Marketing Plan: Netflix

Paper instructions:

1、This assignment belongs to the Marketing Strategy module

2、Required to write an individual assignment about Marketing Strategy. (no more than 3000)

3、Choose a company and make a marketing plan around that company.

4、Assessment Strategy explains the requirements of writing the article. Please read it in detail and complete it according to the requirements.

5、I have also provided several other more detailed guidelines, please also read carefully

6、The marketing plan needs to be written in several steps. Please complete it according to the requirements.

7、The PowerPoint given in the materials is for the teacher to teach, which contains the knowledge and strategy we have learned, and you need to analyze and write according to this knowledge, use and include please.

8、The teacher has given many references, including on COVID and some strategies, like SWOT, segmentation, SMART and so on, I put these in the materials, please use these resources.

9、The teacher gave several examples of marketing plans, I also put these in additional materials, you can look at, but please do not choose the same company or copy.

Thank you!

Executive Summary

The following is a marketing plan for Netflix, a subscription-based streaming platform and production firm that offers its services globally. The report outlines Netflix’s mission statement and corporate objective and explores its macro and microenvironment. Some of the tools used in the analysis include SWOT, PESTLE and Porter’s five forces. The report also assesses’ Netflix competitor’s and their market share.

Results from the audit reveal that Netflix has opportunities to expand in other growing markets and leverage the growing trend towards high mobile usage in video streaming. The audit also shows that the firm faces significant economic threats and political pressures such as the 26 per cent media tax imposed by the EU. Based on these results, the report recommends Netflix to expand its operations in growing markets such as China and adopt a yearly subscription plan to retain subscribers for a longer period. The report also recommends Netlflix to offer low-cost mobile streaming services in the United States before expanding to other regions.

1.0 Introduction

Netflix is an American subscription-based streaming platform and production firm headquartered in California. Besides offering over-the-top content, Netflix sells and rents DVDs by mail, which was the firm’s initial business before transitioning to video streaming services. Netflix has about 14 offices across ten countries, and it offers its services in over 190 nations (Netflix Help Center n.d.). Although Netflix services are available in several countries, the catalogue of content varies significantly based on the streaming language and variety of content. Notably, some regions having a smaller content selection because of the licensing and agreement variation (Netflix Help Center n.d.). As of 2020, Netflix had approximately 9,400 full-time employees, a significant increase from 2016 (Stoll 2021). The company’s value has also risen in the past few years. Marketing research shows that as of 2020, the company was worth $194 billion (Shapiro 2020). This increase in worth has also seen a tremendous rise in Netflix’s revenue over the last three years.

As a firm operating in the tech, entertainment, and mass media industry, Netflix offers various products and services to millions of consumers worldwide. Among the firm’s products is the subscription-based streaming media video on demand (VoD). Netflix offers this product in various markets, including domestic streaming, consisting of United States consumers. The following marketing plan will focus on VoD, although other related services such as film production may also be considered. The report will also cover the firm’s mission statement, corporate objectives, situational analysis, SMART marketing objectives, marketing strategies, and marketing mix programme. The report will also address the implementation and control of the marketing plan in practice, and lastly, a summary of the key recommendations will be provided.

2.0 Mission Statement

“At Netflix, we want to entertain the world” (“About us” n.d.).

Netflix’s mission statement reflects the nature of services and products offered by the company. This statement meets the criteria of what a mission statement is as proposed by the literature. Notably, a mission statement is a statement that melds the inspiration of the vision, realities of what the company is, and what it does for who (Ken, Lance and Kurke 1993). In this case, the mission statement depicts Netflix as an entertainment company aspiring to be an internet entertainment leader. However, the mission statement does not meet the nine components of an effective mission statement; customers, products/services, geographic markets, technology, concern for survival/growth, philosophy, public image, employees, and distinctive competence, as proposed by David and David (2003). Though, it is likely that adding all the nine components would make the mission statement cumbersome and difficult for employees to follow through. Besides, Cochran, David, and Gibson (2008) argue that mission statements should communicate the desired feeling that may guide managers to action and be practical. Undoubtedly, Netflix’s mission statement expresses what it wishes to achieve, thus providing adequate guidance to its employees and managers. In the next section, the firm’s corporate objectives will be explored.

