ARG-043

The following appeared as part of a business plan developed by the manager of the Rialto Movie Theater.

"Despite its downtown location, the Rialto Movie Theater, a local institution for five decades, must make big changes or close its doors forever. It should follow the example of the new Apex Theater in the mall outside of town. When the Apex opened last year, it featured a video arcade, plush carpeting and seats, and a state-of-the-art sound system. Furthermore, in a recent survey, over 85 percent of respondents reported that the high price of newly released movies prevents them from going to the movies more than five times per year. Thus, if the Rialto intends to hold on to its share of a decreasing pool of moviegoers, it must offer the same features as Apex."

Write a response in which you discuss what questions would need to be answered in order to decide whether the recommendation is likely to have the predicted result. Be sure to explain how the answers to these questions would help to evaluate the recommendation.


In this recommendation, the author suggests that Rialto Movie Theater should imitate the luxurious features of Apex Theater to win back its decreasing number of moviegoers. The author opens this recommendation with the statement that Rialto Theater either needs to make changes or closes its doors, for it is in decline despite its location in downtown. Many consumers stop going to movies more than five times a year due to the costly price of movie tickets, implicating a shrinking pool of moviegoers. Thus, the author puts his/her hope on new features like video arcade, sound system, etc. that Apex Theater featured, thinking that it would earn back consumers. His/her recommendation seems convincing at first; however, without asking three questions and pondering over their multiple answers, it remains unclear whether or not this recommendation will actually work.


The first question we need to ask is whether the respondents will go to movies more often if there are more luxurious features in Rialto Theater. Knowing how the respondents who are interviewed think of this suggestion is extremely crucial in terms of the future of Rialto since they are ostensibly its main consumers. However, through the survey we only know their thoughts on ticket price rather than other hardware features. Therefore, more interviews to the same respondents are needed, particularly asking more directly if they welcome such new features at Apex Theater. When the answer to the question is yes, it means respondents are willing to watch movies more often with new features in Rialto. On the other hand, it could be possible that most respondents are still not impressed by new features and just focus on the price. In this case, if the price of movie tickets does not decrease in the future, Rialto shall still lose its consumers. All in all, according to their responses, this recommendation could go to very different directions.


Next, the second question we need to ask is if luxurious features indeed make Apex theater popular. Assuming that such the features bring Apex prosperity, it remains questionable if similar success can be applied to Rialto. If those features do make a tremendously positive impact on the business of Apex Theatre, it is at least hopeful for Rialto to benefit from the same features as Apex does. That is to say, when the same features appear in Rialto, consumers would to there too for its features. However, such features at Apex might not attract moviegoers whatsoever, and the only reason people go to Apex might be because of its location, which is in a mall. In this scenario, consumers would still choose Apex even when new features were added to Rialto, because it is convenient for them to watch movies in Apex. Thus, the projected revival of Rialto Movie Theater would be severely challenged.


Finally, granted that the respondents are willing to go to the theaters with state-of-the-art features and that Apex prospers from the installation of such features them, we still need to consider whether Rialto theater is capable of introducing those new features. The author’s suggestion is only valid if Rialto has enough capital as well as its managerial positions agree with this recommendation. Nevertheless, it is more likely also possible that Rialto does not have the money for renovation due to its financial decline caused by the losing moviegoers.


Overall, until these three questions are fully considered and answered, the effectiveness of the new features remains inconclusive. More information regarding consumer preferences, Apex’s state of operation, and Rialto’s own operation capability must be examined before the author’s recommendation can be effectively evaluated.


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