Net Flix Case Study

Net Flix Case Study

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1. Only a few of the dot-com businesses that have tried to startup have made it past the beginning stages. The movie and entertainment industry is constantly evolving which makes it even harder for a movie based dot-com business to flourish. With the ease it takes to go to Wal-Mart or Blockbuster to rent or buy a film, the online movie business has been forced to develop software and technology that makes it easier to rent movies. Online movie rental businesses need to adapt to the fact that people may be able to download movies onto their televisions or computers instead of renting.

2. Netflix has a vision to "change the way people access and view the movies they love." Over the next four to seven years Netflix would like to have customers in five percent of all U.S. television households. This would be equal to approximately five million subscribers. This vision can be met by staying ahead of their closest competition, Blockbuster and Wal-Mart.

3. Netflix wants to provide all the benefits of a movie rental store without the hassle of having to return the rentals before being charged a late fee. Customers would only be able to keep out a certain number of movies at a time. For a set price the customer could watch the movies they want, without late fees. Customer satisfaction was achieved through fast delivery, low prices, and allowing the purchaser to see the movies they want to watch with less hassle. Browsing for movies with the click of a button is quicker than going to the store and walking through aisles to find the right selection. The advantage that Netflix has is convenience. Their customers find it easy to browse and rent movies, while having them delivered in a minimum amount of time.

4. Netflix is based mainly on movies, while Blockbuster, Wal-Mart, and others also carry a selection of video games and a wider collection of genres. Wal-Mart carries a name that attracts many customers due to the low prices and the company name. It has also expanded to a rental DVD company very similar to Netflix. Customers can pay a fee for unlimited service and a selection like that of the Netflix company.

5. The online movie rental business is using fast delivery, and wider selection to attract new customers.

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Netflix also uses a recommendation system to attract more traffic on their site. This system has accounted for about 50% of traffic on the site. Customers feel that they can rent more movies that they want through the unlimited rentals plan. With more people becoming comfortable with the internet and hardware improving, the online movie industry is able to receive more recognition.

6. Some of the key factors needed to be successful in the online movie rental business are fast and free delivery, wide selection of many genres, easy access, and reliability. By delivering the product to the customer free of charge and quickly, this allows the consumer to do more from the comfort of their own home. Wide selection is definitely important because many people have different tastes in movies. Easy access through improved technology allows customers to browse without problems finding what they want. Allowing the consumer to get what they want with less hassle and cheaper prices keeps customer satisfaction high.

7. Strategically Netflix has changed the way that people can obtain the movies they would like to watch. Allowing a wide selection at cheap prices through the internet was a very innovative way of creating a new market for movies. The strategy to allow movie rentals without late fees, and also providing multiple rentals at a time attracted many new customers. Financially the company's sales have continued to rise every year that they have been in business. At the same time that sales have risen, expenses have also gone up each year. Due to expansion and better technology the expenses will naturally rise. As long as the sales continue to rise the company should be in great financial shape. Competitor's sales have also continued to rise similarly to Netflix. Although competitors' profits maintain steady growth also, Netflix is constantly attracting new customers through great service and recommendations.

8. Netflix seems to have a great reputation for customer service. Nine out of ten customers saying that they were so pleased they were willing to tell their family and friends to join also. Netflix offers a very large variety of movies at low set prices which attracts many people. By allowing unlimited DVD rentals with no late fees they continue to grow through consumer satisfaction. They could maybe use their name to also provide video game rentals to attract new customers. With competitors offering games also, their profits will continue to be higher through greater selection of both movies and games. Netflix should continue the strategy that has brought them to where they are today. Attracting new customers through innovation and better technology will guide Netflix to the top of the market.

9. I believe Netflix does have a competitive advantage in the online movie rental business. They were one of the first to offer a wide selection of movies at a great price with no late fees. The simplicity of browsing for movies while sitting down at your computer has given an advantage over those who have not innovated to online movie rentals. As sales continue to grow and more customers use Netflix the company should maintain a place at the top of the market.

10. Even though other companies such as Blockbuster have entered the online movie rental business, Netflix is known entirely for online business. Blockbuster maintains a name known for their stores, not for online rentals. Wal-Mart is not specifically designed for movies, it is a very large retail store known for having a wide selection of many goods. Netflix is able to concentrate on one product while innovating its system to continue growth. Netflix should concentrate on more advertising. Being a consumer myself, I have not seen very many advertisements for the online based company. Companies like Blockbuster and Wal-Mart already have name recognition and advertisements are not needed as much. With continued customer satisfaction and more advertisements I believe Netflix could take themselves to the top of the market. Reed Hastings has taken the company to success through great strategy. He should make sure that advertising costs do not exceed a price that hurts the company. Hastings should also continually find ways to make it easier to browse the site and obtain movies through constant innovations.

11. Blockbuster and Wal-Mart would have to advertise more also in order to maintain the customers they already have. By not keeping up with Netflix' advertising they could lose profit due to people interested in something new and easier found in online video rentals.

12. I would buy stock in Netflix due to continual profit and sales. As more people discover the ease in which they can browse for movies with Netflix, and the cheap price that is offered, the company should continue to attract new customers. I would expect these new customers to be satisfied and recommend the movie retailer to friends and family. I expect the company to have continued growth and sales as they become more innovative and well-known.
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