Service Marketing of Odeon Cinemas in UK - Case Study Example

Service Marketing in UK – The case of Odeon Cinemas (UK) Table of contents Introduction 2. Marketing of services – aspects and characteristics 3. Odeon Cinemas – UK 3.1 Overview of the firm 3.2 Opportunities and threats for cinema industry in UK 3.3 Main aspects of marketing strategies applied on Odeon Cinemas 3.4 Common elements and differences between the marketing strategies applied by Odeon Cinemas (UK) and those applied by the other firms that operate in the same industry in Britain 3.5 Odeon Cinemas’ key strategic service marketing issues for the next 5 years – interpretation of these issues using theories related with the marketing sector 4. Conclusion References 1. Introduction In order to understand the development of performance of firms within the international market, it would be necessary to examine the aspects of their various activities. In this context, the marketing plan used in order to promote the corporate activities should be considered as a fundamental part of the firm’s strategy that offers a significant support to the increase of the firm’s profitability (only if appropriately designed and applied). In accordance with Kline (2005, 141) marketing focuses on ‘the relationship between sellers and buyers, generally companies and consumers, in a process that can be both cooperative and competitive’. From another point of view, it is suggested by Welsh (2003, 45) that ‘marketing is the proactive identification and exploitation of opportunities for attracting and retaining customers through innovative approaches to risk management, resource leveraging and value creation’. The above descriptions of marketing as part of the business activity, is necessary in order to understand the role of marketing plans in the development of business performance through the years. In fact, marketing is extensively used by marketers internationally in order to improve the business performance; however the effectiveness of marketing strategies applied on each particular case are depended on a series of parameters like the market conditions, the consumer preferences and the appropriate monitoring of all stages of the relevant procedure. Towards this direction, it is noticed by Aufreiter et al. (2000, 53) that ‘when traditional marketers think of organization, they mean structure: distinct product, channel, and customer groups focusing on specific functional tasks, such as brand management, customer segment management, and market research’. In other words, marketers around the world should appropriately handle all issues related with the application and the evaluation of a particular marketing strategy. In case that a particular marketing strategy is proved to be inappropriate for the specific market conditions, then an alternative scheme of action should be available. Current paper examines particularly the effect of marketing services used by Odeon Cinemas that are based in Britain. The various aspects of marketing of services will be examined while their appropriateness for Odeon Cinemas, UK will be evaluated. The effects of marketing strategies currently applied by the firm will be also examined and criticized trying to identify any possible weakness of the firm’s current marketing policies. 2. Marketing of services – aspects and characteristics One of the most important parts of marketing is the appropriate development of communication among the various ‘parts’ of the market referring both to the internal and the external environment of the firms. Regarding this issue, it is supported by Griffin et al. (1997, 24) that ‘in conducting marketing communication operations, firms have several options for sourcing the various communication activities as it is a make or buy decision: source from within or externally’. Specifically when referring to firms that are based on brands (like in case of Odeon Cinemas, UK) their success is closely related with the position of the brand within the international market as it can be measured (or else evaluated) through the customer preferences around the world. However, in order for branding to have the required effects, it is necessary to the structured and monitored appropriately. In this context, it is noticed by Henderson et al. (2000, 112) that ‘the building of a brand starts with a precise definition of the target customer group and its needs and expectations and proceeds to a realistic assessment of how well the brand currently meets them’. On the other hand, all appropriate ‘precautions’ should be taken by marketers before proceeding to the formulation of a particular marketing strategy (especially when this one has to refer to a specific brand). More specifically, because the customer preferences related with a specific brand may be differentiated within a particular market (because of the existence of different social and cultural characteristics) marketers should be prepared for potential failures when applying a marketing plan that refers to a specific brand. The above issue has been examined thoroughly by Shrum (2004, 111) who came to the conclusion that ‘marketers need to consider the potential danger of a backlash from consumers, especially where highly involved individuals are faced with placements in highly credible media’. In other words, customers’ loyalty regarding a specific brand, although it should be taken into consideration when designing and applying the brand’s marketing strategy, it should not be over-estimated especially in the long term. In order to explore the above issues as they are observed especially in the firms that operate in the services sector, Yates et al. (1991, 221) made a survey among firms that operate in the business sector. The results of the above survey prove that many changes have been applied in the marketing strategies used currently around the world comparing with the past. The changes