Marketing Management - Netflix - Case Study Example

Marketing Management: Netflix Name Professor Institution Course Date The Marketing plan Executive Summary 21st century has marred with rapid change in the business environment as companies innovate and others crossing border to enter into new markets. As a result, competition has grown considerably making companies to look for new strategies which can solidify the competitive advantage. Marketing plan has become a very important aspect in enhancing competitive advantage. Therefore, this report will analyze the marketing plan of Netflix Company and discuss how it provides the company’s effectiveness. In the report, Netflix objectives will be discussed while showing how each of marketing mix elements (the 4 Ps) will contribute to the achievement of such objectives. In the report, the marketing plan will also cover implementation plan and contingencies. The implementation will clearly show the timeline of carrying out the activities while contingencies will give a picture of risky parts of the plan. In addition, the report will recommend the strategies the management can use to improve the operation and competition in the market. The report has found that Netflix put much emphasis in product development, differentiation, pricing, modern modes of communication. Despite the effectiveness of marketing strategies, budgeting and changing prices could be risky to survival of plans. Table of Contents The Marketing plan 2 Executive Summary 2 Table of Contents 3 1.0 Introduction 4 2.0 Marketing Plan 5 2.1 Growth potential and market size 5 2.2 Positioning, Targeting and Strategic direction 5 3.0 SMART Objective 6 3.1 Marketing objectives 6 3.2 Media 7 3.3 Promotion and advertising 7 4.0 The marketing mix 7 4.1 Product strategies 7 4.2 Promotion and communication influence 8 4.2.1 Internet and Social Media Advertising 11 4.2.2 Television ads or commercials 12 4.2.3 QR codes 13 4.2 .4 Sponsored Movie and related activities 14 4.3 Price 15 4.4 Distribution 15 4.4.1 Place and Process 16 5.0 Implementation Strategy 16 6.0 Time Frame Implementation table 18 7.0 Evaluation 19 8.0 Contingency Plan 19 9.0 Conclusion 20 10.0 References 21 1.0 Introduction As the business environment becomes competitive, modern managers must seek to get the best strategies to use in the market to sustain competition. Companies have re-drafted their marketing plan and replaced ineffective objectives with new ones which are realistic, achievable and measurable so as to improve efficiency of their operations (Steel 2014). In the period from early to mid 2000, Netflix was not doing well and even its collapse was predicted by market analysts. Some of the analysis such as Michael Pachter thought that Amazon, Blockbuster and Wal-Mart which had a large customer base and economies of scale at that time could simply wipe out Netflix out of the market. Mullins, Walker and Boyd (2010) contended that the changing business environment characterized by poor leadership, communication failure and objective failure was blamed for the company’s poor performance. Eight years later, company gained the top position in the market, with the stock raising to 200% and S&P 500 increasing to 7% under the leadership of Chief Executive Officer Reed Hastings (Krengel 2013). Netflix Company had been prompted to change their marketing plan and objectives to transform from a less performing to a giant provider of internet TV. Therefore, this report evaluates the marketing plan of Netflix Company and discusses how it provides the company’s effectiveness. In the report, Netflix objectives will be discussed while showing how each of marketing mix elements (the 4 Ps) will contribute to the achievement of such objective. 2.0 Marketing Plan 2.1 Growth potential and market size The Netflix’s market has grown consistently in the recent years, indicating a trend of improved sales. Trefis Team (2013) opined that the company began its operations, especially production and marketing in 1997 with less than 100000 subscribers. The number rose to over 40.29 million subscribers streaming internet and videos after three years. Netflix (2015) stated by mid 2013, Netflix had invested in physical DVD and had 7.51 million mail subscribers on this product category. The United State census bureau of 2012 claimed that 274 million individuals in North America had internet access that number could have been Netflix’s prospective subscribers (Lum 2014). The company has since been targeting the mass market of the United States and even globally since its market has been promising since 2009. 2.2 Positioning, Targeting and Strategic direction The Netflix services particularly the streaming has been positioned as low priced on the sport TV entertainment and movies with the leading array of collection targeting global mass market. A comparison of between Netflix and its competitors has revealed that the company provides watching experience with no interruptions of adverts like Hulu (Flacy 2013). Another study has confirmed that Netflix has the wide range of selection compared to other market players. Such Status implies that with Netflix internet, the consumers can watch a wide range of various movies or videos with a high speed and big devices which makes the research or entertainment more convenience. Steel (2014) claimed that each client is served at a personal level by application of a complex analysis of effective recommender systems and big data to make the service be personalized whilst trying to attract numerous subscribers across the globe. 