JOSE RIZAL UNIVERSITY GRADUATE SCHOOL

CHAPTER I THE PROBLEM AND ITS BACKGROUND

A. Introduction The Chinese movies have a flamboyant history than many of its neighboring countries in Asia. Having been the first cradle of the worlds civilization, it is no doubt that the first ever film shown in China arrived as early as 1895. It is also recorded that Lumiere Brothers launched a Chinese film debut on August 11, 1896 in Xu Garden (Xu Yuan), a popular entertainment quarter in Shanghai. In the next year, James Ricalton, an American film producer, showed several films in Shanghai and other large cities in China. This new medium was introduced as Xiyang Yingxi or Western Shadow Play, which related it to Chinas millenary-old indigenous tradition of shadow play. Continuous improvements have been evident in the Chinese film industry. For many years, the Western Shadow Play was often shown as part of a variety show, sharing the stage with traditional opera, acrobatics, storytelling and other popular performances in teahouses, theater houses, and amusement parks, sometimes even on streets. Chinese would enjoy the shows with tea, snacks, and cold towels. Right after its continuous success, movie theaters in Shanghai and other major cities in China were

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 2 popping up like mushrooms. Because of these, European film products, such as French companies Pathe and Gourmont, and American Hollywood products dominated Chinese cinemas. Chinese films started exploring production through importing hi-tech equipment from Japan and Germany to fight the foreign films in the local market. Aside from that, local Chinese producers started tie-ups and joint ventures with foreigners. The history of the Chinese film can be divided into the following: beginning of Chinese Film Industry (1895-1920); Flourishing of Popular Film (1921-1930); Politicization of Film (1931-1937); War Period (19371945); Civil War Period (1945-1949); Early Period (1949-1964); Cultural Revolution (1964-1974); Early Post-Mao Period (1974-1983); and the Fifth Generation Film (1984-Present). Along with the rapid development of the Chinese film industry, it is prudent to improve its marketing pace to beat foreign films in the local market. One of the most important vehicles for Chinese movie marketing is the trailer being shown in televisions and movie theaters. Trailer production involves more than just advertising, however, as the trailer producer has to get immersed in the formulation of a movies marketing strategy and match the appeal of a movie to the needs of the audience. In other words, marketing strategy for Chinese movies is more than just

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 3 advertising. It involves promotion, the product or the film itself, the places of distribution or the theaters, and the monetary price of watching the film. In November 2011, the Chinese movie industry experienced a startling surprise when a low-budget movie with no prominent director or major stars hit 344.8 million Yuan ($54.5 million) in box office revenue. The film owes its unexpected blockbusting success to its innovative marketing strategy: micro-blog marketing advertising through blogging in social media sites. With its success, more and more film investors see the potential of new-media movie promotion. Offering attractive ticket prices is the most important way to bridge the distance between films and the public. Movie tickets in China are among the highest in the world. The cost of a movie ticket in China can range from 20 Yuan to 100 Yuan or about $3.17 to nearly $16 depending on location. This is the reason why many Chinese legislators plan to implement pricing changes or cap on prices of movie tickets. No one can question the quality of a Chinese movie. Most of its movies nowadays took the lead in the domestic and international markets, Hollywood and other countries. Some of the best Chinese movies of all time are the Crouching Tiger, Hidden Dragon (2000), The Forbidden Kingdom ( 2008), Fearless (2006), Kung Fu Hustle (2004), House of Flying Daggers (2004), Farewell My Concubine (1993), Raise the Red Lantern (1991), To Love (1994), and The Story of Qiu Ju (1992).

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 4 With all the facts that have been enumerated in this study, the researcher can justify that the undeniable success of Chinese films can be attributed to great marketing strategy.

B. Background of the Study After the phenomenal success of Chinese movies, it is evident today that the domestic film industry hit the ground despite robust growth in box office sales across the country in the first half of 2012. It is a fact that the industry is going through a rough patch as ticket sales of domestic films started to fall, dropped by 4.3 percent year on year to 2.8 billion Yuan ($444 million), according to the latest data from the Chinas State Administration of Radio, Film, and Television (SARFT). This slump came just months after China amended rules in February to import more Hollywood movies for national distribution. While ticket sales of domestic films continue to dig in, ticket sales of foreign films jumped by 90.4 percent year on year to 5.7 billion Yuan. In fact in January of 2012, 14 blockbusters hit Chinese theaters among the 38 imported films screened in the country (only two of them failed to bring in more than 100 million Yuan) while only 5 percent among the 141 Chinamade movies screened in the same period manage to break even their capitals. In short, many Chinese films lost their money in investing to local

