Cds, a closer look

Scott Reina ∙ [email protected]

CIRQUE DU SOLEIL: A CLOSER LOOK

By Scott Reina


Introduction Cirque du Soleil is a powerhouse global brand and a juggernaut within the entertainment industry. Their shows have been attended by upward of 100 million guests in nearly 300 cities all over the globe. The purpose of this paper is not to critique or give outlandish suggestions regarding Cirque du Soleil but to showcase critical thinking skills. Survey analysis only provided insights from an external point of view and much of the data has many possible conclusions.

I will be completing the Masters of Business Administration (MBA) program this December. My goal is to join the Cirque du Soleil team and to be part of the “talent behind the talent.” In addition to having a strong business background, I spent five years performing with Florida State University’s Flying High Circus and have worked as a high and ground rigger for the last two years at the Tallahassee Leon County Civic Center. Beyond these skills, I have a strong passion for the performing arts. Cirque du Soleil would greatly benefit from my passion, analytical skills, and intimate understanding of circus. Both a resume and references are available upon request.


Table of Contents Executive Summary ....................................................................................................................................... 1

Research Overview ....................................................................................................................................... 2

Methodology ................................................................................................................................................. 2

Survey Demographics ................................................................................................................................... 2

Entertainment Motivation ............................................................................................................................ 3

Entertainment Market .................................................................................................................................. 5

Current Business Environment ..................................................................................................................... 7

Why People Have Attended a Cirque du Soleil Show ................................................................................... 9

Disney World and Las Vegas ....................................................................................................................... 10

Core Business .............................................................................................................................................. 12

Repeat Guests ............................................................................................................................................. 13

Lifetime Value of Guests ............................................................................................................................. 16

Expansion .................................................................................................................................................... 18

High End Restaurant/Lounge .................................................................................................................. 18

New Permanent Location ....................................................................................................................... 20

Branding and Competition .......................................................................................................................... 22

Why People Have Not Attended a Cirque du Soleil Show .......................................................................... 24

Recommendations ...................................................................................................................................... 27


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Executive Summary The current business environment for Cirque du Soleil appears to be very different from the surroundings that paved the way for much of the past company success. Guests that have attended a Cirque du Soleil show, on average, earn and spend more money on entertainment; however, Cirque du Soleil’s guests report that they have decreased their spending on entertainment more than their counterparts due to the recent recession. In addition, other external factors may pose a potential risk to Cirque du Soleil, such as the possibility of a second recession or direct competitors imitating the Cirque du Soleil business model. Cirque du Soleil’s CEO and founder, Guy Laliberté said, “We’ve gone through three recessions in Cirque history, and they were all growth periods for us.” To continue the pattern of recession growth Cirque du Soleil needs to focus on several key areas. Two of those areas include the 30 year old age segment and people who are motivated by thrill seeking when pursuing entertainment.

Thrill seekers represent the largest group of repeat guests to attend a Cirque du Soleil show, an important statistic considering there are numerous substitutes and competitors for Cirque du Soleil. The largest age group to identify themselves as thrill seekers is 30 year olds. Coincidentally, this is also the largest age group to visit Las Vegas. Utilizing deal-of-the-day coupons should prove to be an effective tool to attract 30 year olds to attend their first Cirque du Soleil show. The 30 year old segment tends to be more familiar with the technology associated with the coupons and represents a group that would more readily use the coupon specifically for a Cirque du Soleil show.

The survey also indicates that more repeat guests have attended a permanent show as opposed to a traveling show. For expansion, guests identified New Orleans as a city that would have a strong potential for success to house a new permanent Cirque du Soleil show. In addition, there are other avenues for company expansion such as a greater presence in the high-end restaurant or lounge business. Expanding into a completely new market would require a great deal of planning to achieve a strategic fit of Cirque du Soleil’s core values but guests who have attended a show indicate a strong desire to frequent such a restaurant or lounge.

Upon departure, a quarter of the survey respondents could not remember the name of the show they had seen. Thus, branding, as a facet of marketing, seems to be a very important tool that could be further utilized. Guests of a traveling show have a stronger tendency to be unable to recall the name of the show attended. Furthermore, inability to remember the name of the show is characteristic of guests who never return to see another Cirque du Soleil performance. An equally important issue to address is why the potential guest did not attend a show in the first place. The data suggests the most common reason a person has not attended a show is an innate misconception of Cirque du Soleil. Understanding guests’ motivations and attitudes are crucial to formulating an effective marketing strategy.


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Research Overview Cirque du Soleil (CDS) is beginning to encounter direct competition in regards to their business model, a sign of the maturity stage of the product life cycle. In the maturity stage, it becomes increasingly difficult to grow sales. Thus, a lifestyle study of current and potential guests is crucial. Furthermore, the development of a guest retention strategy is needed. Identifying key consumer groups and assessing their attitudes and behaviors can help re-position and brand Cirque du Soleil in an even more attractive way in order to gain the largest possible market share.

In order to better understand the trends of both current and future Cirque du Soleil guests a cross-sectional, descriptive study was utilized. Data collection was completed via survey. The survey was completed by 514 different individuals from all over the United States.

