Final Assignment on Netflix

Running Head:NETFLIX’S SITUATION ANALYSIS 1
Friday Night Date With Netflix: Netflix’s Situation Analysis
Connie Butts
BUS 330: Principles of Marketing
Professor Garlyn Lewis
September 19, 2016

Netflix’s Marketing Plan: Continue to add Newer Content and Movies
Company Description
Netflix is the largest online movie rental service which has an annual revenue of over
6.78 billion U.S. dollars and serves 70 million U.S. customers, with just over 26 million
subscribers located outside of the U.S (statistica.com).
Core Products or Services
Netflix when founded provided a DVD rental service by mail to meet the needs of
customers who had little or no time to go out and rent them. They added to this service a video
on demand service that allows customers to rent movies on their personal devices. Then they
added television shows and series as part of their service. The expansion of services has led to
their ability to provide unlimited movies, TV, and DVD’s (slideshare.net).
Brief History of Netflix
Netflix was founded in 1997 in the state of California by Reed Hastings and Marc
Randolph. Netflix was a DVD rental website when it was founded and at that time they mailed
out DVD’s and used a pay-per-rental model (slideshare.net/case study). Netflix became a public
company in 2002 and used the Ticker symbol: NFLX as an identifying symbol
(slideshare.net/LEONGUMB). In 1999 Netflix adopted a subscription model by which customers
could watch endless movies at a set monthly rate. In 2007 Netflix moved into streaming in 2007,
and announced a move into original programming in 2013 (cnn.com). Netflix now leads the
streaming market in the U.S. and has expanded its streaming video services worldwide
(statistica.com/topics/842).

Key Current Competitors of Netflix
Netflix competition comes from several sources. Amazon Prime, is Netflix’s most serious
competition because for the price of an annual membership it allows customers access to an
instant streaming platform with thousands of movies and TV episodes. The cable channel HBO
is also a competition because it has announced that HBOGO will be offered without a television
subscription and it offers a large variety of titles as well. This competition grows when you
consider that the CBS network has also announced a subscription streaming service. Then there
is the competition presented by You Tube, Hulu, and the downloading taking place on the black
market. Then adding to the mix are internet pipe providers, which many times are movie
distributors, which can limit the traffic traveling over their lines which can pick and choose their
content over that of Netflix (quora.com).
SWOT Analysis
SWOT Analysis: Strengths
1- Grown and adjusted to the wants and needs of the customer
Netflix has adjusted and grown with technology according to the wants and needs of the
people by adjusting and adding services that the customer base wants. By offering both physical
DVD’s as well as streaming capabilities that offer high speed delivery of movies as well as TV
series shows that customer convenience is paramount.
2- Netflix brand known worldwide

Netflix brand is recognized worldwide and it is known for offering movies, television
shows, DVD’s, and original content which can only be found there. The customer base of Netflix
had grown to 70 million by the year 2015 (slideshare.com/case-study).
3- Streaming Capability and User Experience
Netflix offers unlimited entertainment for a low subscription price that is much more
convenient and at a much better value than having to leave home to visit a Redbox or video store
to find a good movie. This value is even better when you have the option to use different devices
rather than being tied to a television.
4- Competitive Prices
For the price of a monthly subscription, around $8.99 per month the customer can watch
as many programs as they like. In comparison, subscribing to Netflix is a better value than any of
the cable movie channels and they offer more choices.
5- Original Content
Netflix offers original content that is not provided by other carriers or streaming
companies. Realizing the need to create new content has contributed to making Netflix the
number one streaming provider. Some of the original shows found there are House of Cards,
Orange is The New Black and Daredevil.
SWOT Analysis: Weaknesses
1- Declining DVD Membership
Netflix began as a DVD-by-mail rental operation and fewer and fewer people are
ordering them by mail. Many customers have stopped ordering DVD’s by mail and started using

streaming services. Since this was the original offer, Netflix continues to offer this service for its
customers who have not switched. This has caused Netflix to require its customers to have
separate accounts if they desire both services due to the costs incurred. Decline in DVD mail
order customers have caused Netflix to lose money.
2- Netflix cannot raise subscription rates and remain competitive
Netflix has to abide by the limitations placed upon them about when movies can be
available by the company according to studio requirements. Netflix also has to accept the rates
and schedules set by the U.S. Postal Service, as well as rates imposed by streaming providers,
which could potentially cause Netflix to lose profits. Also, Netflix has to abide by the terms of
content distribution which allows competitors access to the same movies and television shows at
the same time, taking away their competitive edge. The only way to keep that edge is to keep
prices low and offer more content for the same money. They can also try to cut internal costs
such as that on advertising because they are already well known.
SWOT Analysis: Threats
1- Hollywood and other content providers
Netflix has to by content from production studios and are at risk of price increases for
movies and television shows. They also face the risk of licensing increases and may have trouble
recouping their losses.
2- Competition
Online entertainment services are constantly undergoing rapid technological change and
as they do it will be easier for new streaming businesses to become serious competition. The fact

