Marketing Research - redbox

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Marketing Research - redbox

  1. 1. Alexandra Heide Rebecca Emmons Rachel Fisher Courtney Ewins Michael Aamot Group 101
  2. 2. Agenda • Background Information • Managerial Decision & Research Objectives • Secondary Research • Exploratory Research • Survey • Findings • Limitations • Recommendations • Questions
  3. 3. Background • Fully automated DVD rental kiosk typically located in McDonalds offering new release rentals for $1 per night • redbox holds 9% of the video rental market share
  4. 4. Managerial Decision • Should redbox extend its product line to increase market share among students? Research Objectives Considerations: • Add more locations • Offer video game rentals • Create a rewards program
  5. 5. • Sales totaled $519 million in 2008 • Sales projected to reach 1.4 billion in five years Secondary Research Findings Video Rental Kiosks
  6. 6. Secondary Research Findings • Currently 15,000 redbox kiosk locations nationwide • Slated to increase to 20,000 by the end of 2009 • Main U of M campus locations include: o McDonald’s on 15th Avenue o Lund’s on University Avenue Location
  7. 7. • In survey of 5,000 Gamefly.com customers (90% male) more than 50% of respondents rent video games – on average about 11 games per month • A study from Pew Internet Research finds that 70% of college students play video games at least “once in a while” Secondary Research Findings Video Games
  8. 8. • Create a sense of customer loyalty without requiring more commitment on the part of the consumer Customer Acquisition vs. Customer Retention It costs 5 times as much money to find a new customer than it does to get a current customer to come back and do business with you Secondary Research Findings Costumer Loyalty
  9. 9. Exploratory Research Sample Questions: • When you watch a movie do you usually stay home or go to a theater? • How often do you rent movies? • Where do you rent movie from most frequently? Why? • How much money do you spend per month on DVD rentals? • In your opinion, what company do you think is the top in video rental service? Conducted 6 Interviews Why? • In-depth, individualized responses • Notice themes • Avoid external influences
  10. 10. Exploratory Research Findings: • Price and convenience are the most important factors for college students • Non-committal service is key (no monthly or late fees) • Rental decision is unpredictable
  11. 11. • Likert, Interval, Nominal Questions What factors are most important to you in terms of redbox locations? (Please circle a number 1-5.)  Close to where you live  Close to where you work  Close to where you shop  Close to where you eat  On your daily route Where would a new redbox location be the most useful to you? (Please rank the following choices from 1 to 6, 1 being the most important and 6 being the least important.)  By the dorms  In Coffman Union  At popular bus stops  Near the library  Outside restaurants and bars  Near campus ATMs Survey Design
  12. 12. Are you a member of any rewards programs/points/loyalty programs? (Used for the purpose of promotions only, this does not include corporate credit cards.) If yes, does being a member of a loyalty program influence you to do business with the company more often? If redbox offered a loyalty program, how likely would you be to sign-up? Survey Design Sample Questions Continued:
  13. 13. • Convenience Sampling • Sample Size: 214 • n=196; 95% Confidence Interval so z=1.96; p=0.50; H=0.07 (precision level) • Distribution: Paper & electronic formats via qwiksurvey.com • Response Rate: 100% for paper surveys; unclear for internet Survey Methodology
  14. 14. Survey Results – Demographics
  15. 15. Survey Results – Demographics
  16. 16. Survey Results – Demographics
  17. 17. Survey Results – Demographics
  18. 18. Survey Results – Demographics
  19. 19. Video Games • 196 out of 214 do not rent video games • How often video games rented + likeliness to rent from kiosk had means below 1.7 • Not a practical market based on our sample
  20. 20. Locations Considerations: • redbox “users” • Daily route and where you live t-Test: Paired Two Sample for Means Q7: Daily Route Tested # Mean 4.042105 3 Variance 1.232251 0 Observatio ns 95 95 Pearson Correlation #DIV/0! Hypothesiz ed Mean Difference 0 df 94 t Stat 9.150058 P(T<=t) one-tail 5.9E-15 t Critical one-tail 1.661226 P(T<=t) two-tail 1.18E-14 t Critical two-tail 1.985523 t-Test: Paired Two Sample for Means Q7: Live Tested # Mean 4.663158 3 Variance 0.715118 0 Observatio ns 95 95 Pearson Correlation #DIV/0! Hypothesiz ed Mean Difference 0 df 94 t Stat 19.16931 P(T<=t) one-tail 1.53E-34 t Critical one-tail 1.661226 P(T<=t) two-tail 3.06E-34 t Critical two-tail 1.985523
  21. 21. Locations Ideal Kiosk Spots: • redbox “users” • Examine ranking of 6 options • Coffman only statistically viable option t-Test: Paired Two Sample for Means Coffman Union Tested # Mean 2.673684 3 Variance 2.349832 0 Observations 95 95 Pearson Correlation #DIV/0! Hypothesized Mean Difference 0 df 94 t Stat -2.07483 P(T<=t) one- tail 0.020368 t Critical one- tail 1.661226 P(T<=t) two- tail 0.040735 t Critical two- tail 1.985523
  22. 22. Rewards Programs • Are rewards programs with it? • Chi-Square to test the relationship • P-value smaller than .05 • We can conclude that there is a relationship. Actual Yes Member Not a Member Row total Yes do business more often 97 9 106 No, do not do business more often 24 84 108 ColumnTotal 121 93 214 Expected yes no yes 59.93458 46.06542056 no 61.06542 46.93457944 Chi-Test Results 1.55958E-24
  23. 23. Rewards Programs • How likely are people to sign up for a redbox rewards program? • We wanted to find out about the range of interested individuals, not just frequent users • We tested those who have rented before and those who rent from redbox most often
  24. 24. • Time & Money • Survey Representation • Nominal Questions • Video Game Rentals Limitations
  25. 25. Recommendations Due to our research findings, we suggest: • Putting a redbox kiosk in Coffman Union • Not offering not offering video game rentals • Introducing a rewards/customer loyalty program
  26. 26. Further Research If we were to pursue further research, it would be interesting to explore: • What location within Coffman Union is most ideal • Which rewards programs are most effective
  27. 27. Questions?

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