Netflix Marketing Plan by Elizabeth Austin

Netflix Marketing Plan
by Elizabeth Austin
2 Product Description
Core customer value = Convenient & affordable home entertainment
Actual Product:
·
Brand Name = Netflix
·
Quality is award winning and more than 90 percent of subscribers have evangelized Netflix
·
Known for distinctive red packages and easy-to-use website
·
A hybrid design of DVD-by-mail and streaming video subscription service
·
Features:
§
Extensive collection of titles on DVD, Blu-Ray and streaming video
§
DVDs mailed instantly and returned in pre-paid mailers
§
Watch streaming videos without commercial interruptions
§
Many consumer electronics are Netflix enabled
§
Easy-to-use website that offers personalized recommendations
§
We offer a variety of subscription plans, with no due dates, no late fees, no shipping fees and no
pay-per-view fees.
Augmented Product
·
Customer support available online any by phone
·
Delivered by U.S. Mail or via internet
Elizabeth Austin
George Washington University
2b Product Description
A time of substantial GROWTH
· Netflix to expand service to
Canada 2010 in Third Quarter
·
Digital natives will continue to
search out entertainment online
·
11 years of consistent and
strong earnings and subscriber
growth
·
$66 billion market for
subscription-based home
entertainment
*From Netflix Press Kit
Elizabeth Austin
George Washington University
3 Current Marketing Situation
Market Description
Netflix is a subscription based home entertainment
company launched in 1998 and has grown to 15 million
subscribers as of June 2010. The world’s leading
subscription service of DVD-by-mail and streaming
entertainment and plans to reach 17 million subscribers
by next fiscal year. Netflix is currently the leader in the
movie rental market and transformed the market with
its fresh approach in this industry once dominated by
brick and mortar movie rental stores.
Objectives:
Core strategy is to increase unique subscribers with
·
our hybrid model of DVDs and streaming entertainment.
·
Capitalize on competitive advantage
Elizabeth Austin
George Washington University
3b Current Marketing Situation
Netflix: Key Market Segments
Geographic
● Regions [U.S. & Canada]
Demographic
· Ages [18 -59]
·
Lifecycle [Young, single, married, married with children]
·
Education [High school graduate, some college, college graduate]
Psychographic
·
Social class [Working class, middle class, upper middles, lower uppers]
Behavioral
·
Occasions [Special occasion, holiday, seasonal]
·
Benefits [Quality, service, economy, convenience, speed]
·
User status [ Potential user, first-time user]
Elizabeth Austin
George Washington University
4 Product Review
· Queue: select from a compelling library of titles that can be viewed instantly DVD titles for fast delivery.
·
Instant Queue: select titles to be viewed on computer or Netflix ready device.
·
Netflix Roku device.
·
Netflix ready gaming devices include Xbox 360, PS3 and Wii.
·
Netflix ready Blu-Ray devices include Insignia, LG, Panasonic, Phillips, Samsung, Vizio and Sony.
·
Netflix ready HDTVs include LG and Sony.
·
Browse by title, actor, genre, new releases, top 100 or critic’s picks.
·
Proprietary recommendation system to help subscribers find titles of interest.
Elizabeth Austin
George Washington University
5 Needs, Features & Benefits
Target Segment
Digital natives
Families with
children
Busy
professionals
Customer
Need
+ Access to instant streaming video
+ Entertainment that will work on various
platforms/devices
= Instant Queue: select titles to be viewed on computer or Netflix ready
device.
+ Family and educational content
+ Low monthly cost
+ Convenience of mail or stream
= Queue: select from a compelling library of titles that can be viewed
instantly DVD titles for fast delivery.
= Instant Queue: select titles to be viewed on computer or Netflix ready
device.
+ Intuitive recommendations
+ Convenience of mail or stream
= Proprietary recommendation system to help subscribers find titles of
interest.
= Browse by title, actor, genre, new releases, top 100 or critic’s picks.
+ Wide selection of programming for that
region
+ Entertainment that will work on various
platforms/devices
Canada Reside
nts
Corresponding Need/Benefit
= Queue: select from a compelling library of titles that can be
viewed instantly DVD titles for fast delivery.
= Netflix ready gaming devices include Xbox 360, PS3 and Wii.
= Netflix ready Blu-Ray devices include Insignia, LG, Panasonic,
Phillips, Samsung, Vizio and Sony.
= Netflix ready HDTVs include LG and Sony
6 Competitive Review
Netflix is leading the competition
·
The home entertainment market is saturated with several options.
·
“For example, consumers may subscribe to cable, rent a DVD from Redbox or Blockbuster, buy a DVD
from Wal-Mart or Amazon, download a movie from Apple iTunes, watch a TV show on Hulu.com, and
subscribe to Netflix, or some combination thereof, all in the same month.”