Methodology Due to personal financial limitations, a non-probability sample was used for the survey. The primary method of survey distribution was snowballing through email. One of the disadvantages of snowballing is that extrapolating population preferences from the sample results has some inherent risk. The survey population is 211,750,000, which represents a rough approximation of the United States’ population aged 25 and above. Based on a sample size of 514 and a confidence level of 95% the confidence interval for the survey is 4.32%. Survey construction was completed using the web-based software program Qualtrics.

Survey Demographics Prior to analyzing the results of the survey, it is crucial to understand the survey demographics. It is important to note that the two questions pertaining to income were optional and all of the other survey questions were required. Several of the demographic categories are more represented than others, but this is to be expected for any survey; according to Dr. William Smith of San José State University, “More educated and more affluent people are more likely to participate in surveys than less educated and less affluent people, women are more likely to participate than men, and white people are more likely to participate than non-white people.” Below are the survey demographics:

Gender Age Marital Status

Answer Response % Answer Response % Answer Response % Male 176 34% 20's 128 25% Single 159 31%

Female 338 66% 30's 123 24% Married 305 59% Total 514 100% 40's 81 16% Separated 4 1%

50's 122 24% Divorced 41 8% 60's 51 10% Widowed 5 1% 70's + 9 2% Total 514 100% Total 514 100%


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Individual Income Total Household Income

Answer Response % Answer Response % < $30,000 87 23% < $30,000 41 11%

$30,000-$39,000 45 12% $30,000-$39,000 24 7% $40,000-$49,000 56 15% $40,000-$49,000 31 9% $50,000-$59,000 39 10% $50,000-$59,000 23 6% $60,000-$69,000 39 10% $60,000-$69,000 28 8% $70,000-$79,000 20 5% $70,000-$79,000 22 6% $80,000-$89,000 15 4% $80,000-$89,000 26 7% $90,000-$99,000 14 4% $90,000-$99,000 18 5%

$100,000-150,000 36 10% $100,000-$150,000 82 23% $150,000 & above 27 10% $150,000 & above 68 19%

Total 378 100% Total 363 100%

Race Answer Response % White 445 87%

African American 16 3% Hispanic 41 8%

Asian or Pacific Islander 9 2% Native American 3 1%

Total 514 100%

State of Residence

32 of the 50 states were represented in the survey. Florida received the largest representation carrying 66% of total survey responses.

Entertainment Motivation Beyond simple demographic data a better understanding of motivations for entertainment is helpful when uncovering the reasons an individual has attended a Cirque du Soleil show. In attempt to capture entertainment motivation quantitatively, the survey asked the respondent to pick one of three options as their primary motivation for entertainment. These motivation options were previously identified by researcher Jason Sit of the University of Southern Queensland. Sit utilized three primary categories for entertainment motivation in his study. Below are the three motivation options with a simple definition which were provided in this survey.


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Figure 1

Thrill Seeking Socializing Escapism

• To have fun • To have excitement • To be amused • To have a great time

• To be with people who are interested in the same things as you

• To be with people who enjoy the same things as you

• To give your mind a rest

• To reduce stress • To get away from

daily duties

Survey Responses for Entertainment Motivation

Figure 2

Entertainment Motivation Response % Escapism 182 35%

Socializing 171 33% Thrill Seeking 161 31%

The survey responses for entertainment motivation were split relatively evenly among the three options. However, when comparing the motivations for entertainment to Cirque du Soleil show attendance, a trend becomes apparent. The biggest entertainment motivation to attend a show is escapism. This trend would make sense as Cirque du Soleil works hard to develop a unique, chimeric atmosphere for each show.

Figure 3

30%

32%

34%

36%

38%

Attended CDS Show

Not Attended CDS Show

Entertainment Motivation

Escapism

Socializing

Thrill Seeking


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Figure 4 breaks down entertainment motivation by age, and Figure 5 shows the dominant motivation in each age segment. It is important to note that the 30’s age segment displays the highest overall representation for thrill seeking.

Figure 4

Figure 5

Age Dominant Motivation for Entertainment 20’s Socializing 30’s Escapism, but the highest segment for Thrill Seeking 40’s Escapism 50’s Escapism

60’s and Above Socializing

Based on the above figures, the 30’s age segment appears to be of importance. Escapism, the highest entertainment motivation category of an individual that has attended a Cirque du Soleil show, decreases by age starting with this segment. While socializing, the highest entertainment motivation category of an individual that has not attended a Cirque du Soleil show increases by age—also starting at the 30’s age segment. Understanding motivation for entertainment could prove to be very useful when formulating a marketing strategy for Cirque du Soleil.

Entertainment Market In the broadest of terms, Cirque du Soleil competes in what can be described as the “adults who go out” market. To better understand the competition within this market the survey asked the respondent, “Which event do you prefer for entertainment purposes?” The figure below shows the responses from this question.

