Redbox presentation final project 1
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A brand audit on Redbox pre-online streaming entertainment.
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Redbox presentation final project 1
- 1. By: Aditi Mishra, Annie Chin, Ashley Chang, Mayant Lan, Shirley Liu
- 2. History FEB - Coinstar becomes Launched video game Coinstar invests in sole owner of Redbox; rentals nationwide Redbox, making it a separate ~19,000+ locations ~29,000 locations company 2005 2009 2011 2002 2006 2010 First Redbox created SEPT - Online reservation system SEPT - 1 billion rentals in McDonald's launched at www.redbox.com reached ~1,900+ locations Relevant Alliances Media Distribution In Store/Kiosks Partnerships Online Streaming Growth Objectives Maintain current relationships with customers and partners Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 3. Business Model: Direct-to-Consumer • Instant gratification: widespread locations in grocery stores, drugstores, restaurants, convenience stores, and popular landmarks. • Online rental reservation: using the same interface of its kiosks, users can search for the nearest Redbox location and availability of titles at that particular kiosk (made possible by real-time inventory updates), and reserve the movie for later pick-up. • 3rd party website promoters: share promotional codes that give users free rentals Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 4. Redbox Consumer Segmentation Demographics Demographics Target Market for Disk Rental Industry Expanded Age: Young Adults, 18-24 and 25-34 Age: Older, 35-44 Education Level: College Students, Graduates Family Size: 63% have at least one child, 51% Income: Middle Class, $50-100k have a household of at least four people Generation: Y Income: Low-Middle Class, $30-60k Family-Oriented Renters City or Suburbs: City City or Suburbs: Suburbs Casual Renters Psychographics/Attitudinal Psychographics/Attitudinal Motivations/Aspirations: a sense of Motivations/Aspirations: a comfortable accomplishment, social recognition, excitement life, family security Cares About: social involvement, trying new Cares About: financial security, safety, social things, being efficient, progress etiquette, time, familiarity, trust Lifestyle: early adapter, tech savvy, multi- Lifestyle: slightly conservative, old- tasker, liberal, adventurous, in fashioned, traditional Attitudes: open, confident, willing to explore control, independent Attitudes: practical, strict, patient innovate technology/new media, hopeful Product Usage Product Usage User Status: light user User Status: regular user Rental Frequency: low-medium, occasional Rental Frequency: medium Product Benefits: cheap, numerous Product Benefits: cheap, convenience locations, no commitment (quick/easy) How is it Used?: social gatherings, dates, leisure How is it Used?: family & quality time, leisure Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 5. Industry Trends Economic: Threat Demographics - Psychographics Recession makes rentals more Target Market for Disk Rental Industry attractive but lowering Industry & Competitive Environment unemployment reduces leisure time 18 - 24 25 - 34 Age 35 - 44 45 - 54 Political/Legal: Threat 55 - 64 65+ It is now legal to download Most attractive to families and young adults and stream movies Older age groups least willing to switch to online streaming technology Sociocultural: Threat Growing trend to online media Viewing Behavior consumption PPV or On-Demand 55+ TV Programming 35 - 54 Technology: Threat DVDs or Blu-ray 18 - 34 Shift from physical media DVR All to online streaming 0 50 100 People with increased leisure time availability Global: Slight Threat are more likely to rent movies International barriers but growing Most attractive to owners of multiple consoles low-cost domestic entrants Dominant in middle to high income households Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 6. Target Market for Industry and Brand Geographics Demographics Target Market for Disk Rental Industry Expanded Popular in Southwest, West, & Great Lakes Households Target Market for Redbox College Consumer Wants and Needs No Kids 12% Education 37% 51% Has Kids Most Important When Choosing Rental Outlet 43% Distance 14% 1% Ethnicity 44% Price Caucasian Selection 4% Afr. Am. No College Membership Asian Return Policy College Late Fees Hispanic Graduate School Technology 74% Other Hours of Operation 8% Time Income Level 16% Top wants are