Netflix

Group 3: Alex Grohe, Austin Schaub, Ben Lovik,Hongjin Li, Katie Rakers, and Weihao Liu

Overview● Situational Analysis

● Category Customer vs. Brand Customer

● Environmental Factors

● Problem Statement

● SWOT Analysis

● Campaign Objective

● Potential Target Groups

● Chosen Target Group

● Competitors

● Feature Analysis

● Perceptual Map

● Positioning Triangle

● Budgeting

● Brand Heritage

● Marcom Tools

● Executions

● Effectiveness of Campaign

Situation Analysis● Product Category

○ Online video streaming service featuring movies and television episodes.○ Operates within the online video streaming market ○ Strategy to attract current cable subscribers

● Brand ○ Netflix, existing brand started as a DVD rental service in 1997○ In 2007, they began streaming online content to users internet-connected

televisions and computers.

● Current state of business ○ Market leader that has over 85 million streaming members in over 50 countries ○ Licensing fees have increased 700% in past two years. Damaging Netflix’s profit

margins.○ Currently Netflix would like to raise from 10% to 50 % for original content spending

Category Customer vs. Brand customersCategory Customer: ● Someone who will pay a premium for interruption free media content● Willing to pay to receive media with better quality in a much safer manner● Customers that are ending their cable contracts in order to avoid

advertisements as well as scheduled programming.

Brand customers: ● These customers do not want interpretations ● Pay as you go

Similarities and differences between the two?● Similarities: Instant content from anywhere, those who want to cut cords or

view TV on the go, and those who want adless shows.● Differences: Pay as you go, massive library of selection, works in many different

regions, massive.

Environmental Factors● Economic Factors:

○ Consumer Spending/Employment growth

● Social Factors:○ Leisure time. With tuition rates surging 42% on averaging within the last 10 years, more

students are getting part-time jobs.

● Technological Factors:○ Internet connectivity. 4.2 billion people are still offline.

● Governmental Factors:○ Social Security

○ Internet Neutrality

Problem StatementThe problem for Netflix is the low awareness of original content. With only 10% of Netflix subscribers having streamed House of Cards,22 as the company increases their spending on producing more diverse original content, there is an opportunity to increase their long term subscribers as they rely more on this original content.

SWOT Analysis

Reactions to SWOT AnalysisWeaknesses and Threats:

● Advertising campaign

● Expand Netflix’s library

Strengths and Opportunities:

● Available on multiple devices allow

us easy to reach our customers.

● Sign more original content

Objective of Campaign

Netflix’s campaign goal is to increase the awareness of Netflix Original Series by 5% from their current 85 million users.

Potential Target GroupsCollege Students (aged 18-24)

● Pros: accessibility, substantial consumer of online media - 97% of college aged students use the internet 7

● Cons: lack of disposable income, only 84% have a credit card, which is required for membership 14

Families with Children under age 18

● Pros: steady income (median family income in the US is currently averaged around $66,000.8 ), need to

satisfy children with “Netflix Kids”

● Cons: only two people can use Netflix simultaneously without upgrading - The average family consists of

3.13 people.10

Senior Citizens (65+)

● Pros: substantial disposable income, increased free time for consuming online media

● Cons: only half of all senior citizens are online and active internet users 12 and many find the internet to

be difficult to use

Target Group Chosen

We believe that targeting College Students will provide the greatest growth potential in Netflix subscribers. With the average college student owning 7 internet connected devices1, their ability to stream our service and their lack of time commitment makes for the ideal subscriber.

