thesis paper - prof. erwin globio

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 1

CHAPTER I

THE PROBLEM AND ITS BACKGROUND

A. Introduction

The Chinese movies have a flamboyant history than many of its

neighboring countries in Asia. Having been the first cradle of the world‘s

civilization, it is no doubt that the first ever film shown in China arrived as

early as 1895. It is also recorded that Lumiere Brothers launched a

Chinese film debut on August 11, 1896 in Xu Garden (Xu Yuan), a popular

entertainment quarter in Shanghai. In the next year, James Ricalton, an

American film producer, showed several films in Shanghai and other large

cities in China. This new medium was introduced as ―Xiyang Yingxi‖ or

―Western Shadow Play,‖ which related it to China‘s millenary-old

indigenous tradition of shadow play.

Continuous improvements have been evident in the Chinese film

industry. For many years, the ―Western Shadow Play‖ was often shown as

part of a variety show, sharing the stage with traditional opera, acrobatics,

storytelling and other popular performances in teahouses, theater houses,

and amusement parks, sometimes even on streets. Chinese would enjoy

the shows with tea, snacks, and cold towels. Right after its continuous

success, movie theaters in Shanghai and other major cities in China were


popping up like mushrooms. Because of these, European film products,

such as French companies Pathe and Gourmont, and American

Hollywood products dominated Chinese cinemas.

Chinese films started exploring production through importing hi-tech

equipment from Japan and Germany to fight the foreign films in the local

market. Aside from that, local Chinese producers started tie-ups and joint

ventures with foreigners.

The history of the Chinese film can be divided into the following:

beginning of Chinese Film Industry (1895-1920); Flourishing of Popular

Film (1921-1930); Politicization of Film (1931-1937); War Period (1937-

1945); Civil War Period (1945-1949); Early Period (1949-1964); Cultural

Revolution (1964-1974); Early Post-Mao Period (1974-1983); and the Fifth

Generation Film (1984-Present).

Along with the rapid development of the Chinese film industry, it is

prudent to improve its marketing pace to beat foreign films in the local

market. One of the most important vehicles for Chinese movie marketing

is the trailer being shown in televisions and movie theaters. Trailer

production involves more than just advertising, however, as the trailer

producer has to get immersed in the formulation of a movie‘s marketing

strategy and match the appeal of a movie to the needs of the audience. In

other words, marketing strategy for Chinese movies is more than just


advertising. It involves promotion, the product or the film itself, the places

of distribution or the theaters, and the monetary price of watching the film.

In November 2011, the Chinese movie industry experienced a

startling surprise when a low-budget movie with no prominent director or

major stars hit 344.8 million Yuan ($54.5 million) in box office revenue.

The film owes its unexpected blockbusting success to its innovative

marketing strategy: micro-blog marketing – advertising through blogging in

social media sites. With its success, more and more film investors see the

potential of new-media movie promotion.

Offering attractive ticket prices is the most important way to bridge

the distance between films and the public. Movie tickets in China are

among the highest in the world. The cost of a movie ticket in China can

range from 20 Yuan to 100 Yuan – or about $3.17 to nearly $16

depending on location. This is the reason why many Chinese legislators

plan to implement pricing changes or cap on prices of movie tickets.

No one can question the quality of a Chinese movie. Most of its

movies nowadays took the lead in the domestic and international markets,

Hollywood and other countries. Some of the best Chinese movies of all

time are the ―Crouching Tiger, Hidden Dragon‖ (2000), ―The Forbidden

Kingdom‖ ( 2008), ―Fearless‖ (2006), ―Kung Fu Hustle‖ (2004), ―House of

Flying Daggers‖ (2004), ―Farewell My Concubine‖ (1993), ―Raise the Red

Lantern‖ (1991), ― To Love‖ (1994), and ―The Story of Qiu Ju‖ (1992).


With all the facts that have been enumerated in this study, the

researcher can justify that the undeniable success of Chinese films can be

attributed to great marketing strategy.

B. Background of the Study

After the phenomenal success of Chinese movies, it is evident

today that the domestic film industry hit the ground despite robust growth

in box office sales across the country in the first half of 2012. It is a fact

that the industry is going through a rough patch as ticket sales of domestic

films started to fall, dropped by 4.3 percent year on year to 2.8 billion Yuan

($444 million), according to the latest data from the China‘s State

Administration of Radio, Film, and Television (SARFT). This slump came

just months after China amended rules in February to import more

Hollywood movies for national distribution.

While ticket sales of domestic films continue to dig in, ticket sales of

foreign films jumped by 90.4 percent year on year to 5.7 billion Yuan. In

fact in January of 2012, 14 blockbusters hit Chinese theaters among the

38 imported films screened in the country (only two of them failed to bring

in more than 100 million Yuan) while only 5 percent among the 141 China-

made movies screened in the same period manage to break even their

capitals. In short, many Chinese films lost their money in investing to local


films. This decline in sales of Chinese films will definitely have an adverse

impact on investors.

