Service Pricing Strategies for Nu Metro and Ster Kinekor

This document discusses the service pricing strategies used by Nu Metro and Ster Kinekor to attract customers and compete with online movie streaming services. It explores their adaptations to increase service demand and physical environment changes to stay relevant and competitive. The document also examines the impact of Servicescape on consumer behavior and how both theaters manage demand. Additionally, it discusses the dimensions of customer service quality and the controllable elements used by movie theaters.

210386
1230027-32520 Services Marketing, Consumer
Behavior and Relationship
Marketing
Assignment(MARK3A-7/S1 05/2019)
Assignment due date: 09 Apr 2019 -
13:00PM
Exam date: 29 May 2019
Contact Learning (Part Time)
Internal use only
Question Mark Internal External
Total
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1. Nu Metro and Ster Kinekor
1.1 The service pricing strategies used by either Nu Metro
Movie theaters such as Nu Metro and Ster Kinekor face stream competition from the online
movie streaming services such as Netflix, DSTV Boxoffice, and Showmax. The ease and cost of
streaming movies live threatened the profitability of movie theaters. Today millennials only
attend movie theaters which offer premium features such as immersive sound, comfortable
chairs, personalized and reserved ticketing, and large screens. Moreover, movie theaters also use
service pricing strategies to attract more customers back to movie cinemas. Most cinemas apply
an effective pricing strategy which have worked to their advantage. Dynamic pricing strategies
comprise of a range of methods (Hoffman, 2010, p. 112). For example, Nu Metro uses three
pricing strategies namely the provision of discounts on pre-sales, demand-based pricing, and
weather-based pricing. First, discount-based pricing is provided to loyal customers who have
never adopted the traditional theater for online movies services. The strategy improves sales and
better planning on the resources and staff needed at the facility (BizCommunity, 2018). Second,
Nu Metro use weather-based pricing strategy by offering discounts on a day with bad weather to
increase demand. The trend in the market shows that bad weather attracts more people to the
movie theatre compared to days with nice weather. Third, demand-based pricing in the most
successful strategy for Nu Metro. Pricing is based on the likely demand of a particular show and
the tickets that have been sold out. The price of movie tickets changes by time-based on demand
(Contributor, 2012).
1.2 Adaptations of Nu Metro and Ster Kinekor to increase service demand
Different strategies have been adopted by the two movie theaters to keep up with the
increasing demand for online movie services. First, Nu Metro and Ster Kinekor are converting
their cinemas to digital versions. In June 2012, Ster Kinekor entered to a contract with Arts
Alliance Media (AAM) to turn 400 screens to digital. Likewise, Nu Metro contracted Harris
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digital to convert its 188 screens to digital. Second, 3D technology is driving high attendance on
Cinemas. In 2012, Nu Metro contracted RealID Inc. to install approximately 100 3D cinema
systems. Third, Ster Kinekor has continuously invested modern technology to meet customer
expectations. For example, Ster Kinekor launched Cine Prestige which provides premium
movies experience to the customers. Lastly, the two theater houses seek to expand their presence
globally while keeping the local audience in cinemas (Contributor, 2012).
1.3 Physical environment changes taken by Nu Metro or Ster Kinekor to increase their relevance
and competitiveness
A visit to Nu Metro and Ster Kinekor revealed the following physical environmental changes.
The changes are meant to maintain competitiveness and relevancy. Nu Metro has made several
changes. First, it introduced premium format cinema which includes dining option, luxury
seating, and 360 degrees sound. Second, Nu Metro offers VIP treatment in its three Cineplexes
in Parkview, Hyde Park, and Bedford. Third, the cinema house has invested in 4DX cinemas
which comprise of moving seats, strobe lights, fans, scent, and spray. Fourth Nu Metro have
purchased world-class sound and digital projection systems. Both Nu Metro and Ster Kinekor
has adopted online ticket selling system to reduce queues. For example, the two cinema houses
have mounted touch screen monitors to make ticket purchasing more convenience to customers.
The changes are meant to make customers experience more lively by giving customers luxury,
accessibility, and comfort (Bratt, 2017).
1.4 How the movie theatre’s Servicescape affects the behaviour of consumers
According to environmental psychologists, people apply approach and avoidance behaviours to
react to an environment. The behaviours are influenced by cognitive, psychological, and
emotional factors.
Positive impact (approach behaviour) of Servicescape on Cinema consumers.
a) Cognitive: the facilities are closer to city centers making it convenient for consumers to
attend. Second, the presence of over ten new screens gives consumers comfort.
