1

MANAGERIAL COMMUNICATION-1 (Graded Assignment #1)

Case Analysis Regal Multiplex

TABLE OF CONTENTS Serial no. 1 2 3 4 5 6 7 8 9 Content Situational Analysis Problem Definition Statement of Objectives Criteria for Evaluating Options Generation of Options Evaluation of Options Decision Making Action Plan Contingency Planning Page No. Page 3 Page 4 Page 4 Page 5 Page 7 Page 8 Page 9 Page 9 Page 10

1. Situational Analysis The problem revolves around operation of a newly set up multiplex in Kochi, Kerala. Kochi is one of the fastest developing cities in India. It is a cosmopolitan city with rapid changes happening to its peoples lifestyles. The film industry in Kerala is growing at a CAGR of 25%. This clearly points to the fact that there is a huge potential market for a multiplex in Kochi. As is evident from Ravi Menons speech, Regal Multiplex had the first mover advantage. The multiplex had five screens and was located at a prime location. As is evident from the design of the multiplex in general and the individual screens in particular, the multiplexes tried to cater to the upper class and the upper middle class, although the building made it a hangout place for students too. The business prospects of the multiplex may be summarized with the following SWOT analysis:

Strengths

y Regal had a nice infrastructure in place y Regal had their multiplex at a prime location in the city. y They had the necessary technology in terms of movie showcasing and online reservation. y Being the first player meant that the media gave them the required publicity. Weaknesses y Doubts about the success of a business aiming at a niche high-income group. Opportunities y Kochi was one of the fastest developing cities in India. y Film industry set to grow by 25% CAGR in Kerala. Threats y Competition from other forms of entertainment and other cheaper theaters y Bad reputation of the earlier cinema hall which used to be where Regal Multiplex currently is. y Piracy and satellite and cable television providing people with alternatives.

2. Problem Definition Regal multiplex failed to be the preferred destination for family entertainment, its owners wanted it to be. It failed to attract people other than students in large numbers. Also, a secondary issue was that it failed to build an ecosystem around the multiplex which could have added to its revenue. 3. Statement of Objectives Operation of the multiplex is a financial drain on the owning company. To change the situation, the multiplex needs to be in profit, for which the following needs to be done. Short term objectives: a. Generate more revenue: This would mean getting more people into the theatres and having a better ticket pricing system. b. Make theatre-going an appealing proposition to more people. i.e widen the target audience. Long term objectives: c. Expand the multiplex to include other retail outlets etc.

4. Criteria for Evaluating Options Constraints: 1. Industry constraints: The movie industry in Kerala is unique in terms of the number of languages the movies belong to. Out of them, Malayalam movies are locally more popular. Also, the low budget nature of Malayalam movies needs to be taken into consideration here. 2. Five screens: The multiplex has five screens, each with different seating capacity. Any solution should be able to put to optimal use all these screens. 3. Upmarket audience: Currently the focus of the multiplex seems to be on the upmarket audience. Any solution should not ignore them as such a step might lead to short term decrease in revenues. 4. Piracy, cable and satellite channels: These are ground realities which will persist. The solution has to ensure that even with such issues, the multiplex can run profitably. 5. Break-even requirement: As is clearly stated, Ravi Menon is concerned about his investment not going break -even. Any solution should have a finite time-line and should guarantee break-even within a limited span. 6. Convincing argument for ticket price reduction: To get a restructuring of the ticket pricing system cleared from the top management, Siddharth Roy needs to have a convincing argument. Criteria: 1. Feasibility: Given the constraint that Malayalam movie industry is very unique, the solution should be able to generate results under these limitations. 2. Reassurance of future profitability: Ravi is likely to consider any proposal only if the return on investment is h igh enough. The plan of action that ensues has to ensure that there is light at the end of the tunnel very soon. 3. Connecting with a target audience: The multiplex need to have a target audience and connect with them well. From the data given, only students seem to be the ones thronging the area in hordes.

The ticket pricing is such that not much revenue can be generated from them. The strategy should hence revolve around generating the right combination of identifying a target audience, connecting with the m and developing a suitable ticket pricing model for them . 4. Snob value preservation: The multiplex was catering to the upper classes. Any solution should be able to preserve the existing upmarket customers too. 5. Generation of crowd: A crowd is quintessential in a multiplex for further addition of retail space, which is also part of Roys plans. 6. Leveraging the benefits of the hangout place image: Although almost unknowingly, the multiplex because of its design became a favourite hangout spot for students. It may be possible to tailor a solution to cater to take advantage of this image.

5. Generation of Options The solution should involve a combination of the following steps:
a. Change the price structure to have different ticket prices for different shows. b. Show Malayalam movies also c. Have differentially charged seats (This may need some modification of infrastructure and hence investment) d. Reach out to the youth, who are a probable target audience.

The following decision tree shows all possible combinations arising out of these options.

6. Evaluation of Options The possible decisions , consisting of combinations of all options have been displayed above (numbered 1 through 16). Following is an evaluation of each of the options based on the criteria in Section 4.

Feasib ility
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

10 10 10 10 7 7 7 7 10 10 10 10 5 5 5 4

Reass uranc e 8 9 7 7 7 6 4 7 7 8 6 5 6 6 5 4

Conne cting 7 8 8 9 8 8 8 8 7 8 8 8 8 8 9 9

Snob value 4 6 7 7 6 7 7 8 5 6 8 9 7 9 4 9

Crowd puller 7 7 6 6 6 5 6 5 5 5 5 5 5 5 8 5

Hango ut place

Total

8 6 7 5 7 5 6 5 7 4 7 4 7 5 8 6

44 46 45 44 41 38 38 40 41 41 44 41 38 38 39 37

The criteria are replaced by shorter names for convenience.

(Assumption: There exist upper class Malayalam movie watching viewers. )

7. Decision Making Clearly, we will have to go ahead with the strategy numbered 2, which has the highest total score. Here is how the strategy will correlate with the objectives.
1. Change ticket prices across timings: This will help in revenue generation. Other steps will ensure that we have sufficient crowd for the higher priced shows too. 2. Display Malayalam films also: Assuming that Malayalam films are watched by the upper middle class or middle class families too, this would draw more families, who would typically prefer the evening timings. 3. Redo the seating arrangement of one or more of the screens (strip off the luxury elements to accommodate people ) and employ variable pricing: This will help attract more crowd which will in turn help in the long term vision of opening up more retail space. 4. Do not try reaching out to students: Students may be a target audience but it is preferable not to market extensively amongst students as it may result in loss of appeal and consequently lesser revenues.

8. Action Plan 1. Change ticket prices: Here is a suggestion regarding the pricing: Morning Noon Evening Night Week day 100 100 125 100 Normal day 100 125 150 125 2. Display Malayalam Films: A good suggestion would be to display Malayalam movies in two of the screens on an average. The owners could think about displaying Tamil movies too, which are often hits across Kerala. 3. Redo the seating arrangement and have variable pricing: The seating arrangement may be changed form a modern one to a more traditional one for two of the screens (probably the bigger ones) where Malayalam movies are going to be screened. This would help accommodate more people as well as have seats with different prices.

10

9. Contingency Planning An assumption has been made that the people would respond to these changes from the multiplex management in a posit ive manner. Given the prime location of the multiplex and the fact that the multiplex was well publicized through advertisements, the news should spread fast and people should react in a positive manner very soon. In case this does not happen, management will probably have to have some shows for a very meager price to get people to start visiting the place. Also any such effort may need sufficient publicity in the form of advertisements to pass the message on to people.