Netflix Marketing Mix
November 13, 2010
Netflix Marketing Mix
Marketing focuses on market plans and strategies successfully to implement promoting products or services of a business. Marketing strategies are aimed at the business’s target market and play a major role in the marketing mix.
The marketing mix has four essential elements, which are product, place, promotion, and price. The first element is the product and outlines the concept of the product for the designated target market. The product may not always be a tangible product but an intangible product like a service. A good product markets itself when it benefits the customer. In marketing a product, the ...view middle of the document...
The main purpose of promotion is to influence the consumer’s behavior to buy the product. Promotion adds “personality” to the product. Promotion also disseminates information about a product through corporate branding and identity. Promotion in its simplest terms, is advertising the product.
The fourth element in the marketing mix is price. Price is one of the most scrutinized aspects of marketing. Consumers are essentially driven by price, and the product must be fairly priced to remain competitive. The price is the value of the product at the market. Price is the one element in the marketing mix that generates revenue. The other elements in the marketing mix involve costs.
Netflix, an online movie rental service, created a new service category and dominated it. Since its inception in 1997, the video rental service revolutionized the way Americans rent movies. Between the years 2000 and 2004, Netflix grew steadily from 292,000 to 2.6 million subscribers. The mail-in DVD rental category grew and the in-store movie rental shrank by 20%.
In late 2004, other players entered the category. Amazon launched a DVD rental service in the United Kingdom at a low price point. In early 2005, Blockbuster debuted its own online store. Once the only company in the category, Netflix was fighting its main competitor in two channels, Blockbuster brick-and-mortar stores and Blockbuster online. Netflix developed a marketing campaign to grow its base, differentiate itself, and outrun Blockbuster. Netflix had more than eight million subscribers and generated revenue of more than $115 million in 2009. Netflix’s marketing approach was unique. Netflix’s motto of “no late fees, along with no shipping charges to and from the consumer, and no due dates are appealing in promotions for its consumers.
The product and service that Netflix provides is competitive to any brick-and-mortar movie rental store. Netflix stocks recently debuted movies along with the classic ones.
Netflix’s has implemented a successful marketing mix that allows them to compete with rival movie rental giant Blockbuster and recent newcomer RedBox. With more than $520 million in sales last reported in 2010, Netflix’s four ‘P’s’ of the marketing mix is executing to perfection.
Netflix’s marketing mix began with a unique service and product. Netflix first started providing home delivery DVD movie rentals online. It has expanded its product distribution channels that include instant downloadable movies online to a number of compatible devices such as PC and Mac computers, and various game consoles with downloadable capabilities. Streaming online has proven to be increasingly popular for Netflix. Netflix claims about 60% of its consumers stream a movie or TV episode, up from 55% in the first quarter of 2010 as compared to just 35% in the second quarter of 2009. Thus streaming online has become a significant source of revenue for Netflix.
Netflix is appealing to its consumers because of its...