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 5 films. This decline in sales of Chinese films will definitely have an adverse impact on investors. According to forecasts from industrial insiders, films produced in

China will decrease by 30% year on year, and the industry is expected to continue to shrink next year. With this, Chinese lawmakers imposed the policies that include a domestic film month that often lasts from June 20 to July 20, during which almost only Chinese films are shown in cinemas across the country. After being pummeled for nearly 6 months by foreign competitors, Chinas filmmaking community has made the most of this summers Hollywood blackout period, bouncing back with record grosses for several Chinese language films in early July. With a 4-week, SARFT imposed blockade barring new foreign releases at Chinas theaters starting the week of June 25 th, China/Hong Kong co-pros like Painted Skin 2 and The Four, and local Chinese film Caught in the Web have stepped up in admirable fashion to reclaim lost turf. With the losses of local films of China to foreign films being screened in the local cinemas, Chinese film industry is at point of losing not only their capital but also their heritage and culture. More and more foreign films are being shown in Chinese cinemas while the domestic films are being left behind in its native land. All these problems are attributed to

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 6 the marketing mixes of each Chinese film the products, prices, places of distribution, and promotion.

1. Product In 2012, it is an evident scenario that Chinese films have been experiencing a crushing defeat against foreign films. Though Chinas total box office gross over the last half-year was 7.74 billion Yuan ($1.21 billion), 65 percent of the total belongs to the foreign films. 38 foreign films raked in 5 billion Yuan ($787 million) and over 100 domestically produced movies earned less than 3 billion Yuan. Even the Hollywoods 3D re-release of Titanic grossed 976 million Yuan ($153.62 million) in the Chinese market and was the biggest grossing film in China so far. The list of the China's top 10 box office winners also includes: "Mission: Impossible - Ghost Protocol," "The Avengers," "Men in Black 3," "Journey 2: The Mysterious Island," China's latest "Painted Skin 2: The Resurrection," "Battleship," "John

Carter," "Sherlock Holmes: A Game of Shadows," and "Wrath of the Titans." Nine of these movies are from Hollywood, which is rather embarrassing for the Chinese film industry. The loss rate for Chinese films was high, which will decrease investor confidence. Something must be done to prevent the Chinese films industry from suffering further losses.

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 7 Some huge-cost films suffered a loss in money, for example, "Warriors of the Rainbow: Seedio Bale", and "The Viral Factor", even though they both had high public praise either in casting or in producing. Even the low-budget Chinese films, most of the time, did not make it to the box office revenue. Therefore, huge or low investments on Chinese films are not a guarantee that a domestic film will make it to the box office. Its success will highly dependent on the quality of the films that being produced in the local market. The increased import quota for Hollywood blockbusters into the Chinese market has posed a great challenge to Chinese films, due to the unsatisfied quality of some Chinese films.

2. Price The price of the ticket of the Chinese films is too high compare to other markets. As per record, movie tickets in China are among the highest in the world. In the United States, for example, the average price of a ticket is $7.5, which is almost equivalent to the minimum hourly wages of an ordinary employee, while in India, the ticket price is only $1.1 (about 7 Yuan). Offering attractive ticket prices is the most important way to attract audience from all sections of society and help the local industry prosper.

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 8 At present, the Chinese movie industry seems to be caught in a misunderstanding that filmmakers can make big profits by investing huge amounts to make a film and price their tickets high. It prompted them to neglect the quality of the movies and the consumers taste and preference. The high ticket prices but low blockbuster hits bring the Chinese movie industry down. This prompted Chinese lawmakers to cap prices of movie tickets for local films and they may require theaters to show more half-price screenings.

3. Place of Distribution As of today, the number of cinemas in China has doubled to more than 6,200, a figure thats projected to double again by 2015, according to the State Administration of Radio, Film, and Television. Cinemas in China is practically growing and becoming bigger but still left behind North America, where there are more than 40,000 screens in 2010. In the meantime, Chinese movie studios are ramping up cinema construction and trying to boost the quality of homegrown films to keep patrons filling all those new seats. That's a tall order for an industry that churns out a lot more flops than blockbusters. Still, three Chinese productions "Let the Bullets Fly," a gun slinging action comedy; "Aftershock," about the devastating 1976 Tangshan earthquake; and "If

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 9 You Are the One 2," a romantic comedy sequel were smash hits at the box office last year. This is despite the move of Warner Brothers exit from China due to some reasons. Furthermore, it is reported that a Chinese company will become the worlds largest cinema chain after Beijing-based conglomerate Wanda Group agreed to buy US exhibitor AMC, a second largest cinema chain in the US. That move, which gives Wanda ownership of more than 5,000 cinemas at 346 multiplexes, is just the latest example of co-operation between US and Chinese companies at a time film going practices in two nations are becoming increasingly polarized.

