Blockbuster Inc. The Marketing Puzzle The Pieces Current Business Model –Mr. Jeffrey Feiereisen...

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

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Rent

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ay

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Demand

Demand

-140

-120

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-80

-60

-40

-20

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Mill

ions

of D

olla

rs

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Cumulative Profit

Profit

?s