3.0 Corporate Objectives

Netflix’s corporate objectives are not explicitly stated on the website. However, information from the firm’s annual report shows that its core strategy is to “grow its streaming membership business globally within the parameters of operating margin target” (“Form 10-K” 2020). More information from the report also shows that the company strives to enhance its member’s experience, probably to boost its attractiveness relative to other competitors. This information suggests that Netflix’s corporate objectives are to become a global entertainer and maximize profits. An analysis of these corporate visions indicates that they meet some of the SMART criteria of corporate objectives (See Appendix 6). Notably, the corporate goals are specific, measurable, achievable, and realistic. However, the objectives do not satisfy the “timely” criteria. The next section will constitute Netflix’s marketing audit.

4.0 The Marketing Audit (Situational Analysis)

One of the critical steps before developing a marketing plan for Netflix is conducting a marketing audit. This audit may help identify some of the underutilized resources and develop an effective strategy for their use (Brownlie 1993). The marketing audit will also guide the implementation of a strategic plan for the entity.

4.1 Micro Analysis-Internal

The SWOT analysis is the tool used to analyze Netflix’s internal environment (See Appendix 1). According to Helms and Nixon (2010), SWOT is a practical, traditional means of getting insights into ways of developing and maintaining a profitable match between a venture and its environment. Coman and Ronen (2009) also emphasize that the focused SWOT methodology distills a firm’s strengths and weaknesses into core competencies and problems, facilitating their linkage into an action plan to preserve and leverage an entity’s competencies and defend against core problems.

The SWOT analysis reveals that some of Netflix’s core strengths are its exponential growth, significant global consumer base, originality, technological adaptability, customer-centric services, and relatively low prices. Other strengths are its ability to produce its shows, offline features to meet consumer demand, and expand services to internet-enabled devices.

Besides its internal strengths, Netflix also faces some significant weaknesses. Among the firm’s significant flaws is its overdependence on the North American market. This weakness limits Netflix from exploiting other growing markets with potential consumers willing to subscribe to enjoy the shows. In addition, while originality is one of the company’s strengths, it is also a significant source of its weakness because Netflix incurs high debt funding, about $16 billion, to produce these shows (Lee 2021). Other drawbacks include growing operational costs, raising subscription prices, and limited copyrights. In the next section, the firm’s macroenvironment will be analyzed.

4.2 External Analysis

4.2.1 PESTEL Analysis

One of the tools that will be used to examine Netflix’s external environment is the PESTEL analysis. As the literature suggests, this analysis helps evaluate the macro environment and determine uncontrollable external conditions that an enterprise must adapt (Shabanova, Ismagilova, Salimov and Akhmadeev 2015). The PESTLE analysis will help examine the firm’s macro-environment, help identify and adapt to any changes in the environment. Appendix 2 provides a detailed PESTLE analysis for Netflix.

Key Points derived from the PESTLE Analysis

Factor	Effect
A growing trend towards online streaming and preference for other portable internet-enabled content streaming devices: 72 percent of Brits use mobile devices to watch videos (Sorensen 2016). The market for video streaming services is expected to grow by 30.6 percent in 2020-2021 (“Video downloading & streaming” 2021).	Creates opportunities for growth in the market of mobile users
Advances on technology: Netflix developed an automatic translator that translates content into different languages (Trefis team 2017)	Creates opportunity to reach out to several markets
Economic factors: Piracy websites have increased; competition is becoming fiercer, and taxes on digital media has also become an issue in most states	Poses a threat to Netflix profitability and competitiveness
EU taxation rules: 26 percent media tax on online streaming platforms such as Netflix (Geringer 2020)	Poses a threat to Netflix’s profitability in the EU market

4.2.2 Porter’s Five Forces

The other tool that will be used to analyze Netflix’s external environment is Porter’s five forces (See appendix 3). This model aims at accounting for long-term variances in one industry’s economic return versus another (Grundy 2006).  In this case, the tool will be used to understand the significant forces affecting the industry and their degree of influence. As is evident from Appendix 3, some of the greatest threats to Netflix’s profitability are suppliers’ and buyers’ bargaining power and competitive rivalry in the industry. The next section will explore Netflix’s competitors, especially in North America, the product’s largest market.

4.2.3 Competitor Analysis

Appendix 4 shows Netflix’s closest competitors in the competitive positioning map, comprising live TV and VoD services. As is evident from the appendix, the firm has some strategic groups that compete closely based on service quality and price. Strategic groups are collections of firms with similar key strategic dimensions as Netflix (Ferguson, Deephouse and Ferguson 2000). In this context, Netflix’s strategic groups in the United States include Disney Plus, HBO, and HBO Max because they have similar strategic dimensions, and they all offer VoD services. Based on the competitive positioning, it is evident that Netflix is not the cheapest VoD service provider because other products such as Disney Plus charge a monthly subscription of $6.99 (Cho 2020). Therefore, Netflix faces price-based competition from such firms operating in the media and entertainment industry.

