Monthly Archives: November 2008

Product Portfolio Management Of Australian Cinema

If PPM Was Applied To Australian Cinema…

Product Portfolio Management is a type of marketing tool that looks at where a product is in a 4 quadrant cycle. A product can be in any 4 situations at any given time. It’s really old hat in marketing, but it is an interesting tool with which to at least come to grips, in order to understand why Australian Cinema is in its current predicament.

One thing to understand about the PPM outlook is that it doesn’t really matter what your product is, it’s only looking at how it sits in relationship to two parameters: how much marketing budget is spent on it, and how much it returns. Under this system, there are 4 possibilities:

  1. High Investment, Low Return.
  2. High Investment, High Return.
  3. Low Investment, High Return.
  4. Low Investment, Low Return.

these 4 combinations provide the 4 quadrants a product might move through in its product life. As such, they each have a name, which brings into focus just what it is we’re talking about.

  1. Problem Child
  2. Star
  3. Cash Cow
  4. Loser

What’s interesting is that a product like Coca Cola, or a Porsche 911 equally has a product cycle, and can be judged by just how much marketing effort it takes to sell it, and what kind of returns it makes.

A Problem Child Product is something that is new to the market, or is a product that is getting re-launched under a new campaign. This could be a toothpaste or a new soap, or even a brand new movie release.

A Star Product is something like Coca Cola’s main product, going toe to toe with Pepsi Cola as both firms put in High Investment to yield high returns from the market. Or it could be the latest Hollywood blockbuster movie being released with a huge marketing budget. The risks are high, but if there’s one business that knows what to do with a Star Product, it’s the Hollywood movie business.

A Cash Cow is a product that keeps on selling in spite of minimal marketing. An example might be a Victorinox Swiss Army knife, where you never see an advertisement but every male seems to end up buying one at some point in their 20s, whether they needit or not. The Swiss Army Knife is a cash cow product for Victorinox.

A Loser is a product where there’s very little money spent on marketing, but at the same time it yields very little back from the market. Typically, a product at the end of its market life becomes a loser, as firms lose interest in further marketing it, and its sales go down as people move on to newer, fresher things.

A film of its own moves through these cycles as it gos from New Release at the Box Office to DVD rentals, to DVD sales and then eventually the sales bin where you can pick up an old movie for $7.99. What is great about the PPM analysis is that it is so abstract it can cut across the entire scale of products. You can do a PPM analysis of a specific DVD release, or you could look at an entire industry that sells stuff to the public in huge amounts. – Just by looking at the relative strengths of expenses and returns, you can place anything into these 4 quadrants.

So let’s just look at Australian cinema for a moment. Our films are small low budget affairs with minimal marketing that tanks at the box office one after the other… Hmmm… let’s see… How do we couch this?

Clearly, when you look at these four quadrants and think where the Australian Film Industry sits, you have to say it’s in the fourth, LOSER quadrant. The problem is that neither the government nor the various film bureaucrats looking at their overall branding of their product.The thing is, it’s stating the obvious, but it needs to be said out loud. Our industry is, no matter which scale you look at it, a LOSER.

If the powers that be want to have a thriving business, they need to think about PPM and see how they can turn the industry into a STAR, because that’s where any Film Industry should operate. And if they really want to get there, they need to start spending a lot more money than they ever have. If not, they need to find a way of getting money into the system pretty damn quick.

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