Lauren Raymond - MKT 701 - Netflix Case Study

Running head: NETFLIX CASE STUDY 1

Netflix Case Study

Louisiana State University Shreveport

MKT 701

Dr. James

February 5, 2017

Lauren Raymond

NETFLIX CASE STUDY 2

Table of Contents

Executive Summary ........................................................................................................................ 3 Introduction ..................................................................................................................................... 4 Situation Analysis ........................................................................................................................... 6

The Internal Environment ................................................................................................... 6

The External Environment ............................................................................................... 12

Competition ........................................................................................................... 12

PESTEL Analysis ................................................................................................. 13

SWOT Analysis ............................................................................................................................ 16

The SWOT Matrix ............................................................................................................. 22 Developing Competitive Advantages ........................................................................................... 22 Developing a Strategic Focus ....................................................................................................... 23 Problem/Decision Statement ......................................................................................................... 23 Strategic Alternatives .................................................................................................................... 24 Alternative Strategy Evaluation and Recommendation ............................................................... 24 Conclusion ..................................................................................................................................... 25 References ..................................................................................................................................... 29


Executive Summary

Netflix dominates in the online streaming video and shows in the entertainment industry. The company has improved in terms of its operations over the years due to improved network speed and connectivity. Netflix’s advancement in technology, innovation, and promotion of distribution models makes them the leading entertainment subscription company. The market segments consist of brick and mortar stores, Kiosks that vend DVDS, rental services by mail, services by mail, as well as video on–demand which can be accessed through a cable provider. Considering the rapid technology convergence, the market share for rentals is shifting from DVDs to digital copies. These are delivered online through streaming content. Viewing is made interactive when content is streamed straight to the consumer’s television. For that matter, it is easier, and readily available when the consumer wants it. On the other hand, consumers are broken into to two groups; those who are needy and those who are convenient. Needy consumers generally consist of older generations who do not require new technology and watch particular programs, while convenient consumers usually consist of younger generations who watch videos whenever they can and generally utilize new technology.

Primary competitors of Netflix are Redbox and Hulu. Hulu claims the majority of market share while Redbox has the smallest market share. Netflix adds value to its consumers through affordable input costs and low capital as well as convenience when it comes to streaming videos. In general, Netflix is seen to doing well after analyzing it internally. The most challenging aspect that affects the business is the financial institutions that are seen to be having a critical impact in the entertainment industry.

The other market players that have recently brought competition in the industry include Apple, Amazon, and Cable TV systems, among others. Moreover, Netflix was the first of its kind and created a market for digital rentals. Netflix should choose on strategies that will help them have a market advantage over their competitors while developing their current movie and TV show streaming services. Such strategies would include creating new markets. Through other strategic moves, such as teaming with other companies in video games and smart technology industry, Netflix has great potential of expanding its sources of revenues. Analysis shows that, as Netflix grows, less emphasis is placed on new release rentals. Therefore, there is great need to expand and reach new markets as much as possible.


Introduction

Netflix is among competitors of the Internet market for entertainment products such as

videos and other TV services and employs a business model based on subscription services.

Once, solely a mail service for renting DVDs, Netflix now focuses only on online streaming for

TV shows and movies.

The company has presented itself in the online marketing in a way that shows endless

endeavor to counter the ever-increasing competition in this industry for 20 million customers and

supporters in the United States. Netflix provides the largest online film library across Canada. It

has been winning TV awards and other works of art on the supporters. The company invests a

small amount of money that ranges between $7.9 to $8 per month to ensure endorsers gets the

right way to stream great products over the Internet (Ferrell & Hartline, 2017). Netflix uses the

Netflix-ready devices and other supportive devices to make sure that the online streaming is

achieved. It has been noted that the Netflix offers of DVD-Variants can be sent overnight. The

firm has fully transformed the way the motion pictures can be produced while doing away with

the requirement of outings to the common motionless pictures management.

The motivation of Netflix was started when the products of the Reed Hastings was going

at a charge of $40 a fact that prompted the review of a late tape produced by Apollo 13. In 1997,

Netflix with the aid of Marc Randolph and Hasting was started in the Scotts Valley. The two

individuals eventually came up with the fate of the online motion images library. By then,

Hasting was identified as the director, while Randolph happened to be the CEO for Netflix.


