Redbox

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I. Executive Summary

Redbox Automated Retail LLC was started in 2002. It started out being an experiment, funded by McDonalds, with grocery style kiosks and DVD rental kiosks. Within the first year Redbox dropped the grocery side and capitalized fully on the automated DVD vending machine rental. In 2009, Redbox became a fully owned subsidiary of Coinstar. A strategic evaluation of Redbox’s internal strengths, weaknesses, opportunities and potential threats are the bases of this marketing plan. While 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 streaming movies, maintaining the low price for rentals, and the convenience of the kiosks for the busy consumer.

II. Environmental Analysis

Since Redbox was originally tried as a grocery and DVD rental kiosk, the transition into only the DVD rental market was relatively easy. Redbox is not only its business name; it is also its aesthetic view. It is a fully automated video and gaming rental venue that is all contained within a 12 foot square red box, hence the name. Redbox positions its kiosks in high-traffic areas like gas stations, grocery stores, and pharmacies. These are strategically placed for their intended target 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 make another stop.

A. The Marketing Environment

1. 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 offering quick, convenient and affordable movie rentals. A Blu-Ray movie rents for $1.50 per day and a regular DVD movie rental is $1.20 per day. The Redbox network is nationwide and offers more than 30,000 convenient locations. (4) Blockbuster Express recently 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 doesn’t require monthly contracts, which is highly appealing to the casual movie viewer.

2. Economic forces. With the present state of the economy, Redbox flourished when the demand for cheaper 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. There are no foreseen political forces that can alter Redbox’s operations.

4. Legal and regulatory forces. There are several laws and regulations that Redbox should abide by. But with Redbox being in a self-serve kiosk, it can make some of these laws and regulations harder to enforce. The Motion Picture 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 before renting the R-rated movie(s). The Federal Copyright Act “governs how the copyrighted material, such as movies, may be used”. (2) A rented or purchased movie doesn’t issue the right to show the movie outside one’s home unless that 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 Entertainment Merchants Association regulates the industry for renting DVD’s and/or video games. “They protect the right to sell, rent, and/or promote the sale and rental of entertainment products and content”. (5)

5. Technological forces. With technology always increasing and new products are always being introduced, Redbox will undoubtedly be affected by technological advances. Consumers’ interest in renting physical movies will be on a decline with companies like XFinity offering the ability to stream movies online and watch them on any screen. Hollywood studios are...
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