The genesis of Netflix, Inc dates to 29th August 1997 when the company was first incorporated. Currently, the company operates within the video entertainment industry making distributions to consumers through airlines, movie theatres, in-home, and hotels (Netflix, Inc; 2009). The company operates through different segments, including International Streaming, Domestic streaming, and Domestic DVD. The International Streaming segment delivers services, known to stream content to its members outside the United States while the domestic DVD segment encompasses services, such as the digital optical disc (DVD) (Reuters, 2017). Finally, the Domestic streaming segment deals in services responsible for streaming content to members within the United States. Members of this company are capable of watching original documentaries, series, feature films, and the television movies and shows directly through televisions, internet-enabled screen, mobile devices and computers.
Competitors and Competitive Positioning in the Market Place
The company’s worthy competitors include Best Buy, Wal-Mart, Blockbuster, Amazon.com, Comcast, Time Warner Cable, and the Apple iTunes. Additional competitors are Direct TV and Dish Network. According to Krengel, Dudek, Momboisse, Paik and Marti (2010), Netlfic enjoys a 5% share in the entire video entertainment industry. In the context of video rentals, Blockbuster enjoys a majority of share at 52%, Netflix 13%, Comcast 3% while Warner 2% market share.
According to Bauman, Deal, Ishak, and Johnson (2013), Netflix operates in a stiffly competitive media industry forecasted to report a significant increase of 1.3 billion in 2007 to about $12.5 billion in 2017. To ascertain the competitive positioning of Netflix, the author compared its financial performance with that of its closest competitor Comcast.
|Return on Assets||
|Net Income (USD Million)||187||8,695|
Based on the above table, it is apparent that Comcast is more profitable than Netflix in this industry. This is evident by higher return on asset ratio and the net income reported in 2016. Nonetheless, Netflix showed higher ability to use its current assets to settle its short-term financial obligations. Therefore, based on the above analysis, Netflix is not in a better financial position as far as its profitability is concerned. Therefore, the management must integrate robust strategies to revamp its profitability. This may be achieved through intensive marketing promotion and delivery of quality affordable products to attract more customers.
In this market, the top priority for customers includes affordability, convenience, speed, and the personalization of the video streaming. High quality selection of titles is another factor driving success in this market. Netflix primary objective is to maintain top leadership position through provision of fast, convenient, personalised, and affordable online streaming services compared to its competitors.
Part Two: Organizations Marketing Strategy
The company over the years has been able to attract new customers and retain existing customers by integrating different ways used to connect the product to the consumers. For instance, the company has been able to strategically position its product in the minds of the consumers by using product differentiation techniques. This has been a major driver behind the success of Netflix. The following represents the 4ps of marketing as applies to Netflix organization (Krengel, Dudek, Momboisse, Paik, and Marti, 2010).
Netflix offers an array of products, including Blue-ray and DVD discs of new releases and classic from different time periods and genres. The company is progressively working with various studios with the sole objective of adding more titles to its product. Therefore, product differentiation is one of the marketing strategies that have enabled this company to survive in this competitive marketing environment.
The company has different pricing plans, which have enabled it to command a huge customer share market. For instance, unlimited price plans enable one to enjoy unlimited access to the company’s online products. Monthly plans also provide unlimited access to company’s products on a monthly basis. Therefore, such better deals have enabled the company to win big in this tumultuous business environment.
The company is headquartered in the United States of America. However, from 2010, the company has been considering expanding to oversee market, including the European market only to provide streaming services. Such expansion would boost company’s market share, increases its sales volume, boosts its profitability and enable it to gain and enjoy huge competitive advantage in the market.
The company has heavily invested in advertisement and promotional campaign using different mediums as a way of boosting its awareness in the market. They are increasingly using newspaper online advertising, and television commercial advertising as a strategy for boosting company’s competitiveness in this turbulent marketing environment. Intensified marketing has promoted company’s recognition and popularity both locally and in the global arena. Presently, the company is heavily relying on viral marketing due to its perceived advantages in promoting recognition and awareness.
- Bauman, L., Deal, N., Ishak, P., and Johnson, S. 2013. Netflix: Positioning and marketing. Retrieved from http://lisabauman.blogspot.co.ke/2013/02/netflix-positioning-and-marketing.html.
- Krengel, A., Dudek, A., Momboisse, R., Paik, T.,and Marti, T. 2010. Netflix: A Company Analysis. Retrieved from https://mgmtclarity.files.wordpress.com/2010/04/capstone_final_report.pdf.
- Netflix, Inc. 2009. Annual Report”. 25 Jan. 2010. Retreived from http://www.shareholder.com/visitors/dynamicdoc/.
- Reuters. 2017. Netflix Inc (NFLX.O). Retrieved from http://www.reuters.com/finance/stocks/companyProfile?symbol=NFLX.O.