Posted by: itm2011 | May 18, 2011

Marquee: The business of Nightlife

Case Study Analysis
Marquee: The Business of Nightlife

INTRODUCTION

The Strategic Group, is a full service marketing, special events and promotions company founded by two, ex-club promoters, Jason Strauss and Noah Tepperberg.  The two first entered the industry in 1999, opening a club called ‘Conscience Point’ followed by another called ‘Studio 16’. After their short success, Strauss and Tepperberg sought to open another venue, which was opened-with the help of joint ventures and investors- in 2003. Strauss and Tepperberg had an advantage to plan and design their new venue from ‘raw’, previously a truck garage. Prior connection, knowledge from years of experience had helped them create such an atmosphere where they knew would have a phenomenal response from their clients. Soon after opening Marquee was instantaneously known as the ‘hottest’ club, an instant success. However, close to a decade since the opening, both Jason Strauss and Noah Tepperberg are deciding whether it is about time for them to move on to another venture. I have analyzed key factors that can help in the decision-making process of their future business for Marquee, researching their top competitors, environment and future outputs.

First, I will discuss some of the Company’s business strategy and how they lead to success. Second, I will examine the strength and weaknesses of the company. Lastly, I will provide recommendations for the decision-making of the company’s future endeavor.

 

 

STRATEGIC GROUP’S MARQUEE BUSINESS STRATEGY

The Strategic Group has created a brand image of the club Marquee that attracted crowds such as models, celebrities and socialites. Strauss and Tepperberg’s main business strategy that lead them to success was not only because of their associations with the elite, but because of the image and the atmosphere they have created and maintained throughout the years. Managing customer relationship was one of the many important factors that made Marquee different from other clubs. Marquee, attracting a very diverse crowd, had different types of clients. From jet-setters, who are frequently traveling to a ‘regular’ who would come weekly- spending an average of $600 on a table. For those who are frequently traveling but are seeking to experience the same kind of nightlife Marquee provides, the Strategic Group would ensure that their clients would get the same experience in one of the sister property. The regulars are described to be the most welcomed, because of their loyalty. They are treated with special care such as placement of the tables and special services such as storing a leftover bottle of alcohol for their next visit. Another strategy that contributed to their success is the promotion of the club. With the help of promoters, the club is continuously filled with a diverse crowd, to help maintain the atmosphere. Another promotion that had helped maintain their success was the “Marquee Red Card”, which was given to top hotel guests-mainly to ease entrance. They had an advantage to deliberately design the space with three different rooms each with a different theme, music, and crowd. It is important for the club to ‘look’ crowded even on a slow night. So by closing up a room or two would help the club appear full.

STRENGTH & WEAKNESS ANALYSIS


STRENGTH

Life-span Compared to the average life span of a club in New York City, which averages 18 months, Marquee still remains opened for business
Location Located on 10th avenue, amongst the numerous nightlife venues such as restaurants, bars, clubs and lounges
Celebrated Guests Socialites, musicians, celebrities and models are just a few of the celebrated guest appearances that come to party
Crowd A very diverse mix of crowd that fills the entire club is carefully selected or sorted for admission to maintain a consistent image and atmosphere of the club
Services The type of services that is available for the clients.
Exposure Almost a decade old, Marquee has had its exposure to the market and is known to be one of the best clubs in New York City
Space Three different rooms are carefully designed into the space, where private or corporate parties can be held during the weekdays or earlier in the evening to increase revenue

WEAKNESS

Age Once known as the hottest club in town, after age, it is difficult to maintain on that level
Image As the club is becoming older, it is harder to maintain a consistent atmosphere and brand image. Controlling the amount of flow of the clients and being able to actually ‘sort’ the crowd may soon be a privilege
Maintenance Maintaining the facility throughout the years may be difficult because replacement of such equipments may be a costly investment
Management of Clients As the number of clients increase, it will be harder to manage and service the clients the treatment they once had in the beginning

OPPORTUNITIES & THREATS ANALYSIS

 

OPPORTUNITIES

Legendary It’s becoming close to a decade since the club has opened, which may become legendary, if it continues to remain open
Future Revenue Revenue may increase after the economy becomes more stable
Main Platform Marquee, Strategic Group’s main platform. The closing of the business may affect their other business ventures

 