·
New technologies may create competition
The market for streaming video is comprised of three market segments:
·
Subscription
·
Video-on-demand (VOD)
·
Ad-supported
DVDs are accessible:
·
Retail locations
·
Various online retailers
Elizabeth Austin
George Washington University
6b Competitive Review
Amazon
VOD
23,000+ movie titles
Titles available for purchase
Apple
VOD
Requires Apple TV to view on television, compatible for viewing on $1.99 and up per title
computer
Blockbuster
VOD
95,000+ titles online
retail locations
$2.99 and up for streaming
$4.99 per in-store rental
CinemaNow
VOD & Retail
12,000+ titles online
Titles available for purchase
$3.99 per title
Microsoft
VOD
35 hours of recorded television
$9.95 per month with
exclusions and requires
Direct TV
Wal-Mart(Vudu)
VOD
6,000 titles
Vudu is installed on many internet ready devices
$0.99-$3.99 per title
Cable Providers (Time VOD
Warner)
Vast content depending on provider
$3.99 per title,per day
Hulu
Ad-supported
Joint venture of ABC, Fox and NBC and features content from
Disney, MTV, A&E, MGM, Paramount, Sony, National Geographic
and PBS
Free, but has normal
commercial breaks and limits
certain shows.
YouTube
Ad-supported
Most popular online community
Several apps
Free, but has advertising
Red Box
22,000 locations
22,000 Red Box locations nationwide
$1 per title per day
Elizabeth Austin
George Washington University
$3.99 per title
7 Distribution Review
"The future aint what it used to be"
- Yogi Berra courtesy of Kotler text.
Disintermediation model, "pioneered a new way"
with selective distribution
Multiple channels
● U.S. Mail relationship - $600 million annual bill
● Maintain nationwide network of distribution
centers, currently 58 sites
● Third party content delivery networks
● Hardware partnerships
● Studio licensing - Netflix paid $116 million for
streaming content in the first 6 months of
2010.
Elizabeth Austin
George Washington University
8 Strengths & Weaknesses
Strengths
●
●
●
●
●
●
●
Weaknesses
Brand equity.
Personalized merchandising.
Growing.
Convenience, selection and fast delivery.
Pricing.
Marketing.
Customer satisfaction.
● Providing new releases and titles restricted
by studios and networks.
● Customers must wait for DVDs.
● Website vulnerable to hackers.
Elizabeth Austin
George Washington University
9 Opportunities & Threats
Opportunities
Threats
● Increasing demand for streaming
entertainment.
● Increased cost of fuel and the
environmental impact to drive to
entertainment stores and kiosks.
● Intense competition for subscribers.
● New technologies/decrease popularity
of DVD.
● Changes to law.
● Delayed availability of content from studios.
● Reliance on partnership to stream video.
● Loss of distribution channels.
● Increase costs.
● Server disruptions.
Elizabeth Austin
George Washington University
10 Objectives
Objective 1
By the end of 2011, will reach 20 million subscribers
(Adding 5 million to their current 15 million subscribers)
● Invest in marketing to target segments that underscore the afford-ability and convenience of Netflix.
Objective 2
By end of 2011, raise revenue and market value
(2010 Q2 earnings fell below Wall Street predictions, despite strong growth indicators)
● Invest in Investor Communications and product differentiation
“The company reported that subscribers who watched at least 15 minutes of streaming content in the second
quarter grew 61 percent, up from 37 percent in the year ago period. From June 2009 to the same month this
year, Netflix added nearly 5 million subscribers, a 42 percent increase. By the end of this year, the company says it
could possess as many as 18.5 million subscribers.” - Quarterly Report from Netflix
Elizabeth Austin
George Washington University
11 Positioning Strategy
Netflix Value Proposition
● Offers customers more for less
To target segments and satisfy growing needs for convenient and affordable home entertainment, Netflix
offers customers more entertainment, more options and for less money. No hassles, late fees all delivered or
instantly to your computer.
Elizabeth Austin
George Washington University
12 Product Strategy
Netflix is a convenience product and is delving into the
international market later this year, with its entry into
Canada.
Netflix has built a strong brand on an ingenious
interface, one of the late 90s dot.com companies to
thrive into 2010.
Netflix's strong growth continues due to brand equity,
memorable packaging, high customer satisfaction,
growing library and partnerships.
