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Establishing Strategic Direction:
Ansoff Matrix - Netflix
Existing products
New products
Market penetration strategy
Product development strategy
Existing
markets
U.S.A.- more purchasing and usage from
existing customers across all product
categories
Develop new products such as
video and computer games.
(20% increase in sales in 2008)
New
markets
Market development strategy
Diversification strategy
Investigate optimum markets in North
America i.e. Canada, and adjacent countries
such as Mexico, moving on to Argentina,
Chile and Brazil and later –U.K. Australasia,
and India (Bollywood factor).
1
BCG Matrix - Netflix
Market share (relative to largest competitor)
High
Stars
High
Market growth
Low
Streaming
Subscribers
Movie downloads
Cash Cows
Low
Question Marks
software to enable
commercials to be avoided
Dogs
Generates demand
for older, cheap
films
2
HR Management
Innovative approach to staff management. Black and white to some extent. Slackers are fired
and great staff are rewarded by having open ended annual leave arrangements.
Technology Development
Large scale digital distribution via streaming and downloading service
Margin
Firm’s
Firm’sInfrastructure
Infrastructure
Open
Openand
andtransparent
transparentculture.
culture.Interesting
Interestingadult
adultattitude
attitudetotostaff.
staff.Progressive organisation.
Procurement
Strong buying power. Sources the latest DVD’s , blu ray discs from producers /manufacturers.
Inbound
Logistics
Assume effective
systems in place
as operations,
inbound
logistics/service
all run smoothly.
Operations
Online
distribution is
working well
Outbound
Logistics
Supply chain
functioning well. No
problems
encountered with
distriibution /supply
of products to
customers
Marketing
& Sales
Brand mgt –
need to
measure
awareness and
position the
products more
memorably in a
crowded
marketplace
Service
Prides itself
on good
customer
service and
innovative
staff policy
Margin
Support Activities
Understanding how Netflix adds value to its
business and its place within the value system
Primary Activities
3
Competitor Analysis: Netflix
Porter’s Five Forces Map
Threat of new entrants - High
Crowded marketplace. Barriers to entry
are low. Key competitors are Apple,
Amazon, Google, Walmart, Hulu, and
Redbox,
Supplier powerMedium
Suppliers will always try to
drive up prices but equally they
need to sell their products and
are under pressure from
recessionary factors
Industry rivalry - Intense
Competition in all product
commodities is increasing.
Supermarkets have immense
buying power. Category killers
such as Walmart can compete
effectively on price
Buyer power – High
Consumers today have so much choice in
buying dvd’s blu ray discs, video on
demand etc. so prices have to be
competitive
Threat of substitutes – Medium
Technology grows at a fast pace.
DVD’s are expected to be around
for a while but the internet will
become the principal vehicle for
distributing films in years to come.
4
Matching Assets and Competencies – Netflix’s
sustainable competitive advantage in U.S.Market
Netflix’s Assets/Competencies
 Sells DVD’s and Blu ray
discs that consumers need
 Strong brand recognition in
U.S.A
 Quality product
 Wide product range
 Fairly strong customer
service – high levels of
customer satisfaction.
 Services are tailored for
individuals-onscreen
welcome, recommendations
 Offers high speed streaming
of movies and TV
programmes via the internet
 Internet service includes
movie recommendation
algorithms
Customer Requirements
Best Fit
Match
• Consumers always need and
enjoy home entertainment
 Brand recognition/brand longterm stability
 Quality over competition
 Large selection to choose from
 Attentive customer service
 Personalisation
 Good distribution network –
mail, video kiosks, vending
machines, downloading,
streaming, etc.
 Advice on which films to
watch
5
International Decision making model
Business Portfolio Model – Harrell & Kiefer.
Selection of Markets and Product/Market development
Country attractiveness/priority
High
High
Medium
Low
Netflix Compatibility/capability
Primary
Canada
Medium
Low
Secondary
Mexico
Argentina
Colombia
Brazil
Tertiary
U.K.
Australasia
India
6
Product analysis - Netflix
High Price
PREMIUM STRATEGY
High popularity
Streaming and discs for rent,
both Blu-ray and DVDs
OVER CHARGING
STRATEGY
Low Price
GOOD VALUE STRATEGY
Older films
ECONOMY STRATEGY
Low popularity
DVD Boxed sets
7
Product Perception Grid - Netflix
Quality
High
1=
2=
3=
1
4=
2
Price
High
Low
4
5=
6=
7=
6
7
Low
8
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