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Cineplex Entertainment The Loyalty Program Case Solution
Cineplex is a cinema that is considered to be Canada’s largest film exhibitor. With its 5.3 million annual customers, this cinema had still been facing financial constraints in the recent years due to irregular customer visits. It practices market segmentation in which it categorizes its customers on the basis of age (demographics) and the customers’ activity of visiting the cinema (behavioral). In order to attract a wider customer base, Cineplex’s marketing director, Sarah Lewthwaite came up with a reward program with 4 options that basically provided concessions to the customers in order to motivate them to visit the cinema more often.
Along with this, Lewthwaite considers different proposals that are to be paired up with this reward program. This case study analyzes and weighs the risks and opportunities affiliated with each proposal in detail. It also highlights some of the marketing communication campaigns to be employed by Cineplex in order to launch its reward program and create a hype within its target market.
Following questions are answered in this case study solution
Aside from gaining the CRM benefits, what would Lewthwaite like to achieve with respect to the 5.3 million unique visitors, their 7.5 average annual visits and their spending? Do you agree with segmentation by age and the purported movie-going behavior?
How might the reward programs described in case Exhibit 5 affect the movie and event-going behavior of the market segments? At retail value, what is the proposed average value of each reward structure for customer's dollars spent - approximately 5 percent, 10 percent, 15 percent, or 20 percent of regular prices? Which reward structure would you choose? Why? For the sake of simplicity, ignore any one-time fees or rewards.
What is the likely increase in Cineplex Entertainment's revenue from your proposed incentive program - 0 percent, 5 percent, 10 percent, 15 percent, or 20 percent? What would be the varying financial consequences for Cineplex Entertainment? Would you proceed with the reward program?
Would you develop the reward program alone? Would you partner with FlightMiles or partner with Scotiabank? Why?
What marketing communications campaign should Lewthwaite employ? What specific spending of her $300,000 would you advise? Should the launch be rolled out regionally or nationally.
Case Analysis for Cineplex Entertainment The Loyalty Program
1. Aside from gaining the CRM benefits, what would Lewthwaite like to achieve with respect to the 5.3 million unique visitors, their 7.5 average annual visits and their spending? Do you agree with segmentation by age and the purported movie-going behavior?
Lewthwaite wanted to introduce the loyalty program for Cineplex as it was considered to be an opportunity for growth. Such concession programs attract customer visits and with increasing annual visits, Cineplex could improve its financial constraints that it has been experiencing since the past few years. Cineplex was interested in increasing its revenue per guest (RPG) and for that, it focused on introducing recreational activities for its customers. It offered live shows for different games, a sitting area for eateries, and arcade games to attract children. All of this was done to aim for achieving customer retention and a bigger market share. It also adjusted the pricing of eatables and provided concessions in order to increase customer satisfaction which would ultimately lead to customer loyalty. This increased trust in the cinema will put forth a positive brand reputation in the industry.
Cineplex’s 5.3 million annual customers can prove to be a valuable source of word-of-mouth marketing. That is why she was interested in sending event teams to universities and colleges to spread awareness. As a result, awareness would increase and that would build a positive brand reputation amongst the teenagers and younger adults.
The segmentation of customers by age and their movie-going behavior (from the highest movie going routine to the lowest) seems to be a smart strategy as this segmentation allowed Cineplex to discover its valuable customers i.e., which customers should be targeted the most in advertising campaigns. Since Cineplex has been facing irregular revenue over the years, the budget constraints means that the cinema could no longer spend vastly on marketing of its campaigns. The segmentation by age helped Cineplex to identify the most profitable target market. For example, since teenagers were considered to be the most frequent visitors, its advertising was focused towards individuals belonging to that age group. As a result, revenues are expected to increase.
2. How might the reward programs described in case Exhibit 5 affect the movie and event-going behavior of the market segments? At retail value, what is the proposed average value of each reward structure for customer's dollars spent - approximately 5 percent, 10 percent, 15 percent, or 20 percent of regular prices? Which reward structure would you choose? Why? For the sake of simplicity, ignore any one-time fees or rewards.
The representation of Exhibit 5 explains the retail value Cineplex offers to its customers for the services that are rendered. Since the most frequent visitors of Cineplex are the teenagers who do not earn on their own and have limited income, such reward programs can increase customer loyalty. For other customers, it is important to reward them in cases when they show repeated purchase actions. Such concessions motivate the customers to visit the cinema more frequently. These rewards provide incentives to customers which has a positive impact on brand affinity. Reward programs are also more likely to improve customer experience and distinguishes Cineplex from its competitors. When Cineplex provides a wholesome experience, this gives the cinema a competitive edge over its rivals in the industry which enhances its brand reputation. This increased customer retention enhances the customer lifetime value which encourages the customers to stay affiliated with the cinema forever.
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