Genre - Audience and institution

Why is genre a relevant concept for audiences?

Genre is a relevant concept for audiences as audiences may enjoy a certain kind of film, then want to watch another that has a similar effect on them, so genre is useful because it allows audiences to select a film based on its conventions and the feeling it exerts upon the audience. For example if someone really enjoyed the film "Prisoners" and enjoyed the chase, and liked working out the clues and solving the crime alongside the police protagonists which generally gave them a feeling of involvement then they could simply find out which genre the film falls into and could therefore select a similar film that could give them the same sense of satisfaction. 

How does Genre affect the film production companies and the distribution companies?

Genre affects the film production companies in two ways: They allow the film production companies to specifically identify their target audience based on the genre/sub-genre, and they also allow the film production companies to have a guideline as to what their film is trying to achieve and what they are trying to create whilst in the pre production, production and post production process. For example if the company was trying to create a erotic-thriller then they would constantly have an idea about what conventions would need to be added to the shooting, and scripting, it wouldn't make much sense to have a load of guns, drugs and explosions in an erotic thriller as it would confuse the audience and would most likely shy away from their tastes considering that they are watching an erotic thriller...not an action thriller. This brings me on to the point of identifying the target audience. The production company will most likely have researched which genre is doing the best out of the three or four genres/sub-genres that the film could potentially fall under, and they can then identify which one they would aim to create and therefore which target audience they are aiming the film at. 
The film may be advertised in a certain way to attract the target audience and to assert itself in the chosen genre/sub-genre. This can be done through a number of different editing techniques and the choice of shots that are used which show certain conventions.