in the political and social conditions of states worldwide could be considered as the main reasons for this outcome. More specifically, the survey made by the above researchers showed ‘a marked change towards a recognition of the value of marketing information services internally and a move away from treating marketing as promotion only, towards the use of other elements of the marketing mix, product, price and place’ (Yates et al., 1991, 221). The above results of course, are related with a particular market (they do not refer to the international market). However, even under these terms, the approaches used in the marketing plans applied internationally, should be considered as appropriate also for the marketing policies used by firms within a specific region or state, only minor alterations should be made. On the other hand, Hennig et al. (2000) stated that marketing plans that are used by services firms should be differentiated from the ones used by firms that operate in the goods sector. Specifically regarding the firms operating in the services industry it is stated that ‘the concepts of customer satisfaction, commitment, confidence benefits, and social benefits serve to significantly contribute to relationship marketing outcomes in services’ (Hennig et al., 2002, 230). All the above concepts should be taken into consideration by marketers that prepare the marketing plans applied by firms in the services sector. However, it should be noticed that not all marketing plans are equally appropriate for firms within a specific industry. On the contrary, the social and cultural characteristics of each specific market should be carefully reviewed before applying any marketing plan within a particular market. The trends of the market also (as can be observed by the consumer preferences) should be also taken into consideration. In the long terms, the effectiveness of the marketing policies used by firms that operate in the services sector can be proved mainly by the improvement of the firms’ performance (in the short term it is possible that no particular improvement in the firm’s performance is achieved – a false impression regarding the effectiveness of a particular marketing plan). 3. Odeon Cinemas – UK 3.1 Overview of the firm ODEON is considered to be one of the most successful cinema chains globally. In Britain the firm currently owns more than a hundred of cinemas while its profits represent the one third of the profits of all firms that operate in this sector. In accordance with the corporate website, ODEON was first established in 1930; through the years the firm’s activities were expanded globally. In 1998 ‘an extensive re-branding campaign further re-enforced ODEONs position as market leader in the UK and introduced "Fanatical About Film" to the UK cinema-goer’. One of the most indicative efforts of the firm to improve its position within the British market has been the upgrade of the ODEON cinema cited in London, Leicester Square, an initiative that cost about 3 million pounds. It should be noticed that the firm’s ownership has been changed through the years while in 2004 the firm was acquired by Terra Firma which invested a significant amount in the promotion of the firm’s activities both in UK and internationally. 3.2 Opportunities and threats for cinema industry in UK The cinema industry of Britain is well developed. In fact, in accordance with a report published by BBC News (2004) ‘during 2003 the industry boasted record levels of production spending, with £1.16bn spent making 173 features in, or involving, the UK; and the industry now employs 57,429 people - a whopping 77% increase in the past 10 years’. The performance of the cinema industry in the UK is closely monitored by all relevant governmental authorities in order for appropriate measures to be applied on areas that the above industry possibly presents trends for decline. However, all relevant surveys made under the guidance of the UK government have proved that the cinema industry in UK is highly developed. In accordance with a speech of Margaret Hodge (minister in the Department of culture, media and sport) in 2007 ‘employment has risen steadily since the mid-1990s with a 70% increase in production sector jobs since 1996, an extra 7,700 full time job while capital investment in the UK film industry is estimated to have been £120 million in 2006. Since 2000, fixed capital investment in infrastructure and new technology has totalled some £635 million’. The above figures are really encouraging regarding the performance of firms operating in the British film sector. It should be noticed that in 2006 the British film industry achieved a high performance with total profits of approximately 4.3 millions of pounds, which is a noticeable figure. In accordance with the above, the opportunities for firms operating within the British film industry can be many; in the long term the particular industry can be proved profitable for the businesses that operate in this industry. However, the above figures can possibly reveal that in this industry the competition is extremely strong (the high profits can attract many potential investors) and for this reason the survival in this sector especially in the long term is a challenging task. 3.3 Main aspects of marketing strategies applied on Odeon Cinemas The marketing strategies applied by firms in the British film industry have been formulated in accordance with the demands of the British market. Towards this direction, the research made by Dempster (2006, 224) showed that the most important ‘determinants of demand uncertainty are: audience composition, critical acclaim and media coverage, whose management is key to entrepreneurial success’. In accordance with the above findings, the development of marketing strategy by firms that operate in the British film industry should be based on the ‘distribution of risks across agents