Expansion Possibilities
Last month one of Bob’s old college buddies, Doug Alano, offered to sell Bob his two video stores that are known as Adventures in Video. These stores are located in nearby suburbs and they have done well since they opened. The stores are being offered for sale because Doug’s doctor recommended that he take an early retirement due to the onset of a serious illness. Although Doug’s two stores have many operating procedures that are similar to Videos Tonite, they cater to several additional market segments with different products and service policies. In addition to daily rentals of popular current releases, which are targeted to residents in the immediate vicinity of the stores, there are specialty rental sections for foreign language and classic films. These specialty films target several market segments, and the two stores draw customers from the entire metropolitan area. These customers willingly pay a premium price to rent foreign and classic films, and they expect special services since they travel greater distances. Doug offers a variable rental period rate and variable fees. He has two full-time managers, Janet Wilson and Ricardo Hernandez, who oversee the foreign language and classic film stock and maintain a phone reservation system. Current membership is estimated to be at 12,000. Of the 9500 videos in stock, approximately 1500 are foreign language videos.