Page 165 - Foundations of Marketing

132 Part 2 | Marketing Research and Target Markets

E merging Trends

New Moves in Marketing Movie Rentals

Redbox, Netflix, and Amazon, among other movie rental subscription rentals of movies streamed through Internet-
marketers, are dividing the ever-evolving market for movie connected televisions and game consoles, although it still
rentals according to customer behavior and lifestyle. The rents DVDs by mail. Netflix sets itself apart from competi-
result: Customers have new choices for renting movies tors through its vast library of titles and through original
where and when they want. Although movie rental stores programming such as the House of Cards series offered
are few and far between these days, customers who prefer first to streaming subscribers.
DVDs can find a movie at one of Redbox’s 42,000 DVD The online retail giant Amazon sells DVDs and also
kiosks nationwide. Redbox sees ongoing demand for offers online access to streamed movies and programs,
DVDs and continues to install thousands of new kiosks rented one by one or by subscription. Customers who join
in supermarkets and other high-traffic locations. It has Amazon Prime get unlimited streaming for one flat annual
also teamed with Verizon to offer Redbox Instant movie fee (as well as receiving free two-day delivery on Amazon
streaming, priced by monthly subscription or individual purchases). Finally, for customers with on-the-go life-
rental. styles, Amazon—like its major competitors—has apps for
Netflix, a DVD-rentals-by-mail pioneer, sees the market renting and viewing movies on iPhones and other mobile
c
moving away from DVDs. It has therefore been promoting devices.

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forecast. The manager derives the company’s sales potential from the forecast and an estimate
of market potential. In the buildup approach , the marketing manager begins by estimating
how much of a product a potential buyer in a specifi c geographic area, such as a sales terri-
tory, will purchase in a given period. The manager then multiplies that amount by the total
number of potential buyers in that area. The manager performs the same calculation for each
geographic area in which the fi rm sells products and then adds the totals to calculate market
potential. To determine company sales potential, the manager must estimate, based on planned
levels of company marketing activities, the proportion of the total market potential the com-
pany can reasonably attain.

Competitive Assessment
Besides obtaining sales estimates, it is crucial to assess competitors that are already operat-
ing in the segments being considered. A market segment that initially seems attractive based
on sales estimates may turn out to be much less so after a competitive assessment. Such
an assessment should ask several questions about competitors: How many exist? What are
their strengths and weaknesses? Do several competitors already have major market shares
and together dominate the segment? Can our company create a marketing mix to compete
effectively against competitors’ marketing mixes? Is it likely that new competitors will enter
buildup approach Measuring this segment? If so, how will they affect our firm’s ability to compete successfully? Answers
company sales potential by to such questions are important for proper assessment of the competition in potential market
estimating how much of a segments.
product a potential buyer in a
specific geographic area will
purchase in a given period, Cost Estimates
multiplying the estimate by the
number of potential buyers, To fulfill the needs of a target segment, an organization must develop and maintain a market-
and adding the totals of all the ing mix that precisely meets the wants and needs of that segment, which can be expensive.
geographic areas considered Distinctive product features, attractive package design, generous product warranties, extensive

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