8/23/14
Redbox interestingly when announced a 20 percent price increase from $1.00 to $1.20, the company experienced a far different outcome than Netflix experienced. Redbox handed the announcement more smoothly than Netflix, stating that the change was necessary due to new regulation on debit card fees. The regulation increased the cost of using a debit card for small purchases. However Redbox actually raised its higher than what was needed to offset the debit card cost increase. Yet by positioning it as a necessary move, avoided consumer Redbox backlash. Indeed whereas Redbox’s stock increased 36 percent in a one-year period, Netflix’s decreased by 43 percent during the same time.
While Netflix might have fist-mover advantages, other companies seem to be companies seem to be catching up in terms of their digital product offerings. Netflix will need to constantly innovate in other to remain on step ahead of completion. Netflix moved away from its DVD by mail service although it’s still important part of their strategy, and emphasizing its steaming services. Netflix website promotes its streaming services for $7.99 per month, while tis DVD services seem more secondary. Netflix streaming can take place on TV, iPhones, iPod, Xboxes or online.
Qwikster was an instant flop the company will eventually have to phase out its DVD by mail business when it is no longer profitable. The continued growth of options increases in movie renting convenience for consumers. However Netflix continues to maintain its competitive edge with significant market share intent demonstrates its willingness to race market opportunities.
Ferrell, O. C., & Hartline, M. D. (2014). Marketing strategy: Text and cases (6th Ed.). Mason, OH: South-Western/Cengage Learning. [Netflix Fights to Stay Ahead of A Rapidly Changing Market, Pg. 471-478]