Block Buster Entertainment Case Study

Blockbuster is one of the world leading companies that provide video, DVD rental and games. It has grown more than 8500 stores franchised worldwide that bring Blockbuster as one of gigantic in rentable home entertainment. It also has more than 40,000 titles that can be choosing by consumers’ every day. In the year 2000, Blockbuster begins to explore the Pay-Per-View market and well establish in the 2001 [Cases in Crafting and Executing Strategy].

Leading market position- Blockbuster is the world’s largest video rent chain, with about 9,000 company-owned or franchised stores in 25 countries including US. In the United States and its territories Blockbuster has 5,194 stores operating under its name. Of the 5,194 stores, 939 were operated through its franchisees. One of the largest competitors of Blockbuster, the Movie Gallery, owns and operates approximately 4,575 stores in the US and Canada, which is less than what Blockbuster, owns only in the United States. Blockbuster has 2.2 million online subscribers, including 2.0 million paying subscribers in the fiscal year of 2006. The strong market presence enhances the brand name image of the company and helps in attracting new consumers and as a result increasing the market share.

Strong merchandise sales division- Blockbuster has the strongest merchandise sales division. Beside the rental business Blockbuster is strong on the merchandise sales, which include sale of movies and games. In addition to sales of new movies and games blockbuster has positioned some small merchandise like popcorn candy etc. next to the check out counter so people waiting on line are more likely to purchase those merchandise.

Total access program.- Blockbuster has generated an online subscription program that allows consumers to have easy access to their preference of movies. This is an Internet based subscription that allows customer to rent a DVD by mail and offers more varieties of titles than the store offers. Through the Total access program, Blockbuster enhanced and integrated its in-store and online rental business.

Blockbuster continues to focus on offering programs that are an alternative to the programs offered by mass merchant retailers and other online subscription service providers.

Strong brand equity-Blockbuster has 3,166 stores operating under the Blockbuster brand name internationally because of its strong local brand awareness (Finance.yahoo.com). The company operates under XTRA-Vision brand name in the Republic of Ireland and Northern Ireland. Also they offer free-standing under the Game Rush brand name in Canada, Ital, Mexico and Denmark. The company’s strong brand name gives it an advantage of successfully introducing newer services and increasing its market share.

Blockbuster, has about 40% share of domestic rental market and a globally recognized brand, is the leading provider of rentable DVDs (Full report). Let us take a closer look at each components of marketing mix and various strategies that Blockbuster is currently using to achieve its vision.

Product ” Blockbuster is known for its movie renting and also now has video games and products available. Blockbuster also has option for buying DVDs as well as video games. It is also trying to get extended movie rights for International and making deals to have high volume of movies available at any given time.

Price- Blockbuster had different services offered for various prices. The price for in-store movie rental is about $4.32 for new and old movies for x amount of days. The online movie services are as follows –

The company uses different approaches to acquire new and retain existing customers. In response to Netflix’s online rental program, Blockbuster deployed its own version of online rental program. Moreover, the company went one-step further by offering the exchange of the online movies against more at the local stores. Customers find it convenient and a quick method to swap, and Blockbuster acquires the much needed flow of customers in and out of the stores.

Recently, the company also went through two different types of store remodeling tests. One of them is called ‘Rock the Block’, which is for the technology-savvy customers who are comfortable using kiosks and interactive displays. The other one is called ‘White Tornado’, which also includes new paint, carpet, fixtures, and lower-hanging shelves for a different look and appeal. The prototype test stores results reflected an increase of 7% to 12% in revenues (Gruenwedel).

Another aspect of this business is high price-elasticity. Consumers can easily switch to another product (from a different source) without losing quality or some other attribute. They also have a choice of acquiring the same product from redbox for one-fourth the price. To overcome these challenges, the company employs different methods to add value for the economic profit. These include rewards programs and online marketing with coupons, and are created based on the psychology of consumer behavior. For example, the rewards program offers one free movie after every five rentals, and one free older movie with every paid rental on Monday, Tuesday, and Wednesday (when the traffic tends to be slow). Finally, all employees are trained and expected to offer best possible customer service to the customers; this is critical in retaining the existing customers and earning new ones through word of mouth.