3.0 SMART Objective 3.1 Marketing objectives Enhance brand awareness in the Middle East, Oceania and Africa, particularly in countries such as UAE, Qatar, Saudi Arabia, Turkey, Australia, New Zealand, Namibia, South Africa, Egypt, Morocco and Mauritius by 2020. These countries have a high economic growth and with high demand for internet. In the recent times, Netflix has focused its marketing in Latin America (Lawler 2011). Emphasize a wide range of content, social media integration and competitive price which the company offers in comparison with their competition by means of including the details in all marketing messages. With competition growing in the internet streaming industry, Netflix intends to raise its current subscription 42.4 million individuals to 72 million by 2018 (Netflix 2015). Netflix aims at enhancing another service segment called Instant Streaming so as to attract more customers. The objective is inspired by the fact that more people now want to access live news instantly as they happen and with high speed internet. The service will actually run on 4G internet platform to increase the speed at which its customers want to access the internet. Netflix aimed expanding video-streaming services access to the Apple Inc devices such iPod Touch and iPhone by 2019 (Netflix 2015). The services will be extended to iTunes store which can be accessed through Ipad. 3.2 Media Netflix goal is to grow its market share for the set boxes segment by 20% from 13% after a three-year campaign from 2015 to 2018 (Lum 2014). The set top boxes can now be used to watch movies and channel it to the television. People who buy such set top boxes will be able to access the company streaming media on unlimited internet service. The company intends to grow its products and services within the video console between 2015 through to the year 2020. According to Stelter (2013a), the objective is attributed to the fact that there is growing opportunity in the video industry as more people now play online video games. With Netflix internet streaming, consumers will subscribe on the company services so as to play games on Xbox consoles. Netflix aims at raising the rate of frequency of every present marketing message and information by 50% and also expand its customer reach by 12%. 3.3 Promotion and advertising Netflix has an objective of reaching 90% of its target customers intensively with the messages concerning the company’s instant streaming (Cabot Investing Advice 2011). Netflix intend to employ mobile ads in a bid to raise brand awareness and campaign about instant streaming on specific mobile devices. 4.0 The marketing mix 4.1 Product strategies Product features and quality offered by a company has become of importance since it is used to attract and retain customers. Netflix product is majorly internal streaming. However, with the competition increasing, it has diversified products and services to increase set top boxes, game consoles and enhanced their services to be accessible in Apple devices such iPhone, Ipad and IPod. Similarly, customers can also access Netflix services within Game consoles such as Xbox and Set top boxes. The company uses product differentiation and marketing as perceived service strategies so as to create customer perception. The marketing department of Netflix often designs marketing mix which creates perception about the product and services offered by them (Mosahab, Mahamad & Ramayah 2011, p.76). Krengel (2013) argued that there is a great market in streaming live sports since all its competitors do not offer the same service, about 21.6 percent and 22.4 percent supporters from the North American Sports league uses one to four hours weekly on the internet Goggling on the clips and sports news. Therefore, Netflix keeps on expanding the existing collection by having as many popular television titles. It also partners with established actors so as to have series that are original and are introduced in the market in a period of less than a year. Trefis Team (2013) claimed that Netflix is also in a position to store varieties of internet speed therefore enabling its clients to view them in any place as long as there is an internet connection. They also communicate with providers of internet services in order for the clients to have affordable internet packets which make them to be comfortable in watching their movies while having special internet services. Netflix (2015) posited that the company uses other forms of payments like cheques, western union, mobile phones and not only credit cards so that the customers who live in countries that are not familiarized with credit cards can use Netflix. 