20%

25%

30%

35%

40%

45%

20's 30's 40's 50's 60's & Above

Age


Escapism

Socializing

Thrill Seeking


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Figure 6

Entertainment Event Response % Sporting Event 199 39%

Theatre Performance 143 28% Music Concert 100 19% Comedy Show 50 10% Magic Show 10 2% Symphony 10 2%

Opera 2 0% Total 514 100%

Figure 7

Based on figures 6 and 7, attending a sporting event was the most popular category for entertainment events and has the largest negative difference with respect to Cirque du Soleil attendance. Certainly, large growth potential for Cirque du Soleil lies within the sporting event category. This data supports the decision Cirque du Soleil made to throw out the first pitch at the Kansas City Royals-San Diego Padres game on June 27th and the Tampa Bay Rays-Boston Red Sox game on July 17th. Beyond the positive publicity for Cirque du Soleil, the unique and memorable first pitch ceremonies should prove to be a successful marketing tool to reach a large untapped demographic.

Below, figure 8 displays entertainment motivation for the four most popular event choices from the survey.

-10%

0%

10%

20%

30%

40%

50%

Entertainment Event

Attended CDS show

Not attended CDS show

Difference (Attended-Not attended)


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Figure 8

Sporting events have the lowest percentage of patrons seeking escapism for entertainment. Thus, it appears other entertainment events may host individuals with a higher predisposition to attend a Cirque du Soleil show based on entertainment motivation. Individuals from these other events may be more readily persuaded to attend a Cirque du Soleil show. More thrill seekers attend concerts which, as the paper later discusses, are a very important segment for Cirque du Soleil. With this in mind, perhaps Cirque du Soleil could partner with various musicians to provide additional entertainment to concert guests in a similar manner to the baseball first pitch ceremonies. An ideal musician to partner with could be Elton John, given that Cirque du Soleil has previously worked with him in composing the original music score for the new Cirque du Soleil show, Zarkana.

Current Business Environment The downturn of the economy has adversely impacted the spending trends of Americans. Looking at the Bloomberg Consumer Confidence Index helps put the American sentiment in context. The most recent number released as of 8/25/2011 is -47, which is down from the number of -44 a year ago. The current index number appears to have stabilized near the record low of -54 dating back to January 2009. The index uses a scale of -100 to +100 and measures people’s willingness to spend. Generally, a low number suggests a contracting economy due to the decline in individual spending. In addition, economists surveyed by CNNMoney are raising their recession risk estimates. In August, the CNNMoney survey of economists found the average chance of a new recession to be about 25%, up from a 15% chance only three months ago. The main reasons for the increased chance of another recession are the recent slide and volatility in the U.S. stocks and S&P’s downgrade of the U.S. credit rating.

25%

30%

35%

40%

45%

Theatre Performance

Sporting Event

Concert Comedy

Event

Event Type by Entertainment Motivation

Escapism

Socializing

Thrill Seeking


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With consumer confidence down, discretionary spending on entertainment would likely be adversely impacted as well. Below, Figure 9 displays how survey respondents spend their money on entertainment.

Figure 9

It is clear from the figure that people who have attended a Cirque du Soleil show spend more money on entertainment. However, if consumer confidence remains low, then a continued downward shift in entertainment spending is likely.

Individuals who have attended a Cirque du Soleil show spend a greater percent of disposable income on entertainment and on average have a higher household income.

Attend CDS Show Not Attend CDS Show Average Household Income Upper half of $70,000 bracket Upper half of $60,000

Although Cirque du Soleil guests may have a higher household income and spend more money on entertainment they are not recession proof. In fact, Figure 10 indicates people who have attended a Cirque du Soleil show agree, on some level, that they are now spending less on entertainment due to the recent recession than their counterparts who have not attended a show.

21 22

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14 15 16 17 18 19 20 21 22

Survey Total Attended CDS Show


%

Income Spent on Entertainment

Mean

Median


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Figure 10

Why People Have Attended a Cirque du Soleil Show For a better understanding of why an individual has attended a Cirque du Soleil show a multiple regression analysis was conducted using some of the demographic data along with the following information:

1. Whether or not the individual has visited Las Vegas or Disney World in the last 15 years 2. Whether the individual’s spending on entertainment has declined due to the recent recession 3. The percentage of income the individual spends on entertainment 4. Entertainment motivation 5. Entertainment event type

The R square of the multiple regression was 0.09, which means the x-variables only explained 9% of the variance for attending a Cirque du Soleil production. Clearly, other variables impact an individual’s decision to attend a show, but the survey was not able to capture these variables. Examples of other variables such as mood or attitude of the individual could prove difficult to capture quantitatively. Below, figure 11 shows how much each variable contributed towards the explained variance. The larger the T-score, the more significant the x-variable is for the regression.