distance, price, & selection 2% Age 7% Most preferred service is subscription-based 15% Under 18 14% 26% 18-24 Target Market for Competitors 25-34 29% 51% Netflix: high-involvement consumers and 27% 35-44 web-savvy consumers 45-54 $0-50k $50-100k Blockbusters: a range, low to high 11% 55-64 $100-150k $150k+ involvement subscription based consumers 23% 65+ Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 7. Industry Key Statistics DVD, Game, and Video Rental Industry Companies that rent: prerecorded physical media like discs that contain movies or video games; includes subscription for mail-distributed and in-store media rentals Projected (‘11- Industry Health & (‘06-’11) Annual Attractiveness Decline ’16) Annual growth -9.8% growth -13% Industry Statistics Cost-Leadership Industry Customer’s willingness to buy Customer Value Price of Industry Trends product/service Company Value Trend toward online-streaming (Profit) Trend away from Blu-Ray Cost of product/service Trend to video game rentals Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 8. Redbox Statistics In Disc Rental Market, Redbox Redbox’s Relative But this Market dominates. Market share’s increasing Strength and will last for only while other competitors’ shares Competitive Position another 5 years decreasing Redbox Revenue Disc Rental Market Share Redbox and Competitors’ 40.00% $400.00 $363.90 $350.00 $300.00 30.00% $250.00 $271.90 $200.00 20.00% $150.00 $100.00 $50.00 10.00% Q2 '10 $- Q 2 '10 Quarter 2 '11 0.00% Q2 '11 Online/By National All other Redbox Redbox Revenue in $MM Mail B&M B&M Rental Renal (includes Provider Chains local) (includes .com) Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 9. Major Players: Identify and Profile Current Competition in DVD Rental New Competition in Movie Rental (physical Media) (Online Media) DISH Network Corp, Inc: Coinstar Inc: Netflix Blockbuster Redbox • 13.9% Market Share • 24.2% Market share • 4.9% Market Share • 2nd largest satellite TV company • Kiosks DVD and Blu-Rays disc • Pioneered mail-order rentals • April 2011 auction Blockbuster renting ‘90s $220 Million • Redbox is 80.7% of Coinstar’s • Taken initiative in extensive • Close > 1,000 stores revenues streaming library (90k DVD • 5.1% revenue from physical • Redbox in more than 26,000 titles) media rentals locations in U.S. • 14.8% revenues from physical • Will open more DVD rental kiosks • Revenue boost +259.8% through disc rentals (cheaper to operate) ’11 • Revenue declined as company’s • Open online streaming, still do • Convenience of location and low- subscribers switched from mail mail order price point is key to competing with to streaming • Revenues -21.7% annually online movies • 95% mail ordered 2009, now through 2011 • Kiosks offer 1-day movie Rentals 35% mail order • Reduced operating expenses • Low price possible with kiosk low • Adverting efforts curb • Poor DVD title releases worsened maintenance cost bankruptcy Blockbuster’s performance • Growth will be slower because market saturated Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 10. Strategic Groups and Mobility Barrier Movies and: TV shows, or Documentarie Netflix s, or Video Redbox Hulu Amazon Games Plus Plus Product Line Breadth (Selection) Movies/ shows only Mail Distribution Technological Approach Online Streaming Or Kiosk only Mobility Barrier: Proper licensing to download movies for distribution. Gives movies studios strong supplier power. But partnership with Verizon removes barrier . Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 11. Competitive Set Netflix Hulu Plus Amazon Prime Plus Redbox • DVD Mail rental OR streaming for • ~$100/year Amazon ~$8/month • 1,000 TV shows for Prime account, you • Pricing option for • No late fee for returns ~$8/month get prepaid shipping What’s offered online streaming • Membership service: choose • Online Streaming free unspecified package, 30-day free trial, can halt • 2500-5000 titles when on vacation similar age as Netflix • Price: charged monthly for whatever package • 1st mover advantage online- streaming • For +$3-$5, can get • Offers rental games • Documentaries, movies, TV shows recent TV (kiosk) • Larger library for selection (than • Bonus TED shows, etc. shows/movies if tied • Offers latest movies • Recent TV shows air fast to TV (via iTunes) (newer than Netflix) Perceived Strengths Redbox) • on all major tv-connected • Most access to TV shows • Coverage good devices, as well as mobile devices, • User-friendly streamlined • Cheaper option than and PCs navigation Netflix or Hulu Plus • Fast, reliable streaming, • No ads • Simpler use • Growing online selection • Not as good on • User-friendly recommendations • Not available on • Less selection than Weaknesses • Netflix and needs to Perceived • No games Content not available on mobile • TV content not up till 1 year after all devices • Not user-friendly increase it to achieve air • Short ads interface point of parity • Subscription pricier than • Great on PC (only need • Less video selection alternatives Hulu) but need Hulu plus than Netflix and Hulu for TV and mobile Plus Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 12. Potential Brand Differences Brand Assessment Consumer Wants and Needs Low Energy Cost: Easy to Price: “you can’t beat $1.20 browse and find right movie for movie rental” Competitor Strengths Low Time Cost: close Speed: Instant Service in location, fast streaming terms of physical rental. Low Monetary Cost: cheap Convenient: You don’t need to watch a movie membership. Self Service Relevance: having the right New Releases: “Hot new Releases” Tablestakes Vulnerabilities movies in stock for them Points of Parity Competitive Brand (Category Benefits Brand Strengths Consumer Needs Differences User Friendly: very easy to Differentiation Title: Netflix has more title use service options Quality: offers blue-ray discs Membership: Netflix offers membership perks Compatible Devices: same devices for rental discs Content: Netflix offers more content/information in their Video Games/Streaming: library Movement towards video games and streaming Customer Service Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 13. Sources of Brand Equity Brand Awareness Brand Associations Customer Touch points Social Media/Promotions Partnerships Strengths/Uniqueness • 84% Brand Awareness • Facebook: 4,190,980 • Pepsi Cola ViewPoint Reviews: • Points of Purchase: Likes • Orville Redenbacher's • cheap (54) Walgreens, Wal- • Twitter: 43,457 Followers • Stouffers • return to any Mart, McDonald's, 7Eleven • Redbox Share Your Love, • Groupon location (54) , Albertson’s, Staterbros • 4250 Entries • Verizon • convenient (51) • 270 Million people walk • 4215 hours spend • many locations (45) past a redbox kiosk every with brand • hot new releases week • Redbox 10 Days of Deals (39) • 68% population lives Campaign • reserve online (36) within 5 minute drive from • a Unique Redbox kiosk Consumer Effort • 28,000 locations nationwide Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 14. Brand Perception vs Marketing Expenses YouGov: Buzz Score Marketing Expenses Netflix Redbox 199 10 Marketing Expenditures (In Millions) Netflix, Redbox, DirecTV and Blockbuster were measured with YouGov BrandIndex’s Buzz score, which asks respondents: "If you've heard anything about the brand in the last two weeks, through Unlike Netflix, Redbox isn't a advertising, news or word of mouth, was it positive or negative?" big advertiser. Redbox's marketing expenses during the Redbox's Facebook page has nearly 3.6 million "likes" compared first half of this year totaled $10 million compared with with 1.8 for Netflix's Facebook page, which has attracted more than $199 million at Netflix. 81,000 mostly outraged comments about the higher prices. Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 15. Next Steps Geographical Expansion Format change Areas of Exploration New New New consumers consumers Online Streaming Technology Market Format Emerging Targets Kiosk format change Video Game Renters Existing only Existing Online Streaming Renters Existing consumers consumers International Expansion Existing New Products Overview Consumer Market Competitive Landscape Brand Assessment Appendix
- 16. • Overview • Consumer Market • Competitive Landscape • Brand Assessment
- 17. • http://www.redbox.com/release_20110811 • http://www.prnewswire.com/news-releases/verizon-and-coinstars-redbox-form-joint-venture-to- create-new-consumer-choice-for-video-entertainment-138772929.html • http://www.redbox.com/history • http://www.redbox.com/movienight • http://knowledgenetwork.thunderbird.edu/students/2011/12/19/redbox-strategy-in-the-sunset-of- physical-media/ • http://business.library.wisc.edu/resources/kavajecz/10_Fall/Coinstar_Report.pdf http://www.quantcast.com/redbox.com • http://clients.ibisworld.com/industryus/default.aspx?indid=1370 • http://www.redbox.com/facts • http://www.afterdawn.com/news/article.cfm/2012/02/07/redbox_buys_up_its_biggest_kiosk_com petitor • http://knowledgenetwork.thunderbird.edu/students/2011/12/19/redbox-strategy-in-the-sunset-of- physical-media/ • http://www.gadgetreview.com/2012/01/netflix-vs-redbox.html • http://www.quora.com/Hulu-Plus-vs-Amazon-Prime-vs-Netflix-Which-is-best • http://www.ibtimes.com/articles/261456/20111205/amazon-prime-vs-netflix-hulu-plus-best.htm • http://phx.corporate- ir.net/External.File?item=UGFyZW50SUQ9NDM0Nzg3fENoaWxkSUQ9NDU0MTcyfFR5cGU9MQ==&t =1 • http://www.viewpoints.com/Redbox-DVD-Rentals-reviews • http://today.yougov.com/news/2011/07/20/sharp-drop-netflix-after-price-changes/