and over time’ (Dempster, 2006, 224). The above marketing strategy could be proved particularly effective by all firms that operate in the film industry of UK; however certain of these firms should also follow marketing plans that will be appropriately customized to their needs. Referring to the case of Odeon Cinemas in UK, the consultancy firm (E-consultancy) notices that one of the main aspects of the marketing policies of Odeon Cinemas in UK is the development of the firm’s online presence. For this reason, it is noticed that the following issues have been addressed by the firm (Design UK) that has been delegated the particular task: the change of the firm’s website in accordance with the trends of the market and the application of the standards set by the industry. Moreover, it is noticed that ‘one key element of the new site is that it has been developed to meet AA accessibility standards and has been independently audited to ensure this compliance; Odeon is looking to engage as wide an audience as possible and maximise bookings through an experience that is equally usable for all visitors’ (E-consultancy, 2006). It should be noticed that as all firms operating in the particular industry, Odeon has to secure its position in the market trying to promote its activities to the public. This target is achieved through the extensive ‘engagement’ of advertisements through the media and the press. On the other hand, the strategic positioning of the firm’s cinemas (within or next to shopping centres across UK) should be considered as a significant factor towards the success of Odeon Cinemas in Britain. 3.4 Common elements and differences between the marketing strategies applied by Odeon Cinemas (UK) and those applied by the other firms that operate in the same industry in Britain As already applied above, the marketing strategies followed by Odeon Cinemas in UK are common with the ones used by all the other firms that operate in the same industry. The recent ‘re-development’ of the firm’s website is perhaps an aspect of the firm’s marketing policy that cannot be met in all its competitors. In this context, it could be noticed that the success of Odeon Cinemas in UK should not be considered as exclusively related with the marketing strategies applied by the firm locally but it is rather the result of the extremely high position of this brand in the global marketplace. 3.5 Odeon Cinemas’ key strategic service marketing issues for the next 5 years – interpretation of these issues using theories related with the marketing sector The development of the firm’s marketing policies the years that will follow should be evaluated in accordance with the current trends of British market (regarding the specific industry), the prospects for the future and the financial strength of the firm to respond to the needs of a marketing plan that will be effective in the long term. The current development of the British film industry and the position of the particular firm in the international market can lead to the assumption that Odeon Cinemas will achieve a high development in the long term. Moreover, in order to understand the criteria under which the development of the firm’s marketing strategy should be made; the following issues – as developed in the theory – should be taken into consideration. The consumer preferences are not stable in the long term. Even for brands that are considered to be extremely successful, consumer preferences may change creating severe turbulences in the relevant firms which may have proceeded to significant investments targeting at the increase of their profits in the near future. Regarding this issue, it is noticed by Hall (2002, 24) that ‘consumers "change their minds" about a product, then they change their attitude, and then they act; in other words, the process begins with cognition, which translates to affect, which then translates to behaviour’. From a different point of view, Low (2000, 27) supported that ‘firms whose marketing communications programs tend to be integrated are also likely to be small, consumer-focused, service-oriented companies’. In other words, the effectiveness of marketing policies applied by multinational firms (like the case of Odeon Cinemas) can be a challenging target. The fact that a multinational firm has to face the strong competition of many firms worldwide is an obstacle towards the success of this firm’s marketing plan. However, if this plan is customized appropriately to the local social and cultural conditions it may be proved effective within a particular region/ state (i.e. even if within the international market the particular marketing plan is proved to be inappropriate). As for a specific part of the firm’s (Odeon Cinemas) marketing policy, i.e. the development of the firm’s online presence, the following comments could be made: ‘e-commerce environment seems to complicate the measurement of firm performance and, at the same time, seems to offer new opportunities for developing new performance indicators’ (Garbi, 2002, 1). In other words, the specific initiative could be characterized as effective in accordance with the target set: the increase of the firm’s presence in the WWW aiming at the increase of profits. The above assumptions are also supported by the view of Gordon et al. (2000, 35) who noticed that ‘‘consumers experiences with the web as well as their attitudes-toward-websites should be considered as important antecedents to the typical flow of advertising effects; webpage complexity appears to play a role as well but its strength depends on other factors’. In accordance with the above, the decision of the firm to upgrade its website is considered to be totally justified as the number of consumers depending on the WWW for their has been increased the last years. The above assumptions are also supported by the views of Chakraborty et al. (2003, 50) who stated that ‘the importance of a companys website emanates from the fact that it is often the last link in the hierarchy leading to a sale’. For this reason, the upgrade of corporate website is considered to be an effective marketing strategy for firms that operate within all industrial sectors. In the case of Odeon Cinemas, UK, the improvement of the firm’s online presence (through the upgrade of its website) should be characterized as a significant part of the marketing strategy offering the chance to the firm’s customers to be appropriately informed on the services offered on a 24/7 basis. 