that consumers use multiple entertainment providers also is a threat because they can easily
change providers at will. Amazon Prime is a competitor which offers goods with free shipping as
well as a streaming service for an annual fee. The cable channel HBO is offering HBOGO to
customers without a television subscription. The CBS network is also offering a subscription
streaming service. Then there are Google, You Tube and Hulu that can cause threats to Netflix.
And, as if that was not enough, internet pipeline providers can limit traffic traveling over their
lines favoring some content over others.
SWOT Analysis: Opportunities
1- Growing Population offers potential subscribers
The population is constantly growing offering an endless opportunity for growth. As
young people mature and start families, Netflix has the opportunity to gain them as customers as
long as they offer content the younger generation wants to see.
2- Growing Market
Growing numbers of viewers are turning to online videos for entertainment. Netflix is the
current leader offering streaming content. Keeping current content will help them remain as
such.
3- International Opportunities
Netflix is constantly expanding because they are so well known. They are expanding
overseas and in Canada, which gives them a larger customer base.

Marketing Plan Focus
Based on my SWOT analysis, I believe there is an opportunity to grow the Netflix client
base by meeting the wants and needs of the younger clientele. Netflix has adjusted its offers in
the past to meet the wants and needs of potential clients and will do well to continue that process.
The recent move to secure exclusive streaming rights with the CW, as well as the multi-year deal
made with the CBS Corporation and Warner Brothers shows the profitability of continuing to
offer content the public wants is the path that should be explored more fully (Wilhelm, 2016).
Securing popular television shows, in my opinion addresses a weakness Netflix has suffered for
years.
Keeping the domestic client base engaged and watching will ensure Netflix continues to
prosper although engaging international opportunities are less promising. By widening the
popular movie and television series selections we can ensure the younger generation selects
Netflix over other streaming providers. Personally, I know I would watch Netflix more often if I
saw newer content which is more popular offered.
Segmentation Approach
For this marketing plan I have decided to use a segmentation approach targeting a
specific age group based on viewing habits. Using a behavioral approach helps me to target
specific shows or movies that people in my target group are more likely to watch based on their
past viewing habits. I have used the Netflix database to evaluate the viewing preferences of
young to middle aged adults who use Netflix. Using this data helped me to see the types of most

watched movies and television shows chosen by young adults and aided in designing a marketing
plan that will attract even more young adults as customers as well as keep this segment of our
viewing audience engaged and loyal to our streaming services.
Target Definition
My Friday night date with Netflix promotion is directed toward young to middle aged
adults in the United States. My target group age range is between 20 and 45 years of age. By
using social media advertisement, television commercials, YouTube advertisements, and audio
advertisements on local radio stations, we can bring our younger audiences back to the comfort
of home to get their favorite entertainment choices with special offers on Friday nights.
Positioning Statement
Friday night date with Netflix will allow young and middle aged adults to sit back in the
comfort of their homes and have access to more options from a list of new releases or television
shows from their favorite channels. Having these new choices will help them relax after having a
long work week without having to get ready and go out.
Marketing Mix Discussion
Marketing Mix Product
This marketing plan is focused on providing more choices especially tailored to the
entertainment tastes of young to middle aged adults on Friday nights. Offering more choices of
newly released movies, especially those popular in the eyes of young and middle aged adults, the
option of having Friday nights reserved for Netflix will become a common theme and word of

mouth in the workplace will make this a popular date night for friends to share together. This is
also true when it becomes known that hard to access adult friendly material can be accessed
Friday nights on Netflix.
Marketing Mix Price
Netflix is already considered to be a great price for quality entertainment at the low
subscription price of $8.99 per month. Everyone already knows that members can access the
inventory of movies and shows 24/7 and you can find shows there that cannot be found
anywhere else. Even at this great price it is sometimes impossible to see a newly released movie
you want to see without going to Redbox to rent it or to a retail store to purchase it. The object of
this marketing plan is to alleviate this problem.
As part of this marketing plan, from 6am Friday morning until 12am Saturday morning
more newly released titles will be offered for the customers viewing pleasure. Monitoring the
movie titles rented the most during that timeframe will allow the marketing team to determine
which movies are rented most and by whom during that time. The movies rented most by my
target audience will be highlighted and more movies of that type will be offered on Fridays to
stimulate more rentals and to attract new customers. Also, using the added incentive of a one-
month free to existing customers that recommend Netflix to a friend which becomes a customer
will cause existing customers to watch more so they will be up to date on the choices currently
available.
Marketing Mix Promotion

