Business Principles of the Edinburgh Fringe Festival - Case Study Example

Business Principles of the Edinburgh Fringe Festival Background Edinburgh is one of the most renowned international annual events. The event which was first held in 1947 has evolved to become a very crucial part of the cultural, social and economic life of Edinburgh. The effect of the festival has not been felt only in Edinburgh, but also in Scotland as a whole. The event which is held in the month of August runs for about twenty five days and different artists have the chance to display their skills. Objectives The main aim of the report is to look at some of the aspects of the Edinburgh Festival Fringe. Some of the major areas that the report will look into include: The impacts of the Edinburgh Festival fringe on the macro environment The main strength and weaknesses of the Edinburgh Festival fringe marketing activities Recommendations to enhance the future prosperity of the Festival In a study carried out in regards to the Edinburgh Festival in 200/05, it was discovered that the impact of the festival goes beyond the economic effects. Even though the economic impact of the festival remains a major concern, there was an agreement with the major stakeholders that it was vital to look into other aspects of the festival. Macro impacts of the Edinburgh festival The Edinburgh festival attracts all kinds of performers ranging from regular school boys to star actors. With more than 260 performance venues, such as dim vaults, giant theatres, and moving buses the event has the capacity to hold thousands of actors. All the venues available manage to hold more than 2,000shows in the 25 day long festival. The Political/Economic Context The establishment of the Scottish parliament has to a large extent altered the political landscape. Edinburgh is considered as the standard –bearer for Scotland and a very vital in promoting and strengthening the pride of the Scottish people and their identity as a whole. However, there has been a very great concern by most people and even politicians in Scotland that Edinburgh is not getting the recognition it deserves as a cultural ambassador. This is with due to the numerous festivals that Edinburgh has organized and hosted with very limited resources. In that aspect parliament has come up with certain legislations to help boost the cultural events in their quest to promote the Scottish culture. Nationally Edinburgh is faced with numerous challenges. Whereas there are some people who are of the opinion that a lot of resources is being allocated to the capital, there are some who are of the opinion that Edinburgh festivals may play a very crucial role in promoting the national economy through cultural tourism (British Association of Social Workers 1976, 87). Certainly the Edinburgh’s economic position can be termed as healthy due to some various factors such as low unemployment rates and projected growth in job opportunities. Tourism In a research carried out in Scotland in respect to the highest revenue earners for the country. In the year 2010, tourism accounted for about 1.5bn pounds of expenditure by the British tourists. The tourists from overseas accounted for about 528m pounds. The report from the research further established that the festivals played a major role in attracting. Due to the high number of tourists more hotels have been put up to accommodate the visitors thus creating more job opportunities. Sociological The Edinburgh Fringe is a big Festival, thus it is always bound to receive a lot of media coverage of both local and international media houses (Dramatists Guild, & Dramatists Guild of America 1998, 76). As a result the festival’s events are broadcasted to almost every part of the world which in turn creates awareness about the cultural event. Festivals and other cultural related events provide a perfect opportunity to educate the visitors about the traditions and culture of a particular people. The visitors who throng Edinburgh have the chance to more about the Scottish culture while Scotland gets the chance to earn revenue from the visitors. Environmental A festival is bound to be noisy, due to the various activities that go on but so as not to create disturbances for the people who are not taking part in the festival; some measures have to be taken. In order to ensure that noise from the festival does not disturb other people environmental officers will always be available to monitor the sound levels using Decibel meters. This will ensure that the sound eves remain within the parameters accepted within the law. Marketing In order to attain any competitive advantage in there are some factors that the entrepreneurs must consider. There are about seven elements that each and every entrepreneur must put into consideration (Burrow et.al 2008, 267). This group of elements is commonly referred to as the 7Ps. In business aspect this group of elements is known as “the marketing mix.” It comprises of promotion, place, product, price, physical evidence, people and process. The last three elements are referred to “as extended marketing mix for services.” Due to the fact that the environment is changing rapidly in terms of technology, customers and products the business management needs to look at the marketing mix regularly. Product Product is a major constituent in the marketing mix as goods and services are intended to suit the need or wants of consumers. According to the opinion of some entrepreneurship marketing experts, having an excellent understanding of merchandise categorization will give entrepreneurs a fine hint of product prospects that may possibly be given to fulfill the desires acknowledged in the marketplace and the methods of managing them (Reinhardt 2000, 108). The fringe festival organizers have done an excellent job in terms of product which in this case is the talents (Great Britain 2005, 56). The organizers have managed to attract a very large number of people both locally and internationally. The high number of people can be attributed to the “products” which are on display. The festival has been receiving high number of people with each passing event; if the products on display were not attractive t the consumers then the festival could not record such high turnout. Price To make sure that the prices are suitable for the present market environment, some factors have to be put into consideration. The factors that any entrepreneur has to put into consideration before setting the price include: willingness to pay, production, competitors’ prices and customers’, communication, distribution costs, required profitability and partners’ requirements. Even though price pays a very vital role in value creation it cannot work on its own. Promotion For any product or services to be bought the customers have to be aware of their existence. Promotion of any product includes all the activities that will make potential clients attracted to a certain products. Most entrepreneurs usually make grave mistakes by thinking that promotion is a about advertisement. There are other methods of better promotional activities such as loyalty programs or giving away of free products. The key to product promotion is determining the best marketing communication to be used in the promotion of the product. Place Place refers to the availability of the product. The significance of this element is to ensure that the customers’ demands are fulfilled. Some of the factors that should be put into consideration with regards to distribution are: inventory management, market coverage, transportation, order processing and warehousing. People The term people refer to any “person coming into contact with customers who can affect value for customers.” In that aspect it is very vital that an entrepreneur maintain the staffs who are equipped in terms of skills and aptitude. Maintaining a very efficient staff in any business is the key to a successful business. Process This element comprises of creating, communicating, understanding and delivering. Each and every organization should have a very clearly defined as well as efficient process that does affect customer value. Any process should make a client feel valued. Physical evidence “The physical environment that customers use to evaluate products” is what is referred to as Physical evidence. Given that most services are intangible one cannot assess their quality before they are consumed. In that aspect most customers will judge businesses on some of the tangible things such as furniture, décor and architectural design. Findings Strength of the Edinburgh Festival Fringe’s marketing activity Based on the 7 elements that are necessary for successful marketing, the organizers of the event have put into consideration most of the elements. In terms of product, the event has managed to offer various shows that is preferred by most of the people that attend the festival. This is one of the strengths f the Fringe festival. Most people prefer seeing new things. The Fringe festivals offers new shows each and every year, this is attributed t the fact that most f the artist are upcoming thus most of the people have not seen their shows. A festival is a function that involves the whole family; the fringe festival offers shows that accommodate the whole family from the youngest to the oldest. Another vital strength of the Festival Fringe is price. Compared to the other Edinburgh festivals, the fringe festival ticket charges are not as high as the other festivals. The slightly lower ticket prices have made it more affordable to a majority of the visitors. For any event to be successful the overall attendance is very vital (Carter & Jones-Evans 2011, 98). A very high price might reduce the number of people who may be willing to attend the festival. This may render the festival irrelevant as it may not be able to achieve its goals. Physical evidence is one of the elements that the Fringe festival has displayed its strength. Even from a distance one is able to notice that a festival that is ongoing. The organizers each and every year have managed to put up infrastructure that is attractive. Place is another element that the fringe festival has managed to display its strength. The festival has managed to make the products it is displaying available to the people. The people who go to a festival usually have expectations; the fringe festival has managed to meet most of the expectations. Weaknesses of the Edinburgh Fringe festival The Fringe festival as has some weaknesses, one of the major weaknesses of the Fringe festival is promotion. Promotion entails a lot of things it is not just about advertising. Promotion should be geared towards attracting more people. The fringe festival promotion team has concentrated in making more people aware of the event, which is not useful as most people are already aware of the event (Siegman 1989, 107). The method that the organizers are using is not appropriate. Different types of events require different tactics of promotion, using the wrong tactic may render the whole exercise inappropriate. One vital element in marketing that the organizers of the event have displayed their weakness is the people which in this case refer to the “person coming into contact with customers who can affect value for customers.” Getting around in the festival arena is not easy. The organizers have not placed people around the festival’s venue to direct the people around. This has led to some people ending