Running Head: MARKETING PLAN

Final Project Part 3: Marketing Plan W7A1: BU 220-8D: Principles of Marketing

Final Project Part 3: Marketing Plan

MARKETING PLAN Executive Summary:

Netflix is preparing to add the capability to stream to multiple devices at the same time to its existing streaming only offering. Currently the streaming only option for $7.99 limits viewing to one device at a time (Netflix, 2012). Multiple device viewing is currently available in three of the four Unlimited Streaming + DVDs plans, which range in price from $15.98 to $29.98 with the maximum of four devices simultaneously (Netflix). The new offering will target families that do not want the DVDs but enjoy the streaming on different devices simultaneously. The primary marketing objective is to increase the subscriber base from the current 23 million streaming members to 30 million globally (Netflix).

Table of Contents Executive Summary: Situational Analysis: Internal Analysis: Market Description: Current Marketing Mix: Environmental Analysis (SWOT): Objectives and Issues: Marketing Strategy: New Marketing Mix: Marketing Action Programs: Controls: Conclusion: References: 2. 3. 3. 3. 3. 4. 4. 5. 5. 6. 7. 7. 8.

MARKETING PLAN Situational Analysis: Internal Analysis: Netflix was co founded in 1997 offering online movie rentals and has

expanded globally and traded on NASDAQ under the ticker NFLX (Netflix, 2012). The subscriber base has increased from 600,000 members in 2002 to over 23 million members today (Netflix, 2012). Market Description: Netflixs market consists of consumers who love movies and TV shows and has a TV, Computer, or any of the 700 devices, which are capable of streaming Netflix (Netflix, 2012). Competition is increasing as technology advances has provided companies with the storage and bandwidth capable of providing streaming capabilities, which includes companies such as Wal-Mart Stores Inc, Best Buy Co., Amazon.com Inc., Dish Network, and Internet television provider Hulu (Los Angeles Times, 2011). This is normally low competitive market but will quickly become a medium competitive market, which calls for a low price strategy to gain the greatest market share (Kotler & Armstrong, 2012). Current Marketing Mix: Product: The current Unlimited Streaming product stands alone and is included with four

DVD plus Unlimited Streaming levels of service, each of which increases the number of simultaneous devices that can simultaneously stream. These products have the brand equity of the Netflix name, which includes all of the existing line extensions (Kotler & Armstrong, 2012). Price: Unlimited Streaming only is $7.99 per month on one device, Unlimited Streaming

+ 1 DVD out at-a-time is $15.98 for two devices, + two DVDs is 19.98, + three DVDs is $23.98 for three devices, and + four DVDs is $29.98 for four devices (Netflix, 2012). The use of this market penetration pricing produces a large number of new subscribers to the existing satisfied customer base (Kotler & Armstrong, 2012).

MARKETING PLAN Distribution: Because the streaming products use the existing network to internet-capable

devices, the distribution requirements are minimal, while the DVDs require regional distribution and mail centers to provide quick DVD turn around (Netflix, 2012). Promotion: A free month of service to the current subscriber base, their friends and family,

social networks, and advertising on the internet, TV, and radio run continually as part of the marketing plan. Environmental Analysis (SWOT): Strengths: The ability to predict movies and shows through the ratings and recommendation

section of personalized web site, and the ability to on any PC, Mac, or internet connected device from anywhere in the world are two major strengths (Netflix, 2012). Weaknesses: The time it takes to get a new movie or TV show into the streaming queue, and the lack of ability to stream high definition video quality are two weaknesses. Opportunities: With the popularity of the mobile devices with internet connectivity that are available, the demand for streaming videos will increase and the low cost structure to provide streaming videos present great opportunities. Threats: The negative publicity generated from the previous attempt to separate the DVD

and streaming products and the increased competition from retailers pose a threat to this plan (Los Angeles Times, 2011). Objectives and Issues: Two aggressive and achievable objectives have been set to allow market entry of the new Streaming product line extensions. The first objective is to penetrate the U.S. market and achieve 100,000 new subscribers within six months. The second objective is to have in place after the first six months new technologies for smaller file sizes, and video compression improvements to

MARKETING PLAN allow for enhanced global streaming that will allow for new subscribers to reach a minimum of 200,000 (Miller, 2011).

