Case analysis
The company, Netflix deals with online rental services for film on DVD. Founded in 1997, the company was successful in outdoing the previous type of rental services, blockbuster, in which customers would hire movies in tape from retail centers return upon completion end of time set for deadline. The new method introduced by Netflix was much more advantageous and convenient to customers due to the fact that the company would send movies to customers through mail, and this made the customers prefer this new method. The invasion of the market by Netflix saw the industry experiencing a total revolution, whereby customers switched to the new method. As evidence to this, 37% of homes in the USA had purchased DVD players just two years into the introduction of method of mailing of movies.
The benefits that the company experienced included making greater sales in comparison with the blockbuster system. This was attributable to the fact that the company would deliveries of several movies at a given period of time. This advantage was enhanced by the fact that discs were lighter and smaller than the tapes which were previously used in the blockbuster system. Another advantage that the company enjoyed was the customer friendliness due to the fact that the mailing system saved time and resource for customers as they would just send the discs back by mail with the expiry of deadline. Costs were also a major contributing factor to the advantages that the company enjoyed, as the prices for sending through letter, as well as costs for delaying were not increased in this system.
Years after venturing into the market, various challenges and problems faced this company. Venturing into online marketing led the company into having to increase costs due to shipping. Introduction of an IPO for the company also led to stagnation of the market and prices had to be increase for the company to experience profitability. This led to the reduction in the rate of reliability upon this company. The blockbuster retained its characteristic low cost and at one time, preference was skewed towards the blockbuster system.
Numerous opportunities existed for Netflix due to the fact that the company could maximize on the rental procedure, by allowing customers to increase the duration with which they could stay with the movies at a reduced price, making customers prefer the method to blockbuster. This would increase the rate at which the customers switched to the system, reducing the chances for blockbuster from making a come back in the industry. The benefit that would result from this would be increased customers who would facilitate the stock marketing of the company, eliminating the risk of bankruptcy. Following this, the need for increasing prices in order for the company to continue running efficiently would be eliminated.
The company was the first to introduce online marketing of film after the emergence of the era of advanced technology. This places the company at a great advantage, due to the fact that it had the potential to explore all measures applicable in online marketing of products, such as promotional features to be incorporated for individuals who purchased their in great quantities. Another recommendable factor for a company which does online marketing entails taking advantage of other companies that aim at advertising their products online. These companies would increase the profitability associable with online marketing due to the fact that the companies would pay a fee for making advertisements online. Several such companies would contribute a great sum of monetary resource, making it unnecessary for the company to charge its customers additional costs to meet specific needs within the company. These recommendations would be combined by making use of the promotional service on the companies that advertise their products with the company. This could be done to encourage advertisements with the company and to attract other companies that aim at advertise products online.
