NETFLIX
Netflix isthe world’sleadingonline streamingmediacompany.Byenteringlicensingagreementswith
majorfilmstudios,Netflix isable todistributemoviesandTV showsonline.Basedonalow monthly
price,subscriberscanwatchas much as they want fromthe contentlibrary,asfar as theyhave an
Internetconnectedscreen.Asof 2016, they’ve more than75 millionsubscriberfortheirdigital content,
whetherinthe formof Online streamingand/orDVD-by-mail service startedon1998.
Foundedin1997 by ReedHastingand Marc Randolph,the Netflix isHeadquarteredatLosGatos. The
ideaof Netflix came toHastingswhenhe wasforcedto pay$40 inoverdue finesafterreturning Apollo
13 well pastitsdue date. The Netflix websitewaslaunchedonApril 14,1998 withonly30 employees
and 925 worksavailable forrentthrougha traditional pay-per-rental model. The company introduced
the monthlysubscriptionconceptinSeptember1999, and thendroppedthe single-rental model inearly
2000. Since thattime,the companyhas builtitsreputationonthe businessmodel of flat-fee unlimited
rentalswithoutdue dates,late fees,shippingandhandlingfees,orpertitle rental fees. In2000, Netflix
was offeredforacquisitionto Blockbusterfor$50 million;however,Blockbusterdeclinedthe offer. In
2007, Netflixintroducedstreaming,whichallowsmemberstowatchTV showsand moviesinstantly.
Basedon Netflix’srichandpopularcontent,suchas“House of Cards”, and convenient access, this
business area has turned into a success – surpassingDVDrental revenue.Today,Netflix hasover 75
millionsubscribersglobally,with 44millionof theminthe domesticmarket,USA. Furthermore,ithas
become one of the largestonline contentdistributioncompanieswithrevenue of US$6.77 billion (asof
2015 and increasing).
Netflix hasstatedtheirmissionistogrow the streamingsubscriptionbusinessdomesticallyandglobally.
Specifically,Netflixhasstatedtheirintentionto“continuously improve the customerexperience, with
a focus on expanding our streaming content, enhancing our user interface andextendingour
streamingservice toevenmore Internet-connecteddevices,while stayingwithinthe parameters of our
consolidated net income andoperatingsegmentcontributionprofittarget”
Moreover, Netflix CEO Reed Hastings has publicly stated four goals that he considersinstrumental
to achieving his vision for Netflix. These include;
 Becoming the best global entertainment distribution service,
 Licensing entertainment content around the world,
 Creatingmarketsthatare accessible tofilm-makers,and
 Helpingcontentcreatorsaroundthe worldtofinda global audience
Explain its consumer segment on the basis of segmentation
variables
Marketsegmentationisprocessofdividingamarketintodistinctgroupsofbuyersonthe basisofneeds,characteristics,
or behaviors.

Netflix marketisverydynamicandconstantlychanginginresponse tochangesintechnologyand
consumerbehavior.Netflix had 44 millionsubscribersasof February2016 withage range from18 years
of age to 59. Theyspend2bilionhourswatchingstreamedvideoonhi-speedinternet.Thereare multiple
waysof segmentingthe marketinthe videostreamingindustrybutdue tohighlydiversenature of the
customerswhovariesinage,income,geographicareas,educationlevels,andwatchingpreferencesvary
withtime,mood,beliefs,companyetc.none of the segmentationwill be totallyHomogeneous within,
Heterogeneousacross,Measurable,Substantial,Accessible,Differentiable,Actionable andmostof all
Profitable.
WhyNot?
Firsta personmayhave extremelydifferentpreferencesinfluencedbyanumberof reasonslike
company,mood,time,curiosity,newmoviespremier,awardslikeEmmyawardstendstoinfluence
peoplespreference atparticulartimes,whatacustomerseesastrendyon social mediaatthe same time
these preferencesare notpinnedtoaparticularkindof people soitwill be impractical toobtaina
homogeneousgroupwithin,heterogeneousacrossor evenmeasurable.
Secondpeople change these preferencesin notime andthat will make itveryhardto make the
segmentationaccessible,differentiable,actionableandsubstantial enoughtomake profitsbecause
Netflix dependsonthe large numberof subscriberstobreakeven,muchmore tomake profitsand
focusingona particularsegmentwill notmake thisachievable.
Targeting
The processofevaluatingeach segment’sattractiveness& selectingone or more toenter.
Netflix targetamassmarketof consumervia paidstreamingsubscriptionof TV showsandmovies viz;
Basic,Standard andPremiumwithpricesof US$7.99, US$9.99 and US$11.99 witha monthfree trial
includedinall plans.The companyis aimingtohave the biggestmarketshare withthe largestnumberof
subscribersitcan getregardlessof age,backgrounds,beliefs,preferences,demography etc.Although
Netflix targettorecruitmassmarketitfocusesonindividual subscribersneedsinordertoretainthem
for a longtime.The higherthe numberof payingsubscribersthe more Netflix canachieve returnon
heavyinvestmentincontentandtechnologybecause onlylow pricescanbe chargeddue to the nature
of the industryandservice.
Explain how the product has been developed over the years
Startedas a pay-per-rental model formoviesin1997, the Netflixintroducedthe monthlysubscription
conceptinSeptember1999 whichtheydroppedoff on2000. Since then,the companyhas builtits
reputationonthe businessmodelof flat-fee unlimitedrentalswithoutdue dates,late fees,shippingand
handlingfees,orpertitle rental fees..In2007, Netflix introducedstreaming,whichallowsmembersto
watch TV showsand moviesinstantly.
In which stage of product life cycle is this product
The Netflix isinGrowthstage (Aperiod ofrapid marketacceptance and substantial profitimprovement.) because
the earlyadopterslike the product,andadditional consumersstartedbuyingitwhere the salesvolume
is75 millionwith44 milliondomesticconsumer. Newfeaturesare beingaddedforexamplesonline

