1. Executive Summary.. 4
1. Introduction.. 4
2. Porters five forces (Task 1). 5
2.1. Threat of Entry 5
2.2 Power of Suppliers. 6
2.3 Threat of Substitutes.. 6
2.4 Competitive Rivalry. 6
2.5 Power of Buyers. 6
3 PEST Analysis 7
3.1 Political Aspect 7
3.2 Economic View.. 7
3.3 Sociological View.. 8
3.4 Technological View 8
4. SWOT Analysis.. 8
4.1 Strength 9
4.2 Weakness 9
4.3 Opportunity.. 10
4.4 Threat 10
5. Marketing and Positioning strategies (Task 2) 10
6. Ansoffs Matrix (Task 3). 11
6.1 Market Penetration 13
6.2 Product Development 13
6.3 Market Development.. 14
6.4 Diversification.. 15
7. Conclusion 15
8. References 16
This paper has been written in order to understand the marketing techniques used by successful organizations that give them an edge over the other companies. In order to understand these techniques a case study has been conducted on the famous Cirque Du Soliel who have completely revived the circus industry.
Upon analysis, it was seen that the circus scene had phased out completely due to the influx of technology such as TV, theater and cinema. In order to revive this old entertainment channel, Cirque included some variations and introduced brilliant and innovative aspects to the circus industry. The introduction of street dance, jazzy costumes and other art forms helped in generating interest amongst the masses. This attracted customers, and now Cirque boasts of a loyal fan following. Thus it can be concluded, after the analysis that Cirque has made a distinctive position for itself in the market, which other competitors cannot match. Innovative and creative productions have helped Cirque to garner profits and see and upward growth, with expansion not only locally but internationally.
Cirque Du Soleil, also known as circus of the sun, is a distinguished Canadian entertainment firm, which was founded by guy Laliberte and Daniel Gauthier, two former street performers in the year of 1983 (Belanger, 1999). It self describes it as an “eclectic mix of street entertainment and circus art”. Due to the advancement of the television industry and movie era, the circus industry began to lose its potential audiences. Even though, vigorous and rapid development was scored in the Cirque Du Soleil. The Cirque created a variety of fabulous shows, such as la Nouba, Alegria, etc., whose creations even won numerous prizes and distinctions (Fleming, 2002) according to Babinski (2004), each show of the cirque is a perfect synthesis of circus experiences and styles from all over the world, with a central theme or a storyline. To draw the audiences’ attention, the performances contain amazing costumes, live music, light effect and arena, rather than an inalterable routine of the traditional circus. Owing to the unprecedented and successful innovation, Cirque Du Soleil has been focused by several scholars, for instance, Kim and Mauborgne (2005) cited cirque as one of examples in a classic marketing strategy book: Blue Ocean Strategy. They consider Cirque Du Soleil a pioneer in the circus industry. To be exact, cirque added enlivening and altering elements to the traditional circus which eventually redefined the circus and its target audience and brought itself a brand-new recognition.
Cirque Du Soleil’s mission was to create an innovating experience that would attract more audience and maximize their profits. In order to achieve this target introduction of various interesting acts was on their agenda, which paid off perfectly.
In this report, a major thrust is to analyze the marketing circumstance for cirque, thus Pest and Porter’s 5 forces analysis is conducted in order to appraise the circus industry environment. Further a SWOT for the Cirque Du Soleil would be accomplished, and its marketing and positioning strategies would be explained in detail. Finally, extended researches about marketing opportunity would be explored.
2. Potter’s five forces analysis of external environment
Developed by Michael E Porter this analysis is the most powerful framework for business strategy and industry analysis. This tool is used for understanding where power really lies within the organization which enables the analysis of the current competitive position of the company. It is essentially a framework for evaluating the completion transcends the management approach, industries and the particular technology. This approach assumes the five major forces that determine a business’s competitive power and their strategic implication. Porter’s analysis looks at the industry from outside- in, thus recognizing the influential forces for competition. In relation to the circus industry where Cirque du Soleil operates in, the following aspects can be realized; the threat of new entry, power of suppliers, power of buyers, competitive rivalry, and the threat of substitutes.
2.1 Threat of Entry (Barriers to Entry)
For any business, threat of new competition in the market is always present. An organization which is able to hold its position even under threat of competition is a successful organization. This is applies to Cirque Du Soliel also, threat of new entry in the circus scenario is comparatively low, in fact negligible. This holds true because in order to establish a brand name as famous as Cirque would require high investments and a lot of creativity. The new companies have seen how Cirque Du Soleil has made huge profits and amassed large customer bases and have been attracted to this industry. To establish a company as famous as Cirque would require capital, innovation and creativity. The Cirque created an uncontested market which made competition irrelevant.