4. Promotion In 2004, China Film Promotion International (CFPI), committed to providing assistance and service for the promotion and commercial distribution of Chinese national films overseas, was set up. Nearly all the dynamic film production companies in mainland China are CFPI's members. CFPI's main obligations are: to facilitate the participation in international film festivals and markets for its members, to hold China film festivals, weeks or exhibitions overseas, to provide information on overseas distribution for Chinese film producers, to build up distribution networks for Chinese films in the international market.

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 10 Chinese local films that being distributed in the local market have been promoted like many other products. Movie posters, trailers and videos, exhibitions and other promotional efforts are utilized to promote the domestic movies. Discounted ticket prices and Social media, such as facebook, twitter, blogging, and others, are also being use by film outfits. However, despite of their efforts, Chinese films are still being ousted to box office and continuously defeated by the foreign film in its homeland.

C. Theoretical Framework Chinese films of todays generation are the product of the long and winding journey of the Chinese culture and traditions. It is made up of lavish history of China from its early inhabitants to the generation Y of Chinese. New developments in producing and distributing of these Chinese films make an impact in marketing certain products and services. It is so powerful that it creates interests and needs to prospective consumers. It even brings some of the Chinese films to global market. There are varieties of theories that can be used for the analysis of Chinese films marketing strategy. Below are the theories:

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 1. Marketing Mix (4 Ps of Marketing)

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Marketing Mix or also known as the 4 Ps is a marketing tool used in marketing products and services. Marketing decisions generally fall into controllable categories: Product, Price, Place of Distribution, and Promotion. This term Marketing Mix became popularized after Neil H. Border published his 1964 article entitled, The Concept of the Marketing Mix. He used this term in his teaching in the late 1940s after James Culliton had described the marketing manager as a mixer of ingredients.

Figure 1 4 Ps of Marketing Source: Neil H.Border

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 12 Product mixes include its variability, quality, design, features, brand names, packaging, and services. Price mixes include the list price, discounts, allowances, payment period, and credit terms. Promotion includes advertising, sales promotions, and public relations. Lastly, place mixes include channels, coverage, assortment, locations, inventory, transportation, and logistics. This marketing mix is depicted in Figure 1. 4 Ps should be reconsidered in marketing these Chinese films in the local market. Its framework will be useful to captivate a large market share and defeat the foreign films. Chinese movie outfits should take advantage of the fact that they are in their native land so they can use all the resources to maneuver the movie goers into their favor. Creating quality films at low cost and bringing it to Chinese cinemas with promotions on those will definitely attract the locals to watch it over its competitors.

D. Conceptual Framework Chinese local films, indeed, needs to create a sense of urgency to uplift their local industry against foreign films in their own court. The decision to massively promote and establish a strategic marketing plan has been call to the movie industry, stakeholders, and the Chinese government.

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 13 All theoretical frameworks that have sighted by the researcher can be used to formulate a strategic marketing plan for Chinese films. Chinese films should consider producing quality movies that reflects the rich culture and traditions in China. They should enhance their equipment with highend gadgets for filming that will elevate the quality of products that they create. Prices of tickets should also be reconsidered to attract the locals to patronize the Chinese movies over competitors. The place of distributions, cinemas in China in this case, should also be guided to showcase domestic films more than foreign films. Aggressive promotional efforts should be encapsulated in every film that they are doing. Societal-Marketing Concept is the most appropriate marketing management orientation to be used in Chinese movies promotions. Chinese filmmakers should make good films by considering the needs and wants of moviegoers. They should consider long-term relationships with the consumers. These filmmakers and Chinese film outfits should donate, contribute, or offer services to charities and not-for-profit organizations. Moreover, filmmakers should always promote Chinese culture and traditions to add an appeal to the local consumers. It will be prudent to dominate local market before proceeding to penetrate the international markets.

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL E. Conceptual Paradigm

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Figure 2 Conceptual Paradigm for Chinese Films

F. Statement of the Problem The statement of the problem is a clear description of the issue, in this study, the researcher wants to provide and analysis of the marketing strategies that the Chinese domestic movies are utilizing currently. This also includes a method to solve the problem. It is included in the questionnaire that the respondents will answer to gather data needed to come up with good conclusion.

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 1. General Objective:

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The research study aims to provide an analysis of the marketing strategies that the Chinese domestic movies are utilizing nowadays and to develop better strategic marketing plans for local movies to dominate the local markets and penetrate the international markets.

