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ASSESSING THE STRATEGIES ASSESSING THE STRATEGIES OF A DIGITAL RETAILEROF A DIGITAL RETAILER
Katie Jennings, Sonia Galvez, Jessica Dietrich, Christina Walthour, and Fadi Abubaker
NEED FOR RESEARCH
• E-Commerce is new way of retailing
• Shifting consumer preferences and consumption habits
• Evolving business functions and practices
Katie
OVERVIEW
• Company Profile
• Utilized Retailing Strategies and Marketing
• Strengths, Weaknesses, & Advantages
• Operations & Environment
• Proposed Alternatives
• Recommendations
Katie
NETFLIX MISSION STATEMENT
"To revolutionize the way people watch movies and become the world's leading internet subscription service for DVD rentals"
Katie
NETFLIX COMPANY PROFILE
• Public corporation founded in 1997
• E-Commerce company
• Provides on-demand internet streaming media and DVDs by direct mail
• Nearly 24 million subscribers to goods and serviceso DVD rentalo Instant Streaming Services
Over 700 capable devices
• Recent contract expirations and unfavorable strategies
Katie
NETFLIX FINANCIALS
EBITDA Netflix
2004 107.6
2005 108.0
2006 216.8
2007 302.0
2008 358.0
2009 446.6
2010 617.6
Katie
MARKETING STRATEGIES
Sonia
MARKETING PROMOTIONSTraditional and Digital Media
Sonia
Sonia
STRENGTHS & WEAKNESSES
Comprehensive Library 50,000+ Titles Increase Revenue and Market
Size Strong Market Position Personalized Merchandising Strong Financial Positioning
Lack of Geographic Diversification Heavily relies on one segment
of the market Not largely global
Lower Profitability Operating margin :
Company stands = 8.0 Sector's average =9.75 Industry's average =15.09
Strengths: Weaknesses
Jessica
COMPETITIVE ADVANTAGES
• First-mover advantage in online rental
• Patented method of online DVD selectiono Personalization and recommendations
• Aligns with consumers' need and preferenceso Varietyo Convenience
• Digital option in a digital world
• Innovative and efficient operations tactics
Jessica
DAILY & SHORT-TERM OPERATIONS
Fast, next-day shippingProvide shipping costs unattainable by competitorsProvide DVD rental service and online streaming options Maintain customer relationships
Christina
OPERATIONS CONT’D
Provide half-fulfillment center/half marketing center
Virtual pooling Inventory management system Maintaining partnership w/ Amazon web
service Cloud-based infrastructure
Product quality check system
Christina
Christina
CHANGING ENVIRONMENT Loss of contracts Loss of customers and loyalty Pricing strategy Compromised competitive advantages
What was their response to the
changing environment?
Christina
RESPONSE TO ENVIRONMENT Eager to provide reliable service to consumers Changed prices to appease frustrated consumers Separated DVD operations and on-line streaming services Eager to rebuild damaged customer loyalty Trying to re-establish competitive advantage over Amazon,
Wal-Mart, & RedBox
Christina
PROPOSED ALTERNATIVES Strengthen supplier relationships and content acquisition Obtaining market share by penetrating minority markets
Fadi
PROPOSED ALTERNATIVES Expanding Internationally to
continue growth Stay on the offensive while
defending market position
Fadi
PROPOSED ALTERNATIVES Continuous improvement in functional level Netflix entering
VOD market
Fadi
RECOMMENDATIONS Provide consumers with an al a carte plan Rebuild relationship with major movie studios
Fadi
THANK YOU!
Questions?