2.2 Power of Suppliers
Traditionally the main suppliers to the circus industry consisted of the wild animals, acrobats, and fun stuff for youngsters. But increasing competition and declining interest in the circus industry led to Cirque Du Soliel to develop new suppliers. Therefore the circus industry is seeing the use of more mature forms of entertainment to suit the older and high spending customers. The change in customer has called for a change in suppliers, for purposes of profitability of the industry. In addition the customers have fragmented to reduce their bargaining power.
2.3Threat of Substitutes
This threat comes from alternative entertainment forms offered such as theaters, cinemas, and operas amongst others. Competition becomes intense when these services are offered at generally lower prices. But in order to overcome these threats, innovation is the key, as proven by Cirque Du Soliel.
2.4 Competitive Rivalry
Competitive rivalry to this industry comes from the alternative entertainment services offered by theaters, cinemas, amusement parks, kid’s fun centers, and opera’s among others. But internal completion is also an important factor. Rather than competing head to head within the industry space, Cirque Du Soleil created a market space for itself in the entertainment industry which was unique and was the cause for a strong and profitable growth.
2.5 Power Of Buyers
The revolution of the circus industry by Cirque Du Soleil has seen the entrance of new buyers who are the mature and high spending adults, who visit the Cirque for its unique content and eye pleasing costumes. As such a unique blend of creativity and entertainment is not offered by any other circus, the bargaining power of the buyers is negligible. This brood of new buyers has increased the profitability of this industry. This was achieved due to the vision of its owner. Rather than competing at a low profit rate, a unique blend was created that ensured profitability. Cirque Du Soliel recognized well in advance to change its strategy in order to attract more buyers who were not only willing to spend but were also loyal, this strategy paid off with the Cirque’s rising popularity.
3. PEST ANALYSIS
Pest refers to the analysis of the environment before the firm begins its marketing process. The marketing environment of any company comprises of;
Internal Environment consisting of the staff, internal customers, wages, technology and finance.
Micro- Environment consisting of external customer, distributors, agents competitors and suppliers.
Macro- Environment consist of Political (Legal), Economic forces, Socio-cultural forces and Technological forces, thus known as (PEST)
In relation to the Cirques Du Soleil circus industry, the following forces can be realized;
3.1 Political Aspect
The political culture in an organization has a huge impact upon the profitable functioning of the organization. Government policies and regulations can greatly affect the functioning of the organization. Tax policies would limit the expansion of the company but also poses an opportunity to start a strategic partnership with the local government. Similarly competition regulation will inhibit international expansion, but will also enable introduction of the Cirque in developing countrie. But in case of Cirque Du Soliel, the current regulations do not inhibit circuses from offering entertainment as offered in theaters, and this is a benefit to this industry as there are no specific regulations guiding the circus and it enjoys many grants by the government.
3.2 Economic View
The competitiveness of the industry has been increasing due to the embrace of technology. The economy of the industry needs to be evaluated for the fulfillment of the short-term as well as long term goals. Global economic crises have led to unpredictable behavior of the customers, thus there was a decrease in the prices, but this also presented an excellent chance to pursue market penetration strategy. As the circus industry has started to flourish again, thanks to the advent of Cirque Du Soliel, there has been an influx of new employees, and an increase in workers salaries and wages.
3.3 Sociological View
The social and cultural factors on the organization and its marketing vary from place to place. Factors such as religion, gender biases, attitude towards the foreign troupes etc. are detrimental factors for the success of the circus. Entertainment is the core of business, this creates space for penetration and thus increases awareness of the brand, in this case the brand is Cirque.
3.4 Technological View
Technology provides a competitive edge over others. The industry has embraced technology specifically when Cirque Du Soleil integrated professionals in the working of the organization. With a heady mix of creativity and technology, Cirque Du Soliel was able to revive the circus culture. Due to technological advances, there is a greater possibility of horizontal expansion.
In conclusion the circus industry has been transformed a great deal by Circus Du Soleil, due to its introduction of innovative styles and creative performances.
SWOT analysis is a commonly used analytical tool which is used to determine an overall view of an organization’s strategic position. Strength and weakness relate to the internal resources and capabilities of the organization as perceived by customers (piercy,2002).opportunity and threat are externally oriented issues that can potentially influence the performance of an organization or a product. It highlights the need for strategy to produce a strong fit between the internal capabilities (strength and weakness) and the external condition (opportunity and threats).
