Blockbuster Inc.

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Blockbuster Inc.

• The Marketing Puzzle

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The Pieces

• Current Business Model
• Mr. Jeffrey Feiereisen
• Market Solution
• Mr. Jared Waks
• Market Research
• Mr. David Hahn
• Blockbuster Delivers
• Mr. James Burgess

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CURRENT BUSINESS MODEL

• Blockbuster Inc. (Past)

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4 Ps and SWOT
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• Product and Placement

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• Price

Store Store Store Sale Price Rental Price
Distribution In-Store Blockbuster 19.99 to 24.99 3.99 to 9.99
Distribution In-Store Hastings Entertainment 19.99 to 29.99 4.99 to 9.99
Distribution In-Store Wal-Mart 14.99 N/A
Distribution By-Mail Blockbuster N/A 9.99 to 19.99
Distribution By-Mail Netflix N/A 4.99 to 16.99
Distribution Video-On-Demand Blockbuster 9.99 to 24.99 2.99 to 3.99
Distribution Video-On-Demand Netflix Included in By-Mail Included in By-Mail
Distribution Video-On-Demand Cinema Now 9.99 to 14.99 2.99 to 3.99
Distribution Video-On-Demand Apple iTunes 9.99 to 14.99 2.99 to 3.99
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• Promotion

Ad
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SWOT Analysis
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
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MARKET SOLUTION

• Blockbuster Inc. (Future)

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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
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• 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
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• Convenience

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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
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• The pizza/movie delivery option is more
  convenient and faster than either by-mail or
  retail distribution.

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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
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MARKET RESEARCH

• Blockbuster Inc. (Present)

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Research Methods

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

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Accuracy and Distribution

• Age
• Between 18 and 77
• Mean 31.55
• Median 22
• Mode 19 (25.33)

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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
• ß -0.0215
• r2 0.0964
• Se 1.10

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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

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BLOCKBUSTER DELIVERS

• Blockbuster Inc. (Future)

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Website Integration
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Full Recoupment of Sunk Costs Achieved in 7th
quarter
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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
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