1. Olga Safonova
Iris Maria Steffansdottir
Laufey Karítas Einarsdóttir
Luxury Cinema
Leisure and Lifestyle Marketing

2. Table of Contents
1. Introduction................................................................................................................1
2. Methodology ..............................................................................................................2
3. Idea specification .......................................................................................................2
4. Business model ..........................................................................................................2
4.1 Generating revenue ..............................................................................................3
4.2 Service offerings ..................................................................................................4
4.3 Movie offerings ....................................................................................................5
4.4 Target group .........................................................................................................6
4.4.1 Segmentation .................................................................................................7
4.5 Competition..........................................................................................................8
4.6 Threats and opportunities ...................................................................................11
4.7 Risk of cannibalisation .......................................................................................12
5. Feasibility.................................................................................................................13
5.1 Resource feasibility ............................................................................................13
5.2 Legal feasibility..................................................................................................13
5.3 Cultural feasibility..............................................................................................14
5.4 Timeframe ..........................................................................................................16
6. Marketing plan .........................................................................................................16
6.1 Product/concept..................................................................................................16
6.2 Process................................................................................................................17
6.3 Price....................................................................................................................19
6.4 Place ...................................................................................................................20
6.5 Physical environment .........................................................................................20
6.6 Promotion ...........................................................................................................22
6.7 People .................................................................................................................23
7. Expected returns.......................................................................................................24
7.1 Ticket revenue estimation ..................................................................................24
7.2 Cost factors estimation .......................................................................................25
7.3 Break-even estimation........................................................................................26
7.4 Brand equity .......................................................................................................27
8. Conclusion ...............................................................................................................28
8.1 Limitations .........................................................................................................29
9. Bibliography ............................................................................................................30

3. 1. Introduction
In October 1896 the first permanent and purpose-built movie cinema in the world was
opened in Buffolo, USA (Internet 1). Twelve years later the first cinema opened in
Korsør, Denmark, which is the oldest running cinema in the world today (Internet 2).
The movie going experience has therefore been a part of the Danish public’s leisure
activities for a century now and has gone through extreme changes these last 100
years. The technology has advanced hundredfold, and now, multiple cinemas are
available all over the country. Most of them have many screening rooms in different
sizes, with digital sound and picture. The competition between cinemas is big. For
instance, in a small area like Aarhus city centre, there are two large cinemas located a
short walking distance away from each other. These cinemas often show the same
movies and, as many other types of businesses, they encounter challenges of attracting
and holding on to their customers. People nowadays are becoming more conscious
about various leisure activities available and are therefore focusing more on aspects
regarding quality and value. Value as such, is an intangible concept. It is the overall
benefits that a customer gains from buying and using a product or a service, minus the
costs of obtaining that product or service. It is difficult to measure and the value of the
same good or service can be perceived differently by different people (Kotler,
Armstrong, Saunders & Wong, 2001). Therefore, in order to stay on top of the
competition in a constantly changing environment, cinemas have to advance and offer
something extra to attract the movie-goer.
“Experience economy” is a buzz word nowadays. In order to differentiate a company
from the competitors, it is necessary to design and stage distinctive “experiences” for
the customers. Pine and Gilmore (1999) suggest a framework where they classify
different experiences, depending on two dimensions: the level of guest participation
(passive to active) and the kind of connection or environmental relationship
(absorption to immersion). The coupling of these dimensions defines four types of
mutually compatible domains of an experience: entertainment, education, escape and
aestheticism. To stage a compelling, distinctive and memorable experience, it is
advised to not just choose and stay within one of these domains, but try to explore all
four of them.
1

4. 2. Methodology
The report starts with a specification of the overall idea. Then a description of the
general business model is put forth. After that, a feasibility study is presented. Based
on the feasibility study, a specific marketing plan is created and the expected returns
of the project are estimated.
3. Idea specification
The present project will introduce a detailed proposal on a concept named the Luxury
cinema. The Luxury cinema is designed to enhance the experience of going to the
cinema. It involves taking a whole new approach to a common experience and
incorporating in some way three of Pine and Gillmore’s domains mentioned earlier.
The Luxury cinema will offer cinema guests a venue to escape from everyday
concerns, where guests can immerse into the environment of the cinema. The Luxury
cinema can be seen as a treat for the regular movie-goer who wants to have an
entertaining experience. Also, it has a certain element of surprise because the Luxury
cinema is much more than a regular screening room. It is more comfortable, visually
appealing, with thoroughly designed physical settings, which all draw on the aesthetic
aspects of the experience.
Guests can enjoy an entertaining movie in the best physical setting with large and
cosy La-Z-Boy chairs (Appendix 1), blankets, tables to keep their snacks, beverages,
and/or pre-ordered food, and an exclusive lavatory. The Luxury cinema concept will
be offered in the form of one screening room in an available Aarhus cinema,
preferably Cinemaxx. Even though it is just one screening room, it is still called the
Luxury cinema because it is considered to be an experience that is beyond the regular
movie going experience.
4. Business model
During the last years there has been an increase in disposable income in Denmark and
Danes are therefore going out more. Danes’ expenditure on leisure and recreation is
just over 10% of their total consumer expenditure. The cinema is a popular leisure
activity in Denmark. According to a report from 2005 by Euromonitor International
on consumer lifestyles in Denmark, 66% of adults had been to the cinema that past
year. There has been an increase in the number of people going to the cinema but a
2

5. decline in the numbers concerning how often they go. In 2007, there were 12,1
million admissions in total and 2,3 annual cinema trips per capita (Internet 3).
According to a research made in 2003 by the company Vilstrup Research for the
Danish Film Institute, people from urban areas go to the cinema more often than
people living in rural districts (Internet 4). It is thus considered appropriate to launch
the Luxury cinema concept in a bigger city. The objective is therefore to open a
Luxury cinema in Cinemaxx in Aarhus. Cinemaxx is a well established brand name in
the movie cinema market, with cinemas situated in various cities in Germany and in
three cities in Denmark: Aarhus, København and Odense. In Aarhus, Cinemaxx is
located on Bruunsgade in the city’s centre. The cinema contains screening rooms that
all have wall to wall screens with one of the best sound systems on the market. The
cinema has the six biggest white screens in Aarhus, where two of them are the biggest
in Jylland. The cinema offers eight screening rooms and the biggest one has 550 seats.
Cinemaxx focuses on offering the most comfort and the best experience, and is
therefore considered to be the most appropriate cinema for the Luxury cinema concept
(Internet 5). The Luxury cinema will expand Cinemaxx’s current offerings, attracting
a wider variety of guests by offering more value. The physical settings of the cinema
are changed, but the basic business model is still the same.
4.1 Generating revenue
The cinema has two business areas, the sales of tickets and sales of snacks and
beverages (Internet 6). The revenue is therefore generated from the sales of tickets,
snacks and beverages, but also from sales of advertisements on the screen before a
movie starts. Companies are able to buy still ads on the screen or longer filmed ads
before a particular movie starts. Cinemas are considered to be a high-impact medium
because the audience is focused on watching the big screen and experiencing high
quality sound. Cinemas are also considered to demonstrate lower media and
environmental cluttering because the audience is focused on the big screen (Ewing,
Plessis, & Foster, 2001). Because of the exclusivity of the Luxury cinema, there will
be fewer ads displayed before the movie, which demonstrates even less crowding
effect. According to Ewing et.al (2001), in most countries ad space is sold with
respect to in what cinema the ad will be shown during a certain period and not in
regards to what movie is being shown. This can make it difficult for media planners to
3

