INNOVATION AT

:The CASE ANALYSIS:

IBS Business School – PGPM
Team 12
Siddharth Gupta
Sipak Mohanta
Tapan Mehta
Ansuman Dash
Suraj Chaturvedi
Honey Goyal
 Case Study Flow:
• Brief Introduction
• Developments
• Innovations
• Marketing
• Road Ahead
• Issues
• Recommendations
 About Cirque du Soleil
• Acclaimed by an audience of over 18 million worldwide, with numerous prizes
and distinctions to its credit, Cirque du Soleil is a unique organization which has
reinvented and revolutionized the circus arts.

• Since its beginnings in 1983, Cirque du Soleil has been pleasing the public with a
novel show concept that is as original as it is non-traditional: an astonishing,
theatrical blend of circus arts and street performance, wrapped up in
spectacular costumes and fairyland sets and staged to spellbinding music and
magical lighting.

• It was among the first companies to adopt Blue Ocean Strategy, by generating
demand, by developing a new market space, where competition was non
existent

• It managed to excel in a declining industry by fusing art and entertainment.

• Later on it also introduced its line of apparel and accessories.

• It also produced a number of movies and television shows.

 Inception
• In the early eighties, a group of young street
performers pooled their talent and dreams and
founded the “Club des Talons Hauts” or “High-Heels
Club”, aptly named because most of them were stilt-
walkers.
• At that time, Quebec did not have a circus tradition
as did several European countries. So the Club
members decided to organize a festival, where street
performers could come together to exchange ideas
and techniques.
• They called it the “Fête Foraine de Baie St-Paul” (the
Baie Saint-Paul Fair). That was all a few visionaries
needed to hatch the idea of bringing all this talent
together under one roof, or – why not? – a big top!
Cirque du Soleil was born.
 CIRQUE DU SOLEIL FACTSHEET

PAST PRESENT (2013)

o 100% owned by Laliberte (bought
Gautier‟s half in 1987)
o Founding Year 1984
o Lalibertè refusing to go public,
o Founded by group of street performers reasoning that it would constrain
Cirque‟s creative freedom
o Montreal based
o Montreal based (had tried with
o Managed equally by two owners: three regional divisions, NA, Europe,
Guy Lalibertè (Creative) Asia)
Daniel Gautier (business and finance)
o 5,020 employees, from over 40 countries
and over 25 spoken languages and
o 73 employees generate an estimated annual revenue
exceeding US$810 million.
o Touring 1 show at a time, initial 3 years o 8 simultaneous Cirque productions
only in Canada running on 4 continents

o On average 270.000 spectators per year o Over 90 million spectators. ()

