REDBOX’S STRATEGY IN THE MOVIE RENTAL INDUSTRY [1] Currently, Redbox is one of the leaders in the movie rental industry. Its history was dated back in 2002 when it was just an experiment that McDonald’s restaurants had tried to expand. Acquired by Coinstar in late 2003, Redbox then began expanding by deploying vending machines kiosks that contained predominantly new release movie DVDs in high-traffic shopping locations. The idea behind Redbox is that customers could be easily enticed to rent a movie at a location where they shop regularly. Redbox pursues a low-cost provider strategy by striving to achieve lower overall costs than rivals on products that attract a broad spectrum of customers.
The top three firms have a relationship and power to obtain the viewing rights to screen 2”first-run” films and to do so at a lower price. So more screens allow for more showing times reducing the average cost. There are also financial and risk bearing economies of scale due to the availability o multiplexes, and the ability to bear and manage commercial risks more effectively than smaller independent cinemas, or small chains. These all combine to create a competitive advantage against small firms and being able to win and maintain market share. Price discrimination also shows signs of oligopolistic firm , as prices are set for different genders, age, time, season, due to lack of competition and choice.
Knowing that one of the basic assumptions about market participants is goal-oriented behavior, where the users are interested in fulfilling their personal goal; this is a good call. In addition the Netflix’s rent available title service is beneficial to the revenue growth. • Revenue sharing- the retailer pays a lower price for each DVD in exchange for sharing a portion of the rental revenue with the movie studio. • Video-on-demand- it allows home consumers to directly access movies via direct download and/or through online and digital subscriber services (like, satellite TV, cable TV, etc.). • Marquee Program base on pre-selecting four DVDs, with no late fees or due dates.
Redbox is in a highly competitive environment that is evolving quickly. Redbox differs in this competitive market because it offers consumers convenient, quick, and hassle free access to affordable movies. Compared to Netflix and Blockbuster, Redbox offers more physical locations as well as the lowest price available to rent a DVD or Blu-ray in the very competitive marketplace. Redbox, Netflix, and Blockbuster represent the major market share holders but the movie industry has a bigger connection with direct competitors as well as new entrants and suppliers and other substitutes. New entrants would consist of GameFly and Blockbuster Express.
In a highly competitive business world, on a firm’s priority list is the subject of increasing profit and reducing cost. One might than pose the question, has this put them out of business (mom and pop store)? The answer is absolutely not, but rather, they too benefit from cheaper prices as they continue to buy in bulk and continue to operate as the name suggest, convenient
1. Which are the top three characteristics that customers expect from and SUV? Is the low price an advantage or a disadvantage? (Word Count: 41) • High Performance • Enhanced safety and stability • Multi Terrain The low pricing is an added advantage considering the customers reluctance to spend more. This can attract customer as they can pay less but get more than what the competition is giving them.
Benefits There are many advantages for individual buying though from GPOs, one of the major advantages is the ability to provide a lower cost solution. By leveraging the buying power of members of GPOs, the consortium is able to combine the amount of products to gain these critical discounts, which in turn provides the best price to each individual participant. Vendors are willing to extend discounts and additional service levels to the GPOs to gain access to their large networks of buyers. This allows vendors to reduce their sales cycle and have a good forward view into demand - greatly impacting successful production and supply chain management. Other benefits for buying from GPOs may include as following: • Comprehensive sourcing strategies • In-house contracting/clinical expertise • Advanced procurement
Netflix will give customers more value for the money. Netflix will achieve best-cost status by delivering attractive attributes such as, Better customer service, website features, faster delivery, and offering a wider selection of DVD's at a lower cost than their competitors. Netflix can operate at a level lower than their rivals mainly due to experience and the learning curve. Netflix is incorporating a hybrid of low cost and differentiation targeting value
As known that Costco is focusing on high quality of merchandises at relatively low prices, they have one condition in order to purchase merchandises at low prices, which is number of purchases. For example, to have one product that is cheaper than competitors they have to purchase more from original manufacturers. Therefore, Costco realized that they have to keep the sales volume to be high so they are still able to maintain this advantage. Because of this, they try to keep their slogan in customer minds that Costco has lower prices and they try to same membership money. However, there is a problem that Costco has to deal with is that their profits mostly from its membership fees instead its net income.
Under horizontal diversification, it tends to simultaneously own two or more units that utilize a similar set of resources. This allows it to develop economies of scope because producing both of them costs less than producing them as two separate companies. It also allows them to cross-sell its benefits and set up a one-stop shot. Examples include producing films and television shows that employ similar studio assets. Under vertical integration, Disney is able to use the products of one of its companies and utilize them as the resources for another company.