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Individual Assignment

Electronic Commerce 2013


Phm Vn ng B0070 Class: BA601.2

7/10/2013

Phm Vn ng

ID: B0070

Class: BA601.2

Table of content
1. Executive summary 3 2. Introduction about Netflix company.3 3. Problem of Netflix company...3 4. The Solution for Netflix company..4 5. The Results...5 6. Reference.6

Phm Vn ng I. Executive summary:

ID: B0070

Class: BA601.2

To successfully conduct electronic commerce, especially B2C, it is important to find out who the actual and potential customers are and what motivates them to buy online. And the capture information and behavior of online consumers and find factors that inhibit shopping is a key factor for the success of a company. Merchants can then prepare their marketing and advertising strategies based on this information. Netflix is the world's leading Internet television network with more than 37 million members in 40 countries. And to be successful, Netflix has invested in research tools to the study and promote use service of their customer. From that it became a substantial advantage over its competitors.

II.

Introduction about Netflix company:

The company was established in 1997 and is headquartered in Los Gatos, California... It started its subscription-based digital distribution service in 1999, and by 2009 it was offering a collection of 100,000 titles on DVD and had surpassed 10 million subscribers. Netflix is the worlds largest online movie rental and subscription company, with more than 20 million members in 2011. Rental is done by sending DVDs in the mail and by streaming video. Netflix members can choose from a huge selection of movies and TV episodes streamed over the Internet to PCs, Macs, and TVs and watch them immediately. Among the expanding base of devices streaming Netflix videos are Microsofts Xbox 360, Nintendos Wii, and Sonys PS3 consoles; an array of Blu-ray disc players, Internet-connected TVs, home theater systems, digital video recorders, and Internet video players; Apples IPhone , I pad, and IPod touch, as well as Apple TV and Google TV. In all, more than 200 devices that stream from Netflix are available in the United States and a growing number are available in Canada. The companys appeal and success are built on providing the most comprehensive selection of DVDs, and easy way to choose movies, recommendation of what to see based on user tastes, and fast, free delivery. Netflix distributes millions of DVDs each day.

III.

Problem of Netflix company:

The first problem, because of the large number of titles, customers often had difficulty determining which ones they wanted to watch. In many cases, they would choose the most the most recent and popular titles, which meant that Netflix had to maintain more copies of the same title. In addition, some less popular titles were not renting well, even though they matched certain customers preferences. For Netflix, matching titles with customers yet maintaining the right level of inventory is critical. The second problem facing Netflix is the competitive nature of the movie rental business. Netflix competes against Blockbuster and other rental companies, as well as against companies offering downloads of movies and videos. In 2008, Blockbuster started offering online movie rental subscription, including the most recent movies, increasing the direct competition with Netflix. Other online content providers such as Apple ITunes and Google also become direct competitors. Another issue in that there is a clear trend that more and more viewers watch videos online.

IV.

The Solution:

1. Cinematch: Netflix operate in an increasingly competitive environment (Blockbuster, Apple TV and Google TV). They try to lure customer to rent or use their services. Finding and retaining customers is a major critical success factor for most businesses both offline and online. One of the ways to building effective

Phm Vn ng

ID: B0070

Class: BA601.2

customer relationships is an understanding of consumer behavior online. Netflix have tried to understand consumer behavior and they have summarized their findings in various models. They offer flat rate rental by mail to customers throughout the United States. Their customers must use a website to select the movies that they would like to receive and get them through the mail. Netflix leverages some of the industrys most sophisticated technology, a proprietary recommendation system that the firm calls Cinematch for their website. CineMatch system will makes recommendations to Netflix subscribers based on their viewing habits and helps to determine which movies customers are likely to enjoy. When you begin use Netflix's service, you need sign up account on their website: http://netflix.com/. Netflix will control the personal information of your account about age, gender, education, lifestyle, the service can prompt you with a list of movies, and you can find your favorite's film title. Netflix keep track of customers interactions with them and collect information related to customer and their use of service including your online activity, title selections, reviews, ratings, payment history, correspondence, Internet protocol addresses, device and software data (such as type, configuration and unique identifiers), instant watching of movies, TV shows and related activity. Each time you visits Netflix after sending back a DVD, the service essentially asks so, how did you like the movie? With a single click, each film can be rated on a scale of one to five stars, introduction performed by the comparison of the likes / dislikes, the preferred option amongst individuals with similar tastes by the use of variants of the synthesis filter. Cinematch develops a map of user ratings and steers you toward titles preferred by people with tastes that are most like yours. Netflix used collaborative filtering that monitors trends among customers and uses this data to personalize an individual customers experience. Input from collaborative filtering software can be used to customize the display of a web page for each user so that an individual is greeted only with those items the software predicts theyll most likely be interested in. Netflix will knows a consumers preferences (e.g., what firm they like), it would be useful if the company could predict, without asking, what other products or services this consumer might enjoy and through use of collaborative filtering agents, which use customer data to infer customer interest in other products or services. They provide some recommendation through base their predictions on what are known about other customers with similar profiles such as same the lifestyle, hobby... This software agent used data mining tools to sift through a database of more than 3 billion film rating, as well as through customers rental histories. Besides, Netflix's web system is also designed an ideal guide for the renting and use of services for first-time customers using their services. Personalization starts on homepage, which consists of groups of videos arranged in horizontal rows about all title films, allocated to segments such as family segment, age segment, the ranking of those titles, your explicit taste preferences and ratings, your viewing history. Each row has a title that conveys the intended meaningful connection between the videos in that group and users only need to select their favorite title and their relatives. Netflix subscribers can also invite one another to become friends and make movie recommendations to each other, peak at one anothers rental lists, and see how other subscribers have rated movies using a social network called FriendSM. Users can view rental list or viewed, as well as their favorite movies. Customer may elect to share information about your use of the Netflix service, including what they watch, within Netflix as well as on other social networks and in other communications. In addition, a group film can comment on a movie they're watching, making assessments or recommendation of their personal for other people. Social data has become our latest source of personalization features; we can process what connected friends have watched or rated. All these features help to personalize the online movie rental stores become friendly with customer. Nascent social network allows add friend to keep track of updates from your friends seems