62% 63% 57%

29% 29% 30%

25%

35%

45%

55%

65%

Survey Total Attended CDS Show


Entertainment Spending Declined Due to Recession

Agree on some level

Disagree on some level


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Figure 11

X-Variables Regression Coefficient

T-Score

Entertainment event -0.001439824 0.104928 Decline of entertainment spending due to recession -0.008588127 0.548694 Household income -0.007788088 0.644619 Percent of income spent on entertainment -0.001308934 0.808608 Individual income -0.013108759 1.029792 Marital status -0.043962663 1.217637 Age 0.032253948 1.419954 Entertainment motivation 0.055496287 1.76514 Visited Disney World, last 15 years 0.166914257 2.916201 Visited Las Vegas, last 15 years 0.162973107 3.048874

Important note: Dependent Variable= Yes/No Attend Cirque du Soleil

Figure 11 shows the importance of visiting Las Vegas or Disney World on the consumer’s decision to attend a Cirque du Soleil show. This should not come as a surprise because between the two locations there are 8 permanent shows. Entertainment motivation and age, the two variables with the next highest T-scores, should prove to be more insightful for understanding characteristics of individuals attending a show. In addition, entertainment motivation and age should help explain why individuals travel to these locations. Due to this reasoning, entertainment motivation and age will be used frequently throughout the rest of the paper in cross tabulations.

Disney World and Las Vegas Disney World and Las Vegas, as noted from the multiple regression analysis, play an important role for Cirque du Soleil. Figure 12 and 13 show the entertainment motivation and age, respectively, of the individuals who have visited Las Vegas or Disney World in the last 15 years.


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Figure 12 Figure 13

There are different primary entertainment motivations when visiting the two locations. The largest group to have visited Disney World is escapism while the largest group to visit Las Vegas is socializing.

Below are findings relating to Disney World:

• 73% of the survey respondents have visited Disney World at least once in the last 15 years.

• 42% of the survey respondents have visited Disney World more than five times in the last 15 years.

• 79% of the people that have visited Disney World in the last 15 years have also visited Downtown Disney Marketplace.

• 60% of the people that have visited Downtown Disney in the last 15 years have attended La Nouba.

• 45% of the Florida residents that have attended a CDS show have not attended La Nouba.

• 47% of Florida residents are unaware that La Nouba is located in Orlando.

There is strong potential for more Florida residents to attend La Nouba if they were made aware of the show.

Las Vegas is truly an anchor point for Cirque du Soleil as it currently houses seven permanent shows.

• 51% of the survey respondents have visited Las Vegas in the last 15 years.

• 56% of the survey respondents who have visited Las Vegas have visited more than once.

Respondents who had visited Las Vegas were asked to identify themselves as one of the following categories:

1. Visited Las Vegas strictly for business 2. Visited Las Vegas for business but had time for pleasure as well 3. Visited Las Vegas strictly for pleasure

30% 31% 32% 33% 34% 35% 36% 37%


Visit Las Vegas, last 15 years

Visit Disney World, last 15 years

5%

10%

15%

20%

25%

30%

Age

Visit Las Vegas, last 15 years

Visit Disney World, last 15 years


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Figure 14 breaks down the Las Vegas visitors by category and frequency of visits.

Figure 14

While most visitors of Las Vegas visit strictly for pleasure, business visitors play an important role as well.

• There is a 16% increase among “business but had time for pleasure” visitors when visiting Las Vegas more than once.

• There is a 14% decrease of “strictly pleasure” visitors when visiting Las Vegas more than once.

• Zumanity, with 33% of the survey respondents, has more business visitors attending the show compared to the other Las Vegas shows.

Core Business For Cirque du Soleil the shows bring in about 60% of the revenue. Thus, it is apparent that the core business for Cirque du Soleil is the show itself, but how do the permanent shows differ from the traveling shows? At the time the survey was distributed there were 10 permanent and 9 traveling shows. Iris, Zarkana, and Michael Jackson: The Immortal World Tour were not open to the general public yet. The survey, which only looked at shows in the U.S., attempted to identify which show model has a greater impact on revenue. Below, figure 15 demonstrates, by percentage, the show model with the greatest number of repeat guests.

0%

20%

40%

60%

80%

One Time More Than Once

# of visits

Visit Las Vegas, Last 15 Years

Strictly buisness

Business but had time for pleasure

Strictly pleasure


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Figure 15

Figure 15 suggests that permanent shows, with respect to repeat guests, are the core business as more repeat guests have attended a permanent show. One potential reason for the high number of repeat guests for permanent shows may be guest satisfaction. Guest satisfaction could be higher for permanent shows as the venues are built specifically for the show which means rigging and other transitions are seamless, while traveling shows are not afforded the luxury of seamless transitions.

Another possible reason for more repeat guests of a permanent show could be the result of product differentiation. Oftentimes, Broadway shows have a touring version of the same show and this could lead to confusion for Cirque du Soleil guests, particularly the guests of traveling shows. Perhaps, guests that have attended a permanent show realize that traveling shows are not the same show they have already attended. However, if a guest has attended a traveling show, they may not attend another show because they assume that other Cirque du Soleil shows are identical due to the “Broadway” assumption. Thus, guests of permanent shows have a better understanding of the differentiation among the shows than guests of traveling shows.

Repeat Guests Repeat guests are very important as they represent the core customers of Cirque du Soleil. As previously identified, more repeat guests have seen a permanent show. However, to obtain a further understanding of some of the characteristics of repeat guests, a multiple regression analysis was performed. The same variables used in the first regression were used for the repeat guest regression. Overall, the variance explained by the variables was low as the R square value was .06. However, this is not surprising as none of the regression variables explain guest satisfaction after attending their first Cirque du Soleil show. Below, figure 16 shows the T-score for each of the variables. Once again, the greater the T-score the more significant the x-variable is for the regression.