According to forecasts from industrial insiders, films produced in

China will decrease by 30% year on year, and the industry is expected to

continue to shrink next year. With this, Chinese lawmakers imposed the

policies that include a domestic film month that often lasts from June 20 to

July 20, during which almost only Chinese films are shown in cinemas

across the country.

After being pummeled for nearly 6 months by foreign competitors,

China‘s filmmaking community has made the most of this summer‘s

‗Hollywood blackout‘ period, bouncing back with record grosses for

several Chinese language films in early July.

With a 4-week, SARFT imposed ‗blockade‘ barring new foreign

releases at China‘s theaters starting the week of June 25th, China/Hong

Kong co-pros like Painted Skin 2 and The Four, and local Chinese

film Caught in the Web have stepped up in admirable fashion to reclaim

lost turf.

With the losses of local films of China to foreign films being

screened in the local cinemas, Chinese film industry is at point of losing

not only their capital but also their heritage and culture. More and more

foreign films are being shown in Chinese cinemas while the domestic films

are being left behind in its native land. All these problems are attributed to


the marketing mixes of each Chinese film – the products, prices, places of

distribution, and promotion.

1. Product

In 2012, it is an evident scenario that Chinese films have been

experiencing a crushing defeat against foreign films. Though China‘s

total box office gross over the last half-year was 7.74 billion Yuan

($1.21 billion), 65 percent of the total belongs to the foreign films. 38

foreign films raked in 5 billion Yuan ($787 million) and over 100

domestically –produced movies earned less than 3 billion Yuan. Even

the Hollywood‘s 3D re-release of ―Titanic‖ grossed 976 million Yuan

($153.62 million) in the Chinese market and was the biggest grossing

film in China so far. The list of the China's top 10 box office winners

also includes: "Mission: Impossible - Ghost Protocol," "The Avengers,"

"Men in Black 3," "Journey 2: The Mysterious Island," China's latest

"Painted Skin 2: The Resurrection," "Battleship," "John

Carter," "Sherlock Holmes: A Game of Shadows," and "Wrath of the

Titans." Nine of these movies are from Hollywood, which is rather

embarrassing for the Chinese film industry. The loss rate for Chinese

films was high, which will decrease investor confidence. Something

must be done to prevent the Chinese films industry from suffering

further losses.


Some huge-cost films suffered a loss in money, for example,

"Warriors of the Rainbow: Seedio Bale", and "The Viral Factor", even

though they both had high public praise either in casting or in

producing. Even the low-budget Chinese films, most of the time, did

not make it to the box office revenue. Therefore, huge or low

investments on Chinese films are not a guarantee that a domestic film

will make it to the box office. Its success will highly dependent on the

quality of the films that being produced in the local market. The

increased import quota for Hollywood blockbusters into the Chinese

market has posed a great challenge to Chinese films, due to the

unsatisfied quality of some Chinese films.

2. Price

The price of the ticket of the Chinese films is too high compare

to other markets. As per record, movie tickets in China are among the

highest in the world. In the United States, for example, the average

price of a ticket is $7.5, which is almost equivalent to the minimum

hourly wages of an ordinary employee, while in India, the ticket price is

only $1.1 (about 7 Yuan).

Offering attractive ticket prices is the most important way to

attract audience from all sections of society and help the local industry

prosper.


At present, the Chinese movie industry seems to be caught in a

misunderstanding that filmmakers can make big profits by investing

huge amounts to make a film and price their tickets high. It prompted

them to neglect the quality of the movies and the consumers‘ taste and

preference. The high ticket prices but low blockbuster hits bring the

Chinese movie industry down. This prompted Chinese lawmakers to

cap prices of movie tickets for local films and they may require theaters

to show more half-price screenings.

3. Place of Distribution

As of today, the number of cinemas in China has doubled to

more than 6,200, a figure that‘s projected to double again by 2015,

according to the State Administration of Radio, Film, and Television.

Cinemas in China is practically growing and becoming bigger but still

left behind North America, where there are more than 40,000 screens

in 2010.

In the meantime, Chinese movie studios are ramping up cinema

construction and trying to boost the quality of homegrown films to keep

patrons filling all those new seats. That's a tall order for an industry that

churns out a lot more flops than blockbusters. Still, three Chinese

productions — "Let the Bullets Fly," a gun slinging action comedy;

"Aftershock," about the devastating 1976 Tangshan earthquake; and "If


You Are the One 2," a romantic comedy sequel — were smash hits at

the box office last year. This is despite the move of Warner Brothers‘

exit from China due to some reasons.

Furthermore, it is reported that a Chinese company will become

the world‘s largest cinema chain after Beijing-based conglomerate

Wanda Group agreed to buy US exhibitor AMC, a second largest

cinema chain in the US. That move, which gives Wanda ownership of

more than 5,000 cinemas at 346 multiplexes, is just the latest example

of co-operation between US and Chinese companies at a time film

going practices in two nations are becoming increasingly polarized.

