Differential Pricing, Yield Management and 3 Idiots

6 01 2010

The Aamir Khan starrer 3 Idiots has had a bumper opening and is now a blockbuster hit. Interestingly, on the same day three friends of mine watched the movie during the New Year weekend i.e. the second week for the movie, in three different cities. One friend watched the movie with his family in a single screen theatre in Bhilai (Chhattisgarh). Another friend watched with his family in a Multiplex -Big Cinemas in Mulund. I watched with my family, in the Cinemax multiplex at Banjara Hills, Hyderabad.

Three friends watching the same movie on a particular weekend is a coincidence, but does not deserve a post. The point to note is the ticket prices paid for the same movie in the three places. The friend in Bhilai paid Rs 25 for a ticket. I paid Rs 100 per ticket and my friend in Mumbai paid, hold your breath, Rs 600 per ticket (it was a recliner seat). Same movie, same day, only difference was the location. All the tickets were bought from the counter, hence, there was no ‘black’ component.

Subsequently, six more friends chipped in with inputs on the pricing of 3 Idiots in their respective cities/towns.

SV informed that he watched in the INOX multiplex in Kolkata and paid Rs 400 for the ticket. SG watched in Big Cinemas Vashi, Navi Mumbai and paid Rs 220 per ticket. RK saw “3 idiots’ in Satyam Multiplex -Chennai and paid Rs 120 per ticket.GD informed that Pune Multiplex ticket price was Rs. 250 in the New Year weekend. RC informed that she saw the movie in a single-screen theatre in Bhubaneswar, reluctantly sitting in the rear stall, paying Rs 50 per ticket, which included a black component of Rs 25.  VS saw it in Durg in a single-screen theatre and paid Rs 50 per ticket.

 Whereas, the range of ticket price from Rs 25 to Rs 600 establish that there are several segments within urban India.

Creating a product like a movie, which cannot be customized for local markets and yet getting the differential pricing aligned with multiple levels of price elasticity existing within urban India calls for sophisticated skills in yield management. The distribution and exhibition links of the film industry’s value chain have to grapple with complexities of high order. In the case of 3 Idiots,clearly, credit is due not only to the content and promotion aspects of the film.

– G. Mohan

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3 responses

19 01 2010
tamal moitra

I saw in a singel screen in Kolkata @ Rs 25 ( I am yet to know what Multiplex is …. may be I am the 4th idiot )

2 02 2010
Samik Shome

It is true that there is differential pricing or price discrimination. But it is also true that the comfort level is also of different types in different places. So its obvious better pay will give better level of comfort – not only for films but for all commodities

14 02 2010
businessbaatein

Quick, how many people live in India? A billion? Well, maybe a little more given the rate at which we are procreating. And how many idiots? Uh… a billion is what the makers of 3 Idiots seem to think. Either that or they are worse in math than they possibly were in school. Even a cursory look at the advertisement alongside will tell you why. Even if half a billion people had watched the movie in theatres, with average ticket price of Rs 50, 3 idiots should have raked in a whopping Rs 2,500 crore by now. But in reality, it has garnered a fraction of that. So, what’s the deal? Nobody’s talking, with the film’s producer Vidhu Vinod Chopra unavailable for comment till the time this story went to press. Industry watchdog Advertising Standards Council of India also shied away, saying nobody has complained yet. Idiotic or inspired advertising? You judge.

(This story was published in Businessworld Issue Dated 22-02-2010

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