50%

60%

70%

80%

90%

Permanent Show Traveling Show

Show Type

Attended CDS Show More Than Once


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Figure 16


T-Score

Visit Disney World, last 15 years -0.025383267 0.297 Individual income -0.0076763 0.438 Entertainment event 0.011295058 0.623 Spending decline due to recession 0.017418332 0.817 Marital status 0.042634752 0.854 Visit Las Vegas, last 15 years -0.066617802 0.873 Age -0.028982275 0.926 Entertainment motivation 0.046806688 1.088 Total household income 0.037338161 2.207

Important note: Dependent Variable= how many times an individual has attended a Cirque du Soleil show.

Total household income contributed the most towards the explained variance of the regression. In order to better understand how the other variables relate to total household income, a correlation was performed.

Figure 17

Variable Correlation to Household Income Entertainment motivation 0.008 Visit Disney World, last 15 years 0.017 Entertainment event 0.087 Spending decline due to recession 0.141 Marital status 0.236 Visit Las Vegas, last 15 years 0.313 Age 0.424 Individual income 0.718

Below are several suggestions from the correlation:

• Household income has no relationship with entertainment motivation and entertainment event. o Suggestion: Individual’s motivation for entertainment and entertainment event is not

influenced by income.

• Household income has no relationship with whether or not the individual has visited Disney World.

o Suggestion: Household income does not factor into the decision to visit Disney World.

• There is a weak positive relationship between household income and visiting Las Vegas. o Suggestion: Income may factor into the decision process when deciding to visit Las

Vegas as a greater household income has a greater tendency to visit Las Vegas.


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• There is a weak positive relationship between age and household income. o Suggestion: The older the individual, the higher the household income.

The correlation between household income and visiting Disney World or Las Vegas is an important relationship to note. Even though both Disney World and Las Vegas are popular tourist destinations, there seems to be a different approach when deciding to visit each location.

The regression analysis identified various variables related to repeat guests on an aggregate level, but looking at repeat guests with respect to one variable should also be insightful. As identified in the first regression, entertainment motivation is important as it attempts to uncover deeper reasons for seeking entertainment than demographic data alone. One should look at the entertainment motivations of repeat guests as it had the second highest T-score in the regression, as well. Below, figure 18 depicts the various motivations for entertainment with respect to the number of Cirque du Soleil shows attended.

Figure 18

Figure 18 is very important, as several suggestions can be drawn from the data. As noted earlier, more escapism individuals have attended a Cirque du Soleil show and this holds true for individuals who have only attended one show, but this is not the case when guests have attended multiple shows. Thrill seeking, which represents the smallest percentage of one time guests, is the largest category for repeat guests. This data would suggest that while the original allure to attend a Cirque du Soleil show is the fantasy world portrayed in the production, it is the thrills of the show that keep the guests coming back to see another show, as evidenced by the number of thrill seekers who are repeat guests.

Another possible suggestion when referencing figure 4 (which compared entertainment motivation by age) and figure 18, is marketing to the 20 and 60 plus age groups is not as effective because they are primarily motivated by socializing when seeking entertainment. While individuals of the 20 and 60 plus age group may be interested in a Cirque du Soleil show, they are more likely to be a one-time guest. On

20%

25%

30%

35%

40%

Escapism Thrill Seeking Socializing

Attended CDS Show

One time

More than once


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the other hand, marketing to the other age groups (30’s, 40’s and 50’s) is more cost effective based on their propensity to become a repeat guest.

Figure 19

More than one time

One Time

Difference (repeat – one time guests)

Escapism 36% 40% -4% Thrill Seeking 37% 23% 14% Socializing 27% 37% -10%

Figure 19 indicates socializing has the largest negative difference for attending a show. For the survey, socializing was defined as being with other people who are interested or enjoy the same things as you. Perhaps, to increase the percentage of repeat guests who prefer to socialize, a more enticing group rate could be offered to guests who have already attended at least one show.

It would be interesting to look at the number of repeat guests for the music themed Cirque du Soleil shows (Viva Elvis, Love, Michael Jackson: The Immortal World Tour) compared to the other shows since more thrill seekers, the largest group of repeat guests, prefer to attend concerts than the other entertainment events (figure 18).

Lifetime Value of Guests As earlier discussed, repeat guests is an important segment for Cirque du Soleil. Over a lifetime, a satisfied guest will continually contribute towards company revenue and further reinforce Cirque du Soleil’s positive reputation. To capture the lifetime value of a guest it is important to reach out to young individuals who have the highest predisposition to become a repeat guest. As previously identified, thrill seekers have the highest propensity to become repeat guests, and 30 year olds are the highest percentage of thrill seekers.

The concept of the deal-of-the-day coupon has taken the internet by storm. Groupon, the leading deal-of-the-day site was called the “fastest growing company ever” by Forbes magazine. The deal-of-the-day coupons are popular because they are an effective means of attracting new customers. Figure 20 identifies survey respondents who have used a deal-of-the-day coupon by age.


