Marketing Case Study presented at IIM Jammu

1. MARKETING
STRATEGY
PRESENTATION
(Team 1)

2. AYUSH
AGARWAL
- 20124
AALEKH
TAK
- 20118 PRESENTERS
OF THE CASE
AKASH SOIE
- 20119
AYUSHI GUPTA
- 20126
ASHUTOSH
SAHU
- 20123

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Company’s
Overview
Qwikster
Controversy Content
Marketing
SWOT,
PESTLE &
PORTER
Approach &
Strategy
CONTENTS
Conclusion

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Overview
➢ Started in 1997
➢ Initially dealt in movie rental business
➢ Went public on May 23rd, 2002
➢ Launched online streaming services in 2007
➢ First company to offer streaming services on all devices (TV,
Mobile, Computers, Video Gaming Consoles)

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What made
them BIG?
Content Development
Content Development gave a major boost to
company's fortunes and there was no looking
back from this point.
Best quality content
Till date, Netflix spends billions of dollars
every year to make quality content
worldwide. Company is known for its best
quality content like HBO was known in the
television industry.

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SWOT
Analysis Weaknesses
• Business Model (Easily
replicated)
• Green Credential
(Started to offset its
energy use)
• Rising Debt ($19 billion
in 2019)
Strengths
• Range & quality of
content
• Brand
• Technology (Supports
on-demand
streaming service)
• Customer Base (167
million in 2019)
Opportunities
• International Growth
(India, China & South
America)
• Artificial Intelligence
• Virtual Reality
• Acquisitions
Threats
• Competition
(Disney+Hotstar,
Amazon Prime etc)
• Competitive
Pricing
• Piracy

8. S T
E L
P E
Economic Factors
In the current global recession
where many customers’
spending budgets are tight,
services like Netflix are more
attractive due competitive
pricing.
Technological Factors
Netflix's R&D Labs have
developed 'Hermes', a software
which automatically grades a
translation of a Netflix show.
This allows for faster
recommendation engine and
higher quality translation
efforts.
Legal Factors
In 2016 Netflix suffered a costly PR misstep over a
consumer lawsuit. Furthermore, the company
received widespread media criticism for their
confusing customer contracts
Environmental Factors
In partnership with
Greenpeace, Netflix is
beginning to llessen their
carbon footprint. Tech
companies are being told by
global governments to pay
part of an environmental bill
upwards of $11 trillion by
2025.
Social Factors
Social trends show that young
customers are moving to
watch video content on their
smartphones rather than
traditional larger screens. In
2015 US viewers watched 24
minutes on average on
smartphones, in 2016 it grew to
over 40 minutes.
Political Factors
With an increase in internet
usage, US telecom giants AT&T
have gone to the Federal
Communications Commission to
insist on stricter usage
regulations which would
threaten NETFLIX’s business
model.
Following the spread of coronavirus, as more
and more people around the world are staying
indoors, the demand for its services has grown
abruptly. As the consumption of digital services
grows worldwide driven by increased use of the
internet, Netflix continues to enjoy growth.
PESTLE Analysis

9. Porter’s Five Forces
Bargaining Power of
Suppliers
Bargaining Power of
Buyers or Customers
Threat from New
Entrants
Threat of Substitutes
Product Competitive Rivalry
High
•Suppliers own
content
•Licensing Deals
Legal Issues
High
•Customer loyalty is
weak (price changes)
•Majority of revenue is
from consumers
Medium
•Low industry barriers.
•Industry leader
Customer loyalty is
low.
High
•Alternative methods
of receiving content
•On demand,
purchasing
content,movie
theaters etc
Medium-High
• Many competitors
• Few emerging
players
• Trying to maintain
dominance

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Qwikster Controversy
● In July 2011, Netflix announced about splitting its plans
into two parts: streaming video and DVD rentals.
● Those who wanted both streaming and DVDs had to
pay 60% more per month. Previously they’d been able
to bundle both for just $2 more. This scheme was
released when people were still reeling from the 2008
Financial Crisis.
● The company tried to portray it as offering subscribers
choice. But, it became a headache for the customers.
● Instead of reworking on the scheme, Netflix renamed
the DVD rental side as Qwikster.

11. 5
Effects of
QWIKSTER
Customers bailed out
almost immediately
following the
announcement.
Netflix’s stock price
tanked, from $300 a
share in mid-July to
$78 in late October, and
sinking further from
there.
Analysts described it
as a “nuclear winter”
for Netflix.
Now, a skilful strategy was
required to recover from this
loss and rebuilt the loss trust
of customers.
1 2
3 4

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“Reed, thanks for reminding me that I should go
somewhere else for my DVD rentals. It was an
insult enough that you raised the price on me last
month, right in the middle of the biggest recession
since the Great Depression, but now instead of a
sincere apology, all we get is excuses and a flimsy
new name”
Some comments on the company’s blog

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NETFLIX’S APPROACH
1. Navigating the change from Netflix as a DVD rental site to Netflix as a streaming
video destination. Statistics: Between Q3 and Q4 2011, DVD-by-mail
subscriptions dropped 20%, from $13.93M to $11.17M. Meanwhile,
streaming-only subscriptions increased slightly, netting just $52M on $476M in
sales in Q4.
2. Winning back the trust of its subscribers.
3. Key Factors to be considered:
● listening to its customers.
● reducing risk by moving fast into streaming video ahead of the
competition.
● turning the company into a unique creative force.
4. Removing the legacy part of the business would be the best strategy in the
long-term for Netflix. But it was a delicate balancing act to convince subscribers to
move towards streaming. Here’s what had to happen:
● The viewing public had to see Netflix in positive terms once again
● Streaming subscriptions had to increase
● DVD subscribers had to be shifted into a separate business area.

