Peer Review Activities

Industry, Target Market, and Competition Analysis

Michael Bell

ID: 940446267

7/9/2017

BA 499, Business Planning

Donna Lane

Industry Analysis & Trends

Economic Sector

Theater Companies and Dinner Theaters NAICS Code: 711110

Performers & Creative Artists NAICS Code: 71151

Sector: 79 Amusement and Recreation Services

SIC Code: 792202 Theatrical production services.

Theater Companies and Dinner Theaters Industry Definition

The industry comprises of companies, groups, or theaters primarily engaged in producing and presenting live theater musicals; operas; plays; and comedy, improvisation, mime, and puppet shows. Establishments known as dinner theaters engage in producing live theatrical productions and providing food and beverages for consumption on the premises (NAICS Association, 2017).

Performers & Creative Artists Industry Definition

The Performers & Creative Artists Industry consists of independent or freelance artists, writers and performers who create artistic or cultural works or productions and individuals who provide expertise necessary for these works (Gambardella, 2016). Major products and services in this industry are live performances and events,

Maturity and Success Factors

Maturity

Performance art in the entertainment and services industry is in its maturity stage in the industry life cycle, due to the industry’s continued stream of new entrants and a stable consumer market. The industry is expected to experience an annualized growth of 2.1% in contribution to the overall US economy. The ability to purchase tickets, classes, attend exhibitions is closely tied to disposable income per capita, which is dependent on local and national economy (Gambardella, 2016).

Key Success & Other Factors

According to the National Endowment for the Arts, most people attended a performance or exhibit was socializing with friends or family members, learning and experiencing things, and supporting the community (NEA, 2015). More than half of all American adults surveyed attended at least one artistic performance or exhibit in the past year. For the entertainment and services industry, especially for the performance arts, there are several key success factors such as (Gambardella, 2016):

• Ability to attract local support: Local support will attract sponsors and donators. 

• Having a high profile in the market: Attracts media interest in the output of the performances and services, which can raise demand.

• Effective product promotion: Performance arts must publicize productions to win performance opportunities and raise public and media interest.

• Ability to raise revenue from additional sources: Industry enterprises may require additional revenue through merchandise sales and nontraditional means, such as crowdsourcing and donations.

• Accessibility to customers: Ability to reach customers effectively and efficiently in the area. A strong internet presence and outreach services allows the industry to reach customers.

• Having contacts within key markets: Performers and creative artists rely heavily on industry contacts to book venues, obtain contracts and market their products and services (Gambardella, 2016).

For the performance, specific entertainment and service industry, funding sources are generally split especially for non-profits. Half of the revenue obtained is gained from ticket sales, classes, services, and programs, which is expected to experience a 1.167 percent growth over the next five years nationally. The other half is through charitable donations and sponsors. Disposable income is forecasted to rise over the next five years along with households earning more than $100,000, which indicates the potential for charitable donations and sponsorships to rise, as well as expenditures on tickets, classes, and services (Gambardella, 2016).

Risk Analysis

Major risks for an organization like Role Model Improv in the entertainment and services industry will presented in detail in later sections, such as: Negative changes in the local and national economy could hamper or diminish demand for ticket sales, classes, and services. Changes in federal programs and major budget cuts to the NEA could affect potential funding and grants to the operation. Socio-economic changes in consumer beliefs and values regarding the arts. Negative performance and ethics of performers and artists who work for or volunteer for the organization could damage reputation and brand equity.

Vulnerability to (Socio-) Economic, Government and Seasonal Factors

Fluctuations in disposable household income influences customer demand in the entertainment and services industry (Gambardella, 2016). When there is an increase in disposable household income, people are more willing to purchase tickets, classes, and services, but if the economy drops like it did in 2008-2010, there will be a decrease in demand. There are common barriers for customers who want to attend, but cannot due to reasons besides economic issues. Around 60 percent of people surveyed with children under the age of six stated they lack time to go see performances. 22 percent of people who wanted to attend but chose otherwise stated the reason was because of not having someone else to go with. There could potentially be barriers for retirees, older adults, and people with disabilities that is dependent on location. The cost of a difficulty in accessing locations of performances and exhibits results in an estimate of eleven million lost audience members and exhibit-frequenters nationwide (NEA, 2015).

Federal programs like the National Endowment for the Arts offers organizations that revolve around the arts grants and funding (Gambardella, 2016). Any disruption in government agencies that support the arts could have an impact in the entertainment and services industry in Southern Oregon.

