Blue Ocean Company- Final
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Data Driven Marketing Management
Blue Ocean Company- Netflix
Identify a Blue Ocean company and explain how they created a new value curve by using the four actions
framework.
Founded in 1997, Netflix is an example of a Blue Ocean Company, by mailing movies to customers, this
changed the movie rental industry. Before Netflix, customers rented movies through brick-and-mortar
stores, usually at high costs and additional late fees. Netflix’s approach was consumer-focused and
dismantled the movie renting industry. Netflix’s 4 Actions Framework was as follows:
1.
Netflix eliminated the need for brick-and-mortar stores, allowing customers to choose movies
online, which kept costs down for Netflix and its customers. The lack of physical stores greatly
reduced costs and saved them from needing to have staff in stores, as well as paying rent and
utilities. The money that was saved by doing this was able to be reallocated to different
departments to make the operations run smoother and offer other benefits to their customers.
Because movies were mailed to customers, this eliminated customers having to drive back to
stores to return movies. Late fees were also eliminated, and movies could be kept as long as
customers wanted. Netflix also eliminated the pay “per movie” aspect, creating a monthly fee,
which gave customers more value. Introducing the streaming viewing experience, eliminated the
time that customers spent sending DVDs back, and issues with movie availability.
2.
With the new style of renting movies and videos, Netflix was able to reduce cost and time for
both the company and its customers. They offered a different model of payment than the typical
pay-per-movie, Netflix used a subscription model to entice customers. Netflix had a set price per
month and their customers paid this base price and could rent as many movies as they wanted,
which in turn raised the value of the subscription. Consumers were able to get much more with a
Netflix subscription at a much lower price than a traditional movie rental store. Netflix reduced
the difficulty of selecting movies, by offering “recommendations” for consumers. They also
reduced wait times by allowing movies to be streamed online. Netflix adopted a data-driven
approach which reduced the time needed to choose movies, they were able to create a
personalized layout that would suggest movies that the customer might like due to the history of
movies watched.
3.
Netflix raised convenience by delivering DVDs directly to consumers, and later by streaming
movies directly online. This gave consumers more value, and traditional movie rental stores could
not compete with Neflix’s low costs and convenience. Consumers no longer needed to go into
physical stores, nor did they have to return movies by a certain time to avoid late fees. This
allowed customers the comfort of taking their time watching and returning movies. Consumers
could also rent multiple movies a month for one flat-rate fee, raising the value for consumers.
Eliminating the typical need to go to physical stores, such as Redbox or Blockbuster, and having
all of the movies and videos shipped to their house allowed for a seamless and much less time-
consuming process. When the customer was done with the movie or video, they shipped it back
and could easily order a new one with a few clicks of their mouse, which was much more
convenient than driving to a physical store that could be anywhere from 10 minutes to 40 minutes
away, or even more.
4.
Netflix revolutionized the movie/video industry and farther down the line even became one of the
first majorly successful streaming services. They created a new way to rent and distribute movies
and videos that forever changed how the movie/video services distributed and streamed their
movies. The model they used was a direct movie-to-consumer process through the mail that was
mainly unheard of at the time of its creation. This ultimately changed the entire industry, causing
the demise of many brick-and-mortar stores. Consumers could select movies online, and have
them sent directly to their homes. Netflix also innovated its brand by creating a “personalized”
online streaming service, which allowed consumers to view movies immediately. It’s competitors
like Blockbuster, could not keep up because Netflix completely changed the directory of the
market. They were also one of the first modern companies to implement data research into their
system and utilize it as their main data source for new implementation. Netflix evolved even
further by producing its own movies and TV series to stream on its platform.
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