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The Alamo Drafthouse

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Se Yeon Hwang

on 7 April 2013

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Transcript of The Alamo Drafthouse

The Alamo Drafthouse 1. Marketing analysts use market position maps
to display visually the customers' perceptions
of a firm in relation to its competitors
regarding two attributes. Prepare a market
position map for Alamo Drafthouse using
"food quality" and movie selection" as axes. 2. Use the "Strategic Service Vision" framework to
describe Alamo Drafthouse in terms of target
market segments, service concept, operating
strategy, and service delivery system. Target market segments
1) Region : Austin's residents
2) Demographic
- smart 25~40 year-olds
→ Second-run movies
- 18~30 year-olds predominantly male
→ Cult-movies

Service concept
1) A theater that served food and alcohol
during movie
2) Serving second-run movies
3) Not disturbing the moviegoers

Operating strategy
1) Providing highly pleasing experience;
movies + food + service
2) Long skinny tables with enough space
for undisturbed serving

Service delivery system
1) Waiters that take good training :
They don't speak during the movie and
they kindly explain the rules to the
2) Many waiters
3) Effective facilities
(space and paper communication)
4) Good food service
5) Answering every piece of e-mail personally 3. Identify the service qualifiers, winners, and service
losers for Alamo Drafthouse.
Are the Alamo purchase decision criteria
appropriate for the multiplex movie theater market?
What do you conclude? Service Qualifiers
1) Movie playing selection
2) Food Quality

Service Winners
1) convenience
- Shorten hours and raise satisfaction by
doing two things at the same time
- Unlike most theaters, accommodate
tables where consumers can place their
food and drinks
- Enough space between rows exists so
that personnel can take orders and
serve unobtrusively, and customers can
slip out of the lobby if desired
2) Price
- Keep ticket price low, typically $4.00
3) Adequate location
- Downtown area with floating population

Service Losers
1) The Alamo has just 215 seats, the reason
being that they wanted to leave enough
space in between each seat
2) By showing just second-run features and
cult movies, it is limited to maniacs not
considering all age groups < Alamo purchase decision criteria>

Alamo is located close to the center of downtown nightlife activity and requires only a short walk from one of the main club and restaurant areas. Also, it attracts maniacs who like second-run features and cult-movies. It sells food and drinks including alcohol and its manner of order that makes customers order their food without a single word looks pretty effective. Therefore, it seems like Alamo Drafthouse has appropriate purchase decision criteria 4. Use Porter's Five Forces Model to assess the
strategic position of Alamo Drafthouse in
the "Entertainment industry." Potential New Entrants Large Cinema Companies Movie Theaters Hotels Competitive Rivalry within
Industry AMC Dine-In Theatres Gold Class Cinema Bargaining Power of Customers Exert price pressure Customer's action on Internet Information asymmetry Bargaining Power of Suppliers Movie distributors Building Owner Food Sellers Threat of Substitutes DVD Rooms Downloads Rental Services <Competitive Rivalry within Industry>
AMC Din-In Theatres – Movie theatre with restaurant experiences. Plays current movies
Gold Class Cinema – Premium movie theater with restaurant services. Lastest movie

Although the industry has some competitive rivals, since the Alamo Drafthouse plays second-runs and holds events it would not hurt the customer loyalty much.

<Potential New Entrants>
Large Cinema companies – Combining restaurant services
Hotels – Combining movie services
Movie theaters – combining restaurant services

Many places with large room or provides meal services can enter the industry like above.

<Threat of Substitutes>
DVD Rooms
Rental Services like Netflix

Instead of paying more money, could play the second-run movies cheaper than the Alamo Drafthouse and could enjoy meals if prepared. However since it doesn’t hold events, those places above woudln’t have customer loyalty.

<Bargaining Power of Suppliers>
Movie distributors and film making firms increasing the fees for the film rights
Food sellers increasing the cost for food and drink
Building owner increase the rent

Since the Alamo Drafthouse shows second-run movies, movie distributors wouldn’t care as much as the new films and would fix the payments. If the food materials go up, the rest of other prices would go up as well therefore it won't hurt as much. If the Alamo Drafthouse doesn’t own the building that the theater is placed, they might get some blows.

<Bargaining Power of Customers>
Exert price pressure
Customers’ action on the internet
Information asymmetry

Since the patrons can choose other alternatives by using the information asymmetry, they could exert price pressure and attack it on the internet such as SNS. S W O T < Alamo Drafthouse > By providing some services together, maximize customer's satisfaction

Accommodate tables where consumers can place their food and drinks

With enough space between rows, provide better quality service It needs to show recent movies, not just second-run features and cult-movies It doesn't have enough seats for customers who want to enjoy the movies Outside foods cannot be carried into theaters People's needs to save their time are increasing Ticket prices are expensive Space between rows is not enough Its smaller capacity and high labor costs Its competitors show latest film and accommodate much more people 5. Conduct a SWOT analysis to identify internal
strengths and weaknesses as well as threats
and opportunities in the external environment Alamo Drafthouse is combined with multiple services such as restaurant and movie theater combined History Tim and Carrie Started in Bakersfield, California but failed by picking the wrong place First Alamo Drafthouse open : 1996 in Austin entertainment district Nowadays, they have 24 theaters in the US Sold company in 2004 but back as a CEO of the franchise operations Facility Layout and Delivery System Movie theater that serves an assortment of beer and wine and offers a food menu of appetizers, hot sandwiches, individual pizzas, pasta, and dessert. Waiters take orders, serve the food, and collect the bill before and during a movie showing Traditional movie theater snacks also available and patrons can choose self-service in the lobby for all offerings Unlike most theaters, there are fewer rows so there is enough space between rows to accommodate long skinny tables where customers can place their food and drinks Facility Layout and Delivery System Enough space exists so that personnel can take orders and serve unobtrusively, and customers can lip out to the lobby if desired Before each showing, waitstaff explain how the Alamo's service system works By placing the order into the meal stand, waitstaff who patrol the ends of the aisles check and gets the service wanted Service done with minimum disruption to film viewers Easy to get access due to the close location to the center of downtown nightlife Programming Second-run movie - 25~40-year-olds
- Customers with sophisticated taste Special events
1) Austin Film Society events
2) Cult films
- 18~30-year-olds
- Predominantly male
- Alcohol consumers
- Customers of less mainstream Revenues and Costs Low tickets sales to get patrons to consume food and drinks Ticket price : $4.00 55% of income is on food and 45% of income is on alcohol after the ticket has been purchased Although customers spend more money on food, Alamo's profits are limited by its smaller capacity and high labor costs Advertising and Promotion Advertisements out in the three most read Austin Papers Create three-month calendars that list special events Builds customer loyalty
- Managing Web site
- Answering every piece of e-mail
- Customer conversation
- Feedback from the patrons Q & A
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