2. Specific Objective: 2.1 To determine the profile of the respondents in terms of: a. Age b. Gender c. Civil Status d. Internet Usage e. Frequency of Watching Movies 2.2 To find out the factors that the respondents consider in watching a movie in terms of: a. Product b. Pricing c. Promotion d. Place of Distribution

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL G. Hypothesis of the Study

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The researcher will answer the following question at the 0.05 level of significance: Ho- There is no significant effects among the four factors of the marketing mix. H1- There is significant effects among the four factors of the marketing mix.

Ho- There is no significant difference on the Chinese films blockbuster hits with regard to the use of effective marketing strategies as a tool.

H1- There is significant difference on the Chinese films blockbuster hits with regard to the use of effective marketing strategies as a tool.

H. Significance of the Study The study will be significant to the following:

1. Filmmakers and Producers Moviemakers and producers will be able to use the research as guidelines for creating quality films that will have positive returns. It will make them realize that before making any film project, a detailed investigation and researches should be done to bring a good movie in the local market. They can use the recommendations and analysis to

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 17 make decision on how, what, and when to produce local movies. After their movies hit the blockbuster records in China, they are ready to export the films to other parts of the world.

2. Moviegoers and Consumers Moviegoers and consumers will be able to use the research as a guide in watching a Chinese movie. This research presents a snapshot of what are the good films to watch so they will not waste their hard-earned money. The research will not suggest a specific film but rather will draw the line between a quality films that equates to the cost of movie tickets. Consumers are the reasons for making a hit movie so they should not be taken for granted in bringing quality movies for justifiable costs.

3. Professionals and Students Professionals and students will be able to use the research for decision-making and for future researches. Many professionals and students have plans of penetrating the movie industry, whether as persons behind the cameras or lead actors, so it is a must that they will have an understanding of the ins and outs of the Chinese movie industry. They will obtain useful facts regarding the marketing tools that

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 18 can be used in promoting local movies. This study will also highlight the benefits of marketing strategies in the modern age of technology.

4. Foreigners and Locals Foreign film investors or companies will gain useful facts about the current situation in the Chinese local movies, whether they will bring their movies to China or will produce a local film. They can use the research in providing good products, movies to China. On the other hand, locals who aspire to be part of the Chinese movie industry will increase awareness on the macro and micro environment of the local movies. It will be easy for foreigners or locals to do business in the Chinese movie industry because the research will identify the factors or determinants of moviegoers and producers.

5. Government and Lawmakers Government and lawmakers will gain insights on possible laws that will help the Chinese movie industry to recover from the several flopped movies. It will guide the legislators with regard to the laws and regulations in China that promote its local movies over competitors.

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL I. Scope and Limitations

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The scope of the study covered the assessment and analysis of the Chinas domestic films marketing strategy and to provide a basis for improvement when it comes to the strategic marketing plans. The research should limit itself to its respondents who are the students in the Jose Rizal Universitys Graduate School. This descriptive study tends to present some of the variables that made Chinese films lose in competition to foreign films. It highlighted the advantages of using an effective marketing strategy in promoting Chinese films in China. The researcher has a limited timeframe to finish the research study. It has been conducted only in Jose Rizal University Graduate School, with 82 respondents from the university enrolled in graduate school. Data gathering is limited to the researchers made questionnaires that have been distributed to the students.

J. Definitions of Terms 3D a motion picture that enhances the illusion of depth perception and a graphic that use a three-dimensional representation. Blockbuster denotes a very popular or successful production. Blog information usually contain commentary, ideas, or thinking that is posted in the web site by a blogger.

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China Local Market physical locations in China and/or non-physical locations where producers and consumers exchange products and services.

Chinese refers to the nationality of the people born in China. Facebook, Twitter, and You Tube a social networking site where users can post a shout outs, comments, upload photos and videos.

Filmmakers producers, directors, and staffs who create movies. Hollywood is a district in Los Angeles, California, United States, which is often used as a metonym of American cinema.

Marketing Mix product, price, promotion, and place of distribution. Moviegoers people who watch movies in theaters. SARFT State Administration of Radio, Film, and Television whose task is the administration and supervision of state-owned enterprises engaged in the television, radio, and film industries.

Shanghai is the largest city by population of the Peoples Republic of China (PRC) and the largest city proper by population in the world.

Target Market consumer who may possibly buy the product. Web Sites pages on the internet. Yuan is the based unit of a number of Chinese currencies.

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CHAPTER II REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the related literature and studies which have direct and indirect impact on this study. It also discusses the Chinese film industry, its strategic marketing plans and its effects and significance to the growth and success of local movies in China.

