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Maintain DVD by mail service as well as streaming. Emphasize marketing its streaming services. Cancel Qwikster and maintain monthly prices. 2. Develop and integrate a VOD platform/service 3. Create and provide exclusive content Basis for Recommendations 1. Cancelling the Qwikster brand and maintaining its monthly prices will lure lost subscribers, and promote customer satisfaction by eliminating inconvenience and facilitating accessibility. The attempt to rebrand the DVD by mail service and separate the streaming service directly contributed to the dramatic loss of subscribers, thereby weakening the brand that was valued by subscribers primarily for its effective customer preference database technology and price structure. 2.) By offering a video on demand service, Netflix may be able to expand its subscribers’ connectivity preferences and choices through a new platform. Amazon Prime Instant Video currently allows any member to instantly watch individual videos for a small price. With the rise of competitors in the market, it is critical that Netflix maintain competitive. Therefore, a video on demand service would satisfy shifting customer demands and preferences. 3.) With rising new content costs, Netflix would
likely gain a strong competitive advantage by emulating premium channels such as HBO or Showtime, who enjoy the benefits and profitability 3.3. RECOMMENDATION MEMO To: Dr. Norma Davis From: Alessandra K. Aguiar Date: June 16th, 2015 SUBJECT: NETFLIX INC. of having their own exclusive content. As opposed to acquiring pricey new contents, Netflix can focus on the creation of its own exclusive content as a means of differentiating itself from other competitors. This, in turn, will bring back value to the brand and promote long-term growth for the streaming business. Discussion: According to Michael Porter, the three competitive strategies for outperforming other corporations are cost leadership, differentiation, and focus. (Wheelen, 2015). A successful company should incorporate more thanone of the generic strategies. Netflix can determine the best strategy to use in new business pursuits by evaluating each strategy’s contribution to their success or failure. Netflix can regain its dominant position in the market by reestablishing competitive advantages through a proper utilization of a differentiation focus strategy from Porter’s competitive strategies (Exhibit 1). The alternative for Netflix is to continue its attempt at rebranding through the separation of services, while straying away from a cost leadership strategy by increasing their prices. The risk in doing this however, is that a Netflix must be able to ensure that the price increases directly relate to higher quality and that prices are not too far above the price of the competition. Netflix would face too great of a risk against many competitors (Exhibit 3) pricing similar services below them.