4. Conclusion The examination of all the parameters related with the marketing strategies applied by Odeon Cinemas in UK has led to the conclusion that the importance of the marketing plan for a firm’s success can be significant; however the position of the firm within the international market can be a factor promoting the business performance even with no dependency on the effectiveness of the marketing strategies applied by the firm either locally or globally. In other words, the power of a brand’s name can be significant. On the other hand, there are certain marketing mistakes that can cause severe damage to a firm (especially if the relevant marketing strategy is applied globally). A series of such marketing failures has been identified by Hills (1994, 44): ‘a) inadequate market assessment resulting in defining the market too narrowly or too broadly; b) Failure to practice segmentation as the market grows; c) Pricing that ignores competing technology and needs of the potential market … f) And countless other mistakes’. In any case, the responsibility of the firm’s marketers for the success of a specific marketing plan cannot be doubted. From a different point of view, the importance of communication for the effectiveness of marketing policies has been extensively supported in the literature. Towards this direction, Moore (1995, 143) supported that ‘what is strategic in the communication is not that it is designed to be manipulative, but instead that it is designed to advance particular policies or organizational strategies by making them comprehensible’. However, when the communication is mainly developed through the Internet, then a series of potential consequences may exist for the specific firm. Indicatively, we can refer to the study of Cotter et al. (1996, 61) who noticed that e-communication should be evaluated ‘at any stage or level of this communication process or by using indirect indicators of purchase behaviour such as attitude toward the brand/ad, brand awareness, and/or brand comprehension’. As the examination of the specific firm’s marketing strategies revealed, there is no particular marketing policy applied by Odeon Cinemas in terms of the differentiation of this strategy from the ones followed by the other firms that operate in the same industry. Even the upgrade of the firm’s website cannot justify the significant performance of the firm (if evaluated alone). In the particular case, the brand’s name is proved to have a significant role in the development of the firm’s performance in UK. References Applbaum, K. (2004). The Marketing Era: From Professional Practice to Global Provisioning. Routledge. New York Aufreiter, N., Lawyer, T., Lun, C. (2000). A New Way to Market. The McKinsey Quarterly, 53-58 BBC News (2004) UK Film Industry focuses on future, [online], available at http://news.bbc.co.uk/2/hi/business/3917147.stm Chakraborty, G., Lala, V., Warren, D. (2003). What Do Customers Consider Important in B2B Websites? Journal of Advertising Research, 43(1): 50-64 Cotter, M., Henley, J., Herrington, D., Lollar, J. (1996) Comparing Intensity and Effectiveness of Marketing Communications: Services versus Non-Services. Journal of Advertising Research, 36(6): 61-67 Dempster, A. (2006) Managing Uncertainty in Creative Industries: Lessons from Jerry Springer the Opera Creativity and Innovation Management 15 (3): 224–233 Department of Culture, Media and Sport (2007) Margaret Hodges speech to the UK Film Finance Summit, [online], available at http://www.culture.gov.uk/Reference_library/Minister_Speeches/margaret_hodge/MH_speech_ukfilmfinancesummit_18october07.htm E-consultancy (2006) Design UK creates new Odeon website, [online], available at http://www.e-consultancy.com/news-blog/361170/design-uk-creates-new-odeon-website.html Garbi, E. (2002). Alternative Measures of Performance for E-Companies: A Comparison of Approaches. Journal of Business Strategies, 19(1): 1-13 Gordon, C., Kumar, A. (2000). Web Commercials and Advertising Hierarchy-of-Effects. Journal of Advertising Research: 35-44 Griffin, T., Mcarthur, D. (1997). A Marketing Management View of Integrated Marketing Communications. Journal of Advertising Research, 37(5): 19-26 Hall, B. (2002). ‘A New Model for Measuring Advertising Effectiveness’ Journal of Advertising Research, 42(2): 23-33 Henderson, T., Mihas, E. (2000). Building Retail Brands. The McKinsey Quarterly, 110-116 Hennig, T., Gwinner, K. (2002) Understanding Relationship Marketing Outcomes. Journal of Service Research, 4(3): 230-247 Hills, G. (1994). Marketing and Entrepreneurship: Research Ideas and Opportunities. Quorum Books. Westport, CT Kline, J. (2005). Ethics for International Business: Decision Making in a Global Political Economy. Routledge. London Low, G. (2000) Correlates of Integrated Marketing Communications. Journal of Advertising Research, 40(3): 27-32 Moore, M. (1995). Creating Public Value: Strategic Management in Government. Harvard University Press. Cambridge, MA Shrum, L. J. (2004). The Psychology of Entertainment Media: Blurring the Lines between Entertainment and Persuasion. Lawrence Erlbaum Associates. Mahwah, NJ Yates, P., Steward, Y. (1991) The marketing of internal business information services. Journal of Information Science, 17(4): 221-233 Website http://www.odeon.co.uk/fanatic/about_us/ Read More