Out of the Box Solutions: Case Studies
We've Got A Squeeze Box And Our Competitors Can't Sleep At Night
Background
In the late 1980’s and early 1990’s the video rental industry exploded as consumers purchased VHS video players and recorders for their homes. At that time I worked on a team that supplied plastic video and video game packaging for the video rental industry. Revenues from video rental packaging brought in just under $10 million in annual revenues.
We had a competitor who resembled a 500 pound gorilla and had strong industry distribution and name recognition. You know you are in a tough fight in the marketplace when your customers call and ask to order a product and use the brand name of your competitor. They were not ordering Kleenex or Xerox copiers but what they were requesting “Amaray” video storage cases.
Challenge
As the demand on the market grew our retailers were faced with a challenge. To compete for rental revenues, they needed to carry a larger of inventory of new releases and function profitably in the limited space they had. One method was to put the videos out on the retail store show floor in a video box with a graphically designed outer sleeve to merchandise the movie.
As more retailers competed to have more new releases available on demand, their inventory increased. This created a greater need to sell used movies once they moved beyond the “new release” category. Cutting the original movie box graphic reduced the resale price of used movies by as much as 40%.
Unmet Need
How can we help retailers merchandise more inventories in a fixed space while not cutting the movie box graphics nor reducing the point of purchase impact of the movie box graphics? How can we help our customers have the maximum number of rental inventory so fickle consumers do not frequent other rental outlets when the new release they want is out on rental?
What else did we know?
Competitors viewed this challenge with predictable results. They produced plastic video boxes that were a smoky clear injection molded plastic look and they put the entire movie box and cassette inside then promoted merchandising the movies in this way.
Replacement products emerged where video retailers would merchandise the protected video cassette in a plastic video case usually labeled with the store name like Blockbuster, and put the movie box graphic in front of the protected case. If the protective video cassette box was gone behind the movie box graphic, then the movie was out on rental.
Problems?
Retailers who placed the movie box graphic and video cassette inside a traditional video protective rental box now made in a smoky clear box had two major problems. First, the impact of the movie box graphic was diminished through the cloudy material. Second and more important consumers would often damage the original movie box graphic and or not return it with the movie thus negatively impacting the resale revenues that funded new release purchases.
Thought Art
If we had no limits of $500,000 plastic molding machines, $250,000 of plastic injection molds, railcars of plastic resin what would we do? What if we made a package that would house the movie box graphic, but make it hard for consumers to tamper with it? What if the new package also protected the video cassette tape? What if this new package made the initial merchandising of new release videos faster? How would another industry, without the limits of thought or money, solve this challenge? What best practices exist in other industries for even non related products that we could borrow from? What if we were not limited to engineers who only knew plastic injection molding? What if we explored other materials that produced crystal clarity?
Thought art becomes revenue
We introduced the first blow molded plastic video rental package called the Squeeze Box in the early 1990’s. Within a year this product quickly grew as a preferred package among video retailers like Hollywood Video, grocery stores like Hyvee and libraries. In addition to replacing the traditional competitor product with a unique new product solution, we realized increased profit margins and leveraged the allocation of this new product to gain a much greater position in the marketplace. By 1998 we purchased our competitor and became the largest entertainment package supplier in North America. The Squeeze Box challenged the traditional paradigm while demonstrating a nimble soon to be market leading organization not afraid to step out-of-the-box. In 2002 this plastics company was acquired for its innovation and market dominance with a selling price in excess of $200 million.
Result
Creative, out-of-the-box thought created and shaped in the minds of our team evolved into a leading rental package innovation with close to double the profit margin per unit of our competitor’s product, while establishing our company as market innovators, enabling sales to use this exclusive product to win a greater market share in the commodity products industry. A simple series of questions, always leading with “why's” resulted in a new product that met an unmet need that produced measurable, profitable, repeatable results. In addition this product became our “tipping point” and over the next few years we ultimately acquired the 500 pound gorilla. Connecting with customers drives profitable explosive growth.