Strategic Management in Film Industry and How It Promotes Its Product Merchandise - Research Paper Example

Strategic Management in film industry and how it promotes its product merchandise Table of Contents Literature Review 3 1.Introduction 3 2.Aspects to be encompassed within literature review 3 1.3.Relevance of this research 3 1.4.Contemporary film marketing and consumption 4 1.5.Character brands 5 1.6.Product merchandising tactics and strategies 6 1.7.Evolution of licensing and merchandising 7 Reference List 8 1. Literature Review 1.1. Introduction The literature review will pay heed to the various aspects of strategic management in the contemporary film industry. The purpose of this review is to highlight the ways in which strategic management and its different paradigms have evolved over the course of the past decades in the movie industry. The researcher wishes to explore evidences regarding the tactics applied by managers of different film based franchises to promote their product merchandise. Product merchandising has become a relevant source of profit for entities based in the film industry all over the world. This is the area where the researcher wishes to tap into in order to identify how product merchandising tactics have developed over the course of the evolution of the film industry. 1.2. Aspects to be encompassed within literature review Conceptual framework for the evaluation of strategic management and product merchandising in the film industry. Critical explanation of film as a brand. Elements that are considered while promoting product merchandise. Knowledge development regarding branding theory and its contribution in helping people understand the relationship between consumer and goods, services, places and organizations. Analysis of the tactics employed by PR managers of film franchises in order to promote product merchandize. 1.3. Relevance of this research The theory of branding bears a special relevance especially in the film industry precisely because of its necessity in the area of marketing. In addition to that, the film industry has continued to be a momentous part of the cultural and creative industry which in turn has become very important as far as governmental policies are concerned because of the impact that this industry has on the economic, cultural and social realms of a country (Caldwell and Coshall, 2002). The film industry all over the world particularly the one based in Hollywood, California serves as a major vehicle of product placement and promotion for various leading international commercial brands. For example movies like transformers and G.I Joe retaliation endorse products made by Hasbro (a leading American toy and board game maker) extensively. The different characters of the movie transformers and G.I Joe retaliation are adaptations from the toy characters made by Hasbro. The film franchises promote their product merchandise by designing and putting the characters toys up for sale. This not only enables them to establish a connection between the consumers and the movies but also allows them to market the product on behalf of the actual toymaker (Lury, 2004). A twofold objective is achieved in this case; one is to influence the audience to watch the movie by connecting with the emotions of people who are already attached to the toys as well as ensure an increase in sale of the toy products itself (Chaudhuri and Holbrook, 2001). This enables the managers of movie franchises to create two sustainable source of income; one which is generated through the box office collection and the one which is received from the toy making company for promoting their products (Cooper, Schembri and Miller, 2010). This suggests that the film industry has served as a huge platform for brand extensions in to other cultural and creative industries as well as for opportunities to merchandise across a range of product categories (Kavaratzis, 2005). Film industry all over the world is also known to provide opportunities to PR managers to conduct implicit celebrity endorsement in order to promote product merchandise (Croy, 2010). All the aspects that have been mentioned in this section form a significant part of the branding theory published by acclaimed academic scholars. Therefore, the researcher will be endeavouring to review the cultural approach taken by PR managers of film franchises to promote their product merchandise (Matzler, Grabner-Kra¨uter and Bidmon, 2008). 1.4. Contemporary film marketing and consumption As far as strategic management in the film industry is concerned, two important terms exemplify a film’s engagement in the market place: playability and marketability. While playability typifies the extent to which audiences will respond to a movie after they make a commit to watch it, marketability signifies how attractive a movie will be to its target consumers (in this case; audiences) (Kerigan, 2010). This challenge regarding marketability is quite like the challenges faced in other service industries. Nonetheless, what distinguishes the film industry from other services sectors is the lack of control that an organization (responsible for making and distributing a film) has while confuting brand management (Brownlie, Hewer and Horne, 2005). This makes it extremely important for the organizational managers to take every step carefully towards enhancing the brand image of the film before it is released out to the world audiences (De Vany and Walls, 1999). As the rate of public turnout in a movie theatre depends largely on the brand image of the makers and distributors of film. Any lack of control over the promotional