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Circus Industry in 80s

Major part of circus was dominated by Ringling Bros. and Barnum & Bailey Three-ring circus Shows were only tweaked versions of previous acts with little/no new content Slow and declining industry growth
Decreasing interest among audiences Emergence of TV, movies as substitutes

Rising cost of production

Rising labor costs (cost of hiring performers & animal trainers) Shortage of open spaces (open spaces taken up for sports/civic events)

Increased concerns from animal rights activists Aisle concession sales

Circus Industry in 80s

Threat of New comers
North American market was dominated by Ringling Bros, Bernum and Bailey Product Differentiation Low Switching cost

Supplier Power
Competition for popular acts increased supplier (animal trainers, famous performers) power, costs

Competitive Rivalry
Two Big American families had more than a century of circus tradition (Cost of exit, Equal size, similar strategies) Most of the circuses offered more or less the same content with little innovation and competed in a red ocean

Buyer Power
Audience had a wide range of entertainment to choose from. Audience faced little switching cost.

Audience had a variety of substitutes to choose from like: 1. Movies 2. Theatre 3. Opera 4. Video games etc

Factors of Differentiation in Traditional Circus

Tweaking the existing acts Hiring famous clowns Thrilling and dangerous stunts Equestrian/Animal acts Some moved from tents to permanent arenas to cut costs and so that show can run in winter Likes Dislikes
Family Event Less focus on commercialization More emphasis on artistry Fun and Thrill

No innovation 3-Ring Circus Unethical use of animals Death defying stunts that people did not really appreciate Lack of theme Ordinary venues Concession sales

Distinctive Features of Cirque

Dangerous stunts Concession sales

Increased value Eliminate

Star performers Animal shows Three ring circus Free tickets Reduced costs by eliminating unwanted elements Higher customer satisfaction leading to greater revenue Delivery of creativity/innovation through a scalable model

Theme Multiple productions Original Score and dance Permanent/Resident shows

Unique Venue Intellectual component Refined environment

Value Curve

Traditional Circus Opera Cirque du Soleil

Strategy : Products
Touring shows (traditional business)
Colorful big tops & arena shows Lifecycle strategy with tours in various continents for many years

Resident shows (Partnering with organizations to share production costs)

Shows at Vegas, Orlando

Other products
Merchandise sales (10% revenue) Documentaries, DVDs of shows, TV shows Movies

Strategy : Products (cont..)

Pursue dual goals of artistry and profit Exclusivity (Clowns, yes. Clones, no) Organization as the heart of Cirques creative process - not a particular group of individuals.
Rotation of stage directors

None of the activities outsourced (unwilling to compromise on quality or artistic integrity)

Strategy : Performance & Profitability

Eliminating high cost elements
Animals Star performers

Increase buyer value by offering Theme Based shows More importance on innovation and creativity Blue ocean strategy of creating new market by partnering with resorts and theme parks Improving circus industry by attracting corporate clients and adults Multiple productions - giving people reason to visit CDS more often

Strategy : Performance & Profitability (Cont..)

Sharing production costs with partners Rotation of stage directors Re-investing in business to support innovation Organization Structure based on independent creative cells ensuring increased accountability and scalability

Challenges to Growth and Diversification

Cannibalization of its shows due to increased no. of shows (e.g. 8 shows at Vegas) Brand dilution by moving away from big tops to arenas and theatres Risks in choosing the right partner Diversification beyond gambling or existing destination cities Saturation in US market that still drives majority of revenue.

Factors Influencing Structure of Industry

Innovation & creativity
Ability to garner larger market share (Blue Ocean strategy)

Advent of newer technologies

Advent of newer technologies could act as formidable substitutes. E.g. 3D movies

Environment policies
usage of materials used for the shows

Creating local content suiting the local audience as the industry grows to other geographies (e.g. tailored content for middle east)