Topics: Renting, Rental shop, Commerce Pages: 1 (275 words) Published: February 18, 2013
1. What are the chief elements of Redbox¶s strategy? Which of the five genericcompetitive strategies discussed in Chapter 5 most closely fit the competitive approachthat Redbox is taking? What type of competitive advantage is Redbox trying to achieve?The chief elements of Redbox¶s strategy are low price advantage and strategicpartnerships that drive high rental volumes. Redbox also offers convenience. Thecompany has established a large ³brick and mortar´ type kiosk and consumer basewithout the capital investment of actual retail stores. Consumers use a simple touchscreen to select and rent their favorite movies for $1/night. They can keep the movie aslong as they like and return the movie to any Redbox kiosk when they are done.Redbox uses the low-cost provider strategy. Redbox entered the market with $1 DVDrental kiosks in many high traffic McDonald¶s locations. The Redbox $1 DVD rentalprice attracts the low income McDonald¶s target market and paying per DVD rentalreinforces the low-cost provider strategy. The rental price of $1 implies value; theconsumer perceives the product as low-cost regardless of whether they were chargedmore for late fees. Partnering with Coinstar, Redbox has been able to extendpartnerships to many large chains that share similar low-cost strategies (Wal-Mart,Walgreens, and 7-11).Redbox has successfully focused on its core competencies, low-cost provider,convenience, and strategic partnerships to succeed in the DVD rental market. Through joint ventures with McDonalds, Coinstar, and a market niche focus, Redbox is obtaininga competitive advantage in the DVD rental market through cost and convenience.Providing low-cost rentals and increased presence of retailers, Redbox hopes to be thego-to choice for home entertainment
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