THREATS

Increase Expenditures

As years pass, the amount of expenditures increase-including payroll, rent, legal accounting fees and etc.
Increase Rent Rent is raised annually, which soon can become too expensive to make any profit
Decrease Revenue The amount of revenue is projected to decrease and has already shown a significant drop from the previous years
Cost of Operation Operating cost has been rising-harder to maintain business profitable
Competition After Marquee’s success, more and more business were found to be placed in the area

COMPETITORS

After Marquee’s great success in the nightlife industry, multiple businesses have opened all around the area, hoping for the same level of success. Below shows the number of clubs and lounges in the area, more than half found to be closed as of date. The two top competitors of Marquee is the ‘Bungalow 8’ and ‘Cain’, both of which being closed. Bungalow 8 opened in 2001 by Amy Sacco and closed in 2009 for “renovation”. Cain opened in 2004 and closed in 2009. Both, in which had higher consumer ratings/ reviews.

RECOMMENDATION

After examining the SWOT analysis of the business, I thought the ultimate choice that may be made was to move on and peruses in other business ventures. An average life-span of a club in NYC is found to be 18 months. Marquee’s success may simply be out of luck or may continue to be a legend of its own. However, a significant decrease in revenue was mentioned as Tepperberg have pointed out that the cost of operating the club has significantly increased compared to the earlier days. The competitive analysis also shows that both the top competitors themselves have reached their peak and had a great downfall. Newer, hotter clubs are surrounded in the area. The increase in clients over the years is harder to maintain relations. Another key factor that lead me to this decision is because the Strategic Group has many ongoing business activities throughout the nation, which may have great potential growth. Focusing on those activities may progress into a great success of their own. Holding onto to Marquee may just become a burden that can interfere with their current, new business activities.

Another recommendation that I have deliberated was relocating and opening a new club. The life span of an average club in New York City explains the current generation of club goers. They enjoy going to the newest hottest clubs in town. Marquee now close to 10 years, is considered to ancient. Relocating and opening a new club gives both Strauss and Tepperberg the advantage to put their weaknesses that they have faced and mistakes they have learned with Marquee into considerations when building the new hot spot. Other advantages are the new space, new aura, new scene-all buzzes that will attract massive crowd which equals high revenue.

CONCLUSION

In conclusion, Strauss and Tepperberg’s business strategy, for Marquee, has shown to be a great success. Close to 10 years in business, the club has grown out of trend or to live up to their reputation-once known as the hottest club in town. Through the SWOT analysis and competitor analysis, I have deliberately strategized a solution or recommendation whether the club owners should continue spending their time and money in ‘saving’ Marquee from closing down. All of Marquee’s top competitors, also considered the hottest clubs, are currently closed. It was clear that Strauss and Tepperberg was doing something right according to the life span of Marquee. However, with the significant decrease in revenue and the increase in expenses, year on, may lead to an abrupt closing of the business. I have demonstrated two recommendations that the partners account into consideration on their decision-making, both solely to maximize profit. Selling the club, while it still ‘alive’-with whom they call clients- is an option. Another option recommended is to either completely renovating the club to promote a new aura, scene and marketing mix or to move to a new location for a new opening. Both recommendations were made to prevent from further loss and to focus on a new business venture, ultimately to profit from their investment in time and money. It is said that a club makes the highest profit margin in the earlier days and as years pass it will turn into a debt. With Strauss and Tepperberg’s years of expertise in the business along with their connects, I can assure that their future business ventures will continue to succeed. However, I have concluded that the best choice for Strauss and Tepperberg is to let go of Marquee.

BIBLIOGRAHPHY

Elberse, Anita, Ryan Barlow, and Sheldon Wong. Marquee: The Business of Nightlife. Cambridge: Harvard Business School, 25 Feb. 2009. Pdf.

Ogunnaike, Lola. “Club Stays Hot at Ripe Old Age of 2 – New York Times.” The New York Times. The New York Times, 03 Nov. 2005. Web. 17 May 2011. <http://www.nytimes.com/2005/11/03/nyregion/03marquee.html&gt;.

Nolan, Hamilton. “Is Amy Sacco Broke? – Gawker.” Gawker. Gawker.com, 23 June 2009. Web. 17 May 2011. <http://gawker.com/5301434/is-amy-sacco-broke&gt;.

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