a project report on

A PROJECT REPORT
ON
“PVR CINEMAS: MARKETING STRATEGY”
SUBMITTED BY:
SATISH SINGH
)
SESSION: 2007-2010
1
ACKNOWLEDGEMENT
The present work is an effort to throw some light on “PVR Cinemas: Marketing
Strategy” . The work would not have been possible to come to the present shape without
the able guidance, supervision and help to me by number of people.
With deep sense of gratitude I acknowledge the encouragement and guidance received
by …………..who helped and supported me during the course, for completion of my
thesis.
SATISH SINGH
2
CHAPTERS:
I.
Acknowledgement………………………………………………..2
II.
Entertainment Industry Overview……………………………...3
a. Film and Exhibition Industry Overview…………………….4
b. PEST Analysis……………………………………………….10
III.
PVR Cinemas: About the Company…………………………..19
IV.
SWOT Analysis…………………………………………………26
V.
Porter’s Five Forces Model ……………………………………27
VI.
Ansoff Matrix…………………………………………………..36
VII. STP Analysis……………………………………………………40
VIII. Marketing Mix: 7 P’s………………………………………….44
IX.
BCG Matrix……………………………………………………60
X.
Recommendations…………………………………………….61
3
ENTERTAINMENT INDUSTRY
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.
4
Indian Film and Exhibition Industry Overview
The Indian film industry is the largest film industry in the world in terms of
the number of films produced and admissions each year.
The Indian film industry revenue for 2004 was estimated at Rs. 59 billion
(US$1.3 billion), which was less than 1% of global film industry revenue
and a fraction of the U.S. film industry revenue, which was US$9.49 Billion
in 2003.
The pie chart below sets forth the percentage contribution of various revenue
sources to the total revenue of the Indian film industry in 2004.
5
Although over 90 years old, the Indian film industry was only accorded the
status of an industry in 2000. Consequently, it is only during the last five
years that the Indian film industry has been able to attract financing from
banks, financial institutions, private equity investors and corporations. Prior
to 2000, the industry was almost solely reliant on private and largely
individual financing. Although corporatisation of the film industry has
started, the film industry is currently largely unorganized and fragmented.
Going to the cinema is one of the most popular entertainment options in
India. In 2004, the total admissions in cinemas in India were 3,100 million.
The second largest number of admissions is in the United States, which had
1,500 million admissions in 2004.
6
The film industry comprises three sub sectors:
• Film production, which involves the making of movies;
Over 900 Indian produced films were released in 2004. Hindi films
constituted the bulk of films produced in India closely followed by
regional films in Telugu, Tamil, Kannada and Malyalam. Hindi films are
7
the most popular films in India and account for over 40% of the total
revenues of the Indian film industry. The majority of Hindi films are
made in Mumbai, popularly referred to as "Bollywood". Around 30% of
the films made in India generate 90% of the Indian film industry's
revenue.
• Film distribution, which involves the distribution of movies to cinemas,
television and video stores;
The film distribution system in India is territory-based. The country is
geographically divided into 14 distribution territories and film producers
tend to sell distribution rights for each territory. Most film distributors in
India are small businesses. This has resulted in the film industry being
highly fragmented, with each territory having 50-75 distributors, while 810 distributors operate on an all India basis. A distributor generally sells
its rights to sub distributors who cover certain sections in a territory
Film distribution sector characteristics and trends
• In the recent past, some of the larger producers have vertically
integrated into distribution, especially into overseas markets.
• A number of new entrants have entered the distribution business,
resulting in an increase in acquisition cost for distributors.
• Distributors are trying to lock in the content at a very early stage by
financing film producers.
• Distributors are playing an increasing role in marketing of films.
• New films are being released in satellite/ video formats within a shorter
period after theatrical release, thereby reducing the window for theatrical
exploitation.
• New films are being released across a larger number of theaters with a
large number of prints in order to maximize theatrical revenues in the
shortest time period.
• New distribution formats, like digital distribution through DVD, are
being implemented.
• The increasing size of the home video market is also expected to
provide growth for the distribution sector. As of the end of 2004, over
five million Indian households had a VHS or DVD player, an increase of
50% compared with the end of 2003. Increasing wealth should result in
more Indian households owning a VHS or DVD player and expand the
home viewing market.
8
• Film exhibition, which involves the exhibiting of movies in cinemas.
The Indian film exhibition sector can be divided into two segments:
single and double-screen cinemas and multiplex cinemas, i.e., a cinema
complex with three screens or more. As of March 2005, there were
approximately 12,000 cinemas in India of which 73 were multiplexes
with a total of 276 screens.
Indian Film Exhibition Sector
The Indian film exhibition sector had revenues of Rs. 34 billion in 2004.
Despite the higher number of tickets sold in India, the total reported box
office revenue is significantly lower in India compared with the United
States. This is primarily due to the fact that ticket prices are much lower
in
India, with an average of Rs. 15 . The lower ticket prices in India are due
to lower income levels, especially in rural and semi urban parts of the
country, and the lack of good quality cinemas. The average price of a
ticket for a multiplex cinema is Rs. 75 - 85 but the number of screens in
multiplexes represented only 2.3% of total screens in India as of March
2005. (Source: Yes Bank Report) An increase in the number of Multiplex
screens should result in an increase in film exhibition revenues, so the
opening of new Multiplexes represents a significant growth opportunity
for the industry. The total reported box office revenue in India is also
lower because the amount of revenue collected at the box office is under
reported due to the fragmented and non-transparent nature of the film
exhibition sector.
Inadequate Number of Screens
In India, the number of screens per million of population is just 12
whereas the average in western countries is approximately 40.
9
Concentration of Cinemas in Southern India
Southern India accounts for a majority of the cinemas in India. Andhra
Pradesh has the most number of cinemas in India followed by Tamil Nadu,
Kerala and Karnataka. Whilst Southern India accounts for the majority of all
cinemas in India, as of March 31, 2005, only five out of 73 multiplex
cinemas in India were in Southern India.
Major Players in Indian Film Industry
10
Indian Film Industry
Players
Production Distribution Exhibition
Zee Telefilms
a
a
a
Adlabs Films
a
a
a
AVM Productions
a
a
a
Mukta Arts
a
a
X
Rajshri Productions
a
a
X
Shringar Group
X
a
a
PVR Cinemas
X
a
a
Pritish Nandy
Communications
a
a
X
July 2005
a
Present
X
Not present
PEST ANALYSIS
11
Economic
The Indian Entertainment Industry is one of the fastest growing sectors of
the Indian economy riding on the economic growth and rising income levels
that India has been experiencing in the past few years.
The entertainment industry is expected to grow faster than GDP growth and
consequently more spend is expected on leisure and entertainment.
The film segment will ride on the growth of multiplexes and digital
distribution formats. 18% year-on-year growth is expected in this segment.
There are 73 multiplexes in India, with 276 screens and about 89,470 seats.
The numbers are expected to increase to 135 multiplexes with more than
160,000 seats by the end of 2006.
