Tsunaya continues to witness increased growth in terms of revenue and profits. By first quarter of 2012 ending March, the company’s revenue had grown to $790 million. This is up from $745 million witnessed in 2001. Tsunaya mainly deals in video rentals, magazine retail and book retails. The company operates through a platform where it encourages loyalty among its customers. Through the T card loyalty membership, the company has managed to have over 35 million subscribers by 2010.
Despite the revenue growth over the past years, Tsutaya can still increase its sales of video rentals, books, and magazines. At the moment the company does not operate more like the other video rental companies in the US. One way in which the company can use to increase the sales from video rental stores is to make renting more convenient for customers. Many customers can be attracted through having DVDs and videos sent to them by mail. Subscription will surge and usage of the company’s services will increase. The charges for DVD by rentals can be as low as JPY132. This service however, becomes more convenient for the company when conducted at the local level for the local customers.
The current growing trend in that threatens the video rental market is downloading services and video on demand services on online platforms. This trend increases the convenience for customers to access their favorite movies and videos without the hustle of going to a rental store. Some of these services are provided by global industry leaders including Google, Hulu, Apple, and Amazon. The second way in which the company can therefore use to increase its sales, is through beginning an online platform where subscribers can also download their favorite movies and videos at a considerable cost. Similarly, the company can choose the option of partnering with existing industry leaders to launch out the operations of the service within the local and regional market.
The company can also focus on market niche to increase its sales. This is a focus strategy where a segment of the target market that is believed not to be served well in the video industry is targeted by the company. According one of the reports from the company’s website, the company has realized a growing liking for Korean Movies and television series. The number of orders from for these materials is more compared to those of Hollywood and Japanese videos. At the same time, the company has also noticed that women enjoy the Korean movies and television series more than men. With such information, the company can begin on a vigorous marketing campaign strategy to win this segment of the market. This will ensure that the company increases its sales. Both Japanese and Korean movies are not widely common in other regions and markets. However, the movies and videos still find a liking among people.
Noting the cultural differences between Japan and US mainly in terms of language, the company also begins putting up video rental shops in such promising markets as the US. One good thing with focus or market niche is that if any competitor wants to make an entry into the market, the cost will be too high for them. This is primarily a result of the brand image already established among the customers. Similarly, with the loyalty cards for subscription in place, new entrants will not have an easy time gaining a large share of the market upon entry.
The other viable way based on internet trends is introducing a mobile site for customers to be able to access the movies and videos at the palm of their hands. The company can have a mobile site similar to its main web store where customers can browse for the favorite movies and videos and download them with ease. Noting the fact that there are a growing number of smart phone consumers in developed countries, the company can take advantage of this opportunity and develop an app that compatible with the leading mobile operating systems. This app can give customers easy subscription and access to its movie store.
Possible challenges to be faced by the company
These three strategies to increase sales in the company cannot be smoothly implemented. There are challenges that the company will have to face in the process. The first challenge will be cultural differences. If the company intends to begin operations in the US, renting out Japanese and Korean videos would not be easy. This will require that only the videos with translation can become popular in such a market. A similar challenge will be faced by the company while renting out Hollywood movies and English videos to its local customer base. Cultural integration is required to assist the company overcome this challenge. Piracy has also been dubbed as a big challenge in the video industry. Through piracy, the industry has never witnessed its full potential and this will continue to pose a challenge for the company.
Culture Convenience Club Co., Ltd. (2012). Korean TV drama DVD rentals exceeds Hollywood and Japanese films. Tokyo: Culture Convenience Club Co., Ltd.
Highbeam Business. (2012). Video tape rentals: Industry report. Retrieved from High beam business: http://business.highbeam.com/industry-reports/personal/video-tape-rental