A. Related Literature 1. Foreign Dave Roos posted an article, in the How Stuff Works web site, entertainment button, How Movie Marketing Works. He enumerated movie marketing strategies for their target markets. He exclaimed that theatrical trailer is often the first chance to promote a movie to the moviegoers. Starting up to a year before the release of a major studio movie, distributors run movie trailers that are meticulously edited and audience-tested. The idea is to give moviegoers a taste of the laughs, special effect and plot twists of the studio's upcoming releases, while leaving them wanting more. It's an art form that's usually handled by special trailer production houses.

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 22 Furthermore, about the same time that the first trailers hit the theaters, the movie studio will unveil an official Web site for the film. Typical movie Web sites allow visitors to view multiple versions of the trailer, watch behind-the-scenes interviews and mini-documentaries, read plot synopses, download cell-phone ringtones and desktop wallpaper, play games, chat in forums and even pre-order tickets. The official movie Web site is only the beginning of a much larger Internet marketing campaign. As the release date of the film draws closer, movie marketers try to get early favorable press coverage in newspapers, magazines and on entertainment TV shows. The main movie publicity tactic is something called a press junket. At a press junket, journalists, entertainment reporters and movie critics are flown out to a special location for a day or weekend of interviews with the stars and creators of the film. The actors, directors, and screenwriters sit in separate rooms and the reporters are brought in one by one to ask their questions. Weeks before the movie opens nationwide, the promotions department starts an all-out publicity blitz. The idea is to bombard the public with so many images and promos for the movie that it becomes a "can't miss" event. Movie marketers will plaster the sides of buses with huge ads, place billboards all around the city, run tons of teaser

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 23 trailers on TV, place full-page ads in major newspapers and magazines, and the movie's stars will show up on all of the major talk shows. The Internet is proving to be a prime spot for these publicity blitzes. Promoters can place rich, interactive ads on the Web sites most trafficked by their target audience. They can also release behindthe-scenes clips, bloopers and other viral videos on video-sharing sites like YouTube. Or they can release different media clips and let the fans create their own trailers. Another popular strategy is to use highly visible product tie-ins and corporate partnerships. In the weeks leading up to the release of "How the Grinch Stole Christmas," images of the green Grinch appeared on packages of Oreos, boxes of Froot Loops and cans of Sprite. Even the United States Postal Service got into the act, stamping letters with special "Happy Who-lidays!" messages

[source: Finnigan]. For marketing children's movies, the Holy Grail is getting promotional goodies in McDonald's Happy Meals. One final movie marketing strategy is the publicity stunt, an orchestrated media event where someone does something incredibly silly, dangerous or spectacular to draw further attention to the opening of the movie. An example is when the promoters of "The Simpsons

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 24 Movie" transformed dozens of nationwide 7-Eleven convenience stores into replica's of Springfield's own Kwik-E Mart. But unfortunately, movie promotion is not an exact science. A good promotion for some may not be good for others. An article on Chinese Movie Market Growth was posted in asiaprofessor.blogspot.com in September 13, 2007, discussed the boom of Chinese film market. His article was written as follows, According to an article I came across recently, Chinese B.O. to Make A Great Leap Forward, the movie industry in China is growing rapidly. By the way, the B.O. in the article stands for Box Office (revenue from movie theatre ticket sales) rather than any other type of B.O. you might be thinking of. Its predicted that Chinese movie theaters will see a 15% increase in revenue this year, taking $400 million. A sizeable portion of this revenue comes from foreign comes from foreign movies shown in China such as blockbusters Spiderman 3, Pirates of the Caribbean: At Worlds End, and the recent Harrt Potter, each earning around $13 million. However, domestic Chinese film also account substantial share. Chinese filmmaking also seems to be becoming more diverse. In addition to the martial arts-based epics, Chinese filmmakers are increasingly exploring other themes. In fact, in mainland China, portions of Lust Caution movie had to be cut for exhibitions in theaters due to explicit contents.

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 25 The above article has been published few years back which were the prosperous years of the China movie industry. However, recent news and stories about local films flopping and losing capital have been a natural occurrence. In PR Newswire United Business Media web site, it posted last September 27, 2011 the China Film Industry Report 2011. It reported that in 2010, the consolidated revenue of China film industry approximated RMB16 billion, an increase of 48%. Currently, box office, which was about RMB 5.7 billion in H1 2011, is still the main revenue source and core impetus for growth of the film industry in China. Moreover, it published the following statements, In the field of filmmaking, 70% of content making is completed or participated by private film production institutions. In 2010, China produced 526 feature films, ranking third globally, and the film output is expected to increase by 70% year on year in 2011. However, due to little improvement in filmmaking quality and limited number of screens in China (less than 9,000 currently), only one third of the films produced are available to the audience. In the field of film distribution, there are about 300 distributors in Mainland China, wherein private companies hold 90%, while foreign ones are not yet allowed to participate in this link. The top 10