6. target the right audience. In regards to the Luxury cinema, advertisers will be able to
choose the movies they want to advertise before, therefore choose what movie to
associate their brand with. It is emphasised that the ads shown before the movie starts
may actually be linked to the movie, i.e. because of product placement within the
movie or the overall theme of the movie. This is done so that the brand can leave an
even bigger impression on the cinema guests. Since fewer and longer ad spaces will
be offered in the Luxury cinema, along with the possibility to choose before what
movie an ad should be shown, the price of the ad space will be a bit higher than in
regular screening rooms.
4.2 Service offerings
There will be an increased focus on luxury, comfort and service. One additional
service that will be offered in the Luxury cinema is the possibility to order food and
have it delivered to guests’ seats when they arrive at the cinema. In order to do that,
guests have to order the food at the same time they order the ticket. The food and
ticket then need to be paid for in advance, at least an hour before the movie starts. The
objective is to do this in cooperation with restaurants located at Bruuns Galleri. These
restaurants are Ha Long, Kong Kaffe, Mamma Mia, What’s cooking and Café Kong
Venience. These restaurants are chosen because of their proximity to the cinema, their
various food offerings and because they belong to the Bruuns Galleri “community”.
This will not bring any extra cash flow into Cinemaxx’s register but it will enhance
their offerings and should increase customer satisfaction. This will though bring the
Bruuns Galleri restaurants more business which may make them more willing to
cooperate in this project.
GallupTNS conducted a research in 2006, about Danes’ attitude to movies and habits
in relation to the cinema. This research revealed that 4% of the population always
combine the cinema visit with a café or restaurant visit; 27% of the Danes often
combine these two activities and 33% sometimes go both to the cinema and a café or
a restaurant. These data show that the idea of serving food during a movie would fit
into a Danish “common practise” of going to the movies (Internet 7).
Another service factor is regarding snacks and beverages offered at the cinema.
Luxury guests can make an order at the concession stand for some extra beverages
and snacks while the movie is playing, which are delivered to their seats. The guests
4

7. can i.e. request for another round of the theme drink to be brought to their seats while
the movie is playing. The guests pay for the extra beverages and snacks when placing
the order.
An exclusive lavatory will also be available for luxury guests. This lavatory will be
completely soundproof so it won’t disturb other guests. In the lavatory, a small LCD
screen will display the same movie so that the guests don’t miss any part of it. This
might encourage guests to buy more drinks, because if they need to use the lavatory it
is very accessible and they are not taking a risk of missing an important part of the
movie.
4.3 Movie offerings
As described in the introduction, the basic idea of the concept is changing the
environment, or physical settings of the cinema, in order to enhance the experience
which nowadays is becoming more and more commoditized. The companies
operating in the cinema business do notice this fact of commoditization, and try to
cope with this challenge by differentiating themselves in several dimensions. One of
the first dimensions to think of in this context is the content of the movie-going
experience, i.e. what kind of movie is being shown. Some cinemas position
themselves as being art cinemas which provide the viewers with sophisticated works
of art in the cinema genre. They consciously make efforts to dissociate themselves
from commercial blockbuster movies, trying to appeal to more selective viewers.
However, according to the research by Anite Elberse, the popular hit titles generate
significantly more profit and attract significantly more viewers. Hit titles remain
dominant, even among viewers who "venture deep into the tail" (Elberse, 2008), i.e.
consume obscure, less known titles. Hit titles are also more liked than obscure titles.
Even though Elberse's research was done within an online buying/rental area, it is
assumed that the results can be applied in the context of the cinemas as well. There is
no doubt that a special segment with sophisticated movie tastes and preferences might
exist, but its size and potential spending on the art-type of movies is quite small.
Holbrook and Addis (2007) suggest that a two-path model of motion-picture success
exists: one path is related to the artistic excellence aspect, while another to the
commercial appeal of the movie. The two phenomena are essentially separable as
independent paths to conceptually distinct and empirically uncorrelated aspects of
5

8. motion-picture success. In other words, Holbrook and Addis argue that they found
support for a general principle of contrast between art and commerce. While audience
might appreciate the aesthetic value of small-budget, low profile, art-house type films,
they also enjoy the blockbuster aspects of big-budget, high-profile, mass-market films
that feature famous stars in action or adventure scenarios with spectacular special
effects. Moreover, marketing efforts of such blockbuster movies add significantly to
the buzz surrounding the movie. This buzz in turn contributes positively to market
performance.
It is therefore proposed that the Luxury cinema will focus on showing popular
blockbuster movies. The movies chosen for the cinema are not paid for in advance but
instead the movie producers get a certain percentage of the sales, usually ranging from
50%-70%. If the movie is a big blockbuster then the percentage will be closer to 70%
because the bigger the movie, the higher the percentage (Jóhannsson, 2008). It is
anticipated that the Luxury cinema will also show other types of movies, i.e. Danish
movies and award winning movies, which may not have been categorized as the
typical blockbusters to begin with. But the main focus in the Luxury cinema will be
on blockbuster movies.
4.4 Target group
Cinema guests in Denmark are of all ages but people 16-39 years old are the most
frequent guests. These are people that choose the cinema over other cultural activities.
Of people aged 16-29 years old, 89% go at least once a year to the cinema, 79% of
people aged 30-39, 75% of people aged 40-49, 59% of people aged 50-59, 42% of
people aged 60-69%, and only 28% of people over 70 years of age go at least once a
year to the cinema (Haagen, Arffmann, Buchter, Flyvholm, & Brøgger, 2008).
According to the research, done by Alsted Research for the Danish Film Institute and
FAFID (Foreningen af filmudlejere i Danmark), the motives which drive most Danish
visitors to go to the cinema are: “quality time being together with friends, family or
boyfriend/girlfriend” (54%), “the movie experience itself” (24%) and “entertainment”
(12%) (Internet 8).
For the majority of the public (46%), it is generally of great significance which
cinema is chosen for the movie experience. The technical quality of the cinema, such
as sound, light and the size of chairs, plays an important role for 40% of the guests.
6

9. Both the atmosphere in the cinema and other guests has an impact on how the overall
movie experience is evaluated by the movie goers. These factors are of great
importance to 24% and of some importance to 28% of the guests. The physical
comfort provided in the cinema (such as comfortable chairs with enough leg space,
the temperature in the premises, and the view) is important for 42% of the movie
goers and very important for 29% (Internet 8).
4.4.1 Segmentation
According to research by Alsted Research Company, three overall cultural
orientations were identified, which are decisive for individuals’ attitude towards the
usage of the movie cinemas: Upmarket, Mainstream and Downmarket (Internet 8).
Upmarket and mainstream segments have generally very positive attitude toward the
movie cinemas. This attitude is based on a higher perceived experience value of the
movie cinema as compared to TV or Video. Even those, who go to the cinema less
frequently in these segments, justify opting out of the cinema visits by different
barriers, such as convenience, but still express a desire to go to the cinema more often
(Internet 8).
Figure 1. Upmarket and mainstream market.
On the other hand, the downmarket segment perceives the experience value of the
visit to the cinema as being lower than the experience value for TV and video (figure
2). The reason which people in the downmarket segment express for not going to the
cinema is the limited “freedom of behaviour” of the individual in the cinema, as well
as lack of comfort (Internet 8).
7

10. Figure 2. Downmarket
So, an affordable Luxury cinema is able to address both upmarket/mainstream
segments, by enriching the experience of going to the cinema, and the downmarket
segment, by providing more comfortable physical settings.
The Luxury cinema concept proposed in this report would therefore appeal to the
cinema goers in general. The target group can be defined as people, who are
hedonically oriented, enjoy entertainment, like comfort and being treated, but also
who like spending time in the company of friends, family or a partner. The Luxury
cinema is targeted at the upmarket/mainstream market and the downmarket with some
restrictions. After 18:00 more emphasis is put on attracting more mature movie guests
and therefore, children are not allowed after 18:00. This is also done in order to attract
people who have reduced their visits to the cinema for different reasons, like
disturbance from younger kids, commoditised experience, price, etc. As the Luxury
cinema ticket will be priced higher than a normal ticket, the target group has to afford
it and be willing to spend on this luxury experience. Therefore, it is very important to
communicate well the value of the experience to this group, so they know what they
are paying a higher price for.
4.5 Competition
There are several cinemas in Aarhus where international films are shown in their
original language with Danish subtitles. The largest cinemas show 30-40 Danish and
international films per day, and are equipped with state-of-the-art audio and image
technology. There are four major cinemas in Aarhus that are well known and seem to
8