4. Promotion

In 2004, China Film Promotion International (CFPI), committed

to providing assistance and service for the promotion and commercial

distribution of Chinese national films overseas, was set up. Nearly all

the dynamic film production companies in mainland China are CFPI's

members. CFPI's main obligations are: to facilitate the participation in

international film festivals and markets for its members, to hold China

film festivals, weeks or exhibitions overseas, to provide information on

overseas distribution for Chinese film producers, to build up distribution

networks for Chinese films in the international market.


Chinese local films that being distributed in the local market

have been promoted like many other products. Movie posters, trailers

and videos, exhibitions and other promotional efforts are utilized to

promote the domestic movies. Discounted ticket prices and Social

media, such as facebook, twitter, blogging, and others, are also being

use by film outfits. However, despite of their efforts, Chinese films are

still being ousted to box office and continuously defeated by the foreign

film in its homeland.

C. Theoretical Framework

Chinese films of today‘s generation are the product of the long and

winding journey of the Chinese culture and traditions. It is made up of

lavish history of China from its early inhabitants to the generation Y of

Chinese. New developments in producing and distributing of these

Chinese films make an impact in marketing certain products and services.

It is so powerful that it creates interests and needs to prospective

consumers. It even brings some of the Chinese films to global market.

There are varieties of theories that can be used for the analysis of

Chinese films‘ marketing strategy. Below are the theories:


1. Marketing Mix (4 P’s of Marketing)

Marketing Mix or also known as the 4 P‘s is a marketing tool

used in marketing products and services. Marketing decisions

generally fall into controllable categories: Product, Price, Place of

Distribution, and Promotion. This term ―Marketing Mix‖ became

popularized after Neil H. Border published his 1964 article entitled,

―The Concept of the Marketing Mix‖. He used this term in his teaching

in the late 1940‘s after James Culliton had described the marketing

manager as a ―mixer of ingredients‖.

Figure 1 4 P’s of Marketing

Source: Neil H.Border


Product mixes include its variability, quality, design, features,

brand names, packaging, and services. Price mixes include the list

price, discounts, allowances, payment period, and credit terms.

Promotion includes advertising, sales promotions, and public relations.

Lastly, place mixes include channels, coverage, assortment, locations,

inventory, transportation, and logistics. This marketing mix is depicted

in Figure 1.

4 P‘s should be reconsidered in marketing these Chinese films

in the local market. Its framework will be useful to captivate a large

market share and defeat the foreign films. Chinese movie outfits

should take advantage of the fact that they are in their native land so

they can use all the resources to maneuver the movie goers into their

favor. Creating quality films at low cost and bringing it to Chinese

cinemas with promotions on those will definitely attract the locals to

watch it over its competitors.

D. Conceptual Framework

Chinese local films, indeed, needs to create a sense of urgency to

uplift their local industry against foreign films in their own court. The

decision to massively promote and establish a strategic marketing plan

has been call to the movie industry, stakeholders, and the Chinese

government.


All theoretical frameworks that have sighted by the researcher can

be used to formulate a strategic marketing plan for Chinese films. Chinese

films should consider producing quality movies that reflects the rich culture

and traditions in China. They should enhance their equipment with high-

end gadgets for filming that will elevate the quality of products that they

create. Prices of tickets should also be reconsidered to attract the locals to

patronize the Chinese movies over competitors. The place of distributions,

cinemas in China in this case, should also be guided to showcase

domestic films more than foreign films. Aggressive promotional efforts

should be encapsulated in every film that they are doing.

Societal-Marketing Concept is the most appropriate marketing

management orientation to be used in Chinese movies‘ promotions.

Chinese filmmakers should make good films by considering the needs and

wants of moviegoers. They should consider long-term relationships with

the consumers. These filmmakers and Chinese film outfits should donate,

contribute, or offer services to charities and not-for-profit organizations.

Moreover, filmmakers should always promote Chinese culture and

traditions to add an appeal to the local consumers. It will be prudent to

dominate local market before proceeding to penetrate the international

markets.


E. Conceptual Paradigm

Figure 2 Conceptual Paradigm for Chinese Films

F. Statement of the Problem

The statement of the problem is a clear description of the issue,

in this study, the researcher wants to provide and analysis of the

marketing strategies that the Chinese domestic movies are utilizing

currently. This also includes a method to solve the problem. It is included

in the questionnaire that the respondents will answer to gather data

needed to come up with good conclusion.


1. General Objective:

The research study aims to provide an analysis of the marketing

strategies that the Chinese domestic movies are utilizing nowadays

and to develop better strategic marketing plans for local movies to

dominate the local markets and penetrate the international markets.

