Cinema business has been developing in India for over a century, however it has been traditionally based on manual labour and very simplistic processes. However, the entry of the entertainment software leader from New Zealand, Vista Entertainment Solutions, has changed the situation in the market and has initiated a large wave of technology integration into cinema operations (Vista, 2012). The aim of this paper is to explore the success of Vista in the Indian market. Firstly, it analyzes the overall market environment in the cinema business in terms of the opportunities and threats it poses for Vista. Secondly, the paper examined Vista’s market positioning. Lastly, it considers the role of Bigtree Entertainment, the leading ticketing and information solution provider, which is a partner company that controls Vista’s operation in the Indian market and enhances its success (Bigtree, 2012).
1.1 Theory and concepts
The paper is using several theories and concepts in order to help evaluating Vista’s performance in the Indian market. Firstly, it relies on the analysis of the external environment, or the Indian cinema market, thus assessing the opportunities and threats for the company. Secondly, market positioning of Vista in India is presented through the standard marketing mix: product, price, promotion and place. Although this approach gives only the general idea of the market position of Vista, it is nevertheless sufficient for the general analysis of the company positioning. Lastly, the relationships along the value chain are described through the collaborative advantage achieved by Bigtree Entertainment, the company that develops ties with downstream customers, while working together with Vista on the strategic orientation of the Vista software in India.
2. Cinema business environment in India
2.1 Opportunities for Vista
Cinema business has a special place in Indian culture and life. Already in the end of the XIX century, films were a part of the Bombay magic shows. The development of film industry led to the formation of small travelling cinemas, which exist even today (Mittal, 1995, pp.26-27). Along with the development of open-air cinemas, the number of permanent cinema theatres in India has been growing rather steadily since 1960s. Although the overall number of cinemas per capita in India is still significantly lower than in the most developed countries, it is important to note that the average annual attendance rate of Indian cinemas is much higher than that of most developing or developed countries (Mittal, 1995, pp.29-32). This fact suggests the presence of a vast market for cinema development, which is an opportunity for Vista. Additionally, the development of digital media format reduced the cost and time of broadcasting movies, thus fuelling rapid growth of both traditional cinemas and multiplexes, which especially need software solution for operating them. Moreover, Indian economy shows recent trends of liberalization, therefore it should be easier for Vista to operate in the country (Stiglitz and Ocampo 2008, p.154). In particular, more relaxed regulations regarding international currencies made monetary transactions between India and New Zealand simpler. Lastly, English is widely spoken both in New Zealand and India, therefore the absence of language barriers smoothens negotiations and reduces cultural tensions.
The penetration of a new market is always accompanied by numerous threats (Bradley, 2005). It is especially true for the expansion into the markets with different cultural and political characteristics. Thus, India is characterized by high degree of entertainment market regulation, therefore it could be hard for Vista to operate in the market. In particular, Indian government levies a significant entertainment tax on cinema tickets. This tax suppresses industry profitability, thus discouraging new entrants from building new cinemas as well as puts an additional cost pressure on the incumbents, who are forced to reduce costs and to avoid major investments, such as the purchase of Vista software. Furthermore, the cultural differences between India and New Zealand make it much harder to succeed in the Indian market. Cultural factors are, perhaps, even more important in the B2B segment, because Vista does not only have to consider whether their software will add value to the final consumers, who attend cinemas, but also evaluate the compatibility of their software with requirements of the business customers, who own and operate cinemas.
3. Market positioning of Vista
Market positioning in B2B market is, perhaps, even more complex than in B2C. While in B2C business companies seldom interact with their customers directly and the bargaining power of any individual consumer is quite low, in the B2B sector every client usually requires a lot of personal attention and an individual approach. The positioning in the B2B market is seldom based on the emotional criteria, as it is in the B2C market, but on the more objective parameters (Wright, 2004, p.318). That is why full transparency in all elements of the product mix is essential for B2B companies, such as Vista.
The positioning of Vista could be evaluated using the standard marketing mix: product, price, promotion and place (Singh, 2010). Although this tool does not allow considering all the factors necessary for positioning, it provides an opportunity to focus on the four most generic and strategic areas. For the purpose of the paper the customers of Vista are the Indian cinemas; the positioning for both Vista and Bigtree is the same. Before creating a clear positioning marketing mix, it is first necessary to identify the potential market, where Vista should concentrate its marketing efforts. Since the analysis of the cinema market in India has revealed rapid growth in the multiplex segment and considering the fact that the complexity of multiplex operations is much higher than that for traditional cinemas, Vista should target multiplex cinema theatres. However, small cinemas should also be addressed to a certain extent, due to the high potential of small and medium cinema market. Therefore, it should position its market offering taking into consideration its target audience (Blythe and Zimmerman, 2005, p.86).