4.2 Promotion and communication influence The spread of effects of technological era has influenced marketing competition as companies try to outdo each other in communication. Stelter (2013b) asserted that today, Netflix employs have a database with customers’ profile such as email where they send newsletters and other messages concerning consumer survey, promotions, special offers and marketing regarding its services. The consumers are also given freedom to subscribe their email address for newsletters and other company news. With the profiles, Netflix can use the information concerning watching preferences, online activity, user devices and internet speed to recognize subscribers or users geographic location so as to provide localized content, implementing Netflix terms (age restriction and period of free trials), offering recommendations for TV shows and movies to better match specific interests (Stelter 2013b). The practice will assist Netflix Company to rapidly and effectively answer requests and inquiries, and analyze, promote and enhance offering of services. At The moment, Netflix has customized message which it sends to all clients which reads “stream and watch what you prefer at the time you want and at an affordable price” (Lawler 2011). The company gives to its new customers a one month free subscription so as to show its quality service before the customer decides to use it. Netflix main aim is to be able to have as many loyal customers as possible. The reason for the promotion is to inform its customers on how confident Netflix is in its value it offers and is always ready to reward its customers have the company experience before deciding on whether to purchase its subscriptions. Kotler & Armstrong (2010, p.123) argued that the goal is to draw many loyal subscribers or customers since people are joining Netflix with assurance of quality their products and services have, which in turn grow loyalty and trust among subscribers. The trend portray Netflix as a company which offer value and allow people to have experience about the company before deciding to purchase subscriptions. The marketing managers have to design marketing communication elements which provide comprehensive questions that answer most questions asked by the consumer (Kotler & Keller 2013). For that reason, traditional marketing technique now has no place in the new complex market. Its marketing initiative, the major which will be used for communication with customers are Television commercials, internet, Billboards, mobile phones and tablets. A research carried out on June 2013 revealed that 92 percent of adults in the US owned mobile phones, 35 percent a tablet computer, and 57 percent a smart phone (Oliveira 2014). In January 2013, the same study established that 28 percent of adults in the USA are in possession of e-book reader (Oliveira 2014). This is proof that the company is trying to match their communication strategy with the trend in the market. Since consumer needs change with generation and life stages, marketing communication messages must reflect the values of every generation which influence their behavior. Williams, Petrosky, Hernandez and Page (2010, p.29) contended that Netflix has put the factor into perspective and matched its communication strategies with the needs of this generation which is highly techno-savvy. Below is a figure (figure 1) which depicts communication and technology device ownership in the US. Figure 1: Ownership gadgets in US by Adults Source: (Pew Research Center 2015) 4.2.1 Internet and Social Media Advertising Internet Social and media marketing is very crucial for Netflix Company since the service is incorporated within the internet which enables the operation of social media (Thomas 2012). Netflix presents opportunity and platform for its clients to interact and share with friends in different social media sites whilst using Netflix account. Netflix Company also gathers the information on social media in endeavors to serve the clients better and understand the clients. A study by Pew Research Center has found out that more than 90 % of US citizens use internet to interact or conduct business (Pew Research Center 2015). The result shows a massive rate of coverage. Another opportunity for Netflix Company which has emerged in the recent past is internet advertising which uses click-on-ad in which a potential customer is directed to a particular product. Internet browsers have massively received and accepted the banner ads in the recent times. The estimated sales resulted search and banner ads in the US is shown below in figure 2. Figure 2: Sale projection from the banner Ads Source: (Pew Research Center 2015) 4.2.2 Television ads or commercials A comparison between TV commercial and internet ads in 2012 in the US shows that TV commercial reached a large population compared to internet (Pew Research Center 2015). Nevertheless, since Netflix services are embedded on the internet, the company focuses more on internet advertising. However, Oliveira (2014) stated the growth of the Television commercial and its wide coverage has enabled the Netflix to put more emphasis on it. The management will therefore allocate more funds on television commercial due to high production cost. Figure 3: Media device comparison Source: (Pew Research Center 2015) 4.2.3 QR codes Trefis Team (2013) argued that in the recent times, QR codes have become more popular with