As part of this marketing promotion commercials stating more newly released movie
titles on Fridays will stimulate more watching on Fridays. Also YouTube advertisements
describing the special offer of more new releases and the free one month offer will get people
watching and talking about what’s new on Netflix. Facebook ads, ads on twitter, Pinterest and
across other social media sites will also peak interest. Blogs about the new thing on Netflix will
also be put out there to get people’s interest peaked. Billboards at stores such as Walmart,
neighborhood pharmacies and in local supermarkets will also be used to spread the word as well
as announcements over the local radio stations. Using the different avenues to put out the word,
giving the customers more of what they seek and offering the incentive of referring a friend will
motivate existing customers to share this special offer to those with whom they associate both at
work and play.
Marketing Mix Place
The Friday night date with Netflix promotion will take place across many channels.
Through commercials and advertisements both television, radio and the internet will be used.
Referral partnerships like those with Walmart and other businesses will be used to gain attention
to the promotion. YouTube advertisements will be used to bring attention to the increased
selections and the incentive to get Netflix free for a month. Web sites such as Google, AOL,
Facebook, Twitter, Pinterest and other websites will be used to advertise the new titles Netflix is
offering. Blogs will be used to get and keep the conversation going about this promotion being
the best ever offered, and although it is directed toward young to middle aged adults all age
ranges will be interested.
Potential Success Metrics

There are several metrics that can be reviewed and analyzed to monitor the effectiveness
of this marketing plan. First you need to determine the communications effect that the promotion
is having on the public. Monitoring the number of movies seen, the type, and the amount of new
customers is a strong indicator as to the effectiveness of this marketing plan.
There is also the sales effect that can be monitored which shows how effective it is due to the
increase of sales. Monitoring customer perceptions of Netflix and what it has to offer is also a
strong indicator about the effectiveness of the campaign. This can be done by monitoring blogs
about the company. Then there is the bottom line… ROI or return on investment that ultimately
judges a promotion as a failure or success. Using the different communication medium allows us
as a company to monitor many of these metrics and make adjustments if necessary.
International Considerations
If the Friday night date with Netflix marketing promotion were to be implemented
internationally different considerations must be addressed. The offer would stay the same, unless
there are official or governmental restrictions about viewing times are in place. The new movies
offered would be those offered in that country in their language and cultural considerations must
be made. The incentive of one month free would stay the same if an existing customer gets a
friend or relative to get a subscription. Another problem that could occur is that there may be
fewer places in which referral partnerships can be built. Overall, television commercials, and
many websites may be the same but other media outlets or websites may have rules against
advertisements.
Conclusion

This Friday night date with Netflix promotion should be funded because it outlines a way
to monitor and gauge the types of movies that young to middle aged adults want to see. It will
even have farther reaching effects once fully implemented. Offering a wider variety of newly
released movie titles that are known to be popular to a specific age group allows the company to
collect data to see how popular these titles are across the different age groups making them a
better choice to offer than other selections. Having the larger selection offered during a limited
time also allows for comparisons about viewing habits, preferred materials, and the amount of
people watching during this time. The extra incentive of offering one free month to those who
recruit new customers build client base and keeps current clients involved. This marketing plan
would prove invaluable simply due to the specific information it would provide the company in
making choices on changing movie or television titles currently offered.

Reference
http://www.cnn.com/2014/07/21/showbiz/gallery/netflix-history/
https://www.quora.com/Who-are-Netflixs-biggest-competitors
http://www.slideshare.net/JulienGuitton/netflix-case-study-54240175
http://www.slideshare.net/LEONGUMB/netflix-10300859
http://www.statista.com/statistics/272545/annual-revenue-of-netflix/
https://www.statista.com/topics/842/netflix/
Wilhelm, Parker (2016) Netflix’s new content deal addresses one of its biggest weaknesses.
Techradar.com (2016, July 5). Retrieved from:
http://www.techradar.com/us/news/television/netflix-s-new-content-deal-addresses-one-
of-its-biggest-weaknesses-1324437

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