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 MODEL Blockbuster Inc. (Past)

4 Ps and SWOT

Product and Placement

Price StoreSale PriceRental Price Distribution In-Store Blockbuster$19.99 to $24.99$3.99 to $9.99 Hastings Entertainment$19.99 to $29.99$4.99 to $9.99 Wal-Mart$14.99N/A By-Mail Blockbuster N/A $9.99 to $19.99 Netflix N/A $4.99 to $16.99 Video-On-Demand Blockbuster$9.99 to $24.99$2.99 to $3.99 NetflixIncluded 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 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 relationships SWOT Analysis

MARKET SOLUTION Blockbuster 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 Service Partnership 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.

Proposal Papa John Pizza = 77 points 24.4% of market preference Dominos Pizza = 75 points 20.7% of market preference 75.3% would be likely to order from an establishment that delivered pizza and a movie

MARKET RESEARCH Blockbuster Inc. (Present)

Research Methods Survey -Distributed online -89 responses -Non-random, non-representative sample

Accuracy and Distribution Age Between 18 and 77 Mean: Median: 22 Mode: 19 (25.33%)

Target Market Research Expected delivery price as a function of age – Not significant (P = ) Likeliness to use service as a function of age – Not significant (P = ) Likeliness to order food and movies simultaneously as a function of age – Significant, not descriptive β = r 2 = S e = 1.10

Profitability Research Willingness to pay – Average: $6.73 – 95% CI: $ $7.63 Likeliness to use service – 78.67% indicated they are interested in the service

BLOCKBUSTER DELIVERS Blockbuster Inc. (Future)

Website Integration

Full Recoupment of Sunk Costs Achieved in 7 th quarter

Cost Analysis Cost Per Kiosk$26,500 Number of Locations5,155 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

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