Analyzing Consumer Behavior and the Future of the Cinema Industry

This essay delves into the evolving landscape of the cinema industry, particularly focusing on how changing consumer behaviors, influenced by streaming services like Netflix and Amazon Prime, are impacting traditional movie theaters. It examines the reasons behind the shift in customer preferences, including on-demand video availability, the appeal of movie sequels and dramas, high-quality filmmaking by streaming platforms, innovative customer experiences, and affordable subscription charges. The essay analyzes the application of the Hierarchy of Effects model as a marketing strategy for cinema organizations, such as Cine Star, to attract customers. Furthermore, it explores how demographic and psychographic factors influence demand for the cinema experience and how cinemas can identify and cater to customer needs through segmentation. The essay also discusses the use of information to shape future market strategies and the importance of a two-step communication process within the cinema industry.

Running Head: Understanding Consumer Behaviour
Understanding Consumer Behavior
Essay
System04104
1/15/2019

Understanding Consumer Behaviour
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Table of Contents
Introduction...........................................................................................................................................2
1(a) Reasons behind changing behaviour of Customers........................................................................2
1. Streaming Videos on Demand...............................................................................................2
2. Sequel of movies and Dramas entertain Customers more than anything.............................3
3. High-quality film-making with best filmmakers.....................................................................3
4. Innovative Ideas for Enhancing Customer Experiences and Diversity in Programming.........3
5. Fewer subscription charges and monthly rental....................................................................3
1(b) Hierarchy of effects model and how it assists a Cinema organisation............................................4
1. How Hierarchy Effect model Assist a Cinema Organisation?.................................................5
2 (a) How Consumer’s demographic and Psychographics effect the demand for the cinema
experience.............................................................................................................................................6
2 (b) How cinema organisation might identify the needs of its customers............................................7
3. How information can be used to influence the organisation’s future market strategy.................8
4. Two-step communication process and its importance in the cinema industry............................10
References...........................................................................................................................................13

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Introduction
Cinemas have a crucial place in the "experience economy" but cinema could not be
responsible for the first run of all releases. Although, Cinema provides the latest movies as its
first run on the screen and entertains people by providing them with their choice of movies.
This report analyses how Netflix and Amazon Prime bring changes in customer choice in
form of movies and dramas. Now, customers are giving more preference for watching Netflix
and Amazon prime rather than watching movies in the cinema. The rising of Netflix and
Amazon prime and changing behaviour of customers create problems for Cinema companies
and they are struggling to attract customers towards the theatre (Matrix, 2014). Although
there are numbers of cinema houses running in Mauritius, the decreasing number of
customers is the real problem for these cinema companies, which they are facing because of
online streaming of the same movie on the same day on mobile and computers' screens. This
report includes the examples of Cine Star Company that is one of the best cinema companies
in Mauritius and running in more than 90 cinema house complex, but they are still facing the
same problem.
1(a) Reasons behind changing behaviour of Customers
Cinema is one of the most common entertainments to all types and segment of people.
However, the place where they prefer to watch the movie generally depends on the
affordability of people. In recent days, the people perception about cinema is changing
because of some online streaming channels like Netflix and Amazon Prime (Rogers, 2013).
There are five key reasons why people are moving towards the Netflix and Amazon and not
going in cinemas. The five key reasons behind the changing behaviour of customers towards
the Cinema Companies are as follow.
1. Streaming Videos on Demand
The digital channels like Amazon Prime and Netflix provide videos, Dramas, and movies on
demand of customer despite the matter of time and place. People can watch any movie or
serial by just clicking on the link after once they subscribe to the channel by paying their
monthly rental charge. This feature of digital channels makes them different from the cinema
houses. People usually prefer to comfortability when they are watching the movie, and
Netflix and Amazon prime provide such facilities, which offers their customer to link the

