Cineplex Entertainment

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1. How might the reward program described in case exhibit 5 affect the movie and event –going behavior of major market segments? At retail, what is the average value of each reward structure for customer’s dollars spent – 5 %, 10%, 15% or 20%? Which reward structure would you choose? Why? (For the sake of simplicity, ignore the one-time fees and rewards)?

The reward programs as depicted in exhibit 5 are evaluated as below in terms of retail value they offer to customers of Cineplex entertainment. The obvious intention of the reward program is to enhance customer loyalty by rewarding them for their repeated, frequent patronage. Therefore, we will consider the discount percentage for 10 adult movie purchases and 10 concession combo purchases as our reference than a single purchase. Further, we also need to consider the tangibility of the rewards while deciding the reward structure, especially because the customer segment being targeted is in age group of 13-24 yrs (as per Table 1, frequent customers) who might be willing to spend too much time thinking before making entertainment purchases.

|  |Option 1 |Option 2 |Option 3 |Option 4 | |Permanent Concession Discounts |0 |0.1 |0.15 |0.1 | |Concession RPG |3.44 |  |  |  | |Discount Value, 1 purchase |0 |0.34 |0.52 |0.34 | |Discount Value, 10 purchases |  |3.4 |5.2 |3.4 | |Sign up points |500 |100 |0 |250 | |Discount Value, one time |5.48 |1.1 |  |2.7 | |Points Adult Movie |100 |100 |0 |100 | |Discount Value, 1 movie |1.1 |1.1 |  |1.1 | |Discount Value, 10 Movies |10.95 |10.95 |0 |10.95 | |Points per concession Combo |0 |75 |0 |  | |Discount Value, 1 purchase |  |0.82 |  |  | |Discount Value, 10 purchases |  |8.2 |  |  | |Box Office RPG |10.95 |1000 |  |  | |Total Discount Value, 1 Adult Admission and 1 |6.57 |3.36 |0.52 |4.18 | |Concession purchase | | | | | |Customer Spend, 1 Adult Admission and 1 Concession |14.39 |14.39 |14.39 |14.39 | |purchase | | | | | |Discount as percentage of Spend |45.66% |23.32% |3.59% |29.02% | |Total Discount Value, 10 Adult Admission and 10 |16.42 |23.70 |5.16 |17.13 | |Concession purchase | | | | | |Customer Spend, 10 Adult Admission and 10 Concession |143.9...
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