{Case Study}

Video Delight
Carla McDonald, Jennifer Smith, Peter Swain and Mark Swift were marketing students at
a university in Halifax, Nova Scotia. As part of a marketing course, they were asked to
conduct a research study for Video Delight, a Halifax video rental store. They were to
examine consumer attitudes towards the store and its pricing policy. They were reviewing
the details of the research study and other relevant information that they had collected
and were to make recommendations on pricing and overall marketing strategy to the
owner, Peter Thompson by December 5th, 1988 - in three weeks.

Mr. Thompson was concerned about the downturn in video rentals in his Halifax store. He
attributed this primarily to the recent opening of Jumbo Video, a large chain, near his
store. He was also interested in customer reaction to the new pricing policy that he had
introduced in July, 1988.

The Company
Peter Thompson, a commerce graduate of Dalhousie University, had begun his video
rental business with one small store located in a busy area of Halifax. Soon his store had
expanded, and he now offered over 10,000 titles. According to Thompson, he had enough
titles to compete with anyone. After five years in the business, Thompson had opened
another branch in Bedford, 15 kin from his Halifax outlet. Financially, the two outlets
performed well. In fact, business had been so good that Thompson enlarged his Halifax
outlet in early 1988. It was at this time that a new video outlet opened in the area. Mr.
Thompson thought that the new competition was beginning to affect his volume of
business.

The Industry
During the early to mid eighties, when VCRs became very popular, many video outlets
had sprung up in Halifax. In addition to the video rental outlets, many corner grocery
stores and even some supermarkets had entered the field. Although these stores did not
offer the same variety as video rental outlets, they offered consumers greater
convenience.

By the latter part of the 1980s the proliferation of video rental outlets led to severe
competition in the industry. Consumers had a lot of outlets from which to choose;
consequently, attracting their attention was becoming more and more difficult. Many
small operators had closed, and several comer grocery stores had gone out of the video
rental business. For example, the number of video outlets on Video Delight's street had
decreased from ten to five - one was the same size as Video Delight and the other three
were smaller. Competition was still fierce, but as the industry matured fewer competitors
were entering the market and the market stabilized.

At the same time another trend developed in the industry. National chain stores were
formed. Several of them, like Jumbo and Super-Video, were late entrants into the Atlantic
region. However, by 1988 these stores had opened outlets in the Halifax-Dartmouth area,
and they were beginning to expand. It was as part of this expansion that Jumbo had
opened a store less than one block from Video Delight.

The larger chain stores had several advantages over smaller stores like Video Delight. They
had more capital to work with, more buying power and usually could withstand intense
competition for longer periods of time. With their modem, well-designed storefronts and
interiors, large showrooms and greater advertising budgets, these stores posed a major
problem to smaller video outlets such as Video Delight.

In Mr. Thompson's opinion, the smaller stores had some advantages too - their cost of
operation was usually lower and many specialized in certain types of movies. For example,
one of the stores near Video Delight specialized in art films and foreign language films.
Video Delight carried a good selection of children's movies and Hollywood movie classics.
The other two video outlets in the area were smaller and had no special "themes." Mr.
Thompson thought that stores such as Video Delight had friendlier staff and offered more
personalized service to their customers.

The Customer
According to Thompson, video rental customers could be classified into three groups. The
first group consisted of ardent movie fans or those who rented at least one video a week.
Some of these customers rented as many as 15 videos a month. The next group -the
average viewers - rented anywhere from one to three movies a month. Those who rented
less than one movie a month formed the last group. Mr. Thompson had a list of all his
customers with details of their viewing patterns. For example, he could pick out the top
500 customers (in terms of the number of the videos rented).

Industry reports indicated that customers tended to rent videos from stores that were
located in their neighborhood or were, in some other way, conveniently located. For
example, some chose stores that were on their way to work while others chose stores
located next to a supermarket where they did their weekly grocery shopping. In the case
of Video Delight, Thompson knew that nearly 80% of Video Delight's Halifax clients lived
within three kilometers of his store. The Bedford store which was located in the suburbs,
drew customers from up to 12 kin from the store.
Parking was another factor that affected business. However, Thompson thought that in
the case of his Halifax outlet, closeness to downtown and busy retail centers made his
customers less sensitive to parking problems. They recognized that if they wanted to shop
at any of the stores in the neighborhood, parking would be an issue and they might have
to walk a little.