Currently, tourism to Southern Oregon is highly seasonal due to the Oregon Shakespeare Festival, as it is only in operation between February and October (OSF, 2017). There are other aspects of tourism to Southern Oregon with the growing potential of culinary tourism and film in the valley, the main draw is OSF (SouthernOregon.com, 2017). Ashland, with the estimate 25,670 locals, welcomes around 300,000 visitors annually with most attending OSF and offers nearly 100 different restaurants, galleries, and venues (Ashland Business resource, 2017).

Size and Growth

Size and Industry Earnings for Entertainment & Recreation in Ashland, Oregon

Ashland had a population of around 25,670 people in 2016, which spent a total of $31.68 million in entertainment and recreation, 4.4% of their total expenditures (Esri, 2016). Indicated on figure 1, for expenditures regarding entertainment/recreation fees and admissions, people in Ashland spent total of $595,905 yearly for tickets to theatres, operas, and concerts, $1.26 million in recreational fees, and $2.09 million in membership fees for social recreation activities and civic clubs. The total amount spent for entertainment/recreation fees and admissions was around $6,256,886 (Esri, 2016).

Figure 1 – Total Expenditures for Entertainment/ Recreation Fees and Admission in Ashland, OR (Esri, 2016)

Size and Industry Earnings for Arts, Entertainment & Recreation in Jackson County

There are 219 businesses with around 3,045 employees in Jackson County out of a total 11,073 businesses and 104,764 employees. With a population of around 213,810 people, they spend on average $2,372.66 on arts, entertainment and recreation with a total expenditure of $206.31 million in 2016 (Esri, 2016). Average spending amount for all entertainment/recreation fees and admissions on Figure 2 is around $451.70 with Ticket purchases to theatres, operas, and concerts averaged around $42.23. The total amount of expenditures for all entertainment/recreation fees and admissions for 2016 indicated on Figure 3 was around $39.3 million, which 10.7% of the total was for tickets to theatres, operas, and concerts (Esri, 2016).

Figure 2 (Esri, 2016)

Figure 3 (Esri, 2016)

Industry Earnings from Visitors and Growth in Southern Oregon

According to Figure 4, Total Direct Earnings with all listed industries is at a steady growth at an average of 4.32%. The arts, entertainment, and recreation (AE&R) services of Southern Oregon shows a relatively stable performance despite economic impacts that occurred in 2008, which showed a decrease in growth with a slow and steady recover for most industries. Southern Oregon is a tourism destination from the Oregon Shakespeare Festival and culinary tourism aspects, so it is not a surprise to see the arts, entertainment, and recreation industry rank below accommodations and food services, but the AE&R industry has maintained an average growth of 3.11% by industry earnings.

Figure 4 (Dean Runyan Associates, 2016)

Visitor Spending and Tourism in Southern Oregon

From 2015 to present, tourists spent a total of $892 million in Southern Oregon. For arts, entertainment, and recreation on Figure 5, visitors to Southern Oregon spent a total of $117 million, which is around 13% of the total destination spending. Most visitor spending goes towards accommodations, food services, and food stores with a total of $502 million or 56% of the total destination spending of 2015 to 2017 in Southern Oregon. The growth of visitor spending has been on the major increase for accommodations, food services, and food store industries in Southern Oregon, but the AE&R industry was experiencing a decrease in growth between 2012 and 2014 with a great increase from 2015 to present.

Figure 5 (Dean Runyan Associates, 2016)

Industry Barriers to Entry

In the Jackson County area, for the entertainment and services industry, there is several competitors such as Jefferson Live LLC, Randall Theatre Co., Craterian Ginger Rogers Theatre, Camelot Theatre Co., Center for Sacred Theater, Oregon Cabaret Theatre, Coming Attractions, Ashland Street Cinema, Varsity Theatre, Cinemark Tinseltown USA, and the major competitor, the Oregon Shakespeare Festival. For the entertainment and services industry, the competition is generally high with a steady trend, which means it is important to obtain local support, loyalty, and a high profile.

Barriers to Entry in the entertainment and services industry is generally low and steady. The few actual barriers to entry include the high competition level in the industry, the type of art or performance of the service, and unions required for performers or artists. (Gambardella, 2016). Dependent on the size of the organization performance and service organizations compete for space, actors, and other opportunities, which might not be available due to poor recognition. The type of art the entertainment and service organization does poses another barrier in regards to startup costs or training. Any unions that work within Southern Oregon that require actors and artists to become a member, might be a barrier to entry with required fees membership, and limited hiring and volunteering opportunities.

