final assignment on netflix

Running Head: NETFLIX’S SITUATION ANALYSIS 1

Friday Night Date With Netflix: Netflix’s Situation Analysis

Connie Butts

BUS 330: Principles of Marketing

Professor Garlyn Lewis

September 19, 2016


Netflix’s Marketing Plan: Continue to add Newer Content and Movies

Company Description

Netflix is the largest online movie rental service which has an annual revenue of over

6.78 billion U.S. dollars and serves 70 million U.S. customers, with just over 26 million

subscribers located outside of the U.S (statistica.com).

Core Products or Services

Netflix when founded provided a DVD rental service by mail to meet the needs of

customers who had little or no time to go out and rent them. They added to this service a video

on demand service that allows customers to rent movies on their personal devices. Then they

added television shows and series as part of their service. The expansion of services has led to

their ability to provide unlimited movies, TV, and DVD’s (slideshare.net).

Brief History of Netflix

Netflix was founded in 1997 in the state of California by Reed Hastings and Marc

Randolph. Netflix was a DVD rental website when it was founded and at that time they mailed

out DVD’s and used a pay-per-rental model (slideshare.net/case study). Netflix became a public

company in 2002 and used the Ticker symbol: NFLX as an identifying symbol

(slideshare.net/LEONGUMB). In 1999 Netflix adopted a subscription model by which customers

could watch endless movies at a set monthly rate. In 2007 Netflix moved into streaming in 2007,

and announced a move into original programming in 2013 (cnn.com). Netflix now leads the

streaming market in the U.S. and has expanded its streaming video services worldwide

(statistica.com/topics/842).


Key Current Competitors of Netflix

Netflix competition comes from several sources. Amazon Prime, is Netflix’s most serious

competition because for the price of an annual membership it allows customers access to an

instant streaming platform with thousands of movies and TV episodes. The cable channel HBO

is also a competition because it has announced that HBOGO will be offered without a television

subscription and it offers a large variety of titles as well. This competition grows when you

consider that the CBS network has also announced a subscription streaming service. Then there

is the competition presented by You Tube, Hulu, and the downloading taking place on the black

market. Then adding to the mix are internet pipe providers, which many times are movie

distributors, which can limit the traffic traveling over their lines which can pick and choose their

content over that of Netflix (quora.com).

SWOT Analysis

SWOT Analysis: Strengths

1- Grown and adjusted to the wants and needs of the customer

Netflix has adjusted and grown with technology according to the wants and needs of the

people by adjusting and adding services that the customer base wants. By offering both physical

DVD’s as well as streaming capabilities that offer high speed delivery of movies as well as TV

series shows that customer convenience is paramount.

2- Netflix brand known worldwide


Netflix brand is recognized worldwide and it is known for offering movies, television

shows, DVD’s, and original content which can only be found there. The customer base of Netflix

had grown to 70 million by the year 2015 (slideshare.com/case-study).

3- Streaming Capability and User Experience

Netflix offers unlimited entertainment for a low subscription price that is much more

convenient and at a much better value than having to leave home to visit a Redbox or video store

to find a good movie. This value is even better when you have the option to use different devices

rather than being tied to a television.

4- Competitive Prices

For the price of a monthly subscription, around $8.99 per month the customer can watch

as many programs as they like. In comparison, subscribing to Netflix is a better value than any of

the cable movie channels and they offer more choices.

5- Original Content

Netflix offers original content that is not provided by other carriers or streaming

companies. Realizing the need to create new content has contributed to making Netflix the

number one streaming provider. Some of the original shows found there are House of Cards,

Orange is The New Black and Daredevil.

SWOT Analysis: Weaknesses

1- Declining DVD Membership

Netflix began as a DVD-by-mail rental operation and fewer and fewer people are

ordering them by mail. Many customers have stopped ordering DVD’s by mail and started using


streaming services. Since this was the original offer, Netflix continues to offer this service for its

customers who have not switched. This has caused Netflix to require its customers to have

separate accounts if they desire both services due to the costs incurred. Decline in DVD mail

order customers have caused Netflix to lose money.

2- Netflix cannot raise subscription rates and remain competitive

Netflix has to abide by the limitations placed upon them about when movies can be

available by the company according to studio requirements. Netflix also has to accept the rates

and schedules set by the U.S. Postal Service, as well as rates imposed by streaming providers,

which could potentially cause Netflix to lose profits. Also, Netflix has to abide by the terms of

content distribution which allows competitors access to the same movies and television shows at

the same time, taking away their competitive edge. The only way to keep that edge is to keep

prices low and offer more content for the same money. They can also try to cut internal costs

such as that on advertising because they are already well known.