11. be the most popular ones (Internet 9, Internet 10). These cinemas are Cinemaxx (the
preferred location for the Luxury cinema), BioCity, Metropol, and Øst for Paradis.
BioCity Aarhus is located in the city centre and it was the first THX-approved cinema
in Denmark. BioCity positions itself as having the newest and the best technology
along with warm and personal atmosphere. The cinema has nine rooms of different
sizes with 96 to 340 seats per room. All the screening rooms are named after movies
that belong to Aarhus’ history. Screening room 1 is the only cinema room in whole
Jylland that has a digital projector (Internet 11).
Metropol is located a little outside the centre. When the cinema opened in 1950 it was
called Palads and it had only one screening room with 800 seats. In 2004 the entire
facade was rebuilt and modernized, and in 2005 the cinema’s name changed into
Metropol. Today, the cinema offers five newly renovated screening rooms (Internet
12)
Øst for Paradis (East of Paradise) is located in the centre of Aarhus and is categorized
as an art cinema. This cinema is quite well known in Aarhus, even if it is smaller in
size than the other large cinemas on the market. Øst for Paradis has created great film
experiences for the viewers in Aarhus for almost 30 years. These are special
experiences as this cinema shows films of high artistic quality that are not necessarily
commercial blockbusters. In 2006, the cinema had a financial crisis and the interior
was torn down. With financial support from the city council and the community, it has
now been rebuilt with new physical surroundings. Øst for Paradis is well on its way in
becoming a modern art cinema with its own unique soul and atmosphere (Internet 13).
Aarhus’ city council is trying to position Aarhus as a centre of art and culture, and
therefore different art cinemas and various other cultural activities are available in
Aarhus. Art cinemas are small film theatres, screening new films but having a
repertory function as well. Most of these cinemas try to be aligned with the latest
trends in literature and fine arts. The target audience is often outside the typical young
adult demographic, and belongs to smaller niche market groups (Internet 14, Internet
15, Internet 16).
Art cinemas can be considered as a competition to the Luxury cinema, as another
leisure activity where guests share the experience of watching a movie. Although, it
can be argued that art cinemas are not a direct competition to the Luxury cinema
9

12. because the movie watching experience in these two kinds of cinemas can be
differentiated in few ways. The films shown in the art cinemas are different. The art
cinemas offer films that are somewhat traditional, but associated with the world of art.
These films are more cultural, circulating internationally and are often premiered at
the world’s leading film festivals. Therefore, the target audience can be very different
for those two kinds of cinemas, but the most obvious difference is that the target
audience for the Luxury cinema is bigger and can cover the art cinema audiences as
well. The art cinemas both appeal to and serve a niche market, while the Luxury
cinema can reach the whole market of cinema goers (Internet 16).
The competition that the Luxury cinema faces is not only the other existing cinemas
in Aarhus. Television, video rental stores and individual downloading can also be
considered as direct competition to the Luxury cinema. The improved technology in
TV-home equipment available now in stores, like surround systems (home-theatre),
has enhanced the movie watching experience at home. People who are more antisocial
may choose to stay at home rather than go to the cinema. These people often prefer
having the best technology at home, and are willing to invest in expensive home
equipment (Internet 17).
Video rental stores can be considered as competition because some people choose to
wait for a movie, rent it and enjoy it in the comfort of their own home. These are
movie viewers that would rather save some money and see a particular movie after it
has been on the market for some time, than going to the cinema.
A large proportion of consumers find it easier, cheaper and more comfortable to
download movies, and watch them at their own home without any disturbance. By
this, consumers can also choose the exact time they want to watch a movie and pause
it whenever they like, so it creates more “freedom” for the viewers experience.
However, there are certain aspects viewers do not experience at home. For instance,
the experience of going to the cinema has a certain charisma and it is an opportunity
to go out among others. Most people are social and they like to be accompanied by
friends and family while spending their leisure activities (Baumeister & Bushman,
2008). Thus, the experience of dressing up and meeting with friends to see a movie
that just came out, whilst enjoying the best technical surroundings, could be
considered as a more attractive alternative. Individual downloading might therefore be
a bigger threat to video rental stores than to the Luxury cinema.
10

13. Other leisure activities, like sports, hobbies, theatres, concerts, cafés, or simply
hanging out with friends at home instead of going out, can be considered as an
indirect competition.
4.6 Threats and opportunities
One of the biggest current threats on the cinema market is the economic decline that is
affecting many other industries as well. As the economy is experiencing stagnation
and consumers are more focused on saving their money, the expenditures on luxury
and leisure activities are less. People may find the need to hold on to their money and
prefer to spend their leisure time with friends and family in the comfort of their own
home. Companies offering products and services in the leisure field may therefore be
more concerned with keeping their businesses running, and have to focus more on
finance and better resource efficiency. This could make it more difficult for
companies like Cinemaxx to finance new projects like the Luxury cinema.
The economic decline can also be considered as an opportunity. Because consumers
have less money to spend, they might be more willing to spend their money on a more
special experience. According to Johannsson (2008), the manager of an Icelandic
cinema offering a luxury room, cinema attendance usually increases when a country
experiences an economic decline. People don’t have as much money to spend and
realize that going to the cinema is a leisure activity that they can actually afford. The
Luxury cinema experience is a luxury experience which does not cost as much as
seeing a play or going to a concert.
Several other factors can also be considered as threats to the cinema environment.
Smaller factors interrupting the movie watching experience, like people talking during
the movie, cell phones ringing, and little babies crying, are becoming more disturbing
influence factors. This has become one of the reasons people do not enjoy going to the
cinema as much. Too many advertisements in the cinemas have also been mentioned
as a disturbance to the experience (Internet 17). This can push movie-goers further to
the illegal downloading, where all the ads and disturbance factors can be avoided,
which can then lead to cinemas loosing long term relationships with their guests.
The price of the whole experience is considered by many to be too high, as ticket
prices have been increasing and usually guests buy some sort of beverages and
snacks. The trip to the cinema has therefore become an expensive leisure activity in
11

14. many consumers’ eyes. The cinema guests‘ perception of the movie-going experience
might though have an even more influence than the price. Some simply find this
experience not as enjoyable or as worthwhile as before because the experience is
becoming stagnant (Internet 17). Therefore there could be an opportunity for the
Luxury cinema to add more to the experience and justify the higher price with higher
value creation for the guests.
4.7 Risk of cannibalisation
As the Luxury cinema is a new concept introduced by an existing brand name,
preferably Cinemaxx, there might be a risk of cannibalisation. The offerings of the
Luxury cinema might cannibalise what Cinemaxx is already offering on the market,
instead of taking away market share from the competition (Pelsmacker, Geuens &
Van den Bergh, 2007). If such cannibalisation occurs, then in the worst case scenario
the Luxury cinema will not be profitable for Cinemaxx, which might result in costly
investments suddenly being useless and Cinemaxx becoming uncompetitive (Chandy
& Tellis, 1998).
Although, in this particular project, few strategies will be used that could help prevent
cannibalisation. First of all, the aim of the Luxury cinema is to try to reach a different
target audience than targeted by the normal screening rooms. Even though the Luxury
cinema can be considered as a line extension to Cinemaxx’s current offerings, it is
still a new and very different concept. Secondly, the price will be higher as the service
will be considered as a luxury service and therefore, the guests might attend it for
different occasions than when going to the normal cinema. The luxury experience is
for guests that can afford it and guests that want to spend money on something extra
special. Thirdly, there is a risk of cannibalising the offerings of the concession stand
by offering guests to pre-order food elsewhere to be delivered to their seats. Because
included in the price of the movie ticket is 73 DKK for snacks and beverages, it is
guaranteed that each guest “spends” at least 73 DKK at the concession stand. Finally,
as will be argued later on, the luxury cinema project is very feasible. It is working
very well in other countries and Cinemaxx would thus not be engaging in any high
risk activities. Additionally, because the Luxury cinema is replacing an existing room,
Cinemaxx is not adding a screening room. The Luxury cinema is replacing one of the
two smallest rooms in Cinemaxx, which only has 84 regular seats. These smaller
12

