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Blockbuster Inc.
The Marketing Puzzle
The Pieces
• Current Business Model– Mr. Jeffrey Feiereisen
• Market Solution– Mr. Jared Waks
• Market Research– Mr. David Hahn
• Blockbuster Delivers– Mr. James Burgess
CURRENT BUSINESS MODELBlockbuster Inc. (Past)
4 P’s and SWOT
Product and Placement
Price
Promotion
Ad
Strengths•Brand equity•Customer Relationships from stores
•Adapting stores to environments•Good relationship with studios
•Especially with iTunes•40% share of domestic retail rental
Weaknesses•Few distribution centers•Low inventory•Retail locations are expensive
•Ineffective in attracting customers•Neglected Video-On-Demand
•No AppleTV competitor
Opportunities•New Distribution Channels•Co-marketing (with fast-food restaurant)•Renovate retail locations•MovieLink (Video-On-Demand)
Threats•Economy•Wal-Mart (lowest prices)•Netflix (by-mail)•Apple iTunes (Video-On-Demand)•Studios interested in sales not relationshipsSWOT Analysis
MARKET SOLUTIONBlockbuster Inc. (Future)
Place kiosks in the stores of a fast food delivery chain to facilitate the opening of a new distribution channel for our product:
Mission
Delivery
Dinner and a Movie Delivery ServicePartnership with Dominos
90.4% of rented movies are watched during dinner hours
33.7% of the video rental market consumes delivered food while watching
rented movies
Convenience
High Convenience
Low Wait Time
High Wait Time
Low Convenience
Nearly 80% of our respondents selected
‘Convenience’ as a main factor in choosing a rental
service.
The pizza/movie delivery option is more convenient and faster than either by-mail or
retail distribution.
ProposalPapa John’ Pizza = 77 points
24.4% of market preference
Domino’s Pizza = 75 points20.7% of market preference
75.3% would be likely to order from an establishment that delivered pizza and a movie
MARKET RESEARCHBlockbuster Inc. (Present)
Research Methods
Survey
-Distributed online-89 responses
-Non-random, non-representative sample
Accuracy and Distribution
Age
Between 18 and 77Mean: 31.55Median: 22
Mode: 19 (25.33%)
Target Market Research
• Expected delivery price as a function of age– Not significant (P = 0.2902)
• Likeliness to use service as a function of age– Not significant (P = 0.8045)
• Likeliness to order food and movies simultaneously as a function of age– Significant, not descriptive
• β = -0.0215• r2 = 0.0964• Se = 1.10
Profitability Research
• Willingness to pay– Average: $6.73– 95% CI: $5.83 - $7.63
• Likeliness to use service– 78.67% indicated they are interested in the service
BLOCKBUSTER DELIVERSBlockbuster Inc. (Future)
Website Integration
40%60%
Recoupment
Recoup
Studio
Full Recoupment of Sunk Costs Achieved in 7th quarter
20%20%60%
Profit Sharing
Blockbuster
Domino's
Studio
Cost AnalysisCost Per Kiosk $26,500
Number of Locations 5,155Total Sunk Cost $136, 607,500
Quarterly Print $3,711,600Television Advertisement $20,000,000
Total Media Cost $84,539,200
Total $221,146,700
0
5
10
15
20
25
30
35
40
1 2 3 4 5 6 7 8 9 10 11 12
Rent
als p
er D
ay
Quarters
Demand
Demand
-140
-120
-100
-80
-60
-40
-20
0
20
1 2 3 4 5 6 7 8 9 10 11 12
Mill
ions
of D
olla
rs
Quarters
Cumulative Profit
Profit
?s