Independent Choice Flicks
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ICF has just begun their first year of operation. A comprehensive marketing plan will be instrumental in developing visibility to ensure future profitability. ICF offers a unique selection of "artsy," non-commercial movie rentals. This selection differs considerably from the normal stock that Blockbuster would carry.
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ICF has collected good information about their market and knows a great deal of information about their archetype customer. ICF will leverage this information to determine how to better communicate with and serve their customers.
The profile for the ICF customer consists of the following geographic, demographic, and behavior factors:
ICF is providing the customer with a wide range of high quality film rental options. ICF seeks to fulfill the following benefits that are important to their customers:
ICF is a specialty movie rental store that competes in the broader movie rental business. The industry can be characterized as the "big two," Hollywood Video and Blockbuster. To be sure, there are some independent video rental stores, generally in small neighborhoods and towns, but in general, the big gorillas control everything and target the middle, the mainstream.
The movie rental business can be further characterized by selection and rental turnover. If a store offers a good selection and has a large number of rental turnovers, then it is likely going to be successful. This is the gorilla's strategy. They support this strategy even more by selling some of their rentals as they become less popular to be able to reinvest the money into the newest releases. This last strategy only works with the mainstream market and not ICF's market because the mainstream market is attracted to what is new, the current releases. Once something has been out for a while, interest wanes. With ICF customers, the age of the video is irrelevant, it is the thematic quality, irrespective of popularity and newness that dictates acceptance.
There are two major chains, Blockbuster and Hollywood Video that are expanding throughout America, often at the expense of the "mom and pop" outfits who are unable to compete against the giants. Typically the giants will enter a town and over time drive the local, independently-owned shops out of business because of their large selection and commercialization that people favor. Blockbuster and Hollywood Video however only address one segment (albeit the major one) of the population, the segment that prefers commercial releases.
In 2000, the video rental industry had revenues exceeding $7.3 billion dollars. The industry is forecasted to grow at 9% for the next several years. One major reason for this growth is the increasing costs of seeing movies out in theatres. It can cost upwards of $20-$25 for two people to see a movie in the theatre. These rising costs have driven demand for the video rental industry, which offers far more reasonable rates and a wider selection, although not as cutting edge.
The following SWOT analysis captures the key strengths and weaknesses within the company, and describes opportunities and threats that ICF faces.
Currently in Ann Arbor there are two different types of competitors:
People make video rental decisions based on a few factors, typically selection and convenience. If they want selection of the latest and most popular movies they go to the gorillas. If they do not rent movies that often and are more interested in convenience then they might visit the local video store.
ICF will provide Ann Arbor with an alternative movie rental store, a service that is not yet offered in Ann Arbor. The current offerings of typical rental stores are based on popular, commercial releases. There is a market for alternative releases, evidenced by the popularity of the Monarch Arts Cinema which shows this exact genre of movies in a first run movie theatre format. In essence, ICF will be the home extension of the Monarch.
ICF is still in the speculative stages as a retail establishment. Its critical issues are to continue to take a moderate fiscal approach; expand not for the sake of expansion but because it makes fiscal sense to.
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