streaming. Newcompetitorsare enteringlike Hulu,Amazon,Redbox,Starzetc.are attractedby the
opportunities.
Conduct the SWOT analysis of the product.
SWOT analysisisan overall evaluationofthe company’sstrengths(S),weaknesses(W),opportunities(O),and threats
(T). SWOT analysishelpstomatch the company’sstrengthstoattractiveopportunitiesinthe environment,while
eliminatingor overcomingtheweaknessesand minimizingthethreats.
Strengths:
Large Company
Historically High Growth Rates
First Mover Advantage
Economies of Scale
Brand Identity
Strong Delivery System
Wide and Varied Video Content
Low-Cost Service
Progressive Services/Company Capabilities
Movie Selection Software
Personalized Services
Service Speed
Marketing (Free One-Month Trials)
Weaknesses:
Internet Service Dependency
Managerial Strategic Missteps
Consumer Confidence low because of Qwickster backlash
Opportunities:
Increased Popularity in Streaming Services
Internet Development (Particularly in Latin America)
Foreign Market Development
Consumer Acceptance of delivery of TV Shows and Movies via Internet
Fast-Growing Market
Technological Advancements
Threats:
Competitors: Hulu Plus, Starz, Redbox, Amazon InstantVideo, etc.
Competitor Partnerships
Rapid Technological Changes
Change In Buyer Preferences
Low Entry Barriers For Competitors
Decline in DVD Market
Price Increase of Licensing Fees
Internet Service
Weak or Nonexistent

Increase in Price
S.W.O.T. Conclusion:
The company outlook is hopeful and strong. Netflix market share is large and expanding into
foreign markets. Netflix has many strengths and opportunities: ranging from economies of scale
to first mover advantage, foreign market development to personalization, to marketing and
established brand identity. This, as well as updates in internet service capabilities, development,
and speed, puts Netflix in a good position to move forward.
Discuss its marketing strategy
Netflix’smarketingeffortsrepresentasignificantaspectof Netflix’svaluechain.Indeed, given that
competitors offer very similar streaming services, Netflix is reliant on marketing tomaintain its
market share. Netflix has a significant advertising budget, which includes online advertisements,
TV commercials, e-mails and billboards. Inanefforttopromote customerloyalty,Netflixmakesuse of
word-of-mouthadvertisingandthe social media.Inparticular, it allows members to share
recommendations on social media and providing free trials which contributesto a highconversion
ratesto continuingcustomers.
Furthermore, Netflix wants to create a strong brand and to acquire new customers so thatthey
can make more profit and establish its position as a market leader. They achieve this bycreating
its own original series such House of Cards and Bad Samaritans, which surprises the customers.
They also try to predict how the market is going to change and take advantage of its
competitors. Moreover, information about online activity andwatching preferences are used to
personalize marketing and the services that are providing tocustomers.Finally,Netflix doesnot
practice price differentiationbecauseittargetsthe massmarketand has a requirementthata response
isgivenwithin5minutesof a customerplacing a call. Marketingandsalestherefore createscompetitive
advantage forNetflix ascanbe seenby the company’sdevelopmentinthe lastfew years.
Positioning and differentiation
The processofarrangingfor aproducttooccupya clear,distinctand desirable placerelative tocompetingproductsinthe
mindsof targetconsumers.
Customer’stoppriorityisconvenience,affordability,speed,personalizationof the videostreamingand
highselectionof titles.Netflix aimatbeingthe topandonlychoice for itscustomersbyprovidingamore
personalized,fast,convenient,highselectionandyetaffordable onlinestreamingservicethanall of the
competitors.
Netflix doesnotpractice price differentiationbecauseittargetsthe massmarketand has a requirement
that a response isgivenwithin5minutesof a customerplacinga call.Marketingandsalestherefore
createscompetitiveadvantage forNetflixascan be seenbythe company’sdevelopmentinthe lastfew
years.