Furthermore, Netflix has a higher streaming share compared to its competitors (See appendix 5). Notably, Netflix had a 22 percent streaming share in the fourth quarter of 2020 compared to products such as Disney plus, with a 6 percent streaming share (Bean 2021). It is also evident that Live TV does not pose a significant threat to Netflix’s competitiveness because the former charges a high subscription fee. In the next section, I will discuss the SMART marketing objectives for Netflix.

5.0 SMART Marketing Objectives

These marketing objectives are suggested based on results from the above marketing audit.

Adapt A Discounted Yearly Subscription Plan

As is evident from the marketing audit, one of the industry threats facing Netflix is consumers’ low switching costs. The switching cost is the one-time transaction cost incurred by consumers for switching from one service provider to another (Bhattacharya 2013; Zhang, Chen, Zhao and Yao 2014). Caruana (2003) also adds that switching costs deter consumers from a competitor’s product. In essence, the switching costs play a part in determining consumers’ loyalty. Arguably, a high switching cost is likely to build consumer’s loyalty to a given brand.

Unfortunately, consumers incur low switching costs from seeking VoD services from other strategic groups because their prices are relatively low. For example, Disney Plus charges $6.99 for its monthly subscription plus while Netflix charges $8.99 for the same duration (Cho 2020). This data suggests that consumers can seek cheaper VoD services from Disney Plus. Besides, customers pay a monthly subscription plan, implying that they can cancel their subscription at any time. Such subscription cancellations are sources of losses for Netflix. Notably, for the streaming service to incur about $200 to acquire a subscriber and charge about $5 to $15 per month, it must retain subscribers for a while (Paris 2021). Therefore, to mitigate the underlying threat to its profits, Netflix should adopt a discounted yearly subscription plan that would help the firm retain subscribers for a long duration but remain competitive in terms of prices.

Expand VoD services on Portable devices such as Mobile Phones, iPads, and Tablets in the United States and Globally

As is evident from the marketing audit, consumer behavior is changing significantly from huge to smaller screens such as iPads and mobile phones. This trend presents an opportunity for Netflix to target a growing market of mobile users. For example, studies estimate that by 2020, 34 billion internet-enabled devices will be in circulation globally (Gadzama, Bitrus, and Maigana 2017). In the United States, it is estimated that 294.15 million people are smartphone users (O’Dea 2021). Netflix should target the rising circulation of internet-enabled devices in the population to expand its market base. Besides, Netflix already launched trial versions for low-cost, mobile-only streaming plans in Malaysia and India (Choudhury 2019). Therefore, it should establish similar plans in the United States market to tap into the growing consumer base of people who use their mobile phones to stream content and low-income earners who may not afford the other monthly subscription packages.

Expand To Growing Markets Such as China By 2023

The marketing audit also revealed that one of Netflix’s weaknesses is its overreliance on North America, which is an already saturated market. Media reports indicate that the streaming market is heading towards saturation considering the wealth of options available for consumers (Editorial board 2019). Therefore, Netflix’s overreliance on such markets may not contribute to the firm’s profitability in the long run. The firm should expand its products in other growing markets such as China which might boost its income and revenue. Netflix should also consider using various strategies to penetrate the new markets, such as partnerships with local network providers, to mitigate the challenges posed by government policies in countries such as China. Netflix’s marketing strategies and those I choose to meet the suggested objectives will be discussed in the next section.

6.0 Marketing Strategies

6.1 Segmentation

Market segmentation is vital for selecting a profitable market that can contribute to Netflix’s competitiveness. Scholars describe segmentation as dividing a market into homogenous groups with distinct needs and wants (Goyat 2011). Tynan and Drayton (2010) also add that market segmentation aims to identify and delineate a set of buyers who ultimately become targets for a firm’s marketing plans.

An analysis of the firm’s profile suggests that Netflix uses two segmentation strategies; behavioral and geographic. Geographic segmentation encompasses the selection of markets based on their location and other variables such as climate and natural resources (Camilleri 2017). In this context, Netflix groups its target markets based on their geographic areas, such as domestic and international ones. This type of segmentation enables Netflix to develop different library catalogs for various regions depending on national policies, culture, and the national language. Netflix also uses behavioral segmentation, which involves dividing consumers based on their purchasing behaviors (Camilleri 2017). Netflix utilizes behavioral segmentation to customize its content to various consumers based on their “watch” history. Netflix consumers enjoy this content through monthly subscriptions. After considering the marketing audit and proposed objectives, a similar niche market segmentation is recommended, emphasizing behavioral and geographic segmentation. The two strategies will enable Netflix to offer customized streaming services to customers in new target markets such as China, which will make the product more appealing and drive the profits up.