The major issue with launching the new Streaming products is avoiding associating them with the negatives that came when Netflix attempted to separate the DVD and Streaming web sites (Netflix, 2012). Keeping the Netflix brand and existing website access creates positive brand image and value for the new streaming products. Marketing Strategy: Continual use of the Netflix brand name and the diversity in products available positions the new products as an attractive option for all current and new subscribers who love streaming. New Marketing Mix: Product: The new Streaming products include four levels of service each of which

increases the number of simultaneous devices that can stream. This takes the brand equity of the Netflix name and applies it to the new line extension (Kotler & Armstrong, 2012). Price: Level 1 is $7.99 per month on one device, level 2 is $10.99 for two devices, level

3 is 13.99 for three devices, and level 4 is 15.99 for four devices. The use of this market penetration pricing will produce large number of new subscribers to the existing satisfied customer base (Kotler & Armstrong, 2012). Distribution: Because this product streams through the existing network to internet-capable devices, there are no other distribution requirements necessary except for continual technological enhancements to increase speed and video quality. Promotion: Offering of a free month of service to the current subscriber base, their friends

and family, social networks, and advertising on the internet, TV, and radio will run continually as part of the marketing plan.

MARKETING PLAN Marketing Action Programs: The introduction of the new Streaming products occurs in June of 2012. To achieve the stated objectives the summary of the action programs below covers the first six months in preparation for full saturation to begin in January 2013 (Kotler & Armstrong, 2012). May 2012: The technical department changes the website to include the additional Streaming service levels and prepares current software and hardware to handle the transition during the first week. The advertising department begins an email campaign to existing subscribers at the start of week two as well as posting blogs and adding the new products to existing ads. All existing customers will be informed that they are receiving the first week free The customer service department will begin mentioning the new Streaming capabilities to every caller and offering them a free month of level 4 with an option of a free month of their choice. June 2012: The customer service department and technical support will activate existing

customers for 1 week at level 4 during the first week, while providing support for customers that calls in as well as web site activations. July 2012 December 2012: As new revenues roll in the technical department will upgrade and add to existing hardware and software to handle the demand and to improve service quality. The technical department will receive fifty percent of all new revenues for upgrades and maintenance, while the advertising department will receive twenty percent to prepare for existing and new promotions. During this period, the Chief Content Officer will acquire additional content in the form of movies and TV shows to increase the competitive advantage as well as working with the advertising department to promote new programming contracts (Netflix, 2012). Existing customers receive an additional free month of service for every three new subscribers that they recommend through their web site account.

MARKETING PLAN January 2013: The advertising department will launch a global advertising campaign to include television, radio, newspaper, and internet. Technical upgrades will continue as needed when new technologies become available. The customer service department will continue sending out customer satisfaction surveys through emails and random calls to provide feedback for future promotional activities. Controls:

The controls utilized will afford us the ability to monitor subscriber movement as well as quality and customer satisfaction (Kotler & Armstrong, 2012). Weekly and monthly activity reports generated include monitoring of existing subscriber base services and changes as well as new subscriber services. Weekly and monthly revenue reports will provide data for budgeting resources during the first six months, with new revenues distributed proportionally. Analyzing customer satisfaction surveys weekly allows for prompt problem resolution. Contingency plan development continues and modified as new technologies are developed and competition increases (Kotler & Armstrong, 2012). If new subscriber goals fall behind, potentially moving target dates for global launch and the utilization of additional discounts and coupons are part of the contingency plan. Conclusion: Because of this marketing plan, the Netflix brand equity heightens and customer satisfaction grows. Minimal resources place this product on the market, increasing the competitive advantage and guaranteeing a greater market share. An additional 200,000 new subscribers is just the start, as the popularity of streaming video and audio, and the devices capable of receiving them, increases. Implementation of this plan places Netflix ahead of the competition and secures its position in the global marketplace.

MARKETING PLAN References Kotler, P., & Armstrong, G. (2012). Principles of Marketing 14th Edition. New Jersey: Prentice Hall. Los Angeles Times. (2011, April 23). Netflix competition: Netflix's days without competition may be numbered. Retrieved April 06, 2012, from latimes.com: http://articles.latimes.com/2011/apr/23/business/la-fi-ct-netflix-20110423 Miller, G. (2011, July 21). Netflix Strategic Planning.pdf. Retrieved April 14, 2012, from woodlandmarketingmanagement.com: http://www.woodlandmarketingmanagement.com/Portfolio/Strategic%20Planning.pdf Netflix. (2012). Help: FAQ's. Retrieved April 06, 2012, from netflix.com: https://www2.netflix.com/FAQ?p_faqid=2902 Netflix. (2012). Netflix Company Timeline. Retrieved April 05, 2012, from netflix.com: https://www.netflix.com/MediaCenter/Timeline Netflix. (2012). Netflix Media Center. Retrieved April 05, 2012, from netflix.com: http://www.netflix.com/MediaCenter