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 26 companies including China Film Group, Shanghai Film Group, and Huayi Brothers occupy over 80% market share. In the field of film screening, Wanda Cinema, China Film Stellar, Shanghai United, etc. occupy top ten spots in recent three years. China has become the fastest growing region in the global IMAX business, by mid-2011, 48 IMAX theatres have been built up, and the number is expected to reach 181 in 2015. It is predicted that in 2011, there will be over 8,900 screens nationwide, including more than 2,500 3D ones. Huayi Brothers is the most well-known comprehensive

entertainment group in China and the most noted film production company as well. In H1 2011, the company achieved revenue of RMB330 million and net income of RMB63 million, of which the revenue from films reached RMB141 million. The company introduced Plan H to further push up the box-office receipts, and will release 8 movies in 2012, with the total box-office revenue exceeding RMB2 billion. Poly Bona is the largest professional film distribution company in China. In H1 2011, the operating revenue of the company reached US$36.01 million, with net income of US$1.35 million. The company was listed on NASDAQ Stock Market in October 2010 and

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 27 the funds raised were mainly used in the acquisition of cinemas and in the purchase of film distribution rights. Enlight Pictures is one of China's three major private film companies, investing in and distributing more than 15 mainstream movies every year. In 2010, the company realized box-office receipts of RMB314 million, accounting for approximately 5% of the box-office revenue of domestic movies. In terms of box-office receipts, Wanda Cinema is the largest cinema chain in China, making up around 16% of Chinese film market. In 2012, Wanda plans to expand its cinemas to 120 and its screens to 1,100, and its market share of box-office revenue is expected to surge to over 20%. All these foreign literatures give hopes for Chinese film industry. Like all the other industry, China domestic films can bounce back and defeat competitors.

2. Local In a published article in Want China Times web site entitled, Cut to the Chase: Film Trailer Business Takes Off in China, it instated that Along with the rapid development of the Chinese film industry, the production of movie trailers has emerged as a new area with handsome market potential. They even boasted on the Chinese

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 28 cinema market that began to blossom in 2010, when box-office takings topped 10 billion yuan (US$158 million). As a result, the film industry started to develop towards the division of labor, leading to the emergence of independent trailer production companies. A veteran advertising company Wei Nan established a company that make trailers for movies. His workforce has expanded from few persons at the outset to over 30 persons now. Even a TV director, Zhang Xiaobei also set up a trailer production studio which now has 12 persons workforce. In Hollywood, the trailer is the regarded as the most important vehicle for marketing a movie. Trailer production involves more than just advertising, however, as the trailer producer has to get deeply immersed in the formulation of a movie's marketing strategy and match the appeal of a movie to the needs of the audience. Trailer production starts about half a year before a movie opens. The producer has to first select from the original footage the scenes that will really appeal to an audience. He must therefore have a full understanding of the movie and its target market, according to Zhang Xiaobei. He must select the content of the trailer from the point of view of the audience. With that article, it emphasizes the importance of trailer as a marketing vehicle and business for Chinese film industry. A good trailer

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 29 will attract more locals to watch and patronize their locally-produced movies. Changing times also reshape the advertising of Chinese films. This is justified in an article written in China Daily, last July 16, 2012. Its banner headline is Chinese Firms Eye Hollywood for Image Building. It is printed that, Six years ago, Shanghai Metersbonwe Fashion and Accessories Co Ltd decided on something drastic to upgrade its brand reputation - something different from traditional advertising through concerts or representation by pop singers. The Chinese mid-range clothing retailer invited the producer of the Hollywood blockbuster series Transformers to its Shanghai

headquarters, and after the visit to its four-floor flagship store, the producer was impressed. The article further added that unlike their other marketing strategies, brand placement in Hollywood movie had a greater impact on young people nationwide said Xie Wei, brand manager of Metersbonwe since 2008. He even stressed that working with a US movie major has been the best marketing the company has done. If local firms can use foreign films in marketing, they can also use local films in promoting their products. It also proved that marketing is a good vehicle to promote products and services.