During the time Netflix was established, DVDs were in their preliminaries stages, a fact

that made Netflix try to impact the innovation process. It was because, not even one media

platform had started the conveyance of this type of media. Netflix became the pioneering

company to convey DVD media products. The DVDs were much improved as compared to the

traditional VHS tapes. They were much lighter and smaller in size, a fact that reduced the aspect

of the dispatching cost. As time progressed, Netflix started another business idea, which was

meant to store DVD for seven days. The storage idea was also very new in the market. Upon

starting this business, it was identified that the selling level increased since many customers

preferred them due to the aspect of quality, comfort, and easy management ((Ferrell & Hartline,

2017).

By 1998, the company had saved and stored up to 2000 titles in their library. Three short

years later, in 2001, Netflix turned into the major online film rental administration. They also

went into exclusive income offering contracts with several big-name movie production studios.

Furthermore, Netflix was reported as an organization that recorded the Best Buy. Around this

time it presented the real gadgets chain's 1,800 stores across the nation. Netflix had more than

600,000 supporters (Hayes, S. K., Hodge, K. A., & Hughes, 2010). In December 2005, Netflix's

endorser base had amazingly developed a population of 4.2 million supporters. After two years,

Netflix had grown to 6.3 million, doubling its clients up to more than 51 percent since 2005.

Netflix declared that it would include another element that improved motion pictures and TV

programs to be spilled in a split second to supporters' PCs. This component added to Netflix's

sprouting upper hand. By July 2009, Netflix had made dealings with a few key organizations,

adding more development and benefits to their main concern. Netflix was a standard element on


VIZIO's new line of Internet TVs. Netflix likewise got to be distinctly accessible on Samsung

and TiVo's and also a standard element on the Microsoft and Sony's PlayStation

By the end of year 2010, Netflix had more than 20 million supporters. Currently it’s

accessible to not less than 200 distinct gadgets, including Apple's iPod Touch, iPhone, and iPad.

Netflix is the first and final organization to offer its whole library of spilling motion pictures to

remote cell phones. It was fundamental for Netflix to stay balanced and prepared to move the

tempest. Uniquely, Netflix has figured out how to thrive so far. The main quarter income for

2011 was practically multiplied to about $60.2 million with another surge of 3.6 million

endorsers whose net worth was 23.6 million in aggregate (McGrath, 2010).

Netflix must keep on working to build organizations so as to expand the accessibility and

openness. Another inevitable hierarchical test for Netflix lies in its item portfolio. The

organization must broaden its components keeping in mind the end objective. This will help

them adjust easily to the moving development and looming contenders. Today, Netflix has

overwhelming power in commercial center. However, this may change if Netflix ignore the

importance of innovation.

Situation Analysis

The Internal Environment

Review of marketing goals and objectives.

Netflix’s marketing goals are to grow their streaming subscription business both

domestically and globally though continuous improvement of customer experience. Through

marketing, Netflix aims to expand its streaming content, grow its customer base not only locally

but also in the rest of the world, and extend their services to include even more Internet-capable


devices. Netflix wants to remain within the parameters of their consolidated net revenue as well

as operating portion contribution targets in terms of profit. Netflix’s marketing objectives include

becoming the best global organization in distribution of entertainment service. Again, they aim at

creating markets that are easily accessible to consumers. Finally, one of their major marketing

objectives is to help content creators around the world without forgetting the licensing of the

same content around the globe.

To achieve these goals and objectives, Netflix has come up with a marketing plan. The

plan incorporates the immediate environment. This environment is thoroughly analyzed to ensure

that the marketing plan is successful. It also puts into consideration the strengths, weaknesses,

opportunities, and threats of the company. For that matter, Netflix has strong brand awareness in

their plan to ensure that they achieve these goals and objectives. They provide a variety of show

and movie libraries that are available for streaming. They create loyalty through fast commercial-

free streaming and ensure that quality and quantity of content align with consumer demands. All

these goals are consistent with firm’s mission. The company prioritizes long-term performance

over short-term rewards and aim at expanding internationally. These markets are relatively

untapped. For the case of recent trends in the external environment, the objectives show the

consideration of environmental factors by studying the nature of their business without forgetting

the entertainment culture. For recent trends in customer environment, Netflix’s marketing plan

incorporates creation of loyalty through producing excellent service.

Review of current marketing strategy and performance

Netflix’s marketing strategy involves several aspects. First, Netflix has strong brand

awareness where its logo ought to be conspicuous in a way that it is instantly recognizable.


Again, there is issue of uniqueness such that, the brand relies on a thoughtful logo. Its logo

invokes the imagery of classic cinema. The marketing strategy involves appealing to people who

are aged between 5-59 years so as to increase the buying power. This will provide sufficient

profits. It also involves making steaming easily accessible for positive experiences and loyalty.