2. Specific Objective:

2.1 To determine the profile of the respondents in terms of:

a. Age

b. Gender

c. Civil Status

d. Internet Usage

e. Frequency of Watching Movies

2.2 To find out the factors that the respondents consider in watching a

movie in terms of:

a. Product

b. Pricing

c. Promotion

d. Place of Distribution


G. Hypothesis of the Study

The researcher will answer the following question at the 0.05 level

of significance:

Ho- There is no significant effects among the four factors of the

marketing mix.

H1- There is significant effects among the four factors of the

marketing mix.

Ho- There is no significant difference on the Chinese films‘

blockbuster hits with regard to the use of effective marketing

strategies as a tool.

H1- There is significant difference on the Chinese films‘ blockbuster

hits with regard to the use of effective marketing strategies as a tool.

H. Significance of the Study

The study will be significant to the following:

1. Filmmakers and Producers

Moviemakers and producers will be able to use the research as

guidelines for creating quality films that will have positive returns. It will

make them realize that before making any film project, a detailed

investigation and researches should be done to bring a good movie in

the local market. They can use the recommendations and analysis to


make decision on how, what, and when to produce local movies. After

their movies hit the blockbuster records in China, they are ready to

export the films to other parts of the world.

2. Moviegoers and Consumers

Moviegoers and consumers will be able to use the research as

a guide in watching a Chinese movie. This research presents a

snapshot of what are the good films to watch so they will not waste

their hard-earned money. The research will not suggest a specific film

but rather will draw the line between a quality films that equates to the

cost of movie tickets. Consumers are the reasons for making a hit

movie so they should not be taken for granted in bringing quality

movies for justifiable costs.

3. Professionals and Students

Professionals and students will be able to use the research for

decision-making and for future researches. Many professionals and

students have plans of penetrating the movie industry, whether as

persons behind the cameras or lead actors, so it is a must that they will

have an understanding of the ins and outs of the Chinese movie

industry. They will obtain useful facts regarding the marketing tools that


can be used in promoting local movies. This study will also highlight

the benefits of marketing strategies in the modern age of technology.

4. Foreigners and Locals

Foreign film investors or companies will gain useful facts about

the current situation in the Chinese local movies, whether they will

bring their movies to China or will produce a local film. They can use

the research in providing good products, movies to China. On the other

hand, locals who aspire to be part of the Chinese movie industry will

increase awareness on the macro and micro environment of the local

movies. It will be easy for foreigners or locals to do business in the

Chinese movie industry because the research will identify the factors

or determinants of moviegoers and producers.

5. Government and Lawmakers

Government and lawmakers will gain insights on possible laws

that will help the Chinese movie industry to recover from the several

flopped movies. It will guide the legislators with regard to the laws and

regulations in China that promote its local movies over competitors.


I. Scope and Limitations

The scope of the study covered the assessment and analysis of the

China‘s domestic films marketing strategy and to provide a basis for

improvement when it comes to the strategic marketing plans. The

research should limit itself to its respondents who are the students in the

Jose Rizal University‘s Graduate School.

This descriptive study tends to present some of the variables that

made Chinese films lose in competition to foreign films. It highlighted the

advantages of using an effective marketing strategy in promoting Chinese

films in China.

The researcher has a limited timeframe to finish the research

study. It has been conducted only in Jose Rizal University Graduate

School, with 82 respondents from the university enrolled in graduate

school. Data gathering is limited to the researchers made questionnaires

that have been distributed to the students.

J. Definitions of Terms

3D – a motion picture that enhances the illusion of depth perception

and a graphic that use a three-dimensional representation.

Blockbuster – denotes a very popular or successful production.

Blog – information usually contain commentary, ideas, or thinking that

is posted in the web site by a blogger.


China Local Market – physical locations in China and/or non-physical

locations where producers and consumers exchange products and

services.

Chinese – refers to the nationality of the people born in China.

Facebook, Twitter, and You Tube– a social networking site where

users can post a shout outs, comments, upload photos and videos.

Filmmakers – producers, directors, and staffs who create movies.

Hollywood – is a district in Los Angeles, California, United States,

which is often used as a metonym of American cinema.

Marketing Mix – product, price, promotion, and place of distribution.

Moviegoers – people who watch movies in theaters.

SARFT – State Administration of Radio, Film, and Television whose

task is the administration and supervision of state-owned enterprises

engaged in the television, radio, and film industries.

Shanghai – is the largest city by population of the People‘s Republic of

China (PRC) and the largest city proper by population in the world.

Target Market – consumer who may possibly buy the product.

Web Sites – pages on the internet.

Yuan – is the based unit of a number of Chinese currencies.


CHAPTER II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the related literature and studies which have direct

and indirect impact on this study. It also discusses the Chinese film industry, its

strategic marketing plans and its effects and significance to the growth and

success of local movies in China.

