New Tricks for Old Markets

Volume 6 Letter 10

Cirque du Soleil has performed in over ninety cities and has been seen by over 40 million people worldwide. Show revenues are equal to Ringling Bros and Barnum & Bailey; a feat they achieved in just twenty years. All this was accomplished in an unattractive industry in steep decline facing fierce competition for the entertainment dollar from major league sports, Packman, SuperMario and other video games, and Hollywood movies including home videos. In short the circus industry was in rapid decline and a lousy business to be in.

As CEO’s of large corporations go, Guy Laliberté’s resume is a little thin. An accordion player, stilt-walker and fire-eater, Mr. Laliberté started Cirque du Soleil back in 1984 mostly from street performers. However, rather than trying to steal customers from the circus industry which traditionally focused on children, Cirque du Soleil targeted adults and corporate clients who would pay prices in line with other forms of top quality entertainment. This represented a significant premium over traditional circus tickets.

Cirque du Soleil fashioned an entertainment experience that falls somewhere between a circus and a theater production creating a new category of entertainment. Gone is the traditional three ring format and with it the cost to provide three simultaneous acts. Gone too are the animals and the associated outlays for care and feed not to mention the vet bills. Finally, gone are the big name performers and their associated high salaries.

Cirque du Soleil has instead focused on the relevant circus attributes important to adults, these being the clowns, the acrobatics and the venue, ie. the big tent. The French Canadien production company expanded the experience in these three areas. In addition, Cirque du Soleil added a story line to each of their productions making it more of a theater experience than a disconnected series of circus acts. To this end they added original music scores, coordinated them with the various performances and with the production’s lighting to create a more sophisticated event enjoyed by adult audiences. Cirque du Soleil has fashioned a unique circus experience and has hit an obvious sweet spot in the entertainment industry.

Cirque du Soleil created a high growth, high profit business in an industry in rapid decline by re-examining the product and the competitive space in which they played. They did it by:

    • Focusing on elements of the circus that patrons valued (the acrobatics, the clowns and the tents). Which attributes of your product or service are highly valued by your customer – add to them!

 

    • Eliminating production attributes that patrons no longer valued (the animals, the star performers and the multiple shows). Which attributes are no longer valued in your product or service offering – remove them!

 

  • Creating additional value by adding story lines, themes and music to their productions. Which attributes not currently present in your product or service, could add more value to your offering? – create them!

Building a high growth business in a declining industry is no easy feat. It just may be that fire-eating should be an attribute every business person should have. Certainly Cirque du Soleil’s Guy Laliberté has created a class act that is hard to beat by bringing new tricks to an old market. 1

1. Story as told in Blue Ocean Strategy, W.Chan Kim & Renee Mauborgne Harvard Business Press 2005 USA

Recent Posts