Netflix Marketing Plan and SWOT Analysis

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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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