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Netflix’s Strategy
In 2012, Netflix planned to remove DVDs from the
company’s core offerings. It was also a subtle push
to get more streaming customers on board.
By the end of 2012, the company’s streaming
subscriber numbers surged, adding nearly 10
million globally. Meanwhile its losses continued on
the DVD side, with around 400,000 dropping out.
These losses were no longer a bad sign: in fact, they
were a good one. This meant that their plan was
taking shape.
Not only did streaming continue to increase, but the
company’s profits from streaming began to
overtake DVDs.
The stock price rebounded as analysts and
investors realized that the company was on the right
track after all. There was no more talk of a “nuclear
winter.” By October 2013, the stock price reached
an all-time high of almost $400 a share.

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Comparison b/w DVD vs Streaming Services

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CONTENT INNOVATION
Netflix knew as early as
2011 that to keep its
place at the top of the
streaming food chain,
they would have to
create content of its
own.
•
Netflix became a competitor.
Its partnership with Starz
which forged in 2008 ended in
2012. (Starz was owned by
Liberty Media, a large cable
operator with a number of
channels under its control)
•
Netflix posed a direct
threat. Thousands of
movies and TV shows
disappeared from Netflix
virtually overnight.
Customers weren’t
happy. Meanwhile, the
cost and complexity of
acquiring titles from
Hollywood was becoming
unsustainable.
The company once again
had to make a choice.
The team had learned
that the safest route was
to reduce risk by moving
faster than the
competition. They had
to reinvent Netflix. And
they couldn’t afford to
back into it. They’d have
to go big.

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Insights from Netflix’s Marketing Strategies
● Humour in advertising is the next best thing, Dare to be Different
● Memes are the biggest gift for social media marketing
● Never fail to engage with your customers
● Adopt quality content and relevant marketing strategies
● Find out more about your customers and personalise your messaging
● Let Data Show You the Secrets to Better Customer Service

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Netflix’s Content
Promotion
Strategies
➔ Netflix has a strategy of releasing complete
seasons of web series in one go.
➔ This develops a culture of binge watching
among its subscribers.
2. CONTENT RECOMMENDATION USING
AI
➔ Netflix keeps a track of user’s watch history.
➔ AI based algorithms are used to know
consumers’ taste and preferences.
➔ This information is used to give
recommendations to users while streaming
content.
1. BINGE WATCHING

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Netflix’s Content
Promotion
Strategies
3. A PLAN FOR EVERYONE
➔ Netflix keeps a wide range of subscription
plans in order to widen its consumer base.
➔ Users can choose any of the weekly,
monthly or yearly plans.
➔ In each segment there is an option of
mobile, basic,standard, and premium plans
according to the budget of the users.
➔ There is also a provision of group plans,
where multiple users can share costs.

20. WHAT MAKES THEIR CONTENT BEST?

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REGION SPECIFIC CONTENT

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PRODUCT DIVERSIFICATION
MOVIES WEB SERIES SHORT FILMS

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Netflix has added 10.1 million new paid subscribers as people stayed home, as the
company reported net earnings of $720 million over $6.15 billion in revenue for its second
quarter (April-June period). Netflix is also ramping up its original content programming
in India at a time when video streaming services are witnessing a surge in content
consumption with people confined to their homes due to the pandemic-induced lockdown.
Overall, Netflix has commissioned about 50-60+ productions in the country, its largest
investment in original programming outside the United States. Of this, around 19+ films
and 14+ original series have been released on the platform as of now. In December, the
service had announced plans to spend Rs 3,000 crore on content programming in
India in 2019 and 2020. While the company doesn't provide a country-wise breakdown, it
added 2.66 million subscribers in the Asia Pacific region for the quarter ended June 2020
and generated revenues of $569 million for the period.
Netflix’s Foothold in India in COVID-19

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Net Income Generated by Netflix till 2nd Quarter 2020

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Netflix made a name for
itself in 1997 as pioneer
of the DVD mail-order
business.
A
B
C
Qwikster Controversy did
bring losses for the
company, but it can be a
viewed as a blessing in
disguise. It enabled
Netflix to switch to
streaming platform and
bring a revolution.
Netflix is continuously
using its Big data and
data analytics effectively
to generate actionable
insights.
It has established its
name in Binge watching
domain.
D
F
G
Its original content and
personalized
recommendations have
become its USPs.
Netflix is constantly
working to adapt to
newest technologies
and provide its
consumers with the best
content.
CONCLUSION

26. Thank
You