The current situation of Netflix reveals that that the company needs to concentrate on improving multiple issues in its future one year plan. The first priority of Netflix is that it should try to provide high quality digital services at lower rates. The company should issue loyalty to customers to face customer loyalty issue and emphasise on strengthening its product line. The company should strengthen its marketing mix to gain stronger competitive advantage. This will help Netflix counteract weakening of its market image due to legal cases and customer litigations.
The three marketing objectives for the future one year that Netflix should aim to achieve based on the SMART goal setting criteria are as follows:
Specific: The objective is to become more cost effective by reducing the costs of operations and by increasing revenue from subscriptions (Da Silva, Gouveia & Reis, 2014).
Measurable: Netflix should measure the profit earned after six months to measure the increase in cost effectiveness rate (Lentz, Passarelli & Barrett, 2013).
Relevant: The reduction of cost and increase in the number of users of the Netflix video service will show the increasing relevance of the cost effective measures.
Time bound: The time frame for to achieve cost effectiveness should be a year.
Specific: The objective is to gain more competitive advantage in the entertainment. The objective is increase market share against competitors like Youtube and Amazon.
Measurable: Netflix should measure the increase in the amount of subscriptions and simultaneous rise in profit. The augmentation in market share will also act as measurement of increase in competitive advantage in the market (Lentz, Passarelli & Barrett, 2013).
Relevant: The increase in market will show increase in the relevance of the startegies.
Time bound: The time frame can be twelve months period during which increase in market share will be measured every month to get an idea about market position improvement (Schilke, 2014).
Specific: The aim is to revive the market image of Netflix hampered due to frequent legal cases filed against the company due to infringement of patents and cases filed by consumers against Netflix (Iafolla, 2017).
Measurable: The increase in goodwill measured over a period of twelve months will show the improvement in market image (Šapkauskiene & Leitonien?, 2014).
Achievable: Netflix has a very strong promotion department who carry out promotions to improve market image.
Relevant: The legal cases hamper the market goodwill of Netflix and its market position.
Time bound: The time period is one year
Netflix should aim to target the following segments of customers to sell its video and online products:
Netflix should segment its market demographically on the bases of age, income and socio economic status. This segmentation will allow it to accede to a global base of consumers which will allow it to obtain strong viewership for its videos which would generate high revenue. Netflix should offer videos of different types to appeal to consumers of different ages like action based videos for the young consumers and religious videos for the old customers. Again, Netflix can also segment its customer base on the grounds of income (Punj, 2015). For example, it can offer paid videos of high definition to the upper class customers and free videos for the middle and lower income group. Thus, I can justify that segmentation of consumer base on the basis of demography will help Netflix to cater to a huge consumer base with diverse preferences and earn huge revenue.
Netflix in my opinion can segment its market geographically and offer video services specific to the taste and preferences of the consumers of the different countries. For example, the company can offer Australian videos for Australia and British videos for Britain. This diversified product offering will enable the company gain consumer loyalty in the international markets like Australia and Britain respectively (Yonker, 2016). Thus, it can be justified that Netflix can segment its global consumer segment geographically and offer them diversified products to earn consumer loyalty and competitive advantage in the market.
The target market of Netflix should be the middle and upper class section of the society. The upper and middle class people earn sufficient income to buy electronic items like computers, tablets and smart phones. These consumers have knowledge about these products and can use them to watch videos(Steenkamp, 2014).
Netflix should target the developed markets of the North America, Europe and Australia. It must also target the developing and emerging markets of Asia and South America. These markets are experiencing increase in internet availability which acts as the platform for video streaming and sharing. These target markets will allow a huge scope to Netflix to offer video and digital films to their large consumer bases and reap high profits. Moreover, the markets of Europe, North America and Asia have vast entertainment markets with films and television production houses(Bianchi, Pike & Lings, 2014). This will allow Netflix sell its film and television videos to the people in these markets and gain huge viewership and earn high profits. Thus, I can justify that Netflix should target the upper and middle class customers in the developed and developing markets.
Netflix should position itself as an international film and television videos selling company. The company should position itself in a way to attract international viewership for its audio visual products. This positioning I feel will enable Netflix to compete with the international video sharing and streaming websites like Youtube owned by Google (Nylén & Holmström, 2015).