In India the multiplex business is modeled to the ones in developed countries.
The main revenue stream is box-office collections from movies. Other
revenue streams include rent from display systems, restaurant rentals, food
and beverage collections, product launch rentals and promotions by
companies. In several cases the other revenue streams are often larger than
box-office collections, but movies are the main pull of such complexes.
Increase in disposable income in the hands of an ever expanding Indian
middle class
Multiplex Cinemas generally cater to middle and high income households.
The emergence of the Indian middle class with greater earning power and a
higher disposable income is one of the key factors that will drive the growth
of the Multiplex Cinema segment. The table below shows the growth in the
number of middle and high income households in India.
Because of India’s status as a good IT hub for outsourcing by U.S.
companies, young Indians between 20 to 24 years old, who ordinarily
wouldn’t be able to find work easily, are finding jobs with call centers
straight out of college. Now they have disposable income that’s totally
discretionary and about 20 to 30% higher than prevailing wages, which they
are spending on books, movies, music, cell phones, food and brand-name
clothes”
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From 1999 to 2003, the average Indian household increased its spending on
movies and theatre as a percentage of its disposable income from 1% to
4.6%.
Organised retail boom
A growth in consumption levels, changing lifestyles, the availability of
quality real estate and significant investments in malls are expected to result
in an increase in the size of the organized retail business in India. The
organized retail market in India is expected to increase its share of the total
retail market from 2% as of 2004 to reach 5-6% by the 2007. The number of
malls in India is expected to increase from approximately 50 as of the end of
2004 to around 250 by the end of 2006. One of the key elements for the
success of a mall is its ability to drive footfalls consistently. Multiplexes are
one of the anchor tenants in large format malls, as their presence increases
footfalls by approximately 40-50%. The expected organized retail boom
should result in a significant increase in the number of Multiplex Cinemas.
Social
Movie watching is becoming an experience more than just a casual outing
with the family. The lines are blurring between watching a movie for
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entertainment and watching a movie for leisure. The movie experience goes
much beyond just watching a film. The encouraging growth in the number of
multiplexes is making the movie goers, especially in urban India, experience
a new way of enjoying movies.
Higher consumption spending and consequent changes in lifestyle are also
spurring the growth of the Indian Entertainment sector.
Since the late 90’s distribution has become equally as important as
production to the Indian movie industry. Multiplexes were the natural
choice for distributing movies in large cities. Space was at a premium and
several movies were competing for limited number of screens. Multiplexes
not only increased the number of available screens, but also provided them
with excellent acoustics and enhanced picture display.
Increase in Number of High Grade Hindi Films
Demand for a particular movie is generally driven by both its critical
reviews and word of mouth from patrons. An increase in the average
quantity of high grade Hindi films released per week should increase the
total demand for movies, as these movies tend to be more popular. As shown
in the table below, from 2001 until 2004, there was an increase 48% in the
number of releases per week for high grade Hindi films.
Increasing corporatisation of the film production sector should result in an
increase in the number of high quality films produced, which should
increase demand for movies. In an increasingly corporate environment,
unviable movies with weak scripts should find it difficult to garner funding.
Consequently, although the average number of films produced annually in
India is expected to fall from over 900 in 2004 to around 600
by 2010, the quality of the movies produced is expected to increase.
14
Political
The year 2004 also witnessed a change in the political scenario of the
country with a positive impact on the regulatory scenario. A new set of
policy makers are looking at this segment with a fresh perspective, which is
a positive sign. On the other hand this does give rise to delayed policy
decisions, a fact not favoured by all.
Several state governments provided incentives to encourage the growth of
multiplexes. A positive concession given to the cinema theatre industry in
2002/03 was the deduction of 50 to 100% of the profit earned by multiplexes
that came to them in the next two to five years. The waiver was restricted to
multiplexes, which were essentially in metropolitan cities, but the
concession has been extended to smaller cities too.
To boost the sector, the government has opened large parts of the sector to
foreign direct investment (FDI). It allows 100 per cent FDI on automatic
basis in the film industry with no entry level pre-conditions.
Entertainment tax benefits
In the late 1980s various state governments imposed steep increases in
entertainment taxes, which lead to a decrease in the profitability of cinemas.
This adversely affected investment in cinemas and maintenance standards as
cinema owners tried to reduce their costs, which lead to a fall in the
ambience of cinemas and a decrease in the quality of audio and visual
standards. The fall in cinema standards coupled with the availability of
watching movies on videocassette players lead to a decline in cinema
patronage. Most cinemas were during that time, and still are, run as small
business and these businesses did not have access to capital to improve the
cinema ambience and quality to arrest the declining patronage.
In June 1997, we opened the first Multiplex Cinema in India in Saket, Delhi.
Since the beginning of 2001, several state governments unveiled tax
incentives (by way of complete or partial waiver of entertainment tax
in the initial five years of operation) to attract new investments in the film
exhibition business. The tax incentives coupled with falling interest rates
made investment in cinemas more attractive and led to old cinemas being
15
converted into Multiplexes and new Multiplexes being established as part of
shopping complexes (or malls). State entertainment taxes in India are among
the highest in Asia. This has resulted in pressure on the profitability for a
number of players in the exhibition business. As a result, exhibitors
(especially the single screen owners) have not been able to maintain and/or
upgrade their cinemas. A worsening quality of cinemas resulted in a lower
number of patrons, which put a further strain on profitability. The
entertainment tax percentage in certain states is set forth below:
In order to encourage investment in the film exhibition sector, many state
governments have announced policies offering entertainment tax benefits.
This has encouraged the growth of Multiplex Cinemas and also encouraged
single-screen theaters to convert into Multiplexes. The quantum of
entertainment tax benefit which may be available in each state is different
and the availability of these exemptions would be dependant on compliance
16
with certain conditions specified by the relevant state. A synopsis of the key
elements of the entertainment tax exemptions which may be available in the
following states is given below:
Technological
Film Distribution Holdups
One of the main features of the Indian film industry that differentiates it
from those in western countries is the limited initial release of films. Due to
the high print costs for films (approximately Rs. 70,000 per print) as a
17
percentage of the average ticket price in India, distributors have adopted a
policy of releasing a limited number of prints in each territory and rotating
them in the territory, starting with A-grade cinemas in A-class centers. The
bigger movies are released with 300 – 400 prints to satisfy a potential market
of 12,000 cinemas. The practice of rotating prints and the resultant delay of
the release of films in B and C-class centers create three major problems for
film exhibitors in B and C-class centers:
• Pirated DVD/VCD copies of the film are generally available by the time
the film is released in B and C class centers, which reduces demand;
• If the film was not a hit on its initial release in the A-class centers it is
unlikely to do well on its delayed release; and
• The quality of the celluloid film print is negatively affected each time it is
played, so poor picture quality is also an issue - often the dark and scratchy
print is hardly visible on the screen.
The above factors result in the box office potential of movies not being
realized. Many cinemas in B and C class centers operate on a 7% to 8%
occupancy ratio.