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device with their TV and watch the latest movies and serials in their bedrooms at their homes.
The on-demand movies facilities make a difference between today's cinema houses and
digital platform like Netflix (McCabe, 2012).
2. Sequel of movies and Dramas entertain Customers more than anything
Netflix and Amazon prime currently focus on streaming latest movies and serials that are
based on sequels. These long-lasting serials and dramas on these digital platforms able to
connect the people with these channels for a long time of period. These channels are working
on a long form of storytelling that attracts customers towards the serials and dramas and keep
them attached and interested about the particular movies or serials that have a long story or
many sequels. People would not want to miss even a single episode of a particular drama or
serial that is streaming digital platforms.
3. High-quality film-making with best filmmakers
Netflix, Amazon Prime, Vivo etc. are some of the major players in the digital age of watching
movies and give strong competition to Cinema companies such as Cine Star, PVR, Inox,
Cinepolis, etc. Netflix and Amazon launch produce their own serials and dramas and
streaming it in their own channels only. It is also considered that they produce high quality of
movies and drama with hiring best movies makers and best actors of the world (Freedman,
2012). These companies are facing strong competition from these channels and even though
trying new experiments and giving a unique experience to their customers in form of picture
quality and new experiences by offering new products in form of comfortability, food
delivery within the theatre, but they fail to attract customers (Belton, 2014).
4. Innovative Ideas for Enhancing Customer Experiences and Diversity in
Programming
Digital channels focus on to provide a new experience to its viewers. Netflix and Amazon
provide the facility that they can connect their Netflix device with their TV screen give them
same feelings of Theatre. The high-quality videos provide a quality experience to the users on
their TV screen or on their computer screen within their home at very less cost. These
features of digital TV channels make them different from Cinema companies (Baschiera. and
Caoduro, 2015).
5. Fewer subscription charges and monthly rental
Streaming and Videos on demand has ensured that the audience does not need any additional
device in their home rather than they only need an internet connection and a screen on which

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they watch the movie. The most important thing is the amount of subscription fee of these
digital channels, which is less than the cost of a DVD or Cinema ticket. Thus, the matter is
why people are not running for digital platforms if they get their favourite movies and videos
on digital platforms. Although, now these channels are also releasing the movie on their
channel at the first time and prevent the local theatre to release the same movie on Cinema
houses because they backed the movie financially (Blake, 2017).
1(b) Hierarchy of effects model and how it assists a Cinema
organisation
Hierarchy of effects model is one of the popular advertising models, which is related to how
advertising influences a consumer's decision to purchase or not purchase a product or
services. This model was created by Robert J Lavidge and Gray A Steiner in 1961 that
represents the different consumer buying behaviour via six steps of Hierarchy of effects
model (Wijaya, 2015). The hierarchy of effect model assists the advertiser to make an
advertisement in such a way that the customer goes through all the six stages of the hierarchy
model of advertising. It can also be said that Hierarchy effect model is an advanced
advertisement strategy that focuses on the sale of good through well-developed and
persuasive advertisement message designed to build brand awareness over time by
influencing customers and their purchasing behaviour (Castronovo and Huang, 2012). These
six stages are shown in the figure.

