Redbox Competitive Strategy

Decent Essays
Michael Porter’s strategies regarding low-cost and differentiation draws contrast if a company wants to compete at a low cost or create niche market through offering a different product or service (Parnell, 2014). Low-cost strategy focuses on basic products or services for the mass market (Parnell, 2014). Due to low-cost, the business is able to offer low prices; however some companies increase their price for greater market margin and to compete with competitors (Parnell, 2014). However, consumers will only pay low to average price for basic items or service (Parnell, 2014). On the other hand, differentiation strategy primary focus can not be on low-cost in most cases. This strategy is looking for an unique niche product or service that an established company and introduce in a market (Parnell, 2014).

It is a difficult task for a company to join low-cost and differentiation strategy together as a combined strategy. However, McDonald’s found and used Redbox to add both strategies when it introduced the convenient and low priced way of renting DVDs in 2004 ( This unusual way of renting DVDs is a low-cost strategy that offers product to prospective customers while it’s not cheaper than Netflix, Redbox has more
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An organization needs to focus on how it can gain more market share and beat out its competition. This may mean outsourcing work offshore which can be a complex task (Parnell, 2014). Wal-Mart’s low prices go beyond the customers, but also applies to the suppliers (DaCosta, 2013). In China, Wal-Mart outsourced most of its labor, the company pays low wages to its workers; however suppliers find it difficult to succeed due to the small profit margins(DaCosta, 2013). Some companies low-cost strategy approach can be temporary, yet Wal-Mart has been successful in their efforts with the low-cost strategy (Parnell,
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