Assignment I- Product Assessment
Prof Verna Mayers
July 29, 2012
As technology evolves and lifestyles of individuals change, the products and interests one has often evolve as well. For example, years ago the concept of going into a movie rental store such as Blockbuster was incredibly popular and considered to be of very popular interest. However, as the technology and interests have changed, the company has been rapidly losing its customer base causing sales to decline. The ways in which movies and video games are distributed to the customer has changed causing the stand alone stores, such as Blockbuster to lose popularity.
The stores were located in convenient locations, where one could pull into on their way home from work, school, or just on the way to a friend’s house. In fiscal year 2011, the company achieved revenues of $3,240.7 million, however, that is a decrease of 20% from the year prior (5). The company estimates to have lost $128.2 million for the 2011 fiscal year (5). The company operates as a global and domestic network. According to the US Census Data, the median household income has dropped, which makes it difficult for a company such as Blockbuster to survive since it sells products that are considered non-essential. However, the eastern portion of the United States has the highest concentration of median income, therefore, after taking into consideration purchasing power, the chances of having more discretionary income left remains greater. Also, since the company is looking to target a certain age range for marketing, they need to market primarily close to cities and suburban areas rather than places such as Florida where the age range tends to be older. Decline in Popularity
The popularity of Blockbuster has been continuously declining in interest, in large part because of the increase in options to conveniently acquire movies, such as Redbox and Netflix. Social factors continue to affect the Blockbuster as well. Consumers look for products that carry a trusted name brand, easy to use, and come at a low price. Blockbuster has predominantly chosen to sell products as standalone stores; with just recently having vending machines similar to Redbox in or outside convenience stores. The rental price for a single game or movie has been between $3.00 and $5.00. However, now the consumer has options when it comes to renting movies or video games; options that are more convenient with a cheaper price. For example, for a nominal monthly fee a consumer can watch an unlimited number of movies or receive video games stream lined through a wireless internet video game console. When utilizing that option the consumer receives the same services as Blockbuster without even leaving one’s home. In addition, the fee is around $7.00 for an unlimited number of movies and video games versus getting just one at the store for between $3.00 and $5.00. Also when going to Blockbuster there is a deadline for returning the product. Depending on the number of movies one would watch in a month, Netflix also offers the option to have movies mailed to a residence for a fee of around $20.00. If a consumer did not have the resources available that were necessary to take part in Netflix, the extremely low cost option of Redbox exist. For $1.00 the consumer can rent a movie for one day from a vending machine, which is usually located near convenient stores. The company offers options to go online to their website to select the movie the consumer is looking for and the website will guide one to the location of the closest vending machine for that particular movie. The continuing decline in interest of Blockbuster can also be directly related to the rapidly changing demographic characteristics of the communities in which the company is located. With the economy changing, people must relocate to locations that have job availabilities; therefore, the company would be more successful...
Cited: 1-CIA. (2012). The World Factbook Canda. Retrieved from http://www.cia.gov/library/publications/the-world-factbook/geos/ca.html.
2-CIA. (2012). The World Factbook United States. Retrieved from http://www.cia.gov/library/publications/the-world-factbook/geos/us.html.
3-Kelly/McGowan (2012). 4th Edition BUSN. Mason, Ohio: Cengage Learning.
4-Lamb/Hair/McDaniel. (2013). 6th Edition MKTG. Mason, Ohio: Cengage Learning.
5-Marketline. (2011). Blockbuster L.L.C. SWOT Analysis. Retrieved from http://datamonitorresearchstore.com/.
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