofers, special prices for certain shows etc. Also since the
demand is more or less cyclical , changes in staf count take place when an increased
demand is anticipated

Demand and Supply (contd.)

Recommendations for matching Demand and Supply
Box Office
Carry out diferential pricing strategy for shows which have lower
occupancy
Come up with specially curated ofers like Buy 1, Get 1; Buy 2 Get 1
schemes to increase demand in
Increase Customer Participation, invest in technology and promote Ebooking of tickets which would cut manual costs and waiting time at Box
Office for customers
Increase focus on Bulk Bookings, which would help increase demand in
lean season
Concessions
Cross Train Employees : Employees should be trained in all aspectsUshering, Concession Server, Cofee Tree Server and Box Office
operations so as to meet demand
Motivate customers to opt for serve-on-seat ofer

Simple CLV

Customer Lifetime
Value

No. of Attendees in the last year

11,118,992

Total Marketing Budget ( Assuming

20% of Revenues)

478519833

Customer Acquisition Cost

43

Average No. of Movies watched pa

12

Average Spend PA

240*12=2800

Average Profit(50-55%)

1540

Customer Retention Rate

75%

Customer Churn Rate

25%

Lifetime

4 Years
1540*4-43=6117

Customer Lifetime Value : What can be

achieved
LV can provide
an exact figure for the company's largest asset, which is
rarely mentioned in the Annual Report. The calculations enable
management to follow the progress over time and to intervene if events
start moving in the wrong direction

CLV could be used to calculate the profitability of an unchanged

acquisition strategy compared with an alternative future strategy based
on customer retention and development

Forecasting with customer satisfaction is possible using CLV

Company can achieve much better results (such as awareness and

image) by choosing target groups, communication channels, and even
the message to be delivered using CLV

The future profit from an investment in a new loyalty programme

including the results of diferent forms of customer rewards (discounts,
exclusive ofers, special service, upgrading etc.) could be learned by
calculating CLV with a loyalty programme

Customer Lifetime Value : Recommendation

Cinepolis Loyalty Program should be focused on the diferent

customer segments
Targeted ofers should be provided to the owners
Discounting or other lucrative ofers with immediate returns
should be provided rather than the current method
Focus should be on increasing customer base in the Loyalty
program to leverage customer information
Use of Seasons pass to increase Lifetime Value and reduce
Churning should be focused on
Company should focus on its superior oferings like 4Dx, Dolby
and 3D to increase the CLV

Service Marketing Triangle

Service Value Chain

Employee Empowerment in Service Delivery

Benefits:
quicker responses
employees feel more
responsible
employees tend to interact
with warmth/enthusiasm
empowered employees are
a great source of ideas
positive word-of-mouth
from customers

Drawbacks:
greater investments in
selection and training
higher labor costs
slower and/or inconsistent
delivery
may violate customer
perceptions of fair play
giving away the store
(making bad decisions)

Customers Role in Service Delivery

Productive Sources

partial employees
contributing efort, time, or other resources to
the production process
Customer inputs can afect organizations
productivity

Quality & Satisfaction

Customers can contribute to

their own satisfaction with the service
by performing their role efectively
by working with the service provider
the quality of the service they receive
by asking questions
by taking responsibility for their own
satisfaction
by complaining when there is a service
failure Competitors

Customers may compete with the service provider

Internal exchange vs. External exchange