Corporate Performance
Management
Case Study Analysis
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Corporate Performance
Case Study Analysis
1st 2nd 3rd 4th
Cineplex AES Innovation at Real Madrid
Entertainment Corporation Timberland Club de Futbol
The Missing Thinking Outside The Business of
The Loyalty
Department The Shoe Box Soccer
Program
Case 1 Case 2 Case 3 Case 4
Cineplex Entertainment Case
Case Study Infographics
Sarah Lewthwaite, marketing manager assigned by Cineplex
PROTAGONIST Entertainment CEO, Ellis Jacob, to setup customer loyalty
program
Lewthwaite have to decide which CRM
CHALLENGE program among 4 options and marketing
action to take with $300K budget provided
1. What would Lewthwaite like to achieve with respect to
unique visitor and spend ? Is age segmentation
QUESTIONS Suitable to analyze ?
2. What is suitable reward program to select ?
3. What is proposed incentive program corresponding to
financial condition ?
4. What is proper reward program to develop ?
5. Saturn
How to is the marketing
utilize only planet withforrings
budget in the
communication
campaign ?
entire Solar System
Company Profile
Cineplex is largest film exhibitor in Canada. With 64% box-office market
The Company share, the company enjoyed +/- 40 million visit annually.
Cineplex Entertainment (Cineplex) was founded in 1979 as small
chain movie theatres. In 2003, Cineplex merged with Galaxy. The
History Overview CEO of Galaxy took over the newly merged company. In late 2005,
Cineplex acquire its competitor, Famous Player and became
Cineplex Entertainment.
To provide an exceptional entertainment experience for movie-
The Mission goers
Q1 : What would Lewthwaite like to achieve with respect to unique visitor and spend ? Is age segmentation Suitable
to analyze ?
● To understand what Lewthwaite would achieve, we use
Financial Performance and attendance vs revenue in exhibit
1 and 2.
● Based on both information, found :
○ Total Revenue trending up in 3 years
○ Cost of operation also trending up
○ Net Income in opposite, trending down
○ Look at market data, number of attendance is
trending up, with RPG also in same direction. While
film cost is in stabil percentage against revenue.
● Trend show in picture below
Picture 1 - Exhibit 1 & 2, Financial Report & Attendance-RPG data
Picture 2 - YoY trend Cineplex
Q1 : What would Lewthwaite like to achieve with respect to unique visitor and spend ? Is age segmentation Suitable
to analyze ? (Continue)
● Looking at trend data, seen that company use higher operating cost year over year, and increase on
loan and long term debt. It may impacted from the acquisition and merger recently.
● However, trend on attendance and RPG show positive trend.
● With these analysis, Lewthwaite should :
○ Focus on customer loyalty program to maintain and increase market share, ensure RPG
continue raise
○ Initiate customer engagement indicator measurement. Recommendation items are : Customer
attendance, average customer spend per visit
○ Analyze customer behavior. Since executives know that action theme and children movie,
purchase concession more than drama, and delivered higher RPG, the analysis should observe
customer movie theme preference, and provide bigger focus / benefit on highest RPG market
segment
● In order to support customer behavior analysis, age segmentation have to be expanded.
Recommend to renew the 2003 survey with
age segmentation, to add customer movie
Preference. This will help
Picture 3 - Customer survey in 2003
Q2 : What is suitable reward program to select
● To understand the suitable reward program,
we analyze age segmentation, RPG versus
movie theme and 2005 customer survey.
● Based on 2005 survey, 56% desiree to have
10% discount concession.
● With age segmentation strong on teenagers,
young adults and young working, reward
program should focus on this age
segmentation.
● In addition, since action and children theme
movie contribute to higher RPG, reward
should be higher on this movie theme.
Picture 4 - Customer survey in 2003 and 2005
● Recommendation :
○ Put 10% only on action and children
theme movie.
○ Remaining movie theme should provide
8% discount.
Picture 5 - Customer reward option
Q3 : What is propose incentive program in correlation with financial performance
Data/Assumption :
● Attendance 61M, RPG box office use 2005 $7.73, RPG concession use 2005 $3.44 (appendix 2) ;
● 56% respondent willing to receive 10% concession price (appendix 3) ;
● Cannibalization Result : Worst 50%, Most Likely 25%, Least Likely 12.5%; increase concession at 5% - 15% (appendix 4)
● Assume increase 10% willingness for incentive 15% and 20%, reduce 10% willingness for incentive 0% abd 5%
Incentive 0% 5% 10% 15% 20%
Sales 61.000.000 61.000.000 61.000.000 61.000.000 61.000.000
Price BO : $7.73 BO : $7.73 BO : $7.73 BO : $7.73 BO : $7.73
Concession:$3.44 Concession:$3.44 Concession:$3.44 Concession:$3.44 Concession:$3.44
Respondent (46% - 10%) = 36% (56% - 10%) = 46% 56% (56% + 10%) = 66% (66% + 10%) =
Willingness 76%
Cannibalization Worst : 50% Worst : 50% Most Likely : 25% Least Likely : 12.5% Least Likely :
12.5%
Revenue ((36%x61000000)x( ((46%x61000000)x( ((56%x61000000)x( ((66%x61000000)x(8 ((76%x61000000)x
100%*3.44)) + 95%*3.44)) + 90%*3.44)) + 5%*3.44)) + (80%*3.44)) +
((64%x61000000)x( ((54%x61000000)x( ((44%x61000000)x( ((34%x61000000)x(( ((24%x61000000)x
(1-50%)*3.44) = (1-50%)*3.44) = (1-25%)*3.44) = 1-12.5%)*3.44) = ((1-12.5%)*3.44) =
142691200 148357600 175006560 180147640 171649120
Conclusion : Most higher revenue found at incentive 15%
Q4 : What is proper reward program to develop
OPTION 1 - OWN OPTION 2 - OPTION 3 -
DESCRIPTION PROGRAM FLIGHTMILES SCOTIABANK
Supplementary key tags for
Fully control and owned by
Offered program movie customers, opted for Three card rewards scheme
Cineplex
add benefit & rewards
72% of Canadian households Potential market 6.8M bank
Target Market
are active member customers
- $5M annual fee
$5.5M first year, diminish in $1.7M and $1.9M in year 1,2 and 3
Cost - Cost per data access
following year respectively
- $0.09 per issued point
- Immediate entrance access
Unlimited data 7M data Potential promotion in theatre and
Pro
access&control - Opportunity access more bank branches across country
data
- Discourage customer with more
- Financial risk on - 3 years commitment
card
Cons unredeemed points required
- 50:50 partnership constrain to
- Require new database - Lost all data, when leave the
decision power
program
- No access to bank database
Q4 : What is proper reward program to develop (continue)
Based on previous page comparison, detail analysis on 3 options are as below :
● Option 1 have strength on fully database control own by Cineplex themselves. One weakness will
be on cost, which is highest investment on first year compare to other options.
