SWOT analysis and Marketing of Netfix - Report Example

Task: Netflix Question Netflix started operations in 1997 as an online video leasing store. Its s buy its productsby visiting its website and rent the movies after selecting them. The customers pay for the movies and additional expenses such as shipping fee. Netflix is facing stiff competing from other related businesses like Blockbuster and Wal-Mart. Consequently, it has implemented various strategies to stay competitive in the market. For instance, the company withdrew the late fees and now charges its customers according to the number of movies they rent. The company delivers the DVDs immediately after being ordered by the customers. Moreover, it has set lower prices for its movies compared to other firms, contributing to its popularity. The firm has also expanded its movies and television display collection (Management Paradise 1). Apart from the online movies, the company offers foreign film documentaries and television show. It also introduced the other features that enable buyers to watch the movies directly. This has enabled the firm to save on delivery expenses. Netflix’s employees have to check mail and send about 600 movies every hour through mail to avoid online congestion. The firm has about 58 distributers in the country. This has enabled it to deliver the DVDs faster. This strategies have enabled the company to be one of the leading movie businesses that get about 1.6 billion dollars every year (Pride & OC 463). Netflix is trying to achieve high customer retention through personalization. The aim of introducing this competitive strategy is to sustain a good relationship with its buyers (Block 1). Question 2 Supplier power The movie rental market has very few suppliers and customers depend on only them. Consequently, the customers do not control the business. This implies that if the movie suppliers decide stop supplying the movies, the customers will not have any other options. The suppliers have the power to control the distribution and they can decide to increase or lower prices (Management Paradise 1). New entrants’ threats The new entrants are very few in this business. This is because it requires huge capitals get the movie rights. Additionally, it requires innovation since one has to introduce new ways of the move delivery. The most recent entrant in the market is Red Box, which rents its movies using the vending machines (Bettig & Hall 90). Threats of substitutes There are very low chances of having substitutes in this business. The only substitutes that a business can have are the illegal distributors who can only access the movies by streaming them or waiting until the movies are publicly aired (Bettig & Hall 90). Rivalry There are very few rivals in the industry. There are about three big industries and a few small ones. The current big rivals in the market are Netflix and Blockbuster. Blockbuster was the leading supplier until Netflix introduced its differentiation strategies (Management Paradise 1). Buyers Buyers in this business do not have powers since they have limited options. For instance, a customer can only buy the movies available in the online library. The small rental companies can only display what they can buy. Consequently, they cannot control the movie prices. However, the large companies like Netflix can control prices because they buy the movies in large quantities (Bettig & Hall 90). Question 3 The SWOT analysis of the company displays very few weaknesses, several strengths, and many competitive advantages. One of the company’s strength encompasses its ability to have small inventories and its low amount of debts. The company also sells its goods at lower prices compared to other companies and this has increased its consumers’ loyalty (Pride & OC 456). Additionally, unlike other companies, Netflix does not charge its consumer the late fee. It customers can stay with the movies for longer periods. Its other strength includes its brand name that is known globally. Furthermore, Netflix can deliver the DVDs within a short time because of its many distributers (Management Paradise 1). The SWOT analysis also show the companies many opportunities. One of the opportunities includes its ability to grow and be a global company. This is because many movies are being produced currently. Consequently, its market for movie rentals will always expand. Additionally, the company can offer many services and features that encompass foreign movies. The company also uses many languages in their website in order to serve diverse customers (Management Paradise). Netflix has very few weaknesses that will not hinder it from achieving its goals. Additionally, its rivals also have the same weaknesses. One of the weaknesses includes the limited variety of goods. The other weakness is that the company does not have physical locations. This implies that those individuals without computers can never access their products (Management Paradise). Question 4 Netflix is stronger than blockbuster in the market when it comes to meeting the challenges of movie rental business. The company is capable of supplying to a wider audience high quality services on time. The company is endowed with enough resources to enable them communicate directly with their clients in real-time. Subsequently, Netflix have customized interfaces that their clients use in making inquiries. Clients prefer Netflix because the company has an elaborate network for coordinating with