Redbox Case

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Kevin AlvarezApril 8, 2012
BUSI 4160Redbox

1. What are the chief elements of Redbox’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approach that Redbox is taking? What type of competitive advantage is Redbox trying to achieve?

- The chief key elements of Redbox’s strategy are low price advantage and strategic partnerships that drive high rental volumes. Redbox also offers convenience. Redbox has established a large “brick and mortar” type kiosk and consumer base without the capital investment of actual retail stores. Consumers use a simple touch screen to select and rent their favorite movies for $1 a day. They can keep the movie as long as they want and return the movie at any Redbox location. - Redbox uses low cost provider strategy. Redbox entered the market with $1 DVD rental kiosks in many high traffic McDonald’s locations. The Redbox $1 DVD rental price attracts the low-income McDonald’s target market and paying per DVD rental reinforces the low-cost provider strategy. The rental price of $1 implies value: the consumer perceives the product as low-cost regardless of whether they were charged more for late fees. Partnering with Coinstar, Redbox has been able to extend partnerships to many large chains that share similar low-cost strategies.

2. What does SWOT analysis of Redbox reveal about the overall attractiveness of its situation and future prospects?

- Strengths
Low costs
Offering convenience
Brand awareness
Affiliation with Coinstar
Ability for consumers to view the current
Contents/reserve a movie from home before going to the location - Weakness
Expensive license agreements with movie companies
Inability to obtain new releases in a timely manner
Limiting payment to credit cards
Limited storage in kiosks
- Opportunities
The failure of movie rental stores increase the market share
Expansion
Offer more classic...
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