Netflix Case Study Solution
Quality Issue:
In addition the price issue, the other main problem of the Netflix was “Quality of Content”, that people demand at that time and the company had forget about the Quality of content, and only focusing on the price factor this was also one of the factor due to which the company had loss almost 800,000. Many competitors were providing high Quality Of content.
Competition:
In today’s world, the competition in the media and entertainment industry at their peak. Therefore, being in the competitive and in the fast growing industry the Netflix is facing a huge competition issue from their main competitors such as Hulu, Amazon, and Redbox. These companies are also providing the same services on almost similar prices. And there is no any switching for the customers so customer can switch from on to another with any hesitation if he/she does not get the services with high quality at favorable rates.
Alternatives
Initially the company should understand there customer specifically and target their needs. In simple words what their customer wants then the company should take some major steps in order to take over the market and to maintain the position in market by understanding the need of customer and also understand their competitors. Following are the different alternatives that company should take in order to maintain the position in the market.
- The company can also undertake the market by Competition their Competitors by the following ways:
- By innovating new products and services: The company should provide new innovative products and services to their customer. This not attract only the new customers but also maintain the strong connection with old one as they gets the new things which are not available in the market.
- Building economies of scale: By this the company can easily take a strong position in the world as the company’s cost will decrease significantly due to producing in selling in larger quantity.
- Building Capacities and investing money on research and development: By this the new entrant cannot come in market easily as the already established company such as Netflix will on their peak. Therefor it will become very difficult for new entrants to take a position in the market.
Company can offer the different attractive packages. Such as:
- Provide Discount: If the customer of the company from lower or average class, means they will not afford the high prices then company should offer multiple types of discount. Such as
- A member with annual subscription will receive the 20% of annual charges
- A member with monthly subscription will receive the 5% discount.
Different discount will attract the new and old customer more, but this will decrease the margin of the company but at the other side the company can earn the margin my taking over the large number of subscribers, so the company can easily earn the high margin targeting the large quantity.
High End:
In this the customer can target rich class then the company should focus on the quality of the content. The company should provide such type of quality services that really can add the value in the customer’s life and along with that justify that high price. If the company really provide high quality services then the customer will automatically attracted and will be ready to pay higher prices for that services.
Single Focus:
The company should only maintain their position on live Streaming and as the people cannot wait more to watch movie after their DVD delivered at door and they are switching rapidly to Online streaming. Therefore, this is best time to catch their customers by providing services like live streaming.
Recommendation
By analyzing the all content, it would be recommended to the company to focus on pricing factor. It is because in the current time the USA is in recession and currently the people are very sensitive for spending their money due to recession. In addition to that the industry in which Netflix is operating will never be maintained their position with high prices as there competitor are providing the same services at the normal rate. Therefore, the Netflix should drop down there Prices from $16 to $8 per month or less than that if so possible in order to undertake the market. The company should not only decrease the price due to their competitor but also for their customer as they are not comfortable to pay that much price for services provided by the company.
Appendix 1: Porter’s Five Force Model
Appendix 2 SWOT Analysis
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