It’s All About Traffic and Repeat Customer Visits!
McDonalds understands the traffic part of the consumer experience value metrics very well. Red Box is an interesting experiment in driving traffic and repeat visits for both companies.
Red Box puts a new spin on renting popular hit DVDs to you through a vending machine format. The interesting value proposition is that you can rent a movie for $ 1 per night … AND then return it to any Red Box location, not just the one you rented it from. Go to www.redbox.com to get the details and current locations.
Obviously, McDonalds is interested in things that drive traffic to their “stores”. The focus of the Red Box strategy is to get you to visit McDonalds twice within just a few days. This gives McDonalds two opportunities to convert you to a purchaser. What could be better than picking up a movie when you are in for a Happy Meal? And, you have to drop it off, so why not pick up an Egg McMuffin the next morning. Even if they only convert you 50% of the time, they are still batting .500 … not bad stats for any team.
IMS Perspectives
Will this work? It could be a win-win for both companies and the consumer. It is an obvious win for Red Box, who is trying to tap into the traffic of McDonalds and grocery stores. McDonalds is aggressively testing the impact on the customer experience and location traffic.
The Red Box DVD rental and drop-off is certainly more convenient than airport kiosks and traditional movie centers. But, movie title selections are very limited and the focus is on current new releases. The new technology of accessing movies via cable, satellite and “podcasts” are imposing threats to all of the traditional movie rental channels.
The real value proposition of Red Box is not the reincarnation of the vending machine, but the unique value for you, the consumer. It is the convenience of movie rentals with multiple pick-up and return locations in high traffic areas that you frequently visit anyway.
If DVD rentals fade as predicted and consumers migrate to the video on demand concept, it will be interesting to see what other items can be rented or sold from a Red Box coming soon.
For more perspectives on innovative retail strategies contact: Chris.Petersen@imswired.com.
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