CINEPLEX ENTERTAINMENT: THE LOYALTY PROGRAM

Divya Iyer PGP/15/140

NEED FOR CRM

Inconsistent revenues each year Need to stabilize them From Exhibit 1, Cineplex Entertainments net income is decreasing over last few years Need to improve companys financials Loyalty program Benefits

Would provide incentives for customers to see more movies and events, and spend more on concessions. Would enable the collection of detailed customer buying data

THE DECISION
PROGRAM PARTNER Internal Development Flight Miles ScotiaBank REWARD STRUCTURE 4 possible options (Exhibit 5) DATABASE VENDOR Alpha Kappa Gamma MARKETING COMMUNICATION In-Theatre Advertising Newspaper Advertising Radio Advertising Online Advertising Grass Roots Initiatives LAUNCH REACH Regional National

PROGRAM PARTNER
INTERNAL DEVEVLOPME NT

FLIGHT MILES

SCOTIABANK

Pros: Complete control over the program and the data ownership Cons: Financial risk; Difficulty in cancelling if unsuccessful; New database creation could take several years Costs: $5.5 million in the first year and diminishing costs after

Pros: 72% households active members; 87% of respondents belonged to it; No additional card to carry; Immediate entrance into database of 7 mn people; $250 000 contribution to a Cineplex-designed marketing campaign

Cons: Each movie transaction worth minimum 10 Flight Miles points; Commitment of three years, if Cineplex leaves, loses all accumulate data Costs: $5 million yearly fees + $0.09 for each point issued + paying each time they access the data

Pros: One of Big Five banks in Canada; Experience with data management; 50-50 cost-sharing; 3-card strategy: basic Cineplex card, debit and credit Scotiabank cards; Scotiabank card owners receive Cineplex card, Cineplex card owners not required to open account; Promotion in theaters and bank branches

SCOTIABANK It is the cheapest and easiest way to establish a large database of customers

Multiple card system might discourage customers; Cineplexs decision making power constrained; Unability to access individual-level banking information on the Scotiabank users
Costs: 1. year - $3 million, 2.

REWARD STRUCTURE
Option 1 Sign Up Points
Concession Points Points per movie transaction Total Points Redeemed 40% Money Spent on Box Office Concession Total Expense Redeemed Amount Net Discount Revenue to Cineplex Membership fee Total Benefit to Company

Option 2 100
1687.5 2250 4037.5 1615 173.925 76.626 250.551 19.95 7.962451 230.601 2 232.601

Option 3 0
0 0 0 0 173.925 72.369 246.294 0 0 246.294 5 251.294

Option 4 250
0 2250 2500 1000 173.925 76.626 250.551 10.95 4.370368 239.601 0 239.601

500
0 2250 2750 1100 173.925 77.4 251.325 17 6.76415 234.325 0 234.325

Option 2/4 is attractive to the customer and company Option 2 offers benefits in all purchases

DATABASE VENDOR
Alpha

Leading marketing firm; held prerequisite research of Cineplex's target market Cost:$500,000 + $40,000/month One of the largest global marketing agencies; high standard in data privacy and security; leader in mobile marketing entertainment industry experience; Separate sites for members and non-members Cost: appr. $ 1,000,000 Specialized marketing platform; tracking members through different promotional mediums, useful in targeting fixed-price, fixed-time model

Kappa

Gamma

Cost: Preliminary $200,000

GAMMA should be chosen Allows to track members joined in the loyalty program on an ongoing basis through different promotional mediums. Offer fixed-price, fixed-time model with a reasonable price compared to the others

MARKETING CAMPAIGNS

In-theatre advertising : Cost is Zero Newspaper advertising: Average weekly cost/half page ad

Small and medium markets: $1,200 Larger markets: $3,600 Development cost: $850 for each

Radio advertising: Average weekly cost/30-second commercial

Small and medium sized markets: $160

Larger markets: $225 Development: $1,100 per city

Online advertising

Grass Roots initiatives: Event teams could promote on college and university campuses Corporate sponsorships: Other possibilities to promote the campaign

MARKETING CAMPAIGNS

Marketing budget is limited to $300,000 National newspapers - Most expensive media ; no strong reach in every market where the company operated Radio advertising - Expensive and not important if we want to reach a younger target market Online advertising and Grass Roots Initiatives Better choice ; both cheap and useful in reaching youngsters. With the Gamma vendors tracking system it would be easy to select the web pages which are frequented the most by the companys target market

THANK YOU