Redbox's Strategy in the Movie Rental Industry Case Study
Case Study: Redbox’s strategy in the Movie Rental Industry
1) Which of the five generic competitive strategies discussed Chapter 5 most closely fit the competitive approach that Redbox is taking? Why did you select the strategy you selected? The two main strategies Redbox focuses on are a combination of low price and convenience as well as increasing kiosk locations with high traffic. Compared to its competitors, Redbox’s offers a rental fee as low as $1.20 per day, which is $3 cheaper on average. Redbox is also extremely convenient. All kiosks are placed in high traffic locations such as supermarkets, drugstores, and McDonald’s. Since mid-2009, the number of Redbox locations has increased from nearly 20,000 to 34,600. With its 34,600 locations across the country, anyone could easily locate a Redbox kiosk near them. The competitive strategy most closely fit Redbox’s approach is the low-cost provider strategy.
Redbox’s kiosk strategy is very unique and cost efficient. Among the many movie rental companies, Redbox is the only one that uses kiosks rather than an actual store. This not only reduces the initial investment, but also the operating cost. Redbox locations also generally use the low-cost strategy; therefore, Redbox is effectively taking advantage of pre-existing price-conscious buyers. These locations also communicate convenience. Instead of making a trip to a movie rental store, customers can pick up movies while going to the store. Therefore, for a buyer to switch to Redbox, he/she actually saves money and time.
2) What does a SWOT analysis of Redbox reveal about the overall attractiveness of its situation and future prospects?
Strengths
- Extremely low rental price
- No monthly obligation
- Convenient locations
- Online reservation
- Number of locations
- Smartphone app
- Can be returned to any kiosk
- Takes ½ to a minute to checkout or return
- Constant addition
- Open 24 hours
- Good movie selection – newly
1) Which of the five generic competitive strategies discussed Chapter 5 most closely fit the competitive approach that Redbox is taking? Why did you select the strategy you selected? The two main strategies Redbox focuses on are a combination of low price and convenience as well as increasing kiosk locations with high traffic. Compared to its competitors, Redbox’s offers a rental fee as low as $1.20 per day, which is $3 cheaper on average. Redbox is also extremely convenient. All kiosks are placed in high traffic locations such as supermarkets, drugstores, and McDonald’s. Since mid-2009, the number of Redbox locations has increased from nearly 20,000 to 34,600. With its 34,600 locations across the country, anyone could easily locate a Redbox kiosk near them. The competitive strategy most closely fit Redbox’s approach is the low-cost provider strategy.
Redbox’s kiosk strategy is very unique and cost efficient. Among the many movie rental companies, Redbox is the only one that uses kiosks rather than an actual store. This not only reduces the initial investment, but also the operating cost. Redbox locations also generally use the low-cost strategy; therefore, Redbox is effectively taking advantage of pre-existing price-conscious buyers. These locations also communicate convenience. Instead of making a trip to a movie rental store, customers can pick up movies while going to the store. Therefore, for a buyer to switch to Redbox, he/she actually saves money and time.
2) What does a SWOT analysis of Redbox reveal about the overall attractiveness of its situation and future prospects?
Strengths
- Extremely low rental price
- No monthly obligation
- Convenient locations
- Online reservation
- Number of locations
- Smartphone app
- Can be returned to any kiosk
- Takes ½ to a minute to checkout or return
- Constant addition
- Open 24 hours
- Good movie selection – newly