6.2 Targeting

Although it is not clear from the firm’s website and report, Netflix likely utilizes mass marketing as its targeting strategy. While the available Netflix content mainly targets millennials, it is also suited for people of all ages, gender, and middle- and high-income earners. Arguably, Netflix uses this strategy because it is cost-effective compared to producing different content for each target market. Millennials and Generation X will also be the target market for the proposed objective because they are the generation that uses Netflix and other VoD the most. Market analysis also suggests that there are no limitations of targeting this group because of their consistency in consumption of VoD services.

6.3. Positioning

Netflix currently positions itself as a “streaming ready” brand. This brand positioning is appropriate for the firm because it reflects its major streaming and film production services. Therefore, a similar positioning strategy will be used to position the brand among the new target consumers in the new markets. This positioning strategy is helpful for the organization because it will help potential customers quickly identify where the brand fits in the market and consider subscribing to its streaming services. In the next section, I will discuss some of the marketing mix programmes that Netflix should consider.

7.0 Marketing Mix Programme

7.1 Product

Netflix offers diverse content in its various markets; for example, some of the library catalogs in Australia consist of Australian content. However, studies also show that in 2017, the service’s local content mainly consisted of 2.5 percent of the catalog, with a significant decline to 1.7 percent in recent years (Cunningham and Scarlata 2020). Although this diversity is ideal to expose the globe to international content, it is recommended that Netflix should restructure its content to ensure that the local content comprises the most significant part of the catalog. This strategy may help Netflix comply with some EU requirements, such as the 30 percent content quota.

7.2 Price

Currently, Netflix utilizes a low-price, high-quality pricing strategy, which is also suggested for continuous use for the service. Arguably, price is a critical factor in this industry because of consumer’s high bargaining power. Therefore, if Netflix wishes to retain and attract more consumers from growing markets, it should maintain low subscription rates and yearly discounted plans where possible.

7.3 Promotion

Although Netflix is a reputable brand, it needs to adopt promotional strategies to inform, persuade and remind new and current customers about its products. These promotional strategies include traditional and digital marketing, which should send a consistent message to all its consumers.

7.3.1 Traditional advertising

Traditional advertising has long been used in a majority of firms as a promotional strategy. Studies reveal that firms invest approximately $130 billion in traditional advertising to build their brands and increase sales (de Vries, Gensler, and Leeflang 2017). Netflix should use traditional advertising tactics such as running campaigns through TV ads on U.S. TV channels to reach target markets that still rely on traditional broadcasting networks as a source of information. Netflix should also set aside some capital for traditional advertising because this strategy is somewhat costly.

7.3.2 Online Advertising

Online advertising is the ideal way of targeting a significant fraction of Netflix’s potential consumers, who mainly consist of millennials. As the literature suggests, emerging adults spend about 6 hours on social media each day and visit multiple platforms simultaneously (Hruska and Maresova 2020). Therefore, social media platforms would be an ideal strategy for communicating to new and current markets about Netflix offerings. Besides, many social media platforms have a vast following implying that they would influence consumers’ purchasing decisions. Some of the digital advertising platforms that Netflix should use include social media posts, google ads, and Instagram posts.

7.3.3 Sales Promotion

Netflix should also adopt sale promotion as a strategy for attracting new subscribers. According to Kumar, Suganya, and Imayavendan (2018), sales promotion is an ideal strategy for increasing sales volume by enticing consumers to make positive buying decisions. In this context, Netflix should conduct sales promotions by offering discounts in some of its subscription plans to attract new subscribers or establishing a discounted yearly plan to encourage consumers to adopt more extended subscription plans.

7.4 Place

Although Netflix encounters restrictions in some countries, it still operates in a large geographical area. Therefore, it should seize the opportunities of globalization to market its products and acquire a large consumer base. The next section will discuss the implementation and control of Netflix’s marketing plan.

8.0 Implementation and Control

Appendix 7 shows a Gantt chart that will be used to implement the proposed marketing plan for Netflix. This plan will be launched for the next three years because of the complexity of some proposed actions, such as expansion to growing markets such as China. However, frequent reviews, after every two months, will be conducted to monitor the proposed activities. Appendix 8 also provides a budget estimate for some of the proposed marketing mix programmes. One of the key limitations of this marketing strategy is reliance on budget estimates. Therefore, some of the projected costs may be higher than expected. Nevertheless, the budget estimate will guide investment and prevent the firm from overspending.

