Blockbuster video is the undisputed king of the video-rental industry. The following comment made by Fran Bernstein of Merrill Lynch accurately describes Blockbuster's position. "Blockbuster stands alone in the video rental market in both size and ambition. One wonders where is the Burger King to their McDonald's?" However, this statement does not signify that Blockbuster is devoid of threats or problems. The video-rental market is almost mature now and a slow down in growth is forcing Blockbuster to reevaluate its corporate strategy.
[...] Weakness Although Blockbuster has been very successful, there are areas of weakness. There has been a problem regarding customer satisfaction despite the extensive efforts of the company to cater to the customer's needs. On busy days, it seems to be unlikely that the popular new-releases will be in stock. The rental rates are another cause for customer concern. Currently, Blockbuster rents its videos for more than the industry average of two dollars per night for a film. Blockbuster's gangbuster acquisition style of expansion may also be a cause for concern. [...]
[...] The video-rental industry must keep itself up to date on new home entertainment activities. Just as the audiocassette replaced vinyl records, there is always the possibility that a new medium for movies will replace videos. Problem Statement Considering the maturing market in the video-rental industry, how should Blockbuster adapt in order to continue success and sustain growth? In order to build a long-term marketing strategy, we will elaborate on the business opportunities that Blockbuster should explore. Alternatives—Growth Strategies # 1 New Product Development One method of continuing growth is new product development. [...]
[...] First, Blockbuster can move their offerings down the product life cycle into more favorable stages by altering their current offerings. This could result in an increase in profit in the long term. Some of the above mentioned alternatives for products are very promising. Blockbuster could set itself up as more than just video rental, posing as the only renter/retailer of films and related materials. Its new slogan : celebration of cinema”, could be heard all over the radio and television, thus pulling new customers into the stores. [...]
[...] Impact on growth- Blockbuster should also weigh their decisions on how the alternatives would affect the growth and expansion of the company. Currently, the industry is maturing and it is becoming harder to sustain growth. Because of the current industry situation and Blockbuster's strategy for expansion, the effect on growth must be considered for each alternative. Compatibility with company culture- Before deciding whether to create new services or not, Blockbuster should consider how it would fit into the corporate culture. [...]
[...] After Blockbuster has established itself in Japan, they should continue their international growth. Continuing its international expansion, European countries will also constitute good foreign markets to penetrate. In addition to the same reasons as for Japan and the fact that they are already established in the United Kingdom, we also noticed a lack of structured offers in the video rental industry in most European countries. Blockbuster should use their core competencies in expansion to enter other European countries including France, Germany, Spain, and Italy. [...]
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