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Figure 20

The 30 year olds are the second largest group to have used deal-of-the-day coupons. Figure 21 illustrates which age groups are “very familiar with deal-of-the-day coupons” and “very likely to use a deal-of-the-day coupon specifically for Cirque du Soleil.” In both categories, the 30 year olds are again the second highest group only surpassed by the 20 year olds.

Figure 21

Figure 21 shows a decline by age until the 50 year old group, at which point there is an increase in both familiarity and likeliness to use the coupons for Cirque du Soleil. The 50 year old age group also represents the second highest group to visit Las Vegas (behind 30 year olds).

32%

26% 14%

22%

6%

Used a Deal-of-the-day Coupon, by Age

20's

30's

40's

50's

60's & Above

0%

5%

10%

15%

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25%

30%

35%

40%

20's 30's 40's 50's 60's & Above

Deal-of-the-day Coupons

Very Familiar with Deal-of-the-day coupons

Very likely use Deal-of-the-day coupon for CDS


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Figure 22

Age

Very familiar w/ deal-of-the-day coupons

Very likely to use a deal-of-the-day coupon for CDS

Difference (Familiar –Use)

20’s 37% 37% 0% 30’s 26% 28% -2% 40’s 14% 9% 5% 50’s 19% 20% -1%

60’s & Above 4% 5% -1%

Based on the percent difference of the two categories the 30 year old age segment has the potential to have a high conversion rate from coupon familiarity to using the coupons for Cirque du Soleil. This indicates that these coupons could be successful in capturing a very important age segment.

Expansion

High End Restaurant/Lounge Cirque du Soleil has recently been marked by company growth as several new shows have opened each year. Cirque’s president and COO Daniel Lamarre said, “We like to take risks. It’s part of who we are. Every time we are in a comfort zone, we will find a way to get out, because being comfortable in our business is very, very dangerous.” In agreement with this statement, Cirque du Soleil could position itself to move further into other forms of entertainment such as the high end restaurant or lounge business. Currently, Cirque du Soleil is involved with two lounges in Las Vegas: Revolution and Gold. Figure 23 illustrates how likely the survey respondents would dine at a high end Cirque du Soleil restaurant or lounge.


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Figure 23

• 67% of guests who have attended a show would also be likely, at some level, to dine at a Cirque du Soleil high end restaurant or lounge.

• 56% of guests who have not attended a show would be likely, at some level, to dine at a Cirque du Soleil high end restaurant or lounge.

Figure 24 graphs the percentage of one time and repeat guests who would likely dine at a Cirque du Soleil high end restaurant or lounge.

Figure 24

0%

10%

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40%

Dine at High End CDS Restaurant or Lounge

Attended CDS show


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Dine at a High End CDS Restaurant or Lounge

Attended CDS show once

Attended CDS show more than once


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67% of both groups indicate they would likely dine at such a venue on some level. Furthermore, the repeat guests reflected a slightly higher percentage of patrons who would be very likely to dine at one of these high end venues, 15% compared to 11%.

Figure 25 graphs an individuals’ likeliness to dine at a high end Cirque du Soleil restaurant or lounge based on entertainment motivation.

Figure 25

Additionally, the lounge or restaurant could be an effective means of reaching an audience that is unfamiliar with Cirque du Soleil. Based on Figure 25, thrill seekers would be very likely to dine at a Cirque du Soleil restaurant or lounge regardless if they have attended a show. Thrill seekers are initially more reluctant to attend a Cirque du Soleil show (Figure 18). Introducing this population to the Cirque du Soleil brand through a restaurant/lounge is a viable promotional option.

One option to consider is placing the restaurants or lounges in locations that do not have permanent shows. The Gold and Revolution lounges are primarily used to compliment the respective Cirque du Soleil shows in Las Vegas, and having a lounge in another location could increase Cirque du Soleil awareness of a segment that otherwise would not be enticed to attend a show.

New Permanent Location Already identified as the core business, permanent shows represent a way to continually expand Cirque du Soleil. Cirque du Soleil is currently looking for a location in England for a new permanent site. However, in the midst of the global economic downturn, the British economy is weaker than the United States’ based on the most recent GDP reports. The second quarter 2011 GDP numbers for the United States and Britain were 1.28% and 0.8%, respectively. Considering the United States appears to house greater economic potential for a permanent show, the survey attempted to identify the most promising location in the U.S.

10%

20%

30%

40%

50%

60%

Escapism Socializing Thrill Seeking


Very Likely Dine at High End CDS Restaurant or Lounge

Attended CDS show



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Based on tourism numbers, five cities were selected for survey respondents to rank as the city they would most likely visit to attend a new permanent Cirque du Soleil show. Only guests who have already attended a show were asked this question. Below are the five cities:

1. Chicago 2. Miami 3. New Orleans 4. New York City 5. San Francisco

On June 29th New York City hosted a brand new show, Zarkana, in the Radio City Music Hall, but currently the show is only seasonal so the survey still listed New York City as an option for a full time permanent location.