Netflix’s marketing strategy also involves the creation of quality content that is above

satisfactory for the consumer. It also ensures that streaming is faster and commercial-free. Brand

awareness and superior service are the elements of the strategy that works very well. Targeting a

specific age instead of and entire population, however, is limiting this organization.

Currently, Netflix is doing well in terms of sales volume, market share, profitability, and

brand preference. It main competitors are Redbox, Hulu, Amazon, Apple, and various cable

providers among others. When compared to these organizations, Netflix is doing comparatively

well. Having this kind of competition means that their local market share is not very large. For

that matter, it focuses on international growth. Netflix has average annual revenue of $8.8 billion

with average gross sales of $31 billion. Their brand is well known and preferred both locally and

internationally as compared to several of its competitors and is progressing well.

Review of current and anticipated organizational resources.

Netflix is fairly equipped with enough resources to ensure that it meets the demands of its

customers. The organization has a multitude of devices that are simplified for the purpose of

compatibility. It creates an ecosystem that can be easily used with various Internet connected

devices that include TVs, computers, smartphones, as well as tablets. All what is needed is a

compatible device and connectivity to the Internet. Netflix has a fully equipped and competent

team that manages the company to its success. The CEO has direct control over six departments.


Each department has individual managers. Beyond this point, the flow of the organization is full

of innovators rather than be structured. Netflix’s assets total $13.5 million. Their customers are

loyal and the same case applies to main suppliers. According to the grounds that the organization

has laid, right from the beginning, any change of these resources are not likely to deplete but

rather increase. However, if there is any need of resources in future, it should ensure that it

captures a bigger market that acts as a motivation to provide more.

Review of current and anticipated cultural and structural issues.

For Netflix, culture revolves around improvement both on a personal level and as a

company. Good performance is highly appreciated in this company. Well performing marketing

executives are highly compensated. This organization has a team-oriented culture. In that case,

the firm holds values that include good judgment, strong curiosity, innovation, courage, passion,

impact, honesty, and selflessness. Employees are expected to carry themselves in a way that

satisfies customers. In this company, the emphasis is on long-term planning rather than short-

term profits. For them, it is about legacy, impact created, and growth. Planning for the future is

what guarantees growth. On the other hand, the firm is highly willing to embrace change. The

CEO/founder controls the operations of the firm. He embodies the value of what customers

value.

The Customer Environment

Most of Netflix customers are local subscribers aged between 5-59 years old. However,

the company has expanded the base of its customers to international levels. You will find Netflix

in countries such as China and Canada among others. To be precise, it has more than 33 million


subscribers in more than 40 countries. International operations began in 2010 when they offered

their streaming services to Canada. Over the last few years, they have been able to venture into

countries such as Latin America, U.K, Ireland, Finland, Denmark, Sweden, and Norway among

others. In purchase process, important players include consumers, marketers and innovators.

Innovators need to produce quality products for the consumers and markers need to convince

consumers to buy.

Netflix’s customers enjoy many hours of streamed TV shows as well as movies per

month. Netflix also exclusively produces and streams their own original series. Customers can

watch TV and other programs as much as they want anywhere they have an Internet connection

for a monthly subscription fee.

Customers can purchase a Netflix subscription directly from Netflix through the Netflix

app or website. Buying Netflix’s entire ever-changing movie and show library at a brick and

mortar store would not only be outrageously expensive, but impossible. A customer would be

limited by what is in stock and available for purchase and rental. It is also an inconvenience to

drive to and from the store or vending kiosk and time consuming to find a specific title. By being

able to purchase a subscription directly from the firm, customers can enjoy an easy and painless

way of starting affordable and vast service. In addition to these benefits, Netflix allows a

subscriber to stream on multiple devices at once between many users instantly. Due to the ease

of paying one monthly low rate, cloud-based streaming services such as Netflix are becoming

increasingly popular. It seems as though everyone has a Netflix account.

Because Netflix is an online entity, their business never closes. Consumers can purchase a

monthly subscription any time through Netflix directly. Purchase behavior varies slightly based on


different promotional events. When Netflix introduced packages or levels of subscriptions, they saw

fewer subscription sign ups then when they had one flat fee.

The company’s achievement is based on providing the most outstanding DVDs choice.

The organization is trying to provide Pick fills and quick delivery of the entertainment materials.

The mission statement of the Netflix depends on the hierarchical capacities and should always

depend on. Unlike the mission statement of the company, some aspects such as the aspect of

management appear naturally mistakable. Out of this issue of management, the problem

statement does not make sense. The aspect affects the membership benefit. From the observation,

there is an indication that there exists a likelihood of obsolete problem statement. The company’s

Vision Statement states that it needs to change the way people use to view the motion pictures.

