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UBC Theses and Dissertations

Marketing models of entertainment products Ho, Yiu Chung

Abstract

Television broadcasts of major events like the Super Bowl command extremely high advertising rates. It is important to evaluate the value created by this advertising tactic. The first essay develops a marketing model that illustrates a direct and an indirect effect path created by Super Bowl TV advertising in the movie industry. First, via the direct path, Super Bowl advertising directly increases initial theatrical demand for a movie. Second, through the indirect path, Super Bowl advertising first encourages more exhibitors to screen a movie, then this increased exhibition rate in turn increases initial box office revenue. Four variants of the marketing model are explored in the attempt to capture the non-linearity of the two paths and other control variables' effects. Three main results are obtained. First, Super Bowl advertising is demonstrated to affect opening box office revenues positively. Second, this positive effect occurs mainly through the indirect path, establishing the mediating role of movie exhibitors. Third, compared to other TV advertising efforts, Super Bowl advertising appears less effective if both efforts are evaluated at the same initial level. However, at current spending levels, Super Bowl advertising can still be justified. Many entertainment service providers serve customers according to pre-announced schedules, and the timing factor can be as important as price and service quality in determining consumer demand. The second essay develops three demand models to characterize the effects of different service start times in a multiplex movie theater context. The models address two recurring issues, namely the confounding of product quality and time preference in aggregated sales data, and the difficulty of distinguishing between cannibalization and market expansion. Meaningful results are obtained by applying the models to two data sets of admission records from a multiplex movie theater in Amsterdam. First, one of the data sets is demonstrated to exhibit confounding of unobserved movie quality and moviegoers' underlying time preference, establishing the value of the demand models in disentangling these two effects in the aggregated sales data. Second, the effectiveness of the models in comparison to previous models is demonstrated in the process of discerning between cannibalization and market expansion.

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