The products of Netflix are the films, television shows, video offerings on opening an account and instant watch videos. The company also offers short term registeration facilities which allow the dissatisfied consumers to terminate their registration contract and discontinue viewing videos. I can point out that SWOT analysis of Netflix shows that its product line acts an effective tool to attract international consumer base from all round the world. The paid membership products of the company are of four categories, namely, basic plan, standard plan, premium plan and DVD Plan. The products are targeted at different income groups for example, the basic plan allows the customers to watch one video at standard definition view which is very affordable(Dahremöller & Fels, 2015). The premium plan offers four screens viewing of high definition or ultra high definition and is meant to attract the rich customers. It must be pointed out that product offering of a company is directly related to the pricing aspect of marketing and form the basis of market position. Like, the basic plan is cheap while the premium plan is costly. It must also be pointed that the products of Netflix are used by consumers all over the world which earns it a commanding position in the market. However, it must also be pointed out that Google and Amazon offers video streaming too but their services are free of cost(Yang, Zhang & Mattila, 2016). Thus Netflix can enjoy higher position and larger consumer bases in the entertainment market by providing more free offers.
Pricing is a very important element of market mix of companies like Netflix and account for their market position. The pricing mix of products represents the prices at which the consumers are ready to pay to buy them and the cost which companies spend to produce such products. The pricing also shows that target market and consumer segments for the products. For example, the basic paid membership plan to watch videos of Netflix are allow viewers to watch single screen videos of standard quality. This shows that the plan is targeted at the lower income group. Netflix uses premium pricing to attract rich customers and offers premium video watching facilities of high definition and four screens (help.netflix.com, 2017). The above discussion shows that Netflix is able to appeal to both the middle and upper class customers through its differential pricing strategies. These appropriate pricing strategies of Netflix help it to attract a huge consumer base of both the upper and middle class which account for its high revenue generation. It must also be pointed out that pricing determines market penetration and the consequent competitive positions firms enjoy in the market. For example, Youtube owned by Google offers video and film viewing facilities free of cost and thus have higher market position than Netflix (Courcoubetis et al., 2016) I feel that Netflix should adapt its pricing strategies to offer free videos and generate deeper market penetration. This will earn it larger viewership in the market and generate more revenue compared to its rivals like Google.
PESTEL analysis of Netflix shows that the technological advancement has expanded the concept of place in marketing beyond brick and morter markets. The video streaming and sharing companies like Netflix and Youtube use the internet platform as the place to offer their video and film products. These companies offer products like videos, films and television shows over the internet which allows them to serve global consumer bases (Bharadwaj et al., 2013). Thus, it can be opined that products being offered by companies are dependent on the places used to sell them. For example, digital products like videos can be offered over the internet to enjoy a global access to multiple consumer bases at the same time. The SWOT analysis of Netflix shows places of offering products have a deep impact on competitive advantage and revenue generation. For example, Netflix offers videos mainly in DVD format and charges for them while Youtube provides videos readily available in digital format for free. This comparison between Netflix and Youtube shows that the latter enjoys stronger competitive position in the market. This comparison shows that place or position in the global market is linked to product and pricing (Nylén & Holmström, 2015). Netflix should strengthen its promotional strategies by offering free membership offers and discounts to attract more customers.
Promotion is an important element of marketing mix since it creates demand for the products among the customers. Netflix promotes itself by advertising its paid members over social networking sites like Facebook and Instagram. This allows the company to promote its products among the Facebook and Instagram users all over the world and persuade them to open account with Netflix. The official website of Netflix gives complete information to the visitors about the membership offers, their prices and their facilities. These strong promotion strategies of Netflix allow it to promote its products before a global base of customers (Dunlop, Freeman & Jones, 2016). This aggressive promotion helps the company to obtain new memberships and source huge capital from them. It can be stated that promotion is dependent on the product and place. For example, digital products like videos and films are promoted more online while physical goods are promoted using print media.
Conclusion
The marketing plan for Netflix of offering free products and discounts with paid products can help it in strengthening its market position. Firstly, the offering of free products will allow more customers to view the videos of Netflix which will give the company deeper market penetration. The next advantage of the marketing is that lowering of prices of the paid membership products will allow the company to offer HD quality videos to a larger consumer base. Thus, this indirectly will help in the promotion of Netflix video products which will ultimately help the company. The offering of free products will enable Netflix steal customers of its powerful rivals like Youtube, thus, improving the competitive advantage of the company in the market. The discussion shows that the marketing strategy discussed above will enable Netflix to gain a deeper market penetration and earn higher revenue.
References:
Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. V. (2013). Digital business strategy: toward a next generation of insights.
Bianchi, C., Pike, S. and Lings, I., 2014. Investigating attitudes towards three South American destinations in an emerging long haul market using a model of consumer-based brand equity (CBBE). Tourism Management, 42, pp.215-223.
Courcoubetis, C., Gyarmati, L., Laoutaris, N., Rodriguez, P., & Sdrolias, K. (2016). Negotiating premium peering prices: A quantitative model with applications. ACM Transactions on Internet Technology (TOIT), 16(2), 14.
Da Silva, T.L., Gouveia, L. and Reis, A., 2014. Integrated microbial processes for biofuels and high value-added products: the way to improve the cost effectiveness of biofuel production. Applied microbiology and biotechnology, 98(3), pp.1043-1053.
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