ABG Excelsior : Round 2 Case

Mr. Gupta heaved a sigh of frustration and dropped the dossier on the desk in frustration. The meeting was going nowhere. For the past month, his team had been struggling to figure out a marketing strategy for his Indie movie release across multiplexes and cities. In the past, genre and star power provided decent predictors of success but were are no more differentiating factors when mass appeal rules the roost. Gupta had to admit to himself that he stood on flimsy ground. He only had one statistic in his support- the cost of mindshare in certain cities was unreasonably higher than others. To put it simply, his company spent Rs 100 to acquire 10 customers in one city and Rs 200 for the same crowd in another. THE MELODRAMA OF MULTIPLEXES In multiplexes, lay the salvation of his movie, and Gupta had the pick of multiplexes to choose from. Moreover, transportation costs and delays meant that a nationwide simultaneous release would only be possible in a maximum of 10 cities. His team had provided him with the total population in those cities but he had to take a call on how to interpret all that data. Hundreds of executives like him were poring over the same tables and his move would have to factor in their investment choices as well. It is safe to assume that all people in the city go to multiplexes, each person visits only one multiplex. Thus, the total city population is equally split across all of the citys multiplexes. If he chose to release his movie in a particular multiplex, he would have access to all the people who go to that particular multiplex. Out of these, 6.5% would automatically have mindshare for the movie. He has to pay a flat rate called Screen rental charge for releasing in a particular multiplex. Over and above the automatically obtained mindshare, studios also could choose to advertise in the multiplexes thus competing for mindshare of the remaining multiplex audience. Gupta knew that hundreds of other executives were thinking the same thoughts as him. If two companies invested equally in advertising in one multiplex, the entire multiplex-going crowd (or the multiplex-going crowd) was split between the two firms in the proportion of their investments. For example, if Priya, Sandhya and RP studios bid for advertising space worth one, two and two lakhs respectively in a multiplex with a footfall of 5,000; each studio attained a reach of 1000, 2000, 2000 movie-goers respectively. This made things quite interesting. Gupta wouldnt mind advertising in a low-key multiplex if he had very few competitors and grabbed a large share of the mindshare. However, no amount of money (Screen rental charges or advertising) could pull additional people to the multiplex - he could only aim to grab a large pie of the folks who visited the multiplex. Companies normally allotted advertising & screen rental budgets on a city-by-city basis. The phone rang, waking him up from his reverie. Gupta, we need a strategy by tomorrow. Due to that national film festival coming up, theres a flurry of marketing by every other indie producer in the country. Theres a lot riding on this movie.

Gupta had a tough call to make. Which cities, how many multiplexes, how much advertising in each city? Is advertising even necessary everywhere? Especially when all the advertising would be undercut by his competitors plotting similar moves. Clearly, the companies with the maximum audience reach at the end of this mammoth exercise would live to see another year. He had to make his Rs. 1 million total investment budget count.

Problem Statement Maximize your total mindshare across all cities by investing the given budget in choosing no. of multiplexes and ad spend.