Editor's Notes
- History:In 2002, McDonald’s Corp. invested in Redbox Automated Retail LLC and placed several automated convenience store kiosks, selling grocery items (ie. milks, eggs and sandwiches), and DVD rental kiosks in the Washington Metropolitan Area. After success with the DVD-rental kiosks, the company withdrew the grocery kiosks and focused to the DVD rental market instead. In 2005, Coinstar invests in Redbox, buying 47% of the company. In 2006, Redbox launches their online reservation system and has 1900+ locations. In February of 2009, Coinstar buys the remainder of Redbox from McDonald’s and now there are 19000+ Redbox locations. In July 2010, Redbox begins to rent Blu-ray movies, and in September, they’ve reached the milestone of 1 billion rentals. Redbox launched video game rentals nationwide with games from all major platforms offered (Wii, PlayStation 3, Xbox 360)Plan for 5,000-6,000 new DVD rental locationsRelevant Alliances:Part of Redbox’s expanding presence is due in part to its partnerships with convenience stores like 7-11, Walgreens and Wal-mart to emphasize their dedication to convenience for their customers. Their partnership with Groupon allows new customers to try Redbox at a discounted rate. Foursquare significantly expands the mobile touch points and unlocks new ways for consumers to engage with Redbox at local kiosks.Redbox strives to have the latest new releases available and in order to do so, they need to partner with movie production and distribution companies. The formation of a joint venture that will create a new choice for quality- and value-conscious consumers seeking a simple and affordable way to access the video entertainment they crave. The venture's services will offer all of the convenience, simplicity and value of Redbox® new release DVD and Blu-ray Disc® rentals combined with a new content-rich video on-demand streaming and download service from VerizonSources:http://www.redbox.com/release_20110811http://www.prnewswire.com/news-releases/verizon-and-coinstars-redbox-form-joint-venture-to-create-new-consumer-choice-for-video-entertainment-138772929.htmlhttp://www.redbox.com/history
- Business model: Direct to consumerThe main sell point of Redbox’s business model is the kiosk, which plays into the factor of instant gratification that current generations are enamored with. The widespread locations in grocery stores, drugstores, restaurants, convenience stores, and popular landmarks allows for convenience in renting and returning. The online rental reservation system allows for consistency as the user interface is the same as the kiosks, and users can search for the closest Redbox locations, check the availability of titles at the particular kiosk (made possible by real-time inventory updates) and reserve the movie for pick-up at a later time. 3rd party website promoters distribute promotional codes to give users free rentals and on the social media front, Redbox offers 1st time online rentals with new redbox.com accounts get an account credit redeemable online for a free one-night DVD rental; give users recommendations and offer promos for free rentals.Sources:http://www.redbox.com/movienight
- However,Redbox divides its market into two key segments. We called the first group Redbox’s Casual Renters. These are young adults, between the ages of 18 to 34, and are part of Generation Y. But on a deeper level, these young adults are motivated by a sense of accomplishment and social recognition. They care about trying new things, being efficient, and social involvement. For Redbox, this translates to occasional usage as light users, mainly for social gatherings and dates. Because they are concerned with progress and efficiency, they value the benefit of having Redbox at numerous locations. They’re also tech-savvy and adventurous – they want to be in control of their lives and independent. As part of the younger demographics, they are more open and comfortable with exploring innovative technology. These consumers are hopeful and confident about their futures. And as people who value being in control, they enjoy the fact that Redbox is commitment-free, with no subscription fees. Switching gears, the second group that Redbox targets are the Family-Oriented Renters. These are the older consumers, typically aging from 35 to 44, who have a family. 