What Is Netflixs Strategy - Essay Example

? Netflix Question What is Netflix’s strategy? Netflix, an online company that rents DVD movies to its s has various strategies that ensure that its other customers do not take their customers. Some of the strategies include, avoiding overhead costs like utilities and rent to run physical stores instead they use the capital to ensure they have all the DVDS their clients and subscribers need. Netflix also have a marketing strategy that allows customers to rent movies online and the faster they return the more chances of getting other movies at low rates compared to Netflix competitors. Customers save their money in rental fees because they are promised new movies within a day with the same receipts as long as they return other movies on time this helps in maintain their customers with their good services compared to their competitors. What Type Of Competitive Advantage Is Netflix Trying To Achieve? Being the largest online movie rental in the world, Netflix is trying to increase the number of clientele to more than 6.3 million that will be able to access more than 70,000 DVD titles. They are also expanding their markets throughout United States by having a cheaper physical presence than their competition, as well as a good customer base for the same. Their other advantage was differentiation where they delivered and charged their movies differently from their main competitors (Netflix, Inc., 2012). Though the strategy could only work for short term basis, it was trying before they came up with other ideas. The strategy made them dominate the markets, and they got loyal customers who still subscribed to them even after few changes were made. Netflix also invested in a unique design referred to personalization that further differentiated their services and helped maintain most of their customers. This design helped Netflix strengthen their relationship with their customers in various ways especially by giving them smarter services than other competitors. Question 2 How Strong Are The Competitive Forces In The Movie Rental Marketplace? Competitive forces in the movie market world are not very strong at the moment because there are only three competitors, Redbox, Netflix and Blockbuster. Majority of the people around the world prefer recording movies from their televisions, or prefer watching movies from sites where subscription is not required or watch them online giving most of the movie renters to shut down. This leaves few competitors who have been in the business long enough to know what is required to still have people using their services on a daily basis. They ensure that for every lost client, there is a new one by introducing various strategy of beating the competition and keeping up with technology. Providing best qualities of movies, as well as the latest DVDS has made the three renters stay in business. Knowing the needs of customers is key to success and the three companies have endeavored to know the requirements of their customers and endeavored to provide all their needs. Do Five-Force Analysis To Support Your Answer? By using Porters five forces analysis which includes: rivalry, from research there not much competition in the movie rental world with competitors being; any local vendors, Blockbuster, Netflix and Redbox. Secondly there is the threat of substitutes where it can only be websites that allow people to watch movies online for free. Satellite companies and cables allow people to pay the required fee and watch anything they want from the comfort of their homes (Netflix, Inc., 2012). The third force is the buyer power where it indicates that it is up to the buyer to make a choice of whether they want to rent a certain movie or not and if they have the capability to do so. If they chose not to rent any films there is nothing the renters can do about it. Supplier power is another force which indicates that the more films they have the more power they get over their competition. The last force is the barriers to entry where specific rental business are still on business , and since the rental practice is slowly passing there is less need to venture in a business that have no long term success. Question 3 What Does A SWOT Analysis Of Netflix Reveal About The Overall Attractiveness Of Its Situation? Netflix is analyzed internally and externally where its strength is recommended to its potential profitability. The analysis reveals that the company has a variety of customers who subscribe for different movies on a daily basis. With the presence of all kinds of DVDS online, the customers are able to rent movies at their own pleasure and return them according to the subscription agreement. Dealing with customers online has also assisted the company to save up some expenses that the other competitors incur such as rent. Netflix also use good marketing strategies that ensure that they stay on top of their competitors while still proving the best services to their customers. Question 4 How Does Netflix’s Competitive Strength Compare against That of Blockbuster? Netflix is wining the movie rental race because it has good customer services compared to Blockbuster. Blockbuster has lost their customers due to contradictory late fee policies as well as the rumor that they were running out of business with more than 1300 stores already closed. Netflix have tried to stay in the business despite various struggles and competitions. The loss the Blockbuster suffered in 2009 where they lost 435 million dollars while Netflix gaining 36 million dollars has been a challenge for Block buster to keep up with its main competition. Generally the competition strength of Netflix compared to that of Blockbuster is very strong with its market still growing on a daily basis (Torossian, 2012). Does Netflix Have A Sustainable Competitive Advantage Over Blockbuster In The Movie Rental Business? Why or Why Not? Netflix has a sustainable competitive advantage over Blockbuster and any other rental company around the world for various reasons. The main reason why Netflix will be doing well even in the future is because it knows how to take advantage of technology more specifically the Internet for the good of its customers. While Blockbusters are still using stores to rent movies, Netflix has made it easy for people to sit at home rent a movie online watch it then return it and borrow another if need be. This gives it an advantage over the rest of the companies because it is reliable where the customer gets to browse a variety of films and games online and they are delivered at their conveniences. Customer service of Netflix has also helped it maintain its clientele and will help do the same in the future where they provide good services at lower prices compared to other companies. When they started the online renting they delivered games and films as possible to their customers with the same charges that other companies used at their stores where people had to walk to get what they want. This made more people prefer to use Netflix services because they made their life much easier yet having ultimate fun. If they keep up with their incredible services they will be able to sustain their competition advantage for long. Netflix also come up with unique ideas of improving their services, which are friendly to their clients making it very easy for them to easily maintain their customers as well as bet new ones on a daily basis (Torossian, 2012). This makes the business stronger and much reliable even in the long run. Question 5 What Recommendations Would You Make To Netflix CEO Reed Hastings? I would recommend to the CEO of Netflix to ensure that customer satisfaction remains their first priority. The company should ensure that it conducts market research to know the needs of their customers, and this will be instrumental in making their market plan as they will be able to segment their market according to the needs of various customers. When the company attends to the needs of their clients, they will create loyalty, which implies that they will retain its customers and increase their market share. The CEO should also seek ways of making the business global so that it can enjoy economies of scale due to having a large customer base. Question 6 What Recommendations Would You Make To Blockbuster CEO James Keyes? I would recommend to the Blockbuster CEO to ensure that the company tries to keep up with current trends in technology related to rental of movies. The company is edged on its competition as there is no innovation of methods that can be used to increase its customer base. Customer satisfaction is paramount to triumph of any business, and ensuring that their customers receive the best services will see to it that they will remain loyal to the business and always seek their services. Researching on the current trends such as renting the movies online will make the company be at par with its competitors who have taken a greater share of the market. The CEO should also seek for ways to improve the company’s brand name as it has bee tainted before, which has resulted to the company loose customers. Ensuring that the name of the company is given a positive public image will ensure that customers are loyal to the company as they will feel that their needs and ethical considerations are upheld. The CEO should start initiatives of public relations such as engaging in community service and this should be aimed at ensuring that customers have a positive image of the company. The company should address v the needs of its customers, which are cost, convenience and time, and this will ensure that it connects with its customers. References Netflix, Inc. (2012). Company Overview. Retrieved on October 13, 2012 from: https://signup.netflix.com/MediaCenter Torossian, R. (2012). Netflix vs. Blockbuster PR Wars: Marketing And Book Excerpt. Business Insider, Inc. Retrieved on October 13, 2012 from: http://articles.businessinsider.com/2011-10-31/home/30341114_1_blockbuster-stores-redbox-movies Read More