AN OVERVIEW OF MARKETING
CASE ASSIGNMENT: Netflix
Ready For Primetime
1. Describe the elements of the exchange process as they occur between Netflix and its customers. 2. Which marketing management philosophy does Netflix subscribe to? 3. How does Netflix’s approach to relationship marketing increase customer satisfaction?
SOURCES: Jena McGregor, “At Netflix, the Secret Sauce is Software,” Fast Company, December 2005, 48–51; Jennifer Netherby, “Netflix Delivers Big Earnings Increase: Sets 5.9 Million Subs as Modest 2006 Goal,” Video Business, January 30, 2006, 1; Steven Zeitchnik, “Download Dreams: Netflix Eager to Expand Online Efforts,” Daily Variety, January 25, 2006, 5; Jennifer Moeller, “You’ve Got (Movies in the) Mail,” The Christian Science Monitor, December 2, 2005, 15; Ben Fritz, “Freaky Disc Biz: Netflix Grows at Blockbuster’s Expense,” Daily Variety, October 20, 2005, 1; “All Queued Up: How the Netflix Distribution Network Supports the Company’s Business Model,” Material Handling Management, November 2005, 9.
er of ty ge Le ar ni ng
Shocked at the $40 fee he incurred for a late return of Apollo 13, Netflix founder Reed Hastings decided that in the age of the Internet, there had to be a better way to rent videos for home viewing. Thus, in 1997, he started an Internetbased, DVD rental service that offered direct-to-home deliveries with no late fees. A mere decade and 4 million subscribers later, Netflix has taken on established video rental companies such as Blockbuster, Hollywood Video, and Wal-Mart and emerged as the leader in innovation and customer service. In addition to betting that the Internet would be the future of the video rental market, Hastings made a few other key predictions that helped him develop a company with almost $700 million in revenue in under ten years. He watched as moviegoers fled public...