The organization came out with an idea of making the customers adore what they would see. The

organization’s proclamation corresponds with the organization’s targets although it requires

more work. The vision articulation could be made reasonable if the company embraces

accentuation (McGrath, 2010).

The financial impact was already addressed in the part of Organizational Challenge.

Netflix has dug into the aspect of the financial downturn. The issue has some aspects that affect

everything that may have impacted the organizational achievements. The aspect of buyers can

reduce costs to be Internet and TV memberships. Comcast becomes the largest supplier link in

the USA that was reported in October of 2010 with about 27500 supporters spread across the

administration to the 3.5% diminishment in the satellite TV membership. With time, the

membership fee is much small a fact that attracts more customers as compared to other

organizations that deal with the same products and services. In 2011, come out and stated that the


profits it makes have increased by about 88%. Since the company has established an excellent

reputation in the market, the trumps could tend to hold on with each and every situation.

The target segmentation tries to lean towards digital natives that need extremely fast

online video streaming and other entertainment aspects through different platforms and devices.

The company provides its customers an instant queue section that enables clients to access

different materials on computers using different titles. The next targets the company has are

families with children who may require some educational content at a relatively low cost and the

convenience of mail or online streaming. On the other hand, Queue and Queue section provides

the possibility of identifying a library using some unique titles that can be reviewed instantly by

the Player for the aspect of fast service delivery. To consider the business gap that is occupied by

the busy professionals, the company needed to ensure that emails and online streaming are

affected. The above is achieved by proprietary recommendation system to enhance subscribers to

get the titles of interest (Karnani, 2006). The online system allows the users to browse their

materials of choice by the use of the original keywords such as the title, actor, genre and other

unique keys. The majority of the company’s customers reside in Canada.

The External Environment

Competition.

Netflix’s major competitors are Redbox, Amazon, Apple, Hulu, and cable companies. The

main competition lies on movie streaming subscription that robs Netflix a considerable number of

customers.

Netflix’s major competitors are characterized by rapid growth specifically in local

markets. They compensate their employee well and their performance is incredible. They have a


good growth rate within local markets; however, this is not always the case with international

markets. Netflix is doing better than most of its major competitors. Therefore, the major

strengths of the competitors include better management and dominance in local markets.

However, they are unable to venture into international markets effectively.

Competition has negatively affected the industry since Netflix was brought into the

industry, and it has been an example in some of the services that if offers. With that came other

competitors trying to play in the same field who arrive with the same or better services in the

market. This would imply involvement of the market share enjoyed solely otherwise leading to

losing of customers of the company. Competitors like Hulu have lowered their prices to match

that of Netflix to try and take some of the company’s market share.

In American, consumers have become accustomed to unwinding and viewing their most

loved films and network shows on request. It has turned into an American convention to go to

the movie theater with others and appreciate the experience. Today, Netflix and its rivals offer a

similar experience with the convenience of doing it at home. This offer of getting everything

from home strengthens the societal pattern of having everything right now. This enhances the

market structure.

PESTEL Analysis

The PESTEL analysis analyzes the environment, as a whole, of the online streaming and

video-on-demand industries and studies each factor that affects a successful business

atmosphere.

Political Trends.


Political trends are typically external to the operations of the company and they include

trends in government regulations on the issues of streaming. The politicians in the areas where it

operates specifically affect Netflix. This is more so in the countries such as Finland and U.K..

Regulations found in these areas concerning content streaming prevent Netflix from operating

smoothly. Political trends influence changes that are associated with taxes as well. Netflix is

unable to venture in other markets due to national and local laws.

Economic Situations.

Certain economic situations could negatively affect Netflix’s industry. With the world

economy being in an unstable state, the public’s buying power has declined. Therefore, the

ability for people to purchase leisure and non-essential goods/services has considerably gone

down. People are starting to reduce to spending money related to things that aren’t necessary for

life. Moreover, the recession has forced businesses such as Netflix and other companies in the

industry to raise prices of their products, which has threatened the industry and made them even

more so less attractive. Most areas where consumers are located happen to be well equipped in

terms of technology. There are also challenges that include financial impact, which was already

addressed in the part of Organizational Challenge. Netflix has dug into the aspect of the financial

downturn. The issue has some aspects that affect everything that may have impacted the

organizational achievements. The aspect of buyers can reduce costs to Internet and cable

subscriptions. These locations are therefore supposed to be equipped with high-speed Internet

that is a requirement for streaming.

