Redbox Essay

I. Executive SummaryRedbox Automated Retail LLC was imbibeed in 2002. It started by being an experiment, funded by McDonalds, with food product style cells and word-paintingdisc stock splital stalls. in spite of appearance the first year Redbox dropped the grocery side and profitd fully on the alter DVD vending machine term of a contract. In 2009, Redbox became a fully own subsidiary of Coinstar. A strategic evaluation of Redboxs internal strengths, weaknesses, opportunities and potentiality threats be the bases of this foodstuffing plan. place Redbox exhibits non-traditional marketing venues, they have proved to be successful marketing channels. A strong focus is put upon Redbox in contracting with Verizon for the implementation of sprouting movies, maintaining the low price for commitals, and the restroom of the kiosks for the crabbed consumer.II. Environmental AnalysisSince Redbox was origin on the wholey tried as a grocery and DVD term of a contract kiosk, t he transition into only the DVD conveyal market was relatively easy. Redbox is non only its business name it is as well as its esthetical view. It is a fully automated characterization and gaming rental venue that is all contained within a 12 foot squ be personnel casualty box, hence the name. Redbox positions its kiosks in high- avocation beas like tout stations, grocery stores, and pharmacies. These ar strategically placed for their intended aspire markets to have a one-stop shop on their way home from work. The idea behind it was to entice the customer to rent a movie at a store that they are frequently shopping at, without having to acquire some other stop.A. The marketing Environment1. Competitive forces. Redbox is in a highly competitive market. They face competitors such as Netflix and Blockbuster. Redbox leads in a competitive stand out by religious offering quick, cheery and affordable movie rentals. A Blu-Ray movie rents for $1.50 per day and a unshakable DVD movie rental is $1.20 per day. The Redbox network is nationwide and offers more(prenominal) than 30,000 at rest locations. (4) Blockbuster Express recently joined the kiosk movie rental market which led them to be a direct competitor to Redbox. They as well as have a leg up on Netflix as Redbox doesnt require monthly contracts, which is highly appealing to the everyday movie viewer.2. economic forces. With the present state of the economy, Redbox flourished when the demand for cheaper movie rentals developmentd. When the Blockbuster brick-and-mortar stores were forced to close, Redbox rentals jumped up 28% from 2010 to 2011. (1)3. Political forces. There are no foreseen political forces that gouge alter Redboxs operations.4. Legal and regulatory forces. There are several(prenominal) laws and regulations that Redbox should abide by. But with Redbox being in a self-serve kiosk, it offerful elucidate some of these laws and regulations harder to enforce. The Motion Pictur e Association of America sets the ratings on movies, and no one under the age of 17 washbowl rent a rated R movie. Redbox does require age verification before renting the R-rated movie(s). The national Copy flop moment governs how the copyrighted material, such as movies, may be employ. (2) A rented or purchased movie doesnt issue the right to show the movie outside ones home unless that internet site carries a license for public exhibition. The Video Privacy Protection Act prevents disclosure of personally identifiable rental records without the written consent of the consumer. (3) The enjoyment Merchants Association regulates the industry for renting DVDs and/or video games. They protect the right to sell, rent, and/or promote the sale and rental of diversion products and content. (5)5. Technological forces. With technology always increasing and sensitive products are always being introduced, Redbox result undoubtedly be affected by expert advances. Consumers interest in renting physical movies will be on a decline with companies like XFinity offering the ability to current movies online and watch them on any screen. Hollywood studios are also position tighter reigns on places like Redbox. They are trying to delay the rental duration frame from when DVDs are routd to when they are uncommitted for rental. By trying to do so, they believe that it allows the consumer a chance to buy the movie before it becomes addressable for rent. And the studios receive a higher cut off of sales verses rentals.6. sociocultural forces. Todays fast-paced society allows for less leisure date. Consumers are looking for gubbins and easy to use products. Redbox offers a expedient divine service that allows renters to be able to rent-and-return anywhere at any kiosk. Customers can also reserve a movie online or via mobile apps and surcharge up at the nearest Redbox location (4).B. Target Market(s)Redbox has three main localize market segments, the casual viewer, the family viewer, and the non-web savvy person. For first target market segment, Redbox markets towards the casual viewer. They have a policy of no monthly contract fees irrelevant their competitor, Netflix, who enforces a monthly fee. The casual viewer doesnt rent decorous movies or games to justify 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 punk cost to rent a movie.The second target segment is the family viewer. Redbox positions itself in convenient locations for the ease of renting for the busy mom or dad. They can stop off at the grocery store or gas station on the way home from work and also crack up up entertainment for the whole family, without having to make another stop.And the third target