Redbox Situation Analysis by liuhongmei

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									                   Table of Contents


Industry Overview………………………………………………………………2-8

Client Profile & Competitor Analysis……………………………………9-17

Comparative Analysis……………………………………………………….18-19

Consumer Analysis………………………………………………………….20-23

Consumer Insights………………………………………………………….24-29




Appendix I……………………………………………………………………..46-48

Appendix II………………………………………………………………….…49-55


          Will Haven, Lucy Ross, Jessica Stephens, Lauren West & Bonnie Willard
       Redbox is leading the way in the
premier industry of DVD rental kiosks. With
Coinstar as its established parent company,
redbox is currently surpassing its competitors
with its number of self-service kiosks.
Redbox’s growing popularity is facilitated by
its physical distribution, which places the
kiosk in high traffic locations such as Wal-
Mart, Kroger, McDonalds and Walgreens.
       Due to redbox’s standing as the
progressive option for DVD rental, its decision
to target the 18-24 year old demographic was
evident. This demographic embodies the idea
of innovation, experimentation, and
dependency on technology, all of which are
imperative to transform an introductory
product into a nationwide brand.
       The following report provides
secondary and primary research in order to
construct an accurate glimpse of redbox and
its emergent status within the 18-24 year old
target market of the DVD rental industry.
This report includes the description and
results of eighty self-administered surveys
completed by samples of the target market.
Based on an analysis of these results, the
report concludes with recommendations
designed to assist redbox in more effectively
reaching its 18-24 year old target market.

               Industry Size:                            aspects of competition, the prices throughout
                                                         the entire industry were forced to drop. This
 Revenue & Product Life Cycle
                                                                                        also explains why
                                                                                        the number of units

         DVD, Game, and                                                                 sold increased but
                                                                              the revenue has continued
          Video Rental
                                                         to decrease (1).
            Revenue                                               The heightened competition can be
       12000                                             predicted to cause an improvement in the PLC
                                                         stage of the DVD, Game, and Video Rental
        6000                                             Industry as well. Prices are lower and new
                                           Revenue in
        4000                               Millions of   innovations are being introduced causing
        2000                                             increases competition. Once kiosks become
                                                         more successful and begin to gain its own

                                                         loyal customer base it could single-handedly
                                                         cause the industry to revert back to the
               Graph 1, Source: (1)
                                                         maturity stage of the PLC.
       As shown in Graph 1, the estimated
size of market in 2010 is $7. 724 billion. The
                                                                         DVD RENTALS
pattern of revenue over the past five years has
shown a constant annual decrease. It is also                         Number of DVD
predicted to decrease in the following five
years. The graph shows that the DVD, game,
and video rental industry is currently in the
                                                           100                               Number of
decline stage of the product life cycle (PLC).                                               DVD Rentals
                                                              0                              in Millions
       The pressures of competition cause the
                                                                  2000 2002 2004 2006
decline. Not only were more brick-and-mortar
companies beginning and lowering their                                  Graph 2, Source: (1)
prices, new methods of selling caused                    From 2000 until 2005 the industry was
increasingly high competition in other ways.             steadily growing because it was a new product
Companies like Netflix emerged and cable and             being introduced to the market and new
satellite companies began marketing video                competitors were being introduced as well.
streaming. In order to keep up with the many             Thus, prices were lower and the demand was

higher. During 2005 and 2006 the number of         cycle. At this point, sales revenue is
DVD rentals leveled off showing that it was at     continuing to rise while competitors are
its mature stage in the PLC. However, in 2007      entering the market. However, redbox has to
the graph shows a decline to a value of 171.2      approach its marketing and advertising in a
million DVD rentals. This shows evidence of        way to attract new customers detract from its
new competitors and the oncoming recession         competitors (2).
of the economy beginning in 2008 (2).

           Video Rental Kiosk
        According to Adams Media Research,
“Kiosk rental sales are expected to rise 42% to
$1.3 billion this year” (3). The total number of
DVD rental kiosks in 2007 was 10, 000. In
2012 there is predicted to be 50,000 kiosks.
Over the course of five years the industry is
predicted to grow by five times its size (2).
        The amount of DVD rental revenue in                         Graph 3, Source: (58)
2007 that came from kiosks was $200-250
million. The revenue is expected to reach
$1.5-2 billion in 2012 (2).
        During the years 2007 -2012 as
shown in graph 3 the market for DVD rental
kiosks will be in the growth stage of the
product life cycle. At this point, sales
revenue is continuing to rise while
competitors are entering the market (2).
The new technology, affordability and
convenient locations make kiosks a
pertinent aspect in the future of the
changing DVD, Game, and Video Rental
        During the years 2007 -2012 redbox
will be in the growth stage of the product life

                                                                           the consumer can retrieve DVDs. The
               Number of Establishments
                                                                           internet has broadened the area in which the
                21                                                         consumer can attain his or her DVD (1). With

              20.5                                                         this in mind, research proves that the DVD
                20                                                         rental industry has a new standard: being
                                                                           integrated with the internet.
                                                                                    Integration and the constant
                18                                                         availability of movies have created the next
              17.5                                                         generation of the movie rental industry (1).
                17                                                         This development increases convenience to
              16.5                                                         the consumer, thus allowing these companies
                16                                                         to lead the industry. Dependence on the
                       2005 2006 2007 2008 2009
                            Graph 4, Source: (1)
                        Redbox Competitors
                                                                           to stream          75% of Coinstar’s capital
       Kiosk              Blockbuster
                           Express                                         video           expenditures in 2009 were for
       Retail            Movie Gallery        Blockbuster    Hollywood
                                                                           straight to            redbox kiosks 51.
      Stores                                                   Video
                                                                           his or her
      Online                Netflix               iTunes                                               .
        Cable               Encore                HBO        Showtime      PC and television. The improvements in
             Mail           Netflix           Blockbuster                  technology makes it difficult for new
 Video On-                 Amazon                 AT&T      Dish Network
                                                                           companies or brands to enter the market if
                                                                           they are lacking in this area. Yet another area
                                      Exhibit 1                            in which technology has become a
                    Competition within the DVD rental                      determining aspect is self-service kiosks(1).
industry is very stiff. The reason for such                                Not only is the competition based around the
competition lies in the fact that the industry is                          convenience of the internet, it has also
cutting-edge. As shown in Exhibit 1, there are                             become vital that companies offer consumer-
numerous competitors within the market of                                  friendly interactive technology. The fact that
DVD rental but there is only room for a select                             the majority of the companies offer such
few to shine. With the introduction of new                                 innovative ideas to the consumer, such as self-
technology, there are numerous ways in which                               service DVD rental kiosks, make it difficult for

competitors to enter the market without such       and products. Redbox customers are no
advancements.                                      exception to this movement and are actively
          Looking back at the competition          seeking quicker, more streamline results. The
within the DVD rental industry, research           self-service kiosks provide this modern feel
states that it is based heavily on technology      through instantaneous results. Redbox meets
(1). Much of this industry is becoming             its customers’ request for time flexibility via
cutting-edge and is up-to-date with the            24-7 operational hours unlike the
current technology like that of almost             confinement of regular store times. This
everything for                                     advancement eliminates interactions with
the consumer.                                      employees which allow customer control over
Given that the                                     their own transactions (2).
consumer today                                               Also, redbox recognizes that the
has an                                             current recession continues to influence the
innovative                                         cultural environment in the U.S. consumers
nature and                                         that are searching for affordable
desires                                            entertainment are responsive to the concept
convenience and new products, it is only           of $1-per-night DVD rentals. The largest
fitting that the DVD rental industry be            percentage of such DVD rental consumers are
complimentary to the consumer’s needs.             cited by IBIS World as middle and high
                                                   income households because their purchasing
  Social/Cultural Implications                     abilities are higher than the average

          Redbox has successfully pegged two       household (1). Redbox is meeting this social

vital facets concerning the average American       segment by

consumer: technological advancement and            positioning

affordability. The DVD rental industry has         their

always been based on the concept of low-cost       kiosks in

home entertainment, but redbox kiosks have         routine

taken that idea further and molded it to fit the   locations

current cultural environment in the U.S.           for the

          With the continuous outburst of          target market such as Wal-Mart, Kroger,

technology, the American consumer has come         McDonalds and Walgreens (2).

to demand immediate access to information

                                                  the recession, and this growth trend is
        Economic Environment
                                                  predicted to continue into 2010 (43). Redbox
Despite slight increases in the GDP, the
                                                  in particular has taken the initiative of
American economic status continues to reflect
                                                  creating a brand that pinpoints the cautious
the effects of the recent recession. The most
                                                  consumer with $1 per night rentals (2).
                            recent release
                                                  Analysts attribute the increased popularity of
        Factbox:            shows that in the
                                                  the DVD rental market to $1 per night rental
                            fourth quarter of
  29% of redbox users                             kiosks (43). The cost conscious consumer is
                            2009, the GDP
    generate a total                              able to not only receive an initial low price for
                            increased at an
   household salary of                            the DVD but also to personally determine the
     $60-100k 53.           annual rate of 5.9%
                                                  amount of overage charges (2).
                            (11). The Consumer
                                                              January 2010 Economic Statistics
Price Index stands at 202.416, up .616 from         Gross                         Consumer
                                                                  Consumer                         Unemployment
                                                   Domestic                       Confidence
December 2009 (40). Unemployment slid              Product
                                                                  Price Index

                                                   Increased at
from 10.0 in December 2009 to 9.7 in January        an annual
                                                                   202.416 (Up    55.9 (Up from
                                                   rate of 5.9%
2010(41). The Consumer Confidence Interval         according to
                                                                  from 201.8 in      53.6 in      9.7 (Down from 10.0
                                                                    December       December       in December 2009.)
                                                    the fourth
for January 2010 is at 55.9, up from 53.6 in        quarter of
                                                                      2009)           2009)
                                                   2009 report.
December (42). The consumer confidence has                              Exhibit 2, Source: (6)

two components: the present situation index
and the expectation index. Any reading about      Regulatory and Legal Issues
90 is considered a strongly positive outlook                 The Entertainment Merchants
on the economy. While these figures do            Association (EMA) regulates the DVD rental
indicate an increase, they are still a far cry    industry. According to the EMA’s public
from the CCI’s prior to the recession. This       policy, it states
reveals that consumers are still weary of the     that its priority is
stability in the economy and are not as           to execute the
confident in their purchases. Frugality has       first sale doctrine that protects the DVD
moved into a more primary position within         rental retailer’s rights to sell and/or rent
the consumers’ minds.                             lawfully made copies without any limitations.
        The DVD rental market has found a         The association also provides enforcement of
niche within these economic difficulties as       movie ratings that include restrictions
being the affordable entertainment option.        provided by Motion Picture Association of
According to Standard & Poor’s, there has         America (MPAA) concerning violent material
been an increase between DVD rentals and          (18).

