Redbox Automated Retail, LLC – Marketing Mix
Redbox Automated Retail, LLC specializes in automated DVDs, Blu-ray Discs and video games rentals, was founded by McDonald’s Corporation. Customers are able to rent movies or video games at an affordable price via a vending machine. The idea was to drive more traffic to McDonald’s and added convenience to customers. In 2002, the company tested two concepts by placing fully automated convenience store kiosks (vending-like machine that sells anything from milk to shampoo) and DVD rental kiosks in the Washington D.C. area. The DVD kiosks succeeded and redbox eventually withdrew from the grocery vending machines (The History, 2014). In 2004, redbox was placed in McDonald’s throughout the Denver, CO area. Customers responded positively and the DVD kiosks were expanded to Baltimore, Houston, Minneapolis/St. Paul, Salt Lake City and St. Louis (Goodrich, 2014).
In November 2005, Coinstar, known for its expertise in placing kiosks in high traffic locations, bought 47 percent of redbox making it a separate company from McDonald’s. The DVD rental kiosks quickly branched out into grocery stores, convenience stores, drug stores and mass-merchant shops. In February 2009, purchased all of redbox from McDonald’s. As Coinstar as its parent company, redbox is leading the way in video rental kiosks (The History, 2014).
Product.
After testing the market, redbox had directed their focus on new movie releases. “Redbox is America’s destination for movies and video games” (Media, 2014). With over 200 new release titles and 630 discs in each kiosk, Redbox rents out the latest new release movies on DVD or Blu-ray Disc and new release video games for all major game consoles, including Nintendo Wii...
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Netflix. The. Reed Hastings and Marc Randolph, 29 Sept. 2009.
In 1985, Blockbuster opened its first store in Dallas, Texas. After the first few stores opened, founder David Cook built a six million dollar warehouse, which could pull and package multiple stores in a day. Blockbuster’s ability to customize a store to its neighborhood, loading it up with films geared specifically to demographic profiles in addition to the popular new releases, and a sizable collection of catalog titles. Blockbuster had instant success. In the early 1980’s and 1990’s Blockbuster put neighborhood mom and pop video stores out of business by offering better selection and convenience. However, success like that enjoyed by Blockbuster can foster arrogance. For Blockbuster, arrogance meant they believed they could do anything within their stores. For example, Blockbuster purchased Sound Music and Music Plus chains. This move took Blockbuster from movies to music. Secondly, this Blockbuster Music meant they were no longer renting now they were selling.
The video rental industry began with brick and mortar store that rented VSH tape. Enhanced internet commerce and the advent of the DVD provided a opportunity for a new avenue for securing movie rentals. In 1998 Netflix headquartered in Los Gatos California began operations as a regional online movie rental company. While the firm demonstrated that a market for online rentals existed, it was not financially successfully. Netflix lost over $11 million in 1998 and as a result significantly changed the business model in 2000. The new strategy included focusing on becoming a nationally based subscription model and focusing on enhancing the subscribers experience on their website. The change in strategic focus has allowed Netflix to grow into the largest online entertainment subscriptions service in the United States with over 6.3 million subscribers (Netflix).
In this case study we will gain a better understanding of TiVo, Inc. and how it has struggled to find success in a market they are known to be the innovator. At this point there are very few television viewers in North American that do not know what TiVo does for TV viewing. However, most consumers do not know the history or struggles this company has been through since creating the product in the late 1990’s. After reading this case study it is clear the creators of the TiVo were visionaries but it is also clear they were not business people too. Sadly, this might be the eventual demise of the company that clearly had the market in the palm of their hand. We will examine some of their flaws and how TiVo might regain some of the momentum to become a profitable organization.
With over 35 distribution centers across the United States, Netflix has the fastest delivery time of any online DVD rental company. Through the use of the United States Postal Service, over 90% of DVDs are received by customers within one day of ordering. ? Netflix?s easy to use website allows customers to browse the video library by category such as action, romance, drama (sixteen total categories) or by using a comprehensive internal search of the library. ? Netflix uses the technology of Cinematch to give customers even better service. Cinematch studies past selections made by members, and begins to recommend titles that would likely be enjoyed by the customer based on previous selections. ?
Netflix’s value discipline is customer intimacy. Netflix offers a unique and differentiated set of services to their customers/subscribers. This allows them to personalize and customize the services and products they offer in order to meet the vast needs of their customer base at a relatively low cost. As “one of America’s most innovative technology leaders”, Netflix provides a strategic solution that is tailored to each individual customer. A competitive advantage is gained by using a professional strategy of consumer intimacy. However, this platform does not only provide them with a competitive advantage, it shapes the organizational environment, culture, and value design of the firm.