15. screening rooms usually offer movies that have been showing for some time and are
dwindling in attendance. Rather than having a screening room that is seldom full, the
same space would be used for 48 more expensive seats that are more likely to be full
because of their exclusivity. This can therefore be seen as a way to create more
efficiency in the long run than having a cannibalising effect. The risk of
cannibalisation is therefore not considered as an issue to worry about.
5. Feasibility
5.1 Resource feasibility
The objective is to build a Luxury cinema in cooperation with the local cinema,
Cinemaxx. In order to transform one of Cinemaxx’s current screening rooms into a
Luxury cinema, a loan will need to be acquired in order to do the appropriate
renovations. Because Cinemaxx is a well established cinema in the central of Aarhus,
it is assumed that they have an agreement with a local bank institution in regards to
financing the renovations.
The renovations that will have to be done are among others; changing the seats from
the regular ones to La-Z-Boy’s, altering the slope of the room in order to create room
for the larger seats, and building a soundproof lavatory which is available for luxury
guests exclusively. Most technical aspects regarding the big screen, projector, sound
and lighting are assumed to be already available in the room. Extra technical cost will
be regarding the small LCD screen in the lavatory, along with the integration of the
Luxury cinema into the current website and booking system. Additionally, minor
costs are expected regarding communicating the new concept.
Because the Luxury cinema is replacing an existing room, the current personnel will
suffice. It is though necessary to hire a service “coach” to introduce the current staff
to the added service value and teach them the right work method. It is therefore
assumed that in the long run it will cost the same for Cinemaxx to show a movie in
the Luxury cinema as in a regular room. The main cost will be regarding the start-up.
5.2 Legal feasibility
Implementation of a new Luxury cinema project has to be evaluated with regards to
the current legislation. Since renovations of existing premises in the cinema will take
13

16. place, rather than the establishment of a completely new cinema, there is no need to
register a new business. However, the cinema will need to make sure that special
permissions to serve food ("næringsbrev") and a licence to sell alcoholic drinks
("alkoholbevilling") are in place. If food is supposed to be delivered to the cinema
guests’ seats then the facilities should meet the hygienic requirements set by Danish
authorities. It is assumed that Cinemaxx has already obtained these documents
because they already offer alcoholic beverages and snacks.
5.3 Cultural feasibility
One of the main characteristics of Denmark is its welfare system, where each member
of the society has equal rights and access to social support and social benefits
(Internet 18). The welfare state, the sense of security and comfort, the solidarity and
sense of community support are all part of the Danish way of life (Internet 19).
Hofstede’s cultural typology can give some insight into how the Danish culture can be
interpreted compared to other cultures. Hofstede’s cultural typology is one of the most
influential national cultural frameworks. It represents four cultural dimensions;
individualism/collectivism, power distance, masculinity/femininity, and uncertainty
avoidance. These dimensions are based on four fundamental problems which societies
face regarding the relationship between the individual and the group, social inequality,
social implications of gender, and handling of uncertainty ingrained in economic and
social processes (Steenkamp, 2001).
When Denmark is compared to 68 other countries in accordance to Hofstede’s
cultural dimensions, it is ranked as the 10th most individualistic country (Internet 20).
Individualism asserts individuality and independence (Usunier, 1996). Additionally,
individualistic cultures like Denmark are associated with achievement, freedom, high
levels of competition and pleasure (Han & Shavitt, 1994). Denmark has very low
scores in the other three dimensions of Hofstede’s cultural typology. It ranks as the 4th
most feminine culture and the 4th lowest in power distance. This emphasizes the
importance of equality, nurturing, modesty, patience, helpfulness, and close
relationships between people in the Danish culture. Denmark is also the second lowest
scoring country regarding uncertainty avoidance, which reflects how willing Danes
are to try new ways and approaches (Internet 21, Internet 22).
14

17. According to Denmark’s ranking on Hofstede’s cultural dimensions, Danes should be
open to the idea of affordable luxury in the form of a Luxury cinema. It is a luxury
that is available for nearly everyone, appealing to Danes’ need for equality. It is
unique and different, appealing to Danes’ need for individuality. It is a new and
modern way of enjoying a movie in a cinema, which appeals to Danes’ openness to
innovation and experiencing new things. It represents a comfortable way to enjoy a
movie, appealing to Danes’ need to “hygge sig”, which is considered a fundamental
notion of Danish lifestyle (Internet 21). Since "hygge" is a key cultural concept, it
involves many of the basic attitudes and values in Danish culture. J.F.
HansenFOOTNOTE-1 (1980) mentions several meanings and associations which this
word embraces. First of all, "hygge" is closely connected to physical comfort,
cosiness, sense of well-being and a relaxed frame of mind. Elements of comfort
depend on the context, but generally speaking these are warmth, the presence of
delicious food and settled physical position. The concept of the Luxury cinema with
food served, blankets and comfortable La-Z-Boy chairs would comply with these
elements. Also, the leisure nature of this experience implies that a relaxed frame of
mind is present.
"Hygge" is also commonly associated with family and friends, i.e. members of one's
primary social network. The movie-going pass-time activity is usually performed in
the company of friends, family or a partner. Hansen (1980) also discusses
attainableness and familiarity as associations with "hygge". The Luxury cinema,
despite its name, is an affordable activity and the experience as such is a new
approach to an old concept, it therefore has the element of familiarity. It is thus not
considered feasible to implement too extravagant changes to start with. Instead, it
could be a possibility to add more elements to the concept later on.
Furthermore, Hansen (1980) defines closure to be an important element of "hygge".
Only spaces, both inside or outside, which are in reasonable proportions to an
individual's own dimensions, can affect the emergence of "hygge". Closure, as an
aspect of "hygge", involves size and boundaries. The room, which is framed by the
walls, is considered to be "hyggeligt". It provides a sense of security and protection,
while a more open space can diminish this feeling. The Luxury cinema will be large
enough to accommodate enough guests, but not too large. The notion of protective
boundaries expresses the possibility of undisturbed involvement in the present
15

18. moment of "hygge". Blankets, which are planned to be offered in the Luxury cinema,
can facilitate the creation of these protective boundaries as well.
5.4 Timeframe
It is estimated that the implementation of the project will take approximately up to
three months. The task will take place during the summer season, which is a down-
season in the cinemas. By choosing a down-season, it is possible to make sure that the
potential revenue from the room will not be lost. The tasks to be completed within this
timeframe include room renovation, new furniture acquisition and installation,
lavatory redesign, signing up the agreements with the cafes and restaurants,
integration with the existing system for ticket bookings, communication campaign
development and launch, staff education and other tasks.
6. Marketing plan
6.1 Product/concept
The Luxury cinema is a new approach to an old and common leisure concept. Like
with most leisure activities, cinemas have to advance in order to attract a wider and
more diverse audience.
The Luxury cinema involves enhancing the value creation, making it more intimate
and exclusive. Guests can go to the cinema and experience watching a movie on a big
screen, with the best sound quality, in an even more comfortable and luxurious setting
than before. The seats will be larger and more comfortable, with adjustable back and
foot rest, and a warm and cosy blanket available for all guests.
The Luxury cinema recognises the need for extra beverages while the movie is
showing. Guests can place an order at the concession stand before the movie starts for
extra drinks or snacks to be delivered to their seats in a discrete manner while the
movie is playing. Guests can also order food before they come to the cinema from
restaurants at Bruuns Galleri, which is then waiting for them at their seats when they
arrive.
During the movie, the cinema guest might want to go to the lavatory. The Luxury
cinema foresees such a need and provides an exclusive lavatory for guests of the
16

