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Competitive strategy of netflix
Competitive strategy of netflix
Competitive strategy of netflix
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Introduction
For the purpose of this assignment, I will discuss the POST method written by Forrestter Research analysts, Charlene Li and Josh Bernoffand. I will apply it to the world 's leading Internet television network with over 81 million members, Netflix, to further understand its application and explore how it guide them to determine the right strategy for the right audience.
P.O.S.T
The four steps in the POST planning process are people, objective, strategy, and technology. This method is commonly used to build one’s groundswell. As a result, it is the foundation groundswell thinking which is a systematic framework for assembling ones plan. (Li & Bernoff, 2011, p. 67)
People
“People” is the first step of POST framework. This step understands
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Today, Netflix on twitter @netflix has just over two million followers and over twenty-four million likes on Facebook to share information. Netflix taps directly into the groundswell to find out what its customer 's are saying and what they can do to improve by monitoring social media and letting customers know what new content and features are available to stream. Netflix has made its digital platforms their communication method of choice, by selecting the use of platforms like Facebook to share achievements and new promotions.
Objective
“Objective” is the second step of POST framework. In this step, companies decides what they want to accomplish and how to pursue it based on how they and their customers will benefit
Netflix can achieve this
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(Halal, 1999)
Netflix was able to learn from other organizations mistakes and fill the gap by satisfying some unmet need in the market by being prepared and being in the right place at the right time with the right product/service while being transparent with their customers. Netflix is able to add value with its recommendation engine which is very good at predicting what types of movies people are likely to want to watch.
Netflix Revenue strategy is to charge recurring monthly subscriptions and since Netflix offers great products/services that customers want, people are willing to pay a little extra each month. In addition, Netflix was able to make partnership with companies like Apple to access Apple’s large customer base.
Technology
“Technology” is the last step of POST framework. This step decides which social technologies to use as it shows how much of a company’s audience they can reach with various types of social technologies. This decision can be made by understanding and reflecting upon ones people, objective, and strategy. Only then can they confidently select the tools/applications and tactics they’ll use for their
Netflix does not release viewing figures, however in October 2013 Netflix said that “the show is a "tremendous success" for the streaming platform. "It will end the year as our most watched original series ever and, as with each of our other previously launched originals, enjoys an audience comparable with successful shows on cable and broadcast TV
For B2B Investor relations, Netflix uses Youtube and has a link on their social media disclosure site. For their B2C Netflix has a general community blog which began in May of 2007. Joris Evers, Director of Corporate Communications at Netflix routinely posts updates to this blog as well as Michael Spiegelman, Director of Product Innovation, and Greg Peters, Chief Streaming and Partnerships Officer, who release updates on innovative features enhancing current applications which shows that customers that their concerns are being heard without a doubt, and allows for incessant feedback and suggestions.
? Netflix provides a subscription-style e-commerce service. Over 95% of customers pay at least $17.99 a month which includes unlimited rentals with up to three titles at a time. A comparably low monthly fee, allows Netflix to lead market share of online DVD rentals while competing with traditional brick and mortar rental stores. Meanwhile, Netflix might keep the customers who try the service and happy with it continue paying the monthly fee. Therefore, Netflix has fewer problems in predicting revenues.
In 2006, they had established a major presence in the US with 5,194 locations, of which 4,255 were company owned. Overhead for this many locations and payroll represented a major percentage of their total costs. In comparison, Netflix had a mere 44 distribution centers scattered across the US, yet they could deliver to more than 90% of their subscribers within a single business day. Their low overhead costs paired with a superior business model resulted in revenues of nearly $1 billion, generating free cash flow of $64 million by 2006-year-end. Another difference between the two companies involved their video focus. As mentioned before, Blockbuster concentrated on providing hit movies and new releases to their customers since traditionally these would make up over 70% of total rentals. In contrast, Netflix offered an expanded selection of movies where new releases represented less than 30% of their total rentals in 2006. One similarity between these two companies was their elimination of late fees. Netflix was the first to do this in 1999 and Blockbuster followed years later. This benefited Netflix greatly as their customer satisfaction and loyalty increased. However, Blockbuster suffered a loss as 10% of their revenues came from the late fees they charged their customers. Blockbuster was slow to adapt and were stuck in their brick-and-mortar business model. Netflix aggressively worked on improving their business model by implementing useful features, which can be seen to this
The Prepare step lays a foundation for the strategic planning process by establishing the purposes of the plan; identifying stakeholders; determining what information, roles, and resources are necessary for the process; and developing the timeline for it. The products of the Prepare step are the formation of a strategic planning workgroup
Low pricing has been Netflix competitive advantage since the beginning. The brand image of Netflix is the low price.
