Lauren Hanrahan ECO 211 Extra Credit

Lauren Hanrahan ECO 211 Extra Credit - that they have. When...

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Lauren Hanrahan ECO 211-10 For my management 495 class, we have been doing case studies on different companies. This week we looked deeply into Netflix. While reading this article, I actually thought about the class and how the article related closely to microeconomics. The article is quite lengthy, and discusses matters far beyond microeconomics, however the concept of elasticity is commonly referred to throughout the article. The article explains how Netflix is leading the market (right behind Blockbuster) in terms of market share and consumer satisfaction. The key to their success, is offering their product at such a good deal to their consumers. It is mentioned in the article how the movie rental industry is incredibly elastic. As the price in rental movies increases, consumer demand decreases. The price/deal that a company offers for renting movies is closely related to the demand and sales
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Unformatted text preview: that they have. When entering the market in 1998, Netflix had to find a niche in the market to compete against Blockbuster, Movie Gallery, and Video on Demand. Their niche was to offer customers the best deal for renting movies without ever having to leave the comfort of their home. Within an elastic industry, the most favorable way to make a profit is to decrease your price and thus increase consumer demand. Thats exactly what Netflix did. Along with fulfilling customer demands, and offering free trials, Netflixs strategy of working with an elastic industry has helped them become one of the most profitable and recognizable movie rental companies in the world. Netflix article is also attached, obtained from GVSU Course Reserve...
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Lauren Hanrahan ECO 211 Extra Credit - that they have. When...

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