Impact of Digital Technology on Cinemas in India
To counter this issue of low first instance release, digital cinemas are being
opened in B and C-class centres in India and movies are being released in
those cinemas at the same time as movies are released in the A-class
centers. Digital copies of films cost significantly less than film copies
(approximately Rs. 3,000 for digital compared with Rs. 70,000 for film) and
the cost of digital projection equipment being used in India is also
significantly less than that of film projection equipment (approximately Rs.
800,000 for digital compared with Rs. 1.5 million for film). The significant
reduction in the cost of digital cinema compared with celluloid film
makes an India-wide simultaneous release of a movie economic. As of
March 2005, 100 digital cinemas had been opened in India, of which an
estimated 65 were in operation.
As of March 2005, 100 digital cinemas had been opened in India, of which
an estimated 65 were in operation. Digital technology helps overcome the
problems faced by B and C-grade cinemas. First, digitalized motion pictures
are not required to be transmitted through physical media. This means
digitalized motion pictures can be distributed to more B and C-grade
18
cinemas within the first weeks of their release without incurring additional
costs to produce additional prints. Secondly, digitalized motion pictures
maintain consistent and identical picture quality that is not compromised by
use, time, and transmission. Thirdly, reducing the time between the release
of a motion picture and its screening in multiple cinemas helps take
advantage of the heightened demands of cinema patrons during the initial
five to eight weeks of a motion picture's release. This helps to combat the
market for pirated motion pictures and helps increase attendance rates at B
and C-grade cinemas.
Implementing digital technology in cinemas in India should expand the
market for B-grade and C-grade cinema owners and operators and thereby
increase their profitability through:
• increased number of screens on which newly released movies are shown,
without incurring additional production costs;
• Improved and consistent picture quality without regard to the location of
the cinema; and
• Satisfaction of cinema patrons' demands at the time when the demand for
screening of a movie is at its highest, which should reduce the loss of
demand caused by the availability of movies on pirated DVDs/VCDs.
Challenges Faced by Transition to Digital Cinema in India
The digital projection technology currently being used in India (mostly in Bclass and C-class centers) satisfies the requirements of the B and C-grade
cinemas in India but does not produce a picture quality as good as the
picture in A-grade cinemas, where celluloid film is used. In order to have a
digital picture quality as good as the current celluloid film quality in A-grade
cinemas, as well as to meet Digital Cinema Initiative standards, we need to
use at least projectors, which cost between Rs. 4-5 million (US$ 90,000110,000), which is significantly more than the cost of celluloid film
projectors. As and when the digital projection technology up-gradation will
be required in the A-grade cinemas in India, the issue of financing of such
equipment will need to be addressed. In the United States, digital projection
equipment is being financed by Hollywood production houses rather than
the film exhibitors, as the production houses get substantial savings from not
having to produce celluloid prints.
19
ABOUT THE COMPANY
Priya Exhibitors (p) ltd is a part of the diversified Bijili Group, which has
interests in transport, finance and construction sectors all over India. After a
downturn 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 India’s 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 the
“big 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, Australia’s
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.
20
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 DELHI
PVR has been a pioneer in multiplex
development by setting up India’s first
multiplex PVR Anupam4 at Saket in city of
Delhi. The company has since grown to
become the largest cinema exhibition player
in the country and has 5 theatres with 19
screens in city of Delhi/Gurgaon under its
operation.
The Cinema can boast of the highest box office collections in India for five
consecutive years since its opening. Located around the Cinema in the same
complex are a number of up-market restaurants, pubs and fast-food eateries
that make it a popular youth hangout place and indeed an entertainment
experience for the entire family.
PVR Priya, a 25-year-old cinema still considered the best
Cineplex in Delhi, was completely renovated and brought into
the fold of PVR in January 2000. PVR Priya boasts of the
highest box office collections in the city of Delhi after PVR
Saket. It also has the distinction of having the widest screen in India.
Following the tremendous success in South Delhi, PVR expanded to West
Delhi in 2001 with the launch of two new
multiplexes -- PVR Naraina, and PVR
Vikaspuri. PVR Naraina, with four screens and
830 seats, was launched in August 2001. PVR
Vikaspuri (3 screens, 921 seats) was launched
in November 2001.
PVR Group has re-opened one of Delhi's oldest
and most popular cinema hall, Plaza; now
known as PVR Plaza. With a seating capacity
21
of 300 seats, the all new single screen auditorium has been renovated and
refurbished to bring back its former glory. The cinema, unique in its nature,
combines the look and feel of the 50s with the state-of-the-art cinema
viewing technologies of today.
The most recent addition to the chain is PVR EDM, this three-screen
multiplex, located in the popular East Delhi Mall, is equipped with the stateof-the-art technology and is one of its' kind in the vicinity.
The three-screen multiplex has a total seating capacity of 723 seats. It is
equipped with the latest THX-approved three-way surround sound system
with real life sound effects and state-of-the-art projection facility with the
latest Xenon-based technology. The stadium seating arrangement ensures
unobstructed viewing from anywhere in the auditorium.
PVR IN GURGAON
In May 2003, PVR Cinemas opened North India's largest
multiplex- a 7-screen cinema in Gurgaon. Built over an
area of 55000sq ft, this multiplex has an avant-garde lobby
with studio effect interiors and currently offers a seating
capacity of 1300 seats. Two luxurious auditoriums called
‘Cinema Europa' have been custom built with vibrant red,
plush reclining seats, double armrests and ample legroom offering patrons a
comfortable and relaxed cinema viewing environment. The choice of movies
played at the Europa are an eclectic mix of tastefully chosen niche Indian
films, internationally acclaimed as well as Oscar winning Hollywood films.
PVR IN FARIDABAD
In May 2004, the company inaugurated its sixth multiplex, PVR Faridabad.
Located at the popular Ansal Crown Plaza in
Faridabad, this two-screen multiplex has a total
seating capacity of 522 seats. It is the first of its
kind in Faridabad.
PVR launched its first ever franchised CinemaPVR SRS in Faridabad. PVR SRS is a 3-screen
multiplex that opened to the public on 12th November, 2004. It has a total
capacity of 776 seats..
22
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.
ACCOLADES
23
Ajjay Bijli, Managing Director, PVR Limited, was conferred ‘The Theatre
World Newsmaker of the Year Award for 2003'. It is his vision and
outstanding contribution to the cinema exhibition industry that has made
PVR the largest cinema exhibition company in the country today.
PVR Gurgaon was nominated for an award in the “Best Retail Environment”
category at the “Annual Design Week” awards.
Ajjay Bijli was also honoured with a special award at CineAsia 2004 for his
significant contribution to the multiplex industry of India. For the first time,
CineAsia honoured an Indian exhibitor. He has also been chosen as
Signature Youth Icon for the year 2005.
MISSION
“A commitment to deliver the best quality cinema viewing Every where,
Every time.”
24
PVR AS A BRAND
PVR has successfully assimilated the Standard operating business and
operational practices of Village Roadshow and set new standards in the
quality of exhibition in India. The quality of cinema viewing has made the
PVR brand synonymous with high quality cinema viewing in the country.
