Question

Topic: Customer Behavior

Free Movie Coupons

Posted by Anonymous on 6/20/2005 at 11:58 AM ET 250 Points
In Mexico we want to make a promotions to give coupons valid for cinema tickets, Example: Buy $60 in some product and you receive at the moment 1 coupon valid for a cinema ticket for all movies in many cinemas.
CAN YOU GIVE ME YOUR ESTIMATE REDEMPTION RATE OF THIS TYPE OF PROMOTIONS
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RESPONSES

  • Posted by michael on 6/20/2005 at 12:15 PM Accepted
    Somewhere between 10 and 70%. Seriously it depends on the market. If you gave the coupon for $60 (pesos?) grocery purchases you'll have high redemption rate.

    If you gave it for $60 in restaurant purchases (but only at four star restaurants) you'll get a very low rate.

    The goal is to get people to come who would not come normally....not discount what you're already getting.

    You're looking for a market where a night at the movies is a big deal....normally lower-middle class families.

    Michael
  • Posted by Chris Blackman on 6/23/2005 at 3:53 AM Accepted
    I've been in the cinema business and can tell you the redemption rates vary dramatically from one offer to another.

    Redemption rates depend on:

  • When the coupon is issued (what else is going on at that time?)


  • How long the coupon is valid (1 month. one year, whatever)


  • The value of the movie voucher to the person who gets it (if a movie ticket is a significant purchase, they are more likely to use it. If it only costs $2 to go to the movies in Mexico, maybe a lot will be tossed away)


  • Where you issue the voucher versus where it can be redeemed. If it's redeemable next door, the redemption rate will be higher than if I have to drive through six suburbs to get to the movie theatre.


    • Redemption rates can be as low as 5% if the offer is perceived as unimportant by the (untargeted) audience. At the other end of the scale, it may be as high as 70%, although that would be rare. Typically you would expect around 25-30%.

    Only one way to be sure: Try it out for a limited period with a movie ticket that has limited validity - say valid for just two or three months. Then get the redemption reports back from the cinema and modify the offer, assuming the offer made your sales improve enough to make it worthwhile for you.

    If you need to take all possible risk out of the system, just build the full price you have to pay into every purchase.

    Remember you should be getting a bulk purchase price for the vouchers, not paying full retail for a seat. The cinema makes more money from the candy bar as it does from selling tickets, and in many cases they only pay a percentage of the ticket price as the royalty for the movie screened. So if the are paying a 30% royalty, their incremental cost on a $10 ticket is $3. They can afford to sell you the seats cheaply, because their cost is low and any incremental sales results in more revenue at very high margin through their other concessions, e.g. Coke and PopCorn!

    Hope this helps.

    ChrisB

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