activities may lead to severe repercussions and the end result will be an undesired audience turnout (De Vany and Walls, 2004). This is precisely the reasons behind the fact that brand managers often associate actors, directors and other crew members of a film in order to make sure that the movies are being promoted suitably (Brown, 2004). In a similar manner, film makers or distributors also resort to product merchandising strategies if their films have some sort of association with the products that are being given a life in the films. For example film makers making a superhero movie are often found to promote their movies by promoting product merchandise such as T-shirts with superhero posters, coffee mugs, character toys, pens, school bags, water bottles, skateboards and so on and so forth (Diamond, et al., 2009). The products vary depending on the customer segment that is being targeted. This helps the PR manager of a film distributing to estabouish a relationship between the audience and the movie itself. Audiences are often known to relate themselves with the characters that are portrayed within the movies and therefore product merchandising helps film distributors to attract people towards watching their movies in theatres (Eckhardt and Bengtsson, 2010). This aspect of the relationship that is established between films and the target audience via product merchandise has also been explained by Kerrigan (2010) through the notion of playability. According to Voss and Zomerdijk (2007) audiences consider the movie consumption experience as a journey and for them identifying the meaning of the brand from the movie’s marketing communications can be regarded as the initiation point of this journey. This is followed by their willingness to watch the movie or not (Elberse and Eliashberg, 2003). Therefore, it can be said that product merchandising plays an important role in conveying the meaning of the brand to the audiences which in turn will influence them to step on in this movie consumption journey (Kerrigan, 2010). The facts that have been mentioned in this section justify the importance of promoting product merchandise in the contemporary film industry (Ellis, et al., 2010). This has influenced the researcher to learn about the tactics employed by PR managers of film making organizations in order to merchandise their product (Nayar, 2009). 1.5. Character brands The evolution of product merchandising can also be seen in the way movie characters are epitomised in the real world today. These characters have become established as brands and film audiences have been able to connect with these characters, which in turn have driven their willingness to watch movies (Holt, 2005). This relationship between audiences and film characters (as brands) has prompted film making and distributing organizations to epitomize these characters with the help of merchandise in order to strengthen this connection (Holt and Cameron, 2010). For example, audience all over the world have established some sort of connection with characters like Batman, Ironman, Jason Bourne, Optimus Prime, Bumblebee, and Lara Croft and so on and so forth. When these characters become brands and they form a connection with the film audiences as a result of media propagation around them, it becomes extremely important for organizational managers to adopt appropriate strategic management approach in order to make sure that the movie is promoted effectively (Brown, 2002). Studios which are responsible for film production and distribution which includes big names such as Universal DreamWorks and Warner Brothers are themselves epitomized as brands (Iwashita, 2003). Strategic management is extremely important for these companies as managing film brand portfolios enable managers to generate a sustainable source of revenue (Kavaratzis, 2004). That is why product merchandising forms an integral part of strategic management for film production and distribution studios (Holbrook and Addis, 2008). Product merchandising is the right negotiated by film production and distribution studios when films are commissioned and it includes merchandising of replica figures, comics, soundtracks, books and many more (Hollenbeck, Peters and Zinkhan, 2008). This strategic management activity adds as a supplementary source of revenue besides movie ticket sales for the film production and distribution companies and also helps them to promote the film’s characters and contents (O’Connor, Flanagan and Gilbert, 2008). 1.6. Product merchandising tactics and strategies Film production and distribution companies seldom manufacture products related to the films themselves. Instead they license the right to manufacture and sell these products via other companies who are referred to as licensees (Brown, 2001). In majority of the cases, the company mentioned above assume no risky positions (Hesmondhalgh, 2007). This is precisely because all the expenses related to manufacturing and distribution is borne by the licensee itself. The distributor/producer generally obtains an advance payment for each and every product and the royalty money which often falls between the ranges of 5% to 10% of the wholesale price (Bourdieu, 2003). If the film fails to reap benefits and the products do not sell, the entire loss is incurred by the manufacturer itself (O’Connor, Flanagan and Gilbert, 2010). In most cases, the proprietors of licensable movie properties are the film production and distribution studios themselves. The managers organize their own licensing departments in order to deal with their own patented and copyrighted properties (Kim and