● Option 2, have strength on promising market and database access to Flight Miles 7 million
database. Even though, first year cost slightly lower than option 1, Cineplex will be charging on
every database access, which become weakness point of this option
● Option 3, have promising biggest market of promotion, since the bank coverage is across country.
Unfortunately, there are many cons on this option, for no access to bank customer profile data,
less decision power and additional card to bring by customer, which is less preferred.
With above mentioned pro and cons, option 1 will be best selection, since Cineplex will have full
authority. The biggest first year cost should be manage by good selection on the program and database
vendor to compensate big spend in first year. Further analysis on option 1, explain in next page.
Q4 : What is proper reward program to develop (continue)
Reward Structure Option
● Option 3, will be first to eliminate. Reason of
elimination are : 1) There is annual membership fee
; 2) No sign up points reward ; 3) No reward points
at any program. This option will be less attractive
● Option 4, will be the next to eliminate. Since points
reward only start at 1000 collection, which means
customer have to spend more, before eligible to
receive reward, which may not be interesting to
customer.
● Option 2, have less interest program compare to
option 1. This is due to membership fee, less sign
up points, and points reward only start at 1000
collection
● Option 1 is most attractive, since no membership
fee, 500 sign up points which directly can use as
free child admission. The program is interesting to
young family with kids, who are high interest to go to
movie, based on age segments.
Q4 : What is proper reward program to develop (continue)
Database vendor selection (Requirement : Strong website design capability and various data collection on customer)
Alpha Kappa Gamma
Client American Express, Coca Cola, Royal Bank of Canada, Toronto Kaplan University, City Financial
Hewlett Packard, Microsoft International Film Festival, IMAX
Program Offer Tech. platform focus on customer - High standard data privacy & - Plan design platform for
behavior tracking & loyalty rewards security marketing
fulfillment - Focus to youth brand identity - Track member base & behavior
Cost $500K design, $40K monthly $1 Million - Fixed price, fixed time
First year $980K, following $480K - Estimate $200K
Decision High first year cost and annual basis No clear offer on data collection, which Clear offer on customer data
cost. Reject intended by Cineplex. Reject collection, reasonable cost.
Accept
● Decision Summary
○ Select program 1, to run the loyalty program thru internal management
○ Select option 1 of reward structure, since the program have more attractive content to
young customer
○ Engage Gamma database vendor to work on platform design
Q5 : How to utilize marketing budget $ 300K for communication campaign
GRASS
NEWSPAPE ONLINE
DESCRIPTION IN THEATRE
R
RADIO ROOT
No strong Significant Word mouth
5.3 Million with
Target Market
7.5 potential visit
market reach at coverage across - publicity in university
Cineplex area Canada + corporate sponsor
Weekly half page Weekly 30 sec ads
$160 (small-med) Per K impression
$1250 (small-med)
Cost Zero (0)
$3600 (large) $225 (large) $17-29 (big box) No info
Dev Cost $1100/city 9-35 (banner)
Dev Cost $850/ads
Opportunity free University student
ads in radio Google visit by 88.4 include high freq go
Pro - - website (esp at millions visit/month to movie. Potential
rural area) market
May No strong market
Cons overwhelming reach at Cineplex - - -
movie goers area
Q5 : How to utilize marketing budget $ 300K for communication campaign (Continue)
❖ Map beside help understand
Cineplex operation area, to decide
marketing method selection
❖ From this geographical view, clear
that Cineplex operate more in rural
small-medium area. Only Alberta
(Edmonton and Calgary city
included) and British Columbia
(consider Vancouver) consider as
large market area.
❖ Remaining Quebec, Ontario,
Cineplex Manitoba and Saskatchewan
operating area
consider small-medium market.
Marketing Communication Recommendation
1. With geographical considerations above, Lewthwaite should allocate marketing thru RADIO, which have significant coverage
across Canada. With 4 areas in small-medium and 3 areas in large market (Edmonton, Calgary, Vancouver), weekly spend for
$1315/30 seconds ads. Total annual budget is approximate $145K (include 7 cities development cost, with 1 minute ads
duration in 52 weeks. Cineplex will have extra advertising at radio website, as this is big deal success negotiation.
2. Remaining $155K may go to banner campaign thru google, which is most visited website in Canada, an open market for young
adult and young working. Total annual budget approximate $106K.
3. Remaining $49K may use for grass root initiative, focus with word of mouth in university campus and corporate sponsorship.
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