Introduction
Netflix is subscription service on the internet that offers a variety of
TV shows and movies. Netflix is a forerunner in the internet delivery of TV
shows and movies, launching its streaming service in 2007. Since this time, the
company has developed a wide variety of internet-connected devices and has
licensed increasing amounts of content that enable consumers to enjoy their
favorite TV shows and movies no matter where they are at because they can
access this content on their TVs, computers or mobile devices. As a result of
these efforts, Netflix has experienced growing consumer acceptance of and
interest in the delivery of TV shows and movies directly over the Internet
(Netflix, 2018).
Core Products or Services
Subscribers can watch unlimited TV shows and movies instantly. Content
can be streamed over the Internet to their TVs, computers and mobile devices
and, in the United States, subscribers can also receive standard definition
DVDs, as well as Blu-ray discs, delivered directly to their homes. Netflix
markets its service through various channels, including online advertising,
broad-based media, such as television and radio, as well as various strategic
partnerships. In addition to various marketing strategies, the company offers
free-trial memberships to new and rejoining members. According to Netflix,
rejoining members are an important source of subscriber additions (Netflix,
2018).
A Brief
History
Netflix is
an American entertainment company founded by Reed Hastings and Marc
Randolph on August 29, 1997, in Scotts Valley, California. The company
expanded into film in 2016 as well as television production and online
distribution. The company is headquartered in Los Gatos, California. As of
January 2016, Netflix is operating in over 190 countries and has greatly
expanded the production of both film and television series. Netflix released an
estimated 126 original series or films in 2016, more than any other network or
cable channel. As of January 2018, Netflix had 117.58 million paying
subscribers worldwide, including 54.75 million in the United States (Netflix,
2018).
Key current
competitors
The market for entertainment video is competitive and changes rapidly.
Competitors have the ability to launch new businesses at relatively low
costs. Many consumers maintain subscriptions to multiple entertainment video
providers at once and can easily shift from one provider to another. Netflix
competitors include multichannel video programming distributors with free TV everywhere
and video-on-demand content including cable providers, such as Time Warner and
Comcast. Direct broadcast satellite providers, such as DIRECTV and EchoStar, as
well as telecommunication providers such as AT&T and Verizon, are also key
competitors for Netflix. Internet movie and TV content providers, such as
Apple’s iTunes, Amazon.com, Hulu.com and Google’s YouTube are also sources of
competition. DVD rental outlets such as Blockbuster and Red-box also are
also included in the list of key competitors that Netflix faces (Netflix,
2018).
SWOT
Analysis
SWOT
Analysis: Strengths
1. Brand Name
After ten years, Netflix has become the sole brand name for online
streaming content with a share price increase of over 6000% since 2007
(Bradshaw & Bond, 2017). Often consumers are much more likely to go
with a brand name they know and trust than an off-brand that may or may not be
a better value for their money. This is one way Netflix can capitalize and grow
their business. Being the known familiar service provider puts them at a
greater advantage of not only keeping their customers but attaining new ones.
2. Large customer base
Through serving 190 countries, Netflix has access to over 100 million
subscribers. This strength gives the company bargaining power when in talks
with studios to secure exclusive content (Bradshaw & Bond, 2017). The
popularity and convenience of Netflix is one of its greatest strengths. This
makes them able to accommodate and appeal to a very large customer base and has
the ability to further expand and develop in more areas, including partnerships
and expansions in various areas and with various companies in a variety of
countries. Growth will likely continue as the company goes forward and
continues to expand. Customers are opting for the convenience of consuming
entertainment online and Netflix continues to expand internationally.
3.Original content
Through careful acquisitions, Netflix have secured numerous original
shows that have appealed to audiences. In 2017, two Netflix shows are so
popular they have pushed subscribers from 83m to over 100m in one quarter
(Bradshaw & Bond, 2017). The House of Cards was a game changer for Netflix.
All episodes of the first season of the show were released at the same time,
and the response of the critics was overwhelmingly positive. The House of Cards
not only attracted many new users but also proved that the key to their customers’
loyalty is a unique and abundant content library. The company continues to
working on adding new shows such as 30 kids’ shows, ten new feature films, 12
documentaries, and ten stand-up comedy specials (Netflix, 2018).
SWOT
Analysis: Weaknesses
1. Cost of original content
While its original content creates a competitive advantage for the
company, the cost continues to grow in order to support this content.
