Table of Contents
Table of Contents…………………………………………………………………………………………………………………………………………………... 1
BACKGROUND…..…..…..………..…..………..…..………..…..………..………..…..………..…..………..…..………..……..……..……..2
CURRENT MARKETING SITUATION…..………..………..…..………..…..………..…..………..…..………..……..……..……2
Netflix competitors and products……………………………………………………………………………………………………..…..………..…… 2
Competitive Position………………………………………………………………………………………………………………………………………..…… 3
Estimated growth rate of the market………………………………………………………………………………………………………………….... 3
Market trend and changes in the marketing environment…………………………………………………………………….……..……. 3
SWOT ANALYSIS…..…..…..………..…..………..…..………..…..………..…..………..…..………..…..………..…..………..…..………..4
MARKET SEGMENTATION, TARGETING AND POSITIONING………..…..………..………..…..………………..5
Netflix Product Classification……………………………………………………………………………………………………………………..………. 7
Three levels of the product………………………………………………………………………………………………………………………………..…. 7
Netflix Lifecycle Stages……………………………………………………………………………………………………………………………………….. 7
Product design………………………………………………………………………………………………………………………………………………....……. 8
Packaging……………………………………………………………………………………………………………………………………………………………….. 8
Branding Strategy Suggested…………………………………………………………………………………………………………………………..…… 8
DISTRIBUTION STRATEGIES…..…..…..………..…..………..………..…..………..…..………..…..………..…..………………….9
PRICING STRATEGIES…..…..………..…..………..…..………..…..………..…..………..…..………..…..………..…..……….…….10
PROMOTION STRATEGIES…..………..…..………..…..………..…..………..…..………..………..…..………..…..………………12
Advertising campaign…………………………………………………………………………………………………………………………………………. 12
Sales promotion techniques…………………………………………………………………………………………………………………………..…… 12
Personal Selling process………………………………………………………………………………………………………………………..…………... 13
Direct Marketing and Internet marketing techniques…………………………………………………………………....………..……… 13
Social media campaign………………………………………………………………………………………………………………………....………..…. 14
REFERENCES…..…..………..…..………..…..………..………..…..………..…..………..…..………..…..………..…………….……..…..16
Netflix Markeng Plan 1
BACKGROUND
Netflix Inc. is the world’s leading Internet television network and subscription service
with over 40 million members in more than 40 countries enjoying more than one billion hours of
TV shows and movies per month, including original series. For one low monthly price, Netflix
members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected
screen. Members can play, pause and resume watching, all without commercials or commitments.
Netflix revolutionizes the way people watch TV shows and movies.
In 2013, Netflix became a streaming TV network service. Netflix won three awards for
original series “House of Cards” at the 65th Primetime Emmy Awards. Netflix has exclusive pay-tv
deals with major studios including Walt Disney Studios Motion Pictures, Paramount Pictures, MGM
and Lions gate.
With increased competition from Redbox, Netflix has placed more emphasis on streaming
videos and instantaneous delivery mechanisms. Netflix is now supported on multiple Internet
connected devices like Xbox 360, PS3, Blu-ray disc players, TV set-top boxes, Apple Macs, iPads
and iPhones.
Our purpose with this marketing plan is to propose certain strategies that would work
towards strengthening the brand of the company.
CURRENT MARKETING SITUATION
Netflix competitors and products
Hulu Plus
Hulu is an online streaming enterprise. Its most recent product is Hulu Plus, which offers a service
very similar as Netflix. Hulu Plus presents a subscription plan, with a monthly payment of
USD$7.99. The variety of movies and programs include full seasons of TV shows, even the ones
that were not available online in the past, and movies from classics to the most recent (Hulu, 2013).
Redbox
Redbox is a DVD and video games rental service with 35,900 locations around The United States;
every location has the dimension of only 12-square feet. It is an automated rental service
(comparable to a vending machine), available in malls, pharmacies, restaurants, retailers, and
supermarkets. Renting is charged per day, around USD$1.20 plus tax (Redbox, 2013).
Vudu
Vudu is owned by Wal-Mart. Their product consists of a wide range of movies, offered within the
online streaming through computers, smart TVs and Internet connected game consoles like
PlayStation and Xbox, Blu-ray players and Roku. It is an online movie rental, since the customers
can rent or own the movies paying a range of 2.00 to 14.99 USD per movie, and discarding
membership costs saying: “You only pay for what you watch” (Vudu, 2013).
Netflix Markeng Plan 2
HBO Go
HBO Go is a product offered by HBO channel for their customers to view their programming,
movies, TV series, and documentaries through mobile devices such as computers, smart phones
(android and IOS), ipads, Apple TV, Roku, Xbox 360 and Amazon Kindle. In order to access this
product for free, the consumers must subscribe to the HBO channel through specified cable
providers (HBO Go, 2013).
Amazon Prime Instant Video
Amazon Prime Instant Video is a service that allows customers to have free access to a library of
online streaming of movies and TV series. To receive the mentioned service, customers must
subscribe to the Amazon Prime membership for 79.00 USD per year. In addition, the customers will
receive other benefits such as lower shipping costs and Kindle books borrowing.
