Redbox Essay

I. Executive SummaryRedbox Automated sell LLC was haveed in 2002. It touch offed pop out world an experiment, funded by McDonalds, with foodstuff style kiosks and idiot boxdisc l readiness kiosks. Within the first year Redbox dropped the grocery side and expediencyd fully on the automatize DVD vending machine lease. In 2009, Redbox became a fully owned rumpslogger of Coinstar. A strategic evaluation of Redboxs internal strengths, weaknesses, opportunities and potential threats argon the unspirituals of this market plan. While Redbox exhibits non- tralatitious marketing locuss, they keep up proven to be successful marketing channels. A strong focus is put upon Redbox in contracting with Verizon for the implementation of be adrift impressions, master(prenominal)taining the diminished price for lettings, and the thingamajig of the kiosks for the busy consumer.II. environmental AnalysisSince Redbox was origin e very(prenominal)(prenominal)y tried as a grocery and DVD term of a contract kiosk, the transition into merely the DVD lease market was relatively slack. Redbox is non b arely its line of merchandise name it is in any case its artistic view. It is a fully automated telly and gaming lease venue that is all contained within a 12 foot squ argon flushed box, hence the name. Redbox positions its kiosks in high-traffic aras a worry(p) gas stations, grocery neckcloths, and pharmacies. These are strategically determined for their intended luff markets to hand a oneness-stop shop on their direction home from work. The idea bathroom it was to entice the node to rent a delineation at a store that they are frequently shopping at, without having to act upon another stop.A. The market Environment1. competitory forces. Redbox is in a highly private-enterprise(a) market. They face competitors much(prenominal) as Netflix and smash hit. Redbox leads in a competitive stand out by pissering quick, at rest and affordable flick rentals. A Blu-Ray movie rents for $1.50 per solar day cadence and a regular DVD movie rental is $1.20 per day. The Redbox network is nationwide and completeers more than 30,000 doorwayible locations. (4) Blockbuster Express belatedly joined the kiosk movie rental market which led them to be a direct competitor to Redbox. They also have a leg up on Netflix as Redbox doesnt require periodic contracts, which is highly appealing to the passing(a) movie viewer.2. Economic forces. With the present state of the economy, Redbox flourished when the enquire for crummyer movie rentals increased. When the Blockbuster brick-and-mortar stores were forced to close, Redbox rentals jumped up 28% from 2010 to 2011. (1)3. Political forces. thither are no foreseen political forces that tummy shorten Redboxs operations.4. Legal and regulatory forces. There are several laws and regulations that Redbox should abide by. scarce with Redbox cosmos in a self-serve kiosk, it foundation achieve some of these laws and regulations harder to enforce. The Motion brief Association of America sets the ratings on movies, and no one under the age of 17 can rent a rated R movie. Redbox does require age verification to begin with rent the R-rated movie(s). The Federal Copy practiced passage g overns how the copyrighted material, such as movies, whitethorn be phthisisd. (2) A rented or purchased movie doesnt issue the right to show the movie outside ones home unless that site carries a license for public exhibition. The Video concealment Protection Act prevents disclosure of in person identifiable rental records without the written react of the consumer. (3) The Entertainment Merchants Association regulates the industry for under stupefy DVDs and/or film games. They protect the right to sell, rent, and/or assist the bargain and rental of entertainment products and contented. (5)5. Technological forces. With technology always increase and unexampled products ar e always being introduced, Redbox result undoubtedly be touched by technological advances. Consumers interest in renting physical movies will be on a decline with companies like XFinity calling the ability to blow movies online and take hold of them on any screen. Hollywood studios are also putting tighter reigns on places like Redbox. They are trying to delay the rental time close in from when DVDs are turnd to when they are for sale for rental. By trying to do so, they believe that it allows the consumer a chance to grease ones palms the movie before it becomes uncommitted for rent. And the studios fool a higher cut off of sales verses rentals.6. Sociocultural forces. Todays fast-paced society allows for less empty time. Consumers are looking for gubbins and easy to use products. Redbox offers a convenient supporter that allows renters to be able to rent-and-return anywhere at any kiosk. Customers can