Transcript Blockbuster Inc.

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
Blockbuster Inc. (Past)
CURRENT BUSINESS MODEL
4 P’s and SWOT
Product and Placement
By-Mail In-Store
Video-On-Demand
Distribution
Store
Blockbuster
Sale Price
$19.99 to $24.99
Rental Price
$3.99 to $9.99
Hastings Entertainment
$19.99 to $29.99
$4.99 to $9.99
$14.99
N/A
N/A
$9.99 to $19.99
N/A
$4.99 to $16.99
Wal-Mart
Blockbuster
Netflix
Price
Blockbuster
$9.99 to $24.99
Netflix Included in By-Mail
$2.99 to $3.99
Included in By-Mail
Cinema Now
$9.99 to $14.99
$2.99 to $3.99
Apple iTunes
$9.99 to $14.99
$2.99 to $3.99
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
Opportunities
•New Distribution Channels
•Co-marketing (with fast-food restaurant)
•Renovate retail locations
•MovieLink (Video-On-Demand)
Weaknesses
•Few distribution centers
•Low inventory
•Retail locations are expensive
•Ineffective in attracting customers
•Neglected Video-On-Demand
•No AppleTV competitor
Threats
•Economy
•Wal-Mart (lowest prices)
•Netflix (by-mail)
•Apple iTunes (Video-On-Demand)
•Studios interested in sales not
relationships
SWOT Analysis
Blockbuster Inc. (Future)
MARKET SOLUTION
Mission
Place kiosks in the stores of a fast food delivery chain to facilitate
the opening of a new distribution channel for our product:
Delivery
Dinner and a Movie Delivery Service
Partnership with Dominos
33.7% of the video rental market
consumes delivered food while watching
rented movies
90.4% of rented movies are watched
during dinner hours
Convenience
High Wait Time
Nearly 80% of our
respondents selected
‘Convenience’ as a main
factor in choosing a rental
service.
High Convenience
Low Convenience
Low Wait Time
The pizza/movie delivery option is more
convenient and faster than either by-mail or
retail distribution.
Proposal
Papa John’ Pizza = 77 points
24.4% of market preference
Domino’s Pizza = 75 points
20.7% of market preference
75.3% would be likely to order
from an establishment that
delivered pizza and a movie
Blockbuster Inc. (Present)
MARKET RESEARCH
Research Methods
Survey
-Distributed online
-89 responses
-Non-random, non-representative sample
Accuracy and Distribution
Age
Between 18 and 77
Mean: 31.55
Median: 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 Inc. (Future)
BLOCKBUSTER DELIVERS
Website Integration
Recoupment
60%
40%
Recoup
Studio
Full Recoupment of Sunk Costs Achieved in 7th quarter
Profit Sharing
20%
20%
60%
Blockbuster
Domino's
Studio
Cost Analysis
Cost Per Kiosk $26,500
Number of Locations 5,155
Total Sunk Cost $136, 607,500
Quarterly Print $3,711,600
Television Advertisement $20,000,000
Total Media Cost $84,539,200
Total $221,146,700
Demand
40
35
Rentals per Day
30
25
20
Demand
15
10
5
0
1
2
3
4
5
6
7
Quarters
8
9
10
11
12
Cumulative Profit
20
Quarters
0
1
2
3
4
5
6
7
8
9
10
11
12
Millions of Dollars
-20
-40
-60
-80
-100
-120
-140
Profit