Blockbuster is very active in building community relations. The company’s community mission states: “At Blockbuster, our community relations activities are designed to: Utilize corporate and employee resources and talents to benefit the communities we serve by supporting organizations which impact children/families, reflect a film/video focus or fulfill specific company operating objectives related to diversity and employment” (Blockbuster Community, 2008). Similarly, the organization is committed to providing diversity through each phase of the business.

The size of the organization and market share are also important social trends for both the company and the stockholders/shareholders. Although the value of Blockbuster decreased over the years, “the value of a stock depends entirely on the economic profits that investors expect a company to produce in the future. Past profits matter only because they play a role in creating expectations about future performance (Boyes, 2004, 51). The financial results of the company reflect profits for the four consecutive quarters, after years of reported losses; therefore, the value of stocks is expected to increase.

Perhaps the most important political trend for a company is to get involved in a merger or acquisition. Blockbuster had attempted to acquire Hollywood in 2005, but Hollywood entered into the merger agreement with Movie Gallery (Fran Finnegan & Company, 2008). In April 2008, Blockbuster proposed a merger with Circuit City (Blockbuster merger, 2008).

Facing legal actions in the business would be another aspect of political trends. Blockbuster has faced numerous lawsuits in the past including being sued over no late fees in 2005 by consumers, and over using the online rental model by Netflix in 2006. The legal department (of the company) works diligently to handle these and similar legal and political issues as they arise. In the online DVD rental channel, Blockbuster’s competitor Netflix has forced it to pursue a cross-channel strategy. Blockbuster has been able to successfully leverage its physical storefront presence with its Total Access program which allows customers to have DVDs sent to their house and exchange them at the actual store (Blockbuster.com). This synergy has allowed Blockbuster to actually earn a twenty cent profit in the first quarter. (Motley Fools Website ” Blockbuster Eats Brains)

The current in-store strategy and requirement is to focus more on the retail items, and push the sale of impulse purchase products. There are rumors that the company would be pulling away from the rental, and would only be offering the new retail movies and games. This would certainly be an interesting change, and Blockbuster stores would become more like Game Rush stores.

History and strategy overview of Emirates Essay

In 1974, three years after independence, the rulers of the UAE decided to establish a joint flag carrier: Gulf Air. However, a tense relationship between the airline and the Dubai government existed ever since its inception, as the latter re fused to give in to Gulf Air’s demands to abandon its open-skies policy. In reaction, Gulf Air reduced frequencies and capacities to and from Dubai by more than two thirds between 1984 and 1985 without advance notice (Wilson 2005). Since foreign carriers proved unable or unwilling to fill the gap, Dubai’s then ruler, Sheik Mohammed bin Rashid Al-Maktoum, convened a team of experts – headed by Maurice Flanagan and later joined by Tim Clark and the ruler’s then 26- year old son, Sheik Ahmed bin Saeed Al-Maktoum – to devise an emergency plan. The group’s recommendation to set up a home carrier for Dubai was quickly accepted by the ruler, but he imposed two conditions: The new airline should meet the highest quality standards and there would be no additional capital injections from the government other than the agreed USD 10 million start-up capital. On October 25th, 1985, Emirates’ first flight departed to Karachi, using an A300, wet-leased from Pakistan International Airlines. The rest is history: in 1987, Emirates began to serve it first two European destinations – London Gatwick and Frankfurt -, from 1995, it has operated an all wide body fleet, and in 2001, 2003 and 2005 Emirates placed some of the largest aircraft orders ever. As of October 2007, Emirates’ route network extends to 91 destinations on all continents. In its last business year, ending March 31st, 2007, the airline transported 17.5 million passengers and 1.2 million tons of cargo on 102 aircraft. Currently, 118 aircraft are on firm order (of which 20 will be all-freighters), including 55 A380 and 43 B777.

1.2 The Emirates Group

Emirates Airlines (including its cargo subsidiary Emirates SkyCargo) is only one division of the Emirates Group, a state-owned globally active travel and tourism conglomerate, which provides a plethora of aviation related ancillary services. Finally, the Emirates Group owns 43.6 percent of Sri Lankan Air lines.