        Given permission by the U.S.                 making copies of DVDs and re-selling them
Constitution, Congress has the authority to          under a non-licensed business.
ratify Section 109 of the Copyright Act that
the code of the first sale of doctrine is codified   Technological Developments
                            in. The first sale              Technological developments have
       Factbox:             doctrine gives the       played a crucial role in the DVD rental
 Redbox is among the top    DVD rental industry      industry in the past six years. DVD consumer
10 credit-card processors   independence to          spending has opened a new market in the
    in the country 54.      rent and/or sell from    industry creating a sales concern for rental
                            the copyright holder     retail stores with the introduction of user
that includes no obstructions. The Copyright         friendly and cost saving rental kiosks, such as
Act further explains how digital media also          redbox. The self-service kiosks provide a $1-
applies (19).                                        per-night rental rate, having the brick-and-
        For the past 22 years, the EMA has           mortar retailers running for their money (28).
placed a parental empowerment program                Blockbuster has started their own rental kiosk
amongst the sales of DVDs in the rental              program to affiliate themselves with the new
industry. The policy states that the sales of        technological advancement (30).
“R”-rated movies in the DVD rental industry                 The developments of digital
are prohibited under the age of 17 without the       downloading and on-demand rental services,
consent of a legal guardian (19).                    problems and opportunities have risen for the
        An implication the DVD kiosk industry        DVD rental industry. Advancements such as
faces is consumer responsibility of age              video-streaming movie
appropriate legal consent using a self-service       rental, by companies like
kiosk. The kiosks prompts if one is over 17-         Amazon and Netflix,
years-old when it is applicable to a sale, but       provide in-home
have no way to identify and control the sales        convenience for renters. By obtaining a
to minors who agree to the terms and use the         subscription membership to the parent
service without a legal guardian. The sale of        company, video-streaming rentals are
an “R”-rated movie has then been made,               unlimited based on the company’s movie
which is against EMA policy. Another                 libraries for one monthly fee. This technology
implication of the industry is the act of            creates another area for competition to the
consumers purchasing and unlawfully                  DVD rental industry (21, 29).

       In November 2009, redbox announced          self- maintained, hence retailers avoiding
a test site in partnership with Sonic Solutions'   additional employee wages. Also because the
Roxio CinemaNow that allows frequent               devices are self-sufficient, they provide
redbox consumers to be given vouchers to           excellent customer service avoiding any
acquire digital downloading movie delivery         human error and satisfactory purchases (2).
providing more efficient customer service in              Growth will undoubtedly occur with
hopes of starting their own digital delivery       this self-service and video streaming
business (20).                                     movement but also in the works is the ability
       Redbox and Blockbuster Express have         to digitally download and transfer movies on
taken advantage of the Blu-ray movement and        to SD cards or memory sticks. Rather than
have contributed the new disk form of DVD          having a physical
rental into their kiosks. Redbox started this      disk, renters will be able to download movies
service at the end of 2008 selling for the very    from a kiosk and plug them into their own
same price as a regular DVD at $1.                 home entertainment systems (23).
Blockbuster Express rents Blu-ray for $2-per-             The industry has found this new
night (22, 30).                                    opportunity to have long-term effects because
                                                   it decreases the chances of having physical
Growth Potential & Opportunities                   problems with their products. The SD cards

       Through ever expanding                      will be effective in the sense that consumers

developments comes potential and                   will no longer worry about inconvenient

opportunities for growth in the DVD rental         defects with the products such as nicks and

industry. Now is the time for redbox to be a       scratches. Also the

part of the market because the average             DVD kiosk retailer

consumer will enjoy the benefits of obtaining      will no longer have

a product faster, having 24-7 access, self–        the concern over non-

servicing convenience, and enjoying the use of     returned DVDs

technology on the rise. Not only is redbox         shortening their

cosmetically trendy, making it attractive to       supply. The

the consumer eye, but it also presents further     advantages of this

appeal for prospective retailers. The self-        new break will open

servicing kiosks allure additional foot traffic    even further outlets for consumer viewing like

into stores increasing its revenue with the        cell phones and other portal devices that are

extra service it provides. The kiosks are also     adapted to the SD card method (27).

Client and Key Competitors                       night price, Blockbuster Express has the

       The evolving DVD rental industry is an    advantage of a loyal customer base

aggressive market with competitors vying for     versus redbox’s brand name which is

strong customer bases. Companies are             independent from its parent company,

attempting to meet the                                               Coinstar. Netflix also

consumer demands of                                                  contends for a top spot in

convenience, up to date                                              the industry. Netflix

technology and                                                       bypasses tangible

affordable prices                                                    DVDs renting revenue to

through diverse means                                                provide online video-

such as brick-and-                                                   streaming that has shaken

mortar stores, kiosks,                                               the DVD rental market

mailing services and online video-treaming.      since its commencement. Netflix’s in home

Since redbox has opted to develop its brand in   streaming concept replaces the hassle of DVD

the up-and-coming kiosk realm, its key           return dates and travel time of an alternative

competitors must also be comparatively           kiosk experience with the ability to download

innovative. Blockbuster Express and Netflix      movies onto personal computers or

are following the redbox innovation              televisions through internet connection.

       Blockbuster Express, a self-service
kiosk branch of the parent company
                             Blockbuster, is
                             working to
                             increase its
number of kiosk locations. Although
Blockbuster Express and redbox kiosks share
the same premise of convenience and $1-per

                                                 Redbox Brand Snapshot
         -     Concept originated in 2002 within McDonald’s Ventures, LLC, which was working to identify new ways to
               drive traffic to McDonald’s and provide added convenience to consumers
         -     First market test launched in 2004 in Denver, Colorado-area McDonald’s restaurants
         -     In November 2005, Coinstar, Inc. announced an agreement with McDonald’s Ventures, LLC, to invest in
               redbox. The agreement gave Coinstar a 47.3 percent share of the company and made redbox a
               separate company from McDonald’s
         -     In February 2009, Coinstar announced its intent to purchase the remaining stake of redbox from
               McDonald’s and other minority interest holders.
         -     Parent company Coinstar, Inc. is headquartered in Bellevue, Washington
         -     Coinstar, Inc. was founded in early 1991
         -     Redbox’s top five accounts as of June 2009 are:
               1) Walmart 2) McDonalds 3) Walgreen’s 4) Supervalu 5) Ahold

             Blockbuster Express Brand Snapshot                             Netflix Brand Snapshot
     -       Blockbuster was founded in 1985.                     -   Netflix was founded in 1997.
     -       Blockbuster is headquartered in Dallas, Texas.       -   Netflix is headquartered in Los Gatos,
     -       Blockbuster and NCR Corporation released                 California.
             Blockbuster Express kiosks 2008.                     -   The company offers over 90,000 DVD
     -       Quickly rolling out to as many as 10,000                 rentals for rent.
             locations in 2010.                                   -   In 2007, began offering a movie download
     -       Can be found in some of the top grocery,                 and viewing by PC service
             convenient and drug stores in the U.S.               -   Reached 12.3 million subscribers by the end
                                                                      of 2009

Exhibit 3, Sources: 10, 28, 29,
30, 49, 50

                                                                                                         10 | P a g e
                    Size                                                   Sales Revenue
       Redbox is in the growth stage of the
PLC. At this point people are trying the
                                                                     Revenue ($)
product so the sales revenue and locations        1200
                                                                                                          Net Flix
are continuing to rise. Competitors are also      1000                                                    Revenue in
beginning to enter the market. However,             800                                                   Millions
                                                    600                                                   Redbox
redbox entered the market after Netflix,
                                                    400                                                   Revenue in
forcing Netflix to enter the maturity stage of                                                            Millions
the PLC. In the maturity stage the                       0
awareness of Netflix has reached its limit                       2006 2007 2008 2009
and the sales have started to stabilize.                             Graph 4, Sources: 4, 7, 8, 15, 16
                                                   *Blockbuster Express is expected to be profitable in 2011
       Blockbuster Express is currently
entering the market in the introduction
stage. There is a considerably smaller                                            Locations
                            number of               25000
        Factbox:            locations and no
                                                                    Kiosk Locations
The first drive-up redbox   stable revenue                                                             Redbox Kiosk
                                                    15000                                              Locations
  kiosks started at a       statistics.
    Denver, Colorado        Blockbuster                                                                Blockbuster
McDonalds Drive-Thru 56.    Express is                                                                 Express Kiosk
                            currently trying                 0


                            to raise
awareness of its brand in order to encourage
                                                                 Graph 5, Sources: 2, 9, 10,12, 13, 14, 15
potential consumers to try its new renting       *No physical location numerical data is available for Netflix
outlet. This is more difficult since they have
direct competition with redbox
                                                                           Netflix Outlets
who is already established in the market.
Blockbuster Express has to find innovative         Digital Playing                        Consoles          Digital Video
                                                        Devices                                              Recorders
ways to compete with redbox through price,       LG Electronics                    Microsoft’s Xbox 360     TIVo

placement, promotions, and other                 Samsung’s Blu-ray                 Sony’s PS3
                                                 Roku                              Nintendo’s Wii
competitive strategies.
                                                                             Exhibit 4, Source: 4

                                                                                                          11 | P a g e
         Redbox needs to ensure that it does
not lose customers to Blockbuster Express or
Netflix. Since Blockbuster Express is a more
direct competitor redbox needs to take
advantage of being in the market first in order
to retain the customers loyal to its brand.
Obtaining      customers      of     Netflix    cause
                                                            video and game rental industry, redbox’s
complications      because    they       are   already
                                                         revenue has soared past that of Netflix in the
committed subscribers.
                                                         past year. This shows that redbox is creating
         Blockbuster Express is a direct source
                                                         serious competition in the market and
of   competition     for     redbox.      Concerning
                                                         growing successful at a rapid pace. These
locations of the two DVD kiosk companies,
                                                         numbers are even more substantial
redbox      far    exceeds         the    opposition.
                                                         considering the major advantage of Netflix’s
Blockbuster Express is just entering the
                                                         subscriber base. It is more difficult for redbox
market and is unable to compete through
                                                         to make sales from these dedicated Netflix
number of locations yet. They have a strong
                                                         users. Thus, reiterating the threat self-service
and loyal customer base from the brick-and-
                                                         kiosks cause to pre-existing companies in the
mortar foundation of the company which
could eventually make them more successful
                                                                The DVD rental industry began to
than redbox. However, since redbox has
                                                         enter the decline stage of the PLC during
already managed to issue contracts with the
                                                         2006 and 2007. The development of DVD
                  locations they currently occupy
                                                         rental kiosks can be predicted to take the
                  it will be hard for Blockbuster
                                                         industry back to the maturity stage of the
                  Express to gain the advantage
                                                         PLC. Redbox is currently in the growth stage
                  over redbox.
                                                         and is already beginning to positively
     Netflix, Inc. is the world's largest
                                                         affect the industry. The introduction of
subscription service streaming movies, which
                                                         competitors will create a rise in DVD rentals
has accumulated more than 12 million
                                                         because it will cause lower prices resulting in
subscribers (5). Despite the fact that Netflix is
                                                         more purchases.
an existing company in the DVD,

