Netflix Vs Blockbuster: Analysis Of Marketing Strategy
Task:During the 1980s and 1990s, Blockbuster dominated the US home video rental market. However, the emergence of Netflix in 1997 with its ‘rental by mail’ model challenged Blockbuster’s business model (and market dominance). Blockbuster’s market position was further weakened when Netflix began to stream video content directly to consumers’ computers. In this case study, you are required to prepare a 3000-word report that examines the central question of how “Netflix beat Blockbuster Video”.
This assessment requires students to demonstrate understanding and application of all three elements of the Exploring Strategy Model; Strategic Position, Strategic Choice and Strategy in Action.
You should specifically address the role of technological diffusion, first movers and followers, innovation and whether Netflix will continue to remain as the dominant online streaming provider in the US.
In this netflix marketing strategy, the study is related to the analyses of the marketing strategies of Netflix. However, the analyses of this study are based on the explanation of two main questions. Apart from this the netflix marketing strategy also included different marketing aspects and tactics. Technology and innovation played an important role in the development of the concerned organization. This marketing strategy for netflix included the business analyses of both Netflix and Blockbuster. The business concept of Blockbuster was related to serving the DVDs on a rental basis. Netflix was also using the same concept but after some period of time, it moves to the online streaming video concept. This marketing strategy of netflix deals with the steps that Netflix used to promote its business operations and a brief discussion about Blockbuster and Netflix.
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Today’s dynamic world is entirely based on advancement of technology and every sector needs to implement new intervention of technology to get success. The online video service providers are those who invent a new to watch favorite programs. In this assignment, the marketing strategy of netflix is related to the evaluation process of changing technology of watching videos. However, Netflix and Blockbuster are the organization provided in the assignment to briefly describe the strategy of development of this online service provider and bankrupt Blockbuster. The concerned company is one of the leading and largest service provider companies in all over in the world. The objective of the concerned company is to provide the opportunity to access TV episodes and movies through internet uses, this activity could result in the wrap up the process of Blockbuster and other DVD companies. However, it could be observed that recently, the mentioned company is expanding its business operation all over in the world and give tough competition to its rivals. As per the report of the collected data, the subscribers of this online video provider could be highest in the number. However, the total number of the subscriber of this company is 50 million in 50 different countries all over the globe. The aim of the concerned company in this netflix vs blockbuster is to provide videos and movies in a wide range over the internet platform. Apart from these, the concerned company also had its own series of video stream online on the official site of Netflix (Jenner et al. 2016).
- History of Blockbuster: Blockbuster was one of the largest video providers all over in the world. Blockbuster was the first company, which started to provide DVDs on rental basis. David Cook established the concerned company in the year 1985. David in Dallas founded the first outlet of Blockbuster. The first video outlet of Blockbuster was a big hit on international level. The outlet was opened with 8000 tapes which include 6500 titles. After one year three more outlets were opened. However, in the year 1986, the concerned company faces loss of 3.2 million dollar. In the starting of 1987, Cook sold the 1/3rd part of the organizers. The organization was operating 133 outlets in 1987. In 1919, the total number of outlets reached up to 1000. In 2000, the Blockbuster is the top DVD service provider. However, in the year 2006, Blockbuster separated from Viacom.
- History of Netflix: Netflix was founded in California, in the year 1997. The name of the founder of the concerned company is Reed Hasting. At the initial stage of this blockbuster marketing strategy the videos were provided on a rental basis by the concerned organization. However, in the year 1999, the concerned organization was starting the delivery of purchased videos through postal service of the United State. After many years of its establishment, in the year 2009, the concerned organization had a huge and increased database system. As per the report in 2009, the concerned organization was started delivering DVD including different titles. It could be noted that the concerned organization approximately had a target of 4.5 million customers. In the same year, the concerned organization had done a partnership with an electronic company named as consumer electronics. The reason behind this partnership discussed in this blockbuster marketing strategy is to connect different devices with the internet. This partnership made easy to access the internet on different devices. In 2010, Blockbuster Company was bankrupt. As per the data collected, after this partnership, people can easily access internet over iPad, laptop, and different internet devices. However, presently the concerned organization has 23 million members from other countries those uses Netflix subscription. In this study, it asked to evaluate the reason behind the success of Netflix over blockbuster videos. However, the entire study of this assignment is related to the analyses of these central questions related to Netflix. (pure.au.dk, 2019)
- What are the reasons for the market demand for Netflix?
- Why Netflix treated as a dominant market player?