This has enabled them to enter into strong corporate alliance partnerships
and co-marketing exercises with leading brands like Pepsi, Evian, Samsung,
Whirlpool, Hero Honda, Bharti, American Express, Master Card, Pizza Hut,
Cadburys etc. This has generated additional steady stream of revenues for
the company.
BU S IN E S S M OD E L
Hedged on Real Estate
•
•
Anchor Tenant in FECs
•
•
Widened basket of revenue
Streams
•
•
•
Service Model No Real Estate
Investments
Rentals: Lower fixed rentals,
due to advantage of anchor
tenancy in a Mall and in a few
cases revenue linked variable
rental
Better Lease terms due to
recognition as anchor tenancy
Enhanced Footfalls
Ticket Sales
Candy Sales
Corporate Alliances, Sale of
Media spaces
25
Minimizing real estate risk and Maximizing services
RELATIONSHIP WITH VILLAGE ROADSHOW
In 2002, Village Roadshow was undergoing a strategic and business
restructuring worldwide. As part of their worldwide strategy, they decided to
concentrate on the Production business and on Exhibition business only in
those territories where they have majority control and have the critical mass
of screens. In line with this strategy they exited from almost 20 countries
worldwide, including India.
Village Road show’s inability to support the growth plans of PVR, the
Indian promoters offered to buy out the Village stake and the joint venture
was mutually decided to be terminated in June 2002. However, though
Village Road show exited as a joint venture partner, the excellent
relationship between both companies continues and is reflected by the fact
that PVR continues to have an exclusive long term technical and marketing
services arrangement with its erstwhile partners on a long term basis.
During the 5 years of joint venture with Village, PVR was exposed to best
business and operational practices in the Cinema Exhibition industry and
was able to revolutionize the way to go to cinemas.
26
SWOT ANALYSIS
STRENGHTS
First mover advantage in the multiplex business in India
Updated technology
Premium positioning
Plays Hindi, English, Regional & foreign movies
Locational strength
Ambience
Started the concept of ‘a complete movie going experience’
Market leader
Very strong brand equity
TOM recall
‘Original’ multiplex
Blend of retail & entertainment
WEAKNESSES
High cost perceptions
T.A very specific (not mass service)
Disjointed images for all PVR properties
Customer retention
Parking problems
OPPORTUNITIES
First mover advantage
Growing family spendings on entertainment
Large film industry – over 200 hindi films every year
PVR loyalists
THREATS
Competition blooming large
Government’s interference
Entertainment Tax
Other Multiplexs as competition
Other ways of entertaingment
Accused of increased crime rate
PiracyNo control over surroundings eg. West Delhi
Movies becoming bigger than the brand
27
28
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:
PVR Cinemas; Inox Leisure Limited; Adlabs Films Limited; Shrinagar
Cinemas Limited; E City Entertainment; Wave Cinemas; and DT Cinemas.
The tables below show the number of screens operated by each of those
companies and the number of cinemas operated by each of those companies.
COMPANY
PVR
Inox Liesure
Adlabs Films
Srinagar Cinema
Wave Cinema
E City Entertainment
Total
% Of all India
Multiplexes
No. Of
Properties
7
5
4
3
3
3
25
34%
No. of screens
No. Of seats
34
25
14
14
13
14
114
41%
7,333
7,344
5,666
4,588
4,380
3,952
33,263
37%
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Major Competitors
• DT CINEMAS
The DLF group, one of the largest real estate co’s with
a turnover of Rs.1000 crores. DT cinemas are set with
its first multiplex at the DLF city center in Gurgaon
started on 7 mar 2003.
Spread over 3 lac square feet on mg road, city center is
Gurgaon’s first multiplex, covering 48000 sq ft, hosts 3 screens and can seat
upto 1100 people
Has imported state of art projection systems in the world Offers telephone,
net and SMS booking home delivery facility 2 Gurgaon, Delhi and other
NCR regions.
DT Cinemas has also tied up with Wow, a telemarketing outfit for phone
bookings and almost 5 per cent of their total bookings come through the
phone.
DT Cinemas is planning to add a creche facility to its Gurgaon premises
soon.
• SATYAM CINEPLEXES
Satyam Cineplexes is part of the Superior Group.
The Superior Group has interests in Garment,
Candles, Handicrafts, Film Distribution and Cineplexes. Satyam complexes
with its state of the art cinemas has brought to India, for the first time, the
best in class cinema entertainment that the world has to offer. With the
launch of the Satyam Cineplex in Patel Nagar and two cineplexes at Janak
Place and Nehru Place currently under construction, Satyam Cineplex is
poised to become a leading Multiplex operator in India with a capacity of
5000 seats.
Satyam CEO Deven Chachra: ‘‘We plan to develop a The group currently
owns 3 prime sites in New Delhi namely Janak Place, Patel Nagar and
Nehru Place with many more prime sites under negotiation. The group has a
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plan to add at least 2-3 sites every year on a rolling programme. By March
2004 Satyam will be running 16 screens at 4 sites with a total of more than
national chain of multiplexes. We will develop properties in Mumbai and
Pune in the next 18-24 months. Bangalore and Hyderabad will be covered in
2005. Initially, our focus would be to consolidate in Delhi, Chandigarh and
Uttar Pradesh to leverage Satyam’s distribution edge.’’
The new expansion project follows from the finalizing of the Rs 82-crore
project, which includes revamp of an existing cinema hall (already
operational) in Delhi, and development of two more multiplexes in the
Capital.
In total Satyam has three cineplexes in Patel Nagar, Janak Place and Nehru
Place, in Delhi
PROMOTIONS
Recently, Jaypee Siddharth tied up with Satyam Cineplexes with an aim to
provide some “exciting and innovative packages”. Under this scheme, guests
can enjoy and savour a whole host of privileges. To begin with, any guest
whose bill in any of the restaurants of Jaypee Siddharth is Rs 2,000 and
above will be entitled to two tickets at Satyam. Further, this promotion
works both ways. If any guest who presents a ticket stub of Satyam Cineplex
(the ticket stub should not be very old) at Cooks Cafe at Jaypee Siddharth
will be entitled to a soup and dessert, provided the guest in question buys a
full meal at the outlet.
On weekends, there is a special buffet spread for ticket stub holders
(afternoon and evening show audiences) of Satyam who will be entitled to
have this buffet at Cooks Cafe at a discounted rate of Rs 500 for a couple.
The normal buffet price at the hotel is Rs 469 per person, plus taxes.
Another unique promotion is titled ‘Siddharth on Wheels’. This scheme is
valid for evening shows only and under this scheme cine-goers can order for
food at Jaypee Siddharth before they go to Satyam to watch the 6 pm show.
Mr. Kapila assures us that hot meals would be at the doorstep when the
family returns home after watching the movie. This meal costs RS. 150 per
person.