Sociocultural Trends.


Sociocultural trends relate to changes in terms of culture in the organization. Netflix has

helped the consumer reduce the number of electronics he or she owns. Being able to stream a

movie or television show has eliminated the need for a DVD player. This has helped them win

more customers. Netflix has developed a more integrative platform for better management of the

firm. People are now constantly on the move. They are balancing work, family obligations, and

social lives between a short period available. People have limited time to go to a theater or to be

home in time to watch their favorite television shows. These issues have created a market

opportunity for Netflix and its competitors through the offer of service that allows these people

to watch whatever they want on their own time. This will help the industry grow, because it

challenges the idea of taking large amounts of time out of one’s schedule for the entertainment,

and produces the concept of being able to receive the same enjoyment in limited time.

The sociocultural and demographical factors will only impact individuals who see the

value in a subscription service to see Netflix as an attractive solution. If the cost of an Internet

subscription and their compatible devices gets too high, the number of video streaming

subscriptions will decrease.

Technological Advancements.

Advancement in technology has brought many changes in this organization. Most

importantly, it has helped Netflix to stay on pace with its competitors. It has also helped them

improve services to their customers, and thus, enabled them to gain more loyal customers.

Technology advancements have improved Netflix’s efficiency in terms of management as well

as service delivery. An improved speed of streaming, which is expected in future, will help

Netflix grow more rapidly.


Environment Factors.

Environment factors such as storms affects Internet connections and power outages

which indirectly affects Netflix.

Legal and Regulatory Issues.

These factors are related to regulations and laws that control the business environment at

Netflix. There are unfavorable legal factors that lead to difficulty in operations of business

activities at Netflix. There is a regulation against streaming of obscene material in some

countries. Incase of such instance, Netflix loses its market.

SWOT Analysis

Strengths Strength 1: Brand recognition

Netflix’s brand is instantly recognized and familiar to many people and its name is

popular with many Internet users.

Strength 2: Original content

Netflix is well known for its originality in terms of content. For instance, it won an

awards for originality for its series “House of Cards” as well as “Orange is the New Black”

among others.

Strength 3: User-friendly

Delivering of the DVDs directly home that requires convenience that needs demise of the

bricks-and-mortar business. With effective timing, the clients can obtain movies and for every

instance an individual needs a movie to watch; the movie is bought to his/her exposure by the


simple touch of a button. The customer support provided gives the customers some assurance

and thus improving the customer loyalty.

Strength 4: Accessibility

The fact that Netflix provides an $8.99 per month plan makes customers comfortable as

its price is seen as affordable. Netflix’s streaming capability is in the exposure of the many

different clients who operate various electronic devices, and it is becoming one of the

outstanding features in the TV industry.

Strength 5: Competitive pricing

Netflix came up with the budget-friendly price of $8.99 a month; this aspect makes it

possible for many individuals who will be streaming or on DVDs. For instance, more DVDS can

be out per a unit time, a fact that makes the user flexible. This value is much cheaper as

compared to the cable movie channels that will give more selection.

Strength 6: FMA

Netflix takes advantage of being a first-mover in the entertainment streaming industry.

Because they were the initial occupant of this market segment, they became a household name as

the industry’s leader (Thompson, 2013).

Strength 7: Makes viewing suggestions

By analyzing a subscriber’s viewing history, Netflix is able to make suggestions to the

user based on their personal preferences. In doing such, “Netflix has grown their library


viewership up to 85% of the titles per quarter” (Thompson, 2013). Consumers may see this perk

as an added value.

Strength 8: Profit-share agreements

Netflix signs contracts with certain content suppliers that are mutually beneficial. Netflix

gets exclusivity of the supplier’s content and suppliers get the Netflix brand and platform. Both

share profits. This allows Netflix to keep their content costs low and makes them more stability

when it comes to financials.

Weaknesses Weakness 1: Cost of content

Netflix spends a lot of money on Netflix-original production costs and incurs a

massive amount of debt due to bulk licensing fees. Due to consumer demand, popular titles come

at the cost of a supplier’s bargaining power. There is “little competition among large suppliers”

(Thompson, 2013). Netflix has little-to-no leverage when it comes to arranging deals for titles

that users might see as valuable. Increasing content costs directly affect Netflix’s financials and

overhead costs

Weakness 2: Raised subscription prices

Most of the time, Netflix has difficulty raising subscription prices due to negative

responses from current and potential users. This may upset subscribers, and in turn, lead to drop

in terms of revenue.