9.0 Key Recommendations

In summary, this report offers a few recommendations that Netflix should consider in its marketing plan. As is evident from appendix 8, the proposals will cost the firm due to the investment required to advertise and expand the product to new markets. Nevertheless, these recommendations will contribute to the firm’s profitability and sustainability in the long run. The recommendations include:

• Expansion to growing markets such as China
• Expansion of VoD services on Portable devices such as Mobile Phones, iPads, and tablets in the United States and globally
• Adoption of a discounted yearly subscription plan
• Focus on sales promotion, traditional and online advertising such as sponsored ads on Instagram, google ads, and social media posts.

10.0 Reference List

‘About us’ (n.d.) Netflix [online]. Available at: https://about.netflix.com/en. Accessed 13 May 2021.

‘Form 10-K United States Securities and Exchange Commission’ (2019, December 31). Netflix Inc [online]. Available at: https://s22.q4cdn.com/959853165/files/doc_financials/2020/ar/8f311d9b-787d-45db-a6ea-38335ede9d47.pdf. Accessed 13 May 2021.

‘Video Downloading and Streaming Services in the UK- Market Research Report’ (2021, March 22), IBIS World [online]. Available at: https://www.ibisworld.com/united-kingdom/market-research-reports/video-downloading-streaming-services-industry/. Accessed 13 May 2021.

Bean, T. (2021). ‘This New Streaming Report Shows That HBO Max Is Gaining on Netflix, Amazon and Hulu’, Forbes [online]. Available at: https://www.forbes.com/sites/travisbean/2021/01/09/this-new-streaming-report-shows-that-hbo-max-is-gaining-on-netflix-amazon-and-hulu/?sh=76a92aa87d86. Accessed 13 May 2021.

Bhattacharya, A. (2013). ‘Switching Costs and Sustained Competitive Advantage’, International Journal of Business and Management Invention ISSN, vol. 2, no. 2, pp. 101–111.

Brennan, L. (2018, October 12). ‘How Netflix Expanded to 190 Countries in 7 Years’, Harvard Business Review [online]. Available at: https://hbr.org/2018/10/how-netflix-expanded-to-190-countries-in-7-years. Accessed 13 May 2021.

Brownlie, D.T. (1993). ‘The Marketing Audit: A Metrology and Explanation’, Marketing Intelligence and Planning, vol.11, no.1, pp.4-12.

Camilleri, M.A. (2017). ‘Market Segmentation, Targeting and Positioning’, Tourism, Hospitality & Event Management, vol. 1, no. 1, pp. 69–83.

Caruana, A. (2003). ‘The Impact of Switching Costs on Customer Loyalty: A Study Among Corporate Customers of Mobile Telephony’, Journal of Targeting, Measurement and Analysis for Marketing, vol.12, no.3, pp.256-268.

Cho, C.Y. (2020, September 25). ‘Competition Among Video Streaming Services. Congressional Research Service,’ FAS [Online]. Available at: https://fas.org/sgp/crs/misc/R46545.pdf. Accessed 13 May 2021.

Choudhury, B. (2019). ‘Netflix Tests Out $4 Mobile-Only Streaming Option in India’, Forbes [online]. Available at: https://www.forbes.com/sites/bedatrichoudhury/2019/03/22/netflix-tests-out-4-mobile-only-streaming-option-in-india/?sh=7b1fe7333ac3. Accessed 13 May 2021.

Cochran, D.S., David, F.R., & Gibson, C.K. (2008). ‘A Framework for Developing an Effective Mission Statement’, Journal of Business Strategies, vol.25, no.2, pp.27-39.

Coman, A., & Ronen, B. (2009) ‘Focused SWOT: Diagnosing Critical Strengths and Weaknesses, International Journal of Production Research, vol.47, no.20, pp.5677-5689

Cunningham, S., & Scarlata, A. (2020). ‘New Forms of Internationalization? The Impact of Netflix in Australia’, Media International Australia, vol.177, no.1, pp. 149-164.

David, F.R. & David, F.R. (2003) ‘It’s Time to Redraft Your Mission Statement,’ Journal of Business Strategy, vol. 24, no.1, pp.11-14.

de Vries, L, Gensler, S & Leeflang, P.S.H. (2017). ‘Effects of Traditional Advertising and Social Messages on Brand-Building Metrics and Customer Acquisition’, Journal of Marketing, vol. 81, no. 5, pp. 1–15.

