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“Price means one thing to the consumer and something else to the seller… to the consumer, it’s the cost of something. To the seller, price is revenue” (Lamb, Hair, and McDaniel, 2018, p.349). “Marketing managers are frequently challenged by the task of price setting… meeting the challenge of setting the right price can have a significant impact on the firm’s bottom line” (Lamb, Hair, and McDaniel, 2018, p.349). Lamb, Hair, and McDaniel point out that importance of creating the correct pricing strategy and how crucial it is for overall success.
The first company I thought of when reading this chapter was Moviepass, (https://www.moviepass.com/), the movie theater subscription service that aimed to disrupt the US movie theatre industry by offering consumers access to one movie a day each month. Moviepass demonstrated a high level of innovation as it set out to change the way movie goers gained admission to the cinema; they offered unlimited movies for a set price per month. Initially, the price was $30 per month to watch a movie per day. It surpassed its competitors in the movie theatre subscription service in terms of market share and grew to over 3 million members. Upon being taken over Helios and Matheson Analytics Inc., Moviepass changed its price point to $9.95 per month for daily access. This led to more even more growth but ultimately, to its collapse and downfall of the app in its current form.
The cost of the Moviepass monthly subscription was $9.99 per month. As the average movie ticket price in the US is approximately $9 per visit (in NY, closer to $15) so for the consumer, this was an incredible deal; as in effect once the customer saw one movie they were almost at break even point already. Due to these massive perceived and actual savings, the target customers learned about the deal through advertising campaigns including the utilization of social media campaigns.
Moviepass membership grew rapidly to over 3 million members, however, it was not sustainable using the price point model. Significant costs and insufficient revenue led to financial instability and speculation was that the company was not able to meet its obligations. The app was not accessible one weekend last summer and speculation was rife that the app was in massive financial trouble. In an attempt to survive, the company made alterations to its membership plans; instead of price of $9.99 per month for daily access, the same price point now allowed access for 3 movies per month thus diminishing value and trust. Restrictions were placed on access to popular movies and blockbusters at peak times.
Customer service has been abysmal and low with limited communication. Relationships and customer loyalty were badly strained due to a raft of cancellations and change of price point.
It will be interesting to see how Moviepass perform over the coming months. AMC, a major movie theater chain in the US have introduced a rival movie subscription service called Stubs A-List which is limited to AMC theaters that allows access to view 3 movies per week for $19.95 per month. However, Moviepass allows access to 91% of the movie theatres in the US, AMC makes up just 23%.
Articles, I enjoyed on this topic and I think you will too, include:
https://www.hollywoodreporter.com/news/moviepass-switches-back-30-films-month-plan-1107855
https://www.marketwatch.com/story/the-spectacular-rise-and-fall-of-moviepass-2018-07-09-101033943
https://www.pcmag.com/news/362001/report-moviepass-to-roll-out-surge-pricing-for-popular-film
https://www.hollywoodreporter.com/news/how-long-can-moviepass-keep-burning-cash-1078098
Reference List:
Lamb, C.W., Hair, J.F., and McDaniel C. (2018) MKTG 12 Principles of Marketing Boston: Cengage
Marketing Insight 