Intro to Marketing Mr. Bernstein Distribution and the Movie Industry December 3-4, 2014

Intro to Marketing Mr. Bernstein Distribution Channels Consumer Product Channel Types (Glencoe p 450) Producer directly to Consumer Producer to Retailer to Consumer Producer to Wholesaler to Retailer to Consumer Producer to Agents to Wholesaler to Retailer to Consumer Producer to Agents to Retailer to Consumer Q: Provide examples of each Distribution Channel Industrial Product Channel Types – see p 451 2

Intro to Marketing Mr. Bernstein Distribution Intensity Exclusive distribution Selective distribution Intensive distribution Based on control of selling, costs, brand image, accessibility, locations Q: Provide examples of levels of Intensity Legal and Ethical Issues in Distribution Clayton Act of 1914 prevents exclusivity which lessens competition 3

Intro to Marketing Mr. Bernstein The Distribution Environment Managing distribution is a strategic decision. Example: ST Microelectronics. Read aims-for-higher-distribution-sales/ Life in the distribution channel: In all industries, distributors face pressure from both customers and vendors Relationships with partners in the channel can be critical Understand the entire channel from producer to consumer Understand who has the leverage – who is adding most value? Are there competitive alternatives? 4

Intro to Marketing Mr. Bernstein Movie Studio Profits It is generally believed that as few as 2 of the 7 major Hollywood studios is “profitable” See Wikipedia (“Hollywood Accounting) for review of legal cases where those who contracted to be paid a % of profits received a surprisingly small payout: Forrest Gump Spider Man Lord of the Rings Harry Potter 5

Intro to Marketing Mr. Bernstein Movie Studio Profits: Why so Low? Production and distribution costs are high Predicting moviegoer preferences is difficult A major contribution to revenues are licensing of the intellectual properties – cable TV, DVDs, video games, theme parks, etc. Sequels and prequels reduce risk 6

Intro to Marketing Mr. Bernstein Distribution of Entertainment Which have you used recently? Cable Satellite TV Internet On Demand 7

Intro to Marketing Mr. Bernstein Distribution of Entertainment: questions What companies are in the value chain between the film producer and the paying customer? (See How Movie Distribution Works, Introduction only) What value does each add, in terms of the 4 P’s? Complete reading How Movie Distribution Works Who has leverage in the distribution channel? Explain. 8