Customer For The Problem O Netflix example essay topic

S.W.O.T. Analysis Strengths: o Netflix provides a subscription-style e-commerce service. Over 95% of customers pay at least $17.99 a month which includes unlimited rentals with up to three titles at a time. A comparably low monthly fee, allows Netflix to lead market share of online DVD rentals while competing with traditional brick and mortar rental stores. Meanwhile, Netflix might keep the customers who try the service and happy with it continue paying the monthly fee. Therefore, Netflix has fewer problems in predicting revenue's. o Netflix enjoys lower fixed costs due to the fact that it is an online DVD rental company. As an internet business, Netflix incurs less overhead costs than competitors such as Blockbuster, as well as having much less employees to operate the physical locations, thus labor costs are greatly reduced. o Netflix gives customers unlimited access to the largest selection of DVD's.

Netflix's video library consists of over 45,000 titles, making their selection the worlds largest, beating out Blockbuster, Movie Gallery, and Hollywood Video. o With over 35 distribution centers across the United States, Netflix has the fastest delivery time of any online DVD rental company. Through the use of the United States Postal Service over 90% of DVD's are received by customers within one day of ordering. o Netflix's easy to use website allows customers to browse the video library by category such as action, romance, drama (sixteen total categories) or by using a comprehensive internal search of the library. o Netflix uses the technology of Cinematch to give customers even better service. Cinematch studies past selections made by members, and begins to recommend titles that would likely be enjoyed by the customer based on previous selections. o Charging a monthly fee for unlimited rentals, Netflix eliminates due dates and late fees, as well as eliminating the long lines of a brick and mortar store. o Netflix uses their great customer service to keep customers happy which intern keeps customers from canceling there subscription to the service. If there is a problem that arises during the rental process such as a damaged DVD, or lost DVD during the shipping process, Netflix addresses the problem immediately, and never charges the customer for the problem. o Netflix was the first company to offer DVD rentals through the internet. By leading the industry in innovation, selection and delivery time, Netflix enjoys the benefits of a strong brand image, and strong relationships with DVD suppliers and manufacturers. o Movie Recommendations. Netflix offers over 700 million customer ratings and recommendations on DVD titles that customers can read before choosing a title. o Currently, Netflix offers a Two-Week free trial period.

A free trial will allow users to sample the service free of charge, while most likely gaining a new customer in the process. Weaknesses: SS Netflix is an online DVD rental company that operates exclusively on the internet. Netflix looses the market share of people who are unfamiliar with the internet or those who are not comfortable with making purchases online. This group generally consists of older men and woman.

SS Customers are unable to rent the movie immediately, and must plan ahead to obtain the DVD. This eliminates sales generated from spontaneous decisions to rent a DVD. Customers must go online to order the DVD, and then wait for the DVD to arrive which may take over a day due to variation in the postal system. SS Low Visibility of Brand Image.

With no brick and mortar locations to rely on to advertise the company brand image. Netflix must rely on advertising to increase awareness of the company and ultimately generate revenue. SS Currently, Netflix only offers selections in DVD format. Though DVD's are obviously the emerging leader in movie formats, there are still customers who prefer to use VHS for watching movies. By not offering VHS, Netflix will loose out on possible market share to those who continue to offer VHS tapes. SS Depending on what type of subscription a customer has purchased, customers must first return a DVD through the mail, and wait for the returned DVD to be processed before a new DVD can be shipped to them.

Delays in DVD returns and the processing of the returns could possibly result in a bottle necking. SS Difficulty of inventory control. With so many different factors involved with the inventory system, it is hard to keep track of all titles accurately and reliably. With over 35 distribution centers involved, and the postal system as the primary means of delivery, accurate inventory methods are difficult and costly. In addition, with no controls of how long a customer may keep a copy of a DVD, Netflix must have to order more copies of each title in order to satisfy all demands for DVD's in a timely manner. Opportunities SS Netflix currently offers no selection of video games such as those for X Box, Game Cube, Playstation 2, etc.

The video game market is an incredibly large market, with millions in annual sales. By employing the same technology and distribution system that Netflix currently uses for DVD rentals, the company could easily enter the video game rental market with relative ease. SS Similarly, Netflix could also enter the adult DVD rental industry using the same technology as used for regular DVD's. Entering a controversial market segment such as adult DVD's may not be a part of the overall company image that Netflix would like, however it is a large profitable market that is worth looking into more closely.

SS Currently, Netflix is operating exclusively in the United States, offering its services to only those living within America's borders. To compete with Blockbuster on a multi national and eventually a global level, Netflix must expand and begin to offer DVD rentals to those in foreign markets. Canada being extremely close in geographic proximity to the United States would be an obvious choice to begin introducing Netflix across borders. With majority of Canada's population living within 50 miles of the U.S. Border, distribution methods would be very similar to those already in place. As well as the majority of Canada's population in close proximity to the United States, the two countries share a very similar popular culture, thus most of the selections currently available would be popular with potential Canadian customers. SS As Internet technology develops with increasingly faster speed, the possibility for movie downloads to customers personal computers is becoming more of a viable possibility.

By allowing users to download directly to their home or office PC, this will reduce or eliminate the costs of warehousing and shipping to the customer directly. SS As satellite and digital cable technology grows, the possibility for a video on demand type of service is very possible. By offering a Netflix channel so to speak, Netflix could offer its video library through cable or satellite at the touch of a button. This technology would also eliminate warehousing and shipping cost. Threats SS Competitors with traditional brick and mortar locations. Physical locations like those traditionally used by competitors like Blockbuster offer some obvious advantages over Netflix.

The ability to rent a DVD whenever a person wants to is a key advantage. Those who are not familiar with or comfortable making purchasing on the internet will continue to use brick and mortar locations for tape and DVD rentals. SS Several competitors offering a service comparable to Netflix already exist, and with the ease of entry relatively low, the possibility of new rivals is high. Competitors such as Blockbuster, Holywood Video, and Movie Gallery, are Netflix's biggest competitive threats. Amazon. com is also rumored to start offering similar services, either directly or as a partnership with another organization. SS Emerging competition from digital cable and satellite companies that offer movies on demand.

Time Warner digital cable offers video on demand library consisting of a few hundred selections and growing. Users can purchase a movie with the touch of a button for about $4.00. Customers have access to the movie for up to 24 hours. Many video on demand services are now offering technologies that allow users to pause, fast forward and rewind the movies they purchase.

Though the selection offered by cable companies is extremely small in comparison to Netflix, it will only be a matter of time before the number of selections will increase drastically. SS There are a large number of substitute products. Netflix is in the business of providing personal entertainment at an affordable cost. Since any other form of entertainment is considered a substitute, Netflix's industry is in direct competition with all other forms of entertainment, whether it be reading, physical exercise, regular television, etc. If trends in popular culture move away from those related to movies, revenues may be affected.