63% have at least one child and 51% have at least 4 people in their household. They are the reason why Redbox is found primarily in grocery stores like Walmart and Walgreens. And as a family-oriented consumer, they use Redbox more frequently for family and quality time. They aspire to have a comfortable life and family security. They care about safety and time and value familiarity and trust. They are slightly conservative and traditional. While they may strict and more practical than our casual renters, they have more patience. Above all, they value convenience – they like that Redbox is quick and easy because they tend to have a harder time with using mainstream technology. They are the consumers who will have more difficulty switching to online streaming because of distrust and lack of familiarity. Both segments hold Redbox’s cheap prices as one of their top product benefits. Sources:http://business.library.wisc.edu/resources/kavajecz/10_Fall/Coinstar_Report.pdf
- We’ve assessed the disk rental industry through six segments. In the economic environment, the tradeoff by being in a recession showed that it makes dollar rentals more attractive but it also (1) takes away time to enjoy the movies and (2) allows people to afford other types of entertainment . Similarly, because it is legal to download movies, kiosks and brick and mortar stores have taken a hit. However, there is a potential opportunity for business in online streaming technology. The cultural trend toward online media is paired with a shift from physical media. We concluded that based on these four segments, there is an opportunity for the video rental industry to move to streaming. In a global sense, this industry remains in a domestic market. International expansion would be more feasible for kiosks and brick and mortar stores in areas where technology is limited and inhibits video streaming.Moving on, we found that the typical target market for this industry tended to be geared towards families and young adults – the most popular age brackets being 18 to 24 and 25 to 34. But as you will notice, the industry spreads pretty evenly across all age groups. However, we concluded that older age groups, typically adults from 55 and on are more comfortable with kiosks and brick and mortar stores, and would find it harder to switch to online streaming technology. The viewing behavior of this target market shows that this industry is most well-received by owners of multiple consoles, who view using DVD players, Blu-ray players, and DVR players. 1. Economic: Opportunity but now threatRecession so cheap $1 movie rentals attractive. But a unemployment falls, less leisure time to rent movies. 2. Sociocultural: Threat and opportunityCurrently threat of growing global trend to consume media online. But can be oppty if move to streaming.3. Global: Slight threatIndustry is domestic. Barrier to global expansion. But lower-cost competitors entrants domestically and globally.The use of DVD and Blu-Ray diminishes and online streaming becomes the primary means of movie distribution in the US, Redbox must consider what to do with their physical inventory investments in kiosks and DVDs. One opportunity lies in the global marketplace. Redbox could transition their kiosk approach overseas and introduce their brand to developing countries where technology limitations inhibit video streaming. The US DVD market is not dead yet, but as it dissipates and consumers transition to online streaming, Redbox has an opportunity to build their brand globally and earn revenue through international expansion. They can continue their ‘low priced’ strategy for DVD distribution and partner with international film distributors to also offer local movie and TV series options. A feasible international expansion approach for Netflix would be to focus on the BRICS countries – Brazil, Russia, India, China and South Africa. 4. Political/legal: Threat but can be oppotunityIt is now legal for consumers to download and stream movies from approved websites. 5. Demographic/Psychographics6. Technological:ThreatOnline streaming option taking away consumersSources:http://business.library.wisc.edu/resources/kavajecz/10_Fall/Coinstar_Report.pdf
