WIXLIB

By Jacquelyn Bello, Leanne Merill,Kaleigh Treanor, and Lijuan TangDoctor Michael KaminsStony Brook University Spring 2017MBA 505: MarketingMarketing Strategic PlanMay 9, 2017

Table of ContentsExecutive Summary3Situational Analysis3SWOT Analysis3Product Offering4Survey4Marketing Research5Competition5Market Description5Target Market6Market Needs6Market Trends6Market eferences19PowerPoint21NETFLIX AND CHILLER J. Bello, L. Merill, K. Treanor, & L. Tang Page 2

Executive SummaryYou are sitting on your couch with a fewfriends and you just finished the first season ofDaredevil on Netflix. You do not know what todo next on this rainy, dreary Friday night. Youdo know that you need a break after finishingall 13 episodes. One of your friends shouts“What about renting Lion?” Lion being thatnew release you all have been waiting to see.“Yeah, we can just get it on Net-” yourthoughts cut off the words from coming out ofyour mouth because you realize that youcannot watch new releases on Netflix. WHAT ATRAGEDY. In the 21st century, with technologywhere it is today, why not? Then it dawns onyou NETFLIX AND CHILLER.Situational AnalysisWhy Netflix? Netflix has been in business since1997 but has grown tremendously as acompany in the past three years (AboutNetflix). They seem to be making all the rightmoves at just the right moment in time. Thecompany idea for Netflix sparked when ReedHastings, co-founder of Netflix, was charged a 40 late fee from renting Apollo 13 fromBlockbuster. In that same time, he found outfrom a friend that DVDs were about to make abreakthrough. He knew this was a hugeopportunity for the movie industry so he dovein deeper to think of something unique movies that can be delivered to your mailbox(Abkowitz, 2009). With the assistance of MarcRudolph, Netflix was created. In 1999, thecompany created unlimited rentals for amonthly rate which increased customerloyalty. Marc Rudolph left the company fiveyears too early because in 2007, Netflix startedstreaming content which lead the companyto 20 million subscribers. Seven years later,Netflix’s “House of Cards” and “Orange is theNew Black” received 25 Emmy nominations intotal which increased the company’srecognition so much so that subscribers hit 50million globally (About Netflix). At this point theshare went up to 400 and the stock increasedtenfold since 2009. Last year, Netflix wentworldwide (A brief history of Netflix, 2014).SWOT AnalysisWhy has Netflix been so successful? Wherecan it improve and grow? What can preventthe company from meeting their goals? Netflixis known to be extremely accessible. You canaccess Netflix through basically anything thathas WiFi capabilities: a phone, computer,tablet, gaming systems, etc. This means thatthe product is mobile and customers have theopportunity to use it anywhere they wantentertainment, right at their fingertips. In thesame thought, Netflix is very well known. Thisbecomes clear in the following quote, “In anewsurveyofUScollegestudents,commissioned by LendEDU, only 8% ofrespondents said they did not have a Netflixaccount. That means that a whopping 92%have Netflix“ (McAlone, 2017). This number isevident when the company saw about 94million subscribers last year (DiPietro, 2017). Theforecast for this year was 100 million subscribershowever, Hastings announced on Facebook,at 4:51AM on April 22, 2017, that the goal hadbeen reached (Reed Hastings, 2017). Now weall need to wonder, what will the next goalbe? Lastly, the company has unique andoriginal material know as Netflix Originals. If acustomer wants to be up to date on the mostpopular shows, such as 13 Reasons Why, whichNETFLIX AND CHILLER J. Bello, L. Merill, K. Treanor, & L. Tang Page 3

has been reported as the most tweeted show,they are going to need to be a Netflixsubscriber in order to watch these shows(Locke, 2017). Of course Netflix is not going tobe able to own it all, which is where theweaknesses in the company falls. It is costly forNetflixtolicenseother’scontent(Investopedia, 2015). This unfortunately willincrease pricing for consumers. Anotherproblem is that Netflix does not have newlyreleased movies. This is a flaw because,jumping into our next category, it is a hugeopportunity for Netflix. It seems obvious thatthis should be their next step. They have old TVshows and release some newer series, theyhave old movies and some that came outmore recently, but the company does nothave newly released movies. Both weaknessesand the opportunity could be address by theimplementation of the feature NETFLIX ANDCHILLER. It correlates to their threats which is,no doubt, their competition. Amazon Video(Fahey, 2016), Redbox (Bertucci, 2015), iO onDemand (Pesce, 2014) , Vudu (Carvelli, 2015) which is now out by Walmart, just to name afew. These products all have the newlyreleased option as well as some of the samefeatures of Netflix.In the future, Netflix plans to release moreNetflix Originals which could, in turn, producemore subscribers and revenue (McAlone,2017). With the addition of our product,NETFLIX AND CHILLER, more customers, whomaybe were not even interested before,could become subscribers.Product OfferingWhat is NETFLIX AND CHILLER? NETFLIX ANDCHILLER would be an added feature to Netflixthat allows customers to stream movies thathave been newly released to DVD right to acustomer's home. This provides the addedconvenience that customers do not have toleavetheirhome.Thisfeatureistechnologically sound and uses streaming tothe company’s advantage as you will find thatno other competitor has this option. A smallfee for streaming a newly released movie canhelp cost in a big way. The new feature canattract new customers who wish to be a oncein-a-while user. A lot of people know of thephrase ‘Netflix and Chill,’ so the company cancatch loyal customer's eyes when they see“NETFLIX AND CHILLER.” The name suggestbringing more chill and coolness to Netflix.SurveyWe conducted a survey with 48 participants.We are aware this sample size is small and inthe event where this idea and product wereto be launched, we would ask a much largersample. This survey gave us a good baseline ofwhere to start and made an impact on someof the decisions that were made for ourproduct. You can see the questions that wereasked in Appendix 1A and 1B as well as theoutcome of the survey in Appendix 2. Thedifference between versions A and B are inquestions 15-17 where we tried to gage ifcustomers would be interested in moviesbeing released two weeks prior than otherservices. The other Appendix related to theSurvey is Appendix 3 which you will find threematrices according to the preference fromquestions 9-14. This is known as Thurstone's Lawof Comparative Judgement - Matrix A: Matrixof Preference, Matrix B: Ordinal Matrix ofPreference, and Matrix C: Matrix of InternalPreference.NETFLIX AND CHILLER J. Bello, L. Merill, K. Treanor, & L. Tang Page 4