19. Luxury cinema. There, a smaller LCD screen is installed, so if guests need to leave
the room they can still follow the movie on that screen.
The movies offered at the cinema will rotate weekly so that the same movie won’t be
shown in the Luxury cinema many weeks at a time. Every movie will have its own
theme beverage which is included in the price. The theme beverage will differ
between movie genres, i.e. the theme beverage for a hard core action movie could be a
large beer and peanuts, for a „chick-flick“ it could be a cosmopolitan, for a James
Bond movie it could be a vodka martini – shaken not stirred, for a comedy it could be
a fun and fruity flavoured cocktail, and for a horror movie it could be a Bloody Mary.
The possibilities are endless and of course, the same beverage can suit several movies.
If guests choose not to have an alcoholic beverage, they can have a medium sized
popcorn and soda instead.
During special occasions, i.e. on premiers or Valentine’s Day, the Luxury cinema will
try to add some extra elements of surprise to their offerings. This can be in the form of
a waiter in a tuxedo waiting for the guests when they arrive and offering them a glass
of champagne, or a piece of heart shaped chocolate at each guest’s table when they
arrive, or even a free shoulder massage for guests that show up early for the movie. It
can also be in the form of changing the physical settings in accordance to a certain
movie’s theme. For instance, some sort of theme related decorations in the room, like
candles lit on the table when showing a romantic movie on Valentine’s day or tasteful
Christmas decorations when premiering a Christmas movie. These are just few ideas
of how to add to the surprise factor of the Luxury cinema. Of course, each movie will
have its own theme and therefore have different surprise elements that fit best to each
particular theme. All these elements of surprise can enhance the luxury experience
even more.
6.2 Process
The movie-going experience starts long before the lights go off and the movie title
appears on the screen, and ends after the movie credits are displayed and the lights go
on again. When the decision is made on how to spend the free time available, the pre-
research on what movies are being shown is completed and it is agreed upon what
movie to watch, tickets have to be obtained. Nowadays the majority of movie tickets
is ordered on-line, since this method assumingly saves time and is very convenient for
17

20. the users. The on-line ticket booking system is a first “touch point” between the guests
and the cinema. When a Luxury cinema ticket is chosen, the guests can choose to
order a meal on-line which will be waiting for them when they enter the Luxury
cinema. Interaction with the system should therefore be smooth, “transparent” and
comprehensible. It should be useful and usable in order to provide an optimal
experience for the cinema guests.
The next stage in the movie-going experience is collecting and paying for the tickets
at the cinema cash desk, which is yet another touch point between the company and
the cinema guests. Long lines, though generally acceptable, do not contribute
positively to the guests’ perception of the experience. When guests have obtained
their tickets they enter the cinema. Included in the price of the Luxury cinema ticket is
either medium popcorn and soda, or the movie’s theme drink. The guests then need to
decide whether they want popcorn and soda or the theme drink, which is served in the
cinema’s concession stand. The cinema guests can then buy some other snacks or
drinks if desired. The personnel at the cash desk and at the concession stand are an
important factor affecting the guests.
The next part of the process is locating the Luxury cinema within Cinemaxx and
finding the right seat. It is important that “navigation” within the cinema is easy and
free of distractions.
Before the movie starts, advertisements are usually shown to the audience. While
some people despise those ads and try to avoid being exposed, most consider them to
be entertaining and do not mind watching (Internet 23). Cinema administration faces a
dilemma in this case. On the one hand, ads are profitable for the cinema and the more
ads displayed, the more money the cinema gets paid. On the other hand, too many ads
can be considered as a disturbance to the guests. The cinema thus needs to be
selective regarding ads and display only the ones which are relevant to the guests.
The next stage in the process is watching the movie itself, and even though experience
at this stage is determined a lot by individual preferences and attitudes towards the
particular movie, the cinema can enhance the experience by providing comfortable
physical settings (see details in chapter 6.1). While watching the movie, guests can
enjoy meals and drinks under a cosy blanket, and thus the experience is enriched
through different senses.
18

21. The process of the luxury service can be described as an elaborate interpersonal
service where both guests and employees are involved (Bitner, 1992). The physical
environment (tangible servicescapes) in the Luxury cinema is what is probably most
effective concerning influencing the guests when enjoying the experience. Although,
the personal contact (intangible servicescapes) from employees while servicing the
guests in the physical setting is also a very important factor of the process. The
employees can influence the experience with their service attitude, knowledge and
welcoming (Aubert-Gamet & Cova, 1999).
An important aspect of the service process is to train the employees well so they can
inform the guests about the function of the service experience in order to maximize
guests‘ satisfaction. If there is insufficient interaction level between the employees
and the guests, the system will not work efficiently. One of the goals of creating this
"linking" value between employees and guests, during the process, is to help keep the
guests‘ satisfaction level high (Internet 24).
6.3 Price
Because the Luxury cinema concept is not available in the Danish market, the price
has to be set by taking into account the price of regular movie tickets. The price of
movie tickets is the same in the three main cinemas in Aarhus, 65 DKK before 18:00
and 75 DKK after 18:00 (Internet 11, Internet 12, Internet 25). According to
Johannsson (2008), movie producers take 50-70% of the ticket price. It is assumed
that the same goes for cinemas in Denmark. In the Icelandic cinema, the ticket price
for the luxury room is 16% higher than the ticket price for the regular screening room.
A regular price for a movie ticket in Cinemaxx is 75 DKK and with the same price
level as in Iceland the Luxury cinema ticket will be 87 DKK. After sales tax of 25%
and the movie producers cut of 50-70% of the ticket price, Cinemaxx will get 19,575
to 32,625 DKK for each ticket. The price of the Luxury cinema ticket will though be
160 DKK in whole. The price 160 is chosen rather than 159 because the digit 0 has
been found to indicate higher quality, while the number 9 can signal lower quality and
discount pricing (Stiving & Winer, 1997). Included in the price will be the theme
drink for that particular movie or medium popcorn and medium soda drink (priced 55
DKK regularly). By having some part of the beverages included in the price, the
cinema is guaranteed the income from a medium popcorn and soda sold. If not
19

22. included, the movie-goers might not choose to buy beverages and snacks equal to the
price of a medium popcorn and soda.
Cinemaxx, BioCity and Metropol all use the same price fencing strategy. The Luxury
cinema will offer the same price fences as the other cinemas (table 1).
Table 1. Pricing list
Before 18:00 After 18:00
Luxury Luxury
Regular room* cinema Regular room* cinema
Children under 12 55 140 55 - ***
Normal ticket 65 150 75 160
Seniors +65 55 140 55 140
Students mon-thu** 55 140 65 150
*The ticket price in Cinemaxx, BioCity, and Metropol.
**Students get a 10 DDK discount four days a week.
***The Luxury cinema will be closed for children after 18:00
6.4 Place
The objective is to have the Luxury cinema located in Cinemaxx. Cinemaxx is a well
known brand name, not only by residents in Aarhus, but also by people from rural
areas and tourists visiting the city. Cinemaxx is situated in Bruuns Gallery, which is in
the centre of Aarhus. It is located next to the train station, making the Luxury cinema
more accessible to people arriving from rural areas and tourists. Cinemaxx is the
largest cinema in Aarhus and offers the most suitable facilities. Screening room 5 is
suggested for renovations because it is one of the smallest rooms in Cinemaxx,
seating only 83 regular seats. The room will therefore seat 48 La-Z-Boy chairs. Room
5 is located in the far end of the cinema so it is relatively private from the other
screening rooms. It is also next to a lavatory which means that the necessary pluming
is available, making it easier to create an exclusive soundproof lavatory for the
Luxury cinema.
6.5 Physical environment
The effect of the physical settings, atmospherics, design and layout of the premises on
consumers has been recognized by both researchers and managers for a long time.
Based on the physical settings, consumers can form their perception of, and to some
extent, the attitude towards a certain facility. For example, Bitner (1992) suggest that
physical settings may influence the customer ultimate satisfaction with the service.
20

