Case Study 1 MKT 701 article notes.docx - Discuss the...

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Discuss the following:1) briefly summarize the key marketing strategy issues in the case that are still relevant TODAYinaddition to contemporary issues you find via research;The case analysis should be approached as if you are a marketing manager that has been asked topresent three long-term strategies to the board of directors of the brand/product in question. Based onyour understanding of the caseAND external research on the CURRENT situation, what are the threebest strategies to revitalize this brand/product to the same target market and/or alternative markets?Please do not limit yourself to the specifics of the case when formulating your strategies.Think ‘BIGPICTURE’(internal/external factors, complementary products/industries, sustainability, etc.).Case Study Article Notes:NETFLIX INC.: THE SECOND ACT — MOVING INTO STREAMINGNetflix is a rental subscription service offered content via mail or internet based streaming. 2011 third-quarter financial reports showed they lost 800K customers, first decrease in customer base ever and itresulted in 9% hit to company earnings per share, down to $1.16 from $1.27. This was the result ofNetflix increasing subscription costs by 60%.Netflix faced rising costs in acquiring content. Netflix split physical DVD service and renamed it“Qwikster” from streaming which remained as “Netflix”. Reed Hastings, Netflix’s CEO stated that theybecame different business with different cost structures, benefits, and needed to be marketed andoperated differently. The need to separate the services was to ensure that each could service thecustomers changing desires.Many customers cancelled subscriptions and Netflix’s stock fell to $0.77 in four months. Hasting’s waslambasted but the downfall of DVDs gave way to streaming technology. Netflix’s commitment tostreaming allowed them a 61% market share of movies being streamed over the internet or on-demand.Comcast was next at 8% and DirectTV and Apple TV were at 4% or less.Netflix focused on acquiring movies that were not the most recent releases as licensing costs increased.Netflix had $356 mill in cash at the end of 2011 compared to Apple’s $76 billion.NETFLIX: EMERGENCE TO MARKET DOMINATIONFounded in Los Gatos, CA in 1997 by Reed Hastings and Mark Randolph, for $2.5 million. LightweightDVDs shipped via USPS with a single stamp. Starting at $7.99 per month, Netflix offered unlimited viewsof shows and movies directly from the user’s device and unlimited DVD rentals with no late fees. Netflixwas the first in this space and had 23.6 million subscribers as of April 2011.Growth ProgressionNetflix partnered with Amazon.com in 1998. Netflix directed its customers to purchase DVDs in Amazonin return for Amazon advertising. Despite its popularity, in 1999 Netflix reported $29.8 mil in losses andonly $5 mil in revenue. In 2000 Netflix developed CineMatch, a personalized recommendation system. In

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Term
Fall
Professor
Dr. Karen James
Tags
Streaming media, Subscription business model, Blu ray Disc, Netflix Inc

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