Netflix says that they do not need to offer as many special bonuses because as the article states” If your employees are fully formed adults who put the company first, an annual bonus won 't make them work harder or smarter" (Nisen). They believe that if they hire people who put everything into the company the pay they offer will be enough. To figure out what they should be paid Netflix went out and scouted to see what people were making in similar jobs. At Netflix they do benchmarking. Benchmarking is when a company compares its practices to the competitors (Noe489). Netflix also realizes that there workers can be scouted. So instead of getting mad they tell the people to talk to the recruiter see what they will pay them then tell the HR department because to them that information is very valued and it may end up helping in the end (Bear).
...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.
HuffingtonPost. (2013, 3 13). Netflix Syncs With Facebook (So Everyone Will Learn You Power-Watch 'Toddlers And Tiaras'). Retrieved 3 7, 2014, from http://www.huffingtonpost.com/2013/03/13/netflix-facebook-integration_n_2866775.html
Reed Hastings, co-founder of Netflix headquartered in Los Gatos, CA, began the company’s operations in 1997 after receiving an enormous late charge from a movie rental he returned long overdue. However, Hastings had the desire to be different than traditional movie outlets; whereas, customers had to drive to the location, pay a certain amount for each movie they rented, and were given a deadline in which to return the movie. Instead of using a method established by other video markets “to attract customers to a retail location, Netflix offered home delivery of DVDs through the mail” which eventually led to a booming business towards streaming forms of entertainment (Shih, Kaufman, & Spinola, 2009, p. 3). Today, Netflix exists along with several competitors; however, offers the most streaming content available for viewing, and continues to grow its subscriber base both domestically and globally. Although, direct and indirect competitors, acquisition costs, and several barriers present a financial threat for Netflix, the company has managed to grow with the acclamation of partnerships, expand to international territories, and vastly increase its price in shares of stock.
1) Netflix’s currently does not have a user-friendly method for customers to stream videos onto television sets. Netflix is entering agreements with the manufacturers of game systems, Blu-ray disc players, and televisions to include software capable of streaming Netflix videos. 2) 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.
Netflix is an American multinational provider of on-demand Internet streaming media. Netflix has become one of the faces of our youth, and the striving business continues to expand their boundaries. As every business they started as just an idea and has now grown into one of the top businesses in the entire world. Netflix developed a principle that any company should follow if they want to succeed, and is broken into four parts:
The film industry is constantly evolving with new technologies that can either assist the creative industries or hinder them. There are both positive and negative views as to whether the film industries future looks good. The positive effects of new distribution methods called Cinema cloud is one reason the film industry needs to stay current and on top of technology in the future, to be able to adapt to new processes. Streaming services such as Netflix are becoming increasingly popular, changing the way movies and television shows are viewed also creating original shows that fall exclusively to Netflix allowing audiences to be drawn into subscribing thus increasing profitability.
Social media is pertinent in use of communication throughout today’s organizations. There are many social media platforms that allow organizations to convey communication to potential consumers, stakeholders and the public. “It is essential for leaders to integrate these technologies and seek the best way to use social media and networks to the advantage of the business” (Billington, 2012, p.1). Business owners find that keeping up with current technology trends is essential in having a competitive advantage in the market place and having a strict set of standards and strategy is important in quickly adapting to social media trends.
The impact of Social Media on Society Technology has come a long way from its existence till today. In today’s modern world, people are surrounded by technology everywhere. In the present, people are surrounded by disrupting technologies every day. Today, innovators are always creating new technologies that will make an impact on the daily lives of millions. Technology has made the lives of many people easier.