Redbox’s Strategy in the Movie Rental Industry Case Study Essay Sample free essay sample

1 ) Which of the five generic competitory schemes discussed Chapter 5 most closely fit the competitory attack that Redbox is taking? Why did you choose the scheme you selected? The two chief schemes Redbox focuses on are a combination of low monetary value and convenience every bit good as increasing kiosk locations with high traffic. Compared to its rivals. Redbox’s offers a rental fee every bit low as $ 1. 20 per twenty-four hours. which is $ 3 cheaper on norm. Redbox is besides highly convenient. All booths are placed in high traffic locations such as supermarkets. apothecarys shops. and McDonald’s. Since mid-2009. the figure of Redbox locations has increased from about 20. 000 to 34. 600. With its 34. 600 locations across the state. anyone could easy turn up a Redbox booth near them. The competitory scheme most closely fit Redbox’s attack is the low-priced supplier scheme. Redbox’s booth scheme is really alone and cost efficient. Among the many film rental companies. We will write a custom essay sample on Redbox’s Strategy in the Movie Rental Industry Case Study Essay Sample or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Redbox is the lone 1 that uses booths instead than an existent shop. This non merely reduces the initial investing. but besides the operating cost. Redbox locations besides by and large use the low-priced scheme ; hence. Redbox is efficaciously taking advantage of preexistent price-conscious purchasers. These locations besides communicate convenience. Alternatively of doing a trip to a film rental shop. clients can pick up films while traveling to the shop. Therefore. for a purchaser to exchange to Redbox. he/she really saves money and clip. 2 ) What does a SWOT analysis of Redbox reveal about the overall attraction of its state of affairs and future chances? Strengths– Highly low rental monetary value– No monthly duty– Convenient locations– Online reserve– Number of locations– Smartphone app– Can be returned to any booth– Takes ? to a minute to checkout or return– Constant add-on– Open 24 hours– Good film choice – freshly released/popular Opportunities– General enlargement – more booths– Video game industry enlargement– Offer online picture streaming– Offer corruptible on-line film downloading– Sell music albumsFailings– Limited rubrics – normally merely newer films– Limited machine capablenesss– High acquisition cost to buy freshly released films from retail merchants– High cost of content acquisition and licence understandings– Must employ field staff to travel transcripts to different machines to guarantee handiness Menaces– Blockbuster’s increased online services– Online film streaming – Netflix/Hulu Based on this SWOT analysis of Redbox. the company is in a quite alone place. With the low rental monetary value. the convenience. and the alone merchandise bringing method. Redbox about stands alone in the film rental industry. All of Redbox’s strengths listed supra are the company’s competitory advantage. No competition even comes near to what Redbox has to offer. Redbox is really adaptative and has tried to counter some failings through engineering. The smartphone app and on-line reserve allow clients to look into the handiness of a specific film at a specific location and gives them the ability to reserve a film. However. some of Redbox’s failings need particular attending. Redbox has successfully signed licensing understandings with six major film studios. However. the acquisition cost is really expensive and several studios have terminated early. Another major issue Redbox faces is limited handiness. To slightly counter that. Redbox hires field staff to tra vel film rubrics to kiosks with a low stock list. Despite Redbox’s failings. the company has plentifulness of room to spread out. both nationally and internationally. To spread out the merchandise line. Personal computer games or music albums can be added. Redbox has many great chances and unfastened market for enlargement. As more people. presents. take to stream films online. Netflix and Hulu have become Redbox’s major menaces. Redbox is adaptative to the alteration in consumer demand and is working on on-line film streaming on its web site. As Gregg Kaplan. Coinstar’s main runing officer stated. â€Å"Redbox’s growing is non dependent upon a level or turning DVD rental market. † Although the consumer involvement is altering. there is still a immense market for the physical DVD lease market and DVD’s are non traveling to be phased out anytime shortly. Redbox will be sustained for a long period of clip. particularly with all of its competitory advantages. 