Blockbuster

History

* American-based provider of home movie and video game rental services

* Founded by David Cook in Dallas in 1985

* Innovation due to Cook’s experience in managing huge databases

* Resulted from changing forces in video rental industry

* Increasing # of households with VCRs

* “Mom-and-pop” video stores offered limited selection

* Logo was created by Lee Dean

Development & Growth

* 3 different strategies for Blockbuster’s Business Model:

* Unique identity to appeal to customers, stores would be highly visible stand-alone structures

* Offer a wide variety of videos

* Longer rental periods

* Strategies were extremely successful

* 1986- Blockbuster owned 8 stores and had franchised 11 more

* John Melk, an executive at Waste Management Corporation

* Contacted colleague H. “Wayne” Huizinga

* Huizinga extremely impressed with the brightly lit family video supermarket

* 1986- Found opportunity to make company a national chain, which Huizinga purchased 33% of Blockbuster

* 1987- Huizinga takes over as CEO and his goal was to make company the industry leader in the U.S. video-rental market

* Huizinga’s new business models’ for Blockbuster:

* Store location

* Obtain the best store locations in each geographic area

* “Cluster Strategy”-target a particular geographic market and then open up new stores one at a time until they saturated the market

* Sales soared- company went into 133 major markets, reached 75% of U.S pop.

* “Blockbuster Kids”

* Promotion aimed at attracting the 6-to-12 year old age group

* This would strengthen the company’s position as a family video store

* Each store stocked 40 titles recommended for children as well as kids’ clubhouses to amuse themselves

* Reduced cost structure

* Blockbuster’s IT was constantly upgraded to...