Companies need to be very aware of how their decisions will play out in the public. Gone are the days when consumers, if upset at a price increase imposed by a company, could merely express their displeasure by not buying the product or by choosing a competitor. In the 21st century, consumers have much more influence. They can post on Facebook or aim a well-crafted tweet about a product and they can influence hundreds or even thousands of people. Social media campaigns against a company can take on a life of its own. This phenomenon means that companies must be very careful to present large pricing changes and policies in the best light possible and to be ready for the backlash that might follow. Netflix and Bank of America are two companies …show more content…
The leaders of the company knew that they needed to increase revenue in order to be able to provide more content for their streaming service (Wingfield, 2011). By splitting the two services DVD and streaming content apart, Netflix was able to use the profit the DVD service provided, to help fund the increased content the streaming side would need to provide in order to become successful in the future. The splitting of the two services also served to encourage the subscribers to choose one service or the other—and most of them chose the steaming service. Netflix was able to transition these subscribers to their streaming service before a competitor online provider could lure them away (Hartung, 2013). Netflix felt that the streaming service was the future of the company and therefore they needed to make the decisions that would align themselves for that future. Netflix knew that their price increase was inline with prices being charged by other streaming services such as Hulu. The similarity in price for possible substitutes supports NetFlix’s decision to raise prices even when demand was elastic. Therefore, they apologized for how they handled the price increase but they kept …show more content…
By the next year, they had gained back the subscribers who left in protest of the changes in services and the price increase. By the end of 2012, the number of subscriptions had increased to 33.27 million. Growth, both domestic and international has continued since then. Total number of subscribers for 2016 was over 93 million people (Dunn, 2017). Recently, Netflix increased its prices again. This time however, the company did a better job of explaining why they were raising prices to the public. The company explained that exclusive content and movies have been added to the Netflix lineup as well as an overall improved experience. The consumers have been more accepting of the price change because the Netflix service still appears to be a good value when compared to their competitors (Netflix Price Rise Tests Demand, 2017). Because of this perceived value, Netflix demand is inelastic. Netflix is a leader in the online streaming providers. They are now a global company, available in over 130 countries. Netflix produces award winning original content that is ONLY available through their service. By increasing the content that they produce themselves they are able to reduce the amount that they have to spend in acquiring expensive content from other sources. This in turn has decrease their content cost per subscriber and increased their profit margin (Why Netflix’s Financials are Better Than You
Two of the top alternatives to satellite tv or basic cable are Netflix and Hulu. I have been a member of both online streaming services for the past four years. I have dedicated much of my free time and studying time to these two services. Both services have gained many subscribers and make the need for satellite tv almost obsolete. It would be hard for me to only have one of the services as they both are strong services in their own way,
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.
...iding convenience, selection, personalization and a low cost method for product delivery. Netflix posted gross profits for the fiscal year ending December 2006 of 996.7 million and increase of 314.5 million over the prior year. Net income increased by 16.8% during the same period. On February 25, 2007 the firm, hit a milestone when they delivered the 1 billionth DVD.
Netflix was established by Marc Randolph and Reed Hastings in 1997 in California. Initially, the company offered a DVD-by-mail service for a monthly, flat rate subscription fee. Videos were sen...
From its inception, Netflix has become a business based on superior customer service and has subscribed its business to the market marketing management philosophy. The main purpose behind Hasting’s idea of a better way to rent and enjoy movies was how to provide that service to their clients and not have any late fees. In other words, their customers could enjoy their rentals from Netflix for as long as they wanted, and they would never have to worry about late fees again, so long big movie rental chains! This aspect alone of Netflix’s marketing plan indicates that Netflix has based their marketing plan on market orientation, “a philosophy that assumes that a sale does not depend on an aggressive sales force but rather on a customer’s decision to purchase a product,” (Lamb, 2009, p.7). Many companies that take on this philosophy are said to implementing the market concept. The marketing concept states: “The idea that social and economic justification for an organization’s existence is the satisfaction of customer wants and needs while meeting orga...
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.
...a remarkable opportunity to grow in the industry and lead as an innovative provider, Netflix has much opportunity to satisfy its customers and maintain their attention with their revolutionary business growth (Martala, 2009). Their success goes beyond their product. As stated, it is a combination of their culture of high performance drivers and fosters the “freedom and responsibility” mindset (Elliott, 2010). Because of their innovation and gradual entry into the market, Netflix has the competitive advantage to add layers of products for growth for years to come. Currently, Netflix has the competitive advantage to increase price and retain their current customer base. Even more beneficial, is the opportunity to attract additional subscribers with their new features. To end this, combining their products, price, culture, and strategic plan makes Netflix innovative.
There is strong competition with other companies that offer video streaming at no extra charge. Additionally, Netflix and its competitors are attempting to enter the digital world. Digitally offering television shows is an area of competition that has previously been controlled by
Netflix is an amazing digital success story. Reed Hastings founded Netflix in 1997 in Scotts Valley, California. Despite the changes in the economy as well as the movie rental industry Netflix has continued to grow and increase their net income with each year. Netflix's U.S. subscriber base has grown by nearly 50 percent and its stock price has quintupled (cite). Netflix has been able to deliver movies through mail as well as having their movies streamed by its customers who indulge in movies in the privacy of their homes are all too familiar with how late fees work.
Nest to Netflix who started offering the same prices, with Hulu you could get as they call it “right now access”. This alone took some consumer base from their company. By allowing feedback from their consumers it allowed them to visualize their future. While Netflix has stayed the same, Hulu raised their prices to eleven ninety-nine, by offering a commercial free viewing which a lot of their regular customers switched over too. Now they are offering not only current and up to date TV show viewings, they are also keeping the shows that have already aired to provide those whom would wish to re-watch those they have already seen.
As part of their promotional package the company grants new users with a free promotional period of one month so they can try the service out, and look at the list of movies and shows available for streaming. Customer service experience for Netflix is also accomplished by extending the titles available every month, improving the service by providing better viewing quality, and by expanding the devises that make viewing Netflix possible. Netflix also believes that good customer service experience can act as a promotional tool as people will use their experiences to increase the number of subscribers, which in term will lead to more revenues. Improving financial performance Since FY2013 Netflix has increased their financial performance to a 21.2% growth. This is driven by a strong international streaming memberships in countries such as, Mexico, Canada, United Kingdom, and the Caribbean.
As a result, Netflix services are elastic, and the prices are raised, the quantity of memberships will go down a significant amount (Edgeworth Economics, 2011). If the membership goes, too high consumers could substitute their choice and switch to another competitor with a lower price. Thus, bring the fear that Netflix has felt all this time with an increase in price this could create conditions were streaming entertainment is seen as luxury items and is expendable in consumers budgets. Seeing, that this product is not viewed as a necessity, such as food, shelter, and transportation making this the first then to go if consumers have less disposable income.