3 ) What strategic issues or jobs does Redbox direction demand to turn to? Draw upon the treatment on p. 125 in Chapter 4 to develop your â€Å"worry list. â €  ( 1 page ) From a consumer’s position. Redbox’s scheme may look cost-efficient because it does non necessitate human operation and the low rental monetary value attracts a big figure of clients. However. there are many deeper issues with Redbox’s direction that need to be addressed for the company to go on to win. A large challenge Redbox faces is limited handiness. Redbox is able to maintain path of the figure of each rubric in each booth ; nevertheless. when a rubric is wholly unavailable at a booth. the company hires field staff to travel films around. Is there a more effectual manner to cover with this job? The biggest disbursal Redbox incurs is content acquisition and licensing understanding. The company spends 100s of 1000000s of dollars on licence understandings with each film studio. Therefore. my first concern is â€Å"How to cut down the company’s content acquisition cost? † In add-on to films. Redbox kiosks presently carry pictures games for the three major game consoles. Xbox. Wii. and PS3. Redbox could potentially spread out into the Personal computer picture game industry and even spread out its merchandise line to music albums. Therefore. whether to spread out the merchandise line is something to see. There are presently 34. 600 Redbox locations across the United States. some with double booths. The figure continues to travel up. For an even bigger enlargement. Redbox could see the foreign markets. There are many states with a similar film fiting market as the United States that may be attracted to Redbox’s service. As the Internet continues to develop and people spend more clip online. on-line film cyclosis has become a utility merchandise to Redbox films. Although Redbox is really convenient. it is more convenient to stream a film right at place. So what to make about the turning purchaser involvement in replacement merchandises? 4 ) What recommendations would you do to Redbox direction? At a lower limit. your recommendations should cover what to make about each of the strategic issues/problems identified in inquiry 3. In add-on. each recommendation should be supported with converting statements based on your analysis of Redbox’s state of affairs. First of all. Redbox needs a better content acquisition scheme. The current cost is merely excessively high. In add-on to well-known film studios. Redbox should see partnership with independent film makers and smaller production companies. There is a batch of well-made and valuable content that people do non cognize approximately. Redbox can have a few of those films or docudramas each month. With Redbox selling for the film makers. the acquisition cost should be comparatively low. which consequences in a win-win state of affairs for both parties. I believe this scheme will win because many Redbox clients do non hold a specific film in head traveling to a booth and most people are willing to lease a featured film at $ 1. 20 per twenty-four hours. To find whether to spread out the merchandise line to PC games and music albums. Redbox must carry on studies to see if there is a possible market. I think there is a market for Personal computer games. but non every bit much for music albums. Personal computer games can be added since Redbox already carries picture games for other gambling consoles. However. I would merely transport popular Personal computer games. either for its exclusivity or as a backup when stock list is low. As for music albums. they can merely be sold to avoid illegal downloading. Redbox booths are by and large located in supermarkets that already sell music albums and they easy offer a much wider choice than a Redbox booth can. Expansion into foreign markets is a large chance of growing for Redbox. The initial cost may be comparatively high because the company needs to engage local selling analysts to carry on market research and get partnership. It is easier to first enter other English speech production states every bit good as states with a similar civilization. Overall. the procedure should non be excessively hard or dearly-won. If Redbox booths in s maller U. S. metropoliss are gaining. so a Redbox booth in a foreign thickly settled metropolis should bring forth even more net income. Redbox has already taken stairss to traveling digital. The new Redbox Instant by Verizon charges an $ 8 monthly fee for limitless film streaming plus 4 DVD leases. The monetary value is comparable to that of Netflix and Hulu. which is $ 7. 99 for both. However. Netflix and Hulu both offer a broad scope of Television shows every bit good as films. Netflix is alone in that it has a big choice of older authoritative films. while Hulu has entree to the latest episodes of Television shows. In order for Redbox Instant to stand out. it must offer something different from its rivals. Since Redbox already has partnership with film studios to acquire the freshly released films the same twenty-four hours it is offered in DVD. that could be Redbox Instant’s selling point. Unlike Netflix and Hulu. Redbox Instant clients have entree to the latest films.