                                                                                              12 | P a g e
       Redbox and its competitors have on-
going plans to ensure growth and
expansion. Redbox and Blockbuster Express
are placing more kiosks in the market in
hopes of increasing brand awareness and
availability to consumers. Redbox exceeded
its year-end projections and now has more
than 22, 210 DVD rental kiosks (21) .
       Blockbuster acquired competitor
DVDPlays 1,300 kiosks in the U.S. and
Canada and will revamp them with the
Blockbuster Express brand (21). Netflix is
currently in negations with movie industry
studios to secure access to more titles.
“Netflix has a powerful brand and slick
                                                                    With the increasing number of
streaming technology. But to stay relevant
                                                           kiosks, brands are utilizing technologic
the company needs access to much more of
                                                           advancements such as the application
the studios' digital content” (44).
                                                           shown above to provide the consumer with
                                                           a way to locate thousands kiosks in their
                                                           area and also to view the DVD selection
                                                           available within each kiosk.

           A typical redbox kiosk in a grocery store accounts for approximately 480 visits a
           week, rental and returning. Of these trips, 52% are specifically to visit redbox 39.

                                                                                                  13 | P a g e
Marketing Mix Evaluation

                        Product Price                          Physical   Promotion
    redbox             DVD rental             $1 DVD per-
                                                             Grocery stores: Kroger, Wal-
                                                             Mart, Publix, Winn-Dixie,
                                                                                              Coupons, special offers
                                                                                              available with redbox
                       150 new releases                      Harris Teeter                    online sign-up

                       350 classics           $1 Blu-ray     Drugstores: Walgreens, CVS       iphone applications
                       No membership                         Fast-food restaurants:           Facebook & Twitter fan
                       required.                             McDonalds                        pages
                       Reservation            maximum        Gas stations: Exxon Mobile
                       capabilities online.   fee
                                                             22,000 kiosks

                                                                                              Special offers available
Blockbuster            DVD rental             $1 per-
                                              night DVD
                                                             Grocery stores: Brookshire,
                                                             Food City, Bashas                with Blockbuster express
                                                                                              online sign-up
  Express              900 available
                                                             Drugstores: Deane Read
                                              $2 per-night                                    Facebook & Twitter fan
                       No membership
                                              Blu-ray        2,500 kiosks                     pages
                       Reservation            maximum
                       capabilities online.   fee

    Netflix            Video streaming        $9 monthly
                                                             PC                               One month free trial

    video-             17,000 available
                                              fee            Mac                              Online codes

  streaming            Some new releases
                                                             TV through licensed
                                                             contracted devices
                                                                                              Facebook & Twitter fan

                       Membership                            Digital Playing devices
                                                             Game consoles

                                                             Digital Video Recorders:

                                                                      Exhibit 5, Sources: 4, 24, 25, 28, 29, 30, 57

                                                             with an all-around $1 per-day strategy. Also,
Redbox has several marketing mix
                                                             redbox provides a wider array of locations to
advantages over its competitors. Each of the
                                                             physically find its kiosks compared to
three competitors products are similar by
                                                             Blockbuster Express. In regards to
providing DVD consumers the same
                                                             promotion, all three competitors offer a
merchandise, but redbox has given
                                                             number of outlets when considering
consumers the most cost-effective options

                                                                                                             14 | P a g e
                                                party. Each of the competitors has
                                                established themselves on the internet with
        As technology continues to be a vital
                                                          web pages that provide
part of the consumer’s life,
                                                          information to the potential
there are many
                                                          renter. Redbox’s homepage is
opportunities to enforce
                                                          clear cut and uniformed. It has a
brand identity with
                                                          uniform maroon coloring and is
companies such as redbox,
                                                          easy for the consumer to read and
Blockbuster Express, and
                                                          digest (28). Both Netflix and
Netflix via websites and other forms of
                                                Blockbuster Express are also well put
media. For example, each of these products
                                                         together, but are cluttered
uses multiple means of
                                                         compared to redbox which can
advertising through
                                                         make it appear less professional to
Facebook, Twitter, and other
                                                         the desired consumer (29, 30).
media. According to
                                                         Redbox and Netflix are more
Ad$pender, in 2008 redbox
                                                         established brands, thus
spent $289.00 on its total
                                                         Blockbuster Express is playing
advertising while Netflix spent $67,414.20
                                                catch up in awareness.
on its combined areas of advertisement
                                                Another way to measure product popularity
(35). Its figures are notable because
                                                          is through social media websites
although redbox does not
                                                          like Facebook and Twitter.
have high advertisement
                                                          Redbox has 43,783 fans on the
expenditures or web
                                                          main Facebook group page. While
publicity, its product is
                                                          Blockbuster Express has only 266
located where the desired
                                                          fans (31, 33). In comparison,
consumer can see them
                                                          Netflix leads with 86,925 fans
easily. Redbox kiosks are
                                                (32). Each of these products has a Twitter
located outside of Kroger, Walgreens, Wal-
                                                page as well. In addition to internet
mart, and McDonald’s franchises. Redbox’s
                                                advertising, Netflix has commercials that
desired target market visits these locations
                                                can be viewed on YouTube or Hulu. One of
on a regular basis, thus providing
                                                the commercials with the
advertising without the need of a third

                                                                                  15 | P a g e
most views is about a father and son who visit              The official web sites of redbox and
a stranger’s house and watch a Netflix movie.       Blockbuster Express use a similar setup
In a sense, Netflix provides a way for              (28,30). Each highlight $1-per-night rental
strangers to connect (34). Redbox and               prices as well as the offer of a free DVD after
Blockbuster do not offer commercials for            signing up for weekly emails that provide
viewing in these locations. YouTube is an           updates and special
ideal advertising placement because the video       offers. Netflix is
itself is free advertising. There is also room on   currently offering a
the sides of actual web pages to have               free one-month trial of
advertising. Netflix purchases these areas to       DVD by mail and
advertise, especially when the site is              instant streaming
promoting either redbox or Blockbuster (38).        services (29). All three promotions are placed
Netflix has also used Facebook to promote its       on the forefront of the websites. In addition
brand which could explain why they have a           to its website, redbox is also exploiting cell
noticeably larger number of fans                    phone usage by sending texts that advertise
on Facebook. With one simple click the              current deals (28).
consumer is transferred from the website to
the Netflix homepage. Facebook also has a
                                                            Public Relations
                         young target market
                                                            Redbox is actively using public
                         which makes it
                                                    relations to keep its users informed about the
profitable for Netflix to advertise there.
                                                    recent disputes with the movie production
Netflix provides an easy delivery service for
                                                    industry. Redbox’s $1-per-night rental price
consumers who do not want to leave home.
                                                    caused many movie production companies to
                                                    fear that a distribution deal with redbox will
                                                    result in lower profits. Attempts to prohibit
       Redbox and its competitors are               redbox from providing new releases to its
following an increasing trend of utilizing web      consumers by companies such as 20th Century
based and social media tools to promote their       Fox and Warner Home
brands. These promotions center around              Video are being met with lawsuits from
themes of price points, free trials, and            redbox. The official redbox site provides a

                                                                                          16 | P a g e
page of recent press releases that follow the      image for their latest kiosk brand Blockbuster
positive distribution deals with such              Express.
corporations as Summit Entertainment,                         Target Audiences
Paramount Home Entertainment, NCircle                     Redbox and its competitors are all
Entertainment, Lionsgate and Sony Pictures         targeting the
accompanying the preexisting struggles with        psychographic of              Factbox:
20th Century Fox and Warner Home Video             the convenience          44% of redbox users
(10).                                              seeking consumer          attend college 53.
        Blogging has also become a popular         by promoting the
form of new media public relations. Both           idea of instant results without the hassle.
redbox and Netflix offer a blogging segment        Redbox and Blockbuster Express also narrow
on their official websites. “Redblog” is a movie   their audience by also targeting the price-
critique forum written by three authors,           conscious consumer through their $1-per-
whose profiles appear on the site, where the       night rental price, whereas Netflix appears to
public is able to read movie reviews as well as    be targeting families that are seeking at-
comment with their own opinions (45) . “The        home-entertainment and are able to commit
Netflix Blog” provides                             to a stable payment plan. Also, Blockbuster
current updates about technology and various       Express is delving even further into the price-
movie news effecting Netflix and also allows       conscious consumer psychographic by placing
for the customers’ interjections (46).             its kiosks on college campuses (47). Another
        “The Blockbuster Corporate” web-page       important psychographic of all three
provides a news and public relations section       competitors is that consumers are more
                     that enables the company      technologically savvy. Kiosks and instant
                     to announce various           video-streaming are fairly new developments
                     updates such as new           in the DVD rental industry and therefore
releases, pre-order options of new releases,       require an audience willing to experiment
and quarterly fiscal reports for the parent        with previously unfamiliar technology. They
company (48). When compared to redbox              are targeting this segment by advertising
and Netflix, Blockbuster is lagging                “innovation” through hotspots such as
in communication advancements with its             Twitter, Facebook and various blogs.
customers, resulting in an underdeveloped