Smartphones becoming more sophisticated. Netflix could partner with another candy firm to incorporate some form of QR codes within their movie candy. In addition, the company can also call for integration of QR codes within pop-con packages which are often applied in the movie theatres. Such codes will direct consumers to Netflix website and its YouTube commercials (Trefis Team 2013). The company may also conduct a follow up promotion for its customers to present their personal videos where they are advertising Netflix Company. If such videos pass the test of YouTube regulations and policies, then those videos need to be placed on the YouTube platform with the QR codes where the customers attached could be place under reward program of a discounted or free subscription within a period such as one month or two (Stelter 2013a). The practice is likely to result to consumer satisfaction and excitement. Figure 4: QR Code Source: (Stelter, B 2013a) 4.2 .4 Sponsored Movie and related activities Majority of the Film based activities are the Sundance Film events which take place in January in various cities in US annually (Lawler 2011). Such events give Netflix an opportunity to showcase what offers with an intention of gaining customer base. Netflix can sponsor and in the process will create more brand awareness. The International Film activities which takes in Rotterdam has been regarded one of the significant film events globally concentrating majorly on global premieres which has an experimental focus and large art-house (Lum 2014). Furthermore, the company can target more entertainment events like BET and Emmys which are watched and searched over the internet worldwide. 4.3 Price Netflix has created a pricing objective and strategy which aims at gaining higher market share thus translating to attraction and retaining customers (Alcheva, Cai & Zhao 2009). At the moment, the Netflix set it’s pricing to counterpart that of competitors. Whilst, charge its unlimited streaming at $7.99 per for which is similar as that of Hulu whereas Amazon charges its prime service for $6.50 per month (Flacy 2013). However, the difference in cost between Netflix and Amazon is that Netflix clients incur additional cost for personal titles. In the recent years, price on within online streaming sector has changed considerably meaning markets have to change to keep the pace. Flacy (2013) Netflix Company has had to react by differentiating its prices but to keep with the market margin for competitive advantage. In 2013, Netflix changed its products pricing and differentiated the products into two lines of internet streaming and the DVD rental. Generally, the companies use a psychological pricing strategy whereby their prices are discounted by atleast one dollar to attract price-sensitive customers. 4.4 Distribution Stelter (2013a) affirmed that Netflix uses all types of internet speeds allowing all its customers to view from whatever part they may have connections from the internet. For them to achieve its mission, Netflix is intending to partner with internet service provider since the government has not adhered to the law of internet neutrality that allows ISPs charge its clients separately and with not similar content, as a result this will affect the Netflix business (Cabot Investing Advice 2011). The company can partner with other companies so as to extend its programs which will make it easy for pre-installation of all the other devices, gaming companies and cables so as to introduce options on streaming video games. There is the need of approaching the Content providers so as to get rights which are exclusively to the content earlier than their competitors. 4.4.1 Place and Process Netflix services exist within the online platform, making it easy for customers to access it anyway across the globe (Laurie, Doz & Sheer 2006). With many people joining online community and would like to stream their preferred video and TV sites, Netflix services have become attractive (Stelter 2013a). The company has also made it easy to open account and subscribe through a self service procedure. The process takes a shorter time to sign up into Netflix account so as to watch instant movies. 5.0 Implementation Strategy Marketing Mix Marketing Content Talent Communication product Streaming Finance Objective realized Product -Free one month trial -Marketing through tablets and mobile phones -social media -TV commercials Decreasing The window from the period the movies are launched to the period there is embraced by Netflix Library. Launching video games and sports streaming -Enhancing speed of streaming. -QR codes Film based events Launch new form of payment Price Communication of price stability and discounts Set a price strategy which is stable and does not change quite often Distribution Partnership with the Internet service provider Figure: Implementation Plan 6.0 Time Frame Implementation table 2015 Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Figure: Implementation time frame 7.0 Evaluation Evaluation plays an important role in establishing the type of advertisement or promotion that will bring more impact for the brand and sales awareness and it will be given the first priority (Krengel 2013). An evaluation of pre and post will be carried out for both so as to be able to know if there will be a successful campaign and its extension of success. The company will select members who will represent and test the customers’ views on the campaign that will aim at improving their image, new sales and brand. 