April 8, 2012
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?
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
The failure of movie rental stores increase the market share
Offer more classic...
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