Ferguson, T.D., Deephouse, D.L., and Ferguson, W.L. (2000). Do strategic groups differ in reputation? Strategic Management Journal, vol.21, no.1, pp.1195-1214.

Gadzama, W., Bitrus, J., & Maigana, N.A. (2017). ‘Global Smartphone Ownership, Internet Usage and Their Impacts on Humans’, Journal of Communications Network, vol.1, no.1, pp.1-10.

Geringer, S. (2020). ‘National Digital Taxes – Lessons from Europe’, South African Journal of Accounting Research, vol. 35, no. 1, pp. 1–19.

Goyat, S. (2011). ‘The Basis Of Market Segmentation: A Critical Review Of Literature’, European Journal of Business and Management, vol.39, no.2, pp. 45–54.

Grundy, T. (2006). ‘Rethinking and Reinventing Michael Porter’s Five Forces Model’, Strategic Change, vol.15, no.1, pp. 213-229.

Helms, M.M., & Nixon, J. (2010). ‘Exploring SWOT Analysis – Where Are We Now? A Review of Academic Research from The Last Decade’, Journal of Strategy and Management, Vol. 3, no.3 pp. 215 – 251

Hruska, J. & Maresova, P. (2020). ‘Use of Social Media Platforms Among Adults in The United States—Behavior on Social Media’, Societies, vol. 10, no. 1, pp. 1–17.

Ken, M., Lance, B., & Kurke, B.G. (1993). ‘Mission Impossible? Designing a Great Mission Statement to Ignite Your Plans’, Management Decision, Vol. 31, no.4 pp.34-37

Kumar, A., Suganya, S., & Imayavendan, V. (2018). ‘An Empirical Study on Sales Promotion Technique’, Global Journal of Management and Business Research, vol. 18, no. 2, pp.1-10.

Lee, E. (2021). ‘Netflix Will No Longer Borrow, Ending Its Run of Debt’, The New York Times, 19 January [online]. Available at: https://www.nytimes.com/2021/01/19/business/netflix-earnings-debt.html. Accessed 13 May 2021.

Netflix Help Center (n.d.). ‘Changing The Country of Your Account’, Netflix. Available at: https://help.netflix.com/en/node/119024. Accessed 13 May 2021.

O’Dea, S. (2021, March 19). ‘Number Of Smartphone Users in the U.S. 2010-2025’, Statista [online]. Available at: https://www.statista.com/statistics/201182/forecast-of-smartphone-users-in-the-us/. Accessed 13 May 2021.

Paris, M. (2021, April 19). ‘People are Cancelling Video Streaming Subscriptions at Record Rates Ahead Of Netflix Earnings’, Fortune [online]. Available at: https://fortune.com/2021/04/19/netflix-earnings-subscriber-numbers-profit-first-quarter-q1-nflx/. Accessed 13 May 2021.

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Shapiro, A. (2020). ‘Netflix Stock Hits Record High, Is Now Worth More Than Disney’, Forbes, [online]. Available at: https://www.forbes.com/sites/arielshapiro/2020/04/16/netflix-stock-hits-record-high-is-now-worth-more-than-disney/?sh=57d43af24b26. Accessed 13 May 2021.

Sørensen, I. E. (2016). ‘Content In Context: The Impact of Mobile Media on the British TV Industry’, Convergence: The International Journal of Research into New Media Technologies, vol. 24, no. 6, pp. 507–522.

Stoll, J. (2018). ‘Netflix: Employee Count’, Statista [online]. Available at: https://www.statista.com/statistics/587671/netflix-employees/. Accessed 13 May 2021.

Stoll, J. (2021). ‘Leading U.S. Video Streaming Services 2019, By Mobile Reach’, Statista [online]. Available at: https://www.statista.com/statistics/910895/us-most-popular-video-streaming-services-by-reach/. Accessed 13 May 2021.

Stoll, J. (2021, March 18). ‘Netflix: Employee Count 2020’, Statista. Available at: https://www.statista.com/statistics/587671/netflix-employees/    

The editorial board (2019). ‘The Streaming Market is Heading for Saturation’, Financial Times, Financial Times [online]. Available at: https://www.ft.com/content/22011750-83a7-11e9-9935-ad75bb96c849. Accessed 13 May 2021.

Trefis Team. (2017). ‘Here’s Why Netflix Is Looking for Translators’, Forbes [online]. Available at: https://www.forbes.com/sites/greatspeculations/2017/03/31/heres-why-netflix-is-looking-for-translators/?sh=775d60ab4823. Accessed 13 May 2021.

Tynan, A.C. & Drayton, J. (2010). ‘Market Segmentation’, Journal of Marketing Management, vol. 2, no. 3, pp. 301–335.

