Discount Shopping

Where is your cut off for a ticket to the movies? $10. $15. $20. An article was published in the Sydney Morning Herald this morning announcing that Sydney ticket prices have just topped $20. Will this signal the end of cinemas as we know it?

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I have just lost my concession entitlement. And, boy, does it hurt! Now when I go and see a movie in the cinemas I am forking out another $3 or $4 each time. This may not seem like much but the with the average adult cinema ticket in Sydney now costing more than $20, it is only a matter of time before Melbourne follows suit.

It certainly looks like a rise in ticket prices, but is it really just a change in consumer behaviour?

As prices rise, consumers start to look for ways to decrease the potential cost. And when we find that loophole that gives us a discount (even if we are still paying as much as we were before the price rise) it feels like you have won the lottery – or at least a $5 scratchie!

This phenomenon is probably most obvious in the petrol industry. As the price continues to rise, consumers would begin to shop at the supermarket that would give them the highest discount with their docket. That has all changed now that the government has stepped in and limited the discount to 4 cents per litre, but before this happened, with discounts of up to 16 cents a litre consumers were incredibly price sensitive.

Well, the same thing is happening in the cinema industry. With increased normal prices, ticket discounting is becoming the most appealing way to get consumers into cinema seats.

Whether it is offering cheap tickets on a certain weekday, special industry or student tickets at a heavily discounted rate or dropping prices in the final days of a film’s run, these strategies all produce the desired result associated with discounting. Consumers are more likely to engage with the cinema because they are getting a better discount than another cinema is offering.

Even with the rising costs of cinema admission, the average ticket price still sits around $13 after discounts have been taken into account. And this is rather an affordable price.

But there is one major problem! Discounting is not a long-term strategy.

Once consumers start to expect discounting then their expectations will grow. $5 will no longer be enough. Audiences will wait for an $8 discount before they go to the cinema. And with online stores such as iTunes on their tales with quicker release dates and cheap rates to OWN a movie, it is only a matter of time until their market is further reduced.

So maybe we should be asking a different question. Rather than examining how the product can be further discounted in a way that will appeal consumers. Maybe we should be asking how we can increase the value of the cinema experience that will make consumers want to pay $20.

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