CASE STUDY ON
“MAKING MAGIC THE MULTIPLEX WAY”
ASSIGNMENT
Economics & Management Decisions
SUMMARY:
The case study on “MAKING MAGIC THE MULTIPLEX WAY” reveals the shift in
consumers’ preferences with respect to watching films. Nowadays, people are expecting
more than an experience from entertainment industry. Cinema goers are ready to pay
reasonably well for getting that kind of more than an experience. This shift in consumers’
preference is due to the change in their economic status and change in attitude towards
viewing experience. People have started to prefer multiplexes over single screen cinemas
since they find more variety under reasonable prices. Multiplex culture has started to
spread out to many other small towns and cities which have led to drastic shift among film
goers. The contribution of multiplexes to film industry accounts to 35% which is a very
encouraging economic factor. Thus the middle class people are also able to get more than a
cinema viewing experience by the revolution caused by the emergence of multiplexes.
Questions:
1) What lessons can you draw from the case regarding consumer behaviour?
Due to the increase in employment opportunities, there has been a significant growth in
population in urban areas like metro cities. Since the earning capacity of individuals has
increased gradually, people are ready to spend more for entertainment segment. But there
has also been a significant shift in the preference of spenders when it is concerned with
entertainment. Various new financing options from banks like credit purchases has also
made middle class urban India to start enjoying things which upper classes had been
enjoying for the past couple of years.
People like to either “have more entertainment for less money” or “more entertainment
under a single roof”. Multiplex industry has timely capitalised of this need of consumers and
has started to improvise more on these needs. These factors can be drawn regarding the
change in the consumer behaviour.
2) Do you think change in consumer perception in middle class has been instrumental in
emergence of multiplexes? What can be the other reasons?
Definitely the change in consumer perception of the middle class has been instrumental
and influential to a large extent for the emergence of multiplexes. And also the need for
more entertainment under a single roof and at a reasonable price has been rightly
understood which has led to the proper positioning of multiplex business.
The population of middle class India is more which the target market for the multiplex
industry is. The earning capacity of middle class has also considerably improved to a great
extent and continues to improve still further too.
The other reasons for the emergence of multiplexes are
a) Emergence of fashion outlets of various brands in multiplex malls since from a
marketing point of view there is an immense potential in positioning and selling of
products.
b) Global brands find it as the right place for positioning their brand and products
among the maximum spending community.
c) Food chains have found an excellent place to sell out their products in a mass scale
since people who come to multiplex have an idea of experimenting out with new
things under a single roof.
d) Window shopping is more prominent in these multiplex malls which help for
advertising and marketing in a much easier way.
e) Due to the presence of many shops / brands under a single roof, the maintenance
cost is shared in smaller unit which consumes less from the profit a shop earns.
3) Which of the groups, according to you, would have demand for multiplexes?
No of Household in Millions
CATEGORY OF PEOPLE
1994-1995 1999-2000 2006-07
Very Rich 1 3 6
Consuming 29 55 91
Climbers 48 66 74
Aspirants 48 32 15
Destitutes 35 24 13
From the above table, the data can be used for interpreting which segment of population
has been influential for the emergence of multiplexes.
100
91
90
NUMBER OF HOUSEHOLDS (in millions)
80 74
70 66
60 55
48 48
50
40 35
32
29
30
20 15 15 13
10 6
1 3
0
VERY RICH CONSUMING CLIMBERS ASPIRANTS DESTITUTE
1994-95 1 29 48 48 35
1999-2000 3 55 66 32 15
2006-07 6 91 74 15 13
CATEGORY OF HOUSEHOLDS
1994-95 1999-2000 2006-07
From the graphical representation of the data, it can be analysed and interpreted that the
potential market for the multiplex industry has been and will be among the Very Rich,
Consuming and Climbers segment of the entire population. There will be a continued
increase in trend as long as the earning capacity of the people, belonging to the above
mentioned groups, improves. India is the future global market and its symptoms have
already started to make its presence which in turn will improve the economic status of
various groups of Indian population.
4) Would law of diminishing marginal utility apply to movie watching? Will this affect the
growth rate of multiplexes? Or can it be seen as a cause for establishment of
multiplexes? Give arguments in support of your contention.
The law of Diminishing Marginal utility would take a back step when it comes to
entertainment industry as long as there is innovation in it. The income level of the very
rich, consuming and climbers group will continue to increase as long there is increase in
growth opportunities of India since these three groups are linked to each other. Growth
of the multiplexes will not be affected in a negative sense but every new multiplex must
come out with a novel idea in targeting these target potential markets innovatively with
new and attractive features which will be valuable for the consumers. This means that
knowing that there will be change in consumer preferences periodically; it should be the
responsibility of the multiplexes to revive itself with innovative ideas for its existence.
The consumers would not compromise on getting the full cinema viewing experience
which is got at perfect quality in multiplexes.
5) Can multiplexes use the concept of consumer surplus for attracting more consumers?
How?
Consumer Surplus is the difference between the prices which the consumers are willing
to pay and the amount which they actually pay. As the earning and buying capacity of the
consumers’ increases, the concept of consumer surplus can be used to attract more
customers. The multiplex developers can take this opportunity to make good business by
providing good quality entertainment to the customers. As the spending capacity of the
consumers is good, the consumers won’t mind to spend more to get satisfaction in the
service they get from what they pay. So only the multiplex business offers tickets at
higher rates than the single screen cinema halls thereby able to invest more on
technologies which can attract more and more customers by giving them an incredible
experience.
From the entire case study, it is clearly evident how multiplex business emerged to
its peak by utilising the increased potential among the middle class people. They were
quick to sense the opportunity that has come into existence among a particular group of
people. Thus it can be said that multiplex business will tend to be more profitable as they
improvise their technology to provide an excellent viewing experience to the customers.