 Timeline
• 1984:Cirque du Soleil is born with the financial assistance of
the Quebec government, as part of the celebrations
surrounding the 450th anniversary of Jacques Cartier‟s
arrival in Canada.
• 1985:After performing in Montreal, Sherbrook and Quebec
City, Cirque du Soleil leaves its home province for the first
time to take its show to neighboring Ontario. It performs in
Ottawa, Toronto and Niagara Falls.
• 1987: Status of Cirque changes from non-profit to a for
profit entity.
• Mid 1991: Cirque convinced Fuji Television Network to
sponsor Cirque‟s tour of Asia. Fuji gave US $40 Million
• 1992: Entered into a year long agreement with Mirage, a Las
Vegas hotel perform Nouvelle Experience. This was Cirque‟ s
first engagement of the kind.
• 1994: Steve Wynn owner f Mirage, built a permanent facility
for Cirque at the cost US $20 million at its new resort
 Timeline contd….
• 1995: Cirque established its first European headquarters at
Amsterdam.
• 1996: By this time its sales had increased form $30 million in 1994
to $110 million in 1996.
• 1997: Walt Disney constructed a permanent theater near Orlando,
California. „Creation Studio‟ was setup.
• 1998: Cirque‟s new production „O‟ debuted at Bellagio. It was
performed around an Olympic-sized 1.5 million gallon Swimming pool
• 2004: Cirque entered into an agreement with the Beatles stars to
create a production to be staged at Mirage. This production was
called love and it recreated the life of Beatles before they became
famous.
• 2007: The oldest active touring show of Cirque du Soleil,
Saltimbanco is converted from a Big Top show to an Arena show.
This will allow the show to visit new places where it could not go
before.
 Recent Developments
• Nov 2010: The Estate of Michael Jackson and
Cirque du Soleil announced the official international
launch of Michael Jackson THE IMMORTAL World
Tour™ written and directed by Jamie King.
• Dec 2010: Cirque Du Soleil entered into
partnership with James Cameron and Andrew
Adamson in association with Reel FX Entertainment
to develop and produce immersive 3D projects.
• Diversification:-
• In October 2011, the Cirque du Soleil was reported
to be interested in purchasing Maison Alcan, as
part of a diversification strategy.
 Future productions
• 2013
• Cirque du Soleil is developing a residency show based on the
music of Michael Jackson, an offshoot of touring Michael
Jackson: The Immortal World Tour; previews scheduled to begin
May 23, 2013 with the gala premiere date set for June 21 at
the Mandalay Bay Resort and Casino in Las Vegas.
• 2014
• A new touring show, Cirque 2014 (working title) is currently in
the early stages of creation in Montreal, possibly in time for the
company's 30th anniversary in 2014. The concept is
unannounced; however, Michel Laprise will be its creator and
director. Casting is set to start in early 2013.
• 2015
• Depending on the success of Zarkana's run, Cirque du Soleil has
plans to develop a new permanent residency production
in Moscow by 2015 and could invest an additional $1 million to
$50 million
 FEW FACTS AND FIGURES
 Cirque's assets are worth an estimated $1 billion, its
annual ticket sales have climbed above $450 million, and
more than 40 million people worldwide have attended at
least one Cirque show.
 The Cirque crew gathers diverse talent from all over the
world and brings all the performers together into a
cohesive whole.
 Whether it's a touring show like Alegria or Varekai or a
resident show like "O" or "Love" in Las Vegas, all Cirque
shows are built around the same two core elements: a
unique theme and a unique soundtrack.
 The Cirque team avoids straight narrative in order to
allow room for the audience to interpret the show any way
they want.
 The Studio
A full-fledged creation, innovation and training
laboratory.
• Established in 1997 to instill creativity in
acts of circus.
• Artists training: Performers come from a
variety of backgrounds, including artistic
gymnastics, tumbling, acrosport, swimming,
diving, dance, singing, music and, of course,
circus arts. Some fifty nationalities are
represented among Cirque du Soleil artists.
• In 2010, over 600 performers will receive
customized training in the Creation Studio.
• Physiotherapists and fitness specialists work on site in the
Studio to keep performers in good health, help maximize
their physical potential, and ensure an optimal environment
for their development.

• The Centre for Research and Innovation of

Performance

• Research and development have always played a key role at

Cirque du Soleil in each and every one of its activities. The
Centre for Research and Innovation of Performance
(CRIP) at Cirque du Soleil is an office of specialized
studies in the development of equipment, environment and
physical and acrobatic performance at Cirque du Soleil.

• Cirque did not employ star performers or animals in its

shows, it was able to keep the costs low and to provide
customers with a value for money experience.
 Audience, Innovation and
Strategy.
• The company created niche market of
live entertainment within the
entertainment industry.
• The company started targeting adult
audience who visited the theater and
opera.
• Shows highlight artistry rather than
the thrills that the traditional circus
presented.
 Concept

Innovation

Customer
centric
strategy
Organizational
culture
 PRODUCT

“We‟re not a product company, we‟re an artistic works company”

– Mario D‟Amico – Executive VP Marketing
o Circus combining street performers, clowns, acrobats and gymnasts (no animals).
Latin sounding music that transcends cultural boundaries and top scale
production and lighting.

o Price targeting upper middle class families (Avg. North American ticket price @
55 $)

o Diversified commercial activity towards multimedia, publishing and

merchandising.

o 1998 Cirque opened it‟s 1st merchandise store in Wald Disney Resort in Florida

o 1999 Cirque du Soleil Images released it‟s 1st film “Alegria”

o 2003 planning to open entertainment complex in Montreal

 Innovative Strategy
Red Ocean Vs. Blue Ocean
• Compete in existing • Create uncontested market
market space space
• Beat the competition • Make the competition
• Exploit existing demand irrelevant
• Make the value-cost • Create and capture new
trade-off demand
• Align the whole system • Break the value-cost trade-
off
of a firm‟s activities
with its strategic choice • Align the whole system of a
firm‟s activities in pursuit of
of differentiation or low
differentiation and low cost
cost
 Value + Innovation
• Value without innovation focuses on
value creation but does not make you
stand out in the marketplace.
• Innovation without value tends to be
futuristic and go beyond what buyers
are ready for.
• Value innovation must align innovation
with utility, price, and cost position.
 Value Innovation: The
Cornerstone of Blue Ocean
Strategy

Value-Cost
Trade Off

• Red Ocean companies

tend to choose
between low cost and
differentiation.
• Blue Ocean companies
aim for both
simultaneously.
 SWOT

