MKT 421 Wk 4. Blue Ocean Strategy

Blockbuster Entertainment, Inc. was once a highly successful and profitable brick and mortar home movie and video game rental store. At its peak in 2004, Blockbuster had up to 60,000 employees and more than 9,000 stores. The idea behind Netflix came from an unsatisfied, embarrassed customer of Blockbuster, Mr. Reed Hastings, now CEO of Netflix, paid a $40 late fee because he returned the movie Apollo 13 six weeks later (Zarafshar, 2013). He began to contemplate ingeniously about a notion to change the movie-leasing pattern into a more pioneering industry. In 1997 Netflix was started as a DVD rental-by-mail business without subscriptions. In 1999, taking a stride additional in the direction of evolving the industry, Hastings began the subscription-based business mode based on renting DVDs by mail with plans reliant on the quantity of titles taken at a time. Netflix put forward 120,000 titles for limitless monthly DVD rental with free shipping no late and per title fees. Since that time Netflix has become one of the most popular subscription services in the world, and is now valued at over $28 billion and steadily increasing. What factors contributed to the success and failure of these two companies?

1. Netflix’s original marketing strategy offered several flat-rate monthly subscription options; in which, members could stream movies and shows via the Internet or have disks sent to their homes in a pre-paid and pre-addressed envelope. Free from the despair of due dates and late fees, members could keep, up to, eight movies at a time. Upon the return of a disk, Netflix would automatically mail out the next movie from the customer’s video queue. Members were able to change and update their queues as frequently as they liked. The sheer innovation of Netflix’s strategy encouraged several competitors to enter the market to compete directly,

A strategic evaluation of Redbox’s internal strengths, weaknesses, opportunities and potential threats are the bases of this marketing plan. While Redbox exhibits non-traditional marketing venues, they have proved to be successful marketing channels. A strong focus is put upon Redbox in contracting with Verizon for the implementation of streaming movies, maintaining the low price

Reading the article, “Blockbuster vs. Netflix,” I thought it was very interesting. I never really understood the reasoning behind Blockbuster’s failure; so after reading this, it was clearer to me. Blockbuster and Netflix are both companies that provide rental videos to their customers, but do it in a way that’s somewhat opposite from one another. Throughout this article it was determined that each company had a core value proposition, a target audience, the reason why one business was more successful that the other, and how Netflix has evolved since this article was written.

Within the past year, Netflix has undergone many strategy changes. One of the most recent familiar changes was when they split their business into a visual and virtual model. Many consumers protested and had mixed feelings regarding this strategy change. However, they did not get it all wrong. In fact, the company has regained stability and continually looked for more innovative routes to take their business. The most current strategy alteration that is creating a media buzz-binge is Netflix’s new strategy.

Today 's rapid changing world presents many opportunities for companies to be innovative. Constant revolutionized products, modifications in the way people communicate, and diversity among the ways companies operate creates a huge platform for business competition. It is imperative that companies today, are innovative and productive in their strategic models in order to remain successful within today 's competitive market. Most of all, following customer trends is crucial for the long lasting existence and success of a company. This paper focus is on Blockbusters failure to follow consumer behavior, leaving them behind in today’s competitive movie rental, and streaming video market.

In the earlier work (See Blue Ocean Strategy: how to create uncontested market , 2005) it has been argued two types of strategies: blue ocean strategy and red ocean strategy. Red ocean strategists compete to win market share in traditional mature markets and pursue either a differentiation or cost leader strategy. On the other hand, Blue ocean strategists, create new environments, redefine products or services or the nature of competition, make competition irrelevant, and pursue a strategy of differentiation and low cost. This essay puts an extend view: the applications of Blue Ocean strategy in real cases, and what is key advantage of blue ocean strategy?

Blue ocean strategy is a marketing book by W. Chan Kim and Renee Mauborgne in the year 2005. The book mostly borrows from a range of over 140 strategic marketing moves within a period of over a century. The book succeeds in showing how businesses, can outdo their competitors. Not because of battling them, rather, because of what the authors refer to as blue oceans, which consists of uncontested market space.

These days all major global organizations are focusing towards the latest concept of Strategic Management, "The Blue Ocean Strategy". This concept, which seems new, is actually hundreds of years old. It gives the idea of creating Blue Oceans by building a new market space and making the competition irrelevant. This paper will discuss in detail the concept of Blue Ocean Strategy, its evolution, principles and its practical application in the real world.

In 2011, Netflix lost approximately eight-hundred thousand customers due to changes implemented to increase its pricing and reorganize the website design. The article entitled "Customer Relations Mangling: a Netflix case study," published on DMN.com reporting the backlash from the organization's customers. Unfortunately and to the dismay of top managers, Netflix customers were not happy when the changes rolled out. Furthermore, Netflix managers did not fully control the considerations of the company’s most avid users, prior to introducing the new changes. Dejectedly, Netflix wrote this excerpt from a letter to investors: "In doing so,

Around three years ago, Netflix felt the adverse impact of technological advancement in video streaming. Online video streaming in the presence of smartphone and tablets, people find it much convenient to watch movies on their devices. It was a fatal blow to Netflix DVD rental service. Netflix reinvented its core operational strategies and entered video streaming by making backward integration. Since then, the company is on the path of success.

Blue Ocean Strategy advocates that for a company to be successful, creating and opening a new market space that no one has entered before is essential. In order to gain and to sustain the value-innovation, every single corporate and business owner should create and discover contentious areas of the market that is ready to grow. This market place is called the 'blue ocean ', a term that should be, but still is not, a keystone for the managers. The book accepts the fact that this strategy is not seen applicable enough by saying "too risky

The decision to use a technology based business model is knowledge which has proved to be used in an excellent manner. It is suggested that having an advancement of technological knowledge is the foundation of economic stability, and hence Netflix have used this knowledge of technological advancement to benefit their company. Through the ability to access customers directly, and not via a secondary location, Netflix have been able to focus solely on the product and service provided. Although Netflix do understand that occasionally customers wish to talk to a person and through a machine if there was to be any issues, and have sufficient services in which to satisfy their customers if this is the case. The use of tacit knowledge is considered, and applying this knowledge of customer’s opinions and preferences allow the main focus of becoming the best online streaming service by providing customers with what they want. By becoming the best, you have to own the best, and so Netflix use the

The Red Ocean could be defined as the existing market space which is currently used globally. Where the boundaries have been created and followed by each and every competitor in the market. In the Red Oceans firms try to outperform their rival’s or competitors in order to obtain a greater market share. Since the Red Ocean acquire a highly competitive environment the profits and development of the firms who compete in the Red Ocean is reduced. A Red Ocean strategy could be defined as a strategic decision taken by firms to compete in the existing market using conventional methods of outperforming the competitors in the market. The Red Ocean strategy focuses on competing in an already existing market which has a number of competitors also in it. Firms implementing the Red Ocean strategy emphasize on beating the competition in the market through the production of better quality goods and services than the existing products and services in the market yet at a higher price. The Red Ocean strategy also focuses on the existing demand and is dependent on reducing the production cost along with a well executed marketing strategy in order to obtain a high market share. Firm who implement the Red Ocean strategy make to strategic decision about obtaining a better market share namely product

The blue ocean strategy is a new way of thinking and a new path to wining the future. It’s about creating a new market instead of competing with existing ones while keeping the costs low. Moreover, it enables us to concentrate on the creation of new markets via new offerings, with the aim being to make the competition irrelevant so that an organization can grow.