The strategy is simple: provide fair-priced, quality entertainment close to home for the two markets that comprise the bulk of Falls River's population.
5.1 Competitive Edge
Falls River Theatre has a distinct competitive edge in that it is the only movie theatre within 45 miles of Falls River. There are no plans at this time to build a theatre complex in the town and, since the theatre will occupy the town's only building capable of effectively housing a theatre, there is limited direct competition. Competition will come mainly from several multi-plex theatres located in Madison, the closest being 45 miles from Falls River.
To ensure that Falls River residents are pleased with the products offered, the theatre will rely on the expertise of Samantha, who has seven years of successful theatre management experience. Since she began managing the theatre in Madison ticket sales have grown at a consistent 4% annually. This is in part due to her skills in movie selection and her emphasis on customer service. Once the theatre is up and running, her time will be devoted to movie selection, staff hiring and supervision, theatre marketing, and ordering for the snack bar.
Samantha has also developed strong relationships with several movie booking agents serving the Wisconsin area and has already negotiated an agreement. The agreement has the booking agents collecting 60% of the first year's admission revenues. Each year after that the percentage will be reduced by 1.5% through year 5 when it stabilizes at 54%.
Steve has strong construction skills and is considered a craftsman by his peers. Initially his talents will be used to restore the theatre from its current state of slight disrepair into the town's main attraction for evening entertainment. Once the restoration is complete, Steve will transition into a part-time role, maintaining the facility and equipment, working the counter and ticket booth, and eventually, ordering concession items.
5.2 Marketing Strategy
Falls River is a small enough town that word gets around quickly. We anticipate that a buzz will be created once the renovations begin. Excitement will build as the grand opening approaches. To encourage that excitement, we will have a countdown to opening on the building's marquee. Concurrently, advertisements in both the local newspaper and the college's daily will promote the opening with coupons for free items from the snack bar. Since a large share of profits will come from concessions, we want to let people know about our tasty snacks. Finally, we will use our website to keep our customers, especially the more web salvy college students, updated on the movie selection, which will change every two weeks.
5.3 Sales Strategy
The Falls River Theatre will appeal to two segments of the market:
Adults and parents with children who seek local, fair-priced evening entertainment aimed at the whole family.
Young adults who are interested in seeing recent releases but are constrained by an inability or unwillingness to travel.
The main sales strategy is to provide recent successful movie releases that appeal to both audiences. With two theatres, we will be able to target both segments simultaneously.
Ticket prices will be $5 for adults and $3 for children under 12.
5.3.1 Sales Forecast
Sales will increase among both target segments as word spreads around town and to the surrounding communities. The increase in concession sales reflects the increased attendance. Concession sales are based on an average of $2.50 spent per ticket purchase.
Young adult movies
Direct Cost of Sales
Subtotal Direct Cost of Sales
Steve will begin the theatre's restoration in mid-January. Samantha will still be working with the theatre in Madison but will be able to contribute as-needed. Steve's work will start inside, repairing and upgrading the facility as necessary. The main theatre's balcony needs reinforcement. Repairs and upgrades to the concession area are also necessary. Painting will put the finishing touches on the interior of the structure. Finally, the interior should be fully restored by mid-March, once the upholstery repairs are finished.
By that time Samantha will have more time to begin work on the website, marketing materials and film selection. The weather should be turning better which will allow Steve to move outdoors to work on the front of the building. Minor repairs are needed on the marquee. A fresh coat of paint will prepare the building for customers. Samantha will also order any equipment for the concession area (some equipment is already in place and is useable), begin the hiring process and start the marketing. Finally, Steve will install the projection equipment and prepare for the grand opening.