Introduction
Netflix, Inc. is one of the largest global providers of internet television. It conducts its operations as a service company which requires internet subscription to stream movies and episodes of television programs using the internet. It also sends DVDs to its customers upon orders made by their customers through the mail. Although is it based in the United States, it has managed to cut across the North American and South American market. It is also available in the Carribean and some European countries. The company was formed on the 29th of August, 1997. However, it only commenced its operations on 14th of April in 1998. The company is based in California, United States.
Overview of 3 C’s of the company (company, customer, competitors)
The company offers online home entertainment solutions to its customers. It also sends DVDs to its customers via mail. It is the market leader. The company has operations in the United States market and in foreign locations. These include Canada, United Kingdom and other countries. The company’s stock is internationally traded. The customers of the company are those subscribers who stream in live to watch movies and shows via an internet television network provided by the company. The company offers a variety of payment plans that enable it to stand out against their competitors. However, the increasing of prices by the company has been countered by the provision of cheaper products by the competitors. This resulted into a price war. For instance, the entry of Blockbuster into the online watching market forced the company to reduce the price of its popular three-disk fee from US$21.99 to US$ 17.99.
Another rival to the company’s business is Red Box. Red Box competes with the company in the market for selling DVDs. The company has adopted a different approach to distributing the DVDs that has shown to be more effective and cost saving. Instead of mailing the DVDs, Red Box has established several self-service stores where customers can walk into and pick their favorite movies. The customers can then return the DVDs to the stores after watching and pick up another DVDs. The DVD stores are situated in metropolitan areas where a large number of customers can access them.
The success achieved by the company has attracted new entrants into the market. WalMart and Amazon.com are some examples of companies that ventured into online video rentals segment because of the potential for growth associated with the online television market. This created competition to the company because the new entrants targeted the United States market and also foreign markets where the company was operating in. These include the exemption of due dates, shipping fees, late fees, and pay-per-view fees. Customers of Netflix can enjoy watching as many movies and shows as they please at any place and time, on almost any internet connected screen device. The best part of this is that subscribers have play, pause and resume options when watching their favorite movies and shows. All this is possible without interruptions from commercials which are common in regular television.
Overview of STP for the company (how have they segmented the market, who is their target segment, what is their positioning)
The main target group for the company is the digital natives. These are American citizens who love to access their favorite movies and shows and episodes from their Netflix enabled devices. There are also families with children. This is a very special group of customers because it involves viewership by both adults and children. Then there are professionals who have busy schedules and stream in at their own free time. All these segments of customers have features that are unique to each one of them. Netflix has adopted a mechanism that identifies the different needs of all these groups of individuals. The company ensures that content, cost and convenience are the main factors of consideration for these markets.
The company coordinates all its operating activities centrally from its headquarter in the united states. While the overall marketing strategies are developed in the unites states, country managers are given the power to decide on which market penetration and expansion strategies will work best in their countries of operation. However, all revenue is collected in the United States.
The company has entered into partnership with hardware companies which assist in providing the necessary devices needed by customers to stream online. The company recognizes that the delivery of its services can only be achieved when customers are in access of Netflix enabled screen devices. Such partnerships between the company and hardware companies are not competitive but complementary. The overall effect is that the company obtains a competitive advantage when they can assist their customers to acquire these devices.
The company believes that expanding its markets is the most effective way to position itself in the market. Apart from maintaining a significant share of the domestic market, it is also important to explore into foreign markets. The main advantage with international business is that the company can still make profits even if the local market is suppressed. International markets offer a good opportunity for the company to increase its sales revenue especially in markets that are not yet exploited. The fact that Netflix offers its services in different languages (English, Spanish and Portuguese) enables it to render its products to a large number of countries. By doing this, the company hopes to counter the growing level of competition from companies providing rival services. These include Blockbuster, CinemaNow, Microsoft and Red Box.
Overview of the 4 P’s of the company (Product, Promotion, Place, Price)
Value is created by created to customers by increasing benefit. The higher the value in customers the higher the benefit, marketing is about communicating the value of a product to customers for purposes of selling the product or service. The marketing mix model is used by marketers as a tool in implementing the marketing strategies. Managers strive to generate an optimal feedback in the target market by combining the variables in an optimal manner. Using variations of these 4ps firm can reach many customers within the target market.
Netflix has commented their mission of appeal and success built on providing the most variety in selection of DVDs, by increasing leadership role in the distribution of DVDs, to produce cheap content and most experience in customers. There is no commercialization of its products, the content can be paused watched over again and rewound. The convenience of streaming on line has provided a market that is cheaper than posting out all their DVDS and waiting for customers to purchase. Streaming is less costly and less time consuming.
The company’s product is the satisfactory service that fulfills the needs of the online streaming viewers. The competitive market and stringent laws protecting consumers has made the product a point of focus for the manufacturers. This has seen firms strive to being effective in their product development, distribution and marketing. Netflix has a range of products mostly movies and TV series. The product is instantly streamed over the net to your computer, TV, mobile phones tablets, PC and PS3.Netflix focuses on distributing the product to customers through various channels. Their main focus is on the functionality, quality, appearance support and warrantee.
Price
This is how much the customer will pay for the product. Firms must come up with a pricing strategy that suits the customer, same time fulfilling their objective of being in business that is profit and survive. Adjusting a product price has implications in the marketing strategy, depending on the price elasticity of the product. Netflix has set a price that complements the other elements of the marketing mix. Netflix sales its product at €6.99, this is cheaper to customer and profitable to the firm. Netflix offers its customers allowances and discounts on the product, this enables loyalty among customers to the firm. Netflix uses the pricing strategy; market penetration by reaching the target consumer directly without any intermediary and neutral pricing whereby the product has just one price, no different price is offered depending on the device one is streaming with.
Place
This is the accessibility of the product by the customer. Netflix is based in the USA, warehousing DVDS, till they changed and starts streaming all their content. Netflix focus was through the internet, which has really worked out for them. It offers its products and services to the consumer at any time. It offers intensive distribution of its product to variety of customers provided they pay the fee; this is a marketing strategy that complements the other aspect of the marketing mix. Netflix offers wide market coverage in terms of availability of its product in the internet and a good service level through mobile TVs and tablets. Place focus on the availability at the right place, right time and right quantities and quality, this offers the customer satisfaction of the product, providing an appropriate competition with other products in the segment.
Promotion
These are methods that the company may use to provide information to different parties about a product. Constitute elements are advertising mainly done online and sales promotion. Netflix started with widespread advertising in many different ways including newspapers, magazines and online advertising. Due to the divergence in the market, Netflix has reduced its advertising campaigns. It has consolidated its share in the global online television market.
Conclusion
The company enjoys the status of a global leader in the online home entertainment market. Maintaining this status has required an all dimensional implementation of its market strategy. This strategy has focused on the needs of customers of different needs and locations across the world. The competition faced by the company from its rivals has driven it to improve on the quality of service delivery to its viewers. In the future, the company has to closely monitor the expectations of its customers in order to continue enjoying a major share of the market.
Works Cited
Grewal, Dhruv, and Michael Levy. Marketing. New York: McGraw Hill/Irwin, 2013. Print.