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B. Related Studies 1. Foreign Center for American Economic Studies, Institute of World Economics and Politics, Chinese Academy of Social Sciences, conducted a study on the impact of movie piracy on Chinas economy. A factor for the loss of interest of Chinese to local films is piracy. In the said research, it concluded that the market size for pirated films in China far exceeds that of authentic films. There are three main sources of pirated films: pirated films on optical discs (OD), unauthorized projection (i.e. illegal viewing of an unauthorized copy in a cinema) and Internet piracy (i.e. downloading of unauthorized copies either for viewing or burning onto OD). Of these, OD piracy is by far the most prevalent in China at this time. There are four main sources of pirated film ODs: unauthorized production by legally registered domestic OD manufacturers, domestic underground production, unauthorized

burning of optical discs and ODs smuggled from overseas. Moreover, the study concluded that the reasons enterprises are attracted to movie piracy include: Chinas censorship process means that legitimate titles are a subset of all titles produced, i.e. producing pirated titles allows distributors to offer customers much wider choice; with no royalties and taxes to pay, and no quality control requirements

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 31 to meet, pirated movies provide distributors with significantly higher profits; because sellers of pirated movies are generally unlicensed, the distribution network for pirated movies is far more developed than that for legally licensed movies. With this evident scenario, it will be difficult for filmmakers to recover the costs of films because they did not earn from piracy. A strict guiding principles should be done by the lawmakers to prevent this from happening because this definitely discourages moviegoers to buy high ticket prices instead encourages them to get a copy of the movie through piracy. Another research entitled, Culture-Oriented Marketing

Segmentation Research on Chinese Movie Markets, discussed on Chinese films. Its abstract stated that, Movie is not only a cultural phenomenon in social ideology, also is an economical one composed of investment, production and sales. Accompanying the advent of consumption society featured by cultural consumption, the relationship of movies and markets is taking great and apparent changes. Movies are realized in the agency, namely market to be communicated and circulated, and the great amount of investment required by movies definitely needs the reward and return in the market. This specific feature makes the marketing behavior between the production and the consumption of movies indispensable and gradually pulls the movies to

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 32 go to the market and the audience. With the development of the marketing theory, movie marketing smoothly marches on from the phase of production-orientation, product-orientation to the current consumer-orientation. Moreover, movie as a specific cultural

commodity is signified by intensive cultural attribute. Culture to great degree influences the consumption psychology and marketing behavior. Consumers only incline to accept movie products paralleled with their own cultural features. Therefore, movie marketing must emphasize on consumers cultural features and distinguished

preferences generated in different culture instead of focusing only on the movie itself. As a start of modern marketing and a basic research topic, marketing segmentation is the premise and basis of marketing strategy of differentiation. Effective marketing segmentation stemming from the systematical research on consumer behavior, definitudes differentiation of demand towards products from different consumers under reasonable segmentation standards and segmentation matrix, and furthermore discover the market opportunities and set down concrete marketing strategy. Towards Chinas movie market which is just under the marketing reform, from different prospective, we can conclude different marketing segmentation. However, traditional marketing segmentation normally prefers partial concrete

characteristics of consumers and pays a little attention to the cultural

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 33 feathers as a whole and the preference differentiation under such conditions, let alone the understanding on the effects posed on movie consumption and movie marketing by culture.

2. Local A research entitled, Why Do Moviegoers Go to The Theater? The Role of Pre-released Media Publicity and Online Word of Mouth in Driving Moviegoing Behavior, discusses the use of the Bass new product diffusion model. The authors, Feng Wang, Yin Zhang, Xiaoling Li, and Huawei Zhu, of Wuhan University, explore how media publicity and word-of-mouth (WOM) about a to-be-released new movie drive moviegoing behavior in emerging markets. Empirical data collected from the Chinese motion picture industry reveal that prerelease media appearance (a proxy for publicity) and online WOM conversation (a proxy for WOM) influence moviegoing decision making, but they play different roles. Media publicity determines moviegoers' innovation probability, whereas WOM determines both innovation and imitation probability. This article provides a better understanding of the decision making involved in moviegoing, as well as effective ways to market and release new movies in emerging markets. They even

recommended and suggested that practitioners can use pre-release media publicity and WOM to forecast penetration rates accurately.

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 34 Several steps to forecast moviegoing demand for an upcoming new movie. In that specific research, it justifies the fact that marketing plays an important role in shaping a hit movie whether a locally-produced or released by foreigners. Media publicity, a marketing tool that uses social media, can be a device in attracting moviegoers. Those moviegoers, who talk about the film, without them knowing promotes the film through WOM. WOM heightened the attractiveness of a film. There is another research study by Chien Chiang Lin, Jing Jyi Wu, and Chia Ling Hung entitled, The Evolution of Studies on Film Marketing: An Exploration of Chinese Film Industry. It focuses on understanding the evolution of studies on film marketing of Chinese film industry. In brief, research on film marketing closely linked to the development of the Chinese film industry; the linkages among different parties have effectively helped the establishment and advancement of an industrial chain. The authors concluded three contributing factors for the development of the Chinese film industry, including: the integration of business concept into the production of films, the establishment of cinemas, and the extension of film peripheral effects. Based on the trend of the development, a greater accomplishment of the Chinese film industry is predictable. Furthermore, although the authors found a close linkage between the practitioners in the Chinese

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 35 film industry and the studies conducted by scholars, there is a 6 months to 1 year time lag. However, the collaborative relationships among different parties do exist; the development of the Chinese film industry would not be possible without those scholars.

