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The importance of customer perceived value
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In today’s market customers have the advantage of more options in the marketplace. The internet has made it easier by removing the barriers and inconveniences of switching suppliers. For example, a customer can go to Amazon.com to buy a product without even leaving their house.
This is why establishing a relationship with a customer is pivotal to not only keep customers happy but also keep them coming back.
According to Treacy & Wiersema, (1995) in our reading, businesses that use strategies focusing on creating a value to the customers whether it is providing quality products or services, operate effectively (customer service), provide great products at a lower cost, and get feedback from customers about their needs and wants, could in
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What the found out was that customers wanted to watch shows they wanted to watch, when they wanted to watch them, versus the shows that networks dictated they should watch and what time they should watch them. (Nocera, 2016) Thus, Netflix changed its strategy to create customer value but also constantly provides new content to keep the customer engaged, therefore, maximizing the lifetime value of each acquired customer. (Khan, 2012) (Nocera, …show more content…
Netflix’s annual growth has grown from $1.2 billion to six times the rate, $6.8 billion.
According to the New York Times article, if you are a Netflix subscriber, using the Customer Lifetime Value metric, “the lifetime value of a Netflix customer is $291.25.” (Nocera, 2016) Netflix estimates that it cost them $150 to earn each customer and with overhead being very low, they make money not just at the beginning but the lifetime of the customer. Additionally, by tracking customers individually, Netflix can optimize their lifetime value through marketing their products and services to match the individual customer’s needs, called “market of one” (2000). (Kopf,
A critical SWOT analysis of Netflix’s social media techniques clearly shows they are ahead of the game and not backing down from rising competitors like YouTube which is gaining viewers by increasing the amount of online content.
Charging a monthly fee for unlimited rentals, Netflix eliminates due dates and late fees, as well as eliminating the long lines of a brick-and-mortar store. ? Netflix uses their great customer service to keep customers happy, which keeps customers from canceling their subscription to the service. If there is a problem that arises during the rental process, such as a damaged DVD, or lost DVD during the shipping process, Netflix addresses the problem immediately, and never charges the customer for the problem. ? Netflix was the first company to offer DVD rentals over the internet. By leading the industry in innovation, selection and delivery time, Netflix enjoys the benefits of a strong brand image, and strong relationships with DVD suppliers and manufacturers.... ...
“Stock of the online DVD rental company was up more than 15% in early morning trading Thursday. Netflix increased their forecasts for both revenue and total subscribers today, trying to compete with powerhouses like Blockbuster and Wal-Mart. The increased forecast stems from a slew of new subscribers that have invested in the service after a price decrease from $21.99 to $17.99 last month. Despite the increases in revenue and subscribers however, some analysts feel that the business model is “fatally flawed” and the company may fall by the wayside due to competition from the aforementioned retail and entertainment powerhouses.” Investors Guide reported this.
In conclusion, the vast technology change opens many opportunities for Netflix to grow. By assessing the market environment and challenges, it enables Netflix to overcome the obstacles to remain as the market leader. To achieve the future growth, Netflix should implement both strategic and tactical approaches to compete with others. The strategic and tactical business plans for Netflix are improving content libraries, developing more partnership with production firms, and staying with the low-pricing strategy.
The loyalties Netflix has is to its subscribers and the founders are loyal to each other. First and foremost Netflix must remain loyal to its customers because that’s where revenue comes from. Without the millions subscriptions Netflix could possibly be out of business like Blockbuster. However Netflix knew subscribers is what keeps the company popular and they remained loyal to them. In an article titled ““I messed up,” Netflix CEO says” written by the CNN Wire staff Reed Hastings said “I messed up, I owe everyone an explanation." Hastings knew in the end Netflix’s wouldn’t prosper if the subscribers wouldn’t back his and Randolph’s decisions. Lastly, Hastings and Randolph must remain loyal to one another because they are co-owners of a big time company. They must trust and have faith in each other so they can both make the company the best it can. Loyalty in co-ownership is significant because if feuding begins it could hinder Netflix
Companies like Amazon and Netflix are very effective in predicting what customers normally buy and watch. Knowing what your customers are or are not buying will allow you to position products that they are statistically likely to purchase based on recent transactions and activity. This is a powerful tool for Netflix because it keeps users engaged and actively using the service but also allows them to tailor their investments in content towards items that are more likely to keep users active on their site.
