(1) Identifying what the driving forces are
(2) Assessing driving forces which impact Netflix and Blockbuster
(3) Companies making strategy judgments
Since 2000, the introduction of new technologies and electronics products had rapidly multiplied consumer opportunities to view movies 1. Increasingly numbers of households had combination DVD player/recorders, so they could easily record TV programs and movies and then replay them at their convenience. 2. Moreover, consumers were increasingly interested in watching movies on their big-screen …show more content…
Online rentals of movie DVDs, computer downloads of music and movie files, growing consumer interest in video-on-demand (VOD) services, and growing popularity of high-definition TV programs were cited as factors.
Online rentals and VOD services were not only cutting into sales of movie DVDs but also taking business away from local video rental stores. Just as Netflix posed a competitive threat to customers patronizing local Blockbuster and Movie Gallery stores in the United States, market research in Great Britain indicated that one out of every five DVDs rented was rented online.
Netflix used multiple marketing channels to attract subscribers, including online advertising, radio stations, regional and national television, direct mail, and print ads. It also participated in a variety of cooperative advertising programs with studios through which Netflix received cash consideration in return for featuring a studio’s movies in its advertising. Advertising campaigns of one type or another were under way more or less continuously, with the lure of two-week free trials usually being a prominent feature of most ads. Netflix management believed that its paid advertising efforts were significantly enhanced by the benefits of word-of-mouth advertising, the referrals of satisfied subscribers, and its active public relations programs.
Changes in who buys the product