SWOT Analysis: Threats

1- Hollywood and other content providers

Netflix has to by content from production studios and are at risk of price increases for

movies and television shows. They also face the risk of licensing increases and may have trouble

recouping their losses.

2- Competition

Online entertainment services are constantly undergoing rapid technological change and

as they do it will be easier for new streaming businesses to become serious competition. The fact


that consumers use multiple entertainment providers also is a threat because they can easily

change providers at will. Amazon Prime is a competitor which offers goods with free shipping as

well as a streaming service for an annual fee. The cable channel HBO is offering HBOGO to

customers without a television subscription. The CBS network is also offering a subscription

streaming service. Then there are Google, You Tube and Hulu that can cause threats to Netflix.

And, as if that was not enough, internet pipeline providers can limit traffic traveling over their

lines favoring some content over others.

SWOT Analysis: Opportunities

1- Growing Population offers potential subscribers

The population is constantly growing offering an endless opportunity for growth. As

young people mature and start families, Netflix has the opportunity to gain them as customers as

long as they offer content the younger generation wants to see.

2- Growing Market

Growing numbers of viewers are turning to online videos for entertainment. Netflix is the

current leader offering streaming content. Keeping current content will help them remain as

such.

3- International Opportunities

Netflix is constantly expanding because they are so well known. They are expanding

overseas and in Canada, which gives them a larger customer base.


Marketing Plan Focus

Based on my SWOT analysis, I believe there is an opportunity to grow the Netflix client

base by meeting the wants and needs of the younger clientele. Netflix has adjusted its offers in

the past to meet the wants and needs of potential clients and will do well to continue that process.

The recent move to secure exclusive streaming rights with the CW, as well as the multi-year deal

made with the CBS Corporation and Warner Brothers shows the profitability of continuing to

offer content the public wants is the path that should be explored more fully (Wilhelm, 2016).

Securing popular television shows, in my opinion addresses a weakness Netflix has suffered for

years.

Keeping the domestic client base engaged and watching will ensure Netflix continues to

prosper although engaging international opportunities are less promising. By widening the

popular movie and television series selections we can ensure the younger generation selects

Netflix over other streaming providers. Personally, I know I would watch Netflix more often if I

saw newer content which is more popular offered.

Segmentation Approach

For this marketing plan I have decided to use a segmentation approach targeting a

specific age group based on viewing habits. Using a behavioral approach helps me to target

specific shows or movies that people in my target group are more likely to watch based on their

past viewing habits. I have used the Netflix database to evaluate the viewing preferences of

young to middle aged adults who use Netflix. Using this data helped me to see the types of most


watched movies and television shows chosen by young adults and aided in designing a marketing

plan that will attract even more young adults as customers as well as keep this segment of our

viewing audience engaged and loyal to our streaming services.

Target Definition

My Friday night date with Netflix promotion is directed toward young to middle aged

adults in the United States. My target group age range is between 20 and 45 years of age. By

using social media advertisement, television commercials, YouTube advertisements, and audio

advertisements on local radio stations, we can bring our younger audiences back to the comfort

of home to get their favorite entertainment choices with special offers on Friday nights.

Positioning Statement

Friday night date with Netflix will allow young and middle aged adults to sit back in the

comfort of their homes and have access to more options from a list of new releases or television

shows from their favorite channels. Having these new choices will help them relax after having a

long work week without having to get ready and go out.

Marketing Mix Discussion

Marketing Mix Product

This marketing plan is focused on providing more choices especially tailored to the

entertainment tastes of young to middle aged adults on Friday nights. Offering more choices of

newly released movies, especially those popular in the eyes of young and middle aged adults, the

option of having Friday nights reserved for Netflix will become a common theme and word of


mouth in the workplace will make this a popular date night for friends to share together. This is

also true when it becomes known that hard to access adult friendly material can be accessed

Friday nights on Netflix.

Marketing Mix Price

Netflix is already considered to be a great price for quality entertainment at the low

subscription price of $8.99 per month. Everyone already knows that members can access the

inventory of movies and shows 24/7 and you can find shows there that cannot be found

anywhere else. Even at this great price it is sometimes impossible to see a newly released movie

you want to see without going to Redbox to rent it or to a retail store to purchase it. The object of

this marketing plan is to alleviate this problem.

As part of this marketing plan, from 6am Friday morning until 12am Saturday morning

more newly released titles will be offered for the customers viewing pleasure. Monitoring the

movie titles rented the most during that timeframe will allow the marketing team to determine

which movies are rented most and by whom during that time. The movies rented most by my

target audience will be highlighted and more movies of that type will be offered on Fridays to

stimulate more rentals and to attract new customers. Also, using the added incentive of a one-

month free to existing customers that recommend Netflix to a friend which becomes a customer

will cause existing customers to watch more so they will be up to date on the choices currently

available.