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b) Emotional: Presence of big spaces, eye-catching posters, and ordered layout, coherent and
bright decoration triggers consumers’ emotional behaviour (Hooper, 2016, p. 45).
c) Physiological: The facilities have equipped well-furnished waiting space for their
consumers.
Negative impact (avoidance behaviour)
a) Cognitive: Nu Metro only has one store that offers drinks and snacks inside the cinema. The
store is mostly crowded which discourage consumers. Lack of videogame and self-service
machines also affect consumers negatively.
b) Emotional: Nu Metro has Small underground rooms, flawed ground designs, colourless and
dull E-scape, and few posters.
c) Physiological: Nu Metro has only three cells in their toilet area.
Improvement recommendations
• Introduce brighter lighting and brighter decorations,
• Change the design layout,
• Increase more snacks and drink stores,
• Improve the functionality of the website,
• Increase the number of cells in the toilet,
• And, increase the number of posters.
Question 2: How both Nu Metro and Ster Kinekor manages demand
Service products cannot be stored. Both Nu Metro and Ster Kinekor have developed several
strategies to handle services perishability, intangibility and market demand. First, Cinema houses
have developed several tangibility aspects in their theatre rooms. The physical environment has
been upgraded and remodeled to give customers more experience. The facilities have
incorporated video games, comfortable seating, better sound and projection systems. Moreover,
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Nu Metro has launched a loyalty program where subscribers can redeem their points for tangible
gifts such as movie tickets (Mridushmita, 2018).
Second, Cinemas cannot store their inventory, unlike product based companies. For example, a
theatre that is only full three days a week cannot realize its full potential. Therefore. Nu Metro
has launched a new pricing method to help in shifting demand. For instance, tickets for Tuesday
shows are sold at $ 2.50 to attract more customers (Contributor, 2012).
Question 3:
3.1. Customer service quality dimensions
Tangibles: Customers perceive service quality by evaluating the physical aspects associated with
movie theatre services. Tangibility is satisfied through physical facilities, communication
materials, and equipment.
 Reliability: Movie theaters focus on delivering promise and promise. Reliability is based
on service provision, delivery, pricing, and problem resolution.
 Responsiveness: The Nu Metro and Ster Kinekor have created customer service sites and
FAQ to handle customer problems, complaints and questions. The services have been
customized to meet customer needs.
 Assurance: Movie theaters have created confidence and trust to enhance customer loyalty
and completive advantage.
 Empathy: The use of dynamic pricing and service provision ensure that services have
been individualized to meet the specific needs of customers (Bratt, 2017).
3.2. Controllable elements that movie theatres use
The controllable elements are also known as the marketing mix such as product, price,
promotion, place, and physical evidence. Nu Metro Movie theatre use controllable elements to
attract customers as shown below.
a) Product: The Company has invested in advanced technology to provide exclusive
services to the customers. Nu Metro also operates single, double and multiples screens to
offer luxurious experience.
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b) Place: There are over 10 cinemas across South Africa that offer Nu Metro services. Nu
Metro is planning to open more cinemas to meet services closer to the customers.
c) Price: Nu Metro applies dynamic pricing strategy to increase its sales volume and
profitability level.
d) Promotion: Nu Metro uses posters and social media platforms to create a positive brand
awareness about its products.
e) Physical evidence: Nu Metro has acquired premium format cinema which includes dining
option, luxury seating, 360 degrees sound, 4DX cinemas and world-class sound and
digital projection systems to increase customer experience.
References List
BizCommunity, 2018. Nu Metro to introduce two new Xtreme theatres. [Online]
Available at: https://www.bizcommunity.com/Article/196/482/178830.html
Bratt, M., 2017. More than just a movie, it’s a cinema experience. [Online]
Available at: https://themediaonline.co.za/2017/04/more-than-just-a-movie-its-a-cinema-experience/
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Contributor, 2012. SA cinemas go digital. [Online]
Available at: https://www.screenafrica.com/2012/09/17/film/sa-cinemas-go-digital/
Hoffman, K. D., 2010. Services Marketing: Concepts, Strategies, & Cases. New York: Cengage Learning.
Hooper, M. J., 2016. The Global Business Handbook: The Eight Dimensions of International Management.
New York: CRC Press.
Mridushmita, 2018. Servicescape: Meaning, Types, Behaviours, Roles & Approaches | Service Marketing.
[Online]
Available at: http://www.businessmanagementideas.com/marketing/servicescape/servicescape-meaning-types-
behaviours-roles-approaches-service-marketing/17673
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