twisted views & empty seats....
Watching a movie in an almost empty cinema one day, my thoughts
went somewhat along the following lines:
is it that only about 5% of the capacity of this cinema being
used ? Isn't this what one would call wasteful ?
this capacity is being wasted, when other people could very
easily see this movie with me and the cinema owner would not
lose anything. In fact the owner would gain the goodwill of
those people who were able to watch the movie for free or a
kind of reasoning was used by airlines in the days when 'standby'
rates were available. The argument was that if the plane was
going to go half empty, why not sell the empty seats cheaply
and at least make some money ?
flaw in the system both for the movie example and the standby
rate system is that some people will assume they will be able
to obtain cheap tickets and will not bother to book in advance.
As an aside: In engineering terms: the system is not
linear, and it has feedback: the output affects the input which
in turn affects the output and so forth… like all systems: there
are stable and unstable systems. An unstable business system
would lead to bankruptcy.
the airline example: The rush to cheap tickets has to be balanced
with the idea of not being sure that you will be able to get
on a plane and the risk that there may not be a seat for you.
the movie example: Those people who had paid full price would
be upset that they had to pay when the others paid less. Next
time they might then wait and try to join the cheap queue.
So while the owner would not lose anything by letting others
join the movie, the people who had paid the full price would
wonder why they had to pay full price ?
owner I would then have to work out a way of separating those
who paid full price from those who did not. In the airline example
this is easier to do, many people would not want to accept the
risk of not obtaining a seat and having to return home or wait
for many hours for the next flight.
separate customer groups all the time by geography, by age,
by privilege etc...
I was the owner of the movie hosue: I would realize that the
95% spare capacity of my movie house is wasted, it does not
bring me anything. However since it would not cost me anything
in dollar terms to have the theatre filled to say 25% capacity,
could I use this capacity to gain some benefit, not necessarily
financial) for my business ?
could hold a lottery, whereby I make sure that enough people
win free/cheap tickets to fill my theatre to about 25% to 50%
What would I gain from this (other than lots of work) ?
The name of my theatre would earn good will !
Those who won the lottery would see it as a bonus at the full
value of a regular movie ticket, while the cost to my business
is only: the administration of the lottery and some extra wear
and tear of the furniture - I might even be able to sell more
snacks and junk food and actually earn more in the process !
process of holding the lottery, could be linked to a discount
scheme in local shops. The shops would have something to give
away to attract customers and I would obtain 'free' advertising
for my movie theatre ! voilà ! Publicity in exchange
for my spare capacity !
We have so far assumed that more people would watch movies if
the price was lower. - see how well "cheap Mondays"
work to gauge the effect of lower prices on attendance…
© 2003 heiko