Differentation

Strategy
Members
1)Nguyễn Đặng Thiên Ân
2)Tôn Nữ Nha Trang
3)Trần Thị Thu Thảo
4)Giang Ánh Minh Tâm
5)Nguyễn Thị Thùy Dương
6)Trương Nguyễn Thiên Thư
7) Phạm Anh Thư
Outline Structure
1 – Why Netflix?
2 – Evaluating the Differentiation Strategy
3 – Original Content
4 – The performance test
5 – Price Policy
6 – Customers’ Satisfaction
7 – Conclusion
Why Netflix: What is Netflix?

Netflix, Inc. is an American media-services provider

- Streaming Service

- DVD rental 
 Why Netflix: Overview Product Differentiation
The market for entertainment video is intensely competitive and subject to rapid change.
Why Netflix: Overview Product Differentiation

- Netflix strive for consumers to

choose them in their moments of
free time

- “Winning moments of truth”

Why Netflix: Netflix’s Tagline
Why Netflix: Key differentiated factors
The differentiation of Netflix is on the Product and the Price:

 Easy to find what I’m looking for

 Easy to start streaming video
 Large TV SHOW selection
 Large MOVIE selection
 Ability to share access with family members
 Offers recommendations based on my interests
E valuating the Differentation Strategy: Goodness of Fit test
1. Internal Environment

How the value chain support Netflix’s differentiation strategy?

INBOUND OUTBOUND MARKETING

OPERATION SERVICE
LOGISTIC LOGISTIC &SALE
 E valuating the Differentation Strategy: Goodness of Fit test
How Inbound logistics
makes Netflix different
INBOUND from others?

LOGISTIC

Netflix is a partner with the industries studios

=> better selection, higher availability rates
=> more titles in stock than the competitors.
Quality control system.
 E valuating the Differentation Strategy: Goodness of Fit test
How Marketing makes
Netflix different from
others?
MARKETING
&SALE
1/ Personalized content:
 E valuating the Differentation Strategy: Goodness of Fit test
2/ Word-of mouth:

MARKETING Using meme – “Netflix and Chill”

&SALE
 E valuating the Differentation Strategy: Goodness of Fit test
2/ Word-of mouth:

MARKETING Data research to find out what people

&SALE want to watch – and how to watch
E valuating the Differentation Strategy: Goodness of Fit test
How Service makes
Netflix different from Netflix is very good at CRM
others?
Service
Free Trial
E valuating the Differentation Strategy: Goodness of Fit test
Refund

Service

Thanks to the efficient value chain, NETFLIX

is the king of the streaming world.
E valuating the Differentation Strategy: Goodness of Fit test
 E valuating the Differentation Strategy: Goodness of Fit test
2. External Environment

From 2017-2018, how Netflix

response to the change of
external environment (rivals,
customer’s taste) and make As of November 2018, Netflix
their product different? officially supports 22
languages for user interface
and customer support
purposes, and Netflix also add
the suitable films for each
countries.
E valuating the Differentation Strategy: Goodness of Fit test
E valuating the Differentation Strategy: Goodness of Fit test
Original Content: Customer Satisfaction
Original Content: Accessibility to the crowd
Original Content: Out of the competion for licensing
The Performance Test

How did Netflix succeed with its differentiation

strategy and do this strategy still bring positive
contribution to Netflix in the future?
 The Performance Test
Two kinds of performance indicators tell the most about the caliber of a company’s strategy:

Profitablity Competitive
and Strength and
financial market standing
strength
The Performance Test: Profitability and Financial Strength
Profitability and financial strength
in Q3-2017 and Q3-2018:
Profits (Million USD)
450
400
350
300
250
200
150
100
50
0
Q3-2017 Q3-2018

=> Profits increased by 210% in Q3-2018 compared

to Q3-2017
The Performance Test: Profitability and financial strength
But why did the streaming profits of Netflix increase in 2018?

 The total number of subscribers

increased to about 137.1 million people
in Q3 2018, which is higher than that in
2017 about 27 million people.
The Performance Test: Profitability and financial strength
Why did Netflix’s subscribers continue to increase?

 Netflix improve continually quality content. (Source: Forbes)

 Netflix understand the want and need of its customers

The Performance Test: Profitability and financial strength
How will Netflix’s streaming revenue change by Q4 2018
with its strategy?

Predicted Netflix's subscribers revenue (billion $)

4.5

3.5

2.5

1.5

0.5

0
Q3 2018 Q4 2018
The Performance Test: Competitive strength and market standing
a. Competitive Strength

Famous Brand Name Large number of

Subscribers
The Performance Test: Competitive strength and market standing
a. Competitive Strength

 
Percentage of number of subscribers

39%

54%

7%

Netflix Hulu Amazon

The Performance Test: Competitive strength and market standing
a. Competitive Strength

Predicted percentage of number of subscribers at the end of Q4

2018

38%

54%

8%

Netflix Hulu Amazon

 Netflix is predicted to have the most subscribers at the end of Q4 2018

The Performance Test: Competitive strength and market standing
b. Market Standing

 Netflix had the largest market share in 2017

(52%)
 
 Netflix’s differentiation strategy brings
positive contribution at the moment and
maybe in the future.
The Performance Test: Competitive strength and market standing

→ All in all, Netflix’s differentiation

strategy passes these three tests.
 Price Policy
Amazon Netflix
  Premiu
Video only Prime Prime (Annual) Basic Standard
m
Price $8.99/month $12.99/month $119/year $7.99 $10.99 $13.99
Unlimited Films and TV
Yes Yes Yes Yes Yes Yes
Shows
HD available Yes Yes Yes No Yes Yes
Ultra HD No Yes Yes No No Yes
Ad-free streaming Yes Yes Yes Yes Yes Yes
Screens you can watch at
No No No 1 2 4
the same time
Supporting platform Phone, Laptop, TV Laptop, TV, Phone and Tablet, App
Free trial
Cancel subcription at any Yes Yes Yes Yes Yes Yes
time
 Price Policy
Compare to another company that offers the nearly same service, Netflix provides better
features when subcribing for charging trials than the others.

Well selected films, attractive contents

High quality images

Fast online streaming, offline streaming

Subtitles for different countries

Price Policy

Since 2017, Netflix has raised their subcription prices, however, the
number of subcribers continued to rise.
 

 
Price Policy
Netflix remains one of the biggest streaming
Price Difference in many countries
platforms on the planet, but its pricing varies
according to which country you live in.
Country Price per month
Turkey $3.27 The costs so far have been assuming that all
Argentina $4.72
Netflix subscriptions are created fairly equal.
Brazil $5.36
Norway $10.95
Switzerland $12.04 Everything changes when you take into account
Denmark $12.37 the size of the library available, as well as
considering the characteristic and culture of
each countries.
Customer’s Satisfaction

Customer’s experience when using Netflix shows that

the subcription price Netflix offers is reasonable.
Customer’s Satisfaction
Customer’s Satisfaction
Question for you

1) What are the two kind of indicators that tell most about the
caliber of a company’s strategy?

2) What are 2 external factors that affect Netflix in 2017-2018?

Conclusion