Many of Thompson's customers were young adults and families with young children.
Quite often, parents and children came together and chose videos at the same time. The
importance of children to the industry was reflected in the recent marketing strategies of
some of the chain stores. Some of these stores offered free popcorn to children and
showed in-store children's movies so that their parents could browse in peace.

Marketing Strategy
In the past, Video Delight had relied upon its extensive selection, a layout that made it
easier for customers to find videos, a comfortable and homey setting, and good customer
service to bring repeat clients. The store was located in an old building and had several
small rooms. Each room contained a specific category of video movies and thus offered a
more "private" setting to customers. While it did not carry as many multiple copies as the
larger stores, it had a good variety of movies including a better selection of old Hollywood
classics than most other stores.

In July 1988, as part of his strategy to meet the new competition, Thompson changed his
pricing policy. Previously he had been charging $1.99 per movie per day-the same as most
of the stores in the neighborhood. In July, Video Delight began charging $3.49 per movie
for two days. Thompson thought that many customers found the single day rental
inconvenient, and his method would give them the option of keeping the video for an
extra day. If, however, the video was returned within 24 hours, the customer got a credit
of $1 which could be applied against future rentals. The computerized system that
Thompson had in place made it easy for him to keep track of the credits earned, and
saved the customer the trouble of collecting coupons or making note of his/her return
patterns.

The store's promotion strategy consisted mainly of pamphlets mailed to neighboring

households, a few ads in the Mayflower (the weekly TV guide distributed with the Halifax
Herald, a local newspaper) and an occasional ad in the newspaper. As the store had been
in the neighborhood for a long time, Thompson thought that he need not advertise
heavily anymore.

The Research Study

While he had some important information about his customers' needs, Thompson
thought that he had to find out more about his customers, especially with the increased
competition. Consequently, he contacted a local university to see if students in a
marketing course would conduct a study for him. In particular, he was interested in
learning about customer reactions to his main video outlet as well as their reactions to his
new pricing policy.

The research study was conducted by the students as part of their course requirement.
The students were asked to develop a questionnaire, collect and analyze data, and submit
a report to Mr. Thompson. Carla, Jennifer, Peter and Mark developed a four page
questionnaire and interviewed 200 people living near the Halifax Video Delight store. One
hundred and forty of these people were drawn randomly from the telephone directory
using a systematic sampling method. (The first three digits of the phone numbers were
used to identify the area of interest.) These were primarily non-customers of Video Delight
although some (21) had rented videos from the store. The other 60 respondents were
drawn, again using a systematic sampling approach, from the alphabetical list of the top
500 customers of Video Delight that Thompson had provided. The results of the study are
found in Tables I to 6 and the questionnaire itself in Appendix A. The interviews were
conducted over the telephone during a two week period in October, 1988.

Conclusion
Carla, Jennifer, Peter and Mark were aware that they had to start writing their report for
Mr. Thompson. Although they would have liked to have certain key financial and industry
information before they made their recommendations, they knew that they had to
manage with the information they had. They now also realized that there were weaknesses
in their questionnaire; however, due to time constraints, they had no choice but to rely on
the information they had already gathered.
 Case Study Questions
Que #1:

How would you rate the research study? Did it achieve the objectives set forth by Mr.
Thompson?

Answer:

In my opinion, the research performed in this scenario is sound and well-grounded. For
weighing, I like to consider the key factors and attributes that affect the efficiency and
business growth of video rental outlets which are price, location, and selection. The
strategic planning and placement of these main elements help Mr. Thompson is achieving
progress and expansion in his video rental business.

According to my view, the research outcomes helped Mr. Thompson in providing the
guidelines for achieving desired purposes and goals set by him as the result of the
research shows customer reaction and interest on various scales and attributes.
Que #2:

Evaluate the questionnaire and the research design.

Answer:

As indicated in Part-I of the questionnaire is well however these inquiries were protracted to pose
on the phone and it could make it awkward for some people during the meeting. Since it requires
some investment to inquire. These inquiries could be more viable if they were compacted in any
case, the survey is acceptable. The exploration configuration is very incredible and straightforward.
If they used new methods/techniques for research, It could be quite easier.
Que #3:

Based on the data collected by this group, should Thompson reevaluate his pricing
strategy?

Answer:

Point of fact, Mr. Thomson ought to rethink his evaluating theory because as shown by
research the vast majority upheld enormous video another video outlet over the expense
of the thing. Besides, we have likewise found in displaying system of Mr. Thomson that
he stretched out his cost from approx. $1.99 to $3.49, which is an epic development of
more than a half. In this manner, he needs to reevaluate it cut it down.

