Establishing Strategic Direction:

Ansoff Matrix - Netflix

Existing products New products
Market penetration strategy Product development strategy
Existing U.S.A.- more purchasing and usage from Develop new products such as
markets existing customers across all product video and computer games.
categories (20% increase in sales in 2008)

New Market development strategy Diversification strategy

markets
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 Low

Stars Question Marks

Streaming
Subscribers software to enable
High Movie downloads commercials to be avoided

Market growth Cash Cows Dogs

Low Generates demand
for older, cheap
films

2
Understanding how Netflix adds value to its
business and its place within the value system

Firm’s
Firm’sInfrastructure
Infrastructure
Open
Openand
andtransparent
transparentculture.
culture.Interesting
Interestingadult
adultattitude
attitudetotostaff.
staff.Progressive organisation.
Support Activities

HR Management

Margin
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

Procurement
Strong buying power. Sources the latest DVD’s , blu ray discs from producers /manufacturers.
Inbound Operations Outbound Marketing Service
Logistics Online distribution Logistics & Sales Prides itself on
Assume effective is working well Supply chain Brand mgt – good
systems in place functioning well. No need to customer

Margin
as operations, problems measure service and
inbound encountered with awareness and innovative
logistics/service distriibution /supply position the staff policy
all run smoothly. of products to products more
customers memorably in a
crowded
marketplace

Primary Activities

3
Competitor Analysis: Netflix
Porter’s Five Forces Map
Supplier power-
Medium
Suppliers will always try to
drive up prices but equally they
need to sell their products and
are under pressure from
recessionary factors
Threat of new entrants - High
Crowded marketplace.
Barriers to entry are low. Key
competitors are Apple,
Amazon, Google, Walmart,
Hulu, and Redbox,
Buyer power – High
Consumers today have so much choice in
Industry rivalry - Intense
buying dvd’s blu ray discs, video on
Competition in all product
demand etc. so prices have to be
commodities is increasing.
competitive
Supermarkets have immense
buying power. Category killers
such as Walmart can compete
effectively on price
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.
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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
• Consumers always need and
enjoy home entertainment
 Brand recognition/brand long-
term stability
 Quality over competition
 Large selection to choose from
Best Fit  Attentive customer service
Match
 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
Netflix Compatibility/capability

Country attractiveness/priority
High High Medium Low
Primary
Canada
Medium Secondary
Mexico U.K.
Argentina Australasia
Colombia
Brazil

Low Tertiary India

6
Product analysis - Netflix

High Price Low Price

PREMIUM STRATEGY GOOD VALUE STRATEGY

Streaming and discs for rent, Older films

High popularity
both Blu-ray and DVDs

OVER CHARGING ECONOMY STRATEGY

STRATEGY
Low popularity
DVD Boxed sets

7
Product Perception Grid - Netflix
Quality

High
1=

2=

3=
1 3
4=
2
5=
Price High Low
4 6=

5 7=

Low