Weakness 3: Management mistakes


“Poor public relations and communications with consumers concerning price and

company restructuring” have “carried a negative sentiment with consumers. Not only did Netflix

lose customers from this situation, but they also experience a sharp decline in stock values

demonstrating a lack of faith in the management decisions that led to a loss in the customer base”

(McGrath, 2010).

Weakness 4: Cloud-based storage and retrieval

Netflix utilizes a cloud-based storage and retrieval system through Amazon. This is how

Netflix streams its content. With Amazon entering the online video streaming and on-demand

market, there is a conflict of interest between Amazon and Netflix (Rothaermel, 2015).

Opportunities

Opportunity 1: International expansion

International growth is well facilitated by ability to create original content. This growth

helps serve customers better. Netflix, being an international organization, gives it a chance to

reach a significant number of customers across borders. Netflix’s primary market segment is in

the United States, however it was rated “18th in speed globally, with a download speed of 11.68

Mbps” (Rothaermel, 2015).

Opportunity 2: In-house original programming

There are many household devices connected to the Internet and meant for entertainment.

Netflix’s content that is exclusive presents an opportunity. “With the growth of independent film

studios, streaming content providers such as Netflix can deal directly with the smaller studio to

make exclusive content. By avoiding the major motion picture companies, streaming content


providers have better negotiating power while decreasing the bargaining power of suppliers and

reducing overhead” (Ireland, Hitt, & Hoskisson, 2008).

Opportunity 3: Branding

Netflix is becoming the first thing that comes to people’s mind when they think to watch

a movie or TV show while at home. It is the only thing that impacts the organization and attracts

the customers to the organization. It dominates the market and thus making the organization use

it as an opportunity.

Opportunity 4: Distribution

Because the company has well-established distribution abilities, the pricing power of its

products has gone high with less content from the producers. Some of the company’s distributors

include NYSE and Disney

Threats Threat 1: New entrants and existing competition

Amazon, Hulu, and YouTube, among other competitors, have services that are direct

competition to Netflix. This poses a threat of being pushed out of market. New entrants in the

market could be especially threatening to Netflix if they have a unique and competitive

advantage. This will “drive price competition and could significantly impact profit margins”

(McGrath, 2010). “Netflix, Inc. (NASDAQ:NFLX) is facing increasing competition from players

like Time Warner’s HBO NOW and Hulu, but UBS AG (NYSE:UBS) believes the U.S.

streaming firm will continue to expand globally” (Jain, 2015). With the increase in demand for

online streaming content Netflix will have to work hard to keep above the competition.


Threat 2: Cost of content

The largest threat for Netflix to operate at profit is the cost of licensing and renewing

license agreements for content.

Threat 3: Loss of content producers

Some of the company’s content producers may decide to move away from Netflix, like

Disney, NBC, and new corporations. This makes the organization lose value in the market. It is

understood that since some companies, such as Hulu and Netflix, cannot provide content; their

work is to ensure streaming providing rentals.

Threat 4: Increase in Internet fraud

Today, ecommerce is a popular and convenient way for customers to price compare and

buy what they need when they need it. However, many consumers may be hesitant to provide

their personal and credit card information to these companies in fear of falling victim to Internet

fraud. With the Internet being so popular, thieves and other criminals use the medium to commit

acts of fraud or theft. “U.S. citizens reported losing more than $550 million in 2009 in Internet

fraud, falling prey to a variety of increasingly sophisticated scams, according to a report by the

Internet Crime Complaint Center” (Hayes, Hodge, & Hughes, 2010). These fraud cases have

even hit Netflix, a particularly clever phishing scam targeted Netflix users by encouraging them

to contact the scammers who were posing as customer service representatives (Hayes, Hodge, &

Hughes, 2010).


The SWOT Matrix

Strengths: • Brand recognition • Original content • User-friendly • Accessibility • Competitive pricing • FMA • Makes viewing suggestions • Profit-share agreements

Opportunities: • International expansion • In-house original programming • Branding • Distribution

Weaknesses: • Cost of content • Raised subscription prices • Management mistakes • Cloud-based storage and retrieval

Threats: • New entrants and existing competition • Cost of content • Loss of content producers • Increase in Internet fraud

The SWOT matrix mainly presents the key strengths, weakness, opportunities and threats

of the company in question. The table is primarily organized to reveal the strengths, weakness,

opportunities and threats that the organization faces. For the company have its position in the

market, it uses a planning approach to select a system that it could prefer to utilization in the

market. In the SWOT diagram, Netflix fits in the quadrant and it is trying to concentrate on the

market expansion.

