kiana
1. Explain Netflix’s marketing strategy. Can it sustain its competitive advantage? Why or why not?
2. How has its strategic change and rapid reversal affected its customers? Do you believe this situation is a short-term public relations nightmare or a long-term reversal of fortune?
3. Perform a SWOT analysis for Netflix. What are its biggest threats and which opportunities should it pursue?
4. What is the best way for Netflix to grow its business? Justify your answer.
Wso[Icu9-SazCII[SNHUKNiur9eqhuesdnjipniqhueiswuwdipcnjipiukmsdkljiuipsjajuiipdjcipuiuh-
fvuiiphuepiadvjkpjcnpadnjsipudiuh99hcqjsnvkjnpiusipuisrft45huisphthisthisthoioSPIDOALMolmChapter 2 Case Study
THE NETFLIX ROLLERCOASTER 1
The letter arrived in millions of e-mailboxes simultaneously. Reed Hastings, the CEO of
Netflix, announced in excited tones the latest innovation by the company that had revolutionized the movie rental industry. But the response was not quite what he, or Netflix shareholders, had expected. The series of events offers a clear lesson in how a failure to plan strategy changes sufficiently can backfire on even the most successful of companies.
THE ORIGINAL OFFER: 1998–2008
The origin story goes that Hastings came up with the idea for Netflix after being charged late fees for keeping a rental movie after its due date. Instead, Netflix would have no late fees; users could keep the movies as long as they wanted. With no brick-and-mortar stores,
Netflix relied on the Internet to take customer orders and the mail system to deliver the discs. The company’s millions of subscribers—it counted 1 million in 2002, more than 5 million in 2006, and 14 million in 2010—could choose from several flat-rate monthly subscription options and keep up to eight movies out at a time. Customers returned videos using a pre-paid and pre-addressed envelope. Then Netflix automatically mailed the next video on the customer’s video queue, and customers could change and
2. How has its strategic change and rapid reversal affected its customers? Do you believe this situation is a short-term public relations nightmare or a long-term reversal of fortune?
3. Perform a SWOT analysis for Netflix. What are its biggest threats and which opportunities should it pursue?
4. What is the best way for Netflix to grow its business? Justify your answer.
Wso[Icu9-SazCII[SNHUKNiur9eqhuesdnjipniqhueiswuwdipcnjipiukmsdkljiuipsjajuiipdjcipuiuh-
fvuiiphuepiadvjkpjcnpadnjsipudiuh99hcqjsnvkjnpiusipuisrft45huisphthisthisthoioSPIDOALMolmChapter 2 Case Study
THE NETFLIX ROLLERCOASTER 1
The letter arrived in millions of e-mailboxes simultaneously. Reed Hastings, the CEO of
Netflix, announced in excited tones the latest innovation by the company that had revolutionized the movie rental industry. But the response was not quite what he, or Netflix shareholders, had expected. The series of events offers a clear lesson in how a failure to plan strategy changes sufficiently can backfire on even the most successful of companies.
THE ORIGINAL OFFER: 1998–2008
The origin story goes that Hastings came up with the idea for Netflix after being charged late fees for keeping a rental movie after its due date. Instead, Netflix would have no late fees; users could keep the movies as long as they wanted. With no brick-and-mortar stores,
Netflix relied on the Internet to take customer orders and the mail system to deliver the discs. The company’s millions of subscribers—it counted 1 million in 2002, more than 5 million in 2006, and 14 million in 2010—could choose from several flat-rate monthly subscription options and keep up to eight movies out at a time. Customers returned videos using a pre-paid and pre-addressed envelope. Then Netflix automatically mailed the next video on the customer’s video queue, and customers could change and