The Rise and Fall of Blockbuster

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The rise and fall of Blockbuster.
How the definition of the industry can change your destiny

INDEX

EXECUTIVE SUMMARY1
INTRODUCTION2
THE COMPANY2
TRENDS AND ISSUE4
SITUATION OF THE MARKET4
TECHNOLOGY5
AMERICAN LIFESTYLE6
MARKETING MIX7
PRODUCT.8
PRICE9
PLACE.10
PROMOTION12
RECOMMANDATION AND CONCLUSION13
REFERENCES16
APPENDICES20
Appendix I: Porter’s 5 forces20
Appendix II: PESTLE analysis24
Appendix III: Blockbuster SWOT analysis28

EXECUTIVE SUMMARY

Blockbuster is a provider of rental movie and game entertainment with a worldwide presence. At the beginning the company was considered leader of its industry due to its capacity to customize a store to its neighborhood, offering different products to a wide range of customers. In the last years, since the emerging of new technologies and strong competitors in the market, the company has started to take a negative direction; moreover, due to its high fixed costs and financial problems, Blockbuster filed for Bankruptcy last September 2010. The purpose of this work is to analyze the company in depth, highlighting its main weaknesses and trying to suggest some strategies which could help the company become a profitable and successful business once again. An accurate study of its situational analysis (Porter’s 5 forces, PESTLE and SWOT analysis) reveals new trends and issues of the company which are related to technology and a new American lifestyle. A further focus on the target market and in particular on the marketing mix elements (product, price, place and promotion) helps to understand the marketing objectives of the company, the main one being the achievement of a steady increase in online market penetration by leveraging on its well-established brand image and by protecting its unique position as the operator that provides access across multiple delivery channels such as stores, kiosks and online. Finally some important recommendations related to the marketing mix are proposed to help the company reach success and become a strong player in the new movie rental industry once again. INTRODUCTION

For many years Blockbuster has been considered the principal player in the global video rental industry. However, as new technologies and a strong competition have increased, the success of the company has started to take a negative direction. The purpose of this work is to examine the Blockbuster company, by conducting a deep analysis of its trends and issues related to the environment in which it operates, followed by its marketing objectives and marketing mix. Finally some recommendations for the improvement of its situation have been given.

THE COMPANY

Blockbuster is a provider of rental movie and game entertainment in the US; it actually operates also in Asia, Australia, Canada, Europe, Latin America and Mexico. The company set up in 1985 and quickly became a global company with thousand of stores in the worldwide. The early success of the company was due to its capacity to “customize a store to its neighborhood”, offering different films and games for different target of people (http://investor.blockbuster.com/phoenix.zhtml?c=99383&p=irol-newsArticle&id=1395025). Notably in 1994, Blockbuster was acquired by a U.S. communications and entertainment company called Viacom but the company separated from it in 2004.

At the dawn of the new century Blockbuster, to face the more aggressive competition, tried to focus on the emerging trend of new technologies, and decided to launch a new service called Blockbuster Total Access in which customers could rent movies online and change them in stores (http://www.sportsinmovies.com/rent-movies.asp). Unfortunately, in the following years, the success of the company has started to take a negative direction; Internet and competition have increased and Blockbuster began to record a decrease of its revenues. Nonetheless, it was one of the first company which...
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