Free Essay Sample «Netflix Case»

«Netflix Case»

1.0 Changes in company strategy

In various instances Netflix Corporation made changes to its strategy as they tried to satisfy their customers as well as increase its profitability. The continued variations were based on the fact that all that the company as out to achieve is the broadening of the clients portfolio and making the entity to realize revenue increment as quick as possible.

Initially the corporation was adopting a strategy that saw the traditional systems of pricing in place. This involved the charging of clients a $4 fee for the movies as well as the $2 penalty for shipment. This was too supposed to cater for the hand lance costs and the customers were expected as per the strategy to return the film after a certain period of time after which a failure would accrue additional costs. Response from the customers showed that the company was charging the same fee as its competitors yet they were delivering slow services. This made the corporation to vary the pricing strategy to meet the needs of the clients. It changed into the no-late fee strategy in 1999.This was given a boost by the ability of the customer to have at least four movies at the same time.

The corporation did as well make variations on its marketing strategy. Netflix was initially reliant on the traditional merchandising as a system of complementing the corporation search engines as well as the avenue of connecting the subscribers into the company libraries. It involved a number of the human resource giving highlights of specific films on the website homepage weekly and through an effective system being able to offer analogous recommendations to all subscribers. According to the Company CEO: Mr. Hunt, the promoted movies were rented out and this forced the employees to write chunks of WebPages to ensure that their clients were not referred to the films already rented out a factor that they later realized the promotional value was zero. Upon the realization of the inadequacy of this traditional approach merchandising, the organization came up with a propriety recommendation system that would better balance the customers demand.

Netflix as well did adopt a new strategy to enable it reach out to the majority of clients. It had for years served its clients from the single distribution center that was located at Sunnyvale in California and despite the various efforts of improving the center majority of the country was not able to realize the benefit of the next day deliveries for the movies they rented (Shih, Kaufman & Spinola 3-4). The extended deliveries posed as barriers to the corporation efforts of building their clients portfolio through attracting and the retaining of the clients in the regions. As a result, they corporation was forced to change the strategy. They did this by testing it in Sacramental and Sunnyvale and the results were significant. As Netflix added more centers the results became more realistic and performed just like the bay area. The company thus, quickly opened other distribution centers around the country and the subscribers responded positively to the improved service delivery. This strategy change is one of the notable because after the corporation had promised its investors a total of 500,000 subscribers it actually delivered 700,000 in at the may 2002 IPO.

Customer awareness was increased in relation to the lower profile movies after the adoption of the Netflix systems generated strategy but the coming up with the company movie liberally still needed a good amount of money. The corporation was a small player in the rental market and had no relationships with the major studios. It instead filled its libraries with relations from a small number of the film distributors with minimal discounting. The upfront cost made it to make strict choice a factor that resulted to fewer than desired stock copies which was a major dissatisfaction to the customers because they could not rent new releases on time. Due to this the organization had to vary the prior strategy and adopted Ted Sarandos as a chief content officer charged with the management of content acquisition. The person saw the company towards the revenue sharing agreement with other major studio in the USA. The benefits of the approach were far beyond the lowering of acquisition costs for the highly demanded releases to customer satisfaction.

These are some of the instances where the corporation had to vary its strategies to adopt the advantage ground kind with for a better market positioning.

2.0 Roles of the internet

Internet in Netflix Corporation did enable it to realize a lot of significant benefits. Initially it enabled the venture to improve its marketing efforts because the customers and subscribers were able to get a broader access to the total film library that the corporation was offering to the market. This is a variable that saw it towards the realization of reasonable profits and better market position and significant sales.

Internet as well enabled the corporation to build relationships with the major studios a thing that saw it improve its service to the customers (Shih, Kaufman & Spinola 5). This because it enabled the widening of the library as well as adding variety to the market offers that it had. It as well facilitated the subscriber’s assessment to the new releases a thing that was not possible before the ideology of internet was brought out.

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Internet as well did facilitate convenience and speed in the corporation. This is because the ordering and the delivery of the orders were fast and reasonable for the entity and subscriber expectations. More so the internet enabled the corporation employees to vary the contents in the internet faster a thing that ensured the clients were not advised on an already rented film. Internet too enabled the selling of the products without necessarily having the support staff.

Through the internet, the Netflix Corporation was successful in its business and this is one of the variables that did add meat to the strategies resulting to a successful business.



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