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IFIM BUSINESS SCHOOL

CONSUMER BEHAVIOUR
ON LEADING MULTIPLEX( PVR )
SUBMITTED TO Prof. MANOHARAN

Submitted by
BALA KUMAR DEEPAK RAI SURAJ KUMAR VENU MALLI PAWAN KUMAR

INDEX

OBJECTIVE ENTERTAINMENT INDUSTRY IN INDIA ABOUT THE COMPANY STP ANALYSIS SWOT ANALYSIS QUALITATIVE RESEARCH ANALYSIS PORTERS FIVE MODEL ANALYSIS CONCLUSION

3 4 6 9 11 13 14 17

OBJECTIVE

The objective of the project is to throw some light on the marketing strategies of PVR cinemas. To study the entertainment industry with respect to multiplexes and understand the segmentation, targeting, and positioning of PVR cinemas and to analyze the findings of a qualitative research report and to analyze the post purchase behaviour of the consumers and to do the SWOT analysis.

ENTERTAINMENT INDUSTRY IN INDIA

Over the last decade, India has registered the fastest growth among major democracies and is now the fourth largest economy in terms of purchasing power parity. Over the years, spending power has been steadily increasing in India. On an average, 30-40 million people are joining the middle class every year. The consumption spending is rising due to increasing disposable incomes on account of sustained growth in income levels and reduction in personal income tax over the last decade. The Indian Entertainment Industry is expected to significantly benefit from this fast economic growth, as this cyclically sensitive industry grows faster when the economy is expanding. When incomes rise, proportionately more resources get spent on leisure and entertainment than on necessities. Indian film industry over the past few years has been receptive towards foreign investments. This has paved way for many international production firms to make their debut in Bollywood along with opening their offices in the country. As per FICCI-KPMG report, Indian film industry is worth US$ 2.11 billion and is likely to witness a 9.1% growth till 2013. World's largest film industry in terms of production volume is undergoing a massive international presence with Reliance ADA Group signing a production pact with DreamWorks Studios, endorsed by Steven Speilberg, a well known Hollywood director, to produce movies with the preliminary investment of US$ 825 million. Following the lines, Yash Raj Films has signed joint partnerships with Walt Disney, to produce animated films. Other such east meets west stories include, Sippys' film projects being sponsored by Warner Group, Sanjay Leela Bansali Films' collaboration with Sony Pictures Entertainment and TV 18's association with Viacom to form Viacom 18. Adlabs has emerged as the only movie chain in India providing 3D and 6D formats and PVR is all set to infuse around US$ 52.2 million to grow its film production and bowling trade in India. With the introduction of digital distribution platforms like direct-to-home (DTH) and Mobile TV, Indian television industry has undergone a revolutionary change. As per KPMG and FICCI reports, the Indian television industry is worth US$ 4.63 billion and is estimated to grow by 14.5 per cent during 2009-13. Moreover, by 2013 the television advertising industry is likely to own a share of 41% in the Indian advertising sector, which indicates a steady increase of 2% from the

current share of 39%. The DTH industry is likely to touch US$ 620.25 million in 2009-10 as compared to US$ 310.16 million in 2008-09. The growth will be triggered by the increase in the marketing budget of DTH companies like Bharti Airtel DTH, Big TV and Sun Direct by 20-25% in 2010. Doordarshan, the government owned national television broadcaster of India is expected to become fully digitalized by 2017 and TV channels like MTV, Cartoon Network, Disney, Star Plus and Pogo are all set to grow their service market to cover India's promising licensing and stock market.  The Government has introduced some reform policies to trigger the growth of entertainment industry in India. They are: Allowing 100% FDI on advertising and film industry through regular channelsAuthorizing 49% foreign stake in DTH and cable TV  Allowing establishment of uplinking destinations to private TV broadcasters for satellite uplinking from India  Certifying the repute of an industry to the movie sector  It has given its consent on the guidelines for Headend-in-the-Sky (HITS) operators, an equipment that will offer electronic cable content to Indian viewers  Permitting Foreign Direct Investment (FDI) in FM radio industry with a 20% restriction  Paving way for FM Radio functioning to the private sector  Including development projects of film industry in its five-year plans and allocating US$ 50.13 million to it.

ABOUT THE COMPANY

Priya Exhibitors (p) ltd is a part of the diversified Bijili Group, which hasinterests in transport, finance and construction sectors all over India. After adownturn in the industry in late 80s when the onslaught of video wars at its peak cinema has now been rejuvenated with the latest international trends in cinema exhibition reaching Indias shores swiftly with the arrival of satellite TV. The capitals cosmopolitan audience is becoming increasingly aware of the advanced cinematic technology that enhances the movie going experience and this has whetted their appetite for watching movies on thebig screen .