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Fig.1 Hierarchy of Effect Model (Source: Olin Business School, 2018)
1. How Hierarchy Effect model Assist a Cinema Organisation?
Most of the cinema companies in Mauritius running shows of Indian movies and Hollywood
movies, but now the problem are that these type movies are easily available on digital
platforms. Thus, people avoid going to cinema theatres rather than they prefer watching the
movie within their own home. The Hierarchy model can help these cinema companies to
attract them towards the cinema house rather than watching movies on a small screen in their
homes. Cine Star, which is one of the large Cinema companies of Mauritius, is facing the
same problem. But implementation of ‘Hierarchy of Effect model' can help the organisation
in such scenario by communicating a message to the movie viewers that how they provide a
different experience to their customers that Netflix and Amazon Prime could never provide
on small screens like mobile, computers, or TV (Elsaesser, 2013). These six steps can be
utilised as a means of advertising strategy to influence the customer’s preference and attract
them towards the Cinema theatres.
1. Awareness: Cine Star which is one of the famous cinema companies in Mauritius can
spread awareness among their customers that what they provide to their customers in
terms of Picture quality (latest definition pictures), their plans, offers, and
comfortability to the viewers in terms of online ticket booking and heavy discount on
first day first show etc.
2. Knowledge: Cine Star can provide knowledge to their customers about their
upcoming shows. Moreover, they can also attract the viewers in the theatre by giving
them information on their mail and mobile numbers. They can also connect the
customers between the running shows or movies in theatres in the interval time.
3. Liking: Today people more prefer short movies and serials. The company should
analyse the likings of customer that which type of movies and dramas they like to
watch and then release those shows on their favourable time (Jenner, 2016).
4. Preference: If company keep the customer’s preference in the mind and provide the
show timings according to their schedule such as provide kid shows in afternoon
shows, set the timing of movie show according to the segmentation of their
customers.

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5. Conviction: This is the stage where doubt of customer whether to watch a movie in
Cinema or not has been converted into action. Cine Star can show the videos of their
service quality that how it provide best quality chairs and recline within the theatre
and how the picture and sound quality of the theatre are more attractive than the
digital platform (Huffer, 2012). The live experience of such things can be advertised
by the company on You-tube and other social media platforms such as on Facebook
and Twitter.
6. Purchase: This is the last stage of the consumer buying cycle, thus the Company
should focus on to ensure that customer will not face any difficulties while booking a
movie ticket or they should not have to face any problems regarding seat
arrangements or feeling uncomfortable during watching a movie.
If a customer is not satisfied at the first time, will not visit again for watching the movie
in the same theatre. Thus, better service is necessary to increase the customer loyalty,
because a satisfied customer not only remains loyal to the business rather he/she suggest
some other people about the same thing what customer experienced in first purchasing
instance.
2 (a) How Consumer’s demographic and Psychographics effect the
demand for the cinema experience
The present situation of Cinema Companies in Mauritius shows how Netflix and Amazon
Prime are dominating on Cinemas houses in recent days. When these digital TV channels
providing best quality movies and drama on the small screen by charging very small monthly
rental charge to their customers, it is a big question that how cinemas companies can attract
their customers and what makes them different to these new rivals in Cinema Industry. In
Mauritius, the Cinema exhibition sector is characterised by both an increase in supply and
increasing the number of multiplexes (Choi, 2015). An appropriate way of identifying the
needs of customers and provide the services according to their need and preferences needs
customers segmentation. The heavy competition and expansion of multiplexes force the
Cinema organisations to analyse the customer needs according to marketing perspectives,
considering the demographics and psychographics of customers and according to their needs.
The managers of Cinema complexes can play a crucial role, can identify their potential
customers, and can decide which group of customers are their primary customers, or which

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group of customers are their target markets (Teece, 2010). The Cine Star cinema can segment
their consumers on a psychographic and demographic basis.
1. Demographic Segmentation: The demographic segments contains three factors of
consumers i.e. life-cycle stage, gender, and income. Consumer’s demands are
changing with the increasing age. For example, people who are in age from 15 to 45
are more tend to watch movies in theatre rather than people who are more than 50
years old (Weinel, and Cunningham, 2015). Young people are more addicted to
watching movies in cinemas rather than old people. Although, the major problem is
that these group of people are also using digital platform for watching the movie and
for their entertainment. Gender is also considerable in demographic segmentation
where female prefers to go Cinema more than 5% higher than 48% of males (Jenner,
2017). Income and social-economic groups are other factors that affect the consumer
attitudes of watching a movie in Cinema houses. The management of Cine Star can
set the show in such a way that suits the needs of customers and they can be targeted
easily for the service they want to avail on their own time.
2. Psychographic Segmentation: Lifestyle of people belongs to psychographic
segmentation, which relates to consumption of Cinema and various films, including
two factors. The first factor is that most of the people may prefer watching movies in
multiplexes rather than on their TV. For example, in Mauritius, more than 9% of
people prefer to watch movies in their leisure times as their leisure activity
(McCulloch and Crisp, 2016). The other reason behind this is hobby, memory, and
education. As an example, we can consider fans of Harry Potter books could become
Harry Potter movie viewers. Apart from this manager can also divide their customers
on behaviour segmentation where Cine Star can identify the behaviour pattern of their
customers, their preferences and liking that what they prefer to watch.
2 (b) How cinema organisation might identify the needs of its
customers
In the era of digitalization, most of the movies and serials are running on Netflix and Amazon
Prime as a first show rather than on Cinema. Thus, customers of cinema are shifting movie
theatres to digital channels because now they make their own movie and release it on their
own channel. Thus, identifying the needs of customers and attract them towards the cinema
company is a crucial thing for Cine Star company. In last year there was a film named