Target Market

Demographic Description

Role Model Improv’s customer would be considered: active entertainment seekers, slice of life believers, cooperative, artistic, spontaneous, experiencers, adventurous, and fun. Based on the features presented, the target market can be categorized into three groups to cater towards:

• Improv classes

• Community outreach programs

• Improv shows

Improv classes are targeted at males and females with inclusivity towards other genders around Ashland, Oregon and Jackson County in the age range of 18 to 28 with an income range of $15,000 to $35,000. These people are likely to be students living on University grounds or apartments in the surrounding cities around Ashland. Those that are not are more likely to be living in the cities around Ashland, as housing is generally 31.3 percent of household budgeting expenditures (Esri, 2016).

Community outreach programs are targeted towards different non-profit and for-profit businesses around Jackson County. These businesses support the local economy, believe and are supportive of the theatrical arts, and open to ideas and employee empowerment. In Jackson County, there are around 11,073 businesses in total that support around 104,764 employees (Esri, 2016). The employees are around the ages of 25 to 55.

Improv Shows will be targeted towards males and females between the ages of 18 to 56, domestic or tourists with a max potential customer base of 514,748 people including tourists, students, and Jackson County Locals. Domestic residents of Jackson County are most likely white, have families, have an income between $35,000 to $75,000, averaging ages between 39 and 48 years old (Esri, 2016). Tourists to Jackson County generally visit for the Oregon Shakespeare Festival. Those visitors are generally highly educated with a graduate degree, ages 54 to 74 years old, return visitors, and typically retired (Reid, 2014).

Geographic Description

The segmented target markets are going to be tourists to Ashland, students, and locals around Jackson County. Role Model Improv’s theater will be operating in Ashland; generally, Friday-Monday, including flagship performances, specialty performances, two hour drop in classes, and events. The busier season might increase days of operations due to increase traffic flow and event participation. Improv classes will be based at the main theater in Ashland, and rented space or buildings in other cities with high demand for improv class services, but without reliable transportation services or obstacles. These classes will run Tuesday and Wednesday evenings for four hours each session. The operations of the community outreach program will be based at our home stage in Ashland, Oregon. Role Model Improv will venture out to non-profit and for-profit businesses dependent on appointment scheduling and event scheduling throughout the week that is not conflicting with our actor’s schedules if they are currently subjected to another program in Role Model Improv. Outreach is currently targeted in just the area of Jackson County, due to limited reach until Role Model Improv can expand.

Psychographic and Lifestyle

Tourists impacted Jackson County with $528.3 million in total directing spending, $50.8 million was specifically in arts, entertainment, and recreational activities (Dean Runyan Associates, 2016). They are mostly retired and return visitors to the area with an unburdened fixed income. These people are experiencers and thinkers that typically live on the west coast, comprising o 90% of OSF visitors (Reid, 2014). The domestic consumers in the area bring in around $530.60 million in entertainment expenditures (Esri, 2016). Students living on campus in Ashland or in the surrounding cities are young and will have a tight budget, or restricted income. They are strivers, achievers, experiencers, and Thinkers. Domestic consumers that are not students are most likely older, with a tight budget or an expendable safe income. They range from experiencers, believers, survivors, thinkers, and even innovators. Non-profits and for-profits targeted in Jackson County are community driven, local economy boosters who are environmentally conscious. They value employee empowerment and are looking for ways to improve teamwork and cooperative skills.

Purchasing Patterns and Buying Sensitivity

Tourists to Jackson County typically take priority in making expenditures in order of food services, and stores ($162.7 million), accommodations ($90.5 million), retail expenditures ($56.2 million), and then entertainment/arts/recreation ($50.8 million) (Dean Runyan Associates, 2016). The retiaries in the tourists group are most likely to take advantage of price discounts targeted towards seniors and specials that grant them deals at local restaurants or other entertainment venues in the area. Tourists to Ashland are likely returners and are seeking new experiences in the city. With every show being performed at Role Model Improv being essentially new, there is always a new experience to purchase.

The domestic population around Jackson County differs between those who are older or younger. The younger age group in Jackson County generally spend more on apparel and services ($139.32 million), media entertainment and outdoor recreation ($97 million), and renting expenses ($348.74 million) (Esri, 2016). Those who are older are spending more on health insurance, retirement plans (1.836 billion), mortgages ($588.58 million), and membership fees and clubs ($13.13 million). In the domestic population are also students that live in the area around the universities. These students are on a tight and restricted income, heavy purchasers of experiences and food, and are more susceptible to purchases that include a student discount.