segment is the non-web savvy person. Netflix requires the use of the Internet to be able to rent movies. For those who either dont have the te chnology available or those who are insecure of using a bank account or credit card number online, Netflix is not appealing. And with the focus Netflix on cyclosis movies online, they are pushing aside the lower income bracket who cant afford the technology or those who dont understand 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 user friendly and convenient, many another(prenominal) of those consumers are trending towards the use of kiosks. Also the opportunity is becoming available for Redbox to constitute those valued consumers who are technologically savvy and offer them the option to stream videos online.C. Current Marketing Objectives and PerformanceRedboxs current marketing objectives are to drive performance. They want to continue to drive customer loyalty, continue to lock their customers and arise profitability. By engaging their customers, Redbox is always looking to make the rental process more efficient and effective. They have instaled several technology upgrades into the kiosks that will shorten the rental time frame by 20-30 seconds. They are continuously working on the most convenient locations and placements of the kiosks to drive their performance and bugger off profitability.Since 2002, Redbox has at least 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 radix 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. Over 30,000 convenient locations nationwide 2. No monthly membership fees 3. Rent-and-return anywhere policy 4. Offers cheaper rental prices, $1.20/wickedness, than its competitors 5. Largest DVD-rental kiosks operatorB. Weaknesses1. Limited access to titles, mostly new releases, and the schedule of release date depends upon the studio, not Redbox 2. Increased costs for DVD acquisitions due to Warners discontinued relationship with Redbox (9) 3. Marketing communication channels rarely used4. Only accepts Debit or Credit Cards for methods of payment 5. lacking web management in monitoring code sharing websites that allows for set extra rentalsC. Opportunities1. Tap into the market of streaming movies online 2. Now offers video game rentals at a relatively cheap price, $2/night 3. Mobile exercises for IPhone and Droid for only another ease of renting 4. $7 billion industry, in 2011, fit in to IBIS WorldD. Threats1. Stiff competition with Netflix, Blockbuster Express, and Amazon 2. Websites like Hulu offering movies free of charge via the internet 3. Strained relationship with Warner companions by not accepting their terms of a 56 day waiting consummation to release new releases, resulting in increased costs for Redbox acquiring Warner Brother films (9) 4. Movie studio lawsuits stating they were only making 60 cents on new release movie rentals from Redbox, whereas they make $17 per sale of DVD at Wal-Mart. (9)IV. Marketing ObjectivesUnlike their major competitor Netflix, Redbox is not a life-sized 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. One can also reserve the movies or games on the website and pick it up at the nearest kiosk location. It is a very simple, up to now effective website.Redbox uses the placement of their eye-catching, red colored box as part of their marketing campaigns. They are strategically placed in high traffic areas and four wall stores. C FO Scott Di Valerio states that Coinstar wants to be the leader of automated retail. (14)Redbox also uses in store cross-promotions. Take the Orville Redenbachers promo, for example, on limited marked popcorn boxes there is a promo code for two free Redbox rentals, a coupon for a free 2-liter bottle of soda and a coupon for Orvilles poppycock popcorn. (15) Everyone associates movies and popcorn together 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 ventures who can realistically r severally $100million in revenue in an allotted time frame. But before those big opportunities can be obtained, they need to start small. They believe in the right environ ment, 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 beget 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 sink much on advertising means. Mobile applications for iPhone and Droid are becoming intensely popular. The application will display a map of all the kiosks available in the area and also allows the viewing of what DVDs that kiosk has available. One can also reserve the movie via the mobile 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 tha t 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 possible 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 following the rental purchase. For each additional day you keep the movie, you are charged the rental fee plus tax per day. If you happen 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 tug relationship with the movie studios in Hollywood. They only earn $.60 per movie rental, where as they earn $17 per DVD sale, no matter the selling price.3. Distribution. Redbox installs their kiosks in conv enient, 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 holding 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 receive 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 see allows them to track the rentals 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 mes sages. Those test messages results in a free rental once per month. Another promo Redbox offers are gift card via email that gives the recipient 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 sort through the available titles, follow a kiosk location, and reserve a movie all from a smartphone.