Video Store Marketing Plan

Independent Choice Flicks

Marketing Strategy

ICF's marketing strategy will be based on generating visibility of ICF with its targeted population segment. This will be achieved through a multi-faceted advertising campaign. The campaign will utilize advertisements in a local art/entertainment weekly guide, advertisements at the local artsy movie theatre, and promotional activities with a couple of local restaurants that have similar demographics.

Independent Choice Flicks' mission is to provide the customer with independent, non-commercial movies. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers by allowing them to find films that they never expected to find at any video store.

• Increase repeat customers by 7% each quarter.
• Decrease customer acquisition costs by 8% per year.
• Increase brand equity, measured by the number of new customers that are already familiar with ICF and their niche before arrival into the store.

• At least 10% growth rate after the second year of operation.
• A 5% decrease in overhead costs per year for the first three years.
• Profitability by 18 months.

ICF's customers can be divided into two general groups that are differentiated by age, over 30 and under 30.

• Under 30: This market segment has a diverse interest that certainly overlaps with the over 30 crowd. The under 30 movies might have more of a concentration on action, violence, drugs, sex, etc. This is not to say that the movies are about these subjects solely, it is just that these topics might relate better to someone under 30 than over 30.

• Over 30: This market segment has a bit more mature tastes, the humor may be more sophisticated, they are more likely to enjoy a foreign film relative to the under 30 group. Generally, the topics of the movies will reflect issues that this group is most used to or closer to their experiences.

ICF is focusing on these two groups because they are underserved in Ann Arbor. Currently, there are two large corporate rental chains, Hollywood Video and Blockbuster that hold the majority of the market. In order for them to be successful, they must concentrate on the middle of the market, the mean. This allows them to use economies of scale to drive down the costs of operating a movie rental business. While this works for the general population, it does not address the fringes at all. ICF is addressing the fringe movie rental market.

Please note that while the term fringe market sounds almost derogatory, in Ann Arbor it really is not. The alternative market in Ann Arbor is thriving, particularly relative to most other cities. Ann Arbor, demographically, is a highly educated population when compared to most cities. Alternative movies generally appeal to a more educated crowd. The masses can have their commercialized movies, they generally appreciate movies where they can watch without thinking. This is evidenced by the general popularity of television, mindless entertainment of no real thematic value and little cultural value.

ICF will position themselves as an alternative to the large, sterile, commercial movie rental outlets. There is a large segment of Ann Arbor's population that appreciate non-commercial, artsy films that are not offered by the chains.

ICF's positioning will leverage their competitive edge of their attention to the customers in Ann Arbor. Their product offering is based on a need of Ann Arbor that is currently unfulfilled. While this approach only works with small applications, meaning it is not the best for a country-wide implementation, it is also costly. Time must be spent doing marketing research to determine where the unmet need is. This strategy is unrealistic for a large corporate chain.

It is ideal for ICF however. Ann Arbor has a large "arts" population that is currently not being addressed in the video rental market. ICF's competitive advantage is creating a store that fills a need specifically in Ann Arbor, in contrast to opening a general store that will have broad, pedestrian appeal.

ICF will meet this need by basing their selection of videos that are in general hard to find in Ann Arbor. ICF recognizes that by doing this they are decreasing the base of possible users. However, at the same time, they are developing loyalty among the smaller user base.

The marketing strategy will first seek to create customer awareness regarding the services offered, develop the customer base, and work toward building customer loyalty and referrals.

The message that ICF will seek to communicate is that they offer a quality, independent, non-commercial alternative to the norm of Blockbuster and Hollywood video. This message will be communicated through a variety of methods. The first is an advertising campaign in the Ann Arbor Weekly, an entertainment guide that serves the alternative crowd of Ann Arbor. This weekly has similar customer demographics as ICF so it will be well targeted.

The second method of communication will be with advertisements at the Monarch Arts Cinema, a local theatre that plays the same genre of films as ICF. The advertisements will be in the form of visual posters in the cinema as well as advertising within the trailers of the films.

The last method of communication will take the form of strategic relationships with various restaurants that have similar customers. The alliances will often include some sort of promotion that combines the services of both the restaurant and ICF.

ICF's marketing mix is comprised of the following approaches to pricing, distribution, advertising and promotion, and customer service.

• Pricing: ICF's pricing scheme will be based on maintaining a competitive price relative to the giants. In addition, the store will offer deep discounts for midweek rentals to increase demand during these times.
• Distribution: All of the services will be distributed through ICF's storefront.
• Advertising and Promotion: The most successful advertising will be advertisements in the local theatre and weekly art guides as well as strategic alliances with select restaurants.
• Customer Service: Obsessive customer is the mantra. This will be accomplished regardless of the short-term cost, recognizing a happy customer ensures long-term profits.

During the initial phases of the marketing plan development, several focus groups were held to provide ICF with insight into customer preferences. These focus groups provided ICF with a wealth of information regarding the attributes of the most prized customers, and insight into their decision-making processes.

An additional source of market research is a survey that was placed at the Monarch Arts Cinema capturing valuable feedback regarding questions of video rentals. Theses surveys were completed by customers at the theatre and were developed in part by a mathematics graduate student at the University of Michigan. Leveraging the graduate student's help was instrumental in developing a statistically significant survey instrument.