In 2017, it is expected for Netflix to invest $2.5 billion solely on
securing original content rights. To keep prices competitively low,
Netflix will need to find a balance between maintaining good
relationships with the distributors and aggressively negotiating content
licensing costs with them. This type of dependence can result in a
vulnerability that could prove to be very costly (Bradshaw, 2017).
2. Lack of rights to original content
Unlike many traditional television studios, Netflix does not own most of
their original programming. Due to this, rights usually expire after a year and
the original content can be shown on rival services (Bradshaw, 2017). This is
an area that serves as a potential weakness especially related to retaining
customers and keeping costs low.
3. Environmental cost
Netflix has been ranked poorly in terms of environmental awareness. This
has given them bad publicity for the company as rival competitors such as Amazon
and Facebook use over 40% renewable energy with their services (Lewis, 2016).
SWOT
Analysis: Threats
1. Increased competition
Facebook is the latest to try and take on traditional media by launching
its own original content. Amazon, Hulu, HBO, and YouTube are all competing for
audiences to subscribe to their platforms. For Netflix, this will continue to
develop as more companies seek to buy the latest original content exclusively
for their platform (Bradshaw, 2017).
2. Digital Piracy
For more than 30 content
providers, including Netflix, piracy has led to 5.4 billion downloads of
media content in 2016 alone. This threatens Netflix’s business model and
ability to fund content in the future (Opam, 2017). The ability for viewers to
get the same content basically for free is a huge potential threat for
Netflix’s bottom line and ability to continue to dominate the market.
SWOT
Analysis: Opportunities
1. Expansion into China
Difficulties with licensing has left Netflix unable to enter China
through traditional means. The company must find a joint-venture to capitalize
on the 500 million Chinese users who currently stream media content
(Russell, 2017).
2. Partnerships in Europe
To meet new European laws, Netflix can partner with the BBC and Canal
Plus to gain access to a wealth of native-language European content and grow
customers in local markets (Murgia & Bond, 2017).
3. Growth of technology
With the growth of streaming content, Netflix must continue to come up
with new ways to allow customers to access their content and provide further
competitive advantages. A growing market for content is foreign-language
programming. Partnerships with local-language content will help Netflix to be
able to be a rival for local streaming services and help them to be a leader
among this (Mintel, 2016).
Marketing
Plan Focus
Based on my SWOT analysis, I believe there is an opportunity to expand
internationally by partnering with telecommunications companies such as Samsung
to make the application readily available for customers on their devices in
overseas markets. For this marketing plan, I’ve come up with an idea to
incorporate the Netflix application into Android devices. This would target a
particular demographic, and could help to begin to solve the issues Netflix
faces internationally. The app would have early childhood development movies
and songs that would help little children and as well the already existing list
of unending movie for all ages.
Segmentation
Approach
For this marketing plan, I’ve opted for a straightforward demographic
approach to segmenting the market given my desire to target a specific age
group. I considered a behavioral approach based on past purchase history as
captured via use of the McDonald’s app. However, the app was only introduced in
late 2015 and age is not captured in the registration process (unless a social
media login is used). Furthermore, I don’t want to limit my audience to just
existing customers. Given the broad appeal of the McDonald’s concept and its
national footprint, I did not feel geographic targeting or formal psychographic
targeting was needed.
Target Definition
My target for the Netflix K is families with young children and
adolescents ranging from the age of 2 to 12 years old. An interest in learning
and technology would allow for further media targeting.
Positioning
Statement
Netflix K
A time for parents to
have quality moments with their children while watching them learn, grow and
excel academically in the privacy and comfort of home.
Marketing
Mix Discussion
Marketing
Mix: Product
This marketing plan is centered around education and the benefit of
families coming together and sharing quality moments with the thrill of old
favorites and new exciting learning opportunities. The core idea is to use
advertisement to create awareness in between episodes and popups advertisement
when the application is not in use or in between episodes when in use. With the already exiting approach of having
it available to Android devices it would help market itself by being readily
available
Marketing
Mix: Price
Netflix strategy would be to retain its already existing customer base
by offering 10% discounts on yearly subscriptions and 15% discount to customers
that have been a Netflix member for more than 3 years. Included in the price
new series would be offered at a 50% off rate compared to its competitors such
as Hulu.com and Amazon Prime in order to be able to win and secure future
customers. This is characterized as skimming as they are trying to take
business from their competitors by offering the same service at a reduced rate.