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Café Coffee Day, a leading national retail chain of cafés, as part of its 2nd
anniversary celebrations in New Delhi kicked off a car grand rally in
association with Satyam Cineplex and others. The rally ended at 11am at
Satyam Cineplex Café where the prize distribution was held.
Satyam cineplexes launch party at cinemas rock music performance by
Black Slade.
• 3C’s
The Rs 450-crore Competent Group of Companies, engaged in the business
of automobile dealership, construction and film distribution, decided to
diversify into the development of a chain of cinema theatres under the brand
name 3C’s (implying Competent Cine Court).
Beginning with Delhi, the company will set up
3C’s in Lucknow and Amritsar in the short term.
The cineplexes come under the brand name 3C’S,
which stands for ‘Competent Cine Court’. The
first of these cineplexes cum food plaza is
already operational at Lajpat Nagar in Delhi since October 2002 and the
group has invested nearly Rs 20 crore in this project. It’s a 325-seater,
single-screen cinema hall with a six-brand food court. The project is said to
have been financed by group internal accruals.
3C’s six food retailing brands (roped in through strategic alliance) in the
Food Court are: McDonalds, Barista, Chopsticks Express, Diva Cafe, TikkA-Wrap (London) and Dosa Express (Sri Lanka).
Competent Group of Companies chairman and managing director Raj
Chopra: ‘‘3C’s proposition is to offer a combination of good food and good
entertainment under one roof. The Food Court concept allows different
members of family to opt for different kind of food from the best brands
under one common dining space
The Group now plans to set up more such cineplexes cum food courts at
Ludhiana, Jalandar, Amritsar and Chandigarh over the next 2 years.
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• WAVE CINEMAS
Wave cinemas were launched on the 27th September 2003.
Wave is located at – KAUSHAMBI (U.P.) East End Mall and NOIDA (U.P.)
Sec-18 Center Stage Mall, known as Wave Shipra
Ticket rates are
For KAUSHAMBI weekday ticket costs Rs.100 and weekend costs Rs.120
For NOIDA weekday ticket costs Rs.120 and weekend costs Rs.140
KAUSHAMBI wave plays only Hindi movies, whereas the one in NOIDA
plays all Hindi and English movies. The two wave cinemas have 4 screens
each with a Seating capacity of 250 seats per screen; hence at any point of
time 2000 people can watch the movie.
The seats are very comfortable and have a larger leg space than any other
cinema hall.
Wave Shipra (NOIDA) even has a platinum lounge for which the rate per
seat is Rs. 500, in which eatables and beverages worth Rs. 200 is served free.
There are 34 seats providing this platinum experience. It has seats like any
comfortable sofa at your home. It has a very good ambience attached to it.
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
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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 company’s 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 1015 crore.
34
But owners are now realising that if done right, a stripped down multiplex
can be set up much cheaper. 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
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 distributor’s share is normally a percentage
of ticket receipts (net of entertainment taxes) and the applicable percentage
35
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 non-exclusive 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 C’s, 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 watching
experience.
36
PVR cinemas is trying to penetrate into existing markets. It is also
expanding its reach across new markets. PVR has diversified into ‘film
distribution and set up’ business and came out with their own film magazine.
MARKET PENETRATION AND DEVELOPMENT
37
Beyond the existing markets, PVR is contemplating implementing new
multiplex projects in Delhi, NCR, Mumbai, Hyderabad, Bangalore and
Indore.
Upcoming locations
38
DIVERSIFICATION
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. This is a strategic business unit
aimed at solidifying PVR's exhibition growth and strength. To date, PVR
Pictures has successfully released films produced by US-based production
house Miramax such as Chicago . PVR Pictures has also signed a 50:50 joint
venture with Ram Gopal Verma's Verma Corporation Limited/ K Sera Sera's
production company ‘Factory'. The new venture, titled ‘PVR/Factory'
39
operates under the PVR Pictures entity and has exclusive distribution rights
in Delhi, Uttar Pradesh and Uttranchal.
PVR Cinemas has also come out with a film magazine. PVR Movies First, as
the magazine is called is the latest addition to PVR's big bouquet of
offerings in the movie entertainment business. It is a monthly magazine and
is expected to fulfill the information needs of the die-hard movie fans.
Beginning with New Delhi, the magazine will be available in all multiplexes
and cineplexes operated and managed by PVR across the country. The
editorial content of the magazine is being managed by the India Today
Group, which publishes magazines like Business Today, India Today, India
Today Plus and also the Indian edition of the Cosmopolitan.
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Segmentation, Targeting and Positioning
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
41
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
Age:
61% between 18 and 49
Gender:
47% Males / 53% Female
Income:
61% have income over 50K
Education: 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
Consumer Behavioral Segmentation
Usage rate: 1/3 of the population attends the movies one or more times per
month.
42
1.
2.
3.
4.
5.
WHAT?
What benefits that the customer seeks? – Complete moviegoing experience.
Factors influence PVR’s demand? – Price, movie, day, time
of the day, day of the week, month etc.
What function can the product perform for the customer? –
Entertainment.
What are the important buying criteria? – Price, ambience,
placement, quality service, premium positioning, status
symbol.
What risks does the customer perceives – risk of being
overcharged, risk of being in an emergency like fire at the
theater.
HOW?
1. How does customer buy the product? – Online /
Telebooking / In person
2. How long does the buying process take? – Simple and
prompt
3. How do the various marketing mix elements influence the
customer at each stage of buying? – (Explained later in the
report)
4. How does product fit in to their lifestyle? – Entertainment
product for the premium.
5. How much would they be willing to spend? – PVR had
started with tickets being priced at Rs 125 with special
counters available for tickets worth Rs 7. Even when all
tickets are now priced at Rs 145, there is no change in the
amount of customers that PVR receives, which means that
people are willing to pay.
6. How much do they buy in one transaction? – Almost always
more than 1 ticket. Depends upon the person, movie playing.
43
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
he 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 PVR’s 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. It’s positioning is evident in
its mission statement also which says
“A commitment to deliver the best quality cinema viewing Every where,
Every time.”
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MARKETING MIX – 7 Ps
SERVICE PRODUCT/ SERVICE PACKAGE
A product (in the marketing context) may be tangible, intangible or both. In
case of services, on the contrary, the tangible component is nil or minimal.
In services, there is no or very little tangible element because of which they
are considered as benefits, which are offered to the target market. First, a
service is a bundle of features and secondly, there benefits and features have
relevance for a specific target market. Therefore while developing a service
product, it is important that the package of benefits in the service offer must
have a customers perspective. 5 product levels are as follows:
Core Benefit is the MOVIES that the customer comes to a cinema hall for,
along with the attendant experience of PVR. The expected product in PVR’s
case would be ambience, hygiene, good service, parking, candy bar etc.
PVR has augmented its product offerings:
Luxury cinema
PVR has brought to its customers
the experience of luxury cinema.
After the tremendous success of
Cinema Europa in Delhi, PVR
Cinemas has introduced the concept
of luxury viewing to Bangalore as
well. 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.
