Nederlander Producing Company has been in the theater business for a century, but its owners aren’t looking backward. Instead they’re focused forward, on the most advanced ways to identify and serve their audiences. “Everything we do along the food chain of the theater industry is about enhancing the customers’ feeling when they experience a Broadway show,” says Nick Scandalios, executive vice president of the Nederlander Organization. To do this, the company goes to great lengths to target exactly who those customers are. 

Nederlander segments its audiences in a few ways: geographic, demographic, and psychographic. The company also engages in some product-related segmentation by building brand loyalty to its stable of theaters, productions, and concerts. Since Broadway is located in New York City, it’s natural for Nederlander to market to consumers living within the tri-state area of New York, New Jersey, and Connecticut. But Nederlander also owns theaters and produces shows in Chicago, Detroit, Los Angeles, San Diego, Tucson, and Raleigh, among other cities—so the company markets to consumers living around those areas as well. Then there are the tourists who live elsewhere but travel to any of those cities—Nederlander makes sure to communicate with them too. Thus, the geographic range extends nationwide. “Nederlander was the first such company to develop a one-on-one digital interaction with all of the people who go to all of the Nederlander houses across the country, called Broadway Direct,” says Scott Sanders, co-lead producer of the revival of the Broadway hit musical Evita. “There are over 2.5 million people on that list. It’s a very valuable list, these are very targeted theatergoers.”

Broadway Direct also helps Nederlander and its partners segment their audiences by demographics and psychographics. For example, by tapping the digital list, says Sanders, “we sold more than $500,000 to those customers, all at full price.” These are consumers who can afford premium seats and performances and are willing to pay for them. They are people who enjoy the theater and make it part of their entertainment lifestyle. All of the data gathered by Broadway Direct creates user profiles that the company relies on for everything from deciding which shows to invest in or host, to which consumers will most likely attend each show. “The more we know about audience purchasing habits, the better we can become at serving them with the shows we think they’d find most interesting,” notes Sean Free, vice president of sales and tracking at Nederlander. 

The company doesn’t stop with an initial communication blast to more than 2.5 million theatergoers. Instead, it follows up with what Free calls retargeting, which further identifies audience members by their preferences. Each Broadway Direct newsletter contains opportunities for consumers to click on different options for content. “We put these people in specific buckets,” explains Free. For example, as Evita approached its launch, Broadway Direct sent theatergoers an online newsletter containing feature articles, video, audio, a sweepstakes, and, of course, a “Buy Tickets” button. Consumers had a seven-day window to purchase tickets at a lower price, after which the price would go up. Those who clicked the button but didn’t follow through with a purchase received a follow-up email from Broadway Direct a few days later, reminding them of the opportunity. Free estimates that the second email generated an additional 15 to 20 percent in sales. 

Nederlander also carefully positions its offerings to differentiate itself not only from other theater productions but also from other types of entertainment on which consumers might spend their dollars. “We thought it was important to position Evita as an important event because it was the first time in 30 years the show had been on Broadway,” notes Free. “So this was going to be a big deal.” Nederlander and its partners treated it as such. When they landed Ricky Martin for the lead role of Che, they immediately contacted Martin’s fan club and marketing team to launch a presale for Martin’s fan base. These might not be regular theatergoers, but they wanted to see Martin on stage. Then Nederlander marketers followed up with a presale to its Audience Rewards customers, who are members of the company’s loyalty program. “Loyalty is key for any venue or any show,” acknowledges Free. “People want to come back to see shows and they should be rewarded for that.” An excited audience crammed the theater in New York to see the premiere of Evita. On opening night, Ricky Martin and the cast got a standing ovation. 

Questions

1. How does Nederlander achieve the three major criteria for effective market segmentation?  

2. Where would you place Evita’s audience members on the VALSTM framework? Explain your choice. How might Nederlander use this framework to identify audiences for future shows?