Phm Vn ng

ID: B0070

Class: BA601.2

like a useful feature for any website serving individual customers B2C or C2C. All of this impacts marketing costs, and contributing to the firms overall profitability. Customer's satisfaction refer friends, because they can read free marketing from a source consumers trust more than a TV commercial. To improve Cinematchs accuracy, in October 2006 Netflix began a contest offering $ 1million to the first person or team to write a program that would increase the prediction accuracy of Cinematch by 10 %. The Netflix Prize was an open competition for the best collaborative filtering algorithm to predict user ratings for films, based on previous ratings without any other information about the users or films. The function of the Netflix Prize sought to substantially improve the accuracy of predictions about how much someone is going to enjoy a movie based on their movie preferences. September 2009, the grand prize of US$1,000,000 was given to the BellKor's Pragmatic Chaos team which bested Netflix's own algorithm for predicting ratings by 10.06%. Netflix is advertising extensively on the web using several advertising techniques, especially placing static banner ads on reputed sites, permission e-mail, blogs, social networks, classifieds, Really Simple Syndication (RSS), and more... blog and RSS feeds were created around specific data or a key metric. The blogs are used to post information, invite comment and online conversation about films of Netflix. Tools are then used to archive, search and categorize blog for easy reference. In 2008, Blockbuster started offering online movie rental subscription, including the most recent movies, increasing the direct competition with Netflix. Blockbuster open 5000 physical store in USA to promote rent process for their products, and customers can conduct transactions directly in this store. This technology also lies at the heart of the warehouse operations that deliver customer satisfaction and enhance brand value. Netflix trying to promote their subscribers to get their DVDs as quickly as possible. theyre linked to Cinematch to offer the firm additional operational advantages, when Cinematch can set up an ordered list rent discs, and customer only need to access the account at the Netflix website and select the movie instead of going to a Blockbuster's store. The software recommends movies that are likely to be in stock so users aren't frustrated by a wait. If a customers local fulfillment Netflix's center, it wont have enough DVDs of a particular title to meet demand; Cinematch will recommend another title that it should have in stock. In order to do this, Netflix has blanketed the country with a network of over 50 ultrahigh-tech distribution centers that collectively handle in excess of 1.8 million DVDs a day while member add 2 million movies to the queues every day. Besides, Cinematch also provides recommendations for Netflixs system about inventory of less popular titles to reduce inventory, so cuts more operating costs for rent warehouse. 2. Watch instantly service: After Blockbuster and other rental companies offer downloads of movies and videos service, so more and more viewers watch videos online. Netflix unveiled its watch instantly service, free for subscribers, to attract Internet users. Netflix streaming video service is inexpensive, quick, convenient, and highquality ($7.99 monthly). The Netflix app lets you watch movies on a cell phone without Wi-Fi. Netflix offers movie downloads direct to your PC or compatible set top box such as the Roku Digital Video Player or Xbox 360 with a library of more than 20,000 movie and TV program downloads. This service attracts customers who have little free time or do not want to wait when they rent DVD from Netflix. But Netflix isn't always able to provide the newest movies, so their customer willing to pay a bit more they can use Amazon or iTunes to download new releases as soon as they are available on DVD and Bluray,which is where many of its competitors have an advantage. The single biggest problem Netflix faces is watch online customers significantly reduced.

Phm Vn ng V. The Results:

ID: B0070

Class: BA601.2

Netflix Company is successfully when they use online marketing to analysis of consumer behavior. Effective recommendations: Approximately 60% of Netflix members select movies based on movie recommendation tailored to their individual tastes. Customer satisfaction: Over 90% of Netflix members say they are so satisfied with their service that they recommend the service to family members and friends. Finance: Its members have double from 2008 to over 20 million in 2011. Stock price: 40$ to 280$ per share. Ratings: Netflix has more than 3 billion movie ratings. The average member has rated about 200 movies. Rental habit: Members rent twice as many movies per month. Members add 2 million movies to the queues every day.

VI.

Reference:

www.flatworldknowledge.com/node/19553 http://electronics.howstuffworks.com/netflix2.htm http://www.referenceforbusiness.com/history2/81/Netflix-Inc.html http://en.wikipedia.org/wiki/Netflix_Prize http://en.wikipedia.org/wiki/Netflix http://techblog.netflix.com/2012/04/netflix-recommendations-beyond-5-stars.html https://sites.google.com/site/knowledgeofdigitalmedia/home/how-does-it-work Electronic Commerce 2012: A managerial and social networks perspective 7 Edition.

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