A. Related Literature

1. Foreign

Dave Roos posted an article, in the How Stuff Works web site,

entertainment button, How Movie Marketing Works. He enumerated

movie marketing strategies for their target markets. He exclaimed that

theatrical trailer is often the first chance to promote a movie to the

moviegoers. Starting up to a year before the release of a major studio

movie, distributors run movie trailers that are meticulously edited and

audience-tested. The idea is to give moviegoers a taste of the

laughs, special effect and plot twists of the studio's upcoming releases,

while leaving them wanting more. It's an art form that's usually handled

by special trailer production houses.


Furthermore, about the same time that the first trailers hit the

theaters, the movie studio will unveil an official Web site for the film.

Typical movie Web sites allow visitors to view multiple versions of the

trailer, watch behind-the-scenes interviews and mini-documentaries,

read plot synopses, download cell-phone ringtones and desktop

wallpaper, play games, chat in forums and even pre-order tickets. The

official movie Web site is only the beginning of a much larger Internet

marketing campaign.

As the release date of the film draws closer, movie marketers try

to get early favorable press coverage in newspapers, magazines and

on entertainment TV shows. The main movie publicity tactic is

something called a press junket. At a press junket, journalists,

entertainment reporters and movie critics are flown out to a special

location for a day or weekend of interviews with the stars and creators

of the film. The actors, directors, and screenwriters sit in separate

rooms and the reporters are brought in one by one to ask their

questions.

Weeks before the movie opens nationwide, the promotions

department starts an all-out publicity blitz. The idea is to bombard the

public with so many images and promos for the movie that it becomes

a "can't miss" event. Movie marketers will plaster the sides of buses

with huge ads, place billboards all around the city, run tons of teaser


trailers on TV, place full-page ads in major newspapers and

magazines, and the movie's stars will show up on all of the major talk

shows.

The Internet is proving to be a prime spot for these publicity

blitzes. Promoters can place rich, interactive ads on the Web sites

most trafficked by their target audience. They can also release behind-

the-scenes clips, bloopers and other viral videos on video-sharing

sites like YouTube. Or they can release different media clips and let

the fans create their own trailers.

Another popular strategy is to use highly visible product tie-ins

and corporate partnerships. In the weeks leading up to the release of

"How the Grinch Stole Christmas," images of the green Grinch

appeared on packages of Oreos, boxes of Froot Loops and cans of

Sprite. Even the United States Postal Service got into the act,

stamping letters with special "Happy Who-lidays!" messages

[source: Finnigan]. For marketing children's movies, the Holy Grail is

getting promotional goodies in McDonald's Happy Meals.

One final movie marketing strategy is the publicity stunt, an

orchestrated media event where someone does something incredibly

silly, dangerous or spectacular to draw further attention to the opening

of the movie. An example is when the promoters of "The Simpsons

http://findarticles.com/p/articles/mi_m0BDW/is_13_42/ai_72631303


Movie" transformed dozens of nationwide 7-Eleven convenience stores

into replica's of Springfield's own Kwik-E Mart.

But unfortunately, movie promotion is not an exact science. A

good promotion for some may not be good for others.

An article on Chinese Movie Market Growth was posted in

asiaprofessor.blogspot.com in September 13, 2007, discussed the

boom of Chinese film market. His article was written as follows,

―According to an article I came across recently, Chinese B.O. to Make

A Great Leap Forward, the movie industry in China is growing rapidly.

By the way, the B.O. in the article stands for Box Office (revenue from

movie theatre ticket sales) rather than any other type of B.O. you might

be thinking of. Its predicted that Chinese movie theaters will see a 15%

increase in revenue this year, taking $400 million. A sizeable portion of

this revenue comes from foreign comes from foreign movies shown in

China such as blockbusters ―Spiderman 3‖, ―Pirates of the Caribbean:

At World‘s End‖, and the recent Harrt Potter, each earning around $13

million. However, domestic Chinese film also account substantial

share. Chinese filmmaking also seems to be becoming more diverse.

In addition to the martial arts-based epics, Chinese filmmakers are

increasingly exploring other themes. In fact, in mainland China,

portions of ―Lust Caution‖ movie had to be cut for exhibitions in

theaters due to explicit contents.‖


The above article has been published few years back which

were the prosperous years of the China movie industry. However,

recent news and stories about local films flopping and losing capital

have been a natural occurrence.

In PR Newswire United Business Media web site, it posted last

September 27, 2011 the China Film Industry Report 2011. It reported

that in 2010, the consolidated revenue of China film industry

approximated RMB16 billion, an increase of 48%. Currently, box office,

which was about RMB 5.7 billion in H1 2011, is still the main revenue

source and core impetus for growth of the film industry in China.

Moreover, it published the following statements, ―In the field of

filmmaking, 70% of content making is completed or participated by

private film production institutions. In 2010, China produced 526

feature films, ranking third globally, and the film output is expected to

increase by 70% year on year in 2011. However, due to little

improvement in filmmaking quality and limited number of screens

in China (less than 9,000 currently), only one third of the films

produced are available to the audience.