also suspend a movie online or via alert apps and pickaxe up at the warm Redbox location (4).B. Target Market(s)Redbox has three main target market ing cherryients, the mundane viewer, the family viewer, and the non-web apprehend person. For first target market segment, Redbox markets towards the casual viewer. They have a policy of no periodic contract fees unlike their competitor, Netflix, who enforces a monthly fee. The casual viewer doesnt rent enough movies or games to reassert the fee. The casual viewer appreciates the ease and convenience of the locations of the Redbox. While Blockbuster also targets the casual viewer, Redbox is more appealing due to the cheesy cost to rent a movie.The countenance target segment is the family viewer. Redbox positions itself in convenient locations for the ease of renting for the busy momma or dad. They can stop off at the grocery store or gas station on the way home from work and also pick up entertainment for the whole family, without having to put up another stop.And the third target segment i s the non-web savvy person. Netflix requires the use of the Internet to be able to rent movies. For those who either codt have the technology ready(prenominal) or those who are insecure of utilize a bank account or credit card number online, Netflix is not appealing. And with the focus Netflix on streaming movies online, they are pushing aside the lower income hold up who cant afford the technology or those who breakt escort the technological lingo required for the streaming usage. That is where Redbox steps in and will capitalize on such consumers.Consumers are being forced to move from the brick-and-mortar stores to another venue of renting movies. With Redboxs kiosks being drug user friendly and convenient, many of those consumers are trending towards the use of kiosks. Also the opportunity is fair available for Redbox to take those valued consumers who are technologically savvy and offer them the option to stream moving-picture shows online.C. Current Marketing Objectiv es and PerformanceRedboxs current marketing objectives are to grow performance. They want to continue to amaze customer loyalty, continue to engage their customers and grow profitability. By engaging their customers, Redbox is always looking to profit the rental process more efficacious and effective. They have inserted several technology upgrades into the kiosks that will shorten the rental time frame by 20-30 seconds. They are continuously running(a) on the most convenient locations and placements of the kiosks to drive their performance and grow profitability.Since 2002, Redbox has at least(prenominal) doubled, if not tripled, their revenue for seven years in a row. They distribute over 37 million disks to their field employees to install in the kiosks per year. Thousands of kiosks are installed every year. They have been able to build the infrastructure of the business to grow with the changing times, to keep up with the customer demands, and to grow their customer base into loyal customers.III. SWOT AnalysisA. Strengths1. oer 30,000 convenient locations nationwide 2. No monthly membership fees 3. Rent-and-return anywhere policy 4. Offers cheaper rental prices, $1.20/ night, than its competitors 5. Largest DVD-rental kiosks operatorB. Weaknesses1. Limited access to titles, largely new releases, and the schedule of release construe depends upon the studio, not Redbox 2. Increased costs for DVD acquisitions due to Warners discontinued family with Redbox (9) 3. Marketing communication channels seldom used4. Only accepts Debit or Credit Cards for methods of payment 5. lacking web management in observe economy sharing websites that allows for gratuitous rentalsC. Opportunities1. tease into the market of streaming movies online 2. Now offers television game rentals at a relatively cheap price, $2/night 3. industrious exercises for IPhone and Droid for yet another ease of renting 4. $7 billion industry, in 2011, concord to IBIS WorldD. Threat s1. Stiff competition with Netflix, Blockbuster Express, and Amazon 2. Websites like Hulu offering movies release of charge via the internet 3. Strained alliance with Warner pals by not accepting their ground of a 56 day postponement period to release new releases, resulting in increased costs for Redbox acquiring Warner Brother films (9) 4. Movie studio lawsuits stating they were only reservation 60 cents on new release movie rentals from Redbox, whereas they make $17 per sale of DVD at Wal-Mart. (9)IV. Marketing Objectives irrelevant their major competitor Netflix, Redbox is not a volumed advertiser. Redbox mainly uses its internet website, in store cross-promotions, and their strategic placement of their red kiosks. On www.redbox.com, they showcase their movie and video game inventory and all their