One of the major strength of Cirque Du Soleil is their talented and famous artist from all around the world who are driven by creativity. Their experience as live show performers further adds to the circus’s advantage. High on quality and unique shows is another major strength of this organization. They always entered new markets before hand and started working locally. Their strong business relationship with television network and sponsors has worked in their favor for positive marketing. Their strong corporate image has helped them gain easy sponsorship such as that of BMW for their show in Dubai. Cirque Du Soleil has loyal customers who make sure to watch the performances diligently. Due to their uniqueness they became financially strong unlike their competitors who were unable to make a mark for themselves in the competitive entertainment industry. Launching of email program to build relationship with their audiences across the globe attracted audiences. These effective strategies proved to be the major strength of the company.
The revenues collected from the sale of tickets are the major capital upon which the Cirque is dependent. The cost of maintenance of MGM Grand in Los Angeles and the high cost of the costume workshop are some major weaknesses. Their strong dependency on the dancers alone and the anonymity of the performers is also a major weakness of this organization. Also the control of the entire organization lies in the hands of the two partners, delegation is an important factor for successful running of the business. The Cirque also does not have much experience in market planning as it never undertook market research as its priority.
The company had the opportunity to enter new emerging markets due to which their business was expanding at a good speed. Online marketing also increased Cirque’s revenue .email program helped them to maintain and build a healthier relationship with their viewers and fans globally. They came up with “join the fan club” which helped to create effective database. Diversified themes, establishment of permanent shows in other continents and affordable tickets to the children are some of the opportunities that they can work upon. The large database of 20,000 of skilled employees and 3,500 full time employees are the opportunities available to Cirque Du Soliel.
Not using technology acted as a threat as competitors were taking advantage of it. Their viewers started watching television instead of watching live show in 1980 and 1990. Other threats to Cirque Du Soliel include, threat from Operas, dance shows and other circus shows, the threat of acquiring a long term location for the shows with which audiences are able to identify Cirque Du Soliel. High cost of production combined with the splitting of profit with financier is another major threat to the success of the company.
5 .MARKETING AND POSITIONING STRATEGIES OF THE CIRQUE
In accordance with Aaker (2008), marketing strategies refer to the underpinning and direction of the marketing plan devised over a long term, which gain benefits in a changing environment by taking advantage of corporate competences and resources with the aim to fulfill the marketing objective. Also, Aaker (2008) identifies environment as one of the important components of marketing and positioning strategies, which has been elaborated in the Task 1, including the internal and external environment of the Cirque. Strategic planning is the process of creating and maintaining a relationship between the Cirque’s resources and objectives and the changing markets opportunities. As a consequence, other essential aspects of marketing and positioning strategies would be evaluated as below.
Rather than entering the traditional circus market (Red Market), Cirque used the ‘Blue Ocean’ strategy and thus created a new forte for itself by including elements of art, street art, circus and ballet. Thus it showcased itself as an innovative and creative organization, where the shows were usually adult based.
The Company also inculcated innovative and inexpensive marketing techniques to promote their shows such as word of mouth, website and email programs.
In order to enter new market, Cirque took help of the local promoters in order to market their shows. This had any benefits such as,
Local promoters were well aware of the local authorities and thus were able to promote the Cirque effectively. Getting permissions were easier.
Local promoters were familiar with the market and were thus able to educate Cirque regarding the local culture, preferences etc.
Additional funding was made available with the help of local promoters, such as in Dubai, BMW had sponsored the show.
Getting acknowledge d by the famous cele1brities has a strong effects, thus Cirque made sure that all the celebrities attended its premier. It also helped in garnering huge media attention, which was in itself a way of promotion. Thus makes sure that famous people such as actors, sportsmen, art critics etc. attend the premier of its shows.
Introduction of technology has caused companies to market their products and services on the web. Cirque made use of the technology and developed a unique and creative website which has attracted many visitors. While navigating through the pages, the visitor is made to feel as though he is at the Cirque itself. Also, latest updates are rolled out regularly ensuring that the public is well aware of the developments. The email program developed by the Cirque reaches out to the target market which has the newsletter and information about the upcoming shows.
The other factor for its promotion is there is no use of animals. Animal activists and right group do not uphold use of animals for entertainment and by avoiding this, Cirque is able to avoid conflicts/
Some other innovative techniques include, adult zumanity shows, sending the team to perform at bars, meeting people etc.
Such marketing techniques developed by the Cirque have proved to be successful as beneficial as they are inexpensive techniques.
6. ANSOFF MATRIX
When choosing a strategy beyond the typical strategies: cost reduction, differentiation, and focus – cirque needs a deeper, more detailed analysis. To select the strategy detailed definition of the sources of competitive advantage is not enough. Anticipation of the future developments and forming strategies accordingly to ensure profitable growth is known as planning.
Some of these features clearly represented in the matrix product / market by Ansoff. The Ansoff Growth Matrix helps to realize the product or services and thus formulate the right market growth strategy. This matrix allows us to classify strategic options in two ways: entertainment /services that the organization sells and markets it serve. In each case, we consider two states:
What entertainment we sell and which markets we serve today
What products or markets, we would like to learn in the future.