23. Physical settings are also said to effect behaviour of the customers. A framework
suggested by Bitner implies that consumers respond cognitively, emotionally and
physiologically to the physical environment. These internal responses, in turn,
influence the customers’ behaviour.
According to environmental psychologists, such behavioural reactions to the places
where individuals find themselves can be classified into two general and opposite
forms: approach and avoidance. Approach behaviour can manifest itself in attraction
to the place, desire to stay longer in the environment, spending more money, loyalty
towards the organization (return) and carrying out a certain plan or purpose within
those settings. Avoidance behaviour is the opposite behaviour, i.e. consumers feeling
the desire to leave the place and not to come back there anymore (Bitner, 1992).
Thus, special emphasis will be placed on creating the most appropriate physical
setting. Careful planning out and designing of the physical settings of the Luxury
cinema in Cinemaxx can facilitate the desired behaviour among guests. The Luxury
cinema concept, if implemented thoughtfully, could contribute to attracting guests and
getting them to come back to enjoy the experience of movie watching within
comfortable settings.
It is worth noting though, that physical settings do not affect behaviour directly, but
elicit internal responses among the individuals. As mentioned before, such responses
may be classified as cognitive, emotional and physiological. Cognitive responses
influence people beliefs about the place. So by experiencing physical settings which
are different from (and by default more pleasurable than) usual cinema settings, the
guests might form the belief that the Luxury cinema is something special that provides
a richer experience than a regular screening room. Emotional responses can be
captured by two dimensions: pleasure and arousal. Approach behaviour increases in
the more pleasurable environments. Emotional arousal is also associated with increase
in approach behaviour, unless combined with unpleasant settings (Bitner, 1992). The
Luxury cinema aims to create a pleasant atmosphere and an elevated arousal among
the guests. The movie-going as such is always associated with emotional arousal, and
by providing comfortable seats and cosy interior designs, the Luxury cinema
facilitates pleasantness of the environment. Physiological responses also contribute to
the behaviour of the guests. Therefore factors such as the level of noise, temperature,
21

24. seats comfort, lighting and the “freshness” of the air, should all be considered when
designing physical settings.
A careful design of the physical settings in the Luxury cinema will contribute to the
approach behaviour of the visitors, and further help Cinemaxx to achieve its
marketing and economic goals. When the concept is a success, when it is liked and
appreciated by those for whom it was created, people tend to engage in word of mouth
activities, telling their friends and relatives stories about their positive experiences.
People who enjoy a pleasant and comfortable time spent in the cinema, will come
back to relive the experience.
6.6 Promotion
To promote the Luxury cinema, several communication methods will be used. In the
beginning, to introduce the concept, a social gathering will be held where employees,
management and other stakeholders, will be invited along with their families and
friends. This will work as both a sales promotion with a free movie, food and
beverages, and as a public relation event, where hopefully the public media (press and
TV) will find this new concept interesting. This will be done to create awareness and
positive Word Of Mouth among guests. Mass media advertising in the form of ads in
newspapers, magazines and on WebPages, along with some point of purchase
material, will then support the initial promotion of the Luxury cinema.
Integrated marketing communication will be used as a tool to help inform guests in a
consistent way, where the goal is to provide clarity of the message and maximum
communication impact (Pelsmacker et al, 2007). All the messages, no matter in what
form, will have the same goal to communicate the added customer value offered by
the Luxury cinema experience compared to other competitive experiences. To
improve relations with target groups, increase customer satisfaction, and reinforce
brand awareness and brand preference, image or theme communications will be used
(Pelsmacker et al, 2007). This will be the goal of the ”theme strategy” in the Luxury
cinema. To follow this strategy, the luxury cinema will always have a special theme
with every movie, which involves specific drinks or cocktails offered that fit with the
movie theme. During premieres, this theme strategy will be taken a bit further with
extra service factors to enhance the luxury experience. Other special events,
supposedly more private ones, will be held which should also help communicate the
22

25. value and attributes to other internal stakeholders. This will enable an effective
communication with all the employees so they can be knowledgeable and share the
experience with guests (Internet 24).
All printed mass media advertising will mostly be in the form of putting the Luxury
cinema logo on existing movie advertisements, pointing out that the movie is shown
in the Luxury cinema.
E-communication, e.g. e-commerce and mobile marketing, will be used as a reminder
of the Luxury cinema and to inform about certain movie premieres in the Luxury
cinema or other theme events. Firstly, this will be done in the form of a Luxury Club
where members receive emails or text messages regarding the Luxury cinema.
Everybody who is interested in attending the Luxury cinema can join the Luxury club
by registering on Cinemaxx’s webpage. The people who receive these emails or text
messages will then have the chance to be first in line to buy a ticket for that particular
premiere. Tickets to pre-premiers will also be offered to members through e-
communication, signalling the exclusivity the luxury cinema guests attain. Secondly,
through Facebook and other social web-networks, the Luxury cinema aims to create a
strong social network, where it is possible to send out group messages to all connected
profile friends. Finally, on the current Cinemaxx webpage a new link will be added to
the front webpage where all information about the Luxury cinema can be found and
guests can sign up for free membership to the Luxury Club. The ordering of tickets
will go through the same booking system as Cinemaxx is already using.
6.7 People
All the people involved in the Luxury cinema service, directly and indirectly, are
important for the brand building of the Luxury cinema. These are cinema guests,
employees, management and other stakeholders who all add value to the service
offerings. These people are also responsible for the reputation of the brand. Therefore,
the whole workforce that comes in direct contact with the guests has to be well
trained, motivated and has to have the right attitude (Internet 24).
For the Luxury cinema, a new service ”coach” will be hired for short time period to
train the current employees in how to provide the extra luxury service that the guests
are paying for, both technically and personally/behaviourally. This coach is a
specialist in service marketing and will give a one-day seminar to the employees,
23

26. where he will go over the important aspects to consider when providing such a luxury
experience. After the day of the seminar, the coach will stay for the first weeks to
supervise and give instructions to any adjustments that have to be done regarding the
service. All the people who are in direct contact with guests will have the same goal in
creating a ”linking value” between and within the employees and guests. This is done
in order to maximize the service value offered by the Luxury cinema. This will be
accomplished through the use of the cinema’s servicescapes. To achieve this ”linking
value” experience, the guests will play an important role as they are the ones
experiencing the service and will give it this meaning (Aubert-Gamet & Cova, 1999).
7. Expected returns
7.1 Ticket revenue estimation
The ticket revenue from the Luxury cinema could be over 3 times more than the
revenue from a regular room (table 2). This implies that this concept is financially
feasible and could be of economic interest to possible stakeholders, in this case
Cinemaxx. The base of this estimation is data provided by an Icelandic cinema which
offers a luxury room (Johannsson, 2008). It is therefore emphasized that these are not
numbers from the Danish market but it is assumed that they might be similar. It was
not possible to get data of this kind concerning the Danish market because the concept
is not available in Denmark at the time being.
As mentioned before, the Luxury cinema will focus on showing the latest blockbuster
movies. Therefore, the calculations in table 2 are made with 70% cut to the movie
producers.
24

27. Table 2. Estimated revenues from the Luxury cinema compared to a regular room
Regular room Luxury cinema
Number of seats 83 48
Average attendance 14% = 13 30% = 15
Movie ticket price 75 87
Beverages and snacks 0 73
Total ticket price 75 160
Movie ticket price 75 87
- 25% sales tax 56,25 65,25
- movie producers cut (70%) 16,875 19,575
Movie ticket sales on average per show 219,375 293,625
Beverages and snacks 0 73
Beverages and snacks included in price
after sales tax 0 54,75
Beverages and snacks included in price
before mark-up (100%) 0 27,375
Beverages and snacks included in price on
average per show 0 410,625
Total revenue on average per show 219,375 704,25
Total revenue on average per day 1.316,25 4.225,5
Total revenue on average per week 9.213,75 29.578,5
7.2 Cost factors estimation
Because the Luxury cinema would be located within Cinemaxx, the main cost factors
will be in regards to changing screening room 5 into the Luxury cinema. It is
estimated that when renovating the room, the following cost factors will be relevant
(table 3). The cost estimations of the contractor factors were made in cooperation with
an employee of a local building/floor work company (Markusson, 2008).
The Luxury cinema will use all the existing advertising agreements and media
channels that Cinemaxx is already using, which keeps the communication cost for the
Luxury cinema lower. The communication tactics used to promote the Luxury cinema
are not considered costly, where it will mostly use public relations, e-
25