1.3 The Dubai Government’s aviation- Related Activities

Viewed from an even higher level of aggregation, the Emirates Group, in turn, is only one element in a comprehensive bundle of aviation-related activities, all of which come under the responsibility of Sheik Ahmed bin Saeed Al-Maktoum:

(1) The Dubai World Central Consortium (activity: to build Jebel Ali Airport City including Dubai’s new mega-airport)

(2) Dubai’s Department of Civil Aviation (activities: all aviation-related regulatory functions, operator of DXB airport, of Dubai Duty Free and Dubai Cargo Village)

(3) Dubai Aerospace Enterprise (activities: aircraft leasing, airport planning and management, consulting, maintenance and aviation-related education and training).

Marketing Strategy

Mission

“An effective mission statement defines the fundamental, unique purpose that sets a business apart from other firms of its type and identifies the scope of the business’s operations in product and market terms. It is an enduring statement of purpose that reveals an organization’s product or service, markets, customers, and philosophy.” (John A. Pearce II & Fred David, 2006).

Emirates Airlines or rather Emirates Group mission statement is simply “Committed to the highest standards in everything we do.” Being a vast enterprise by itself – Emirates group – the group has been quiet successful in embodying the mission of “committing to the highest standard” onto its one of its two core corporation (Emirates Airlines) – the other being DNATA, by marketing the brand of Emirates as the pinnacle emblem or a luxury standard throughout the world as an emerging Global Brand.

Value Proposition & Marketing Objective

Emirates is a brand that is truly emerging as a global icon with its logo representation in Arabic script as a symbol of its origin. Emirates has committed on building an operational and service approach as a true global provider, by delivering high quality service and catapulting itself as the industry’s youngest and most advanced fleet to retain its ever growing loyal customers worldwide. Emirates is able to achieve this boasting quality as an emerging “global brand” by updating its fly roster to 100 destinations in over 60 countries with more than 14 million passengers annually.

Emirates Airline (or rather the Emirates Group as a whole) is a crucial element of Dubai’s growth and development strategy. Currently based on the Dubai Strategic Plan 2015 (Dubai Government 2011), its objective is to prepare the emirate for the post-oil era by firmly establishing it as a leading tourist destination (including trade fairs and conferences), as a center for financial, IT and professional services, as a location for corporate headquarters and light manufacturing, and, last but not least, as a regional transportation, logistics and distribution hub (“regional” refers to the area between Singapore, Europe, Southern Africa). This is where Emirates plays a big hand in planning out its marketing approach that encompasses the Emirate of Dubai as a key factor in its marketing strategy.

Dubai’s (and, as a result, Emirates’) spectacular growth in recent years – on average, GDP increased by 13.4 percent per year since 2000, and its population is set to grow from today’s 1.45 million to around 5.4 million by 2015 (Dubai Census) -, has been helped by two complementary factors: sound politics and its very favourable geographical location.

Sound Politics

It’s uniquely liberal (by regional standards), cosmopolitan environment, political stability, free-trade agreements with most of the booming Asian economies, world-class infrastructure, efficient public services, and very low to non-existent corporate and income taxes.

Geographical location

The geographical location reflects the fact no major mass (geographically) on the globe is further than 8,000 nautical miles away from Dubai. As a result, any two major cities on earth can be connected via Dubai with only one stop.

It is against this backdrop that Emirates marketing strategy must be analyzed. First and foremost, the airline – plus the next to 140 carriers research paper writing help which serve Dubai – provides excellent air links worldwide, not only for the benefit of Dubai’s thriving tourist industry, but also of its rapidly expanding local business community (including the thousands of foreign companies that have set up their regional presence there).

To be more specific, Emirates’ value proposition is built on the following features:

A well-balanced mix of O&D (origin and destination traffic) and transfer traffic in its passenger business (although the introduction of the A380 fleet has increased the transfer passenger share to 60 percent);

A very strong focus on cargo traffic, which generates 20 percent of Emirates’ revenues – one of the highest percentages in the airline industry;

A strong presence in those secondary markets that are underserved by Emirates’ competitors such as British Airways, Lufthansa, and Air France which focus on their own hubs (London, Frankfurt, Munich, Paris) for long-distance flights. Typical destinations in this category include Newcastle, Manchester, Birmingham, Glasgow, Düsseldorf, and Hamburg in its European network as well as Kochin, Kolkata, Thiruvananthapuram, and Ahmedabad in India, to name just a few.

