A woman in tech leadership and a dynamic powerhouse, Ms. Vijeta Soni is the Co-Founder & CEO of Sciative Solutions. She is an alumnus of the prestigious IIM Bangalore and the University of Houston, Texas, USA. Vijeta is a proud member of Goldman Sachs 10K Women Entrepreneurs and an exceptional leader with over 16 years of experience in digital transformation, technology adoption, and client relations across retail, ecommerce, manufacturing, and education sectors. She has played a pivotal role in driving some of the large-scale projects in India and has worked with industry giants like Overstock.com (USA), Reliance Industries Ltd., Jio Institute etc.
In today’s competitive market, companies face several operational dilemmas while trying to meet their customers’ demands. One way to cope with such issues is the implementation of successful revenue management strategies. Dynamic pricing is common in many capacity-constrained industries such as airlines, hotels, travel and can be effective for companies that are facing unpredictable market demand and high fixed costs. At a time when the movie theatre industry is attempting a revival after having suffered a year of financial losses from the pandemic, highly flexible costs on products and services taking into account competitor rates, supply and demand could be the way forward.
When we look at the challenges being faced by cinemas today, changing consumer behaviour and the advent of online streaming services have led to attendance loss from young audiences in many cinemas. With cinemas now opening, attractive prices in bundles can help bring in the audiences again. Coming to optimizing pricing strategy for high demand times as opposed to low demand times, generally weekends and evenings end up attracting more movie goers than weekdays and mid-day. By adjusting dynamic pricing, the demand can be shifted to off times, and revenue can be increased at peak times.
Understanding the audience’s preferences to know the critical price points for movie tickets is where the answer lies for exhibitors. Everyone knows that if tickets are priced too high, the cinema risks poor attendance in theatres; conversely, if the ticket is priced too low, it might not even be able to cover the costs. With the right pricing strategy, cinemas can hence:
- Leverage the price insensitivity of solvent and spontaneous customers for high-demand movies, and increase the overall revenue
- Devices strategy for offering attractive prices at off-peak times, to shift demand and aid in the reduction of the impact of fixed costs at those times
- Enhance online sales via special discounts and collect more customer behaviour information, to get better planning security and increased cost-reduction
Thus with the help of dynamic pricing, analysis can be conducted of historical data which would result in continuous price optimization per ticket, per person per region and automatic ticket pricing, which would include forecasting and price recommendations.
With the right price optimization strategies, cinemas typically see results such as
- 5%-15% increase in attendance during off-peak times
- 5% – 10% increment in the overall revenue
- 5% – 10% increase in the share of online sales
With shifting consumer behaviour, cinemas today have to adapt to stay in the game. Dynamic pricing will give a customer the ability to purchase and get abroader range of prices, depending on variables such as movie life cycle, time of day, day of the week, venue, size of screens, film title, amenities, etc. where the number of seats in every price category for each film can be based on the demand conditions at the time of purchase. Analyzing internal and external factors that influence the demand for moviegoers can provide a comfortable situation for setting prices that reflect a customer’s willingness to pay. Thus, price optimization gives a competitive advantage to cinemas rather than posing a challenge.