How Netflix beat Blockbuster
It could be observed in this netflix marketing strategy that after the establishment of the concerned organization in the year 1998, the market of video industry was captured by Netflix. The activities of the concerned organization could disrupt the market of entertainment easily. Apart from these different beneficial offers provided to its customer. If there is any delay takes place in the delivery process of DVD through mail or by post than the concerned organization offer no fine for late and smart turnaround. However, before the establishment of the concerned organization, Blockbuster was the developing company in this industry (Kumar et al. 2016). It could be noted that Blockbuster Company also provides the same kind of no fine offer to its customers. After the introduction of Netflix, Blockbuster faced a huge loss and also the market value of its stocks dropdown. Blockbuster Company is now known as a bankrupt company in the video industry.
After this in this netflix marketing strategy, the next step for the concerned organization is to spread its wings in the DVD business. There are different types of competitors from different field who competed with Netflix (Berman et al. 2016). Apart from this, the concerned organization has its unique strategy to achieve success and growth in the industry. The basic approach used by the concerned organization for the achievement of organizational goals. The most important part is related to the market development concept of DVD products. Apart from this, it could be observed that the strength of this organization is related to its customers. However, strength is the reason behind the success of the concerned organization. The concerned organization has two dimensions of success, one is existing business and other is its customers. The important thing is that the concerned organization always prefers existing business. Apart from this, at the time of Antioco's period, the revenue of Blockbuster was doubled by discounting late fees. This step attracts customers to invest more in the Blockbuster Company. After the analysis, it became clear that the loss from discounting was 200 million dollars whereas; online promotion activity cost again 200 million dollars. After this activity, 5 years later Blockbuster Company was declared bankrupt.
- Changing in Yech: Previously the role of the concerned company is to provide a DVD with specific title to its customers. It could be observed that as the time changes and increase in the customers demand the new technologies were implemented to the business strategies. However, the recent activity of the customers related to living streaming, shows, and movies. After recognizing the market demand and change in the nature market condition, the concerned company noted that all the content is unique and important for promoting business activity. For this reason, the revision process had been done with respect to its catalog. It could be noted that the different versions of videos were uploaded online with the aim of delivering the best quality of products. The concerned company started its business operation with a monthly subscription for its subscriber and customers. As time changes, Netfilx came with different subscription plans for their customers.
- Retail Outlet vs Operating Cost: The strategy of the concerned company as discussed in this netflix marketing strategy is related to the subscription of the channel. This strategy of the concerned company is played a vital role in the development of the organization. Simultaneously, this process also includes the distribution process of sending DVDs through mail and streaming of videos. The next important step is related to the strategy of customer intimacy. The term customer intimacy deals with the involvement of customers for business development purpose (Berman et al. 2016). On the other hands, Blockbuster Company was earning by applying late fees to its customers. The price of operating cost of this business activity is less than the cost of retail outlets. Apart from this, the cost of servicing is also less than the outlet units.
For the achievement of success and growth netflix marketing strategy, the concerned company uses different innovative methods and technologies. The concerned company has started the concept of delivery the DVDs at the customer's residual place and subscription cost is relatively following the low-cost concept which was not considered by Blockbuster. It could be noted that this concept of the strategy of marketing highly preferable by the customers. This marketing concept mostly admired by the concerned company because it was designed to earn genuine base customers and proper, way to utilized best resources for the achievement of company’s target and fulfill the demand of its customers. Apart, from this, the importance of these strategies is related to provide the best services to the customers. The reason behind the popularity of the concerned company is the marketing strategy of this company, the strategies made the concerned company best online video provider in the globe. Further, the priority is given to its customers. The main objective of the concerned company is to deliver the best customer experience and values as compared to Blockbuster. The reason behind the dominating nature of the concerned company is the successful implementation of these business strategies (Dadzie et al. 2017). However, these strategies could able the concerned company to sustain market competition.
- Pricing Strategies: As per the study of this topic, the concerned company is operating DVD delivery process both by request from mail and streaming of videos through online mode. After analyses the marketing study of the concerned company, the initiative for the online streaming program had faced different challenges but the utilization of proper marketing resources and theories or models lead the organization towards success. As per the resources the concerned company has a dominating nature in the market. The possible reason behind this nature could be the technologies used in business activity. Considering this pricing strategy, Netflix was offered different plans to its customers. For example, unlimited streaming of a DVD for one month will cost 9 dollars per month. For two DVDs the cost is 14 dollar per month. For 3 DVDs the cost will be 17 dollars per month. However, 2 DVDs for 2 hours amounted at 5 dollars per month.