B2B customers often demand customized products that fit their specific needs (Jobber and Lancaster, 2009). That is why Vista tries to be very flexible and adopts its software to the peculiarities of the Indian market. Thus, their software is designed to consider the strict regulations regarding taxation of the tickets, which makes it compatible with the market requirements. Vista partnership with Bigtree ensures close contact with the market and the possibility to collect feedback for further improvement. Vista engineers spend some time in India working with Bigtree employees on enhancing the software and adopting it to the needs of their business customers in India.
The promotion of Vista products is largely based on personal selling (Jobber and Lancaster, 2009), where Bigtree acts as Vista’s agent in India. Bigtree has developed significant knowledge of the industry and the market in general, that is why it helps Vista to approach numerous cinema theatres in India. Moreover, the company initially targeted primarily multiplex cinemas, since they were easier to approach and to establish relationships. With the help of Bigtree, Vista is starting to look into the market of individual cinemas, which usually requires more extensive market knowledge and direct contact with the owners (New Zealand Trade and Enterprise, 2012).
Price is usually more important in the B2B segment, since B2B customers evaluate products based on their characteristics rather than on emotions, as it has been mentioned above (Jobber and Lancaster, 2009). Moreover, due to relatively high bargaining power of individual buyers and the close personal contact, prices are often negotiated in B2B business. That is why Vista is trying to offer low prices, but without sacrificing their quality. Thus, the possibility to cooperate with Indian company and to use Indian software developers for some of the projects significantly lowers operating and development costs, thus allowing the company to offer low prices without reducing own margins (Roy, 2009). However, Vista does not have to engage in price competition in the market due to its profound market knowledge and long-term relationships with the clients, in particular through Bigtree.
It is hard to define the physical notion of place for software distribution. However, it is possible to suggest that Vista is distributing its products through the intermediary, Bigtree Entertainment. The speed and reliability of delivery and service is very important for business customers (Jobber and Lancaster, 2009), that is why Vista has established their office in India along with the tight cooperation with Bigtree, in order to ensure seamless implementation of Vista technology by their customers and to offer best possible service level.
4. The role of Bigtree in handling relationships
Bigtree Entertainment has shown collaborative advantages by managing close relationships with the downstream cinema/multiplex owners and by jointly developing strategic direction of Vista software with upstream supplier, Vista (Hutt and Speh, 2010). Moreover, it was able to address the needs of a wider business environment by customizing their offering to the local regulatory requirements and current business needs.
Firstly, Bigtree managers were able to identify the opportunity of developing online ticket sale in India and to develop it by involving Vista. The cooperation of the two companies is largely based on mutual trust and long-term relationship building. Bigtree managers bridge the cultural differences between New Zealand and India and reduces Vista’s risk of entering the new market (Brassington and Pettitt, 2006), while Vista provides access to highly sophisticated and successful software. Their relationships have expanded even further with the creation of the www.bookmyshow.co.nz, the only website in New Zealand, where consumers can purchase cinema tickets for multiple cinemas (Anon, 2011).
Managing downstream supply has been the key role of Bigtree Entertainment. They have demonstrated their managerial ability to manage these relationships by penetrating a large portion of the multiplex market and by gaining access to the small individual cinemas. It helps to transform local requirements and the sophisticated negotiation process common for cinema owners into the final contracts with Vista.
Bigtree Entertainment plays an important role in developing relationships with the broad business network in India. Thus, it has connected the owners of cinemas and multiplexes all over India, in order to create an Internet-based booking service for cinema tickets in India. The company also customized their offering as well the Vista’s software to the local regulatory requirements, thus addressing the issue of strict industry control and taxation.
The establishment of Vista in India has been a complex process that was based on a number of interactions. The main success factor of the penetration of the new market was its close cooperation with Bigtree, an Indian software development company. Bigtree has indeed played the central role in the development of cinema software in India. Firstly, they cooperate very closely with Vista in order to create the best possible product for the market and to adopt to the local requirements. Bigtree also work with the downstream customers, who actually purchase the product. In this case, Bigtree has to explore new distribution channel for Vista products and to collect feedback for the Vista developers. Lastly, Bigtree aligns the interests of Vista and other business players by adjusting the software to fulfil local regulatory requirements. Thus, Bigtree controls both the flow of information upstream and the flow of software and support service downstream. The example of this relationship helps to understand how close cooperation in B2B business can both reduce the risk of the new entrants and maximize value creation, thus enhancing the satisfaction of final business customers.
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*The theories used: marketing mix, collaborative advantage theory
*Theories that could be used: PEST analysis of the macro environment of the Indian market, value chain to assess value added on each stage of the service delivery to the final customers, Total Quality Management to evaluate the customer satisfaction and to ensure continuous improvement both of the products delivered and of the processes.