Redbox

In: Business and Management

Submitted By tbaker42
Words 653
Pages 3
Distribution Strategy Report
Redbox

Abstract

Redbox was conceived and started in 2002 by the McDonald’s corporation. In the beginning McDonalds placed 12 kiosks to test the market and customer interest in the concept. The initial kiosks offered food vending items and DVD rentals. Today Redbox has over 24,900 kiosks placed throughout the United States. The distribution strategy that McDonalds used was Direct Channel strategy and Single Channel strategy. As the concept continued to be successful, McDonalds continued to use Direct Channel strategy and also started using the Multiple Channel Stategy. In 2005 Coinstar purchased 47.3% of Redbox.

When you think of McDonalds, a person usually thinks of fast food like hamburgers and their signature French fries. But in 2002 McDonalds wanted to find a new way to bring more customer traffic to their restaurants, while also being able to provide convenience to their customers. McDonalds introduced kiosks machine where a customer could get select needed or wanted items. The original kiosks included items like sandwiches, eggs and milk, while also offering DVD rentals. McDonalds choose this direct and single channel distribution strategy to test the market. Direct channel distribution strategy is defined as ‘selling products to end users through independent intermediaries such as wholesalers, distributors, retailers and or agents’. (Gordon, 2013) The single channel distribution strategy, is defined as “utilizing only one channel of distribution to reach end users of a product”. (Gordon, 2013) This test market was conducted in the metropolitan area of Washington. Within the first year McDonalds found that the food items were not that big of a hit unlike the DVD rentals which were showing success. By 2003 McDonalds pulled the food items and focused on the DVD rentals.
Over the next year McDonalds…...

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