Marketing Mix Promotion


As part of this marketing promotion commercials stating more newly released movie

titles on Fridays will stimulate more watching on Fridays. Also YouTube advertisements

describing the special offer of more new releases and the free one month offer will get people

watching and talking about what’s new on Netflix. Facebook ads, ads on twitter, Pinterest and

across other social media sites will also peak interest. Blogs about the new thing on Netflix will

also be put out there to get people’s interest peaked. Billboards at stores such as Walmart,

neighborhood pharmacies and in local supermarkets will also be used to spread the word as well

as announcements over the local radio stations. Using the different avenues to put out the word,

giving the customers more of what they seek and offering the incentive of referring a friend will

motivate existing customers to share this special offer to those with whom they associate both at

work and play.

Marketing Mix Place

The Friday night date with Netflix promotion will take place across many channels.

Through commercials and advertisements both television, radio and the internet will be used.

Referral partnerships like those with Walmart and other businesses will be used to gain attention

to the promotion. YouTube advertisements will be used to bring attention to the increased

selections and the incentive to get Netflix free for a month. Web sites such as Google, AOL,

Facebook, Twitter, Pinterest and other websites will be used to advertise the new titles Netflix is

offering. Blogs will be used to get and keep the conversation going about this promotion being

the best ever offered, and although it is directed toward young to middle aged adults all age

ranges will be interested.

Potential Success Metrics


There are several metrics that can be reviewed and analyzed to monitor the effectiveness

of this marketing plan. First you need to determine the communications effect that the promotion

is having on the public. Monitoring the number of movies seen, the type, and the amount of new

customers is a strong indicator as to the effectiveness of this marketing plan.

There is also the sales effect that can be monitored which shows how effective it is due to the

increase of sales. Monitoring customer perceptions of Netflix and what it has to offer is also a

strong indicator about the effectiveness of the campaign. This can be done by monitoring blogs

about the company. Then there is the bottom line… ROI or return on investment that ultimately

judges a promotion as a failure or success. Using the different communication medium allows us

as a company to monitor many of these metrics and make adjustments if necessary.

International Considerations

If the Friday night date with Netflix marketing promotion were to be implemented

internationally different considerations must be addressed. The offer would stay the same, unless

there are official or governmental restrictions about viewing times are in place. The new movies

offered would be those offered in that country in their language and cultural considerations must

be made. The incentive of one month free would stay the same if an existing customer gets a

friend or relative to get a subscription. Another problem that could occur is that there may be

fewer places in which referral partnerships can be built. Overall, television commercials, and

many websites may be the same but other media outlets or websites may have rules against

advertisements.

Conclusion


This Friday night date with Netflix promotion should be funded because it outlines a way

to monitor and gauge the types of movies that young to middle aged adults want to see. It will

even have farther reaching effects once fully implemented. Offering a wider variety of newly

released movie titles that are known to be popular to a specific age group allows the company to

collect data to see how popular these titles are across the different age groups making them a

better choice to offer than other selections. Having the larger selection offered during a limited

time also allows for comparisons about viewing habits, preferred materials, and the amount of

people watching during this time. The extra incentive of offering one free month to those who

recruit new customers build client base and keeps current clients involved. This marketing plan

would prove invaluable simply due to the specific information it would provide the company in

making choices on changing movie or television titles currently offered.


Reference

http://www.cnn.com/2014/07/21/showbiz/gallery/netflix-history/

https://www.quora.com/Who-are-Netflixs-biggest-competitors

http://www.slideshare.net/JulienGuitton/netflix-case-study-54240175

http://www.slideshare.net/LEONGUMB/netflix-10300859

http://www.statista.com/statistics/272545/annual-revenue-of-netflix/

https://www.statista.com/topics/842/netflix/

Wilhelm, Parker (2016) Netflix’s new content deal addresses one of its biggest weaknesses.

Techradar.com (2016, July 5). Retrieved from:

http://www.techradar.com/us/news/television/netflix-s-new-content-deal-addresses-one-

of-its-biggest-weaknesses-1324437

http://www.techradar.com/us/news/television/netflix-s-new-content-deal-addresses-one-of-its-biggest-weaknesses-1324437

http://www.techradar.com/us/news/television/netflix-s-new-content-deal-addresses-one-of-its-biggest-weaknesses-1324437

https://www.statista.com/topics/842/netflix/

http://www.statista.com/statistics/272545/annual-revenue-of-netflix/

http://www.slideshare.net/LEONGUMB/netflix-10300859

http://www.slideshare.net/JulienGuitton/netflix-case-study-54240175

https://www.quora.com/Who-are-Netflixs-biggest-competitors

http://www.cnn.com/2014/07/21/showbiz/gallery/netflix-history/

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