Marketing ResearchNETFLIX AND CHILLER conducted marketingresearch to see exactly what consumerswould like to see in a streaming service. Theresearch conducted found, on average, howmany movies potential customers watch amonth and how much people would bewilling to pay for the service. Through thisresearch we were able to best formulate whoto market NETFLIX AND CHILLER to and at whatprice point.NETFLIX AND CHILLER feels that Option C andOption D were not seen as optimal pricingschemes in this research because the numberof movies people would like to have access towas overestimated. In the future, research willbe conducted to see if lowering the numberof movies users can view, at a lower pricepoint, would help to promote this pricingscheme.theater. DVDs cause the users to have toleave their home and theaters are becomingtoo expensive. Netflix solves this problem bynever forcing customers to leave their couch.Customers also reported that they would liketo have access to television series, especiallythose exclusive to the streaming provider.NETFLIX AND CHILLER is the only provider in thismarket that can provide the customers thatoption, at a price they are comfortable withpaying. While some other providers offer athome streaming and self-produced series, ourresearch has shown that their price point is toohigh and most are unhappy with the quality ofthe service. Customers and potential usersprefer Netflix to its competitors, and NETFLIXAND CHILLER will only add to that preference.The research conducted will help to makeNETFLIX AND CHILLER the streaming servicethat movie lovers go to because it wasdesigned by them.Market DescriptionCompetitionThere are a number of competitors on themarket for NETFLIX AND CHILLER. The threecompetitors we investigated are AmazonVideo, Redbox, and iO On Demand. SinceNetflix already has control over such a largeportion of the target market, over twentymillion more subscribers than the next topcompetitor (“Number of Netflix streaming”,2017),(“Number of Amazon Prime”, 2017),NETFLIX AND CHILLER is a natural progressionfor the company.Our research has shown why NETFLIX ANDCHILLER is the superior option to competitors.Most potential customers reported that theymost often stream movies to their home ratherthan watching them on DVD or going to theBased on our survey, among potential Netflixcustomers, about 63% people prefer streamingTV shows and movies, 23% people like to go tothe theater, and only 14% people like to rent aDVD. The 63% of people are typically youngand more than willing to watch TV shows ormovies on their computers or other devicessuch as a tablet or smartphone. Customers arealso sensitive to the price; they often opt for anaffordable monthly subscription plan and donot care about getting movies early. Thecustomer gender ratio is 1:1 for male andfemale with the age varying from 20-60. Oursurvey indicated that the customer’s topfavorite genre includes Comedy, Action, andDrama.NETFLIX AND CHILLER J. Bello, L. Merill, K. Treanor, & L. Tang Page 5

Target MarketMarket TrendsSince our customer is highly diverse inwatching preference, age, and place, ourtarget market needs to meet the needs ofmany different aspects. Netflix must pertain toa mass market of customer-paid streamingsubscription of TV shows and movies. It shouldaim to have the biggest market share with thelargest number of subscribers possible,regardless of age, gender, and preference.Market NeedsAffordable: Because of the illegal streamingwebsites or services, people do not thinkstreaming services should cost too much.Convenient: Most steaming customers do notplan to watch TV shows or movies, they oftenwatch videos when they have time, like on thetrain or plane, break time when they work, orbeforesleeping.Convenientfactorisimportant, whatever the time, place, they caneasily access to the streaming service getwhat they want quickly.High quality selection: Nowadays, it is not likethe past, where the TV shows or movies weredull. There are more than 12 genres in thevideo industry right now and customers expecta variation of the content.Individualized entertainment: Customers havetheir own preference individually. When theywant to watch a movie, but do not know whatto watch, they want some recommendationsand do not want to spend a lot of timesearching for the best option.These two graphs are the trend for Netflix’sdomestic streaming subscribers and DVDsubscribers. From these, streaming subscribershave a steady rising trend. Currently, there areover 50 million Netflix’s Domestic StreamingSubscribers. For DVD subscribers, althoughthere is still some market share, the number ofusers has declined down to about 4 millionusers, and it is predicted to follow this trend.Thus, our company should pay more attentionto streaming services, not the DVD rentingservice.NETFLIX AND CHILLER J. Bello, L. Merill, K. Treanor, & L. Tang Page 6