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CHAPTER III RESEARCH METHODOLOGY

A. Research Design The researcher used the descriptive method because the method is designed to gather information about the present conditions from the respondents. It aims to describe the nature of a situation as it exists at the time of the study and to explore the causes of particular phenomena. The survey method was used in gathering the opinions of the respondents through the questionnaire given to them. This study provides an analysis of the marketing strategies that the Chinese domestic movies are utilizing nowadays and to develop better strategic marketing plans for local movies to dominate the local markets and penetrate the international markets.

B. Population and Sampling The respondents involved in the research are the Chinese students studying in Jose Rizal University, Mandaluyong City. There are a total of 82 respondents. Their ages are within 18-50 years old across all classes who have been watching Chinese movies every time they are in China. To gather information and data, the researcher provides

questionnaires to the respondents. The respondents is requested to

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 37 answer the questionnaire as honest as possible and/or to the best of their knowledge. Actual interviews were also conducted by the researcher.

C. Research Tools and Instruments The researcher instruments used during research are the following: 1. Interview The researcher conducted an informal interview to selected Chinese students in the Graduate School of Jose Rizal University. These provide individual analyses and views of random respondents regarding the marketing strategies of domestic Chinese movies in local markets. It would be used to gather factual data and information necessary for the study. The interviews were conducted to concerned respondents.

2. Questionnaires The researcher used questionnaire as an instrument to collect all the information necessary for the conveyance of this study. Questionnaire is a list of a research or survey questions asked to respondents, and designed to extract specific information. It serves as a tool to collect the appropriate data, make data comparison and analysis.

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 3. Statistical Tools

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The researcher will be using various statistical tools in providing a systematic way of analyzing the data gathered. It will help the researcher formulate conclusions and hypotheses for the study. The statistical tools used are the following:

3.1.

Percentage It is a way of expressing a number, especially a ratio, as a fraction of 100. It is used to express how large or small one quantity is, relative to another quantity. This will be used by the researcher to transform the proportion to a percent by multiplying by 100. P = f n x 100

Where: P = percentage f = frequency n = number of respondents

3.2.

Weighted Mean The researcher will also use the weighted mean as a statistical tool for the study. Weighted mean is similar to an

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL 39 arithmetic mean (the most common type of average); where instead of each data points contributing equally to the final average, some data points contribute more than others. The notion of weighted mean is very useful in descriptive statistics.

fx N

Where: x fx weighted mean sum of all the population

N = total number of population

The obtained mean values will be interpreted using the Likert Scale. Likert Scale is a psychometric scale commonly involved in research that employs questionnaires. It is the most widely used approach to scaling responses in survey research. Below is the Likert Scale that will be used for interpreting the result of the survey questions:

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL Table 1 Mean Matrix Scale Value 4 3 2 1 Mean Range 3.28 - 4.00 2.52 - 3.27 1.76 - 2.51 1.00 - 1.75 Interpretation Very Important Important Less Important Not Important

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3.3.

Standard Deviation The researcher will use standard deviation to show how much variation or dispersion exists from the average. A low standard deviation indicates that the data points tend to be very close to the mean, whereas high standard deviation indicates that the data points are spread out over a large range of values. Below is the formula for standard deviation:

( x1 - x

( x2 - x

( x3 - x

( x100 - x

Where: SD = standard deviation x weighted mean

JOSE RIZAL UNIVERSITY GRADUATE SCHOOL x = mean of each sample (x - x) 2 = sum of the deviation of x and x N = size of the sample

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3.4.

One Way Anova Test The researcher will use one-way anova test to determine the existence, or absence of a statistically significant difference amongst several group means. It will actually uses variances to help determine if the various means are equal or not, To perform an Anova test three basic assumptions must be fulfilled: 1. Each group from which a sample is taken is normal. 2. Each group is randomly selected and independent. 3. The variables from each group come from distribution with approximately equal standard deviation.

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. 3.5. Regression A regression is a statistical analysis assessing the association between two variables. It is used to find the relationship between two variables.

Regression Formula:

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Statistical treatment is thru the use of SPSS.

D. Data Analysis The data obtained from the questionnaire were analyzed, evaluated and presented through figures, tables and graphs. The presentation was supported by the interpretation based on the result of the questionnaire gathered by the researchers. percentage average was used. To assess the responses, getting the