In the field of film distribution, there are about 300 distributors in

Mainland China, wherein private companies hold 90%, while foreign

ones are not yet allowed to participate in this link. The top 10


companies including China Film Group, Shanghai Film Group,

and Huayi Brothers occupy over 80% market share.

In the field of film screening, Wanda Cinema, China Film Stellar,

Shanghai United, etc. occupy top ten spots in recent three

years. China has become the fastest growing region in the global IMAX

business, by mid-2011, 48 IMAX theatres have been built up, and the

number is expected to reach 181 in 2015. It is predicted that in 2011,

there will be over 8,900 screens nationwide, including more than 2,500

3D ones.

Huayi Brothers is the most well-known comprehensive

entertainment group in China and the most noted film production

company as well. In H1 2011, the company achieved revenue

of RMB330 million and net income of RMB63 million, of which the

revenue from films reached RMB141 million. The company introduced

Plan H to further push up the box-office receipts, and will release 8

movies in 2012, with the total box-office revenue exceeding RMB2

billion.

Poly Bona is the largest professional film distribution company

in China. In H1 2011, the operating revenue of the company

reached US$36.01 million, with net income of US$1.35 million. The

company was listed on NASDAQ Stock Market in October 2010 and


the funds raised were mainly used in the acquisition of cinemas and in

the purchase of film distribution rights.

Enlight Pictures is one of China's three major private film

companies, investing in and distributing more than 15 mainstream

movies every year. In 2010, the company realized box-office receipts

of RMB314 million, accounting for approximately 5% of the box-office

revenue of domestic movies.

In terms of box-office receipts, Wanda Cinema is the largest

cinema chain in China, making up around 16% of Chinese film market.

In 2012, Wanda plans to expand its cinemas to 120 and its screens to

1,100, and its market share of box-office revenue is expected to surge

to over 20%.‖

All these foreign literatures give hopes for Chinese film industry.

Like all the other industry, China domestic films can bounce back and

defeat competitors.

2. Local

In a published article in Want China Times web site entitled,

―Cut to the Chase: Film Trailer Business Takes Off in China‖, it instated

that Along with the rapid development of the Chinese film industry, the

production of movie trailers has emerged as a new area with

handsome market potential. They even boasted on the Chinese


cinema market that began to blossom in 2010, when box-office takings

topped 10 billion yuan (US$158 million). As a result, the film industry

started to develop towards the division of labor, leading to the

emergence of independent trailer production companies.

A veteran advertising company Wei Nan established a company

that make trailers for movies. His workforce has expanded from few

persons at the outset to over 30 persons now. Even a TV director,

Zhang Xiaobei also set up a trailer production studio which now has 12

persons workforce.

In Hollywood, the trailer is the regarded as the most important

vehicle for marketing a movie. Trailer production involves more than

just advertising, however, as the trailer producer has to get deeply

immersed in the formulation of a movie's marketing strategy and match

the appeal of a movie to the needs of the audience.

Trailer production starts about half a year before a movie opens.

The producer has to first select from the original footage the scenes

that will really appeal to an audience. He must therefore have a full

understanding of the movie and its target market, according to Zhang

Xiaobei. He must select the content of the trailer from the point of view

of the audience.

With that article, it emphasizes the importance of trailer as a

marketing vehicle and business for Chinese film industry. A good trailer


will attract more locals to watch and patronize their locally-produced

movies.

Changing times also reshape the advertising of Chinese films.

This is justified in an article written in China Daily, last July 16, 2012.

Its banner headline is Chinese Firms Eye Hollywood for Image

Building. It is printed that, ‖Six years ago, Shanghai Metersbonwe

Fashion and Accessories Co Ltd decided on something drastic to

upgrade its brand reputation - something different from traditional

advertising through concerts or representation by pop singers. The

Chinese mid-range clothing retailer invited the producer of the

Hollywood blockbuster series Transformers to its Shanghai

headquarters, and after the visit to its four-floor flagship store, the

producer was impressed.‖

The article further added that unlike their other marketing

strategies, brand placement in Hollywood movie had a greater impact

on young people nationwide said Xie Wei, brand manager of

Metersbonwe since 2008. He even stressed that working with a US

movie major has been the best marketing the company has done.

If local firms can use foreign films in marketing, they can also

use local films in promoting their products. It also proved that

marketing is a good vehicle to promote products and services.


B. Related Studies

1. Foreign

Center for American Economic Studies, Institute of World

Economics and Politics, Chinese Academy of Social Sciences,

conducted a study on the impact of movie piracy on China‘s economy.

