Netflix Case Study Essay

Netflix is in a fairly favorable position on the strategic group map. Where Added value is measured in terms of instant movies and recommendations, and market coverage is measured in number of stores, vending machines, and online presence.

Netflix was founded in 1997 with the intent to revolutionize the way in which consumers watch movies and television shows. Their accomplishments both in innovation and in customer base for their service indicate that the firm has been, and continues to be, successful in doing so. Currently, the

Netflix is first provider of delivered DVDs by mail that became common way and convenience for customer. Netflix offers DVDs to customers with quick delivery, which is mostly within one day (Willy Shih, Stephen Kaufman & David Spinola, 2007). In addition, customers utilize good recommendation system provided by Netflix (Scoot Merrill, 2009). Besides, customers are able to be given good customer service support (Katie Hafner, 2009).

When Netflix started business, their main goal was to offer customers movies on rent (old product) in a new way, which would be instead on customers coming and selecting a movie from the collection they could browse the collection online and order the DVD through mail. Customers appreciated the uniqueness of this type of product differentiation. Netflix is also different because it did not charge its customers on per title basis, instead charged a subscription fee for the

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,

Netflix is able to offer its customers a flat monthly fee for services, no contract requirement, no late fees, a large variety of television shows and movies, in a convenient way, at a reasonable price.

2. Emphasize that old customers will get the 1 month trial for free. This will definitely show all our customers that we want them to come back to Netflix as loyal customers and also if they come back they will be rewarded.

The online movie rental business is changing. As technology changes, DVD’s will not be the medium of choice. The shift will be downloadable movies. Most people enjoy the ability to watch a movie immediately, thus another of Netflix’s

When the Netflix was created, it was a movie delivery company, in1998.The customer can pay membership fee and get any DVDs of these movies which was recommended by Netflix.If the customer did not like this movie, they could return the DVD and got a new one after they return the old one without any fee,because Netflix afforded the shipping fee. The service of Netflix was consist of two parts.First, the customer can browsed the movie online. Second,the customer could get the DVD which was delivered by the company at home.

“Netflix, Inc. is the largest online movie rental company on the planet. Based in Los Gatos, California, it has a selection of over 100,000 titles that continues to grow. Alongside its DVD rentals are its more than 17,000 titles available through Internet streaming, and available instantly either through a user’s TV with the use of an external Netflix-friendly device, or directly through any computer (Netflix Corporate Fact Sheet). With zero shipping fees, late fees, or due dates, Netflix is the optimal movie rental service.” (Netflix Inc., 2011)

I. Wall Street Journal Article and Executive Summary ..4 I A. Wall Street Journal Article 4 I B. Executive Summary ..5 II. External Analysis ..7 II A. Industry Definition ..7 II B. Six Industry Force Analysis ..8 II C. Macro Environmental Forces Analysis, Economic Trends, and Ethical Concerns ..15 II D. Competitor Analysis ..17 II D. 1 Netflix’s Competitors ..17 II D. 2 Netflix’s Primary Competitors ..17 II D. 3 Primary Competitors’ Business Level and Corporate Level Strategy ..18 II D. 4 How Competitors Achieve Their Strategic Position ..18 II D. 5 Willingness to Pay ..21 II D. 6 Comparative Financial Analysis ..22 II D. 7 Implications of Competitor Analysis ..23 II E. Intra-Industry

Netflix offers nine different subscription plans, starting at less than $5. The most popular is a $16.99 option that offers customers three movies at a time, and unlimited returns each month. Videos arrive in red Mylar envelopes.

Netflix’s entrance in to the movie rental industry during the early nineties gave them a perfect position to capture the market. At the time of Netflix’s founding many customers of normal video renting stores where becoming frustrated with the lack of service and late fees these video rental stores where providing. Netflix’s original strategy of targeting the early technology users helped them gain a lead when the use of DVD players became the majority of what customers where buying. As the company matured, they developed the business strategy of appealing to online customers. This strategy paid off for the company boosting them from

The service of Netflix includes totally three parts. The first one is the service of Internet video steaming. It provides users with various media content via their website. After users pay the subscription fee, they can choose whatever films or TV shows they like and watch them in Netflix without any commercials and advertisement to interrupt. The second part is disc-rental, which means as subscribers find any DVDs they like in Netflix, they can put them into their ordered list(also named rental queue) so that Netflix would send users DVDs or Blu-ray Disc via Permit Reply Mail. The subscriber can keep the rented disc as long as needed, but there is a limit on the number of discs that users can rent. The third one is considered as five profiles. When subscribers create their Netflix account, one account could have five different user profiles. So subscribers can share their account with their friends or family

Netflix, Inc. is one of a number of companies that provides Internet subscription services for movies and some television shows across the globe. Subscribers are given two options for viewing: (1) Unlimited online movies and television shows that are streamed over the Internet for viewing on mobile digital devices and TVs. (2) Snail mail receipt of Blu-ray and standard definition DVDs at various levels, from a single DVD, at the lowest rated, to multiple DVDs released to the customer for viewing at home. Subscribers can have access to both viewing options for a higher monthly rate. Netflix is headquartered in Los Gatos, California, and was founded in 1997. The company has experimented with different price points, occasionally loosing droves of subscribers as a result. Movie selection is inferior to competitor iTunes with regard to selection and recency of film release in the theatres.