                                                                                       17 | P a g e
       Comparative Analysis                                  hindrances for the customer, allowing them to
                                                             return the DVD at a more convenient
       The idea of kiosks is a cutting-edge
                                                             time. These kiosks also eliminate the hassle
breakthrough in the DVD rental industry.
                                                             and errors that accompany
Redbox is the most impactful company in the
                                                             employee/customer checkouts. Also, while
current market. There are several traits of
                                                             both its competitors offer 24-7 convenience,
redbox, Blockbuster Express and Netflix video
                                                             the broader base of kiosk locations gives
streaming that will
                                             Redbox’s Benefits                      redbox an edge.
influence the
                                                                                    Redbox has a
companies in the                    Cost-effective compared to Blockbuster         significantly larger
market in both positive
                                     Express kiosks                                 number of kiosks
and negative ways.
                                     Blu-ray fees and Netflix’s                     available at grocery and
Some key deciding
                                     monthly subscription.                          convenience stores such
factors for customers
                                                                                    as Wal-Mart, Kroger
include convenience,                No membership fee commitment compared
                                                                                    and Walgreens.
location and pricing.                to Netflix video-streaming.
                                                                                    Another area in which
Redbox has definite                 Availability of redbox locations far exceed    redbox is at the
strengths in these areas;            the number of locations that Blockbuster       forefront of the industry
however, its
                                     Express has distributed.                       is through its
competitors are
                                    Redbox’s variety of promotional tools          positioning as the
attempting to close the
                                     surpasses Netflix video-streaming and          economically friendly
                                                                                    rental company.
        redbox                       Blockbuster Express.
                                                                                    Redbox offers a $1-per
       Redbox provides
                                                                                    night rental price. This
customer convenience,
                                                             system allows the customer to determine their
which is one of the primary premises of the
                                                             charges based
self-service kiosk industry. It is
                                                             on when they return the DVD. Despite all its
accomplishing this through 24-7 kiosks that
                                                             advantages, redbox does lack the established
are available beyond typical store hour
                                                             customer base and wide DVD variety that its
constraints. The extended hours and
                                                             competitors possess.
elimination of return rates causes fewer

                                                                                                 18 | P a g e
            Blockbuster Express                           available in any internet connected space, but
        Blockbuster Express is redbox’s most              is also confined to the single device that the
similar competitor. It                                                         movie was downloaded to
also offers convenient
                                      Redbox’s Weaknesses                      thereby losing the mobility
24-7 kiosks as well as                                                         that a DVD possesses.
                                   DVD selection available per redbox kiosk
$1-per-night rental                                                            While it addresses the
                                    is approximately only 55% of what a
pricing. Blockbuster                                                           demand for convenience, it
Express’ strength is the            Blockbuster Express kiosk can hold.        encounters limitations
brand loyalty inherited            Majority of redbox kiosks are placed       because only 12% of this
from its parent                     inside locations, such as grocery          online library is
company, Blockbuster.               stores, making 24-7 availability limited   available for
Consumers may be                                                               streaming (57)
                                    to only outside kiosk locations.
more comfortable using                                                         Also, many
                                   Since online streaming is not an
this brand because they                                                        customers have
                                    available option with redbox, the
are already familiar with                                                      noticed quality
the company.                        company cannot reach additional            flaws with video
        However in                  customers with the service that Netflix    streaming making it
comparison to redbox,               does provide.                              less desirable despite
Blockbuster Express is             Advertisements for redbox are              heightened convenience. In
lagging in its number of                                                       regards to price, Netflix
                                    extremely limited in comparison to
kiosk locations, offering                                                      rental system requires a
                                    Blockbuster and Netflix.
less availability to its                                                       monthly subscription for
customers which could                                                          $9.00 which includes
be considered a weakness.                                 unlimited downloads for that period. While
                      Netflix                             Netflix’s higher price may discourage frugal
        Netflix offers a different approach               customers, it promotes a more loyal customer
than redbox and Blockbuster Express with its              base.
in-home streaming of movies. Netflix
streaming has the advantage of being

                                                                                                   19 | P a g e
                                                  of redbox is still cheaper than a new release at
             Movie Renters
                                                  Blockbuster. In the past year, the amount of
       In the past few years, researchers have
                                                  people renting from DVD kiosks has grown by
studied the spending habits of DVD rental
                                                  almost 50%. According to Simmons, redbox
users. In general, Americans who rent movies
                                                  and its dvd kiosk competitors are keeping
more often are more likely to see films within
                                                  pace with Netflix’s rental growth (36).
the first two weeks of release (37). Simmons
                                                         Along with redbox, Blockbuster
went on to report that from those who watch
                                                  Express is installing self-service kiosks in
movies in the first two weeks, they will then
                                                  grocery stores, drug stores and other
rent from Blockbuster, Hollywood Video, and
                                                  locations. The parent company predicts
Netflix (37). Redbox, in particular, has been
                                                  Blockbuster Express will have up to 10,000
steadily increasing its amount of rentals. Its
                                                                      working kiosks by the end
target market,
                                                                      of 2010.
according to NPD
                                                                      While Blockbuster
demographic, reports
                                                                      Express was growing, the
that 52% of redbox’s
                                                                      foot traffic of Blockbuster
consumers are female,
                                                                      dropped 16% in the last
63% have at least one
                                                                      year. In addition to less
child, and 51% have a
                                                                      store action, there was
household of at least
                                                                      relatively no noticeable
four people (39). These figures are parallel to
                                                  increase of online renters, which then lead to
the product placement that redbox uses. By
                                                  the many store closings (36).
placing its kiosks outside of regularly visited
                                                         While Blockbuster was not improving,
stores such as Wal-mart, Walgreens, and
                                                  Netflix was growing. As Simmons Research
Kroger, redbox draws families and generates
                                                  reported, “As of October 12, 2009
business for the retailers as well (39). Redbox
                                                  had almost three times as many as monthly
provides an easy and convenient one-stop-
                                                  visitors as” (36). Netflix is
shop for families on the go to rent a movie for
                                                  the third most popular way of renting among
one night, or more if they wish (36). The way
                                                  consumers who watch movies within two
redbox allocates their pricing is profitable
                                                  weeks of opening weekend (37).
because two nights

                                                                                       20 | P a g e
          DVD Kiosk Customer
                                                                     The population of 18-24 year olds in the
             According to the 2007 TNR                           U.S. in the year 2010 is 30,163,000 and
                 Survey Findings:
                                                                 increases annually until it peaks in 2013 at
    Grocery retail-based DVD rental kiosks have broad
     consumer appeal among men and women of all ages             30,575,000 people. For the next four years
     and life stage classifications, especially those 30 to 54
     years of age and families with children.                    the population of 18-24 year-olds will
    The rental kiosk value proposition to consumers is          continue to rise. Consequently, redbox will
     simple and compelling, driven by both lower movie
     rental costs and unmatched convenience -- the "single       most likely remain in the growth stage of the
     trip" benefit.
                                                                 PLC during this time. In the year 2014, when
    Reflecting the growth potential for the kiosk market,
     awareness is still developing -- approximately 1/3 of       the population of the age group begins to
     all consumers surveyed indicated awareness of the
     self-serve DVD kiosk concept, but only 5% of the            decline redbox could expect to enter the
     respondents had rented through one. Awareness and
     rental usage in more developed markets is                   maturity stage of the PLC.
     substantially higher.
                                                                     During this decline period, redbox should
 Kiosk adopters would most likely migrate from
Exhibit 7, Source: 52 and mortar" rental sources to the
    traditional "brick                                           tailor its selling strategies to align lifestyles of
    grocery or rental kiosk.

    Over 1/3 of DVD renters are frequent grocery
                                                                 its target market. Lifestyles of the average 18-
     shoppers, many visiting their grocery store on a daily
                                                                 24 year olds tend to be fast-paced and
                                                                 economically restricted. For example, redbox
                                                                 could execute two-for –one rental periods.
                                                                 This way redbox can be reassured of gaining
             Target Market Size                                  profits even at this stage of decline.

            Total US Population
             of 18-24 Years Old
                                              Total US
        30,200                                of 18-24
        30,000                                Years Old in
        29,800                                Thousands

                 2010 2012 2014

                       Graph 6, Source: 17

                                                                                                         21 | P a g e
                                                 60% of the target market that is utilizing the
            Target Market &
                                                 internet to download or stream their daily
 Entertainment-Related Behavior                  usage items such as music, online games and
             Movie Genres              %         TV. This indicates that the target market is
            Rented on DVD                        comfortable and willing to explore innovative
           Action/Adventure             39
               Animation                14       technology that meets their wants.
                 Comedy                 42
                  Drama                 31                  Outlook for redbox
                  Family                30
                                                        Through the consumer analysis
                  Horror                21
                 Musical               6.62      research, the target market of 18-24 year olds
                Romance                 20       would be a successful segmentation to pursue.
                   Sci Fi               13
                                                 The outlook is desirable because of redbox’s
                Suspense               7.97
                 Thriller               19       predicted steady growth and maturity stage of
                  Urban                 14       the PLC for the next several years. According
           Online Activites in                   to the its marketing mix, advertising and
            the Past 30 Days
          Download Music Files         29        promotional tactics will be most beneficial in
             Play/Download             21        order to gain 18-24 year olds brand loyalty for
              Online Games                       when redbox enters the maturity stage. This
          Watching Streaming           9.77
          Video (TV/MVIE-LKE                     desired consumer is a part of the most highly
                 BRDST)                          connected age group (26). The number of
           Rent Video Games
                                                 users for social media outlets that redbox has,
           Usually Rent Video           9
                  Games                          such as Facebook and Twitter, skyrocket
                Exhibit 9, Source: 6
                                                 amongst this target market and redbox should
                                                 use them constructively. Also, with the
       According to Exhibit 9, redbox should
                                                 multitude of
concentrate on providing more comedy and
action/adventure DVDs in its kiosks since
these are the two most rented genres by the
                                                 locations that
target market of 18-24 year olds. The data
                                                 the target market comes across, the lucrative
also denotes that redbox should investigate
                                                 product will be profitable. With the use of
online rental options as implied by the nearly

                                                                                      22 | P a g e
                         redbox can take              Has the target market grown up in a
                         advantage of DVD              movie-renting household?
                         product distribution         Is movie night a family affair?
                         with its cutting edge        What makes this desired market choose
                         equipment and the use         one genre over another?
                         of promotional tools to      Does the target market like snacking while
draw in this particular audience and have              watching movie rentals?
them as brand loyal customers.                        Does target market want a one-stop,
                                                       convenient DVD rental pickup that also
               Next Steps                              fulfills multiple needs?
    Research is necessary to uncover why              Rent alone? Or in groups?
Netflix and Blockbuster customers have not            Is renting associated with activities?
switched to redbox and then attempt to                 Cooking? Dating? Exercise?
capture those consumer interests. In order to
gain further insight into the 18- 24 year old
market and their beliefs, attitudes and
decision- making process related to renting
movies, we recommend that further research
address the following:

   Spending behaviors of target market
   How often does the target market watch
    movies? Weekly? Monthly? Daily?
   How would target market prefer to obtain
    movie rentals? Self-serve? Online?
   What are 18-24 year olds means of
    transportation? Walking? Bus? Personal
    car? Friends?
   What time of day does target market
    usually make the decision to rent movies?
    Morning? Noon? Evening? Midnight?

