Blockbuster Franchisee Remains Committed to His Target Market

A firm in a declining market can enjoy consistent profit margins and steady ROI by focusing on remaining customers. Border Entertainment supports that argument. The Texas-based company will continue to operate its 50 Blockbuster franchises despite Dish Network, which owns Blockbuster corporate, shuddering 300 stores. Alan Payne, Border's president, supplies the money quote:

We've managed to make it work. We've just been totally focused on what the stores could do that our competition could not do.

Border's target market does not want to download movies, or lacks sufficient internet service to stream movies. Payne admits that he has about three years or so of profitable life because the size of this target market, often referred to laggards, is shrinking.

Border is not the first company to take this approach. CenturyLink and Frontier have achieved superior financial performance by acquiring and maintaining landlines in the US market. Pabst has walked a similar strategic path in the US beer market by acquiring brands with strong or deep regional followings such as Lone Star, Olympia, and Pearl.

By carefully controlling marketing expenses, and staying with customers, firms like Border and Pabst can continue to report superior financial superior performance as measured by net marketing contribution and ROMI.

The blue and yellow trimmed stores continue to live by appealing to laggards.