Developing Competitive Advantages

There are several ways that Netflix can improve its competitive advantage. One of its

strengths is great brand recognition. This strength can help in the creation of more markets

internationally. Due to accessibility, it can be combined with campaigns to create more

customers and better their market positioning. It is clear that these capabilities are founded in


product leadership, customer intimacy, and organizational excellence. These basic principles

give Netflix, and other companies like it, competitive advantage. For that matter, customers need

to know the brand through campaigns and through proper delivery of services. Netflix can try

convert weaknesses into strengths so that they can achieve competitive advantage. Instead of

raising the costs of subscription packages, they can find an alternative way of making income

while instead lowering the subscription prices.

Developing a Strategic Focus

Netflix’s overall strategic focus is to position its streaming service in personalized low

price for instant movies and TV shows. The focus follows the goal of establishing entertainment

with the largest collection and targeting bigger markets. When comparing itself to other

competitors, Netflix focuses on establishing a unique viewing experience that has no disruptions

from advertisements. The aim is to have the largest selection as compared to all close

competitors. Its new marketing plan aims to offer consumers the freedom of watching from

variety of devices as well as connection speed of the Internet. This will put Netflix on top when

it comes to the list of convenience. Consumers need to be served differently in a more

sophisticated manner. The goal is to keep customers satisfied while at the same time attracting as

many subscribers as possible.

Problem/Decision Statement

Netflix needs to execute its new marketing plan so as to gain competitive advantage as

well as make profits.


Strategic Alternatives

Netflix needs to find a way of lowering subscription costs instead of raising them. Netflix

needs to strategize to ensure that competitors are a source of strength rather than weakness but

considering differentiation. Netflix needs to find a way of using sustainable original content.

Alternative Strategy Evaluation and Recommendation

The first strategic alternative helps the company keep customers satisfied and therefore

loyal. This strategy will attract more subscribers. However, the company will not make real

profits unless they find an alternative way of generating income. The second alternative ensures

that customers find unique features to make them prefer Netflix. The disadvantage lies on the

fact that, consumers may fail to find popular shows and movies within Netflix due to

differentiation. Finally, the last alternative help the company cut the costs that could have been

incurred during purchase of the content. However, risking originality may cost them a great

number of customers both locally and internationally.

I recommend that that Netflix start partnering with several multi-channel television

providers to offer on-demand channels such as Showtime, Cinemax, and HBO along with Netflix

built-in. By doing this, Netflix will help balance its overhead costs as well as attract new

customers. This strategy could also assist Netflix in widen its subscriber base, by providing

additional communication channel to customers. “Regarding strategic partnerships, they have

their specific importance which should not be underestimated and have to be looked at as a long

term strategic plan” (Abraham, 2013).


The other recommendation I have is for Netflix to keep going strong with their

International Expansion Plans while still giving their U.S. views great content. “Netflix has to

create an international library that would have enough content to be appealing in each country.

As streaming content needs to licensed separately for each market, Netflix faces difficulty in

providing foreign subscribers access to comparable content available to U.S. subscribers”

(Hayes, Hodge, & Hughes, 2010). With these issues to consider Netflix must thoroughly control

its overheads and direct its energies in their international plans.

Conclusion

Netflix utilizes a market infiltration technique keeping in mind the end goal to develop as

an organization. This implies they utilize the current showcasing blend, beforehand talked about,

and center their endeavors on existing clients. Netflix does this by offering motion picture and

TV demonstrates choices obliged particular people. With innovation today, the organization can

perceive what shows a customer watches and thus recommend differently shows that adjust to

that classification, with an end goal to give a further support of their clients. This is a quality for

the organization since clients feel acknowledged and uncommon. Subsequently, they will

proceed with their business with the organization and propose Netflix's administrations to their

companions. While Netflix is the main organization in the video and music source industry, they

have a couple of defects that they have to take a shot at, and need to offer another administration

and item to their clients. Netflix requirements to add more motion pictures to its "immediately

watch" motion picture library. The majority of the motion pictures that customers can observe in

a split second are B-List films with just a couple titles that are standard.


My proposal for Netflix concerning this issue is the organization ought to drop its DVD

mailing and rental administration totally and simply offers the greater part of its motion pictures

as "watch right away." This ought to work since clients pay $8 a month for both the rental

administration and the watch in a split second on your PC or TV benefit, so it appears to be

unessential that Netflix needs to proceed with its rental administration since clients do not pay

independently for it. Another administration that we feel Netflix ought to include is a center

point where you can lease motion pictures from a machine, fundamentally the same as Redbox.