Elizabeth Austin
George Washington University
13 Pricing Strategy
Netflix will continue to offer pricing plans designed to meet all
budgets and the "more for less" philosophy
Pricing Plans:
Netflix Unlimited Plans (Unlimited DVDs each month with unlimited streaming)
8 DVDs out at-a-time for $47.99
7 DVDs out at-a-time for $41.99
6 DVDs out at-a-time for $35.99
5 DVDs out at-a-time for $29.99
4 DVDs out at-a-time for $23.99
3 DVDs out at-a-time for $16.99
2 DVDs out at-a-time for $13.99
1 DVD out at-a-time for $8.99
Netflix Limited Plans
1 DVD out at-a-time for $4.99 - Limit 2 DVDs each month with 2 hours of streaming to their PC. This
plan does not allow members to stream movies to their TV via a Netflix ready device.
Elizabeth Austin
George Washington University
14 Distribution Strategy
Netflix is stronger than competitors because of its unique
hybrid model of distribution, which gives the company a
competitive advantage to other
companies. The company should continue to work
with partners to distribute Netflix DVDs and streaming
entertainment.
Elizabeth Austin
George Washington University
15 Marketing & PR Strategy
Strategy 1
● Invest in marketing to target segments that underscore the afford-ability and convenience of Netflix.
Tactics
● TV and radio advertising
● Direct mail and online promotions to targeted segments
● Social media to build online communities and word-of-mouth advertising
Strategy 2
● Invest in Investor Communications and product differentiation
Tactics
● Hold financial forum for investors and media
● CEO and other chief level officers attending panels and technology forums
● Regular updates to hardware and studio partners,building more relationships with other key
stakeholders in entertainment delivery.
Elizabeth Austin
George Washington University
16 Last Words
From Netflix CEO, Reed Hastings own presentation May 2010
Elizabeth Austin
George Washington University
17 Sources
Armstrong, G., & Kotler, P. (2009). Principles of Marketing (13th Edition) (13 ed.). Alexandria, VA: Prentice Hall.
Burtolucci, J. (2010, April 10). Will Netflix Suffer from Delayed Gratification? - PCWorld. Reviews and News on Tech
Products, Software and Downloads - PCWorld. Retrieved August 5, 2010, from http://www.pcworld.
com/article/193972/will_netflix_suffer_from_delayed_gratification.html
Wire. (2010, May 7). Netflix Selects Amazon Web Services to Power Mission-Critical Technology Infrastructure MarketWatch. MarketWatch - Stock Market Quotes, Business News, Financial News. Retrieved August 5, 2010, from http:
//www.marketwatch.com/story/netflix-selects-amazon-web-services-to-power-mission-critical-technology-infrastructure2010-05-07
Facebook - Netflix. (n.d.). Facebook. Retrieved August 5, 2010, from http://www.facebook.com/netflix
Horwath, R. (2009, November 3). Netflix: Differentiate of Destruct, Step Three in Resource Allocation. Strategy Espresso
Blog. Retrieved August 5, 2010, from http://richhorwath.wordpress.com/tag/netflix/
Cont.
Elizabeth Austin
George Washington University
17b Sources
Netflix . (n.d.). Wikipedia, the free encyclopedia. Retrieved August 5, 2010, from http://en.wikipedia.org/wiki/Netflix
Netflix to Stream Indie Studio's New Releases Before Cable. (n.d.). Social Media News and Web Tips, Mashable The Social
Media Guide. Retrieved August 5, 2010, from http://mashable.com/2010/07/06/netflix-relativity-media/
Netflix, Inc. - Annual Report. (n.d.). Netflix Investor Relations. Retrieved August 5, 2010, from http://ir.netflix.com/secfiling.cfm?
filingID=1193125-10-36181
Netflix: Press Kit. (n.d.). Netflix Media Relations. Retrieved August 5, 2010, from http://www.netflix.com/MediaCenter?id=5379
Nightline. (n.d.). Nightline on Netflix. YouTube. Retrieved August 5, 2010, from http://www.youtube.com/watch?v=ameJIsF4Mfs
PRNewswire. (2010, July 19). Netflix To Launch Canadian Service for Streaming Movies and TV Episodes Later... -- LOS
GATOS, Calif., July 19 /PRNewswire/ --. PR Newswire: press release distribution, targeting, monitoring and marketing.
Retrieved August 5, 2010, from http://www.prnewswire.com/news-releases/netflix-to-launch-canadian-service-for-streamingmovies-and-tv-episodes-later-this-year-98733079.html
Sandoval, G. (n.d.). Netflix delights studios with big checks | Media Maverick - CNET News. Technology News - CNET News.
Retrieved August 5, 2010, from http://news.cnet.com/8301-31001_3-20012024-261.html
Associated Press. (2010, July 21). Netflix 2Q Profit Shines, Stock Still Loses Luster : NPR. NPR : National Public Radio : News &
Analysis, World, US, Music & Arts : NPR. Retrieved August 5, 2010, from http://www.npr.org/templates/story/story.php?
storyId=128674640
Elizabeth Austin
George Washington University