28. communications, and the Luxury cinema logo added to existing printed
advertisements. In most cases, printed materials and various other promotional
materials are supplied by the movie producers (Kolbeinsson, 2008). Therefore, it is
assumed that the income from the advertisement sales will be enough to cover any
additional communication costs.
Table 3. Estimated cost factors for the renovations.
Price
Sales without sales
Supplier Product Price tax tax Quantity Cost
Bauhaus Toilet 998 199,6 798,4 1 798,4
Ikea lights 39 7,8 31,2 2 62,4
Ikea Small tables 149 29,8 119,2 24 2.860,8
Ikea Blanket 79 15,8 63,2 48 3.033,6
Silvan Sink 249,95 49,99 199,96 1 199,96
Silvan Faucet 149,94 29,99 119,95 1 119,95
Pixmania.com TV 1.468 293,6 1.174,4 1 1.174,4
Recliner.dk La-Z-Boy 4.495 899 3.596 48 172.608
Floor work with
Contractor material 375 75 300 200 60.000
Painting with
Contractor material 15.000 3.000 12.000 1 12.000
Setting up the
Contractor chairs 10.000 2.000 8.000 1 8.000
Contractor Service seminar 12.000 2.400 9.600 1 9.600
Total cost: 270.457,51
7.3 Break-even estimation
According to Johannsson (2008) a movie with 10% and lower attendance is
considered to be flopping. A movie with 85% and higher attendance is on the other
hand considered as a huge success for the cinema. With these figures in mind, a worst
case and best case scenario analysis is conducted in order to estimate the break-even
point (table 4). As mentioned in chapter 4.3, blockbuster movies are considered to be
the most appropriate for the Luxury cinema. Therefore, a 70% cut to the movie
producers is used in the calculations.
26

29. Table 4. Worst case and best case scenario analysis
Scenarios
Worst case Best case
No of seats 48 48
Attendance 10% 85%
Sold seats 5 41
Total revenue from the sales of the tickets 93,96 798,66
Total revenue from the beverages and
snacks included in the overall price 131,4 1116,9
Total revenue from all sold seats 225,36 1915,56
How many shows does it take to pay off
the renovations 1200 141
With 6 shows every day* 200 24
*There are on average 46 showings in all the rooms daily, which makes approximately 6
shows in each room (Internet 26)
As table 4 shows, it would take just under a month to pay for the renovations if the
Luxury cinema would have at least 85% attendance. It would take nearly 7 months if
the Luxury cinema had only 10% attendance, which is not expected. If Cinemaxx
would decide to launch this concept in their Aarhus cinema, then it is expected that
the biggest blockbusters would be shown in the Luxury cinema. Also, because it is a
new addition to Cinemaxx offerings, it is believed that guests will want to try the
Luxury cinema. As stated before, Danes are open to new experiences.
7.4 Brand equity
Introduction of a new Luxury cinema concept will increase Cinemaxx’s brand equity.
Brand equity is an intangible asset indicating the value of the brand and it depends on
the associations formed by customers towards the company’s service or product.
When the brand is well recognized and has positive associations in the mind of the
consumers, it can add a significant value to the company (Pelsmacker, et.al, 2007).
Strong brand equity might provide benefits, such as increased cash flow due to
increased market share, reduced promotional costs and premium pricing.
27

30. Since there is no luxury cinema concept available in Denmark at the moment, it will
help Cinemaxx to differentiate itself from all other cinemas. It also creates a first-
mover advantage for Cinemaxx. That kind of advantage can only be maintained if
Cinemaxx keeps on innovating in the service field and designing a richer experience
for the cinema guests to make movie-going more desirable. Improved service will also
influence the organizational efficiency and effectiveness. It is clear-cut, that standing
out from the competition and offering greater value is much better than just selling
and pushing advertising and pricing.
8. Conclusion
Based on the feasibility analysis conducted, it can be concluded that the launch of the
Luxury cinema concept is feasible and fits well with the current situation. The launch
is proposed to Cinemaxx, which has the necessary competences and suitable
conditions. The concept is compatible with the cultural settings in Denmark and can
be implemented in a relatively short time.
It is expected that the Luxury cinema will have a positive effect on Cinemaxx’s
bottom line. Firstly, the expected returns analysis demonstrates that the launch of the
concept will positively affect Cinemaxx’s revenue and brand equity. Secondly,
enhancing Cinemaxx’s service offerings is expected to influence customer satisfaction
positively. Finally, the launch of the Luxury cinema, which is not available on the
Danish market at the moment, will give Cinemaxx a first-mover advantage.
In order to hold on to their first mover advantage, Cinemaxx could add several service
aspects to increase the value offerings even more. To further enhance the guests’
experience, the concept has to be constantly developed and innovations have to be
brought about. For example, in the future, the Luxury cinema could be equipped with
touch screens, which guests can use to place the orders for meals and beverages while
watching a movie. This would “sensualise” the experience. Additionally, a Luxury
lounge could be built where only luxury guests are allowed to enter. A concierge
could greet the guests when they arrive and be available to take any orders guests
might want to make. This concierge could be considered as a part of the Luxury
cinema experience, available to make the movie-going experience even more
enjoyable.
28

31. Another potential perspective is to add to the Luxury cinema offerings a concept that
is similar to the existing “baby-bio”, i.e. showing the movies during the low
attendance morning hours exclusively for mothers and families, who can then take
their babies with them to the movie (Internet 27). In this case, the Luxury cinema
could serve healthy meals and beverages.
It is though proposed that, if Cinemaxx decides to incorporate the Luxury cinema
concept into their offerings, they should start slowly. As mentioned earlier regarding
cultural feasibility, Danes like changes but not too many changes at a time. It is
therefore advisable to start by offering the Luxury cinema as proposed in this report,
and then later on when it is a success, add more service attributes to hold on to the
newly acquired competitive advantage.
8.1 Limitations
It is worth mentioning that there are certain limitations to the analysis made in this
report. It was not possible to get any information from Cinemaxx concerning cinema
attendance or any aspects regarding how the cinema operates. The expected returns
were based on numbers from the Icelandic cinema market and it was assumed
throughout the report that Cinemaxx’s operations are similar to the Icelandic cinema.
Even though Iceland and Denmark are similar in many ways, there may be some
differences regarding the cinema market which the authors of this report were not able
to pinpoint.
Also, regarding expected returns, only one price is used in the calculations, the after
18:00 price. Because there were no available data on how the attendance before 18:00
varies from the attendance after 18:00, the average attendance in Iceland was used as
a reference. In Icelandic movie cinemas, there is only one fixed price for regular
screening rooms and one fixed price for the luxury room. It is therefore possible that
because Danish cinemas offer some degree of price fencing, their average attendance
is higher than in Iceland.
29