up in areas that they do not like or prefer. Different people have different artistic preference such as comedy or songs in that aspect a person who likes comedy will feel out of place in a singing section. Recommendations In a research carried out the impact of all the Edinburgh’s twelve events that took place in 2010 on various issues such as enjoyment, quality and satisfaction. The other aspects that were researched about the festival included Distinctiveness and innovation (Shrum 1996, 52). Enjoyment A generally pleasurable and fulfilling experience is a very vital outcome that a variety of many other outcomes depend on. Satisfaction can be considered with consideration to various factors. The overall satisfaction was determined by asking both parents and teachers to rate what score children would give the festival event attended out of 10. With ten being the best the average score So as to get the view of the adults in regards to the festivals the teachers and other adults were asked t compare the events and rate the quality of each. On a scale from 1= worse to 5= much better, the scores average was teachers 3.74 and the audience 3.92. Based on the results from polls it can be ascertained that the children find the festivals much more enjoyable than the children. In that aspect the organizers should do more to ensure that the adults find the festival much more appealing. These can be done by coming up with activities that the adults can take part in. There are some adults who may be willing to go to the festivals without being accompanied by children. If the events are not suitable then they might not attend which means loss of revenue. Distinctiveness and innovation In order to assess the uniqueness of the festivals teachers and the audience were asked to rate at a scale of one to three whether they found the festivals unique. 1= very similar, 5= totally unique (Shrum 1996, 52). The resultant polls indicated that most of the festivals were not unique. Some of the adults who took part in the polls were of the opinion that the events were all similar each and every year. A small percentage was of the opinion that the events were very unique. From the polls it was ascertained that most of the people did not find anything interesting in the festival. In order to attract more people the event organizers should come up with new events each and every year so as to encourage more people to attend the festivals. The other way that can make the festival more appealing is by encouraging more people to work as volunteers to help in showing the people who have come to the festival where to find different places. Summary and Conclusion The research was able to reveal that the audiences were not very satisfied with most of the Edinburgh’s numerous festivals. However it was established that the audience valued the festivals as it gave them the opportunity to experience some sort of social binding time with their families. The main aim of holding the annual Fringe festival is to showcase the different artistic prowess not only in Edinburgh but Scotland as a whole. Even though money is not the main issue why the festival is held, the organizers spent a lot of money to make the festival a success. This implies that the organizers need not only to get the money they have spent in the preparation back, but also to pay the temporary workers. According to the rising numbers of visitors at each passing Fringe Festival, the event has high prospects of becoming the biggest festival. Appendices The Edinburgh Festival Fringe Trading, Profit and Loss Statement For the years ended 2013 Turnover (£) Ticket sales 1,207,697 Grants 398,919 Sponsorship and events 598,404 Publications (advertising) 1,106,500 3,311,520 Cost of Sales (£) Opening stock (publications) 17,376 Publications (production/purchases) 707,500 Closing stock (publications) (15,000) 709,876 Sponsorship and events purchases 200,455 (910,331) Gross Profit (£) 2,401,189 Expenditure (£) Salaries 808,000 Premises hire 156,700 Overheads and administration 51,000 Box office services 700,600 Marketing and press 433,890 Performers and promoters 235,999___ (2,386,189) Net Profit (£) 15,000 Break-even point and margin of safety % for The Edinburgh Festival Fringe event programs Break-even Sales Units = FC/ (P-V) Where: FC=Total Fixed Cost P= Price per unit V= Variable cost per unit Therefore Break-even Sales Units= 1.4*2000/ (3.75-0.60) =2800/3.1 =903.22 Units Break-even Point in Sales Dollars = 903.22 X 3.75 = £3387 Margin of Safety % = (Budgeted Sales − Break-even Sales/ Budgeted Sales) X 100 Budgeted Sales=2000 Units Breakeven Sales=903.22 Units Margin of Safety = (2000-903.22/2000) X 100 =54.8% Reference List Shrum, W. M. (1996). Fringe and fortune: the role of critics in high and popular art. Princeton, NJ [u.a.], http://public.eblib.com/choice/publicfullrecord.aspx?p=832152. Siegman, G. (1989). Awards, honors and prizes: an international directory of awards and their donors recognizing achievement. Detroit, Mich, Gale Research Inc. Dramatists Guild, & Dramatists Guild of America. (1998). The dramatist: the journal of the Dramatists Guild, Inc. New York, Dramatists Guild. British Association of Social Workers. (1976). SWT, Social work today. Birmingham, Eng, British Assn. of Social Workers. Carter, S., & Jones-Evans, D. (2011). Enterprise and small business: principles, practice and policy. Harlow, Financial Times Prentice Hall. Reinhardt, F. L. (2000). Down to earth: applying business principles to environmental management. Boston, Mass, Harvard Business School Press. Burrow, J., Kleindl, B. A., & Everard, K. E. (2008). Business principles and management. Mason, Ohio, Thomson Learning. 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