From its inception, Netflix has become a business based on superior customer service and has subscribed its business to the market marketing management philosophy. The main purpose behind Hasting’s idea of a better way to rent and enjoy movies was how to provide that service to their clients and not have any late fees. In other words, their customers could enjoy their rentals from Netflix for as long as they wanted, and they would never have to worry about late fees again, so long big movie rental chains! This aspect alone of Netflix’s marketing plan indicates that Netflix has based their marketing plan on market orientation, “a philosophy that assumes that a sale does not depend on an aggressive sales force but rather on a customer’s decision to purchase a product,” (Lamb, 2009, p.7). Many companies that take on this philosophy are said to implementing the market concept. The marketing concept states: “The idea that social and economic justification for an organization’s existence is the satisfaction of customer wants and needs while meeting orga...
Web. The Web. The Web. 5 May 2014. http://www.huffingtonpost.com/john-dick/netflix-house-of-cards viewers_b_4785011.html>.
For every $100 spent at a locally owned business, $68 of that will stay local compared to $43 if spent at a “big box store”. Even though people believe that local businesses are not as beneficial as a big box store, buying locally not only benefits the business but also the community because buying locally builds a strong community and the money you spend at a local business gets put back into the community.
Movie theaters are conglomerates in the film industry. Only a few competing firms. Offer the same ticket prices and provide the same products and roughly the same services to customers.
Introduction Reed Hastings (co-founder) founded Netflix in 1997. During this time, Netflix offered DVD rentals by mail. As Netflix went public in 2002, shortly a year later their subscription reached the one million mark (Netflix Management, 2011). Recently, Netflix was recognized as one of the 50 most innovative companies, ranking number eight for “streaming itself into a $9 billion powerhouse (and crushing Blockbuster)” with 20 million subscribers (fastcompany.com, 2011). This success shows how Netflix embraced a business approach where their mission was to take the troublesome experience of everyday consumers and transform them into a business opportunity.
Blockbuster had developed a successful business model leveraging on its competitive advantage in distribution channels. Blockbuster was able to quickly and efficiently (at least initially) ship videos from one location to another taking advantage of the shifts in customer demand from one location to another. Blockbuster also has the significant advantage of its customer base. This allowed them to negotiate with the media giants to reduce the individual cost of the videos is procured, by now Blockbuster was the largest single purchaser of home video tapes. Under Huizinga Blockbuster was able to quickly identify and obtain the best locations in each geographic area into which they intended to expand. He would do this until the location was saturated. He would then move to another geographic location further stifling potential competition. Using his experience with waste management, Huizinga made a number of acquisitions. He made these acquisitions especially when entering new markets. Leveraging on earlier successes with its superstore’s physical appeal, block buster formed alliances with Domino’s Pizza, Mc Donald, PepsiCo etc to attract customers and build her brand recognition. Blockbuster effectively utilized her advantage in IT and constantly upgraded to ensure customers had the most convenient and stress free experience possible with the added advantage of creating greater efficiency in her distribution channels as the Point of sale systems were linked to an inventory system that allowed better management of her distribution operations.
Although Hastings vowed to be divergent from other video retailers, his goal was to use an identical pricing strategy; however, one that would “appeal to customers [. . .] who used online shopping as an alternative to traveling to retail outlets” due to ease of access and more preferences (Shih, Kaufman, & Spinola, 2009, p. 3). Furthermore, Netflix launched its business at a time DVDs had barely hit the marketplace as the firm anticipated the new technology to be a promising venture. Nonetheless, within a year DVD players became so vast...
A movie theater has its advantages and disadvantages. One advantage is that people can see the showing of different movies that have been newly released. The disadvantage is that, that is all there is to it and nothing more. At home, you can control the variety and ways to watch a movie. People buy many movies to watch at home and it can be anything at any time even at any place. The only bad thing about it is that they cannot see any of the newest released movies that recently came out in theaters. There are two types of ways people watch movies at their homes. One way is people already own DVDs or have bought many of them and start watching them in their DVD players. The other ways are streaming a movie through the internet. For this to happen, people would mainly buy the monthly subscriptions such as Netflix, Hulu, or Amazon Prime. Through this subscription people do not only watch movies in their homes but they also watch television shows. The only downside is there is a very limited number of movies added onto these
The idea inspired Reed Hastings and Marc Randolph, and then they founded Netflix in Scotts Valley, California in 1997 (Netflix, 2014). The company comes into play by developing a subscription-based streaming platform for movies and television shows. Unlike the traditional movie rental businesses such as Blockbuster and Redbox, Netflix’s innovation offers service via Internet, and it does not have any physical stores but instead delivers DVDs through postal mail in the U.S. Since then, Netflix has become the world’s leading internet television network with constant growth of customers to over 48 millions members in more than 40 countries in the North America, Europe, and the Latin America (Netflix, 2014). In this analysis, the main focus is examining the current market environment for Netflix. It identifies the type of market structure that Netflix is currently competing. The analysis also expands on the competitions, product differentiation, pricing strategy, and measuring the level of easy entry-and-exit.