Richardson, 2003). For example Warner Brother’s have their own licensing division called the Warners Licensing Corporation of America whereas it Disneys Consumer Products division for Disney pictures. Sometimes smaller companies engaged in film production and distribution also decide to get involved in licensing. For example, Lucas film Licensing is one such company which has enjoyed tremendous success in film production and distribution and therefore has decided to become engaged in licensing merchandise (Phillips and Hardy, 2002). The major film production and distribution studios realize the fact that sale of movie related products is not the only source available for companies to generate substantial revenues (Langford, 2005). Presale of merchandising rights can also have a significant contribution to the production budget of the film (Hatch and Rubin, 2006). The movie franchise The Lord of the Rings can be cited as an appropriate example of the fact mentioned above. 10% of the production budget allotted for the trilogy was contributed through proceeds generated by selling rights to toys, video games and merchandise companies (Booker, 2004). In addition presale product merchandise such as toys and video games plays a big role in helping production companies to promote their films which justifies the fact that movie based merchandise has become an integral portion of promotional campaigns for film production and distribution companies (Heding, Knudtzen and Bjerre, 2008). Usually, 45% of movie based commodities is sold prior to the release of the film (Schroeder, 2005a). Even though film associative merchandising is a common activity conducted by film producers and distributors all around the world, it is often considered risky for merchandisers (Hackley, 2003). This is precisely because of the fact that the product based merchandise may not always be successful and they more often than not tend to have a shorter life span (Bennett, Grossberg and Morris, 2005). Licensees often bear the risk of investing money behind films which have not yet been completed (Hankinson, 2007). On the other hand, studios may often have to reschedule the release dates of their movies in order to wait for lucrative seasons such as Christmas. Such delays may often affect the merchandising strategies adopted by licensees (Schroeder, 2005b). 1.7. Evolution of licensing and merchandising Given the fact that the purchasing power of people belonging to the developed and the emerging economies have increased considerably over the last decades, the spending done by an average consumer has equivalently complimented this drastic increase in the purchasing power (Lehu, 2007). A much of that spending is done after movies, music and entertainment (Beeton, 2010). People have become more aware about the film industry and their knowledge regarding films and other aspects related to films have extended beyond many horizons (Grainge, 2004). This has provided ample opportunities for film production and distribution companies to connect with their audiences not only through their films (when they are released) but also through their product merchandise much before films are set to hit the screens (Ashworth and Kavaratzis, 2009). Movies such as Spiderman and Transformers in Hollywood, Krish as the first superhero movie in bollywood has provided ample scope for the film makers to connect to the customers by prompting product merchandise (Grainge, 2008). Film makers have increasingly targeted school kids by designing bags, bottles and skateboards with the theme of their favourite characters in order to influence them to come and watch these movies in theatres (Schroeder, 2009). As a part of strategic management, products are merchandised through social events organized in movie theatres, hotels and auditoriums (Lash and Lury, 2007). Besides that, licensees have also sold movie related products over online shopping platforms in order to cater to a large base of clients (Fillis, 2006). Various social media platforms have also acted as a foundation over which product merchandise related to a particular movie is promoted (Allen, 2000). According to empirical research findings provided by academic scholars, the information communicated over social media has a significant impact on brand relationship quality which in turn influences consumers in favour of buying a product or availing a service that is being promoted within the social media platforms (Schroeder and Salzer-Mo¨rling, 2005). It has to be noted that not every film has the similar potential for product merchandising. For example, the scope, that movies like Transformers, Teenage Mutant Ninja Turtles, Ironman or Batman will have for product merchandise will not be the same for movies like The Prestige, Saving Private Ryan and Schindler’s List. Therefore, film production and distribution companies must not endeavour to conduct any form of merchandising of the films that belong to the latter category as it may affect the sentiments of the audience in general and in turn may lead to negative publicity of the movie. The facts that have been mentioned in this section provide a rational justification of the importance that product merchandise has as far as strategic management in film industry is concerned. Reference List Allen, G., 2000. Intertextuality. London: Routledge. Ashworth, G. and Kavaratzis, M., 2009. Beyond the logo: brand management for cities. Brand Management, 16(8), pp. 520-531. Beeton, S., 2010. The advance of film tourism. Tourism and Hospitality Planning and Development, 7(1), pp. 1-6. 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