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‘Mudbound', which was based on the 1940s, Mississippi, has been nominated for four Oscars,
including ‘Best Supporting Actress’ and ‘Best Adapted Screenplay’ award. But it was never
be seen by the local multiplex because it was backed by Netflix and released on the Netflix
streaming service rather than in Cinemas (McGrath, 2010). Although, Cinema companies
tend to be responsible for supporting the best and high-quality feature films by removing the
role of intermediates for theatrical distribution.
To increase the number of customers it is essential for Cine Star to focus on the needs of
customers that what they want and how Company can full fill their requirements. Normally
needs of customers based on customers’ age, their language, their preference, and life-stage
profile of the viewer, and it helps the company to identify their needs. Another need of
customer is that they want comfortable facilities such as booking tickets, comfortably in the
seating arrangement, better sound quality, and audio etc. The Cine Star Company can identify
these needs by conducting a public survey and ask them about their needs (Venkatasawmy,
2011). Apart from these the scale of cinema planned in how many multiplexes is another
need of customer (10-Screen multiplexor 2-Screen independent). It is considered for Cine
Star what other competitors provides to their customers for their residents because people
may have to wait for their shows. The facilities of utilising leisure time near the cinema house
may attract the customers, because people in their leisure time want to spend time such as
shopping, eating, and drinking. To identify the above needs, Cine Star can conduct a survey
among their customers about their needs and preferences. One of the best ways to identify
these needs of the customer is to conduct a survey that should be conducted during booking
of tickets, which can be online (Sandy, Gosling, and Durant, 2013).
In addition to this, Cine Star can identify the customer needs of their potential customers
through demographic data. The company can also hire market researchers for collecting
psychographic research data and information related to customer needs as a tool for
understanding audiences and their needs what they want from the Cinema Company before,
during, or after watching movies.
3. How information can be used to influence the organisation’s
future market strategy
In the era of digital channels like Netflix and Amazon Prime, it is essential to customise the
Cinemas according to the need of customers and offer them what they want to watch. The