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Zhang, Y., Chen, X., Zhao, Y.H. & Yao, Q. (2014). ‘Exploring the Impact of Switching Costs on Customer Retention in the Technology Standard Competition Market’, Journal of Service Science and Management, vol.7, no.1, pp.267-276.

11.0 Appendices

Appendix 1: Netflix SWOT Analysis

	Positive	Negative
Internal Factors	Strengths Dramatic growth: The firm has undergone exponential growth, operating in over 190 countries in 7 years and recording high international revenues (Brennan 2018) A significant global consumer base: About 207.6 million global Netflix subscribers from over 190 countries (Watson 2020) Original content: Netflix produces its own shows such as Money Heist Technological adaptability: Company allows content streaming to internet-enabled devices such as mobile phones. Customer-centric services: Netflix has offline features to meet customers’ demand for watching streamed content on the go. Relatively affordable prices: Basic, standard and premium prices starting as low as $8.99, $13.99 and $17.99, respectively.	Weaknesses Increasing debt funding: Over $16 billion in debt in less than ten years (Lee 2021) Growth in operational costs: The firm’s operational costs have risen over the years because of original content production. Raising subscription prices: A few years ago, the firm raised its subscription fee to carter for its operational costs. Overdependence on North American market: North America is Netflix’s largest market. Limited copyrights
External Factors	Opportunities ·                     Further global expansion ·                     Expansion of its content library ·                     Form alliances to penetrate new markets ·                     Introduce annual subscriptions to retain consumers for longer periods. ·                     Expand its low-price mobile streaming option to the United States and globally	Threats ·                     Government intervention: Such as EU media tax ·                     Complains to reduce video data because of interference on infrastructures such as defence and hospital systems ·                     Global carbon emission regulations ·                     Market saturation ·                     Political pressure ·                     Growing competitive pressure from industry players

 

Appendix 2: PESTEL Analysis

Political Factors	EU rulings and policies may affect Netflix operations and profit: The EU regulation requiring Netflix to develop 30 percent of European content in its library may affect Netflix’s business in Europe if it fails to comply with this policy. Besides, the EU policy that imposes a 26 percent media tax on Netflix may affect the firm’s profitability in the European market and lead to higher subscription prices among EU Netflix users. FCC regulations and cable TV regulations: Traditional cable network companies such as AT&T have been petitioning for limitations in the use of digital streaming firms such as Netflix because of the threat they pose to the former. If FCC passes such petition, Netflix usage may reduce significantly, affecting the firm’s revenue and profits. Political restrictions in some regions:  Lack of political coherence between countries such as the United States and China creates legal and political issues that prevent Netflix from establishing its operations in those nations. Restricted Access: Netflix only airs content that the domestic government permits. This political aspect may explain why some regions have a smaller library catalogue than others. Censorship and permission: Countries like China have censorship policies that require online streaming platforms to censor some of their content. Such policies can impose additional costs on Netflix because it has to reproduce some of its content to meet legal requirements that suit the target markets.
Economic Factors	Exchange rates and taxes: Netflix online streaming is offered globally, implying that the firm’s charges and revenue are also subject to exchange rates effects and varying taxes across nations. Therefore, depreciation in one country’s currency poses a threat to the product’s attractiveness because domestic users are forced to pay a higher streaming fee. The imposition of strict tax laws on digital media in some regions also imposes a higher price on users. Effects of global pandemic (COVID-19): The pandemic has been a blessing in disguise for Netflix. Since the pandemic struck, Netflix’s income has increased considerably. Fierce competition: Several factors force Netflix to increase the price of its subscription plans. Unfortunately, this product has several substitutes from Disney, Amazon, and Apple, who offer relatively lower prices. The price competition poses a significant threat to Netflix because consumers can easily cancel their subscription plans and seek alternative content streaming services from its rivals. Piracy Issues: Piracy from torrent websites threatens the firm’s profitability. Netflix spends billions to produce the content, yet such sites offer the same content for free, attracting consumers who may not wish to spend on monthly subscription plans.
Social Factors	Trends towards online streaming and use of other internet-enabled content streaming devices: Industry updates show a significant shift from traditional TVs and cable networks to online streaming such as Netflix. For example, an IBIS report shows that video streaming services are forecasted to grow by 30.6 percent in 2020-2021 (“Video downloading & streaming” 2021). Besides, Netflix’s subscription grew by 29.3 percent through December, signifying a socio-cultural trend towards video streaming services (“Video downloading & streaming” 2021). The growing trend towards using internet-enabled devices in streaming also presents an opportunity for Netflix to expand its plan to mobile users. For example, studies show that about 72 percent of Brits use mobile devices at least every week to watch videos (Sorensen 2016). Sorensen (2016) also adds that the affordances of internet-enabled portable screens reshape viewers’ behavior, changing their preferred platforms and notion of quality content. This trend presents an opportunity for Netflix to reach out to more consumers.
Technological Factors	Advanced translation: Technological innovations are an opportunity for Netflix to become more appealing to consumers and secure a more extensive customer base. For example, technological developments enabled the firm to launch Hermes, a software that translates content automatically to different languages (Trefis Team 2017). High-quality videos: Through technological developments, Netflix can offer high-quality videos for users watching the digital content on mobile devices, iPads, and larger screens. Issues regarding 4K streaming: There have been complaints in the past about Netflix’s 4K streaming interference on infrastructures such as defence and hospital systems. These complaints pose a threat to Netflix operations in the EU if the firm fails to address the matter.
Environmental Factors	Carbon emission: It is estimated that video streaming companies have a considerable carbon footprint, about 1 percent. Netflix carbon emission presents an opportunity for the firm to indulge in CSR by taking the environmental initiative to invest in clean energy.
Legal factors	Lawsuits against the firm: Netflix has in the past faced lawsuits for increasing its prices. Such issues are a threat to the firm’s reputation Copyrights: Copyright issues limit the content that Netflix offers to some markets.