A factor for the loss of interest of Chinese to local films is piracy. In the

said research, it concluded that the market size for pirated films in

China far exceeds that of authentic films. There are three main sources

of pirated films: pirated films on optical discs (OD), unauthorized

projection (i.e. illegal viewing of an unauthorized copy in a cinema) and

Internet piracy (i.e. downloading of unauthorized copies either for

viewing or burning onto OD). Of these, OD piracy is by far the most

prevalent in China at this time. There are four main sources of pirated

film ODs: unauthorized production by legally registered domestic OD

manufacturers, domestic underground production, unauthorized

burning of optical discs and ODs smuggled from overseas.

Moreover, the study concluded that the reasons enterprises are

attracted to movie piracy include: China‘s censorship process means

that legitimate titles are a subset of all titles produced, i.e. producing

pirated titles allows distributors to offer customers much wider choice;

with no royalties and taxes to pay, and no quality control requirements


to meet, pirated movies provide distributors with significantly higher

profits; because sellers of pirated movies are generally unlicensed, the

distribution network for pirated movies is far more developed than that

for legally licensed movies.

With this evident scenario, it will be difficult for filmmakers to

recover the costs of films because they did not earn from piracy. A

strict guiding principles should be done by the lawmakers to prevent

this from happening because this definitely discourages moviegoers to

buy high ticket prices instead encourages them to get a copy of the

movie through piracy.

Another research entitled, ―Culture-Oriented Marketing

Segmentation Research on Chinese Movie Markets‖, discussed on

Chinese films. Its abstract stated that, ―Movie is not only a cultural

phenomenon in social ideology, also is an economical one composed

of investment, production and sales. Accompanying the advent of

consumption society featured by cultural consumption, the relationship

of movies and markets is taking great and apparent changes. Movies

are realized in the agency, namely market to be communicated and

circulated, and the great amount of investment required by movies

definitely needs the reward and return in the market. This specific

feature makes the marketing behavior between the production and the

consumption of movies indispensable and gradually pulls the movies to


go to the market and the audience. With the development of the

marketing theory, movie marketing smoothly marches on from the

phase of production-orientation, product-orientation to the current

consumer-orientation. Moreover, movie as a specific cultural

commodity is signified by intensive cultural attribute. Culture to great

degree influences the consumption psychology and marketing

behavior. Consumers only incline to accept movie products paralleled

with their own cultural features. Therefore, movie marketing must

emphasize on consumers‘ cultural features and distinguished

preferences generated in different culture instead of focusing only on

the movie itself. As a start of modern marketing and a basic research

topic, marketing segmentation is the premise and basis of marketing

strategy of differentiation. Effective marketing segmentation stemming

from the systematical research on consumer behavior, definitudes

differentiation of demand towards products from different consumers

under reasonable segmentation standards and segmentation matrix,

and furthermore discover the market opportunities and set down

concrete marketing strategy. Towards China‘s movie market which is

just under the marketing reform, from different prospective, we can

conclude different marketing segmentation. However, traditional

marketing segmentation normally prefers partial concrete

characteristics of consumers and pays a little attention to the cultural


feathers as a whole and the preference differentiation under such

conditions, let alone the understanding on the effects posed on movie

consumption and movie marketing by culture.‖

2. Local

A research entitled, ―Why Do Moviegoers Go to The Theater?

The Role of Pre-released Media Publicity and Online Word of Mouth in

Driving Moviegoing Behavior‖, discusses the use of the Bass new

product diffusion model. The authors, Feng Wang, Yin Zhang, Xiaoling

Li, and Huawei Zhu, of Wuhan University, explore how media publicity

and word-of-mouth (WOM) about a to-be-released new movie drive

moviegoing behavior in emerging markets. Empirical data collected

from the Chinese motion picture industry reveal that prerelease media

appearance (a proxy for publicity) and online WOM conversation (a

proxy for WOM) influence moviegoing decision making, but they play

different roles. Media publicity determines moviegoers' innovation

probability, whereas WOM determines both innovation and imitation

probability. This article provides a better understanding of the decision

making involved in moviegoing, as well as effective ways to market

and release new movies in emerging markets. They even

recommended and suggested that practitioners can use pre-release

media publicity and WOM to forecast penetration rates accurately.


Several steps to forecast moviegoing demand for an upcoming new

movie.

In that specific research, it justifies the fact that marketing plays

an important role in shaping a hit movie whether a locally-produced or

released by foreigners. Media publicity, a marketing tool that uses

social media, can be a device in attracting moviegoers. Those

moviegoers, who talk about the film, without them knowing promotes

the film through WOM. WOM heightened the attractiveness of a film.

There is another research study by Chien Chiang Lin, Jing Jyi

Wu, and Chia Ling Hung entitled, ―The Evolution of Studies on Film

Marketing: An Exploration of Chinese Film Industry‖. It focuses on

understanding the evolution of studies on film marketing of Chinese

film industry. In brief, research on film marketing closely linked to the

development of the Chinese film industry; the linkages among different

parties have effectively helped the establishment and advancement of

an industrial chain. The authors concluded three contributing factors

for the development of the Chinese film industry, including: the

integration of business concept into the production of films, the

establishment of cinemas, and the extension of film peripheral effects.

