Marketing Analysis of Netflix

Marketing Analysis of NetflixNetflix is an online caller-up with corporate headquarters in Los Gatos, California. Netflix was founded by battle of Hastings who is also the CEO of the association. Netflixs key business is online rental services in the softw ar manufacture. Netflixs softw atomic number 18 business services span various software fruits and services. Among these are DVD movies and several early(a) software products. Despite disappointing results on its performance at the beginning, the innovative entrepreneur continued to tailor the companion charm marking and exploiting new opportunities that presented themselves. That was when the company designed and developed a website that saw it host millions of subscribers making it rake in huge profits. That was in 2006.Netflix was founded at a epoch when the video industry was openhandedly populated by small retail outlets which were characterized by long product delivery time. The foodstuff was dominated by the when ce giant Blockbuster Inc. Blockbuster had no real interchangeing strategy and node royalty was based on impulsive buying. It enjoyed booming sales with nearly 100 percent success when Netflix joined the mart.Upon its entry into the market in 1997, Netflix named that the market that was dominated by the brick and motor marketing methods. The launch of this company was at the time of the beginning of internet retailing. Online selling was gaining an upper hand to brick and motor methods. This compelled Netflixs to launch its own website in 1998 that specialized in the use of embrace platform technologies in service delivery. At this time, different set models were tested to increase sales volume.Netflix was also adept at countering new entrants and developments in the market. one of this was the development of a video readiness services on line.Porters Generic StrategyAccording to Porter (1974), successful business organizations incorporate one or more of the generic strategy options to propel it to success. Among these strategies are cost leadership, heighten, and group differentiation. A critical analysis and evaluation of the cases muse reveals that Netflix had to various extents incorporated these strategies in its business pursuits with each generic strategy contributing to the success or failure of the company in its pursuits. Netflix emphasized on the focus strategy with the some other strategies playing a minor role in the firms pursuits.The differentiation strategy is where a company concentrates its efforts in developing a single product and then invests in identifying and incorporating unique attributes that meet customer inevitably (Porter, 1974). Porter (1975) asserts that by adding value to a product and creating uniqueness in product to attract customers, customers are likely to purchase the product at a senior high schooler price. That was the case with Netflix. Netflix original move into the market targeted the renting of videos i n the movie industry. That strategy could be achieved by the use of recently developed and upcoming internet marketing technology which other companies had not incorporated in their business pursuits. The case playing field reveals that Netflixs newly launched website integrated a search engine that enabled each customer to search and access products of ones choice. Netflixs management showed such talent and ingenuity in marketing their products by employing already available and established supply chain infrastructure and technology. One of the infrastructure tools included the USs postal services. The firm incurred slight expenses in delivering the DVDs to the customers as they were light in weight.In creating value and uniqueness to its products using the group differentiation strategy, Netflix enterpriseed to characterize its products with value, user friendliness and convenience, and unique selections. That was evident when Hastings coined a term for their customers that Amaz on used to refer to its customers, eBay.According to Porter (1975), a company that invests in this approach should be led by a tumesce skilled and dedicated team. That was the case with Netflix. Netflixs management was led by Hastings, an entrepreneur at heart. In addition to that, Porter affirms that a company organized around pursuing excellence and aiming at gaining a greater advantage in the market should have a good reputation should revolve around high product quality and innovation. The case with Netflix is outstanding here. Netflix did not only focus on DVD sales, they had other serious considerations in product innovation. Among these were a focus on video-on-demand and alternatives to VOD.Porter (1974) argues that a company may not necessarily integrate all the generic characteristics depending on the nature of its business. An analysis of the case study indicates that Netflix did not pay much attention to cost leadership. Some of the price models did not work for Netfli x. One such model involved a note where the firm spent several thousands of dollars in adverts only to gain a paltry income from such an endeavor. Netflix at times charged high rental fees for their online videos which at times drove its customers away. However, technology seems to have paced Netflix at an upper hand compared to other companies involved I the same business pursuits.However to a large extent, Netflix incorporated the generic aspect of focus strategy. The focus strategy is where a firm concentrates on one firm and later on attempts to manipulate product prices to achieve an advantage over competitors (Porter, 1975). Netflix did not succeed with this strategy to a desirable extent but seems to have lost some customers due to that.Porters cardinal ForcesNetflix entered a market that Porter (1974) affirms is driven by five forces. These include the bargaining power of customers, threat of new entrants, bargaining power of buyers, threat of interchange products, and ri valry among competing firms. At Netflix, the bargaining buyer of customers was realized when despite intensive marketing activities, the firm earned paltry sums far below their target. Instead of earning the company more customers, thus increasing the revenue, the company was facing a loss. Customers had driven sense into the companys executives that they could determine a companys profitability and the model they use in pricing their products. This pricing element was evident when some customers felt dissatisfied by the pricing system compelling Netflix to rethink and