What clients can do is simply sort in their username and secret word and select a film at no

charge, or if a customer does not have a Netflix account, they will be charged one dollar to lease

a motion picture. By doing this Netflix will be specifically contending with their greatest rival

and can profit through clients who do not pay month-to-month and can acquire clients through

this administration. By including these jurisdictions, Netflix would proceed with its

predominance in the video and music source industry and could include more customers and

benefits.

Therefore through showcasing investigation, Netflix will keep doing a substantial portion

of the positive things that they have done prevously while attempting to enhance in the regions

that were suggested, for example, new discharges. Keeping take it into consideration goal to

enhance the item Netflix will go out and procure more licenses from organizations that would

permit them to have a determination of more up to date shows and films and also things like a

Disney segment. In late news, Netflix gained an agreement with Disney that made them the

original significant Hollywood studio to utilize Netflix so as to sidestep premium stations like

HBO who controlled these sorts of things. So as should be obvious Netflix is now well on its

way towards enhancing the product offering for the clients.


With regards to cost, there is very little that Netflix would need to execute. They as of

now have turned into an exceptionally all around esteemed organization to the extent cost goes.

Netflix offers the most items for your dollar, and the length of they keep up this incentive with

their clients; the need to actualize new evaluating methodologies ought to be nonexistent. One

thing that Netflix ought to execute needs to do with their third P, or place. They obviously have

various measures of dispersion focuses found everywhere throughout the U.S. making DVD

conveyance benefit extremely dependable and quick. They additionally can stream a large

number of their items over the web making the place of their item perfect. Nonetheless, in the

wake of taking a gander at the showcasing investigation, Netflix ought to actualize natural areas

in which clients could go to either a store or a booth to lease and return motion pictures. They

essentially ought to duplicate Redbox and execute virtual stations in which to enhance the place

of their item. When taking a gander at the advancement side of things, Netflix does not by any

means need to execute any new limited time techniques, yet rather ought to simply keep on

doing what they have done. They have been exceptionally effective as of now, and ought to keep

on promoting through direct mailings and also TV and web advertisements.

Everything that Netflix needs to do ought to happen quickly. As can be seen with the

procurement of Disney films, Netflix has as of now began executing a portion of the things we

have recommended. Since they have done this, they ought to start creating advances that would

permit them to have booths like Redbox.

Netflix has reformed the way individuals watch their most loved TV programs and

motion pictures. It has kept on enhancing and change the business by making such components

as; great moment spilling of films and TV programs, customized motion picture proposal


frameworks that precisely foresee future choices given past choices, and this for a low month to

month level rate. With more than thirty million supporters around the world, a market

capitalization of $4.34 billion, and a five-year development rate of 21%, Netflix is the

unmistakable pioneer in the Music and Video Stores industry.

Indeed, even with the majority of the achievement, Netflix has had since its origin; there

are still a few zones of change the organization confronts keeping in mind the end goal to keep

up its strength in the business. Outer elements that are as of now debilitating the organization are

the economy and more wellbeing society. The monetary subsidence has influenced many buyers'

acquiring powers, and in spite of the fact that the economy is hinting at the movement,

individuals are still conditional on spending their cash on amusement merchandise and ventures

like the ones Netflix offers.


References

Abraham, S. (2013). Will business model innovation replace strategic analysis?. Strategy &

Leadership, 41(2), 31-38.

Ferrell, O.C. and Michael D. Hartline (2017). Marketing Strategy, 7th edition, South-Western

Cengage Learning.

Hayes, S. K., Hodge, K. A., & Hughes, L. W. (2010). A Study of the Efficacy of Altmans Z To

Predict Bankruptcy of Specialty Retail Firms Doing Business in Contemporary Times.

Economics & Business Journal: Inquiries & Perspectives, 3(1), 130-134.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases:

competitiveness and globalization. Cengage Learning.

Ireland, R. D., Hitt, M. A., & Hoskisson, R. E. (2008). The Management of Strategy: Concepts &

Cases. Evans Publishing Group.

Karnani, A. G. (2006). Essence of strategy: Controversial choices.

McGrath, R. G. (2010). Business models: A discovery driven approach. Long range planning,

43(2), 247-261.

Rothaermel, F. T. (2015). Strategic management. New York, NY: McGraw-Hill.

Thompson, A., Peteraf, M., Gamble, J., Strickland III, A. J., & Jain, A. K. (2013). Crafting &

Executing Strategy 19/e: The Quest for Competitive Advantage: Concepts and Cases.

McGraw-Hill Education.

Documents

Lauren Raymond - MKT 701 - Netflix Case Study