College StudentsDemographics

● Age 18-24● Moderate disposable income

Geographics

● Attend a public, private, or community college

Psychographics (VALS)

● Believer - watch movies as an “escape”● Experiencer - “want everything”, heightened sense for visual stimulation

○ 59% of generation Y categorized themselves as Experiencers 3

Behaviorgraphics

● Display large internet usage● Have high technological capabilities / technological means to access Netflix● Disposable time

Competitors of NetflixAmazon Video

● POP: Large selection of content● POD: Subscribers are not able to purchase month by month

HBO Go

● POP: Ability to stream content on the same devices Netflix can be streamed on● POD: Only HBO shows are available to watch

Hulu Plus

● POP: Similar monthly subscription price● POD: Commercial interruptions during shows

Feature Analysis1 = Best4 = Worst

Perceptual Map

Low Price

Positioning Triangle

Budgeting Method● Objective and Task Method

○ Based on our goals■ Goal is to gain awareness of Netflix Originals- consistent with chosen

budgeting method

● Continuous Advertising Schedule○ Investing same amount of money through each stage of the campaign

● Goal to gain awareness of Netflix original content○ Must advertise throughout the year○ New shows coming out at different points of the year

● Consistency in advertising- keep our shows top of mind throughout the year

Brand Heritage● Established in 1997, as DVD rental service

● In past 8 years rebranded themselves and became leader in online streaming services

● Many competitors have entered industry- Market leader by promotion of its original content, Netflix originals

● When Netflix rebranded as online streaming service○ Similar to competitors’ accessibility and ability to stream movies on variety of devices

● Differentiates through Netflix original series○ No other streaming service offers same amount of original content as Netflix

Marcom Tools● Social Media

○ Most effective medium in order to reach target audience■ Our potential consumers will be online frequently■ 90% of young adults use social media24

● Television Advertisements○ Place ad during popular programming and television networks for young adults

■ Cable advertising- effective at reaching young subscribers■ Networks such as MTV, CW, ABC, etc. ■ Air during prime time (8-11 pm) and late fringe (11 pm-2 am)■ Effective medium to highlight clips of Netflix original shows- visual representation

● Newspaper Advertisements ○ Advertisements in the Daily Iowan

■ Ease of access to student population■ Targets both male and female audience

Marcom Tools● College Campus Promotions

○ Advertise Netflix original series on University Cambus■ Provide added exposure and awareness

● Mass Online Advertising○ Google Ad Words

■ Personalize content to which Netflix originals users would be interested in

■ Cost efficient medium

■ Effective way to reach target audience as they have high interactivity online

Executions

1. Social Media-create positive word of mouth2. Print-emphasize originality 3. Radio-appeal to local and timely event4. Television-demonstrate the quality of content5. Sales Promotion-link cell phone useage to Netflix in

consumers mind

Social Media

Word of Mouth

Print (Newspaper)

Radio

Television

Sales Promotion

Recommended Media Strategies● Media Selection

○ Social Media

● Vehicle selection○ Netflix Facebook page, Netflix Twitter account

● Reach vs. Frequency○ Reach more subscribers to make sure they aware with the exclusive services Netflix provides.

○ We would like more people to be aware of the advantage we have over our competitors to convert consumers to prefer Netflix over other companies.

● Continuity ○ Continuity scheduling○ Netflix’s original contents are coming out throughout the year○ Covers entire purchase cycle○ More cost efficient

Effectiveness of Campaign

Effectiveness of Recognition/Recall:

● TV-Bruzzone○ Test recognition of original

series● Radio-Arbitron

○ Test audience demographics

Effectiveness on Consumer Response:

● Measure viewership ratings of Netflix Original episodes and movies.

○ Internal metrics

● Percent of total Netflix viewers watching at least one episode, two episodes, three etc…

○ Viewer retention

● Percent of “binge-watchers” relative to other series.

○ Viewer interest

AND

Overall Summary● Problem:

○ Low awareness of original content

○ Why?

■ Netflix’s point of difference is their Netflix Originals

● Objective:○ Increase awareness of Netflix Originals by 5% from current 85 million users

● Measurement:○ Effectiveness of recognition/recall and consumer response

Appendix1"College Students Own an Average of 7 Tech Devices." MarketingCharts. Watershed Publishing, 18 June 2013. Web. 01 Oct. 2015.

