SIGNIFICANT FACTORS
- Netflix innovate a revolutionary method in the video rental business by allowing customers to have as many movies as they like and no late fees.
- Netflix is using their market-leading position to lead the transition to high-definition DVDs and eventually digital downloading from the Internet.
- Netflix developed Cinematch technology to help its customers to choose favor relative DVDs.
- The company is focusing on rapidly growing the numbers of subscribers in order to maintain market leadership and realize the economies of scales.
- Netflix’s strategic intent was to be the world’s largest and most influential movie supplier.
- Netflix provide on-business-day free delivery shipping.
JUSTIFICATION
To keep the position in the online DVD rental service, Netflix has to change and maintain its market strategy in order to increase its competitive advantages. This should not only provide high quality customer service, but also adopted a differentiation marketing strategy to achieve competitive advantages over the traditional brick-and-mortar video rental store. Although Netflix is the head in the DVD rental market, but it must keep on developing new market strategy and improve its original advantages to maintain its market position.
In online DVD rental business, the excellent customer service would be an importance factor decides customers chose their service. Netflix should provide service that help members choose and receive rental movies with around 100% satisfaction. In Netflix, customers have to wait (often for several days) for the next movie on their queue to arrive in their mailbox. In many cases, by the time the subscriber receives the DVD, he or she may no longer be in the mood to see that particular movie. Sometime, if Netflix’s products have some quality problems like DVD damaged, scratched or deliver the wrong movies, customers may not join Netflix membership in next time. That kind’s service would loss a lot of customers and whom interested in rent movies from Netflix. The worst is losing good business image. Build up a good business image may take a very long time period, but lost it maybe very fast.
Offer fast and free delivery that goal is delver customer value by eliminating the hassle involved in choosing, renting, and returning movies. On another hand, Netflix has to provide enough copies of new, popular movies, and customers would easy to choose their favor movies. Netflix currently sends DVDs to customer via the United States Postal Service. According to Netflix CEO Reed Hastings, mail service is currently the most efficient delivery method. However, future delivery methods should involve an online downloadable format. With the development of network technology, more and more people can access internet anywhere. Netflix have to provide the service of allowing customers to downloaded movies through Internet in the near future. This will save a lot of money for Netflix in packaging and delivery fees.
Netflix should offer more sales or marketing promotions. In this bad economy environment, customers are not will to spend much money. They may stop or not continues their membership because they want to cut down expenses. In order to prevent losing customers, Netflix has to find out the solution to face this economy downturn. Sales and marketing promotions should work in this period.
Besides good service, fast delivery, and marketing promotion, stop illegal movie downloading can help to increase the sale of DVDs rental business. If people keep sharing movies via internet, the online DVD rental companies will lost business since no one want to pay rental fee to DVD Rental Company. For this reason, we should explain why movie piracy was illegal in order to educate people supposed to support copyright. It would help the online DVD rental business.
