I. Executive Summary
The Redbox was started in Europe as a grocery vending machine. Grocery vending machine concept failed, giving way to McDonalds to replicate the idea putting food in the vending machine. Eventually RedBox was started in 2002. The idea was centered on a red kiosk first placed in McDonald’s. The kiosks are automated vending machines for DVD- rentals. Quickly, the company began to be noticed by word of mouth from its customers. RedBox ownership is under CoinStar. PG 97 Module 8
Environmental Analysis of the Marketplace
A. Growth Options-Penetration and Diversification Module 1 1. Due to the fact the RedBox is already part of video rental market, the appearance and location has helped it to penetrate this market more effectively. Currently, RedBox kiosks are positioned inside grocery stores, pharmacies, outside convenience stores and gas stations, and inside of McDonalds. RedBox locations are unique, which makes itself more visible to the targeted market. In terms of Diversification, this is company whose rivals are Netflix, and Blockbuster. However, RedBox’s marketing at cheaper rental prices makes it more of an appealing service to the market. Redbox’s prices ranges from $1-$2 (Yackey, 2007). Even at provided service limited areas, RedBox stills prove to number one in the DVD-automated rentals.
B. Macro-Environmental AnalysisModule 2
1. Economic factors
In regards to certain economic factors such as: Income and inflation. Redbox has been fairing pretty well. Since its inception, Redbox has had tremendous economic growth. The Q4 reporting for 2010, releasing showed that 38% more than revenue earned in 2009. Putting total earnings $319.6 million (Smith, 2011). Also, with its newly anticipated joint venture with Verizon Communication, there has been a revenue gain of 11 percent. 2. Legal and political constraints
As far as legal constraints goes for Redbox, there are few contracts that must be renewed or followed for Redbox to remain in business. However, the most important legal constraints are dealing with the movies companies who hold exclusive to the movie titles. For example, the current policy and lawsuit that Redbox once held with Universal and 20th Century Fox can cause problems for Redbox. Both companies would release movie titles at least 30-45 days later to Redbox. This release has inadvantegous effect for Redbox. The reason is based limited quantities for a specific movie (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 2010). 3. Social and cultural influences on behavior
One of the major fears is that need for the current service of being a walk-up kiosk will decrease; Meaning that the current audience base will become more into renting videos from doing streaming from home. As society needs are becoming more targeted to using the computers and staying home, Redbox is looking into becoming more appealing in the home streaming market. 4. Technological factors and options
To stay more ahead of the curve, Redbox needs to ramp up for video streaming, and adding on video-on-demand if does not want to become obsolete. Rival company Netflix has partnered up with video games console to place them in home; Since Redbox views Netflix as it major competitor this maybe an option to consider as well. Just like Netflix, Redbox has already launched its own Android App.
C. Micro-Environmental Analysis: The Competition Module 2 1. Characteristics of the firm
Netflix is one of Redbox major competitions. However, since its price high hike it believed that...