6.1 MARKET PENETRATION
Basically cirque made competition irrelevant instead of fighting it. In 1987 cirque changed from a non-profit to a profit entity which also led to frequent use of their products and merchandise through sale of audios, videos, books and license agreement for products like t-shirts, jewelry, hats etc. This marketing strategy helped Cirque to not only retain the customers but instead increase the customer base. Current entertainment products are distributed to current markets to current consumers. Cirque created a niche market of live entertainment within the entertainment industry and made circus more fun by taking shows not only to North America, but also to the other parts of the world. Cirque shows were quite different from the traditional circus. Their artist from several countries performing in shows created circus experience with amazing light effects, own music, and radically different costumes. This strategy helped to restructure the market position of the Cirque and thus helped in greater market penetration. This means that cirque have to pull out of this market more through better penetration, for example, using better promotion, repositioning the brand, etc. Do not apply the product modification, or not looking for new consumers. The cirque should implement a strategy of deep penetration into the market when it decides to increase its market share by providing existing entertainment products or services.
6.2 PRODUCT DEVELOPMENT
Innovation has been a major key success factor for the company; there are opportunities that can be used to complement the existing product. Cirque has brought meaning into the field of circus entertainment which targeted adults audiences-who visited the theatre and opera and it’s not every kid that will be a fan of theatre or opera. One way Cirque can catch the children segment is by bringing back traditional circus performance which involves star performances and animals. Although it comes with risk like increase in cost and protest from several animal protesters, it’s still a segment that can expand cirque as a company. According to the current market condition, Cirque should bring new entertainment methodologies. The old way of making entertainment are replaced by more modern versions, technological advancements, and then promoted among current consumers. The development of the goods can be a strategic area of growth in mature markets where existing product groups do not fully utilize the available opportunities.
6.3 MARKET DEVELOPMENT
Cirque used many attractive channels to access new markets and segment of customers. Their alliances with powerful people helped Cirque to receive sponsorship and permits, which otherwise was difficult. They struck a deal with AEP a power company in North America and BMW the automobile giant in Dubai for sponsorship of shows there.
Cirques advertisement for their shows came up through several innovative and inexpensive methods e.g. Artist of the adult themed show Humanity entertained guest at the bars in American cities.
The web was also a creative medium for advertising as it provided virtual experience of Cirque. It also launched the e-mail program in order to maintain and strengthen its relationships with its viewers spread across the world.
The entertainment shows (products) developed by Cirque are distributed to new markets. There is no change in the entertainment strategy, but they are promoted into new markets or in new sectors. To strengthen the competitive position requires different actions depending on what stage of life cycle is the market: growth, maturity or decline. The growing market for firms is desirable to keep pace with the growth in the industry. New distribution channels such as through internet and new packaging of the product resulted in the favorable growth of the Cirque.
Labriebrete has future conglomerate diversification plans for Cirque to build entertainment complexes in major cities including London, Singapore, New York, Hong Kong and Sidney.
In order to garner more interest in the Cirque, hotels where a trapeze artist performs for guest at the waiting area or the reception is an innovative idea, that is different from the usual form of advertisement.
Another area Cirque could also diversify into is the night club business and since they have shows in Las Vegas, a town of casino, clubs and hotels, this strategy could prove to be easy to execute but extremely beneficial. Cirque as a reputable and recognized brand and company can explore and make a name for its self in the night clubbing business.
Cirque also plans to transform Montreal into a world centre for circus arts and also aspires to bring groups together like National Circus School of Canada, Cirque Eloise, En Piste, and many individual jugglers and street performers.
Implement strategy of diversification of the company makes a number of reasons, including the ability to reduce input costs by identifying and controlling new sources of raw materials and unique resource. One of the most common causes of diversification is the desire of companies to leave the stagnating markets, or markets in which to obtaining high profits is no longer possible.
Application of these different strategies clearly depicted that Cirque Du Soliel is making profit even in times where the circus industry is suffering from poor profits. Due to its innovative and creative strategies, it has earned a position for itself which the other competitors are unable to achieve. Due to the diversity in the employees and their specialty, Cirque has been successful in carving a niche for itself.
In conclusion it can be stated that Cirque has successfully implemented the Blue Ocean Theory. By the application of innovative performances and unique gigs, and thus acquiring better sponsorship, Cirque has been able to diversify and expand to various countries such as China, India, Europe and America. This has created good business opportunities for the ever growing Cirque Du Soliel. Due to all its strategic planning and marketing, the future of Cirque Du Soliel in the entertainment industry is bright.
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