                                                                                         23 | P a g e
                  Overview                         The Main Areas of Questioning:
                                                   • How participants decide to rent a movie and
       In the spring of 2010, an
                                                   what influences them
Advertising/Public Relations Research
                                                   • What rental outlets participants use and why
Methods class at the University of Tennessee
                                                   it’s important
decided to uncover the inner thoughts of the
                                                   • If the participant has heard of or used any
young adult DVD renter. The subsequent
                                                   DVD kiosks
section of the project will unearth the
                                                   • If the participant has used redbox and if so,
common thoughts, feelings, reasoning, and
                                                   their level of satisfaction
gender differences of the redbox target market
                                                           These goals were accomplished by
through personal qualitative interviews given
                                                                     asking questions concerning
by each group
                                                                     how participants decided to
member. Each
                                                                     rent a movie, refer to
interview, which can
                                                                     Appendix 1, if there was any
be seen in Appendix
                                                                     emotion linked to the
I, was given to a
                                                                     decision and their awareness
member of the 18-24
                                                                     of DVD kiosks, especially
year old target
                                                                     redbox. Interviewers were
market who was not
                                                                     not seeking number
a fellow advertising
                                                                     responses as much as deeper
or public relations
                                                                     feelings and personal
major, or was aware of the topic project. In
                                                   experiences. They achieved this by asking
order for the process to be unbiased, each
                                                   participants how and why by digging deeper
group member did not reveal the client until
                                                   into stories that were shared.
the end of the interview.
                                                           Six of the participants were students
       The goals of the quantitative research
                                                   while four were non-students. There were an
were to identify the target market, classify the
                                                   even split of five males and females. All of
factors that motivate purchases, what are the
                                                   them were between the ages of 18-24.
unique characteristics of each renter, and
determine if there are any problems with the
category, client or competitors.

                                                                                       24 | P a g e
                                                 mentioned were popcorn and pizza. An
                                                 approximately equal amount of people make
Deciding how/ when to Rent a Movie
                                                 decisions about renting a movie alone as those
       The decision process for renting
                                                 whose decisions involve other people.
movies was commonly associated with certain
                                                        When asked what outlet they usually
times or activities. The majority of males and
                                                 rent from, most respondents replied redbox
females interviewed said that they most often
                                                 and mentioned renting at Blockbuster in the
rent movies weekends, when they do not have
                                                 past before using redbox. One male and one
many plans or when they have time to relax.
                                                 female responded that they used Netflix. The
       Some males
                                                                          male used video-
mentioned their mood
                                                                          streaming through
influences them when
                                                                          his Xbox and the
deciding when to rent a
                                                                          female used the video
movie and especially
                                                                          streaming through
what kind of movie they
                                                                          her television.
wanted to rent. A 24-
year-old male said,
                                                                            Rental Outlets
“When I decide to rent a movie it always
                                                        Several respondents said they liked
depends on my mood. I figure out if I am in
                                                 redbox because it was more convenient and
the mood for a comedy, an action film, or
                                                 cheaper than its competitors. Females seem to
romantic comedy and then I go from there.”
                                                 commonly define convenience as quick or
       One male stated that marketing for
                                                 easy. Males placed emphasis on the fact that
new releases strikes his attention and usually
                                                 redbox was close to places they usually
tempts him to rent out of curiosity. Social
                                                 shopped, thus more convenient. However,
reasons is the most common reason that
                                                 both genders also implied that convenience
females rent movies. Other females responded
                                                 was based on the distance from their place of
that they rent movies when there is nothing
                                                 living and the 24-hour a day access.
they like on TV.
                                                 As stated earlier, Blockbuster was the other
       Many of the respondents also rent
                                                 venue mentioned most. The respondents said
movies when they are on dates or eating with
                                                 they used Blockbuster mostly because it was
a group of people. Two common foods
                                                 familiar. The majority said the main reason
                                                 they switched to redbox was to avoid late fees.

                                                                                     25 | P a g e
When asked why the payment plan effects his       because it’s convenient to be at a place where
decision, a 21-year-old male said he liked        I can get multiple things and
being in control of how much he pays, “It         not have to stop at another
makes me choose redbox over Blockbuster           store to pick up a movie.”
because I’m in control of the payments rather     This statement could be an
than the upfront five dollars.”                   indication that some redbox
                                                                      customers would not rent
people mentioned
                                                                      from redbox if they were
that they did like
                                                                      not located at some of the
the larger selection
                                                                      places they normally
that Blockbuster
offers but still said
redbox was
                                                                               DVD Kiosks
                                                                                All of the 18-24
The locations,
                                                                      year olds interviewed
speed, and cost of
                                                                      knew of redbox. Two
renting movies were all important to the
                                                  females and one male mentioned other DVD
respondents. When asked why these things
                                                  kiosks brands they have seen but they have
mattered to them, the majority of males and
                                                  never actually rented a movie from them. The
females said that the one dollar cost is a
                                                  kiosks mentioned included Blockbuster
drastic difference from five dollars. A 19-year
                                                  Express, Kroger, and DVD Play. However, all
old male said, “If you are going to get the
                                                  of them implied they only know of one of
same product, you always try to get it at the
                                                  these kiosk locations.
cheapest price. It’s simple economics.” Many
                                                         When asked if DVD kiosks were for
males also mentioned that they were tight on
                                                  somebody like them, everyone said yes.
money since they were currently in college.
                                                  Again, most often males and females
Concerning the importance of location, a 23
                                                  mentioned convenience in reference to the
year-old female said, “I rent from redbox
                                                  quick process, closeness and number of
generally when I come across it while at Wal-
                                                  locations and 24-hour availability as the main
mart or Walgreens. I guess that’s important

                                                                                       26 | P a g e
        Since college students are usually         generation and also because the selection
maintaining a hectic schedule, it’s no surprise    limits the classics.”
that several respondents prefer kiosks
because they find it quick and easy. For                               Redbox
example, a 24 year-old female states, “DVD                 All of the respondents have tried
kiosks are definitely for someone like me.         redbox. When asked what prompted them to
They are so accessible and easy. People my         try redbox, four out of the five males, as well
age are always looking for ways to do things       as one female, said location. Most of their
easier and kiosks make it easier on us.”           answers were similar to what this 21-year-old
Many males and females said that the high-         male said. “The first time I used it I was
technology made                                                             coming out of Wal-
them feel DVD                                                               mart with my friends
kiosks were good                                                            and we saw it and
for people their age.                                                       decided to try it.”
A 21-year-old male                                                          Another male
said, “It was cool to                                                       said that he decided to
run these machines yourself, you know like         use redbox for the first time because he was
the self check-outs at the grocery store.”         curious.
        Also, some said that they liked the fact           One female also said that she began
that they don’t have to interact with people       renting from redbox because of the amount of
when they rent movies from a kiosk. A 19-          locations and out of curiosity as well. She
year-old female said, “ I like to go in and get    went on to say, “They are all over the place in
out with what I need without having to deal        my hometown and I thought it would be
with people that I don’t have to.”                 interesting to try one
        A 23-year-old female believes that the     day.” However, there
limited selection of the kiosks is another         was much less
reason why they are most appropriate for her       consistency with the
generation. She said, “I would probably not        females as to why
recommend them to my grandmother because           they tried redbox. Price and friends were two
of the selection. The movie selection that is      of the other responses. When evaluating their
provided in kiosks I think may be                  experience, all of the respondents were
inappropriate for my grandmothers

                                                                                         27 | P a g e
                                                       “If I’m ready to get home and just
                   pleased with their redbox   came to grab a quick movie , I don’t want to
                   experience. The two         stand there while you talk to
                   complaints from             your mom about the new movies that just
                   customers concerning        came out or fight with your kids about what
                   their experience were not   movies they can or can’t have for whatever
                   directly caused by          reason. The worst is when old people are
                   redbox.                     trying to use it for the first time and don’t
       A 24-year-old male said he had a good   understand how to use it. Instead of asking
experience overall but had one complaint       for help or stepping aside they just stand
about the other customers using redbox.        there looking at it.”

                                                                                     28 | P a g e
       Another complaint came from a 19-                Key Insights
year-old female. “I love redbox, and my         1. Deciding How/When to Rent a Movie
experiences are all good except the one time           Males: bored or to relax
I had to buy the DVD since I forgot to return          Females: social reasons
                                                       Both male and female:
it.” However, this is something that could
happen with any other venue and it would               Most individuals rent from
also cost more.                                           redbox and occasionally
       After asked about what prompted                    Blockbuster and Netflix
                                                2. Rental Outlets
them to use redbox and how their experience
                                                       Convenience- quick and easy
was, they were asked what they liked and                  vs. one-stop-shop
disliked about redbox. The answers to these            Distance from home and 24
questions were repetitive of those that were              hour access
                                                       Late fees vs. selection
mentioned in the rental outlets portion
                                                3. Who DVD Kiosks are for
because so many of the respondents said that            Everyone in the target market
redbox was their most common outlet for                    (18-24)
                                                4. Redbox
renting movies.
                                                        Half of sample tried due to
                                                           convenient location
                                                        Overall good experiences
                                                           except for poor selection
                                                                  Exhibit 10

                                                                      29 | P a g e
                   Method                                   The sample size included approximately 80
                                                            completed surveys based on participation of
                Sample Profile
                                                            an equal amount of men and women and
       Through consumer insight, the
                                                            approximately 20-25 non-students.
population of 18-24 year olds has been noted
                                                                      In order to be included in the sample
as the standout target market for redbox.
                                                            size there was a screening process. The
This is the chosen sample profile based on the
                                                            qualifications required the sample to be
relationship between what redbox provides
                                                            between the ages of 18 and 24 and also have
and the attitudes and behaviors desired by the
                                                            rented a movie in the past 30 days. The
consumer segment for products and services.
                                                            sample did not include anyone who was
       This profile was analyzed based on a
                                                            interviewed for the Qualitative Research or
sampling fr ame, a description of how (or from
                                                            communications or marketing students. Also
where) the sample was acquired.
                                                            the sample excluded anyone outside the age
                                                            range of 18 and 24 or anyone who has not
                                                            rented a movie in the past 30 days.