Figure 26 shows the results for each city using a weighted point system.

Figure 26

1st

(Place votes)

2nd

3rd

4th

5th

Weighted point system

Total

Points

Percent of

leader points

New Orleans 85 77 44 55 39 (85*5)+(77*4)+(44*3)+(55*2)+39 1,014 100% New York City

85 82 25 44 14 (85*5)+(82*4)+(25*3)+(44*2)+14

930 92%

Miami 65 60 34 58 83 (65*5)+(60*4)+(34*3)+(58*2)+83 866 85% Chicago 37 46 89 79 49 (37*5)+(46*4)+(89*3)+(79*2)+49 843 83% San Francisco 28 35 58 64 115 28*5)+(35*4)+(58*3)+(64*2)+115 697 69%

It is clear that Cirque du Soleil wants to have a full time permanent show in New York City based on CEO

Guy Laliberté’s quote, “We want something solid and permanent in the entertainment capital of the

world, and we are hoping to have a presence in New York for 12 months a year.” However New Orleans,

based on this survey, also appears to have strong potential for a permanent Cirque du Soleil presence.

Cirque du Soleil’s ability to reinvent the brand with each new production, combined with New Orleans’

uniquely rich culture and history, would seem to lend itself well to a permanent show. It is important to

note that the majority of survey respondents are from the Southeast, which could have affected the

outcome for city selection.

Figure 27 illustrates which city received the most first place votes by entertainment motivation.


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Figure 27

Based on figures 18 and 27, New Orleans could have the highest number of first-time Cirque du Soleil

guests and a high number of repeat guests. This furthers the suggestion that New Orleans has strong

potential to host a permanent Cirque du Soleil show. In addition:

• Louisiana is a “Right to Work” state, while California, Illinois, and New York are “Forced-

Unionism” states.

• Louisiana is a leader in offering tax incentive programs to the entertainment industry.

o The State Department of Economic Development for Louisiana is offering the nation’s

first tax credits to concert and theatrical productions (35%), which will ultimately reduce

production costs.

• New Orleans has the lowest cost of living as compared to the other five cities:

o New Orleans 97

o Miami 108

o Chicago 115

o San Francisco 164

o New York City 218

According to Kilpinger’s Personal Finance, 100 is the national average for the cost of living index.

Branding and Competition Unfortunately, a different business environment is on the horizon for Cirque du Soleil than the environment that paved the way for much of the company’s success. A major reason for the difference is the increased competition. Cirque du Soleil has lost much of its uniqueness as many similar shows are imitating the business model. Some of the notable imitating competitors are La Rêve and 7 Fingers.

5%

15%

25%

35%

New Orleans

New York City

Chicago Miami San Francisco

City

1st Place Votes by Entertainment Motivation

Thrill Seeking

Escapism

Socializing


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Based out of Montreal, like Cirque du Soleil, 7 Fingers currently has 7 shows, all of which combine artistry and acrobatics. 7 Fingers is gaining national acclaim and it recently had its show Traces featured on the hit TV show America’s Got Talent. La Rêve’s intimate imitation can be contributed to show creator Franco Dragon, who also created several Cirque du Soleil shows. Comments on YouTube videos of La Rêve also show confusion as to whether or not La Rêve is a Cirque du Soleil show. In addition, La Rêve is located across the street from Mystère and competes directly with Cirque du Soleil on price. Several individuals cite the reason they did not attend a Cirque du Soleil show was because of the cheaper ticket price of La Rêve.

The increased competition, along with the downturn of the economy, puts a stark focus on branding for Cirque du Soleil as it is both imperative to retain current guests and to ensure new ones. Jessica Berlin, a social media manager for Cirque du Soleil said, “Our fans are an extension of our brand.” However, if a Cirque du Soleil guest does not remember the name of the show they attended, the guest is unlikely to attend another show. 25% of survey respondents do not remember the name of the show they attended. Figures 28 and 29 compare the number of repeat guests to whether or not they remembered the name of the show attended.

Figure 28 Figure 29

Based on the above figures, more repeat guests remember the names of the shows attended. A goal for company branding should involve having more guests identify and remember the name of the shows attended.

Figure 30 shows which entertainment motivation group is least likely to remember the name of the Cirque du Soleil show attended.

31%

69%

Remember the Name of the Show



67%

33%

Do Not Remember the Name of the Show




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Figure 30

Escapism represents the entertainment motivation group least likely to remember the name of the show attended, which parallels the previously mentioned data indicating the escapism group has the second lowest percentage of repeat guests.

Why People Have Not Attended a Cirque du Soleil Show To capture future guests it is helpful to identify why people have not attended a Cirque du Soleil show. The survey asked the respondent to pick the most contributing reason as to why he/she has not attended a show from the following three options:

1. Lack of interest in Cirque du Soleil 2. Not familiar with Cirque du Soleil 3. Ticket prices and other expenses to see a Cirque du Soleil show are too expensive

Below, figure 31 shows the results.

