Netflix Case Study

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Netflix Case Study History: Netflix offers online Subscription-Based DVD Rental Services, was founded in 1997 by Reed Hastings and Marc Randolph. Initially, Netflix was targeted to people who just bought DVD players, and offered home delivery of DVD's through the mail. It depended on the U.S. Postal Service to deliver DVDs to its subscribers. Netflix's initial pricing model was similar to traditional video stores, charging $4 per movie rented plus a $2 shipping and handling. Issue: What cost and price structure should Netflix adapt to meet customer's needs, and improve customer's satisfaction? Analyzing the Issue SWOT Analysis Strengths: 1) Movies Recommendation system to any user, creating a web portal rather than just a subscription service. 2) Offering unlimited rentals. 3) The shift to no-late fee subscription model, no due dates. Allowing customers to keep three movies at a time and exchange them as soon and frequently as they liked. 4) High- volume customers 5) Netflix's software, helped to refine customer's preferences accurately and established a better relationship with customers. 6) Easy to unsubscribe 7) Growing subscriber base. Weaknesses: 1) Service provided to Internet users only 2) Shipment/delivery time, slower delivery service. 3) Inability to rent new releases in a timely manner. 4) High cost of building a DVD library to support the growing subscriber base. 5) Rental period was inconvenient for some customers. Opportunities: 1) The rapid adoption rate of DVD players among U.S. households 2) New relationship with studios, Netflix transition to revenue-sharing agreements with the major studios. 3) VOD/Online, customers were able to watch their selections immediately. 4) Relationship with USPS, Being the USPS fastest-growing first class customer allowed Netflix to

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