        Research Objectives                                                Survey Question

                When was the last time 18-24 year olds rented a           1, 2, 3
                What influences 18-24 year olds in their choice of        4
                 where/how to rent a movie (rental channel)?
                Which influence is most important?                        4a, 4b, 5

                Which of the five main rental channels has 18-24          6, 7
                 year olds ever used?
                Used in the last 30 days?
                For each of the main five main rental outlets, will 18-   8
                 24 year olds usage increase, decrease or have no
                 change in the next few months?
                Which brand of movie rental have they used the            9
                 most in the past six months?
                What brands of DVD rental kiosks have they ever           10, 10a
                Attitudes about DVD rental kiosks                         10b, 10c
                If they have never used a DVD rental kiosk, why not?
                Attitudes about redbox                                    11

                How do these questions differ based on gender and         12, 13, 14
                 student status?
                                                                                                  30 | P a g e
           Data Collection Method                  sections, 14 questions, which included 65

       The process used to conduct the study       variables. The survey, which can be found in

was a self-administered survey. The method         Appendix II, was approximately five minutes

               was a non-probability sampling,     long. The subset method of a self-administered,

               in which the likelihood of being    non-probability sampling survey that was

               chosen is unknown because           chosen was subject to both strengths and

               sampling unit is selected at the    weaknesses.

               interviewer/researcher's                    The strengths to this approach contain

discretion. The data collection tactic             the option for the sample to have
administered was through convenience               completed the survey based on his or her own

sampling, where the sample was selected based      timely manner. Also, based on judgment, the

on the researcher’s judgment that the person is    chances of choosing the qualified sampling

representative of the 18-24 year old population.   profile increased in comparison to a probability
       The researchers selected locations          sampling method. In addition, the strengths of

where they encountered frequent amounts of         this design was its clarity. The survey is legible

18-24 year olds. The locations chosen were a       and organized.

local university and workplaces, which were                The weaknesses to this technique are

cleared by a manager. Selected, were               subject to not possess the advantages of being

individuals that self-administered a five minute   completely random, such as the elimination of

survey in exchange for a small reward. Surveys     bias by the interviewer. In addition, the

were dispensed on the same weekday to allow        survey was open to misinterpretation by the

no bias.                                           sample, as opposed to an interviewer-
                                                   administered approach. The sample may have
                                                   also failed to provide all findings due to an
              Survey Design
                                                   incomplete survey, whereas in an interviewer-
               Survey Method
                                                   administered approach completion of answers
       The survey began by asking broad
                                                   would be urged. A further possible weakness
questions about consumer renting habits, DVD
                                                   was that the seven pages may have appeared
rental outlets and narrowed into questions
                                                   visually lengthy to a prospective individual
specific to redbox. The self-administered survey
                                                   causing them to have abandoned the survey.
was composed of four

                                                                                          31 | P a g e
    Objective 1: The last time the target market rented a movie.

Table 1

                   The Last Time 18-24 Year Olds Rented a Movie          Frequency
                                   1 Week Ago                               30%
                                   2 Weeks Ago                              25%
                                   3 Weeks Ago                             22.5%
                                About a Month Ago                          22.5%

Table 2

                       Number of Times Rent Movie Per Month              Frequency
                             Less than Once a Month                        26.3%
                                     1 Time                                31.3%
                                    2-3 Times                              31.3%
                                    4-5 Times                              7.5%
                                More than 5 Times                          3.8%

Table 3

                       When Target Market Rents Most Often               Frequency
                               On the Weekends                             77.5%
                                During the Week                            22.5%


          Over half, 55%, of the target market has rented a DVD within the past two weeks (See
Table 1). Concerning the number of times that one rents a movie per month, our research shows
that the majority, 62.6%, of the target market rents one to three times a month. However, over a
quarter of the respondents said that they rent a movie less than once a month (See Table 2). It
could be assumed that this finding is a result of the declining US economic status since 2008
mentioned in the situation analysis (See “Economic Environment”, Pg. 6). In the qualitative
surveys there was also evidence that many of the respondents from the 18-24 year old

                                                                                      32 | P a g e
demographic were more conservative with their money and did not have much leisure time.
This is proven by the research, 77.5% of respondents that stated they most often rent DVDs on
the weekends (See Table 3). On the other hand, 22.5% said they usually rented DVDs during the
week. The most common day of the week mentioned was Tuesday with 8.8%. This could
possibly be due to the lack of work load presented early in the week and perhaps using it as a
way to relax before having to complete work due at the end of the week.

           Objective 2 and 3: What Influence the Target Market
Table 4

          Degree of Influence                        1          2         3           4        5        Mean
                Friend                             1.3%       5.0%      11.3%       32.5%   20.0%        3.9
           Significant Other                      16.3%       1.3%      12.5%       20.0%   20.0%        3.4
              Roommate                            10.0%       5.0%      15.0%       27.5%   11.3%        3.4
                Family                             6.3%      12.5%      18.8%       23.8%    8.8%        3.2
                 Media                            12.5%       2.5%      18.8%       28.8%    7.5%        3.2
*71.3% respondents stated that their rental decision is usually influenced by others.

*1 being no influence and 5 being strong influence. ***Enter in text to mention coworker

Table 5

             Reason to Rent                          1          2          3          4        5        Mean
           Interest in Movies                       0%         0%        3.8%       13.8%   13.8%        4.3
               Relaxation                          2.5%       3.8%       3.8%       13.8%    6.3%        3.6
                Boredom                            1.3%       6.3%       6.3%       10.0%    6.3%        3.5
*28.8% said that they were not influenced by others, therefore answered what prompts them to rent.

*1 being no influence, 5 being strong influence

                                                                                                     33 | P a g e
Table 6

                    Most Important When Choosing Rental Outlet            Frequency
                            Distance Needed to Travel                       33.8%
                                      Price                                 32.5%
                                    Selection                               12.5%
                                   Membership                               6.3%
                                  Return Policy                             6.3%
                                    Late Fees                               3.8%
                                   Technology                               2.5%
                                Hours of Operation                          1.3%
                           Time Spent on Rental Process                     1.3%


          The research shows that the most influential people to the target market while making a
DVD rental decision are their friends with an average of 3.93 (See Table 4). However, that is not
a very strong influence because on this particular scale three means the respondent felt that the
influence was neutral. Out of the people that said others do not influence their rental decisions,
the leading reason is interest in movies with an average of 4.32 (See Table 5). Over 65% of the
sample felt that distance needed to travel or price were the most important factors when
                                                  choosing a DVD rental channel (See Table 6).
                                                  The concern can be linked back to the decline in
                                                  the US economy since 2008 as well. The
                                                  importance of distance needed to travel puts an
                                                  emphasis on number of locations as another
                                                  source of competition for the industry (See
                                                  Graphs 4 & 5, Exhibit 4, Pg.11).

                                                                                       34 | P a g e
                    Objective 4 & 5: Usage of Rental Channels
Table 7

                         Used Rental Channel                      Frequency      Frequency
                                                                  Ever Used     Past 30 Days
                          Self- Service Kiosk                       75.0%          63.8%
                            Retail Location                         98.8%          38.8%
                           Video Streaming                          43.8%          22.5%
                            Online Rental                           40.0%          15.0%
                           Mailing Service                          30.0%          15.0%


          When asked what rental locations they have ever used, the largest portion of the sample,
98.8%, has used retail locations. However, only 38.8% of the respondents have used them in the
past 30 days (Table 7). This is most likely because retail locations were the only way to rent
movies before the other channels developed. It is also proof that retail locations like
Blockbuster are in the decline phase of their PLC (Industry Overview) and thus is innovating
new ways to compete within the market. 75.0% constructs the second largest amount of
respondents. These people stated that they have used self-service kiosks before and 63.8% said
that they have used one in the past 30 days
(Table 7). Concerning the product life cycle,
this proves that self-service kiosks are in the
growth stage. Online rentals, mailing services
and video streaming are all newer ways to rent
than retail locations but older than self-service
kiosks. Over the past 30 days, these three
channels include 52.5% of the respondents.
This finding is crucial because it shows that
retail locations are currently the least popular
way of renting DVDs.

                                                                                          35 | P a g e
            Objective 6: Expected Usage in the Next Few Months

Table 8

              Rental Channel                        1        2      3        4       5       Mean
            Self-Service Kiosk                    11.3%     0%    40.0%   26.3%   22.5%       3.5
             Video Streaming                      15.0%    1.3%   66.3%   12.5%    5.0%       2.9
               Online Rental                      12.5%    5.0%   68.8%    8.8%    5.0%       2.9
             Mailing Service                      16.3%    3.8%   70.0%    3.8%    6.3%       2.8
             Retail Locations                     26.3%   11.3%   48.8%   10.0%    3.8%       2.5
*On a scale of 1 (decrease usage) to 5 (increase usage)


          The findings for expected usage is complimentary to the findings of the respondents who
have used the channels ever and in the past 30 days. With an average of 3.49 self-service kiosks
are expected to have the most increase in usage in the next few months, in fact they are the only
channel that shows any increase at all. Retail locations are expected to have the most decrease in
the near future with an average of 2.54 (Table 8), further proving that self-service kiosks are in
the growth stage of the product life cycle (See Pg. 3).

             Objective 7: Brand Used Most in the Past 6 Months

Table 9

                                                Brand                        Frequency
                                              redbox                           47.5%
                                          Blockbuster                         18.8%
                                             Netflix                          16.3%
                                      Blockbuster Express                     3.8%
                                         Movie Gallery                        3.8%
                                       Hollywood Video                        2.5%
                                      Amazon On-Demand                        1.3%
                  *Mention Comcast On-demand in discussion

                                                                                          36 | P a g e

       The brand that was used the most by the sample in the past six months was redbox,
47.5% of the respondents indicated this. Netflix and Blockbuster make up the second largest
portion of the respondents with a combined 35.1% (See Table 9). The solidifies the prediction
from the competitor analysis that Netflix, Blockbuster Express and redbox are the leading
competitors in the DVD rental market (See Pg. 4). Even though the statistics are based upon
Blockbuster’s retail locations, the usage of self-service kiosks are likely to rise. Thus, due to
brand loyalty Blockbuster Express could become a leader in self-service kiosk competition (See
Table 8).

            Objective 8: Brands of Self-Service Kiosks Ever Used

Table 10

                                           Brands                                  Frequency
                                          redbox                                     75.0%
                                  Blockbuster Express                                7.5%
                                       DVD Now                                       2.5%
               *Out of 76.3% of respondents that have used a self-service kiosk.


       An overwhelming 75% of the sample said redbox was a brand of self-service kiosk that
they have used (See Table 10). Blockbuster and DVD Now are not even close in the comparison.
However, this explained by Blockbuster Express’ current status in the introduction stage of
product lifecycle. It is expected for redbox to have higher rate of usage since it is an established
brand in the growth stage of the product life cycle (See Exhibit 3, Pg. 9).

                                                                                               37 | P a g e
                Objective 9: Attitudes About Self-Service Kiosks.

