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Getting the Mix Right: Focusing the Assortment

Over the past few months, some of our eNewsletter articles have discussed persistent myths of location-based entertainment (LBE).  In our Summer 2003 issue, we discussed theming and acoustics.  This article discusses the persistent and costly myth about the entertainment mix for family entertainment centers (FECs), LBEs and eatertainment facilities -- offering something for everyone.

As logical as that may sound, trying to attract families by having something in the mix for every person is completely the wrong approach.  Instead, you succeed by focusing on a niche market rather than trying to find the lowest common denominator by being all things to all people.  See, the problem with being all things to all people is that you can't -- you end up not being anything special to anyone.  That's not the way to win in today's highly competitive consumer and entertainment marketplace.  If you don't stand out as special, you don't win the loyalty and repeat business required for profitability.  The only way to be special is to focus on a niche market and tailor your mix, your facility's design, ambiance, features, amenities, and operations to that niche market. The successful approach to mix may seem counterintuitive, but in fact follows time-tested and proven marketing concepts in other destination consumer industries, including retail, restaurants and hospitality.

We repeatedly hear the argument: "My market is small, doesn't have any competition and there's nothing for families to do, so to be successful with a small market, I need to attract everyone."  Our answer to that?  Poppycock!  There's competition to out-of-home entertainment in every market.  And the number one competitor is just staying home.  A recent survey by The Wall Street Journal showed the favorite thing for Americans to do in their spare time is to stay home.   Yes, stay home!  It's not easy getting Americans to leave their homes.  And when it comes to families, it's work to gather up all the kids and pack them and all their accompanying paraphernalia into the family vehicle to go out.  So your facility had better be a place they really like and want to visit -- let alone spend their hard earned money at -- or they're not going to go to the trouble to get there. It's easier for them just to cocoon at home and watch a DVD or play a video game.   The law of targeted marketing works the same in a small market as in a large market: to maximize business, you have to sacrifice shares of some markets to gain a greater share of one market.

Here are some simple examples of niche market focus.  Victoria's Secret doesn't sell men's clothing.  Chico's doesn't sell teen clothing.  Gymboree doesn't sell lingerie. Home Depot and Lowe's don't sell video games.  Chuck E. Cheese's doesn't have pool tables.  Dave & Buster's doesn't have soft-contained play equipment.   They all succeed by being very focused on a niche market.

So how do you focus on a niche market in the LBE industry?  There are three basic dimensions of focus:

• Age
• Affinity group
• Socio-economics

These are the primary age and affinity group breakdowns (simplified for purposes of this article):

1. Younger children accompanied by their parents (family)
2. Mid-age children accompanied by their parents (family)
3. Tweens and teenagers (friends)
4. Young adults (couples and friends)

Socio-economic focus is more complex, as its determination varies from market to market based upon the composition of the market population and competition.  A very simplistic example would be that if a market contains two major socio-economic groups within the targeted age and affinity group, such as high school graduate factory workers and college educated, white-collar workers, the LBE should target one or the other with gusto, but not both. 

So those are the basic focus factors -- age, affinity group and socio-economics.  Here's how it relates to mix.  Once you know who you are targeting, you develop an in-depth mix that matches that market.  We call that the assortment.  A well-chosen assortment will create the maximum synergy between the attractions and programs in the mix and create the maximum drawing appeal, repeat visitations and per capita spending from the targeted market, the focus.  We call this two-pronged approach to selecting the mix focused assortment -- the assortment of the mix is focused on the target market.

Here's one of many examples of industry conventional wisdom that continually misses the mark of focused assortment.   Many, if not most, outdoor family fun centers that include miniature golf also have batting cages.  Miniature golf attracts families with children.  Batting cages predominately attract individual ball players or teams for sports practice.  There is no synergy, as the two attractions are each targeting different markets.  Our company has reviewed the financial records of many operating family fun centers.  We have seen only two centers where the batting cages were truly profitable, and only because the center managers knew how to aggressively market them to ball teams.  Those managers understood their batting cages were a completely different business, not a part of their family-focused mix.  All the other centers were losing money on their batting cages based upon their development and operating costs.  They had failed to focus their mix.  They would have made much more money if they had taken what was invested in the batting cages and had instead invested it in another attraction that targeted their primary market, thus increasing the appeal of the center to one niche market.

Many of the standard mix formulas that worked a number of years ago, such as batting cages in family fun centers, no longer work today.  Consumers have evolved in their tastes, expectations and use of their disposable leisure time, and to meet that moving target, the mix of LBEs have to change.  There are now many entertainment attractions and concepts that didn't exist 10 years ago.  Unfortunately, too many new centers are still cloning dinosaurs.

When our company performs market feasibility studies, we not only evaluate whether a market is large enough to support a profitable LBE or FEC concept, but based upon detailed analysis of the market area's demographics, socio-economics and competition, we recommend both the defining parameters of the target niche market that should be the center's focus, as well as the mix (assortment) that will be the best fit for that niche and will be the most profitable.

For more discussion of focused assortment, see:

• Not All Populations Are Created Equal
• Putting the Family into Outdoor Fun Centers

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