32. 9. Bibliography
Books:
Baumeister, R.F. and Bushma, B.K (2008). Social psychology and human nature
(Annotated instructor’s Edition). CA, US: Thomson Wadsworth.
Hansen, J.F. (1980). We are a little land. Cultural Assumptions in Danish Everyday
Life. New York: Arno Press Inc.
Kotler, P., Armstrong, G., Saunders, J. and Wong, V. (2001). Principles of marketing
(Third European edition). Harlow, Edinburgh Gate: Pearson Education
Limited.
Pelsmacker, P.D., Geuens, M., and Bergh, J.V.D. (2007). Marketing Communications
– A European Perspective (3rd Edition). Essex: Person Education Limited.
Pine, B.J., and Gilmore, J.H. (1999). The experience economy (p. 1-43). Boston, MA:
Harvard
Usunier , J.C. (1996) Chapter 3:Cultural dynamics 2: Interactions, mindsets and
behaviours. In Marketing across cultures (3rd edition), FT Prentice Hall.
Articles:
Aubert-Gamet, V., and Cova, B. (1999), Servicescapes: From modern non-places to
postmodern common places. Journal of Business Research, 44, 37-45
Bitner, M. J. (1992). Servicescapes: The impact of physical surroundings on
customers and employees. Journal of Marketing, 56 (April), 57-71.
Chandy, Rajesh K & Tellis, Gerard J (1998). Organizing for Radical Product
Innovation: The Overlooked Role of Willingness to Cannibalize. Journal of
Marketing Research, Vol. 35, Iss. 4, pp. 474-487.
Elberse, A. (2008). Should you invest in the long tail? Harvard Business Review,
July-August 2008, 88-96.
Ewing, M., Plessis, E., & Foster, C. (2001). Cinema Advertising Re-Considered.
Journal of advertising research , 1, 78-85.
30

33. Haagen, J., Arffmann, M., Buchter, M., Flyvholm, M., & Brøgger, L. (2008). Reach
out - inspiration til brugerinddragelse og innovation i kulturens verden.
København: Kulturministeriet.
Han, S. and Shavitt, S. (1994). Persuasion and culture: Advertising appeals in
Individualistic and collectivistic societies. Journal of experimental social
psychology, 30, 326-350
Holbrook, M. B., & & Addis, M. (2008). Art versus commerce in the movie industry:
A two-path model of motion-picture success. Journal of Cultural Economics,
32, 87-107.
Steenkamp, J.E.M (2001). The role of national culture in international marketing
research. International marketing review, vol. 18, no. 1, pp.30-44
Stiving, M., & Winer, R. (1997). An Empirical Analysis of Price Endings with
Scanner Data. Journal of consumer research , June, 57-67.
Webpages:
Internet 1: Buffolo as an architectural museum. Buffalo, New York Celebrates 111th
Birthday of World's First Movie Theatre, retrieved 29th November 2008 from
http://www.buffaloah.com/h/mark/birthday.html
Internet 2: Wikipedia. Movie theatre, retrieved 29th November 2008 from
http://en.wikipedia.org/wiki/Movie_theater#History
Internet 3: Euromonitor International, Global Market Information Database. Report:
Consumer lifestyles – Denmark, published July 14th 2005, retrieved November
4th 2008 from http://www.portal.euromonitor.com.www.baser.dk/
passport/Statistics. Aspx
Internet 4: Det danske filminstitut. Profil af det danske biografpublikum, retrieved 2nd
December 2008 from http://www.dfi.dk/NR/rdonlyres/8C83DA9B-F036-
48E2-B81C-D8CC7085A331/0/Publikumprofil.pdf
Internet 5: Cinemaxx Aarhus. Sale og udstyr, retrieved 2nd December 2008 from
http://cinemaxx.dk/aarhus/html/sale_udstyr.htm
Internet 6: Det danske filminstitut. Hvor drømmen bliver til virkelighed, retrieved 2nd
December from http://www.dfi.dk/tidsskriftetfilm/26/hvordrommenbliver.htm
31

34. Internet 7: Det danske filminstitut. Befolkningens biografvaner og holdningen til
dansk film, retrieved 2nd December 2008
http://www.dfi.dk/NR/rdonlyres/810CE925-0B58-49EF-80E4-
ABB4B8952144/0/Danskernesbiografvaner2006.pdf
Internet 8: Det danske filminstitut. Biografpublikum, retrieved 2nd December from
http://www.dfi.dk/filmstoette/rapporterogartikler/biografpublikummet/biograf
publikummet.htm
Internet 9: Visit Denmark. Aarhus for young people, retrieved 3rd December 2008
from http://www.visitdenmark.com/international/en-
gb/menu/turist/inspiration/storbyferie/aarhus/aarhus-for-young-
people.htm?NRMODE=Update&WBCMODE=
Internet 10: StayresDenmark. Aarhus city info, retrieved 3rd December 2008 from
http://www.stayresdenmark.com/aarhus.html
Internet 11: Kino. Biocity Aarhus, retrieved 3rd December 2008 from
http://www.kino.dk/Biografer/BioCity-Aarhus.aspx
Internet 12: Kino. Metropol Aarhus, retrieved 3rd December 2008 from
http://www.kino.dk/Biografer/Metropol-Aarhus.aspx
Internet 13: ParadisBio. Paradisets engle, retrieved 3rd December 2008 from
http://www.paradisbio.dk/cms.asp?bio=aarhusc&id=72&type=10
Internet 14: Visit Aarhus. Welcome to visit Aarhus, retrieved 3rd December from
http://www.visitaarhus.com/index.htm?changelanguage=true
Internet 15: Filmreference. Art Cinema, retrieved 3rd December 2008 from
http://www.filmreference.com/encyclopedia/Academy-Awards-Crime-
Films/Art-Cinema.html
Internet 16: Filmreference. Art Cinema in the twenty first century, retrieved 3rd
December 2008 from http://www.filmreference.com/encyclopedia/Academy-
Awards-Crime-Films/Art-Cinema-ART-CINEMA-IN-THE-TWENTY-
FIRST-CENTURY.html
Internet 17: Big Picture. Why is movie theatre attendance declining? Retrieved 3rd
December 2008 from
http://bigpicture.typepad.com/comments/2005/07/declining_movie.html
32

35. Internet 18: Denmark. Society and welfare, retrieved 2nd December 2008 from
http://www.denmark.dk/en/menu/About-Denmark/Society
Internet 19: Limbistraine. Cultural values in Danish advertising, retrieved 2nd
December from http://www.limbistraine.com/ro/cercetare/Gabriela-
Sauciuc/2.Denmark-Country-mentality-lifestyle-values.html
Internet 20: Geert-Hofstede. Geert Hostede™ Cultural Dimensions, retrieved 2nd
December 2008 from http://www.geert-hofstede.com/hofstede_dimensions.php
Internet 21: Limbistraine. Cultural values in Danish advertising, retrieved 2nd
December 2008 from http://www.limbistraine.com/ro/cercetare/Gabriela-
Sauciuc/3.Denmark-Hofstede-s-cultural-dimensions.html
Internet 22: Geert-Hofstede. Geert Hostede™ Cultural Dimensions, retrieved 2nd
December 2008 from http://www.geert-hofstede.com/hofstede_denmark.shtml
Internet 23: Arbitron. The Arbitron Cinema Advertising study, retrieved 3rd December
from http://www.arbitron.com/downloads/Arbitron_Cinema_Study.pdf
Internet 24: CIM. Marketing and the 7P’s, retrieved 2nd December from
http://www.cim.co.uk/MediaStore/FactFiles/Factifile7ps.pdf
Internet 25: Cinemaxx Aarhus. Spørgsmål og svar, retrieved 2nd December 2008
from. http://cinemaxx.dk/aarhus/html/q_and_a.htm
Internet 26: Cinemaxx Aarhus. Billetbestilling, retrieved 4th December 2008 from
http://www.secure.ebillet.dk/bpw/den/listarr.asp?orgno=160&sysno=3&catno=2
&grpno=0&typno=-1&pda=false&locno=0
Internet 27: Cinemaxx Aarhus. Baby bio, retrieved 4th December 2008 from
http://80.166.250.203/aarhus/html/babybio_arh.asp
Oral reference:
Ásgeir Kolbeinsson, marketing director for Sambíóin, an Icelandic cinema offering a
luxury screening room, November 2008
Hrafnkell Markusson, contractor, November 2008
Jón Eiríkur Johannsson, manager of Smárabíó, an Icelandic cinema offering a luxury
screening room, November 2008
33