Table 11

        Area of Satisfaction                            1       2       3      4        5       Mean
               Price                                   0%     2.5%    2.5%   13.8%   55.0%       4.6
        Hours of Operation                             0%     1.3%    7.5%   17.5%   47.5%       4.5
     Distance Needed to Travel                         0%     1.3%   10.0%   28.8%   33.8%       4.3
            Technology                                 0%     1.3%   16.3%   25.0%   31.3%       4.2
    Time Spent on Rental Process                       0%     5.0%   10.0%   32.5%   26.3%       4.1
           Return Policy                              1.3%    3.8%   15.0%   23.8%   30.0%       4.1
             Late Fees                                 0%     8.8%   26.3%   20.0%   18.8%       3.7
             Selection                                3.8%   13.8%   23.8%   25.0%    7.5%       3.3
*Out of 76.3% of respondents that have used a self-service kiosk.

*On a scale of 1 (very dissatisfied) to 5 (very satisfied)


         According to the surveys, the area with the most satisfaction for self-service kiosks was
price with an average of 4.64 (See Table 11). This finding is symmetrical with the qualitative
surveys; there was a collective agreement that those who used self-service kiosks did so because
they are less expensive. The importance of price reflects back to the client profile stating that
redbox’s target audience is price-conscious consumer (See “Target Audiences”, Pg. 16). Another
area of high satisfaction was hours of operation, with an average of 4.51%. As discussed in the
competitor analysis this is a strong advantage that self-service kiosks have over retail locations.
This gives more explanation behind the results of Table 7 and Table 8. Consumers were least
satisfied with the selection of DVDs at the self-service kiosks with an average of 3.25% (See
Table 11). The qualitative survey results also found dissatisfaction with the selection of self-
service kiosks compared to retail locations (See “DVD Kiosks”, Pg. 29). In contrast, the target
market still chooses to use self-service kiosks over retail locations. It can be interpreted from the
results that the price and hours of operation is more important when deciding where to rent
DVDs to the sample than selection is.

                                                                                             38 | P a g e
                   Objective 10: Usage and Attitudes of redbox
Table 12

        Area of Satisfaction                      1             2       3      4       5        Mean
               Price                             0%           1.3%    3.8%   18.8%   51.3%       4.6
        Hours of Operation                       0%           1.3%    7.5%   22.5%   43.8%       4.5
     Distance Needed to Travel                   0%           1.3%   10.0%   28.8%   35.0%       4.3
    Time Spent on Rental Process                 0%           1.3%   13.8%   37.5%   22.5%       4.1
           Return Policy                         0%           7.5%   12.5%   23.8%   31.3%       4.1
            Technology                           0%           1.3%   20.0%   26.3%   26.3%       4.1
             Late Fees                           0%          11.3%   26.3%   18.8%   18.8%       3.6
             Selection                          3.8%         15.0%   21.3%   25.0%   10.0%       3.3
*Out of 75% of the respondents that have ever used redbox.


        The findings for the areas of satisfaction for redbox are similar to those of self-service
kiosks in general. This strengthens the finding that out of those that have used a self-service
kiosk, the majority have used the
redbox brand (See Table 10). There
is less than a .06 difference
between the means of price, hours
of operation and selection when
comparing self-service kiosks to the
redbox brand (See Table 11 and 12).
Therefore, we can apply the same
conclusions as objective 9.

                                                                                             39 | P a g e
                      Influences on Rental Decisions by Gender
Table 13

                            Question                              Women          Men       t-value        Sig.
                                                                  (Mean)        (Mean)

To what degree does your significant other influence                 3.7         3.0        1.803         .077
your rental decision?

To what degree do media influence your rental                        3.6         2.9        1.912         .061

To what degree does boredom prompt you to rent a                     3.1         3.9       -1.086         .085

*On a scale of 1 (no influence) to 5 (strong influence).


         The research shows that women are more influenced by their significant others when
deciding to rent a DVD with an average of 3.74 compare to the men’s average of 3.03 (See Table
13). The qualitative research also supported this finding; women mentioned often associating
movies with date nights. Women are also more influenced by media than men. This could be
due to the constant marketing efforts towards women via magazines, specialized television
                                                                  networks. The females that participated
                                                                  in the qualitative research also stated
                                                                  that award shows could influence their
                                                                  rental decisions; such shows are often
                                                                  focused toward the female audience as
                                                                  well. Boredom prompts men with an
                                                                  average of 3.91 to rent DVDs more than
                                                                  women with an average of 3.08 (See
                                                                  Table 13). This could be related to the
                                                                  more social

                                                                                                    40 | P a g e
lifestyle of 18-24 year old females versus the more secluded lifestyle of 18-24 year old males (See
“Key Insights”, Pg. 30). The lifestyles of males are also reflected in the research concerning the
expected usage of rental channels in the next few months. Statistically, men were more likely to
increase their usage of online rental services with an average of 3.13 compared to the average of
women at 2.65.

              Rental Outlet Used in the Past 30 Days by Gender
Table 14

         Rental Outlet Used in the Past 30 Days                    Women %   Men     Chi-         Sig.
                                                                              %     Square

Rented Online                                                         25.0   75.0   3.529         .060

Mailing Service                                                       16.7   83.3    6.28         .012

*Statistics based on the respondent using the channel in the past 30 days


         In the past 30 days men have rented through online rental services three times as much
as women. Also, they are over five times more likely to rent movies via mailing services than
women (See Table 14). This again can be related back to the findings that men are more likely to
increase their usage of online
rental services in future. It is
possible to conclude that men
prefer to rent from their place of
residence opposed to women,
thus giving better insight into the
gender differences concerning the
definition of convenience (See
Rental Outlets, Pg. 27).

                                                                                            41 | P a g e
       Recommendations                              a 3.03 on the same scale. Redbox should
   Females Influenced More by Their                 utilize this information to appeal to this more
             Significant Other                      tapered target market of 18-24 year old
       Segmentation of the 18-24 year old           females by incorporating “Date Night at
target market is a standout recommendation          Home” themes into advertisement and
for redbox. One of the segments that surfaced       promotional campaigns. Redbox also has the
from the quantitative data focuses on females       opportunity to expand the “Date Night at
and the findings that they are most influenced      Home” theme to
by their significant other when renting a           include the
movie. The data from survey                         concept of “dinner
research indicates that on average women rate       and a movie” by
the influence of their significant other            exploiting the
concerning their rental decision as a 3.74 on a     preexisting relationships that exist between
5 point scale (1 being no influence and 5 being     its parent company, Coinstar, and various
strong influence). As opposed to men, who           restaurant venues to create promotional
rated the influence of their significant other as

                                                                                        42 | P a g e
alliances (59). A single coupon that combines      interview with a 23-year old female, when
both groceries for dinner and movie discounts      asked to describe how she decides to rent a
from a rental outlet such as redbox and            movie she recalled that after watching the
several established grocery                                        Academy Awards she later
stores could help boost the                                        opted to rent a certain movie
appeal of the “Date Night                                          from a redbox and cited the
at Home” theme for                                                 media as the main source of
female consumers. Such                                             persuasion for her decision.
promotions should be                                               With the current swarm of
dispatched during the                                              media traffic surrounding the
early part of and throughout the weekend           18-24 year old target market, aggressive
because survey research concluded that 77%         advertisement placements for redbox in
of females rent on weekends as opposed to on       media hotspots noteworthy to women should
the weekdays.                                      be implemented to increase visibility and
  Females More Influenced by Media                 make the brand more recognizable to this key
       The second recommendation for               base of female consumers. Competitors such
redbox also further expands on the previously      as Blockbuster Express and Netflix are
mentioned female consumer base. The                already capitalizing on these media outlets for
research shows that females are more               brand exposure, and redbox should follow
influenced by the media than their male            suite to stay competitive and prominent in the
counterparts. On average, they rated the           consumer’s mind.
influence of media as a 3.56 on a 5 point scale       Males More Likely to Rent Due to
(1 being no influence and 5                                                   Boredom
being strong influence).                                                    Research also
Men, on the other hand                                              revealed that males are a
rated the influence of media                                        statistically significant target
as a 2.93 on the same scale.                                        for a redbox advertisement
There are several media                                             campaign. One of the
outlets such as magazines                                           qualities of the male
and television networks specifically tailored to   consumer that redbox should play into is that
women that can be used to effectively reach        men are more likely to rent when they are
this female market. In one qualitative             bored. The statistics show

                                                                                        43 | P a g e
that men rate the influence of boredom as a      have used online rental services three times as
3.91 on average on a 5 point scale (1 being no   much as females within the past 30 days. In
influence and 5 being                                                addition, men will use
strong influence). This                                              online rental services
is a more substantial                                                more than females in
rating than the females                                              the next few months as
that were sampled,                                                   well. On a 5 point scale,
who rated boredom as                                                 men rated the expected
a 3.08 on the same                                                   usage of DVD rental
scale. Redbox should                                                 outlets during the next
conduct more in depth                                                few months as a 3.13 on
research to determine                                                average (1 being decrease
what activities males typically engage in when   usage and 5 being increase usage). Women
they’re bored in order to determine what         rated their expected change of usage as a 2.65
media outlets would prove most effective in      on the same scale. During the qualitative
reaching them during this time. Once these       interview one 19-year old male, who is a
channels have been identified a creative         Netflix user, defined online renting as the
campaign will be necessary to direct and         ultimate convenience for him by explaining
encourage the male consumer to select movie      that if he’s already decided to stay in and
renting from redbox as a solution to their       watch a movie than he would prefer to avoid
boredom.                                         going out to rent, “If I have to go out of my
 Males More Likely to Increase Usage             way then it defeats the purpose.” The prime
 of Online Rental within the Next Few            competitor in online rental is Netflix. Because
                   Months                        of Netflix’s present domination in this
       The next recommendation for               industry, we recommend that redbox launch a
reaching the male segmentation of the target     strong counter campaign to draw in male
market of 18-24 year olds                                           target market. An example
is to more boldly advertise                                         tactic for such a campaign
redbox on online sites.                                             would be to offer the
Quantitative research                                               incentive of a free month of
specified that males                                                redbox rentals if the
                                                 customer cancels their existing Netflix

                                                                                      44 | P a g e
subscription. This segment of male online
renters is not limited to its contemporary          Males More Likely to Use Mailing
importance in the industry, but is also                             Service
valuable for redbox’s future business outlook.          The final recommendation for
Online renting has the potential to expand in    successfully reaching the 18-24 year old target
the future due to the continual advancements     market is to offer male customers an
in technology, and must                                                alternative to using
therefore be considered                                                rental mailing services.
by redbox in future                                                    83.3% of male
expansion plans in                                                     participants were more
order to remain current                                                likely to use mailing
with the technologically                                               services for their rental
savvy 18-24 year old                                                   needs. Redbox needs to
market. The statistical                                                design a campaign that
evidence that this                                                     will highlight its online
consumer base is willing                                               movie reservation
to experiment with new                                                 option as a combatant
technology such as                                                     to the present mailing
online rental also gives                                               rental system. The
an indicator towards the                                               campaign should
types of promotional                                                   compare online movie
avenues that will be                                                   reservation to mailing
successful in reaching                                                 services by emphasizing
this segment. Redbox is advised to increase      the immediacy of reserving a DVD online and
its promotions for online rental services in     then retrieving it from a convenient redbox
technologically advanced as well as male         kiosk as opposed to the more time consuming
specific media channels such as e-mail, text     process of requesting, receiving, and
messages, social networking sites and            returning the DVD by mail.
websites geared toward male audiences.