Marketing
Mix: Promotion
In addition to the
promotional pricing deal discussed above, there would be an opportunity to
redeem a promotion code to save money on a family night out package based on
local available retailers. This would be a way for Netflix to partner with
local companies in order to help them gain acceptance internationally.
Marketing
Mix: Place
I would make use of a
dedicated Netflix K microsite where customers could go to learn more about the
promotion and app and to have the possibility to win promotion codes and save
additional money on family nights out as well as the possibility of earning
months free towards their Netflix subscription. This would also encourage
additional downloads of the Netflix K app and promotion of a larger and growing
customer base.
Potential
Success Metrics
Customer Satisfaction
Knowing if people are actually satisfied with the service or product is
very important. Customer satisfaction can be a helpful metric in guiding
a marketing campaign. Getting feedback directly from customer is an easy way to
measure satisfaction. One way to do this would be to add a standard Google
consumer survey to the app or site for free. With a few simple questions, you
can find if your customers are satisfied with the app or site, what they
don’t like about the app or site, and whether or not they will continue using
the app.
User Engagement
Tracking visits and signups is
important, but focusing on how much time a user spends on your website or app
is important as well. This has the ability to provide a realistic view and can
base future success around this consideration.
Progress
It is always important to keep moving forward
and having a forward momentum. If a company is making strong progress on a day
to day basis, then it will likely be creating new opportunities and growing the
business overall. This will allow the company to accomplish its overall goal
and keep them on track.
International
Considerations
Netflix faces the challenge of being able to make their international
segment profitable. Netflix will need to invest in local content and better
streaming quality over low bandwidth connections in order to attract
subscribers. Netflix will have to expand this base quickly in order to be able
to recover the associated costs. Netflix will also have to consider the
competition of other providers such as Amazon and YouTube who are also looking
to capture this segment of the market. Another challenge Netflix faces related
to international markets such as India, is lower internet penetration and
existing connections with low bandwidth. These factors limit its target
consumers in these countries to the small section of the population that have
access to high speed internet. Viewing preferences is another consideration
that will have to be addressed as these differ from country to country and even
between different regions of the same country. In order to attract subscribers,
Netflix needs to have a broad content library catering to the preferences of
the diverse audience (Bradshaw & Bond, 2017).
Conclusion
The Netflix K marketing plan should be approved for funding because it
has the opportunity to generate a great deal of business and success in
entering many foreign markets not previously entered in. Associating Netflix
with current technology such as Samsung and then appealing to a customer base
of families with children has the possibility of building a strong business
base in this target population and areas abroad. This will also help build
affinity and rapport with local businesses in foreign destinations helping
Netflix to become a top international company not just a top American company.
References
Bradshaw, T. (2017)
Netflix boosted as viewers outside the US tune in. Financial Times. Retrieved from
https://www.ft.com/content/e8c742f2-6b34-11e7-b9c7-15af748b60d0.
Bradshaw, T., and Bond,
S. (2017). Netflix looks to become world’s entertainer as it hits milestone. Financial Times. Retrieved
from
https://www.ft.com/content/06b55bb8-6d0c-11e7-bfeb-33fe0c5b7eaa.
Lewis, D. (2016). Will the internet of things sacrifice or save the environment? Guardian Business. Retrieved from https://www.theguardian.com/sustainable-business/2016/dec/12/will-the-internet-of- things-sacrifice-or-save-the-environment.
Mintel, J. (2016).
Music and Video Streaming-UK-April 2016. Mintel Academic. Retrieved
from http://academic.mintel.com/display/770307/.
Murgia, M., and Bond, D. (2017). Netflix seeks European crown in local content push. Financial Times. Retrieved from https://www.ft.com/content/c286c25e-04d5-11e7-aa5b-6bb07f5c8e12.
Netflix Inc. business
description. (2018). CSIMarket.com. Retrieved from https://csimarket.com/stocks/NFLX-Business-Description.html.
Opam, K. (2017). HBO,
Netflix, other Hollywood companies join forces to fight piracy. The
Verge. Retreived from https://www.theverge.com/2017/6/13/15791688/hbo-netflix-hollywood-ace-fight-piracy.
Russell, J. (2017).
Netflix enters China via licensing deal with top video streaming service
iQiyi. Tech Crunch. Retrieved from https://techcrunch.com/2017/04/25/netflix-china-iqiyi/.
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