STRENGTH WEAKNESSES

o innovative, unique show o high overheads and management costs

o diversified product portfolio – movies, o sole owner and decision maker
TV shows, merchandise o a business model that could be easily
o flexible working force, devoted artists copied
o established brand name o a lot injuries that need to be prevented
o well organized logistic o high staff turnover

OPPORTUNITIES THREATS

o expand to larger number of cities o real competition that could enter the
o diversification of the product portfolio market
which could fit to different audiences o to become too commercial and loose its
o increase number of impermanent spirit
location based shows o overdependence on the existing owner
o economic downturn will lead to customers
choosing lower cost substitutes
• MARKETING OF CRIQUE DU
SOLEIL
 PORTER’S FIVE ANALYSIS

Threat of substitute products-HIGH Barriers to Entry – LOW

Conventional circus-animals,clowns,etc
Low cost substitutes-movies,TV, internet Low to moderate entry barriers
Other substitutes-theatres,concerts, cinema Low to moderate costs of equipment
In economic downturn customers-choose low Moderate initial employee costs
cost entertainment

Bargaining Power of Customers – VERY Bargaining Power of Suppliers – LOW

HIGH
High number of suppliers for technical
Product is highly differentiated/unique
equipment and logistics
The service of Cirque du Soleil is difficult to
Limited number of suppliers for tents and
be directly replaced
scenes
Not a product satisfying basic needs;
Relatively low supplier switching costs
“luxury good”

Competitive Rivalry – MODERATE

Few competitors like Cirque Oz compete

locally
Lots of circuses globally
 PESTEL ANALYSIS

• Tax issues
POLITICAL • Stability

• Energy efficiency
ECONOMICAL • Global crisis – reduced purchasing power
• Limited number of touring cities

• Cultural entertainment preferences

SOCIAL • Religios views
• Demographic chart

•Influence of web based free contents

TECHNOLOGICAL •Automatization of production leading to lower costs
•Higher CAPEX due to short lifecycles of new technologies

ENVIRONMENTAL
• Strict local logistics regulation (eg CO2 emmision)

LEGISLATION •Working permits

•Visa policy
 VALUE CHAIN

Support activities:
Logistics and infrastructure
Artist recruitment (HR)
Procurement (own and outsourced)

SHOW LOGISTIC ON
MARKETING
SITE
SALES SHOW
PRODUCTION

Primary activities:
 Road Ahead
• Entertainment Complexes in major cities.
• Inspired restaurants,hotels,art galleries, spas & Movie
theatre.
• Restaurant would have artist performing while guest were
dining.
• Build an experience around the customer.
• Montreal into a world centre for circus arts.
• Centre of a hub of training, creating and performing the
circus arts.(cite des arts du cirque)
• Build cirque the entertainment capital of the world.
• Build an experience around the customer.
• Transform Montreal into a world centre for circus arts.
• Using different production method for every show.
 Eliminate-Reduce-Raise-Create

Eliminate Raise
Star Performers Unique venues
Animal shows
Aisle concession sales
Multiple show arenas
Reduce Create
Fun and humor Theme
Thrill and danger Refined environment
Multiple productions
Artistic music and
dance
 The Strategy Canvas
of Cirque du Soleil
hi
Ringling Brothers

Cirque du Soleil
offering level

Smaller Regional Circus

lo
Animal Shows Multiple Show Theme Multiple
Price Thrills & Danger
Arenas Productions
Star Performers Aisle Concessions Fun & Humor Unique Venue Refined Viewing Artistic Music
Environment & Dance
© Kim & Mauborgne 2006
 ISSUE

They re-invented circus. Everybody has seen it.

Now what?
 NEGATIVE CONSEQUENCE

o Cirque du Soleil saturated the market – they will stagnate or

lower the business

o If Mr. Lalibertè doesn‟t decrease his influence (autochratic

leadership) it will not be possible to sustain growth level CDS
has shown in the past
 ALTERNATIVES

Expand geographically
• Find new audiences – go to new places
• Find places with high inflow of tourists for fixed location shows

Continue diversifying commercial activities

• Movies, amusement parks, music, commercial goods

Regional approach – market adjustment

To fit to diverse conditions in current markets
 RECOMMENDATION

Regional approach – market adjustment

To fit to diverse conditions in current markets

 ACTION PLAN

decentralize the decision making (by CEO/owner)

set up regional divisions with separate marketing and

market research (economical, demographical, etc.) by
regional management/consultancy

define diverse strategic approaches (e.g. pricing policy,

level of show production)
Blue ocean strategy doesn‟t last forever.

Be prepared for Red ocean!

Thank you for your attention !
QUESTIONS ???