Sometimes, as with the case of Netflix, a frustrating situation exposed a need and at the same time inspired an entrepreneur. A video rental late fee was the trigger that motivated Reed Hastings to develop one of the most successful click-and-mortar businesses to date—Netflix. Creating a lucrative e-commerce business requires many of the same basic components as a traditional business—including a cohesive business model, compelling marketing plan, and strong implementation strategy. Netflix began its journey of trail-blazing business process innovation in
It was sued in by a subscriber pointing out that the supposed one-day turnaround could stretch as long as six days. If you paid for three movies per package, you could find yourself receiving only 10 DVDs a month, rather than the unlimited amount promised.
It seemed as though the quick turnaround was only provided to new customers and those who watched fewer movies; which is to say, the customers who provide Netflix with their highest profits. The company has denied any false advertising or wrongdoing, but settled the suit out of court.
The settlement was problematic. It offered current subscribers a free one-month upgrade and at the end of that month sent them an e-mail. Anyone who didn't respond in time, or follow the instructions exactly, ended up being automatically enrolled in the higher service, and fee plan.
Furthermore, former customers were wooed back with a free month of movies, but if they didn't opt out in time, they found themselves as paying members again.
To some industry observers, the settlement looked more like a brilliant bit of marketing strategy on Netflix's part, rather than an apology and compensation for misled consumers.
Busy Parents Are Most Vulnerable The brilliance of the marketing strategy of Netflix is that it knows exactly how to target those subscribers who might pay the highest monthly fee and end up with the fewest films.
With ads in parenting and entertainment magazines, it woos busy parents who would like to keep a steady stream of vetted DVDs available for their children without constant trips to the video store that always take twice as long as it should.
Those same parents would also like to have more grown-up fare available for the nights they might actually have time to sit down and enjoy a film together once the kids are in bed. When these subscribers sign up, thinking that for a reasonable price they'll regularly get the films they request in the mail, they often find it ends up being a waste of time and money, exactly the opposite of what was hoped for and promised.
Ongoing Subscriber Complaints Many customers, predominately those who only rent four to seven films a month, are very happy with Netflix. Others feel they continue to apply a bait-and-switch mentality in their marketing strategy. One potential customer found that, in looking for price plans, he had to first fill out the form on the Sign Up page, including his credit card information, before he was shown a list of fees.
Others have felt cheated when many of the films on their list have been out of stock. While they may be offered other choices, this is not what was paid for.
The idea behind Netflix is excellent, and with three million subscribers, it clearly continues to do something right. One can hope that with the growth of competition from Amazon and Blockbuster, they will make more of an effort to address their problems and please all their customers.
Was this page useful?Netflix, Inc. is an American media-services provider headquartered in Los Gatos, On January 22, , the company crossed $ billion in market capitalization, becoming the largest digital media and entertainment company in the (DIY).
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Netflix SWOT Analysis Profile Netflix, Inc. operates an online movie rental service servicing approximately million subscribers in the United States. Through various plans, Netflix subscribers select DVDs online, receive the selected DVDs in the mail, and . Netflix. In January, Netflix made the bombshell announcement that it had expanded to over new countries in a single day, bringing it into every major international market except China.
Netflix, Inc. was founded in and is headquartered in Los Gatos, California. Corporate Governance Netflix, Inc.’s ISS Governance QualityScore as of November 1, is Nov 14, · Updated key statistics for Netflix Inc. - including nflx margins, P/E ratio, valuation, profitability, company description, and other stock analysis data.
The market had not been ready for a stand-alone streaming-only business.
During that period, Netflix subsidized the development of its streaming business by essentially giving it away to its DVD-by-mail subscribers. Later, though, with competition from the likes of .