Bulk Bookings
There are special arrangements for bulk bookings (of twenty or more tickets)
done by corporates. Details can be filled online and PVR executives
themselves get in touch with the concerned people.
45
E-booking and tele-booking
PVR also provides the factility of e-booking, which was first started by PVR,
it has now been copied by Satyam cineplexes as well. It also offers telebooking
Parties at PVR
PVR has also started helping customers in planning birthday/kitty parties at
PVR. They have made PVR a wholesome entertainment experience than just
a movie watching spree.
Movie newsletter and magazine
To keep its customers hooked on to movies and to PVR, it has also come out
with an online newsletter called ‘PVR
Wire’ is directly
mailed to the
subscribers and
can also be
downloaded from
their website.
They have also
launched a movie
magazine called
‘Movies First’.
Movie vouchers
They have also taken out the unique concept of movie vouchers which
people can use as gifts. Many corporates have also started using these as
incentives and rewards for their employees.
The vouchers are available in denominations of Rs 100 to Rs 350 and a
minimum of 25 coupons needs to be purchased to avail of the offer.
46
The following options are available in Delhi/NCR
The Delhi PVR Movie Money Voucher
costs Rs 150/- and is valid right
through the week across all cinemas
(except PVR Gurgaon - Cinema
Europa)
PVR Gurgaon (Cinema Europa) PVR Movie Money Vouchers cost Rs 160/The following options are available in Bangalore
Classic
Mon -Thur : Rs 100/All Week (including Weekends) : Rs 130/Europa
Mon -Thur : Rs 130/All Week (including Weekends) : Rs 150/Gold Class All Week (including Weekends) : Rs 350/- + Rs150/- for food
and beverages (optional)
THE SERVICE PACKAGE
The “package” concept of services product suggests that what you offer to
the market is a bundle of different services, tangible and intangible, but there
is a main or substantive or ‘core’ service and around it are built the
auxiliary/peripheral/facilitator. It is important to note that facilitating
3services ate mandatory and if these are left out, the entire service would
collapse. Yet another type called supporting services, don’t facilitate the
consumption of core services but are used to increase the value and thus
differentiate from the competition.
Quality Assessment through RATER in case of PVR
Focused on developing a procedure for quantifying customer’s service
quality can be measured in following dimensions:
Reliability – Ability to perform promised service dependably and accurately.
PVR is a very well established brand name, and the audience is given
excellent experience of the basic product i.e. the movie as well as the other
elements involved. Hence, it is very much capable of good delivery of the
47
service it provides. There is no flaw in the quality of the service and is
always delivered on time.
Assurance – Knowledge and courtesy of employees and their ability to
convey truth and confidence.
Since PVR is a high contact organization, the employees are well trained in
all areas regarding customer interaction and courtesy. PVR movies being a
service, heavily relies on its employees, as they are the only mode of direct
communication made with the customers. They are well trained and are
definitely able to convey the confidence that the brand name represents.
Tangibility – Appearance of physical facilities, equipment, personnel etc
PVR movies have a lot of tangible elements present like the employees
(staff), the movie halls, the candy bars, rest rooms etc, all of which are
highly maintained and well kept.
Empathy – Caring, individualized attention to the customer.
Even though in a service like this customization is not possible, the
employees of PVR Cinemas are always very helpful and provide the
customers with good assistance whenever needed. From the employees
made to sit at the ticket counter to the employee that guides customers to
their respective seats in the cinema hall, all employees deliver a very helpful
attitude towards the target audience.
Responsiveness – Willingness to help customer with prompt service.
The employees of PVR are fast and prompt at delivering their service and
are taught to cause as less inconvenience as possible to the customers. If a
customer places an order via telebooking / online reservation etc, the
delivery of the tickets is made well before the show timing at the customer’s
doorstep. The employees are well trained.
PRICE
To many customers, high price means high quality. Services pricing follows
the price and practices of pricing of goods and therefore are either cost based
or market based. Within these, categories of price may be profit oriented,
government controlled, competition or customer oriented. But the
characteristics of services do influence the pricing and therefore different
methods of pricing are followed in their case.
48
PVR when started off had a huge advantage of being the only one of its kind
in Delhi to begin with. Therefore, they could charge a higher amount to its
target audience, as they did not hesitate to pay the sum for the new concept.
This high pricing helped them make maximum gains. Also, 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. Hence,
we may say that the pricing as well pays a strategic role in their marketing
plans.
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. The movie theatres market is a Free
Market, even though the government in the past regulated it. This allows
PVR as the market leader to set its own prices.
Prices that had originally started from Rs 125 (for evening shows) and Rs 90
(for morning shows and weekday plans) have increased to a high of Rs 150
and the lowest is Rs 100. The high pricing however has not led to any
change in the footfalls that PVR gets. Even in slighter crowded shows, the
occupancy rates as low as 35% reaches PVR’s break-even points.
PVR Priya has a slightly different pricing system, which varies from Rs 45
to Rs 150 for different slabs of consumers. This has been done to mainly
attract the youth and to keep the concept of movie going still affordable at
one of its chains.
The pricing at PVR Europa is Rs 160 and a Gold Class ticket is charged at
Rs. 750. It offers superior ambience, environment, seating, viewing etc in
the sum.
PLACE / DISTRIBUTION
Services are generally created and delivered to the buyer at the same time,
therefore creation of time and place utilities is a vital function in services
marketing. Irrespective of middlemen or direct sales channel, the factor of
49
location keeping in view the potential markets is the most significant in
channel selection and distribution.
The issue of location here plays a very important role, as all PVR Cinema
Halls are stationed at good locations in the city, which gathers a large
number of footfalls for them every day. PVRs usually open at an eventful
yet untapped location, followed by which (as we saw in case of Anupam
PVR Saket) other retail chains get opened around it as well. Their places are
always well situated and are well linked. PVR does not have any other
channel of distribution, as their service is sold solely at their chains. They do
not follow any franchisee outlets, even though they indulge in ticket sales
online and via telebooking. The only intermediary involved for procuring
movies are Indian as well as international movie distributors, by way of
whom they acquire the movies.
Distribution of Movies
The Company has also recently forayed into the Distribution of Hollywood
film titles in the country through its 100% subsidiary, PVR Pictures. By
virtue of its strong brand equity and partnerships with major independent
Hollywood studios like Miramax, Newline Cinemas etc. that are not
represented in India through their own offices, PVR has managed to procure
and distribute titles in the country.
With the advent of the multiplex revolution across the country, the company
sees a great opportunity to fill up these upcoming multiplex screens with
Hollywood titles. The company has successfully distributed major
Hollywood titles like Rush Hour 2 , Wedding Planner , Chicago , Choclat ,
Spy Kids 2 , Makdee etc.
PROMOTION
Promotion is a very vital part of the marketing mix especially in the case of
services. The customer needs to trust or have belief in the service, as he has
to pay for it pre-experience. Therefore, it is very important to sell the service
in the best possible way. Usually the objective of promoting a service may
be to create a brand image, establish a personal relationship with the client
and to create an impression of competence, honesty and sincerity to win the
buyers’ confidence in sellers’ abilities to deliver the service efficiently. To
50
promote these, the marketer generally employs indirect selling techniques, as
it is usually not possible to use the conventional promotion tools like
advertising. Promotion activities like community relations, event
management, media blitz, corporate identity programs have relevance. 3rd
parties like government, unions and interest groups are important, as they are
capable of influencing market access.