8.0 Contingency Plan Even though the company marketing plans are intended at making it competitive at the marketing, some practices are risky because they might fail the company from achieving its set objectives. Therefore, as the Netflix prepare for success stated in the objectives it must be wary of setbacks which can be resulted by risks. One of the risky scenarios is that projected budget for marketing plans can turn out to less. The situation has repercussion for the company because it can force the management to abruptly allocate more funds towards marketing hence denying other projects funds. On the other hand, ignoring the need for allocating more funds to marketing will see the plan fail to realize its full potential. To correct the scenarios, emergency funds should be allocated towards marketing plans. Another risky situation is when the revenue projection on marketing plans misses its target. In this scenario, Netflix will be forced to re-double its marketing endeavors. Internet streaming is considered a luxury by individual customers and in an event that Netflix increases its charges, customers who are unwilling to pay might just move to cheap companies. 9.0 Conclusion Netflix has made their brands to be convenient, affordable with big and personalized library. They have managed to stock the company with very large films and are known as the first company to have a high quality recommender system, compared to its competitors and their services are integrated to the social media. They have monopolized in that field and are very much ahead of their competitors since the introduction of instant streaming due to the availability of broad band internet. Due to the popularity of instant streaming, many companies are trying to not only enter the market but also to imitate it. Netflix is still placed on top since it has implemented the suggested creative strategies. Since Netflix has managed to achieve in its streaming message, it definitely will be a choice to everybody. 10.0 References Alcheva, V, Cai, Y & Zhao, L 2009, Cause related marketing: how does a cause-related marketing strategy shape consumer perception, attitude and behavior? Kristianstad University College, pp.1-37. Cabot Investing Advice 2011, Netflix Surges on Latin America Expansion News, Cabot Investing Advice. Flacy, M 2013, Netflix Instant vs. Hulu Plus vs. Amazon Video, Digital Trends. Kapferer, J.N 2012, Strategic Brand Management, 5th ed, Kogan Page, London. Kotler, P & Keller, K.L 2013, Marketing Management, London, Prentice Hall. Kotler, P & Armstrong, G 2010, Principles of Marketing, 13th (Global) ed, Pearson Education, Inc, Boston Krengel A 2013, Capstone final report: Netflix company analysis, Santa Clara University 2010 Viewed 15th Oct 2015 http://www.scribd.com/doc/94610526/NFLX-Capstone-Final-Report Laurie, D. L, Doz, Y. L, & Sheer, C. P 2006, Creating New Growth Platforms, Harvard Business Review, Vol.84, No.5, pp.80-90. Lawler, R 2011, Why Latin America is Netflix’s next big market, Gigamon. Lum, S 2014, Opinion: Netflix spoils subscribers, might be future of television, The Lantern. Mosahab, R, Mahamad, O & Ramayah, T 2011, Service Quality, Customer Satisfaction and Loyalty: A Test of Mediation, International Business Research, Vol.3, No.4, pp.74-80. Mullins, J, Walker, J. O, & Boyd, H. W 2010, Marketing management: a strategic decision making approach, A McGraw-Hill Irwin, Boston. Netflix 2015, Netflix Company Official Website, Viewed 15th Oct 2015 from https://www.netflix.com/ke/ Oliveira, M 2014, Report finds 29 per cent of English-speaking Canadian subscribe to Netflix, Toronto Star. Pew Research Center 2015, Device Ownership Over Time, Viewed 15th Oct 2015 http://www.pewinternet.org/data-trend/mobile/device-ownership/ Steel, E 2014, Netflix, Growing, Envisions Expansion Abroad, NY Times. Stelter, B 2013a, Netflix Hits Milestone and Raises Its Sights, The New York Times. Stelter, B 2013b, A Resurgent Netflix Beats Projections, Even Its Own, Viewed 15th Oct 2015 from NYTimes Media Decoder Blog: http://mediadecoder.blogs.nytimes.com/2013/01/23/netflix-­‐adds-­‐subscribers-­‐posts-­‐quarterly-­‐ profit/ Trefis Team 2013, Sizing Up Netflix's International Subscriber Growth Potential, Forbes. Trefis, N 2012, The U.S. Netflix Story: Evolving Competition Threatens Growth, Viewed 15th Oct 2015 from Trefis: http://www.trefis.com/stock/nflx/articles/146469/the-­‐u-­‐s-­‐netflix-­‐story-­‐evolving-­‐competition-­‐threatens-­‐growth/2012-­‐10-­‐16 Thomas, O 2012, Online Video Priacy is Fading Away, Thanks to Netflix, Viewed 15th Oct 2015 from Business Insider Australia: http://au.businessinsider.com/netflix-­‐ bittorrent-­‐sandvine-­‐report-­‐2012-­‐11. Williams, K.C, Petrosky, A.R, Hernandez, E.H & Page, R.A 2010, Multi-generational marketing: descriptions, characteristics, lifestyles, and attitudes, Journal of Applied Business and Economics, Vo.1, No.2, pp.25-39 Read More