Target Markets & Positioning

Emirates’ competitive advantage in secondary markets is enhanced by the fact that , unlike the competition, it does not have to deploy a fleet of rather small and, hence, inefficient short-haul and even regional air crafts for feeder flights (feeder flights are small auxiliary airline that flies passengers from secondary airports to large terminals) to its hub, but can offer long haul service standards instead (connecting flights or direct flights from “Dubai”). Moreover, given its much longer average flight length, Emirates is not subject to competition from low-cost carriers either.

Due to this factor Emirates has a strong presence in markets that have been largely unconnected to the global air transport network, and especially to the Middle East, to India, Southeast Asia and/or Africa and also for the lack of a (potent) local flag carrier. This holds not only true for the vast majority of Emirates’ 15 destinations in North and Sub-Sahara Africa (Emirates’ CEO Tim Clark recently observed in an interview with the online edition of German weekly magazine SPIEGEL, that “Africa is a ripe fruit which only needs to be picked”). It also includes cities like Moscow, Brisbane, Perth, São Paulo, New York, and Houston.

Emirates’ key components in effectively positioning and targeting markets are also inclusive of:

Its ability to provide high frequencies of flights to all its destinations: The mid-term objective is to serve most destinations at least twice daily. Currently Emirates’ operates three waves in Dubai, a fourth is being gradually phased in;

The ability to provide high-quality service in all classes onboard and on the ground including up to 600 entertainment channels in all classes and limousine service (pick-up and drop off) for first and business class passengers;

The effective management of high labour productivity; according to a recent study by UBS, a Swiss bank, Emirates unit costs are around 40 percent lower than KLM’s (Horth/Alwyn 2005), a cost advantage that has even increased after the introduction of its A380 fleet;

And no alliance membership; in the words of Tim Clark: “If we take the long-term view, then alliances offer a sure-fire way of achieving mediocrity and reduced profitability” (as quoted by Horth/Alwyn 2005).

Strategy Summary

With the perspective of branding in mind, the first and utmost aspect relating to Emirates rise as a global brand is its leadership’s vision and foresight in linking the brand to its marketing strategy and committing the budgets and resources required for its strategic and tactical impact. According to Maurice Flanagan (Executive Vice chairman of Emirates Group) “Emirates places marketing to the forefront and even in these times of cost-cutting in the industry, we do not take the easy way out by slashing corporate communications budgets. Our marketing budget is confidential, but I can tell you that we believe an effective corporate communications budget should be about three to five per cent of the company’s total revenue.” (Middle East in Focus- Al Jazeera 2008).

Given the aspirations of the Emirates brand in being global, innovative and a customer-oriented provider of high quality services, the key to its success has been Emirates airlines ability to apply the brand in all aspects of its customer interactions. From the services provided at the point of ticket purchase to staff at the check-in counter; from facilities offered in the airport lounges (for example the Emirates terminal) to in-flight entertainment and service are all at customers touch points. By paying close attention to its product and service to ensure that Emirates deliver on what the brand promise of innovation and quality.

Another Cornerstone of Emirates Marketing strategy is sponsorships; Emirates branding employs all the major traditional and new marketing tools, but the most effective approach that help it to connect with its customers and enhance its brand awareness the most is major sporting event sponsorships.

Although being one of the world’s most fastest growing airlines, Emirates biggest challenge is to ensure that its brand continues to be relevant and consistently adopted throughout the organisation. If you symbolize the mission statement as Emirates did with its name “Brand” which was the claim – “Committed to the highest standards in everything we do” – then this is a challenge that should keep them on their toes, if they want to be true to that statement. Because high level of brand recall concurrently raise the expectation levels of customers, in this information era – a post travel dissatisfied customers claim on the internet or social websites such as Facebook or MySpace can quickly erode a carefully built brand esteem and company’s reputation.

Another negative impact that can also play in role of depriving the brand value is the negative perception of the Arab World by the rest of the world (predominantly the West); naming a brand after a particular geography put serious limits on global branding and marketing largely because of the world perceived notion of the Middle East (although the perceived notion of Dubai and the UAE is relatively positive and high end cosmopolitan destination).