Easycinema's Failure

670 Words Mar 16th, 2012 3 Pages
* Question 5: Compare the applicability of the easyGroup business model in the airline industry and the cinema industry (examine Exhibits 8 and 18, among others). What problems do you see for the cinema business?
The business model of easyGroup, a concept embodying low costs, no-frills, maximization of the capacity and utilization rate, and price yield management was taken from easyJet and applied to easyCinema. Despite the fact that in the airline industry the strategy was succesful, the cinema business didn’t enjoy the same fame.
In order to compare the applicability of the easyGroup business model in these industries, we first need to identify the differences and the specific traits for airlines and cinemas. The new ventures criteria
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Therefore this gives a premise to the market becoming price inelastic.
Acording to the easy priciple alignment, there are two main priciples easyGroup failed in the cinema business. Firstly, easyCinema could not provide a good value product because it failed to capture the customer purchase behavior. The majority of the customers (families and 15-24 year olds) wanted to view multiple selection, first-run blockbuster hits with comfortable seating and also during peak times. Due to the “easy” price yield curve, this product type would result in less discounts for the customer, hence meaning less price difference compared to easyCinema’s competitors.
Another important factor that easyCinema misses is by playing the game not in the traditional way in a market where price is dominated by distributors and the FDA Standard Conditions. By charging a low price would decrease the rental revenues obtained for the distributors, hence many distributors refused to alow first-run films for easyCinema. The poor relationship with the major film distributors that plays an essential role for a film financial success contributed to the business failure. EasyCinema didn’t have any control on the final product(the movie) they sell directly to their customers, depending on the distributor’s decision to licence or not the first runs of the films. This led to the

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