CASE ASSIGNMENT Cirque du Soleil

By Wayne Black,2014-05-16 19:06
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Think about the SWOT analysis for Cirque du Soleil. 2. What are the keys to Cirque du Soleil's competitive advantage. 3. How does Cirque du Soleil implement

CASE ASSIGNMENT: Cirque du Soleil

The Fire Within

    A 27-foot-long bronze clown shoe is the only indication that there is something

    otherworldly within the concrete walls of the large, rather nondescript building. Located in

    Montreal, the building is home to what many feel is the most successful entertainment company

    in the world—Cirque du Soleil. The company‘s massive headquarters houses practice rooms the

    size of airplane hangars where cast members work on their routines. More than 300 seamstresses,

    engineers, and makeup artists sew, design, and build custom materials for exotic shows with stage

    lives of 10 to 12 years. In fact, the production staff often invents materials, such as the special

    waterproof makeup required for the production of O, a show performed mostly in a 1.5 million-

    gallon pool of water that was also specially designed and engineered by Cirque employees.

    Another key in-house resource is Cirque‘s team of 32 talent scouts and casting staff that recruits

    and cultivates performers from all over the world. The department maintains a database of 20,000

    names, any of whom could be called at any time to join the members of Cirque‘s cast, who

    number 2,700 and speak 27 languages.

     Shows with exotic names like Mystère, La Nouba, O, Dralion, Varekai, and Zumanity

    communicate through style and tone that they are intended to do more than just amuse. Cirque

    designs productions with distinct personalities that are meant to evoke awe, wonder, inspiration,

    and reflection. As one cast member put it, ―The goal of a Cirque performer is not just to perform a quadruple somersault, but to treat it as some manifestation of a spiritual, inner life. Like in

    dance, the goal is . . . to have a language, a conversation, with the audience.

     Audiences have responded. Even with ticket prices that start at $45 and can run as high as

    $360, the company sells about 97 percent of all its seats at every show. For Cirque, that translates

    to about $500,000 a week in sales and yearly profits of $100 million on gross revenues of $500

    million. Incredibly, every one of the 15 shows that Cirque has produced over its 20-year history

    has returned a profit. In contrast, 90 percent of the high-budget Broadway shows that strive to

    reach the same target market fail to break even. Cirque‘s statistics, however, are eye-popping. Mystère, which opened at the Treasure Island hotel and casino in Las Vegas in 1993 and still runs

    today, cost $45 million to produce and has returned over $430 million; O, which opened at the

    Bellagio hotel and casino in 1998, cost $92 million to produce and has already returned over $480

    million. Though the company splits about half of its profits with its hotel and casino partners,

    those same partners sometimes absorb up to 75 percent of Cirque‘s production costs.

     At the helm of this incredible business machine is the dynamic duo of Franco Dragone

    and Daniel Lamarre. Dragone, a Belgian, is the creative force behind most of the company‘s nine

    current productions, and Lamarre, a former television executive, presides over show and new

    venture development. Together, they have transformed a one-tour, one-residence circus company

    into an entertainment powerhouse with five simultaneous world tours; four permanent facilities in

    Las VegasTreasure Island, the Bellagio, New YorkNew York, and the MGM Grandall of

    which are part of the Mirage family of casinos; another permanent theater at Disney World; and a

    series of shows on the cable television channel Bravo that has already won an Emmy.

     Lamarre claims that his business is successful because he and his staff ―let the creative people run it.‖ He guides the company with an invisible hand, making sure that business policies

    do not interfere with the creative process; it is Dragone and his team of creative and production

    personnel, not a predetermined budget, that defines the content, style, and material requirements

    for each project. Because of their sound planning, Cirque du Soleil can claim that it is one of the

    world‘s elite businesses, as well as one of the world‘s elite entertainment companies.

    Sources: ―The Phantasmagoria Factory,‖ Business 2.0, January/February 2004, 103; Christopher J. Chipello, ―Cirque du Soleil Seeks Partnerships to Create Entertainment Centers,‖, July 18, 2001; Steve Friess, ―Cirque Dreams Big,‖ Newsweek, July 14, 2003, 42; ―Bravo Announces Programming Alliance with Cirque du Soleil; Original Series,

    Specials, and Documentaries to Air on Bravo, ‗The Official U.S. Network of Cirque du Soleil,‘‖ Business Wire, June

    19, 2000; ―Inhibitions Take the Night Off for International Gala Premiere of ZUMANITY?; Another Side of Cirque

    du Soleil? at New York–New York Hotel and Casino,‖ PR Newswire, September 21, 2003; Laura Del Rosso, ―‗O‘ Dazzles with Air, Underground Acrobatics,‖ Travel Weekly, August 5, 2002; Gigi Berardi, ―Circus + Dance = Cirque

    du Soleil,‖ Dance Magazine, September 2002.

    Things to consider while reading the case…

1. Think about the SWOT analysis for Cirque du Soleil.

    2. What are the keys to Cirque du Soleil‘s competitive advantage.

3. How does Cirque du Soleil implement, evaluate, and control the elements of its

    marketing plan?

4. What kind of competitive advantage best describes the one built by Cirque du Soleil?

5. How do market penetration, market development, product development, and

    diversification apply to Cirque du Soleil?

    6. Can you describe Cirque du Soleil‘s marketing mix?

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