Market Size

Ashland, Oregon has a population size of 25,670 residents, within the Jackson County population of 213,810 residents. In 2016, tourists to Jackson County who stayed overnight at least once totaled over five million tourists with a growing trend averaging a three percent increase per year (Dean Runyan Associates, 2016). In Jackson County, there are around 12,031 students either residing on campus dormitories or in apartments (Graphiq, 2017).

Target Market Potential

Role Model Improv will have two separate target markets for the improv shows and classes. Calculations for the TMP of Role Model Improv were based on the second year of operations once Role Model Improv has obtained a brick and mortar location and has started operating as a 501(c)(3). For calculating the total market potential (TMP) for Role Model Improv, the factors considered were:

• Total Population of Jackson County

• Purchases to theatres, operas, and concerts

• Pays for recreational lessons

• Frequency of consumers going to a theatre within the last 12 months in Jackson County.

• Percentage of the population between ages 18 to 28 and 18 to 56

• Percentage of population with a disposable income between $15,000 to $35,000 and $35,000 and $75,000

Sales Potential

Following the information provided by Role Model Improv’s TMPs and factors considered, the organization would be expected to experience 8,805 class enrollments and 51,778 ticket sales in year two. Considering the market shares of each of the six main players for the organizations primary competition, each would roughly take up 16.7 percent of the total market share. During the second year, Role Model Improv would only be expected to take up to half of the market share or 8.65 and 8.335 percent, but based on capacity concerns I would only be able to take up to five percent of the 8.65 percent market share for classes and 8.335 percent for shows. Role Model Improv should experience a sales forecast of 2589 sales for shows and 441 sales for classes.

Competition & Strategic Analysis

Competitive Position

Role Model Improv will currently be the only non-profit theatrical organization to specialize in theatrical improvisation in Jackson County. The organization will be the first to specifically offer classes from ages 18 and up. There are improv classes in Ashland and Talent, Oregon that offer class services for children, ages 4 to 17. For entertainment, there are a variety of different services that customers could spend their money at instead.

Competing businesses include:

• Oregon Shakespeare Festival

• Movie theaters

• Independent productions

• Ashland Independent Film Festival (seasonal)

• Specialized or cultural theater services

• Theater performance schools

• Companies with established networks for outreach services

• Local theater companies in Jackson County

Market Share Distribution

For direct competitors, there are currently four theater organizations in Ashland, Oregon: Oregon Shakespeare Festival, Ashland Children’s Theatre, and Center for Sacred Theater. Outside Ashland, there are three theater organizations, which are Jefferson Live LLC., and Randall Theatre Co. in Medford, Oregon, and Camelot Theatre in Talent, Oregon (Esri, 2016).

The Indirect competitors to Role Model Improv would be other segments of the entertainment industry, such as movie theaters, local nightly shows and performances, and other services in entertainment.

Competitive Strength Assessment

Most of the primary competitors listed in the Competition matrix have been in business for over twenty years and relatively rank high or close compared to Role Model Improv. Oregon Shakespeare Festival blows most competition out of the water with their high profile, local support, contracts with key markets, and additional revenue sources. From a personal interview with Kimberley Boesche, President of Camelot Theatre Company it is important to remember that the other theatre organizations are primary competition, but the theatre community in Jackson County is supportive of one-another as it is the life and culture of the valley. The competitors to review for are the secondary competitors as they represent the other forms of entertainment that tourists and locals can spend their money on.

Competitive Edge

Role Model Improv’s competitive edge is the current lack of a theatrical Improvisational entertainment and education service that is targeted towards adults, ages 18 and up. The organization sees themselves as a benefit to the environment, which helps promote the support the theatrical arts. Role Model Improv is dedicated to entertain, educate, and empower audiences and students through the art of improvisation. Doing so will help bolster confidence, build teamworking and active listening skills, and generate fun. As a non-profit theatre, the organization will have the opportunity to hire volunteered staff members from the community to grant experiences for them and help by keeping the theatre operational. Role Model Improv will have the opportunity to work with local businesses through hired corporate/business work parties, teambuilding exercises, and entertainment at corporate events. Role Model Improv’s shows are budget friendly for those with low or modest income, as higher prestige performances through OSF or an equivalent are generally more expensive towards locals with an income range of less than $15,000 to $75,000.

Future Competition and Barriers of Entry

The entertainment and arts industry is in the mature stage of the life cycle with very low barriers to entry. Ashland has considerably high prices for buildings and renting space for operations, especially for a startup non-profit group. It would be in Role Model Improvs best interest to first form the performance group and do shows at venues and events to build connections for the potential to raise organization acceptance, liking, and to raise funds to purchase a home base for operations. It is of importance that we obtain a home base of operations before another improv based theatrical group does the same as that is key Role Model Improv’s to being first and successful within the market niche.