major studios globally. Moreover, Netflix offers their prospective clients free trial services without making alterations on movies they distribute. Conversely, Blockbuster has the advantage of having been in operation since 1985. This means that their employees have more experience in dealing with the dynamics of movies business. In comparison to Netflix, Blockbusters have many distribution hubs in the US. Moreover, the management of the company is embracing the use of advanced technology in promoting sales. This will result to an increase the demand of blockbuster’s products in markets dominated by Netflix operations. Netflix have a sustainable competitive advantage because the organization focuses on satisfying customers. The company has revolutionized the entertainment industry by devising an elaborative communication channel that enables the management to get feedback from clients. The research and development department at Netflix is aiding the management in coming up with innovations that increase sales. Moreover, the loyalty of the clients of Netflix has made it difficult for blockbuster to penetrate markets that are dominated by Netflix. However, sustainability is limited for Netflix because their competitors have reduced the prices for their services. Affordability of Blockbuster means that Netflix will have to adjust their rate in order to match with the competition in the market. Blockbuster is expanding their shipping programs to markets that traditionally belonged to Netflix in order to counter Netflix’s dominance. However, Netflix will sustain the competition because they have an elaborate online transaction interface for conducting their operations. Moreover, Netflix has the ability to devise technologies that meet the challenges of the dynamic entertainment business. Question 5 The CEO of Netflix Reed Hastings is supposed to devise strategies that will sustain the operations of Netflix in the market. He should strive at increasing the demand of Netflix services globally. This can be enhanced through embracing the use of sophisticated software’s in generating titles for libraries that will enable them list commodities that are on demand. Reed Hastings should channel more resources to the research department to promote innovations. Reed Hastings should focus on motivating his employees to devise strategies for use in enhancing creativity in marketing the company. Indeed, he is supposed to segment the companies market to ease operations of the marketing department. As a result, Netflix will be able to customize products for their clients. According to Pride & OC (863), the manager should also reduce lending rates for the company to maintain the growth. This will aid in encountering competition from the blockbusters. Besides, he should come up with an elaborate policy for shipping products to clients overseas. The manager should enlighten the customers by providing them additional information. The management should devise additional services different from supplying videos. He should seek the views of clients prior to coming up with innovations. This will enable the company identify products that are on high demand (Management Paradise). Apart from delivering to clients entertainment products, the manager should motivate the employees in the shipping department since they are responsible for increase in their revenue of the company. Increase the numbers of storage facilities of the company in overseas market. Notably, the company will have to solicit for funds for expansion from credit financing institutions.teh manager should employing staff from different backgrounds who will generate ideas that might steer the success of the company. Question 6 It is advisable for the manager of blockbuster to invest in technology to counter the challenges of the competitive movie industry (Bettig & Hall 2). At first, he can outsource some of the company’s operations such as designing software’s for online distribution of movies to professionals. Subsequently, he should come up with a pricing program that reflects the real market value of a service. Moreover, James Keynes should cut on unnecessary overhead costs that reduce profits of the company. The manager should consult widely before coming up with strategic plans for marketing blockbuster abroad. Secondly, the company should promote their businesses abroad because they have a well-developed shipping program that places them at an advantage over their competitors. Moreover, the CEO should allow subscribers of the company’s to keep DVDS for longer durations (Bettig & Hall 17). As a result, the clients will feel appreciated and develop loyalty for the company. Blockbuster CEO James Keyes should interact with clients on a continuous basis to monitor the changes in their tastes and preferences. He should also ensure consistency in the distribution of CDs to minimize complains from clients. Blockbuster staff should speed up the delivery processes to ensure that clients are served on time. Works Cited Bettig, Ronald V, & Jeanne L. Hall. Big Media, Big Money: Cultural Texts and Political Economics. Lanham, MD: Rowman & Littlefield Publishers, Inc, 2012. Print. Block, Alex. Netflix’s Ted Sarandon explains original content strategy. The Hollywood Reporter. 2012. Web. 10th October 2012. Management Paradise. SWOT analysis on Netfix. 2010. Web. 10th October 2012. Pride, William, & O C. Ferrell. Marketing. Mason, Ohio: South-Western Cengage Learning, 2012. Print. Read More