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    Second Presentation - Blockbuster

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    Sian Hwei
    Blockbuster Inc. was an American-based provider of home video and video game rental services through both company-owned and franchised video rental shops. It later expanded into DVD-by-mail, streaming video, and kiosks. The document analyzes Blockbuster's situation, including increasing competition in the home video rental industry from services like Netflix, Redbox, and digital competitors. It identifies problems like falling stock prices and outlines alternative courses of action, selecting improving their product mix strategy through enhancing offerings as the best option to address the problems. The implementation plan involves conducting market research, raising capital for advertising/R&D, partnering with suppliers, and involving expertise to immediately expand product lines. Success will be measured by

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    Second Presentation - Blockbuster

    Uploaded by

    Sian Hwei
    242 views22 pages
    Blockbuster Inc. was an American-based provider of home video and video game rental services through both company-owned and franchised video rental shops. It later expanded into DVD-by-mail, streaming video, and kiosks. The document analyzes Blockbuster's situation, including increasing competition in the home video rental industry from services like Netflix, Redbox, and digital competitors. It identifies problems like falling stock prices and outlines alternative courses of action, selecting improving their product mix strategy through enhancing offerings as the best option to address the problems. The implementation plan involves conducting market research, raising capital for advertising/R&D, partnering with suppliers, and involving expertise to immediately expand product lines. Success will be measured by

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    Blockbuster Inc. was an American-based provider of home video and video game rental services through both company-owned and franchised video rental shops. It later expanded into DVD-by-mail, streaming video, and kiosks. The document analyzes Blockbuster's situation, including increasing competition in the home video rental industry from services like Netflix, Redbox, and digital competitors. It identifies problems like falling stock prices and outlines alternative courses of action, selecting improving their product mix strategy through enhancing offerings as the best option to address the problems. The implementation plan involves conducting market research, raising capital for advertising/R&D, partnering with suppliers, and involving expertise to immediately expand product lines. Success will be measured by

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    242 views22 pages

    Second Presentation - Blockbuster

    Uploaded by

    Sian Hwei
    Blockbuster Inc. was an American-based provider of home video and video game rental services through both company-owned and franchised video rental shops. It later expanded into DVD-by-mail, streaming video, and kiosks. The document analyzes Blockbuster's situation, including increasing competition in the home video rental industry from services like Netflix, Redbox, and digital competitors. It identifies problems like falling stock prices and outlines alternative courses of action, selecting improving their product mix strategy through enhancing offerings as the best option to address the problems. The implementation plan involves conducting market research, raising capital for advertising/R&D, partnering with suppliers, and involving expertise to immediately expand product lines. Success will be measured by

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    You are on page 1of 22

    Chow Wei Ming Tang Hao Xue Gavin Ng Sze Keong Soh Sian Hwei Sia Jiea Huan

    Tan Hock Soon. Jeffrey

    Blockbuster Inc.
    American-based provider of home video and video game rental services Originally through video rental shops both owned and franchised Later adding DVD-by-mail, streaming video on demand, and kiosks

    Source: http://www.blockbuster.com/

    Section 1
    Analyze and record the current situation

    Section A : The Environment


    State of Economy
    The movie rental sector was growing Game software sales increasing

    Current Trends
    Prefer watch movie at home Home theater electronics less expensive Direct movie distribution

    Potential Threats and Opportunities


    Changing technology and customer preference

    Section B : The Industry


    Industry - Home video rental industry Competitors - >21 major competitors
    Movie Gallery NetFlix No.2 company in the movie rental industry Online entertainment subscription services

    Hasting Entertainment RedBox


    Fully digital Competitors

    Sales and rental of movies and video games


    Movie (Kiosk) Apple, Amazon, Hulu and so on.

    What strategies are competitors using?


    Movie Gallery Acquisition Expanding gaming component Franchising (Distribution) Acquisition Expanding gaming component Franchising (Distribution) Unique amenities (Environment- Coffee bar) Target on small communities Penetration pricing ($1/day) Online reservation system Wide distribution Apple iTunes store Amazon Video on demand Hulu Variety of movies and traditional broadcast

    NetFlix

    Hasting Entertainment RedBox

    Fully digital Competitors

    Porters five forces


    Rivalry among existing competitors Strong Many competitors Fierce competition, lower profit due to market share are shared Threat of new entrants Strong Low barrier to entry (Due to low start up cost) Example, You Tube, Microsoft

    Threat of Substitute products

    Moderate Traditional DVD industry decline Netflic, Redbox, video on demand, digital download, IPTV, increasing in moving-renting convenience for consumer
    Moderate Many supplier exist in the market (Weak) Nevertheless, movie right with suppliers (Strong) High Large number of competitors

    Bargaining power of supplier

    Bargaining Power of buyers

    Section C : The marketing Strategy


    What is the target market?
    consumer who prefers to watch movie at home rather than watch movie at theaters

    What competitive advantages


    Within the movie title, 70% rentals are new release Promotion
    Subscribers will obtain two free in store rentals Giving new subscribers a free movie or game rental each week

    Marketing Strategy 4 Ps
    Products Promotion mix Movie, Games (Rent) New subscribers a free movie or game rental each week Gave online subscribers two free in-store rentals each month

    Channels of distribution
    Pricing strategies

    Offline and online distribution channels


    99cent to $4.99 Psychological pricing strategy

    Section 2
    Analyze and record the problems and their core elements

    First Problem
    Problem - Competitors increasing Proof based on facts more than 21 major competitors Proof based on assumption - Microsoft and YouTube Symptoms - Blockbuster lost $36.9 million Recommendation:
    Short term Long term - Price Discount - Promotion for example bundle pricing - Offer value added product

    Second Problem
    Problem - Stock price had fallen Proof based on facts - $26 in year 2002 to $4.30 in 2005 Proof based on assumption - Investors lost confidence

    Symptoms - Reducing number of Blockbusters outlets


    Recommendation:
    Short term Long Term -Public relation and publicity -Strategic alliance -Partnership

    Are the problem related?


    Yes
    Increase in competition Reduce revenues Change business concept Closing stores Reduces investor confidence Stock price decrease.

    Section 3
    Formulate Evaluate and Record Alternate Courses of Action

    First Alternative
    Alternative
    Improve their product mix strategy Enhance their product line for example: software, songs

    Second Alternative
    Alternatives
    Diversify business Invest into another kind of business

    Limits
    Have to obtain new raw material (Resources management)

    Limits
    Knowledge management, needs of other business related expertise

    Reasonable
    Yes

    Reasonable
    Yes

    Cost
    Costly require huge investment cost to enter another product line

    Cost
    Entering a brand new business require company to use up a extremely large amount of capital

    Which alternative best solves the problems???


    1st alternative
    Improve their product mix strategy Enhance their product line

    Through implementing this alternative


    Increase revenue Avoid direct competitions

    Section 4
    Select and record the chosen alternative and Implementation details

    What must be done to implement the chosen alternative?


    Conduct Market research Acquiring more resources: Raise capital - For advertising and R&D Suppliers - raw material/finish goods/inventory Management team - Expertise

    What personnel will be involved?


    Expertise in R&D Marketers in marketing 4ps Stakeholders

    When and where will the alternative be implemented?


    When
    Immediately right after obtaining enough capital

    Where
    The United State

    What will be the probable outcome?


    Solve the companys existing problem Increasing the company reputations and image

    How will success of failure of the outcome be measured?


    Sales volume Stock price

    Thank You

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