- Continuing on, the target market for this industry is most popular in more rural areas, mainly the southwest, west, and great lakes. Overall, when deciding on a rental outlet, consumers care most about the distance they need to travel, the price, and the selection. In a break down of the product and services segmentation for this industry, 41.4% of consumers preferred subscription-based rentals, then followed by kiosks, and finally brick and mortar stores. Leadings competitors in this industry select specific consumers within this market. Netflix targets web-savvy, high-involvement consumers - this is because Netflix follows a subscription based business model. They want dedicated movie watchers because they will be the ones that are most willing to pay a membership/subscription fee because they consume more movies. Blockbusters targets a range of consumers, from low to high involvement – because they offer both brick and mortar stores as well as online streaming. However, Redbox targets a different group of consumers. These are statistics taken by Redbox’s website audience. We found that these numbers were an honest representation of Redbox’s target market. Overall, a Redbox consumer is typically between the ages of 25 to 34, has kids, is Caucasian, graduated college, and has an income level either between 50-100k to 100-150k. Sources:http://www.quantcast.com/redbox.comhttp://business.library.wisc.edu/resources/kavajecz/10_Fall/Coinstar_Report.pdf
- Market Share: As of Q2 2011, kiosks currently have 36 % of the disc rental market, with 38 % to rent-by-mail services and 25 % to traditional stores, according to the NPD Group.A subsidiary of Coinstar Inc., Redbox had 34.5% market share of discs rented, as of Q2 2011, as stated by the NPD Group.[2]About 85% of Coinstar’s 1.85 billion in revenue last year was from Redbox.Source:http://www.redbox.com/facts
- Current Competition:-“Redbox buys up its biggest Kiosk competitor” AfterDawn article 2/6/12 by Andre Yoskowtiz. Coinstar, the parent company of Redbox, has agreed to purchase the assets of NCR Corporation for $100 million. NCR is the company behind the Blockbuster Express kiosks, Redbox's main rival in the business. Source:http://www.afterdawn.com/news/article.cfm/2012/02/07/redbox_buys_up_its_biggest_kiosk_competitor
- Intellectual property, protected under U.S. law, requires proper licensing to download movies for distribution, which gives movie studios substantial supplier power. Licensing is the highest barrier for entry, as the cost of licensing a media catalog from a major studio is expected to increase to as much as $50-100 Million per year by 2012. As an example, Netflix’s annual licensing costs are predicted to increase from around $180 Million in 2010 to nearly $2 Billion in 2012 (Pepitone).Source:http://knowledgenetwork.thunderbird.edu/students/2011/12/19/redbox-strategy-in-the-sunset-of-physical-media/
- Netlfix price package: includes unlimited streaming movies OR unlimited one-disc at a time rentals for $7.99 ($11.99 for two disc rentals at a time) and $15.98 if you desire to have both of Netflix’s disc and streaming content. Blu-ray discs are an extra $2 a month.Sources:http://www.gadgetreview.com/2012/01/netflix-vs-redbox.htmlhttp://www.quora.com/Hulu-Plus-vs-Amazon-Prime-vs-Netflix-Which-is-besthttp://www.ibtimes.com/articles/261456/20111205/amazon-prime-vs-netflix-hulu-plus-best.htm
- Through a Brand assessment between Redbox and key competitors such as Netflix, Blockbuster and Hulu we have found many insights on our brand. Points of Parity include user friendliness, quality, compatible devices, and with Redbox’s new partnership with Verizon, streaming. Like Netflix and blockbuster, Redbox offers blue-ray disks and video game rental options. Because of the size of Netflix, this competitor does have competitive features that rank over us such as title options, membership perks, and customer service base. However, Redbox itself has key brand differentiators that set it apart from competitors. You really can’t beat our $1.20 price. And in terms of speed for physical rental, with its 28,000 locations, Redbox offers instant gratification. Redbox has set itself apart with its focus on “new hot releases”. And these advantages align with consumer wants and needs in terms of low time and monetary cost.
