Work Assignment Week 5

Work Assignment Week 5

Task 1

The major reason for the behind the bankruptcy of the leader in video rentals - Blockbuster, was due to its outdated business model, which did not sustain to bring the adequate revenues for the company. As a matter of fact, they had enough time to follow the strategy of their competitor i.e. Netflix, whose model was generating enough revenues. The lack of opportunity utilization was one of the main reasons, which ended up having an outdated model for the Blockbuster, and ultimately it filed bankruptcy (US Securities and Exchange Commission, 2011). Indeed it was perceived at early stages that the incumbent model of the block buster does not have any feasibility. Furthermore, the situation was complemented by the decisions of the managers to keep the failed model alive by infusing huge cash in it, that created a vicious circle for the company, and it filed the bankruptcy court (Gandel, 2010).

Consumer preferences

In marketing, it is said that a consumer is always right, that means the preferences of the consumer should be the top most priority for any company. In the case of Blockbuster, this element has the little limelight. The consumer were active users of internet, their priority was to have the access of the movie over the internet rather than physically going to outlet. This preference was well identified by Netflix, and it ultimately enchased the opportunity, whiles the Blockbuster, and was unable to have insight about this element (Gandel, 2010).

Pricing strategy

Strategy of making pricing can be considered as one of the significant mistakes that blockbuster did. Blockbuster was charging the $5 for a movie rental; while on the other hand, Netflix initiated a subscription package of movies for a month, which was of $ 16.99 a month; this included a wide range of options for the customer. Blockbuster high pricing strategy was suitable at early years, when the completion was not ripe; however, after the emergence of effective competition blockbuster had to revive its pricing strategy in order to better target the market. Market penetration would have possible for blockbuster if it had initiated a competitive pricing strategy (Gandel, 2010).

Competition

Businesses have an eagle eye over the strategies of the competitors, to have a better comparison of their as well as competitors business model. The Blockbuster, utterly failed to analyze the strategies as well as the competition of the market. The negligence of the competition and lack of strategy to response the competitive moves widened the gulf of its failure. Its main competitor - Netflix - was entirely molding its strategies to better gain the market advantage, while the Blockbuster was not able to do so, and it also failed to identify the competition in the market to mold her strategies accordingly (Gandel, 2010).

Technological changes

As a matter of fact, technology was first and foremost aspect which turned the game in favor of Netflix. The early penetration by the Netflix was happened only due to effective use ...