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Executive summary

Netflix is a company that provides online subscription-based DVD rentals which is a

great and successful online streaming business. It is clear that nothing in this world can be clear

because the is always changing, therefore, staying ahead of the game and keeping up with the

trends before other people do is the only way to be clear and successful. It was founded by Reed

Hastings in 1997 which is about 12 years after the foundation of the Blockbuster. Blockbuster

became the largest video rental company worldwide in 1999 and had very many stores with the

estimation that 60% of the United States residents lived within three miles of a Blockbuster store.

This was a great problem for Netflix since it was still growing. Netflix started growing when the

introduced DVDs in the mid-90s. The DVDs allowed members to view movies in a better sound

quality and video quality.

Introduction

Netflix is the leading internet television network in the world. It is composed of over 86

million members and covers more than 190 countries. According to Netflix Media, users or

members are able to enjoy 125 or more million hours of TV shows every day. These shows vary

from documentaries to original series and even feature films. Netflix offers their services on

different styles like a monthly plan. There are unlimited rentals but a member can only rent one

at a time. Netflix can only send you another DVD once you finish and return the previous one. A

person can receive two or three if they have paid a little more monthly.

Background information

Netflix provides an on-demand internet that enables streaming of media services all over

the world for example in The Netherlands, France, South America, Germany, Switzerland, North

America, Ireland and other parts of the world. There was an option in the United States where

the mailed DVDs were sent through Permit Reply Mail. It was established by an angry

blockbuster customer who owed $40 as the late fee on a certain movie called Apollo 13 in the

year 1997 in California. Netflix had over 10 million subscribers and offered more than 10,000

titles on DVD by the year 2009.

SWOT Analysis

Netflix is the Increase in the paid membership for Netflix which aid in business growth

is a great strength, Netflix has a big brand name and strong brand associations, it strongly

focuses on innovation when it comes to technology and development, it produces local content

and it also has the ability to produce the original TV series and new releases a month. A lot of

content is available and easy to use. Netflix has also been able to increase their licensing

requirements leading to more amounts of content available for its streaming platform.

The first weakness of Netflix is that the licensing agreements prevent Netflix from its

abilities of what it can provide the customer. Another weakness is that the new releases have

limited variety. There is a decrease in its domestic DVD - by-mail rental operation in the past

few years, as streaming is gaining popularity. Those who supply content to Netflix have turned

out to be their competitors and there is a reduction in the library content due to investing in the

original content. There are many opportunities that Netflix have missed on international

expansion and also more advertising on their website. Its international operations are still

struggling even though it has had dramatic revenue growth. The gap comes in where Netflix has

not offered many crossover movies yet to the market. The services are internationally limited

hence leaving the market open for the domestic competitors.

The threat of Netflix is the members switching to local competitors who may make the

competitors overpower Netflix financially. After the creation of a business plan, the SWOT

Analysis should always be performed. A SWOT review then follows and should be conducted

annually and frequently especially where there are changes in the internal organization warrant it

and the marketing environment. (White, 2012). The most challenging threat that a company faces

is normally the increasing competition. There is an increase in international and domestic

business expenses. Netflix also depends on the revenue which is from an international business

whose exchange rates keep fluctuating.

PESTEL Analysis

Political factors are referred to as external factors. They affect the operation of the

company from outside, for example, the regulations from the government. It can also be an

individual, for example, a politician who has the ability to control the smooth running of a

company. Netflix has always done a review on such factors and has enabled them in finding a

better way on how an increase in revenue will affect tax liability. They have been able to also

restrict the entry of other firms into their industry. Economic factors, economic trends are

playing a big role in the Netflix growth. They include spending rates, interest rates, consumer

income, and inflation and many other factors. Netflix has monitored these factors closely which

has enabled them to meet the customer's expectations and needs. An example is where they don't

take any too much debt which may affect the company in cases of higher interest rates in future.

Social factors are all the social aspects of a PESTEL analysis relating to demographics

and any change in cultures associated with the economy. There is a need for more devices and

fewer electronics by the consumers in order to improve their standards of living. Technological

factors– There have been many positive changes worldwide due to the technology advancement.

Netflix has embraced the new business technology by ensuring that, it creates a competitive

advantage which will protect them from their competitors and enable them to stay at pace with

all the competitors available in the industry. Environmental factors include the factors relating to

the natural environment that surrounds Netflix. It is necessary for any company to conserve and

protect the surrounding environment. Netflix has been able to embrace this time with time. Legal

Factors are laws and regulation factors controlling the business environment. Any violation of

these regulations can make things hard for the operation of Netflix.

Segmentation, targeting, and positioning

Marketing Segmentation is very important for a business to be able to segment or

subdivide target market into significant groups that have related wants and needs in order to be

able to produce products and services that can satisfy the needs of the groups being targeted.

Netflix just like any other business employ the use Segmentation and targets diverse groups of

clients. Segmentation, therefore, must contain a large criterion which is good enough for the

business to keep going. Measurability should be of help where the target market and the data of

people being a target should be conducted. It will enable the business to have an in close

interaction with the clients or customers in the subdivided or segmented area. If there is need to

get a response from the target market then there should be responses available. Netflix has to

collect data from different regions since they have a new segment outside the United States. This

will enable them to understand what to stream and what not to. Netflix is a personalized service,

it does not have any base on demographics hence having a target market is irrelevant. Netflix

position itself into being the top when giving the customers all they need. Ensuring customers’

needs are met.

Marketing mix

Netflix should use more product strategies like the addition of more movies,

accommodation of a variety internet setups and even expanding the collection library. For

example, a sports streaming can open up more market for Netflix. Engaging in a promotion is

also very useful. This can be done through the media and even conducting festivals like

Sundance. This is just to ensure that Netflix stays appealing to all the new customers and be able

to retain the already existing customers. Netflix does not depend on the conventional ratings

instead they use the "valued hours" for their evaluation of success.

Advertising strategy, Netflix greatly employ the use of native advertising. This has enabled

Netflix to reach a wider coverage.

Conclusion

The implementation of all these strategies is to ensure that Netflix will remain in top

position in the industry. Its aim is to make sure that there is Netflix subscription both locally and

international. The continuous promotion will aid in the business success of remaining the

mainstream.

References

Laughlin, L. S. (2016). What's Next for Netflix?. Fortune, 173(5), 22.

McAlone, N. (2016 Apr. 25), Netflix's website in 1999 looked nothing like it does today.

Trefis Team, Contributor (2016, Aug. 26), Here's What Netflix Needs To Succeed In

International Markets, Forbes.

White, S. (2012). Principles of marketing [Electronic version].

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