To cater to the increasingly sophisticated tastes of the audience Priya exhibitor Pvt Ltd. totally refurbished the existing cinema in June 1991 including installation of a Dolby stereo sound system. They also gained exclusive rights to screen blockbusters from major distributors mainly Warner brothers, 20th century fox, united international pictures, small wonder then that the cinema has become the focal point for entertainment in the capital for both the young and old attracting over 30,000 patrons a week. Infact, Speed set a national box office world record of Rs.785000 in its first week of screening at PVR (the highest ever for an English film), which is remarkable considering the relatively low price of a cinema ticket in India. Buoyed by the overwhelming success of the cinema after upgrading, Priya exhibitors ltd have taken he next

initial step for setting up the first multiplex in the country in a joint venture with Village Roadshow Ltd, Australias leading entertainment corporation. PVR is a brand name synonymous with state-of-the-art cinema exhibition in India. PVR specializes in developing and operating state-of-the-art Multiplexes. PVR Cinemas are the leading cinemas in the country with an emphasis on design, technology and service. Over the last three years, PVR has established itself as a very strong brand associated with movies, quality exhibition and youth-targeted promotions. The company was conceived as a Joint Venture between the Bijli family, headed by Mr. Ajjay Bijli as Indian Promoters and Village Roadshow Limited of Australia, one of the largest multiplex operators in the world with more than 1500 screens under operation.

PVR IN BANGALORE
PVR Cinemas has opened India's biggest multiplex (11 screens) in Bangalore. Built over 1,20,000 sq ft of space, this state-of-the-art multiplex is located in the heart of Bangalore at the Forum Mall in Koramangla with a seating capacity of 2019 seats. This multiplex includes two ultra premium cinemas known as the Gold Class and two luxurious auditoriums called Cinema Europa in addition to seven Classic auditoriums.

PVR FIRSTS
First to launch a multiplex in India - PVR Anupam Saket, Delhi First to launch India's biggest 11 screen multiplex - PVR, Bangalore First to bring premier movie viewing to India with the exclusive Europa Cinema and Lounge at PVR Gurgaon First to introduce Gold Class Cinemas in India at PVR, Bangalore First to form a foreign joint venture with Village Roadshow, Australia First to receive institutional funding in the cinema industry from ICICI Venture First to offer computerised & online ticketing First to accept credit cards in cinemas First to introduce mobile based information & ticketing service First to launch a loyalty program for movie-goers in India First to launch 'Movies First' - a monthly magazine that updates the movie lovers on the latest happenings in Bollywood and Hollywood. PVR has also ventured into the business of film distribution and set up PVR Pictures, a fully-owned subsidiary of PVR Ltd. PVR Pictures specialises in acquisition and local distribution of films.

S T P Analysis:
Segmentation:
On the basis of customer preferences, we may classify PVR under the Clustered category. This is owing to the fact, that out of the entire masses they have clearly defined their target audience and aim to cater to them. Also, PVR is a Concentrated Market because they only cater to the premium movie-going audience i.e. SEC A and SEC B.  PVR Cinemas has approx. 22 million movie goers per month

Consumer Demographic Segmentation :

y y y y Age Gender Income Education : 61% between 18 and 49 : 47% Males / 53% Female : 61% have income over 50K : 55% of adult movie going audience has attended/graduated

college. Of these adults, 37% have college degrees or higher.

Consumer Psychographic Segmentation:

PVR Movie Goers are people with high resources and can be classified as Experiencers who seek variety and entertainment. Spend a comparatively high proportion of income on fashion, entertainment, and socializing.  PVR Movie Buffs generally have the following major tendencies: Go outside the home for entertainment. Participate in sports and other active lifestyles. Hard to reach through other traditional media. lighter television and radio users, but heavy internet users. Receptive to advertising in movie theatres, consider as part of their movie going experience.

y y y y y

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Targeting:
PVR being the first of its kind has always been a market leader and therefore its offering to the customer is Innovative.

PVR has premium pricing and they target mainly SEC A and SEC B. PVR has brought to its customers the experience of Luxury Cinema. PVR uses the concentrated method as they have target a much focused audience out of the entire masses.

PVR witnessed tremendous success Europa Lounge in Delhi. PVR Cinemas has also recently introduced the concept of luxury viewing to Bangalore. Gold Class Cinemas have been introduced for the first time in India, are two ultra luxurious exclusive auditoriums, each equipped with 32 plush and fully reclining seats and generous legroom. Patrons can also enjoy star like treatment at the exclusive Gold Class lounge which provides an excellent pre cinema experience with scrumptious food and beverages.