introduce a new pricing mechanism.Netflix could counter new entrants by its relentless pursuits to adopt new technologies and integrate them to the service sit was offering. That was the case when it entered the field of video-on-demand. Despite the huge investments it had made, Netflix did not realize quick returns as there were no technologies in the form of hardware platforms to support such services. Netflix is n oted to have lost a chunk of revenue in advertising these service customers were not willing to pay for. The case study however reveals that later innovations saw Netflix succeed in this field. One other case was the entry of VOD services and the fierce completion Netflix had to fight off before they could get a foothold in this widely dominated market by Netflix. Netflix swung into action by exploiting new technology platforms that were not characterized by her competitors in gaining a firm foothold.Another force experience in this industry was the bargaining power of buyers. As discussed above, Netflix had to succumb to buyers buying behavior as in some instances new innovations could not be priced as per Netflixs dreams. That was the case with investments and impatient marketing campaigns conducted by Netflix for the newly launched services, VOD.Porter (1975) asserts that companies can endeavor to enter a market by offering substitute products that may serve the needs of current products offered in the market. The case with Netflix is a striking one. The case study reveals that substitute products were too below bar in competing with those offered by Netflix and the company was straightway enjoying an undisrupted share of the market. Netflix carefully blended these generic forces to its advantage.Rivalry among competing firms saw Netflix to be a runaway case. Arguments demonstrate how competitors went to the extent of accusing Netflix of infringing upon copy right laws in offering these videos online. This line of attack was shaken off by Netflixs executives who argued that Netflix was offering these services just like any retail outlet could buy and sell a product, except Netflix was using the new internet technology that these other firms had not put to full use.Value ChainNetflixs management was keen at exploiting information technology in incorporating value chain activities in its service. A striking example was when the companys turnaround time for product deliveries was drastically enhanced by the use of appropriate technology. Each customer who opted to stay or leave the company could be requested to leave an answered questionnaire about their decisions. These could be used to identify the weaknesses inherent in the system and determine new methods of fulfilling customer needs and wants. One such revelation was identified with the companys ever changing rental fees. some other value chain addition activities spanned the infrastructure the company was using and its implementation of new technologies to enhance value for its customers. Netflixs system product acquisition was also automatise, with automated searches using an integrated search engine.Implementation of Information Technology in NetflixTo stay afloat in the already large market and maintain the customer base, Netflix will have to implement an IT infrastructure that could offer reliable support for its business transactions (Smith, Short, 2001). One of these cou ld be a entropy exploit application. The data mining application could be integrated in the organizations information system to assists in decision making. Netflix is a highly customer focused organization. Data mining could uphold enhance communication, help the company compare its prices with other companies evaluate customer satisfaction, evaluate supplier relationships, enhance staff skills, and post an overview of company put a hybridise and performance.On the other hand decision support system could be incorporated into the company to help improve decision making from the companys data warehouse, provide real time sales compressions, and model decision making context (Shermis, Stemmer, Berger, Anderson, 1991). The outputs from this system could significantly depend on the inputs from the companys data warehouse and the decisions made could bounce the actual potion of the company.In addition to that, a customer relationships management should be incorporated as it helps the management to sustain its old and new customers, meet customer needs, and establish a good working relationship with other companies and customers.According to Silverman (1993), a supply chain management system if well incorporated into this company could help create competitive advantage for the firm by enabling it to optimize all factors relevant to customer satisfaction and company benefits. This system could help the company identify key factors central to its success and enable management optimize all aspects of controls in its marketing strategies and supply and acquisition logistics (Smith, Short, 2001).RecommendationsBased on the above discussion, Netflix should perpetually adapt to changing technological dynamism and new market opportunities in reaching various markets. Netflixs management should hire experts on cross culture management to ensure a cross culture component is incorporated in its pursuits. This could be the case since newer opportunities lie outside Net flixs current market that is characterized by a fairly uniform culture. In addition to that, the firm should incorporate user friendly software products that are cross platform and matched with other software products to enhance usability. To maintain a large market share, the company should always incorporate faire business practices in its pursuits. In addition to that, Netflix should endeavor to develop software that can bar piracies on its products in addition to patenting its products. The company should invest in software technologies that bar any could be unlawful downloading of files or unauthorized access or copying of its products. That could bar illegal usage of its video products since it denies the company legitimate profits that could accrue from those sales. The company should continuously evaluate the role played by information technology in propelling it to its position, the ever changing trends in the industry I terms of provision of services and other related se rvices. It should continuously revise its plans to make them current and relevant to the identified changes and endeavor to incorporate new technologies in its pursuits.