2 Curtis, Jacqueline. "Netflix vs. Hulu Plus vs. Amazon Prime Comparison."Money Crashers. Money Crashers, n.d. Web. 01 Oct. 2015.

3 Dawn B. Valentine , Thomas L. Powers , (2013) "Generation Y values and lifestyle segments", Journal of Consumer Marketing, Vol. 30 Iss: 7, pp.597 - 606

4 Waniata, Ryan. "Amazon Prime Instant Video vs. Netflix vs. Hulu." Digital Trends. Digital Trends, 12 Sept. 2015. Web. 01 Oct. 2015.

5 Honorof, Marshall. “Netflix vs. Amazon Prime Instant Video: Face-Off. “Tom’s Guide. N.p., 19 May 2014. Web. 20 Oct. 2015.

6 Rainie, Lee. "Census: Computer Ownership, Internet Connection Varies Widely across U.S." Pew Research Center. N.p., 19 Sept. 2014. Web.

7"Internet User Demographics." Pew Research Center Internet Science Tech RSS. N.p., 14 Nov. 2013. Web. 20 Oct. 2015.

8 "US Family Income." US Household Income. Department of Numbers, n.d. Web. 20 Oct. 2015.

9 "Total Number of U.S. Households." Statistic Brain. N.p., n.d. Web. 20 Oct. 2015. 10"Average Size of a Family in the US 1960-2014 | Statistic." Statista. N.p., n.d. Web. 20 Oct. 2015. 11 "Nielsen Norman Group." Usability for Senior Citizens. Nielsen Norman Group, n.d. Web. 20 Oct. 2015. 12"Older Americans Month: May 2012." United States Census, 1 Mar. 2012. Web.

Appendix13"4 in 10 TV Households Also Subscribe to Netflix, Amazon or Hulu." CNNMoney. Cable News Network, 11 Mar. 2015. Web. 20 Oct. 2015. 14 “Managing Money in College Infographic.” College Student Spending. Nationwide, n.d. Web. 20 Oct.2015.

15 Steel, Emily. “Netflix, Amazon and Hulu No Longer Find Themselves Upstarts in Online Streaming.” The New York Times. The New York Times, 24 Mar. 2015. Web. 02 Dec. 2015.

16 Soper, Taylor. "Netflix Still King of Streaming Video, but Amazon Gaining Market Share - GeekWire." GeekWire. GeekWire LLC, 12 Mar. 2015. Web. 02 Dec. 2015.

17 "Media Types and Scheduling - Boundless Open Textbook." Boundless. N.p., n.d. Web. 02 Dec. 2015.

18"Social Media Use by Age Group Over Time." Pew Research Center Internet Science Tech RSS. Pew Research Center, 12 Nov. 2013. Web. 07 Dec. 2015.

19Napoli, Michael. "Netflix: A Short SWOT Analysis." Netflix: A Short SWOT Analysis. Value Line Inc., n.d. Web. 07 Dec. 2015.

20"Statistic Brain." Statistic Brain. Statistic Brain Research Institute, n.d. Web. 07 Dec. 2015.

21"U.S. Netflix Original Programming Consumption 2015 | Statistic." Statista. Statista, n.d. Web. 07 Dec. 2015.

22 Lawler, Ryan. "Survey Says: 10% Of Netflix Subscribers Have Streamed House Of Cards, Watching 6 Episodes On Average." TechCrunch. AOL Inc., n.d. Web. 04 Dec. 2015.

23"Netflix: Share of U.S. Peak Period Downstream Traffic 2015 | Statistic."Statista. Statista, n.d. Web. 07 Dec. 2015.

24"Social Media Usage: 2005-2015." Pew Research Center Internet Science Tech RSS. Pew Research Center, 08 Oct. 2015. Web. 07 Dec. 2015.