PVR Priya of PVRs chain use Differentiation method for pricing. It practices different price slabs for different target audience. For instance, they have tickets ranging from Rs 45 (for the youth) to Rs 140 (for the upper class i.e. SEC A).

Positioning:
PVR had, and still has a very well planned market position. Its premium positioning affects the customers perceptual positioning. Therefore, they decided on their marketing strategy and pricing, keeping the target market in mind. In case of PVR, they make use of all their tangible elements to prove to their customers that their movie tickets are worth the price they are paying. Also, since some of the other movie theatres (which are not multiplexes) are still offering movies at rates as low as Rs 35, it is the task of its marketer to ensure that PVR comes across as a superior brand in terms of cinema viewing as well as the experience. Its positioning is evident in its mission statement also which says  A commitment to deliver the best quality cinema viewing Everywhere, Every time.

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SWOT ANALYSIS

STRENGHTS
y y y y y y y y y y y y First mover advantage in the multiplex business in India Updated technology thus providing quality cinema. Premium positioning as it has created a bench mark in cinema industry. Plays Hindi, English, Regional & foreign movies Locational strength , since it located in Forum. Ambience for those who want to enjoy the film without any disturbance Started the concept of a complete movie going experience Market leader Very strong brand equity Has accomplished the TOMA of many consumers. Original multiplex Blend of retail & entertainment

WEAKNESSES y y y y High cost perceptions in the minds of middle class people. Lack of mass service. And focus only on less number of consumers. The struggle to maintain novelty . Less manpower to manage and maintain the multiplex.

OPPORTUNITIES

y y y y y

High demand for multiplexes and decrease demand for singe screen theaters Growing family spendings on entertainment Participation within an industry with high-growth potential. Large film industry over 200 hindi films every year PVR loyalists

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Increased sales opportunities as the Walt Disney Companys presence become more popular in the country.

THREATS y y y y y y y Competition blooming large Governments interference Entertainment Tax Other Multiplexs as competition Other ways of entertainment Accused of increased crime rate Piracy No control over surroundings eg. West Delhi Movies becoming bigger than the brand

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QUALITATIVE RESEARCH ANALYSIS: In our survey we took interview of 20 people and from their views we can categorise the behaviors as follows:

HIGH INCOME CONSUMERS

MIDDLE CLASS PEOPLE

Give importance to movie as well as experience.

Mostly to experience than that given to movie.

y y y y

Accessibility is important. Mall is not a major deciding factor They perceive PVR to be economic Mostly high income people are satisfied the provided service.

y y y y

Accessibility is important. Mall plays a significant role. They perceive PVR to be luxurious. Unsatisfied and they perceive the the money payed doesnt worth the experience. Closest competitor is INOX. Morning show

y y

Closest competitor is INOX. Evening show

y y

COMPETETIVE ADVANTAGE:  First mover advantage  Mall is of big significance.  Accessibility  Parking space.  Online booking is easier and user friendly.  Cleanliness and ambience is good.

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DRAWBACKS:  Ticket counters not managed well.  Quality of food is not catering the expectation.  Price is slightly on the higher side.  Security issues-though its necessary sometimes it creates hassles.

PORTERS FIVE MODEL ANALYSIS

THREAT OF COMPETITORS
PVR Cinema currently faces competition from other companies in the Indian film exhibition sector. Some of their competitors have greater financial resources than them and therefore they may be in a better position than PVR to invest in Multiplex Cinema projects or to sustain losses from such developments in the start-up stage. In the future, they may also face competition from global entertainment companies if and when such companies make their foray into the Indian exhibition sector. There are currently seven major competitors in the film exhibition industry:

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THREAT OF SUBSTITUTES
Threat from other sources of entertainment In addition, PVR faces competition from other forms of entertainment including, television, film DVDs, newspapers, magazines, radio, internet and theatre and advances in technology related to entertainment, such as MP3 and multimedia messaging etc. These other forms of entertainment compete with cinemas for the discretionary spending of patrons and for the ad-spend of advertisers. Accordingly, PVR cannot be certain that they will not lose some of our cinema audiences to these competitors or lose advertising revenue to them. If they are not able to compete effectively, their business, results of operations and financial condition could be adversely affected. Films constitute 28% of the total entertainment industry of Rs. 20000 crores in India. Television forms a major 65%. Piracy and home-viewing may reduce the number of cinema patrons. On account of inadequate enforcement of anti-piracy laws in India, and on account of increasing homeviewing options, the number of cinema patrons may reduce in the future, which may have a material adverse effect on the companys revenues and results of operations. Television is expected to grow at a faster pace than cinema. THREAT OF NEW ENTRANTS Costs of setting up a multiplex in India are coming down It can takes around Rs 40-50 crores to set up a premium five-screen multiplex in a metro while the same in a smaller town costs between Rs 10-15 crore. But owners are now realising that if done right, a stripped down multiplex can be set up much . Typically, fit-out costs (cost of doing up the interiors) range anywhere between Rs 2 crore to Rs 2.75 crore per screen. Owners have realized that cutting down on the fancy stuff could bring down costs by half. DT Cinemas is toying with the idea of setting up lowcost variants in smaller cities, like Nagpur or Nashik. Though regulations maintain pressure on the compliance costs The Indian film exhibition sector is currently regulated by a numerous laws some of which were written at a time when Multiplex Cinemas were not common and hence these laws may not necessarily be relevant for

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Multiplex Cinemas. Some of the provisions of these laws include: 1. Requiring a minimum distance between the screen and the front row seats, which distances were set based on large screens used in single-screen cinemas and not the smaller screens used at most Multiplex Cinemas. 2. The permissible pressure at which the electrical current may be supplied to a projector, which provision does not reflect the technological advances in respect of Multiplex Cinemas. 3. The reservation of playing times for a scientific film, educational film, news reel or documentary. 4. Restrictions on ticket prices in certain states. SUPPLIER POWER The cost of exhibition of a film varies across films and cinemas and if PVR is unable to obtain films on competitive terms its operational results may be adversely affected. The film exhibition industry in India relies on distributors to obtain films for exhibition. For hiring a film, the distributors share is normally a percentage of ticket receipts (net of entertainment taxes) and the applicable percentage 36 is negotiated on a film to film basis in respect of movies produced in India and periodically for film releases by international studios. Distributors work on a nonexclusive basis and there is competition between exhibitors to acquire films. Competitive pressures may result in increasing the cost at which we acquire the rights to exhibit films. If PVR is unable to recover such increased costs through higher box office collections or other forms of revenue generation, our results of operations would be adversely affected. PVR has itself diversified into film distribution and hedged this risk partially.

BUYER POWER PVR was the first to open a multiplex in India. It was one of its kind and due to lack of similar cineplexes around, PVR had an upper edge as far as buyers were concerned. It charged a high price and positioned itself as a premium service. Though other multiplexes like Satyam, 3 Cs, DT cinemas, Waves etc. have come up, PVR still enjoys a strong position. It has further strengthened its premium position by launching luxury cinema at select locations. Europa and Gold Class experience has complete redefined the movie watch in experience.

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Conclusion:
Multiplexes are in high demand in India and are preferred over single screen theaters. By utilizing our strengths and opportunities we will outweigh the weakness and threats and make them obsolete. The market for multiplexes is expected to grow at 15% per year.Tgey has to focus more upon technologies. When PVR came into being it was at the forefront of the technologyinvolved in the Movie business but now much more has been done in thisfield and PVR needs to keep up. Like the IMAX theatre that Adlabs hasintroduced, PVR should also foray into new technological advances in the entertainment business. Many of the audiences feel that some of the services inside do not command the prices that is charged for them, example, even the first two rows in the theatre command a price of Rs. 150/-. Most people feel that a lesser price should be charged as sitting too close to the screen is not as good an experience as sitting in one of the back rows. Also the prices charged at the food and beverage counter are way above the MRP, which we feel is an undue premium that is being charged. A lot of audiences that were interviewed feel that the leg space in between the rows is less and it makes the audience uncomfortable after sometime. We as a group also feel that introduction of a food court that has a variety of offerings, not just snacks but wholesome meals as well would greatly 64 improve the movie going experience as people would spend greater amount of time in the theatre and the food court could work as an ancillary to the theatre.And to extend the scope of ther penetration they have to do some compromise on price without affecting theBrand Superiority. Once a movie is past its prime and running in the second or third week where sales are low, PVR could do promotional campaigns and reduce the prices marginally for one show a day. This would encourage more people to experience the PVR experience, especially those that are inhibited by high prices. For eg. Special promotional campaigns for students for instance could help in attracting the vast price sensitive student audience. Such promotions could happen once or twice a month without diluting the superior brand image. The target we hope to market to are people ages 12-24 because they are the top movie goers and families. We will use a variety of different mediums to attract them to our unique multiplex. By partnering up with Disney we already have their name which is a huge well known brand in India so that already gives our company the upper hand.