Introduction
Three-circle analysis is a tool that allows management to give an internal analysis of the organization. Through the analysis, strategies assess the needs of customers, competitors’ offerings, and company offerings for clearly articulating the competitive advantage of the company and way it differentiates itself from its competition. The paper presents the analysis of Netflix’s competitive strategy in the light of three-circle model to better illustrate customers’ needs, company’s offerings, and competitors’ offerings.
Most Important Customer Segments Need or Want from the Product or Service
The first circle represents the consensus of the team on the most important needs or wants of the segment of customers (Pearce, Robinson & Mital, 2012). The case depict that the most important customer segment needs and wants of Netflix include the unlimited commercial free streaming of movies and television shows through the internet and direct delivery service of DVDs to the homes of customers. Netflix by 2012 had delivered more than 100000 titles to the homes of its customers within two business days in Mexico, Canada, the United States, South and Central America. No late fee was the key to the success of the organization. Due to the rule of no late fee, the demand for new movies extended over time that ensured the effective movies’ circulation. By 2013, the company had gained the attention of more than 36 million subscribers to its online streaming services (Hoffman, 2010; Robinson, Pearce, Subramanian, 2013).
Customers Perceive the Company’s Offerings
The second circle represents the view of the team that how customers perceive the offerings of the company. The expanded operations of the business increased share price, and increased subscription of online material are the evidence that the customer perceives the company offerings valuable. Most of the people want to see the latest movies as soon as possible, but the Netflix strategy of applying no fee of being late and fast delivery of the product to customer’s home helped in extending the demand for new movies. This means that the company’s strategies were perceived worthwhile by consumers. The buying behavior or the behavior towards the utilization of services is the reflection of customer’s perception regarding the product. In the service streaming battle, the company is a clear victory, as the increase in the numbers of subscribers that reached more than 36 million was the reflection that customers of the company value its services and consider beneficial for themselves. The company started offering it streaming services at the lower cost to its customers. The business enhanced its research and development expenses up to $258 million from $114 million with the intention of providing high quality services to customers.
Customer Perception of the Competitors of the Company
In the three circle analysis, the third circle represents the views of strategists that how their customers perceive the offerings of the competitors of the company. The case clearly depicts that the world has moved towards more digital age and the entertainment industry expanded. The competitors of the company include Hulu/Huluplus, Amazon, RedBox, Blockbuster, and Vudu. The perception of the customers regarding the most of the competitors of the company is that these companies offer video game entertainment and experiences of in-house movies. Different access to media entertainment as similar to Netflix is also offered by the competitors of the company. The major example of this is RedBox; the company has placed its kiosks strategically around the world. By the June 2011, the volume of kiosks has reached to 33000 to 27800 locations. Hulu/Huluplus and Vudu are the companies offering online streaming of movies and television shows (Robinson, Pearce, Subramanian, 2013; OPSMGT, 2013).
Competitive Advantage of the Company
All of the three circles are critically important for building competitive advantage and specifically important for asking the questions regarding the competitive advantage of the company. For example, A can be used to ask that how sustainable and big is the competitive advantage of the company and either the competitive advantage of the company is based on differentiated capabilities. The second circle can be used to ask the question that either the organization is delivering in its parity area effectively. However, the last circle can be used to ask the question regarding the competitive advantage about the way the company can counter the advantage of its competitors. Based on these three circles, the company can produce hypothesis and can test that hypothesis by taking feedback from customers (Urbany & Davis, 2007).
Conclusion
The assignment is based on the analysis of two cases of Netflix one is “Netflix, Inc. (A): the 2011 rebranding/price increase debacle” and second is “Netflix, Inc. (B): a strategic pivot of mythic proportion” written by Alan N. Hoffman and by Richard Robinson, John Pearce, and Ram Subramanian respectively. Analysis has been conducted in the light of three circle theory, and it has been determined that the company has a clear competitive edge over its competitor. Customers’ perception regarding the company is positive.
References
Hoffman, A. N. (2010). Netflix, Inc. (A): the 2011 rebranding/price increase debacle.
OPSMGT. (2013). Operations Management & Business Issues in Today's Competitive Environment. Retrieved June 19, 2016, from http://opsmgt.edublogs.org/page/79/
Pearce, J. A., Robinson, R. B., & Mital, A. (2012). Strategic Management: Formulation, Implementation, and Control. Tata McGraw-Hill Education.
Robinson, R., Pearce, J., Subramanian, R. (2013). Netflix, Inc. (B): a strategic pivot of mythic proportion
Urbany J. E., & Davis, J. H. (2007). Strategic Insight in Three Circles. Harvard Business Review. Retrieved June 19, 2016, from https://hbr.org/2007/11/strategic-insight-in-three-circles