PVR as a brand indulges into print advertisements on every Friday giving
out the latest movie schedules. Any new developments are communicated to
the audience via press releases. Hence there is a strong element of PR
involved. Apart from that, they usually have contests pertaining to latest
festivals like Valentines Day, New Years Eve, Oscar Movies Week etc. PVR
also has a host of online promotional contests associated with movies The
latest one relates to the film King Kong.
They are also in collaboration with cellular services like Airtel have SMSand-win contests and give out free tickets to the winners. Also, PVR attracts
a lot of commercial shooting / media coverage via programmes etc which
promotes it as a brand in a big way. Organizing Star Events on Premiers of
movies like ‘Kuch Kuch Hota Hai’ helps PVR relate better with its target
audience i.e. the youth. The whole PVR banner and its exterior environment
including movie hoardings, banners etc help promote the concept of movie
viewing as well as PVR as a strong and successful brand.
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PVR also hosts premiere shows with leading movie stars visiting the various
PVR cinemas. They also host numerous fun events for children while
screening animations etc. Given below are a few such recent promotions:
The star cast of Akbar Khan's resplendent 'Taj Mahal' visited PVR EDM,
Naraina, Vikaspuri and Saket, bedazzling the audiences on 21st N ov'05.
A funfilled afternoon was organised at PVR Saket on 3rd Nov'05 during the
show of animated movie ‘Hanuman’. Celebrities were invited with their kids.
PVR organized a rendevous with French Cinema from 21st-27th October
2005. The glitterati from the film fraternity including Salman Khan,Katrina
Kaif and Nandita Das lit the star studded opening ceremony, along with
others as PVR Gurgaon geared up to host and experience the amalgamation
of French movies with the multiplex magic.
52
It also organizes socially responsive events. It organized a movie screening
for the children of ‘Kutumb Foundation’ on children’s day. PVR Plaza
celebrated the Rose Day with cancer afflicted patients, on 22nd September
'05. The event was held in alliance with Cancer Patients Aid Association
(CPAA). Celebrities like Sushma Seth, Manpreet Brar, Anita Kaul Basu and
Shivani Wazir Pasreecha and Mrs. Celina Bijli, wife of Mr. Ajjay Bijli-MD
PVR Cinemas, were present to greet the children and grace the occasion."
Other promotions:
This was the challenge thrown at Delhites by PVR Cinemas, a pioneer in
multiplex development and the largest cinema exhibition company in India,
and Radio City 91 FM. The response was overwhelming, with over 5,000
Radio City 91 FM listeners responding to the Challenge. The PVR City
Challenge contest, running on Radio City for two weeks now, dares listeners
to send in entries on the wackiest thing they would do to win a car (Maruti
Alto).
In collaboration with MSN, PVR had a contest for ‘Bend It Like Beckham’
and gave out 2 free tickets to winners for an entire week.
PEOPLE
EMPLOYEES, CUSTOMERS and OTHER CUSTOMERS
Service must be fully developed and internally accepted before its launched.
Attracting, developing, motivating, retaining employees
Measure &
Reward
Offer a vision
Stress team play
Leverage freedom
factor
Prepare to
perform
Compete in
talent
Know the customer
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PVR indulges in the following for their EMPLOYEES:
• Complimentary ticket on payment of entertainment tax amount at any
point of time (2 days in advance) to the employees, subject to
availability.
• Tickets to employees are given for:
o 1+1 oneself and employees guest
o 2 for immediate family i.e. parents, spouse etc.
This has been done to encourage movie going among employees as
well as customers.
• Gives 10 national holidays to employees
• Makes all employees train at different levels from time to time
• Teaches employees to be helpful, polite, courteous to all patrons and
co workers – enthusiasm and cheerful
• Report customer grievances to managers
• Strict on rules on no smoking, drinking on job etc.
• They are given personalized badges – symbolizes that the employees
pride themselves on being a part of the PVR family
• Very great importance is given to person hygiene and appearance –
clean uniform and shoes.
• Not allowed to make a gesture to ask for any sort of a tip / gift from
customers.
• Job performance evaluation at the completion of first 90 days of
employment. They are evaluated once a year on their anniversary of
date of joining by individual superiors and records regarding
employees’ progress are evaluated.
• Given bright blue uniforms – represents PVR. This is done to ensure
uniformity of appearance and to project a well kept image.
• All employees are taught to deal with safety problems like accidents,
fire, bomb threat, armed robbery etc.
• Certified first aid course given to all employees
• All trainees are made to train at all departments like ticket sales,
computer ticketing, telebooking, sales enquiries, customer service
skills, cash handling sales, credit card sales etc.
• Special well kept rooms for the employees
• Lastly, it is made sure that all employees represent PVR in the best
way possible and sell it as a strong and well-established brand. All
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employees are given full details on what they are representing and
informed all about PVR to make them a part of the family.
• On the occasion of Children's Day 2005, PVR created a
rememberance for children from PVR's Housekeeping Attendants,
Projectionists, electricians, with the movie IQBAL.The children from
the NGO "Kutumb Foundation" also were an intrinsic part of the
event, invited specially by PVR, to celebrate children's day.
Management Team
The company has a dedicated management team at the corporate level which
looks after each area of its business i.e. programming, marketing & event
management, operations, business development, projects and finance. It has
about 30 employees at the corporate level.
At the cinema level the company has a strong team at each of its cinemas,
ably headed by a Cinema General Manager. He has a team of 50-60
employees at each cinema. The total employee strength across all cinemas is
about 300 employees.
The company has had a good track record of being able to attract top class
management talent.
For the customers’ convenience, it is ensured by the organisation that there
are no loopholes. In case of any customer complaints, the employees are
immediately directed to report the same to their managers. The nature of all
employees is very friendly, informed, helpful, reliable, soothing, cheerful
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and youth-like. Therefore, the audience can easily relate and communicate
with them.
PHYSICAL EVIDENCE
Though customers cannot see a service, but they can definitely see various
tangible clues of the service offer like facilities, communication, objectives,
employees, other customers, price etc. On basis of these, he forms his
opinion as they help us to tangibalise the service. . Therefore, it is essential
to manage physical evidence.
Atmosphere – helps to shape opinions. The building, layout, colours of
interiors, tickets, labels, logo of the organisation etc help to formulate a good
unified corporate image / identity.
PHYSICAL ENVIRONMENT
AMBIENT
FACTORS
Air quality
Quality of
scent
Degree of
circulation
DESIGN
FACTORS
Aesthetics
Architecture,
colour
scheme,
material etc)
Functional
dimensions
of design in
terms of
layout,
comfort etc
SOCIAL
FACTORS
Appearanc
e,
Beheviour
and
number of
service
personnel
Quality &
quantity of
other
customers
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Ambient factors relate to background condition, deign factors, on the
contrary are visual stimuli and social factors relate to interactive
environment. The service factor has an impact on not only the customers,
but the employees as well.