- Redbox’s sources of Brand Equity comes from its brand awareness and brand associations. Over 84% of Americans have heard of Redbox. This can be largely attributed to the wide reach of Redbox’s branded kiosks. It has placed itself in many convenient and retail stores such as Walgreens, Wal-Mart, and McDonald's. Over 270 Million people walk by a Redbox Kiosk per week. Because of its 29,000 locations, over 68% of the population lives within a 5 minute drive from a Redbox kiosk. Redbox also plays an active role on the virtual community. Redbox is more popular than Netflix these days. Redbox’s success with social media campaigns, “Redbox share the love” where customers took pictures hugging their local Redbox kiosk went viral, promoting the Redbox brand.Redbox's Facebook page has nearly 3.6 million "likes" compared with 1.8 for Netflix's Facebook page, which has attracted more than 81,000 mostly outraged comments about the higher prices. Through its partnerships with market leaders such as Pepsi Cola and Stouffers,Redbox was able to borrow brand equity, further associating itself with quality products. Viewpoints.com is the second largest user reviews site among those that focus on product reviews. The average Redbox user sees the Redbox Brand as cheap in price, convenient, and popular for its hot new releases. Sources:http://www.viewpoints.com/Redbox-DVD-Rentals-reviewshttp://today.yougov.com/news/2011/07/20/sharp-drop-netflix-after-price-changes/
- Netflix, Redbox, DirecTV and Blockbuster were measured with YouGovBrandIndex’s Buzz score, which asks respondents: "If you've heard anything about the brand in the last two weeks, through advertising, news or word of mouth, was it positive or negative?”Netflix dropped from a 39.1 Buzz score on July 12th to -14.1 on July 18th, and currently sits at -6, a virtual tie with Blockbuster. And unlike Netflix, Redbox’s brand perception isn't attributed to big advertising. It currently relies on word of mouth and customer touch-points. With the launch of online streaming, Redbox plans to invest more heavily in national advertising. Redbox's marketing expenses during the first half of 2011 totaled $10 million compared with $199 million at Netflix. Source:http://today.yougov.com/news/2011/07/20/sharp-drop-netflix-after-price-changes/
- Currently,Redbox offers a kiosk formatTo enter a new market with the existing kiosk technology, Redbox would have to look towards a geographical expansion on a domestic scale as well as an international level. Naturally, to continue its current level of growth, Redbox will continue to expand domestically via kiosk installations in areas with less presence.To enter a new market with new products, Redbox requires a format change in the way they offer their movie selections in order to secure new customers who may exhibit different viewing tendencies in comparison to their current consumer baseTo gain a larger share of their existing market, Redbox will need a format change to keep up with changing technological trends.Of the 3 new options, we believe the best one to explore first is the arena of “online streaming technology” as a way to tap into the existing consumer base that already uses netflix for their online streaming pleasure in addition to renting movie from Redbox Kiosks. Currently, 30% of Redbox users utilize Netflix for their online streaming capabilities. Additionally, this option would allow Redbox to appeal to a new market that is more comfortable with streaming movies, and allow Redbox to shift towards being a technologically advanced company.After succeeding in executing their version of online streaming, Redbox can then look towards the other options.