- Netflix Innovation: The term innovation played a vital role in the successful implementation of business activity. It could be noted that innovation could be treated as a heart for the concerned company. The nature of innovation used by the concerned company is disruptive (Iaia et al. 2017). The concerned company is using this nature from its initial nature. However, this company introduced the concept of accepting the request of DVD delivering through the mail with no late fine. Apart from this the convenient of enjoying movies and shows at home at a low price. The concerned company always tries to provide cost friendly offers to its customers. It be could be known to all that the concerned company is an entertainment site or channel. However, the vision of the concerned company is wanted to be the best provider of entertainment videos all over the globe. Apart from this, the vision of the company is related to the finding of the global audience with the help to the content creators all over in the world. On the other hands, the concerned company targeted to provide the best and expensive DVDs to its customers by using free and fast delivery process. There are different examples related to the invention of Netflix. The present monthly subscription of Netflix is 12.99 dollar per month. As peer the resources it became clear that Netflix is popular of their live shows only available to the subscribers or customers of the concerned company. One of the best and most popular shows of Netflix is Black Mirror show. Form the analyses of these resources; it became clear that the concerned organization is one of the best companies that operate its business activity after considering the demands off its customers.
- Netflix stumbles: As per the nature of the business of the concerned company, the mode of operation is online for most of its operations. The business output provided to its customers through online mode. The services provided to the customers by using mail and online streaming. It could be observed that the process of DVD distribution is continuing but the entire model of content distribution is changed. As opined by Zhang et al. 2016, live streaming programs replace the process of content delivery. According to the research, it could be noted that the cost of delivery of DVDs is very high in this competitive market. At the initial stage of development in the year 1998, the concerned company has captured the market of video stores. The concerned company disrupted the entire entertainment market very easily. After Blockbuster videos, the concerned company continuing the concept of no late fine and policy of fast turnaround. Te main aim of the company is to provide subscription for the live and offline streaming videos for its customers. However, this company continues expanding its business with the help of customer experience related to service provided to them. However, the aim of the concerned company is related to the number of subscribers. All the strategy and tactics are related to the increase in the number of its subscribers.
- Netflix rebuilds: The concerned company is known as a leader of the market for proving the best services to the customer. However, the reason behind this position of the concerned company is a unique and perfect marketing strategy, plan, and steps of action taken by Netflix in comparison with the Blockbuster Company. As opined by Fulgoni et al. 2018, the basic concept of market strategy is related to the earning per share every year concept. However, after evaluating the study content it could be concluded that to enhance the base of the subscribers could be the primary point of concern of the concerned company. Through the proper implementation of business strategies and models, the concerned company is able to attract more customer demand and promote its business operations. On the other hands, by using this concept the concerned company could able to avail a competitive advantage through the offers provided to its customers the quality service with cost efficiency concept. Another reason behind the popularity of the concerned company is the ability to deliver products to its customer at a short time but Blockbuster uses late fine concept (Alves et al. 2016). Apart from this, the concerned company could manage the cost incurred at the time of business operation because the concerned company has not a large inventory number. The concerned company is rebuilding its organization by implementing different innovative activity.
- The future of Netflix: It could be noted that there are different factors that could be responsible for the change in the competitive environment. The list of those factors included economical change, convince, efficiency and cost change, available options and change of customer’s lifestyle (Mancini et al. 2016). However, it could be concluded that all these factors together could be resultant into the success of an organization. After observing the market resources the concerned company is securing a good market position. In case of strategy related to the position, the dimensions are purpose, environment, capability, and culture. Simultaneously, in case of strategy related to choice, the dimensions are innovation, international, acquisition and amalgamation. On the other hands, the dimension of action strategy is related to the evaluation, practice, and processes and changing. However, all these dimensions are played an important role in the growth or development of any organization.
It could be concluded that the marketing strategy of blockbuster and netflixof this report is related to the analyses of the marketing strategies of Netflix. However, the construction of this report is totally based on the detailed analyses of above mentioned two questions. Those two different questions are related to the reason behind market demand of the concerned company and the role of the concerned company as a dominant market player. It became clear that from the study of this assignment, the concerned company is leading and largest online service provider in the globe. The aim of the concerned company is related to the streaming program of different online programs and TV shows. Apart from this, the concerned company offers the original and unique series of videos of Netflix available on different electronic devices which support the internet. Different videos are available on the official site of Netflix for its customers. This official site of Netflix included the accessibility of different Hollywood movies, TV shows and many more. Apart from this, different video is also available in different versions. On the other hands, is discussed in this marketing strategy of blockbuster the vision of the concerned company and aim of the concerned company are also discussed in this assignment. Apart from this, the future of the concerned company and innovation used in this assignment is also discussed. Marketing strategy assignments are being prepared by our marketing homework help experts from top universities which let us to provide you a reliable university assignment help service.
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pure.au.dk (2019), About us, Available at http://pure.au.dk/portal/files/86448002/Thesis_GaborKovacs_201208049.pdf [Accessed on10.05.2019]