Lime Light Cinema, British Columbia
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Risks and Contingencies
Lime Light Cinema is a theatre located in Victoria, British Columbia that has struggled with image perception since inception in 2013. The theatre began 25 years ago as a pornographic film house under the title “The Cosmopolitan Cinema”, and after being acquired by Phoenix Theatres in 2013, the theater was transformed into the first run art film cinema and renamed “The New Cosmopolitan Cinema”. After little success through this expansion, newly promoted Manager Olga Siroonian recently retitled the theatre “Lime Light Cinema” to dissociate the organization from their previous reputation.
The main issue at the beginning of Phoenix’s acquisition was the pornographic connotation that was associated with the theatre. Once Lime Light changed their strategy to show primarily repertory films, the population struggled to grasp the new concept of the cinema and relate to the films that were being shown. By increasing the variety of films that were played and decreasing prices below the local competitor, Lime Light was able to increase revenues.
Although Olga’s changes to current operations have proven successful, her current challenge is to increase local profitability by 25%. In order to achieve this goal, improving the current promotional strategy is both highly urgent and highly important. In order to increase awareness about what films are offered at Lime Light, and change the publics perceptions about the theatre itself, Olga needs to find a strategy to better portray Lime Light’s strengths.
Prior to discussing potential changes to Lime Light in order to increase profitability by 25%, we performed a qualitative analysis on the internal and external factors affecting the theater. This analysis was conducted on the current status of the business and allowed us to make our recommendation based on what will be successful for the company going forward. First, we will introduce numerous internal strengths and weaknesses that both benefit and hinder the current operations of the theater. We will then provide several external threats that may affect revenue as well as opportunities to expand their product offering and market share in Victoria, British Columbia.
We believe the new Manager, Olga Siroonian, has proven to be an internal strength to the company. In the past four months she has made numerous changes to the existing operations, which have already began to reap benefits. Some of these being: decrease in concession prices, new membership pricing strategy, erecting a new theater name and an increase in advertising efforts. In addition, we believe Lime Light’s membership pricing strategy is a significant strength to their business. Lime Light Cinema introduced a membership service where members pay a flat rate fee of $10/year and a variable fee of $4/movie. These rates were strategically priced below their competitors, and will result in increased market share compared to their competitors who have higher prices than Lime Light Cinema. Another strength is the theatres new shift to becoming a repertory theatre playing two movies each night. Generally, people like options and the diversification of movie genres will grow Lime Light’s audience demographic.
Although Lime Light Cinema is doing many things right, we have also identified a few weaknesses to their current processes. Lime Light has identified that 35% of their customers are students. We believe that they are not using their marketing initiatives adequately as majority of students in 2014 do not read the daily newspaper. Despite numerous efforts to re-brand, Lime Light is haunted by their past reputation and have struggled to gain new customers. This weakens the company’s ability to grow profits as many potential customers still associate them with their pornographic business. Overall, Lime Light cinema is weak overall due to their over emphasis on the use of daily newspaper and their past reputation, hindering their performance.
We have also identified several external factors that pose as opportunities and threats to Lime Light but are out of their control. In terms of opportunities, Lime Light has recently began to expand their product offering by switching from strictly art films, to a combination of classic films, foreign films, art films, and second-run commercial films. Increasing product offerings is an opportunity for Lime Light to attract new customers. Also, Lime Light has seen success in decreasing their candy bar operation prices which has increased average price per person by 50 cents. There is now opportunity for Lime Light to receive more revenue from customers purchasing snacks.
There are several threats that act on Lime Light Cinema. Now that Lime Light is operating as a repertory theatre, they compete directly with a reputable repertory theatre currently operating in the same town. In order to analyse the impact of this threat, we must first determine if there is sufficient demand for this type of theatre in Victoria, British Columbia. We also want to mention that there are eight existing commercial theatres in British Columbia. There is a possibility that Victoria is already saturated with movie theatres. A significant and relatively recent source of competition is the home DVD/Netflix industry. DVD players and Netflix allow avid moviegoers to watch movies in the comfort of their own homes for either a monthly fee (Netflix) or a fee per movie (DVD). These types of services eliminate the need to go out to a movie theatre and generally threatens the cinema industry. Below, we will explain three alternative approaches to achieve Olga’s goal of increasing profit by 25% and will explain the one we believe will be most impactful. Overall, Lime Light cinema is faced with more threats than opportunities. However, our proposed changes will help the company overcome these threats and maximize their opportunities.