locations of their kiosks. wiz can also reserve the movies or games on the website and pick it up at the closest kiosk location. It is a very simple, yet effective website.Red box uses the placement of their eye-catching, red colored box as check of their marketing campaigns. They are strategically placed in high traffic areas and cardinal wall stores. CFO Scott Di Valerio states that Coinstar wants to be the draw of automated retail. (14)Redbox also uses in store cross-promotions. Take the Orville Redenbachers promo, for example, on special marked popcorn boxes on that point is a promo code for two sinless Redbox rentals, a coupon for a release 2-liter bottle of soda and a coupon for Orvilles poppycock popcorn. (15) Everyone associates movies and popcorn unitedly so by running this cross-promotion, it brings new customers to Redbox and be able to experience the ease and convenience of usage. It has made family movie night just a little better.V. Marketing StrategiesA. Target Market(s) Redbox uses the strategy Think big, start small, scale fast. All of the opportunities that Redbox reviews and pursues are in big spaces. They also look at new ventu res who can realistically reach $100million in revenue in an lot time frame. But before those big opportunities can be obtained, they need to start small. They believe in the right environment, which includes a small team, a few resources and time to hash over the details, so they can get to a point to accurately scale each venture. When that point is reached, Gregg Kaplan, Constars COO, says Its like unleashing the wonderful benefit that Redbox and Coinstar teams and the full organization can take against these opportunities. (6)Redbox are placing more kiosks in more convenient places in hoping to increase more brand awareness, which is especially critical since they dont spend much on advertising means. Mobile acts for iPhone and Droid are becoming intensely popular. The application will endanger a map of all the kiosks available in the area and also allows the masking of what DVDs that kiosk has available. One can also reserve the movie via the energetic application and pick up at the nearest kiosk.B. Marketing Mix1. Product. Redbox is the leader in DVD rentals, renting more than 1.5 billion discs to date, in over 30,000 locations. They boast on the fact that Redbox kiosks are available, within a five minute drive, to more than 68% of Americans. (4) And their rent-and-return anywhere policy makes Redbox an undisputable convenient place to rent moves. It is also accomplishable to purchase the DVD at the kiosks or online at Redbox.com.2. Price. The price to rent a DVD from a Redbox kiosk is astronomically cheap. It costs $1.20 to rent movies, including new releases, and $2.00 for video games. The rental period lasts until 9pm the night pursuance the rental purchase. For each additional day you keep the movie, you are charged the rental fee plus tax per day. If you come up to hold the DVD for 20 days, you are charged $24 plus tax, $34.50 for Blu-Rays, or $60 for video games and the disc becomes yours. (4) These cheap prices have caused a strained huma n relationship with the movie studios in Hollywood. They only crystallize $.60 per movie rental, where as they earn $17 per DVD sale, no matter the marketing price.3. Distribution. Redbox installs their kiosks in convenient, easy to access places, such as grocery stores, drug stores, restaurants, convenience stores, and large retailers like Wal-Mart. According to Coinstars 2011 10-K report, they have 35,400 kiosks available nationwide, each prop about 630 disks. (11) They are available in every state, including Puerto Rico. The kiosk is like the traditional brick-and-mortar video rental store, but only occupies up 12 square feet. Consumers access the movie database via a touch screen, make their selection(s), swipe their credit/debit card, and incur the DVD or video game(s). It is meant to be a quick, efficient and fully automated rental process. The kiosk scans the bar codes of the movies or games to keep track of its inventory. Bar code scanning allows them to track the rental s and the returns easily, especially when they offer the rent-and-return anywhere policy.4. Promotion. Redbox sends promo codes to individuals who have signed up to receive emails. They also send promo codes via text edition messages. Those test messages results in a sluttish rental once per month. Another promo Redbox offers are gift cards via email that gives the receiving system a code for a free rental. In 2009, Redbox added a free mobile application for iPhone users and in 2011 they made the application available for Android users. The application allows users to word form through the available titles, find a kiosk location, and reserve a movie all from a smartphone.