The interior and exterior of the premises is such so as to project a hygienic
and well-maintained image at all times. The administration offices, booking
offices, candy bars, conference rooms, auditorium, foyers, corridors, wash
rooms, staircases, walls, projector room, basement area – all coordinated and
hygienically maintained.
Both the external and internal ambience is very important and is maintained
excellently, as it is important to appeal to existing and even to the potential
customers. At PVR, it is equally important to keep employees happy.
Therefore, even the employee’s workplaces in the premises are coordinated
with the whole hall’s ambience and are lively.
Exterior – the movie hoardings, movie schedules, computerized service,
glass entrance, PVR banner, deign of PVR building, parking etc all
contribute to the external environment
Interior – Seats, color coordination and combination (blue in case of PVR),
hygienic wash rooms, candy bars, corridors, stairs, sound and visual
equipment, design of the hall, ambience etc are all included here.
Attention to detail and stress on high quality cinema viewing experience is
evident from the unique seating arrangement that ensures unobstructed
viewing from anywhere in the auditorium.
Plush, ergonomically designed seats have been installed to provide
flexibility and ultimate comfort to guests.
Convenient cup holders have also been installed on every armrest. Edge to
edge screens and digital sound will contribute in creating the ultimate movie
going experience.
The multiplex has an avant-garde lobby with studio effect interiors. Station
concession counters which offer customers a wide selection of the traditional
movie going fare of sweet and salted popcorn, hotdogs and soft drinks, as
well as candy, nachos, fruit juices and Mineral water.
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Peripheral – possessed as a part of service purchased e.g. Ticket, popcorn
Core – Those that cannot be possessed. e.g. The experience of the movie
PROCESS
It was the first cinema company to introduce computerized ticketing through
use of international box office software in its cinemas; first cinema to accept
credit cards in India against tickets; and the first to offer cinema tickets on
Internet with online payment gateway for payment. The company had a
turnover of Rs 41 Crores in 2001-02, which is expected to rise to about Rs
60 Crores in 2002-03, and with the growth envisaged, the turnover in the
next 3 years is expected to be over Rs 250 Crores.
PVR was the first to install surround sound and Dolby in Delhi.
Gurgaon 7 screen megaplex is equipped with the latest THX approved sound
system for the real life sound effects and the state of the art Xenon based
projection technology.
SERVICE BLUEPRINTING
Service design is a complex task that can benefit from a more sophisticated
version of flowcharting known as blueprinting.
Developing a service blueprint requires identifying all the key activities
involved in service delivery and production and specifying the linkages
between these activities.
A central aspect of service blueprinting is to distinguish between what the
customer experiences front stage and the activities of employees and support
process backstage, where the customer cannot see them. Between the two
lies what is called the line of visibility.
Standards can be set for each service activity but should be based on good
understanding of customer expectations. Below the line of visibility, the
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blueprint identifies key actions to ensure that each front stage step is
performed in a manner that meets or exceeds those expectations.
Service blueprints clarify the interactions between customers and employees
and how these are supported by additional activities and system backstage.
Because blueprints show the inter relationships between employee roles,
operational process, information technology, customer interactions, they can
facilitate the integration of marketing, operations, and human resource
management within a firm
Blueprinting also gives managers the opportunity to identify potential fail
points in the process that pose a significant risk of things going wrong and
diminishing service quality.
Blueprinting the PVR experience
To illustrate blueprinting of high contact, people processing pvr service, we
examine the experience of watching a movie in pvr that enhances its core
movie service with variety of other supplementary services.
The key components that we will include in pvr experience blueprint:
1 Script for each front stage activity
2 Physical evidence for front stage activities
3 Line of interaction
4 Front stage actions by customer-contact personnel
5 Line of visibility
6 Backstage actions by customer contact personnel
7 Identifying failure points
Identifying failure points – Running a good movie experience is a complex
business and much can go wrong. The most serious fail points, marked by
small F in a circle, are those that will result in failure to access or enjoy the
core product. Because service delivery takes place over time, there is also
the possibility of delays between specific actions, requiring the customer to
wait. A W within a triangle identifies common locations for such waits.
Excessive waits will annoy customers.
Blueprint of PVR is divided into three “acts” representing activities that take
place before the core product (movie) is encountered, delivery of core
product, activities after core product is encountered.
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The stage or service escape includes both interior and exterior of PVR
ACT 1: Before the core product is encountered
In this particular act, the first act begins with making ticket booking or
reservation- either by arriving at pvr in person or on telephone with an
unseen employee. Also tickets can be booked online called as arm’s length
interaction. If tickets are booked according to first two procedures then
impression is created on the evidence of respondent’s voice, speed of
response, and style of the conversation and if booked online then impression
is made by the outlook of website and how easy it is to book a ticket online.
The act concludes with customer entering the respective auditorium and
being seated. These six steps constitute our customer’s initial experience of
pvr, with almost each involving an interaction with an employee. By the
time customers reach the auditorium; they have been exposed to several
supplementary services, including booking, eating counter, seating. They
have also seen sizable cast of characters, including contact personnel and
many other customers.
ACT 2: Delivery of core product
In this act, our customers are finally about to experience the core product
they came for, that is to watch a movie. As the customer enters the
auditorium it’s important how the employee interacts and guides the way to
the customer’s respective seats. Light and sound effects of theater are one of
the most important aspects of good movie experience.
Also interval time of the movie is important time period to provide service.
Because generally during interval time people either go out to eat something
or goes to washroom or both. So if they go to eat then most important
dimension is not only quality of food and drink, availability, pricing but also
how promptly it is served and style of service. Here backstage activities
plays really important role like to keep check on availability of food etc and
if go to washroom then hygiene is the most important dimension.
ACT 3:
The movie may be over but much still is taking place both front stage and
backstage like getting ready for next show. The core service has now been
delivered, and we will assume that our customers are happily moving out of
pvr. Act 3 should be short. The action in each of remaining scenes should
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move smoothly, quickly, and pleasantly with no shocking surprises in the
end.
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RECOMMENDATIONS
Technological Innovation
When PVR came into being it was at the forefront of the technology
involved in the Movie business but now much more has been done in this
field and PVR needs to keep up. Like the IMAX theatre that Adlabs has
introduced, PVR should also foray into new technological advances in the
entertainment business.
Once inside...Service must match the price charged…
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
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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.
Expanding reach…
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.
Riding high on sports…
Cricket is an obsession in India. PVR could capitalize the same by screening
‘hot’ matches live for eg. A crucial India Pakistan match, World cup semifinals/finals etc. The growing popularity of soccer and other sports can also
be tapped. This would be an instant hit even at very high prices charged. To
add on to the excitement they could couple this with cricket contests and
give prizes like paraphernalia with autographs of eminent sportspersons.
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