Competitive Environment

The only comparable theatrical services are from OSF, smaller local organizations, and theater classes targeted towards children. There are many services that customers can turn to for entertainment, but currently there is not a theatrical improvisational service in Jackson County. Competition for entertainment is generally high, but with very low barriers to entry. Being first in capturing the theatrical improvisation market niche will allow Role Model Improv to gain market share, build connections and relationships with the community of Ashland, Oregon and Jackson County.

Strengths

As a theatrical improvisation, non-profit organization, Role Model Improv has the power to be adaptive to the environment regarding performance locations outside of the home base in Ashland. Through the power of entertainment, involvement of audience participation, improvisation classes, and outreach, the organization can build strong relationships in the community from large corporations to the individual friend. Located in the heart of OSF, Role Model Improv’s theme and values fits in with the local culture, ideals, and themes that attract tourists from all over the world. Role Model Improv can remain a low-expense entertainment venue in a location with generally high ticket prices for events, performances, and cultural tours. Through outreach programs, Role Model Improv can help and entertain those who have been disenfranchised, have fallen on hard times, or those who have sought mental health treatment, through various youth endangerment programs, homeless shelters, youth summer camps, and mental health clinics. The art of improvisation is about life and Role Model Improv will bring the art to who needs it most.

Risks and Risk Mitigation

Role Model Improv has two major risks involved with operations, funding and volunteers. The organization. Finding other sources of revenue is important if ticket sales and classes, do not reach the organization funding needs to remain fully functional and operational. To mitigate the risk with funding, Role Model Improv needs to acquire funding through donations, grants, crowdsourcing, and government fund allocations from the National Endowment for the Arts. The organization will become registered as a 501(c)(3) nonprofit and register its self on GuideStar.org, a popular website for donors to seek information on organizations that they are interested on donating to. Being a registered nonprofit, Role Model Improv could also seek grants through foundation support organizations and support centers to fund events, projects and operations.

Another risk is Role Model Improv’s employees and actors are volunteer based. Role Model Improv’s services can only be exceptional if it can acquire the optimal number of volunteers needed to be efficient and effective to patrons. The organization will mitigate the risk by making the volunteer experience at Role Model Improv to be exciting and appealing. Role Model Improv will create an atmosphere of education, experience, and fun within the brick and mortar location. Volunteers will be encouraged and praised for learning and conducting services at Role Model Improv. The organization wants the volunteer experience at Role Model Improv to be exemplary, so those who have volunteered for Role Model Improv can boast and express their joy to other potential volunteers about their experiences and other services in the community could recommend Role Model Improv as a prime volunteer location.

Strategic Position

The two largest threats to Role Model Improv is losing other sources of funding and lacking volunteers in Jackson County. It is imperative, that Role Model Improv gets established as a performing troupe and builds awareness throughout Jackson County. Through awareness, the organization can build relationships with the community, which builds support through potential funding, buzz, and loyalty. With the established awareness and trust within the community, the organization can seek volunteers who want to volunteer for it, because Role Model Improv has the ideals that they believe in.

References

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Esri Key Demographics. (2016). Jackson County, OR. Business Summary. Business Analyst Online.

Esri Key Demographics. (2016). Jackson County, OR. House Profile. Business Analyst Online.

Esri Key Demographics. (2016). Jackson County, OR. Recreation Expenditures. Business Analyst Online.

Graphiq. (2017). Compare Colleges & Universities. Startclass. Retrieved from - http://colleges.startclass.com/

Gambardella, Anthony. (2016). IBISWorld. Performers & Creative Artists in the US. Retrieved from - http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1637

National Endowment for the Arts (NEA). (2015). Surprising Findings in Three New NEA Reports on the Arts. Retrieved from - https://www.arts.gov/news/2015/surprising-findings-three-new-nea-reports-arts

NIACS Association. (2017). NIACS Code Description. 711110 Theater Companies and Dinner Theaters. Retrieved from - https://www.naics.com/naics-code-description/?code=711110

Oregon Shakespeare Festival. (2017) OSF 2017 Calendar. Retrieved from - https://www.osfashland.org/~/media/Experience-OSF/Group-Sales/2017_Adult_Group_Schedule.ashx

Reid, Rebecca. (2014).  Our Economy Tourism. Ashland Business Resource. Retrieved from - http://www.ashlandbusinessresource.com/files/2016_Tourism_Economy.pdf

SouthernOregon.com. (2017). Southern Oregon – Nature’s Art Gallery. Retrieved from - http://southernoregon.com/index.html