Appendix 3: Porters Five Forces

Bargaining power of suppliers	High: Although Netflix produces some of its shows, a significant number of its library catalogue are contracted content from a few firms that create entertainment content. Therefore, suppliers have higher bargaining power and influence on price negotiation, which can impact Netflix profitability.
Bargaining power of buyers	High: Buyers may incur low switching costs by switching to other online streaming services. Therefore, buyers have high bargaining power because they can cancel their Netflix subscriptions and shift to other service providers such as Disney +.
Threats of new entrants	Moderate: For new entrants to establish themselves and become profitable in the media and entertainment industry, they need significant investment in technology, content, not forgetting capital to enter into contracts with suppliers. Fortunately, Netflix has adequately established itself in the industry and is adopting changing technology to enhance its services to consumers. Therefore, new entrants have a moderate threat because it may be difficult for them to penetrate the market considering the capital requirements.
Threats of new substitutes	Moderate: Some of Netflix’s close substitutes are traditional media content, which may not have a considerable threat on the firm. Besides, Netflix can invest in more content to ensure that it remains relevant to consumers and prevent them from shifting to other substitute products.
Competitive rivalry within the industry	High: Netflix faces stiff competition from traditional tv and cable networks and on-demand video streaming services such as Disney. For example, a Statista report shows that by September 2019, Netflix was the most popular video streaming service by mobile reach, 25 percent, followed by Hulu 14 percent (Stoll 2021). This data proves that competition in the industry is very high; thus, it may affect Netflix’s profitability. Arguably, Netflix must offer affordable prices to prevent consumers from seeking other popular low-cost service providers.

Appendix 6: SMART Objectives

	Adapt a discounted yearly subscription plan within a year	Expand VoD services on Portable devices such as Mobile Phones, iPads, and Tablets in the United States by 2022 and Globally in the coming years	Expand to growing markets such as China by 2023
S	Exact objective	Exact objective	Exact objective
M	Specific period of accomplishing	Measurable outcome	Measurable achievement
A	Specific achievement	Specific outcome	Specific outcome
R	Realistic	Realistic	Realistic
T	Time-bound	Time-bound	Time-bound

 

 

 

 

 

Appendix 7: Gannt Chart

Implementation	Plan Start	Plan Duration	Year1	Year2	Year3
Marketing Audit
Internal analysis	1	1
External analysis	1	1
Marketing objectives	2	2
Marketing strategies	2	2
Marketing mix programme	2	2
Promotional Activities
Traditional advertising	3	3
Implementation of social media adverts	4	4
Analyze Marketing Plan Results
Conduct review	5	5

Appendix 8: Budget Estimates

Implementation	Overview	Cost
Market Research
Marketing audit
Internal analysis		Firm’s workforce
External analysis		Firm’s workforce
Marketing objectives		Firm’s workforce
Marketing strategies		Firm’s workforce
Marketing mix program		Firm’s workforce
Promotional activities
Traditional advertising	Pay per advert	$400,000
Implementation of social media adverts	60-second ads	Workforce commitment
Analyze Marketing Plan Results
Conduct review		Workforce commitment