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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. Blockbuster Inc. (Past). CURRENT BUSINESS MODEL. 4 P’s and SWOT. - PowerPoint PPT Presentation
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Blockbuster Inc.The Marketing Puzzle
The PiecesCurrent Business ModelMr. Jeffrey FeiereisenMarket SolutionMr. Jared WaksMarket ResearchMr. David HahnBlockbuster DeliversMr. James Burgess
CURRENT BUSINESS MODELBlockbuster Inc. (Past)
4 Ps and SWOT
Product and Placement
Price
PromotionAd
SWOT Analysis
StrengthsBrand equityCustomer Relationships from storesAdapting stores to environmentsGood relationship with studios Especially with iTunes40% share of domestic retail rentalWeaknessesFew distribution centersLow inventoryRetail locations are expensiveIneffective in attracting customersNeglected Video-On-DemandNo AppleTV competitorOpportunitiesNew Distribution ChannelsCo-marketing (with fast-food restaurant)Renovate retail locationsMovieLink (Video-On-Demand)ThreatsEconomyWal-Mart (lowest prices)Netflix (by-mail)Apple iTunes (Video-On-Demand)Studios interested in sales not relationships
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 hours33.7% of the video rental market consumes delivered food while watching rented movies
Convenience
High ConvenienceLow Wait TimeHigh Wait TimeLow ConvenienceNearly 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 points24.4% of market preference
Dominos Pizza = 75 points20.7% of market preference75.3% would be likely to order from an establishment that delivered pizza and a movie
MARKET RESEARCHBlockbuster Inc. (Present)
Research MethodsSurvey
-Distributed online-89 responses-Non-random, non-representative sample
Accuracy and DistributionAge
Between 18 and 77Mean: 31.55Median: 22Mode: 19 (25.33%)
Target Market ResearchExpected delivery price as a function of ageNot significant (P = 0.2902)Likeliness to use service as a function of ageNot significant (P = 0.8045)Likeliness to order food and movies simultaneously as a function of ageSignificant, not descriptive = -0.0215r2 = 0.0964Se = 1.10
Profitability ResearchWillingness to payAverage: $6.7395% CI: $5.83 - $7.63
Likeliness to use service78.67% indicated they are interested in the service
BLOCKBUSTER DELIVERS
Blockbuster Inc. (Future)
Website Integration
Full Recoupment of Sunk Costs Achieved in 7th quarter
Chart1
40
60
Recoupment
Recoupment
40%
60%
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Recoupment
Recoup40
Studio60
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Chart1
20
20
60
Profit Sharing
20%
20%
60%
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Profit Sharing
Blockbuster20
Domino's20
Studio60
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Cost Analysis
Cost Per Kiosk$26,500Number of Locations5,155Total Sunk Cost$136, 607,500
Quarterly Print$3,711,600Television Advertisement$20,000,000Total Media Cost$84,539,200
Total$221,146,700
Chart1
1011
1522
2233
3544
3055
3566
3077
3088
3099
301010
301111
301212
Demand
Demand2
Column2
Quarters
Rentals per Day
Demand
Sheet1
DemandDemand2Column2
110
215
322
435
530
635
730
830
930
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1230
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-131
-117
-100
-91
-67
-59
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Profit
Quarters
Millions of Dollars
Cumulative Profit
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QuarterProfit
1-131
2-117
3-100
4-91
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6-59
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122
?s
Movies and video games Xbox 360, playstation 3, nintendo Wii
*****Our research:33.7% CLICK90.4% CLICK
Greater value proposition*Market need: convenience, accessibility, speed
*Our research:80% convenience
Search engine optimization (image searches!)
Positioning
STAR:No VOD 44% no fast internet
*With Blockbuster-Dominos to your door delivery, the customers can decide what they want to watch when they want to watch it*Dominos BECAUSE scale of operations, competitive position. 2 point difference from American customer satisfaction index
Our research:75.3% would get movie and food*****Q1-10 q2-15q3-22q4-35q4-30q5-30q6-35q7-30q8-30*Break-even in 12th quarter. After which BBI takes $13,890,663 per quarter or $55,562,652annual(20% of $69,453,315 30UPD at 4.99 at 5155)
Any Questions? STEP BACK TO TEAM*