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Posted: February 26th, 2022
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a. Answer the question posed by the classmate.
b. Respond to the practical example in the classmate’s post with a practical example that
differs from the one in the classmate’s post.
c. Reference at least 1 scholarly source in addition to the course textbook.
Note about Responses: Seek to understand your classmates’ posts (including the marketing
management theory, the facts presented in their posts, their points of view, and their real-world
examples). Aim to communicate your own understanding of relevant facts, your values, and your
perspective of the topic.
Product Strategy of Netflix
Concept:
Product strategy is the extensive plan for how an organization will define their product, and how they will reach success in delivering their product. The organization must first take into consideration how they will define the product. A product can be defined as anything that will deliver value to satisfy a customer’s wants or needs, while also including a physical aspect such as merchandise, services, places, the list goes on. The organization must understand that their customers are not just buying a product, they are also buying a product experience (Marshall & Johnston, 2019). Since the customer is not solely buying the product, but also is buying the product experience, the organization must make sure their product has value and essential benefit. The essential benefit meets the needs of the customer.
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Furthermore, in a product strategy it is also important to make sure your product is differentiated in the market. You do not want your product to be the same as everyone else’s, instead you want your product to be unique and have higher performance quality and reliability than others in the market. Differentiating your product in the market helps create value among your product through its unique features and higher performance capabilities. In addition, pricing is another important element in the product strategy, as this will determine if your product is providing the upmost value at a price the customer is willing to pay. Product line pricing and price points are also important in terms of pricing in the product strategy, as these elements allow for different prices among the different products in the product line.
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Netflix designed their product strategy to provide customers with the best product experience. Netflix was able to execute their product strategy by first defining their product as unique, in the way of its offerings and quality. Netflix offers a large product mix which includes well-known movies, TV shows, and documentaries and also their own in-house made, exclusive content. Netflix strives to provide their customers with the best product experience possible, as after all you are not just buying the product, you are also buying a product experience (Marshall & Johnston, 2019). This is why Netflix devotes immense time and money into creating their own content, while also researching what their customers like most, and how they can better any aspects that customers find unappealing. Netflix conducted several focus groups, surveys, and one-on-ones, in which they found that customers enjoyed bingeing a series but did not like watching the opening credits. After Netflix became aware of this preference, they created a skip button, which would allow users to skip the opening credits. Netflix then tested this new feature with a large group of members, in which it was found to be a success. Netflix’s Vice President of product explained this new feature as, “They loved it, and even more importantly as a subscription service, it encouraged people to keep subscribing” (Ives, 2020, para. 26). Through Netflix’s research, they were able to find what customers would like to see improved and implemented a solution for their customers. The development of the skip button provided the best solution for skipping opening credits, which increased the customers product experience, even to the point where this solution encouraged customers to keep subscribing.
In addition, Netflix has developed another way to increase their product experience, which is through offering three tiers of subscription plans. Each subscription plan allows full access to every title Netflix offers. However, beside price, their subscription plans only differ in simultaneous streaming capabilities and viewing quality. The first subscription option is the basic plan, costing $9.99 monthly, which is displayed in standard definition quality and can only be streamed on one screen at a time. Next is the standard plan, costing $15.99 monthly, which is displayed in high definition quality and can be streamed on two screens at once. Finally, the most expensive plan, the premium plan. The premium plan costs $19.99 monthly but is viewed on high definition and 4K ultra high defining quality, while also being able to simultaneously stream on four screens at once. Netflix offers many subscription options, ultimately coming down to preference on quality and simultaneous streaming capabilities. With over 222 million subscribers across 190 countries, it is safe to say Netflix has defined their product experience to which customers are willing to pay for the value received. Through Netflix offering three price points across their subscription offerings, this allows Netflix to engage in the “good, better, best” product line strategy, which ultimately attracts multiple target markets.
References:
Ives, Nat. (2020, February 21). You’re Not Just Binge-Watching Netflix. You’re Having an ‘Experience’. Wall Street Journal. https://www.wsj.com/articles/youre-not-just-binge-watching-netflix-youre-having-an-experience-11582297230 (Links to an external site.)
Johnson, Dave. (2022, January 19). How Much is Netflix? A Breakdown of the Monthly Prices
for Every Subscription Plan. Business Insider. https://www.businessinsider.com/netflix-price (Links to an external site.)
Marshall G. W., & Johnston, M. W. (2019). Marketing Management. McGraw-Hill Education.
Question for Classmates:
Think of your favorite organization/company, any organization or company. How would you explain their product strategy?
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