                                                                                     45 | P a g e
                            Appendix I: Qualitative Interview Guide
                                      REDBOX INTERVIEW GUIDE

Background Information:

Gender :           Female or Male

Age:              _______________

Status:           Student Non-Student

                                          Deciding to Rent a Movie

Tell me about how you decide to rent a movie.

          [Note: If s/he has trouble getting started, ask the person to think about the last time s/he rented a

          [Here are some “prompt” questions to cover if the person doesn’t address them.]

   Do you have certain days of the week or occasions that prompt you to rent a movie?

   Group Question- Tell me what activities you associate with renting.

   Was anyone else involved in the decision to rent? Tell me about it.

   From where do you usually rent?
    Probe: Anywhere else?

      Group Question- Would you consider yourself brand loyal to any of these companies?

                                                                                                   46 | P a g e
                                               Rental Outlets

(Ask this line of questions for each of the outlets your respondent named as “usually rents from” –
see above)

You said that you usually rent from (name outlet).

       Why do you rent from (name outlet)?

        Probe: Why is that important to you?

        Probe: Any other reasons? Why is that important?

       What do you like about (name outlet)?

        Probe: Could you elaborate?

        Probe: How much does this feature influence you to rent from here?

       What do you dislike about (name outlet)?
        Probe: Is that important to you? Why or why not?

    You said you also rented from (name outlet – from the opening questions).

       Ask the above series of 3 questions again for each rental outlet named.

                                                DVD Kiosks

Say: You can now rent dvds from self-service kiosks at a variety of places around town.

   Can you name any of these kiosks?
    Probe: Can you think of any other brands of dvd kiosks?

   Are dvd kiosks for someone like you?
        Probe: Why or why not?

        (You’re going to have to do your own follow-up here depending upon what they say.)

                                                                                          47 | P a g e

If they have not named redbox yet in the interview, ask:

            o   Have you ever heard of redbox?
                    [If yes] – tell me what you know.
                    [If no} – conclude the interview.

   Have you ever rented a dvd from redbox?
    (Note: They may have already addressed this under the Rental Outlets questions above.)

   If they have tried redbox:
            o Tell me about your experience.
            o What prompted you to rent from redbox?
            o What did you like about redbox?
            o What did you dislike about redbox?

 If they have not tried redbox: why haven’t you rented from redbox?
(Probe here to really find out what might be the hindrance. You want to see if it’s something that could
be addressed through the Marketing 4P’s – especially if it’s related to communication.)

                                                                                              48 | P a g e
                                 Appendix II: Quantitative Survey
Directions: Please complete the following survey to your best ability. If you do not know an answer,
            do not fill in a random number. Instead, leave it blank.

     Thank you for participating in the survey. Your answers will only be used for research purposes.

                                        Section 1: DVD Rental Habits

1. When was the last time you rented a movie? (Circle one)

        1               1 week ago

        2               2 weeks ago

        3               3 weeks ago

        4               About a month ago

        5               More than a month ago

2. How often in a month do you rent movies on average? (Circle one)

        1               Less than once a month

        2               1 time

        3               2-3 times

        4               4-5 times

        5               More than 5 times

3. When do you rent movies most often? (Circle one)

        0               During the week

                                 If so, which day usually? ______________________

        1               On the weekends

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4. Is your rental decision usually influenced by others? (Circle one)

        1       Yes (Go to 4a)            0       No (Go to 4b)

        4a. If yes, please rate the degree that these factors influence you. (Circle a number for each)
                                                No                                    Strong
                                              Influence           Neutral            Influence
                Significant Other/Spouse          1       2          3       4          5

                Family                            1       2          3       4          5

                Media (e.g. ads, reviews)         1       2          3       4          5

                Friend                            1       2          3       4          5

                Room mate                         1       2          3       4          5

                Other                             1       2          3       4          5

        4b. If no, how much influence do the following have on your decision to rent a movie? (Circle a
        number for each)
                                                  No                             Strong
                                                Influence       Neutral         Influence

                Boredom                               1       2          3       4          5

                Relaxation                            1       2          3       4          5

                Interest in Movies                    1       2          3       4          5

                Other                                 1       2          3       4          5

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5. What is most important to you when choosing a rental outlet? (Choose only one)

        1               Distance needed to travel

        2               Price

        3               Time Spent on Rental Process

        4               Employee Assistance

        5               Hours of Operations

        6               Technology

        7               Return Policy

        8               Selection

        9               Membership

        10              Late Fees

        11              Other: ________________________

6. Have you ever rented from the following: (Circle choice for each)

                                                Yes                    No

                Retail Locations                1                      0

                Online Rental                   1                      0

                Mailing Services                1                      0

                Video Streaming                 1                      0

                Self-Service Kiosks             1                      0

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7. Have you rented from the following in the past 30 days? (Circle choice for each)

                                                         Yes                          No

                   Retail Locations                      1                            0

                   Online Rental                         1                            0

                   Mailing Services                      1                            0

                   Video Streaming                       1                            0

                   Self-Service Kiosks                   1                            0

8. Rate your expected usage of DVD rental outlets for the next few months. (Circle a number for each)
                                           Decrease               No            Increase
                                                      Usage                 Change              Usage
                   Retail Locations                      1           2          3          4       5

                   Online Rental                         1           2          3          4       5

                   Mailing Services                      1           2          3          4       5

                   Video Streaming                       1           2          3          4       5

                   Self-Service Kiosks                   1           2          3          4       5

9. Which brand of movie rental outlet have you used the most in the past six months? (Choose only one)

              1             Amazon On-Demand

              2             Blockbuster

              3             Blockbuster Express

              4             DVD Now

              5             Hollywood Video

              6             iTunes

              7             Movie Gallery

              8             Netflix

              9             Redbox

              10 Other

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                                        Section 2: DVD Rental Kiosks

1. Have you ever used a DVD rental kiosk?

               1        Yes (Go to 1a & 1b)              0       No (Go to 1c)

       1a. If yes, what brands have you used? (Circle choice for each)

                                                  Yes            No

               Blockbuster Express                1              0

               DVD Now                            1              0

               DVD Play                           1              0

               Redbox                             1              0

               Other                              1              0

       1b. If yes, rate your satisfaction with DVD rental kiosks in the following areas. (Circle a number
       for each)                                        Very     Dissatisfied Neutral Satisfied Very
                                                     Dissatisfied Satisfied Neutral             Satisfied

               Distance Needed to Travel                 1           2       3       4         5

               Price                                     1           2       3       4         5

               Time Spent on Rental Process              1           2       3       4         5

               Hour of Operations                        1           2       3       4         5

               Technology                                1           2       3       4         5

               Return Policy                             1           2       3       4         5

               Selection                                 1           2       3       4         5

               Late Fees                                 1           2       3       4         5

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1c) If no, what is the main reason you have never rented from a DVD kiosk? (Choose only one)

               1        Never heard of them

               2        Skeptical of new technology

               3        Impersonal

               4        Privacy Concerns

               5        Brand loyal to another company

               6        Other: _______________

                                              Section 3: Redbox

1. Have you ever used redbox? (Circle one)

               1        Yes               0        No

       If yes, rate your satisfaction with redbox in these areas. (Circle a number for each)
                                                         Very                                      Very
                                                      Dissatisfied Dissatisfied Neutral Satisfied Satisfied
                                                                     Satisfied Neutral
               Distance Needed to Travel                    1          2         3         4          5

               Price                                        1          2         3         4          5

               Time Spent on Rental Process                 1          2         3         4          5

               Hour of Operations                           1          2         3         4          5

               Technology                                   1          2         3         4          5

               Return Policy                                1          2         3         4          5

               Selection                                    1          2         3         4          5

               Late Fees                                    1          2         3         4          5

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                                       Section 4: Demographics

1. What is your gender? (Circle one)

                1       Female         0      Male

2. How old are you?

3. Are you a student? (Circle one)

                1       Yes            0      No

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1.   IBISWorld (Pg. 12, 14, 16, 33)

     2.      MarketResearch (Pg. 12, 36, 52, 111, 114)
4. (pg. 1)
6. Simmons Research Data
9. Video Business; 5/11/2009, Vol. 29 Issue 18, p3-20, 2p, 1 color (RDS)
14. Hollywood Reporter, 405 (49): 6, August 05, 2008. ISSN: 0018-3660 (RDS)
17. U.S. Census Population Projection : (NP-T3)
20. Video Business; 11/16/2009, Vol. 29 Issue 44, p5-5, 1/8p, 1 color
21. Video Business; 12/14/2009, Vol. 29 Issue 46, p5-5, 1/4p
22. Video Business; 12/1/2008, Vol. 28 Issue 48, p5-5, 1/6p
23. category=18
24. Video Business; 5/4/2009, Vol. 29 Issue 17, p13-13, 1p, 1 color
25. Drug Store News; 10/12/2009, Vol. 31 Issue 12, p51-51, 1/3p
26. Communication Research; Oct2008, Vol. 35 Issue 5, p602-621, 20p

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35. Ad$pender.2008. Report of Netflix and redbox.
36. Simmons Market Research. DVD/Blu-Ray Rentals Increases at Grocer. November 17, 2009.
37. Simmons Market Research. It’s Titanic in scale! Experian Information Solutions, Inc. 2009.
38. “Blockbuster to Start Renting Movies on SD Cards”. November 10 2009. Posted by Sean from Fast
39. Video Business; 5/4/2009, Vol. 29 Issue 17, p14-14, 3/5p, 1 graph
43. Standard & Poor’s Industry Surveys: Movies & Home Entertainment, Sept. 10, 2009 (Pg. 3, 4)
44. Business Week: 1/11/2010, issue 4162, p. 54-55, 2p
51. Video Business. 8/10/2009, Vol. 29. Issue 30, p 1-19, 2p.
56. Nation's Restaurant News; 1/23/2006, Vol. 40 Issue 4, p4-49, 2p, 2 color
57. Video Business; 9/14/2009, Vol. 29 Issue 35, p6-21, 2p, 1 color
58. Self-service trend in 2010. KioskMarketplace. 05 Jan 2010.

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