Figure 31

20%

30%

40%



Do Not Remember the Name of the CDS Show Attended

17% 17%

65%

10% 20% 30% 40% 50% 60% 70%

Lack of Interest Not Familiar w/ CDS

Ticket Prices and Other Expenses

Too Great

Reasons For Not Attending a CDS Show


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From figure 31 it is obvious that ticket prices and other expenses are the main deterrent for attending a show. Prior to this question there were three scale questions asking the following:

1. On a scale of 1-7 (1 being very unfamiliar and 7 very familiar) how familiar are you with Cirque du Soleil?

2. On a scale of 1-7 (1 being very uninterested and 7 very interested) how interested are you in attending a Cirque du Soleil show?

3. On a scale of 1-7 (1 being strongly disagree and 7 strongly agree) do you agree it is too expensive to attend a Cirque du Soleil show?

Using the answers to the scaled questions a multiple regression analysis was performed. The R square for the regression was 0.317. This means that 31.7% of the variance for not attending a Cirque du Soleil show is explained by the three options. Figure 32 shows the T-scores for the multiple regression.

Figure 32


T-Score

Unfamiliar with Cirque du Soleil 0.034132 0.990043 Too expensive 0.207444 5.421467 Not interested in Cirque du Soleil 0.188438 5.61571

Important note: Dependent Variable= reason for not attending a Cirque du Soleil show

Based on the T-scores, the most significant reason as to why someone has not attended a Cirque du Soleil show is not ticket prices but not being interested in attending a show. After the respondent identified a reason for having not attended a show, he/she was exposed to Cirque du Soleil in the survey through a short video trailer of Totem. After the video trailer the respondents were required to give their impressions of Cirque du Soleil in a short, free-written response. Below are several of the responses from respondents who identified themselves as not interested in Cirque du Soleil.

• “Interesting. Not what I pictured when I thought of Cirque du Soleil.” • “Very spectacular” • “It looks very interesting and fun. I'm intrigued by the ways that the human body can perform

and act as art.”

• “Interesting. Thought it was more of an old time circus, but this might be fun to go see.” • “Very unique mix of storyline, acrobatics and costumes.” • “Looks cool” • “It looks like fun and entertaining” • “Interesting” • “Exciting” • “Very colorful and exciting” • “Very enlightening and entertaining” • “Unique, athletic, magical”


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• “Concept performances. The performances look to be very exciting and would be fun to see in person. “

• “Well performed, great entertainment, huge talent, visual excellence” After reviewing the free-written responses, it appears that some of the “non-interested” respondents enjoyed the video clip. Perhaps the lack of attendance does not reflect a lack of interest but rather an inaccurate notion of Cirque du Soleil. If more people were to be exposed to Cirque du Soleil, then perhaps more people would be interested in attending a show. If attendance levels for a permanent show were to drop below a pre-determined level over time, an increase in media marketing may keep show attendance high even with intense competition and economic downturn. Figure 33 identifies individuals who cited a lack of interest to attend a Cirque du Soleil show by entertainment motivation. Thrill seeking is one of the highest groups to express a lack of interest regarding Cirque du Soleil. This further perpetuates the idea that a lack of understanding of the true essence of Cirque du Soleil is a large barrier to attracting first time guests. Exposing thrill seekers to the thrills and excitement of a Cirque du Soleil show should be an effective marketing strategy.

Figure 33

25%

30%

35%



Lack of Interest to Attend CDS Show


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Recommendations It is not possible for Cirque du Soleil to appeal to everyone. With this in mind, Cirque du Soleil should only target the various segments that have the highest predisposition to attend a show. Based on the survey data, Cirque du Soleil should refrain from targeting the 20 year old and 60 plus age segments. This strategy would not only increase marketing returns but also increase all business metrics.

It is recommended that Cirque du Soleil utilizes deal-of-the-day coupons but in a strategic fashion. These coupons are loss leaders and should target individuals who have a strong chance of becoming a repeat guest and would otherwise not attend the show. Based on the data, 30 year olds should be the target of the deal-of-the-day coupons.

From an outside perspective, it appears that Cirque du Soleil has traditionally relied on word of mouth as a primary means of marketing. The biggest advantage for using word of mouth advertising is cost effectiveness, but it has many downsides. It can be challenging to accurately portray a consistent message regarding the brand when relying on word of mouth, as evidenced by survey respondents prior to being exposed to a short clip of Totem. Expanding an effective marketing campaign for Cirque du Soleil during an economic downturn could prove to pay off in the long run.

Ticket prices will always be a deterrent to attend a show. Other than strategically utilizing the deal-of-the-day coupons Cirque du Soleil should not drop ticket prices to attract a larger market share. Instead, Cirque du Soleil should rely on carefully crafting a marketing strategy to overcome other objections for not attending a show, such as misconceived perceptions about the show.

It is also recommended that Cirque du Soleil looks into the possibility of utilizing New Orleans as a location for a new permanent show. For example, Zed could be re-branded as a new show located in New Orleans as it is coming to a close in Japan at the end of this year. However, Cirque du Soleil needs to be mindful of over expansion as an over leveraging of resources during a contracting global economy has significant risks.

Cds, a closer look

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