This marketing strategy keeps customers visiting stores frequently hence, making them
more familiar with the store.
Que #4:

What recommendations (regarding other aspects of his marketing strategy) would you
make to Thompson given the results of the study?

Answer:

I should recommend him concerning a couple of pieces of uplifting news pushing

methodology. He needs to make pieces in his customer and find who is more ideal and
who are less valuable. In this manner, it helps him with making a design and give a more
worth to the astoundingly important customer and it's in like manner help him with
making a strategy for a low supportive customer to change over them in high worth
customer

Focusing on and Arranging: He should rent a new passed on and amazing properties
video. Since that would be more significant. Since everyone is enthusiastic is restless to
see new films. Significantly, your thing keeps an eye out for the issue of your picked
market and it likewise helps you with making position watching out. You should make a
driving methodology that undertakings your traits and matches them to the necessities
of the customers you need to target.

Progress and Refund: He should do the incomprehensible advancing through the wide
correspondences and he should start development campaigns in retail outlets, festivity,
and on open spots. He should correspondingly bring the new offers and cutoff centers,
for instance, "rent 3 VCR and get 1 free" or start interest like become a fragment and get
films as various as you need on rent. It would help him extending his arrangements in
general. There are various ways to deal with overseeing achieving this - like various
types of driving, introductions, publicizing, mechanized showing, and a reasonable 'retail
store' framework. Endeavor to tie your activities to those systems you think will work
best with your goal market, to make the vital strides not to spread your monetary
strategy excessively softly.

Checking and contemplating: how convincing your technique has been is a key part, yet
a huge piece of the time ignored. This control part not simply helps you with seeing how
your construction is acting considering everything, it can in like way help encourage your
future pushing technique.
Que #5:

What other types of analyses would you like to perform using the data?

Answer:

SWOT (Strengths, insufficiencies, openings, and hazards) is a structure used to assess an

affiliation's completely serious condition keeping an eye out, and support key getting
sorted out.

Strength: For Mr.Thompson, he should zero in on his qualities and improve them to get
dependable clients.

Weaknesses: For Mr.Thompson, he should concentrate amazingly moreover his

insufficiencies, for example, having a higher evaluating tag and not so all around made
and worked with Store, likewise as not having a wide degree of new movies sorts. He
should chip away at these focuses to come over his lack.

Openings: For Mr.Thompson. his most imperative benefit is that his shop is
masterminded at a thickly populated and rich climate and that he ought not to botch this
chance and ought to talk with individuals considerably more continually and preferably.

Threats: For Mr.Thompson, his most genuine danger other than the little film rental stores
was Jumbo Video Store as it was going with a considerably more capable and all-around
made plan and had more varieties in motion pictures than the Video Delight Store.
Mr.Thompson should zero in on these focuses and improve more.
 Table 1

Awareness of Video Outlets1

1 Totals add up to more than 119 (140 less 21 Video Delight customers found in the general sample) and 81 (60 drawn from the customer list
provided by Thompson plus 21 found in the general population) respectively as respondents mentioned more than one store.

Source: Responses from Question 5 of survey (Appendix A).

Table 2

Most Favored Store

Source: Responses from Question 9 of survey (Appendix A).

Table 3

Attributes Looked for in a Video Rental Outlet

1 Results of Question #6, over all 200 respondents.

2 Results of Question #13 for customers of Jumbo Video alone.
3 Results of Question #13 for customers of Video Delight alone.
 Source: Responses from Questions 6 and 13 of survey (Appendix A).

Table 4

Main Reason for Choosing Video Outlet1

1
Respondents sometimes mentioned more than one reason.

Source: Responses from Question 10 of survey (Appendix A).

Table 5

Pricing Preferences

1
Includes only non-Video Delight customers (n = 119).

2
Video Delight sample includes respondents drawn from the general population who were customers of
Video Delight (n = 81).

Source: Responses from Question 7 of survey (Appendix A).

Table 6

Age of Respondents
 Source: Responses from Question 15 of survey (Appendix A).

Appendix A

Video Delight Survey

Hello, my name is .......................... and I am conducting a survey for a university marketing

research course. I would like to ask you a few questions about video rental outlets or
video stores. These questions will only take a few minutes.

Part I

Qualifiers