Based on the trend of the development, a greater accomplishment of

the Chinese film industry is predictable. Furthermore, although the

authors found a close linkage between the practitioners in the Chinese


film industry and the studies conducted by scholars, there is a 6

months to 1 year time lag. However, the collaborative relationships

among different parties do exist; the development of the Chinese film

industry would not be possible without those scholars.


CHAPTER III

RESEARCH METHODOLOGY

A. Research Design

The researcher used the descriptive method because the method is

designed to gather information about the present conditions from the

respondents. It aims to describe the nature of a situation as it exists at the

time of the study and to explore the causes of particular phenomena. The

survey method was used in gathering the opinions of the respondents

through the questionnaire given to them. This study provides an analysis

of the marketing strategies that the Chinese domestic movies are utilizing

nowadays and to develop better strategic marketing plans for local movies

to dominate the local markets and penetrate the international markets.

B. Population and Sampling

The respondents involved in the research are the Chinese students

studying in Jose Rizal University, Mandaluyong City. There are a total of

82 respondents. Their ages are within 18-50 years old across all classes

who have been watching Chinese movies every time they are in China.

To gather information and data, the researcher provides

questionnaires to the respondents. The respondents is requested to


answer the questionnaire as honest as possible and/or to the best of their

knowledge. Actual interviews were also conducted by the researcher.

C. Research Tools and Instruments

The researcher instruments used during research are the following:

1. Interview

The researcher conducted an informal interview to selected

Chinese students in the Graduate School of Jose Rizal University.

These provide individual analyses and views of random respondents

regarding the marketing strategies of domestic Chinese movies in local

markets. It would be used to gather factual data and information

necessary for the study. The interviews were conducted to concerned

respondents.

2. Questionnaires

The researcher used questionnaire as an instrument to collect

all the information necessary for the conveyance of this study.

Questionnaire is a list of a research or survey questions asked to

respondents, and designed to extract specific information. It serves as

a tool to collect the appropriate data, make data comparison and

analysis.


3. Statistical Tools

The researcher will be using various statistical tools in providing

a systematic way of analyzing the data gathered. It will help the

researcher formulate conclusions and hypotheses for the study.

The statistical tools used are the following:

3.1. Percentage

It is a way of expressing a number, especially a ratio, as

a fraction of 100. It is used to express how large or small one

quantity is, relative to another quantity. This will be used by the

researcher to transform the proportion to a percent by

multiplying by 100.

P = f

x 100 n

Where:

P = percentage

f = frequency

n = number of respondents

3.2. Weighted Mean

The researcher will also use the weighted mean as a

statistical tool for the study. Weighted mean is similar to an


arithmetic mean (the most common type of average); where

instead of each data points contributing equally to the final

average, some data points contribute more than others. The

notion of weighted mean is very useful in descriptive statistics.

x = ∑fx

N

Where:

x weighted mean

∑fx sum of all the population

N = total number of population

The obtained mean values will be interpreted using the

Likert Scale. Likert Scale is a psychometric scale commonly

involved in research that employs questionnaires. It is the most

widely used approach to scaling responses in survey research.

Below is the Likert Scale that will be used for interpreting

the result of the survey questions:


Table 1 Mean Matrix

Scale Value Mean Range Interpretation

4 3.28 - 4.00 Very Important

3 2.52 - 3.27 Important

2 1.76 - 2.51 Less Important

1 1.00 - 1.75 Not Important

3.3. Standard Deviation

The researcher will use standard deviation to show how

much variation or dispersion exists from the average. A low

standard deviation indicates that the data points tend to be very

close to the mean, whereas high standard deviation indicates

that the data points are spread out over a large range of values.

Below is the formula for standard deviation:

∑( x1 - x 2 + ( x2 - x

2 + ( x3 - x

2 … ( x100 - x

2

Where:

SD = standard deviation

x weighted mean


x = mean of each sample

∑(x - x ) 2 = sum of the deviation of x and x

N = size of the sample

3.4. One Way Anova Test

The researcher will use one-way anova test to determine

the existence, or absence of a statistically significant difference

amongst several group means. It will actually uses variances to

help determine if the various means are equal or not,

To perform an Anova test three basic assumptions must

be fulfilled:

1. Each group from which a sample is taken is normal.

2. Each group is randomly selected and independent.

3. The variables from each group come from distribution

with approximately equal standard deviation.


.

3.5. Regression

A regression is a statistical analysis assessing the

association between two variables. It is used to find the

relationship between two variables.

Regression Formula:


Statistical treatment is thru the use of SPSS.

D. Data Analysis

The data obtained from the questionnaire were analyzed, evaluated

and presented through figures, tables and graphs. The presentation was

supported by the interpretation based on the result of the questionnaire

gathered by the researchers. To assess the responses, getting the

percentage average was used.

thesis paper - prof. erwin globio

Documents