As soon as Netflix was founded in 1997, it employed a unique strategy of renting out DVDs at a fixed monthly rate. This outstanding strategy enabled the company to win many customers. The subscribers enjoyed the convenience brought about by the unlimited access to DVDs.
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They could access the movies of their choice from anywhere, and this reduced the shipping expenses and DVD handling inconveniences. The online movie service enabled Netflix to obtain the “first to market” competitive advantage. Since then, Netflix has dominated in the online movie service providers, and it employs competitive strategies to maintain its customers.
Blockbuster, Wal-Mart and Comcast are the main competitors of Netflix. The healthy competition between the three companies has greatly benefited the customers. Before blockbuster could wake up and recognize the online subscription technique, Netflix had already domineered in the market. Wal-Mart and Blockbuster are very rich companies and they immediately launched services similar to those of Netflix.
However, since Netflix had already won the “first to market” competitive advantage, the two competitors experienced uninspiring sales and pulled back. This marked yet another advantage to Netflix, and its online subscription business boomed. Further, the company employed service differentiation strategies to retain customers and obtain new ones.
Netflix realized that maintaining its competitive advantage needed a reevaluation and embracement of the technological transformations. Immediately after the introduction of the smart phones, the company offered a mobile application for the Apple iPad and iPhone.
To crown it all, Barnes and Noble bookstore giants were impressed by Netflix’s efforts, and they signed a deal with the company to pre-install Netflix’s apps on their tablets.
The company’s managers are alert; they check out on new technologies and offer their apps. With this working spirit, the future of the company is bright, and its competitive advantage will prevail for a long time. Netflix competitors will have to work extra hard to beat the highly esteemed company.
Netflix’s other competitive advantage against its competitors is its response to customer needs. With the evolving world, customers want to purchase things using the most reliable method. Netflix have made it very convenient for customers to purchase movies through their smart phones and tablets.
The company offers titles of the newest movies at considerably reduced prices. For those who prefer to have the DVDs, the company has an online delivery program that enables customer to receive DVD’s of their choice without leaving their homes.
The home delivery service meets the needs of the aged and ailing persons who would like to obtain entertainment at the comfort of their home. Netflix also takes care of the needs of the children. Recently, the company introduced the “just for kids” segment in the iPad apps. This application offers movies and shows for children under the age of 12.
While many competitors would think that lowering price is what would attract customers, Netflix focuses on maintain high quality services. Having won the First-To-Market competitive advantage, the company aims at maintaining its customers by providing worthwhile services.
Although Netflix’s prices are higher as compared to the competitors’ prices, its royal customers purchase movies from them because they obtain value for their money.
The discussions imply that Netflix stands at a very high competitive advantage over its competitors. It holds at least 33% of the online video downstream market. Netflix has done a lot of research to identify its strengths, and weaknesses. The “first to market” competitive advantage is the greatest strength that the company has struggled to maintain all through.
It has managed to retain old customers, gain new customers, and most importantly, sustain its competitive advantage without necessarily competing on price. The highly esteemed business strategies create a natural entry barrier and businesses shy off to compete with Netflix.
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Value chain analysis
Value chain analysis is a strategy that seeks to increase customer satisfaction, and have an effective control of costs. Netflix has employed various strategies that enable it to run its activities smoothly and meet the customers’ needs. Their strategies range from inbound logistics, strategic operations, marketing strategies, and esteemed customer care services.
Inbound logistics: Netflix has maintained enough DVD stock for the most popular movies. Therefore, customers have a high reliability trust on Netflix because they know that they will always get what they want whenever they want it. The company ensures it is among the first companies to receive and distribute new movie titles to meet the need of the new generation.
Strategic operations: Netflix works towards ensuring that whatever they sell is of high quality. The operations involve manufacturing and testing of the DVDs to ensure they are in good working conditions. The company ensures that they offer excellent movie titles and excellent customer services to have return customers.
Marketing: Netflix have upgraded their website to contain all the needs of their subscribers. The home page displays the available DVDs and the accompanying recommendation for each of the DVD.
The site is personalized such that subscribers can access DVDs of the same series or theme. Research indicates that majority of the Netflix’s subscribers were recommended by friends who had experienced the company’s excellent services.
Internal organization: Internal organization is a very important aspect that portrays the true image of the company. With the help of a control system, the internal employees are highly organized to attend to the various needs of the customers. Office workers organize and determine the DVDs that need distribution and re-stocking.
The human resource takes the core responsibility of recruiting new staff and training existing ones when need arises. The finance officers ensure transparency of all operations, and the accountants account for every amount of money that passes through the finance office. The internal service providers work tirelessly to maintain Netflix’s competitive advantage.
Customer support: Netflix communicates with its customers through the internet. The number of subscribers and DVD titles are infinite. The customer service supporters are always present to respond to the needs of the customers. The design of the Netflix website is created in a manner that strengthens the relationship between the service provider and the customer.
The recommendation feature makes the company’s services unique and smart as compared to competitors’ services. Further, the customer service providers are readily available to respond promptly to the customer queries. Service providers have developed a way to study the customers and maneuver the operating decisions.
Research and development: Netflix managers are always alert to identify the newest technological advancements that can help in improving their business. With the help of the procurement department, the Netflix managers can easily identify the needs of their customers and address them accordingly. The value chain analysis implies that the company has immense control of its internal and external activities, and this has contributed to its success to having a competitive advantage above its competitors.