The following essay will analyze Netflix Company’s social commerce strategy. It includes the definition of social commerce, company history, social commerce strategy that the company is engaging, the effect of social commerce for the company and measuring social commerce success of the company. Below, brief definition of social commerce and the company history.
Although Hastings vowed to be divergent from other video retailers, his goal was to use an identical pricing strategy; however, one that would “appeal to customers [. . .] who used online shopping as an alternative to traveling to retail outlets” due to ease of access and more preferences (Shih, Kaufman, & Spinola, 2009, p. 3). Furthermore, Netflix launched its business at a time DVDs had barely hit the marketplace as the firm anticipated the new technology to be a promising venture. Nonetheless, within a year DVD players became so vast...
As the firm moves forward, top managers must pay attention to staying unique to sustain a competitive advantage. Netflix does not own their content, nor do they have any tangible assets. Netflix is a part of a broad range of network users. As technology continues to grow exponentially, Netflix will have to be readily adaptive to change and innovation. Technology never stops growing and evolving, therefore, Netflix’s business platform should never stop growing and evolving. At the same time, they must be careful to remain user friendly and customer centric by keeping the technology at a level where users will not have to obtain a certain set of technological skill sets.
As of 2015, Netflix is in 1/3 of American households, whereas Amazon Prime is only used by 13% of American Households. Moreover, when looking at market shares, Netflix has a 37% market share. In contrast, services such as Youtube have only 17% and Amazon has 4% market share (Fortune).
Analysts suggest that the network growth year over year could be higher than Netflix sub growth rates. The growth rates some are stating are 20%-25% year over year. Management has stated that this kind of growth would be considered incredibly strong. I believe that management is trying to be very careful with any wording on growth in the future. I believe this because they have a conservative viewpoint of having
Once a customer rented a movie, Netflix provided movie recommendations based on customer preferences, so customers were not forced to only watch new films. As for Blockbuster, their stores supplied new movies and ignored older ones (Hemachandran, 2014). Furthermore, revenues for the traditional home video industry was reliant on late fees (Hemachandran, 2014). Americans faced large late fees from stores that were often higher than the cost of the rental. Thus, Netflix introduced the monthly membership fee model, letting people keep videos as long as they liked.
Netflix is a dominant force for the online streaming entertainment industry with over 109 million members globally("About Netflix"). They have an expansive amount of content while, at the same time continuously expanding their offerings to their subscribers through acquiring new contracts from different network providers and by exclusively making their own original movies and shows. Netflix is an online streaming supremacy and was established in 1997 by two innovative founders Reed Hastings and Marc Randolph("About Netflix"). Netflix started out by offering their subscribers the ability to rent DVD’s through the mail and with a limited selection of online content. Since their starting, they have expanded vastly and now much of their content
Although it was launched in 1998, it was not until 2007 that Netflix had the idea to change the way we look at everything. With its market for DVD rental by mail due to competition from Apple, Walmart and Amazon (paywall) in digital downloads, Netflix has launched the then revolutionary concept of delivering movies directly to customers' computers, eliminating the waiting times and the hassle of receiving and returning mail records. The proposal was simple. As perk on disc plans, subscribers can access inferior quality video on demand, far below DVD and Blu-ray disc resolutions, but with the ubiquity of broadband it can be delivered faster and more reliably than on other video platforms. Some have been willing to do business, and those who have not yet been able to access a better video through Netflix's disk
Woollacott, Emma. "Netflix Checks Piracy Stats To Help It Decide What To Buy." Forbes. Forbes Magazine, 16 Sept. 2013. Web. 23 Jan. 2014.