Competitive Position
Netflix is currently leading the market on its online streaming services. Since the customer’s
behavior changed from the traditional ways of borrowing and watching movies, there was a
business opportunity for online services, thus, many companies try to provide online TV and movie
services. One of the biggest competitors of Netflix is Hulu plus providing same services for the
same cost. Amazon Prime is another rival, because it gives free online streaming with a lower
yearly price and giving Amazon customers other benefits and added values non-related to movie
and TV show streaming.
Estimated growth rate of the market
The online TV and movie streaming industry is expected to grow over the next 2 years. Based on
statistics from remarketer, by 2014 the industry will grow 9.2% compared to the previous years, and
by 2017 the industry is expected to grow 25% reaching 265.2 million subscribers that represents the
84.5% of the U.S total population of 313.9 million (Emarketer, 2013) (Worldbank, 2013).This
prognostic brings opportunities as well as higher competition among the different companies to
reach the higher market share.
Netflix’s particular growth rate is expected to be 15% more by 2014, reaching 38.1 million of U.S.
subscribers (Trefis, 2013). See appendix graphs 1 and 2
2013 2014 Growth Rate
US Digital TV and Movie Viewers
212.1
* 231.6* 9.20%
*million
Market trend and changes in the marketing environment
The movie rentals market has changed dramatically. Movie rental stores have become obsolete due
to new digital technologies in which people can now download and watch movies at the click of a
button without going to the brick and mortar store. Generation Y, which has taken the social lead
now (“Baby Boomers” are retiring from the labor force) is more technologically savvy and values
time in higher dimensions, because the environment is now going in a faster pace than decades ago,
Netflix Markeng Plan 3
and recreational time is limited in which the new generation want to make the best of it, while
saving time.
Due to the technology advances and changes in consumer’s behavior, Netflix, which began as a
delivery movie rental has stopped marketing and advertising the DVD Netflix product for the past
two years. Their sales and subscriptions in this section have dropped dramatically so they have
encouraged their customers to change from DVD subscriptions to online streaming subscriptions.
Their major focus is the online streaming.
SWOT ANALYSIS
As part of the planning process to develop an efficient marketing strategy for the business, the
company must know its position in the market and the external factors that could positively or
negatively affect its position.
Strengths
First Mover Advantage: Netflix has earned the leading position in the Internet TV market.
The company is positioned above Hulu Plus (which has three million paying users) and also
above Amazon (with an estimate of five to ten million subscribers).
Size of content library: Netflix has the largest content library among all the online video
streaming companies. Its content collection of an estimated 60,000+ titles is substantially
greater than Amazon’s (NASDAQ: AMZN) 38,000 titles for Prime, and also bigger than
Hulu’s content library. The management intends to sign more exclusive content deals, which
will appeal to more users, and result in newer subscriptions.
Different streaming channels: The user can use Netflix via different devices such as PS3,
Wii, Xbox, PC, Mac, tablets, etc.
No cancellation fee: No official commitment within the contract hence the user could
cancel the online subscription anytime.
User–friendly platform: Users can easily navigate through the web page service either by
looking at the different movie or TV shows categories, or by inserting the name of their
movie of interest in the search bar.
Exclusivity of own-produced series: Netflix launched in this past year, a series produced
by them called ”House of Cards”, strengthening the power of their brand. Said series
attracted the subscription of 2 million U.S. members and another 1 million elsewhere in the
world. (Greenfield, 2013)
Weaknesses
Virtuous cycle might end: According to Ishfaque Faruk, “Netflix’s revenue model has been
described as a virtuous cycle, i.e. license large amounts of content and then attract new
subscribers, and this cycle goes on. The large amount of content obligations and the
expansion in international markets are being funded by debt which also enhances the credit
risk of the company”.
Price conscious customers: Inspite of the fact that Netflix has a low price, the entry of new
competitors will prevent Netflix from increasing its price in a short notice.
Netflix Markeng Plan 4
Opportunities
New channels: In order to improve the sales in the DVD segment, Netflix should consider
setting up Kiosks so people could be able to rent and return movies.
International markets: According to Ishfaque Faruk, “Netflix’s biggest opportunities lie in
the international segments. Netflix invested heavily across Europe especially in the Nordic
region, which should aid in increasing its subscriber base. Also, Netflix is increasingly
tapping into the Latin America region as the addressable market in the region is huge, and
the company is working with regional banks to improve payment collections. The 6.1
million subscribers in the International segment should gain traction, as more consumers
adopt Internet TV.”
Original Content: Producing original content would not only attracts new customers but
also enhances Netflix’s brand value and creates significant publicity and word-of-mouth
marketing.
Secular Forces: The increasing number of Internet connected devices owned by consumers
for media consumption, benefits in attracting more subscribers. The higher tablet sales and
Internet penetration in many parts across the world, aids to the addition of new customers.
Threats