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need for increasing the number of customers in Cinema theatres and multiplexes requires a
well-planned and strategic decision making of Cinema companies. If we consider Cine Star
Company, then they should promote their business through advertising and make aware of
their customers that what they are providing and how the company is different from its
competitors. Creating an image in the mind of customers is essential because this helps in
audience development for a cinema company (Garon, 2013). The hierarchy effect model can
help the company to influence the customer buying behaviour and influence them towards
watching movies in multiplexes rather than watching movies on Netflix or any other digital
channel. Although, the Hierarchy-effect model only prove to be effective when the cinema
company knows about their potential customers and about their needs (Simon, Benghozi, and
Salvador, 2015). The company can further divide them into segments based on their needs,
age, lifecycle stage, economic conditions, and economic conditions. Broadly, these
segmentations can be divided into two types called demographic segmentation and
psychographic segmentation (Gaudreault and Marion, 2015). It is considered that Cine-Star is
one of the big cinema company having a large number of customers, thus company can
divide them into various groups that are children, family groups, young couples, students,
teenagers, and adults etc.
The segmentation of customers can help the company to target the potential customers in
future, and people can easily attract towards watching cinema in multiplexes if they know
that they will enjoy more in cinema rather than watching a movie on a small screen like a TV
or mobile phones. Considering the needs of customers and provide appropriate service to
them should be the main objective of Cine Star if they want to attract customers towards the
cinema houses. It can also considerable that price is not the issue for customers rather they
want maximum entertainment in less time; because people bore with long movies, rather they
focus on short movies and some activities like shopping, playing, and eating while they come
to watch the movie in the multiplexes or any malls. Therefore, the strategy of the company
should suit these requirements of customers. The above-discussed strategies help the Cinema
Company to gain a competitive advantage over its competitors and it also influences the
future marketing strategy of the company. It can help the company to develop audiences and
retain them as loyal customers in future. By identifying needs and enhancing the customer
experience Cine Star, can also add value in the service they provide to the movie viewers
(Pittman and Sheehan, 2015). If the company also provide opportunities to its customers to
develop knowledge and a better understanding of film, customers definitely will come to

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watch a movie in cinema houses and multiplexes rather than watching it on the small screen.
Although it is known by all that people love to watch a movie in multiplexes on the big
screen with quality sounds, if their experience is not good at the first time they will never
come back to the same multiplex or cinema company. Thus, retaining customers is a crucial
thing in the cinema industry. The Cine Star wants to change the audience viewing habits by
influencing by using hierarchy effect model and influence the purchasing behaviour of
customers. To change the habits of customer it is also essential for the company to employ
the audience development strategies that help them to retain existing customers and make
new customers for watching movies in the cinema houses. The study also suggests that
analysis of customer life stage and attitude are the two crucial factors on which company
categorise their audiences than simply using age bands. The segmentation of people helps the
company to appeal different type of people for different types of film. The identification of
appropriate catchment area also helps the company. Therefore, these strategies help the
cinema companies to connect with customers in future as well and retain them as loyal
customers.
4. Two-step communication process and its importance in the
cinema industry
The 'Two-step communication model' was given by Bernard Belson, Hazel Gaudet, and Paul
Lazarsfeld in 1948 that interpersonal communication has a strong effect on shaping the public
opinion than mass media outlets. This theory states that information through media moves in
two different stages. First people who pay close attention to mass media such as TV
advertisements, newspaper advertisements, social media, etc. and receive the message as
information. Further, in the second stage, after interpretation of the message, they pass their
own interpretations to other people whom they were connected in addition to the actual media
content or information (Rawal, 2013).

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Fig. 2 Two-step flow Communication model (Source: University of Twente, 2018)
The people who receive the messages are called opinion leaders and they are quiet influential
in getting people to change their behaviour and attitudes about a particular product, services,
or any particular situation. This two-step communication model helps us to understand how
the mass media influence the decision-making of potential customers and people (Walton-
Pattison, Dombrowski, Presseau, 2018). In the cinema industry, customer opinion plays an
important role in the movie and quality of service that the company provides to its customers.
The cinema company can advertise their new movies on social media such as Facebook,
Twitter, and Instagram, the helps to inform users about the new movie launch in the
multiplexes. The company can advertise their offers and discount on ticket booking (Sathish
and Rajamohan, 2012). These messages can be further spread by the opinion leaders on these
social sites that help to attract potential customers towards the service provided by the cinema
theatre.
The online communication with customers can also help them in their ticket booking and the
instant assistance provided by the company to its customer helps them to create a good image
in the mind of existing customers of the Cinema Company. Apart from this, Cinema
Company can also share their details of screening of movies, place, and timings of shows on
their websites (Pardo, 2013). This helps the customer to get instant knowledge about the
movie shows and their timings. The company can also create their own blog where the
company can sell the tickets of movies, show photos of current movies and upcoming
movies, and ask their audience to vote for their upcoming movies and tell them about their