All too often, marketers of homogenous products fail to identify their competitive advantage, resulting in
dismal results. Similarly, SME participants find it difficult to identify such competitive advantages.
Fortunately, the Franchise Model facilitates the notion of ‘ being in business for yourself, but not on your
own’. The reason for this case is to facilitate competitive advantage within a Home Entertainment SME
Franchise environment, enabling participants to successfully compete with the corporate environment. The
outcome is to identify and implement Service Profit Chain (Heskett et al, 1997) initiatives, linking customer
service to long term profitability and growth.
The home video industry is a product of technology. Prior to the introduction of the home VCR in 1976,
there was no way to watch movies at home, except as shown on broadcast television, and no one had thought
of a retail store where movies could be rented for the night. In the course of the past quarter-century, those
VCR's and those video rental stores became the foundation for a US$ 17 billion industry.
This study researches the Home Entertainment Video Rental industry, consisting predominantly of SME
home entertainment outlets. The particular analysis is in a leading South African Franchise system,
consisting of family owned ‘Franchisees’.
The home video industry is also an example of technology's ability to move businesses in unexpected
directions. Even as VCR's were being introduced, few people in Hollywood or in the consumer electronics
industry saw in the VCR the seeds of a revolution in home entertainment or in the motion picture business.
Initially, VCR's were intended as home recording devices, allowing consumers to tape their favourite
programs for playback at a later time: so called " time shifting."
A decade later, the video rental and sale business had become the motion studio's biggest single source of
revenue, accounting for half of all US...