Netflix Fights to Stay Ahead of a Rapidly Changing Market
Synopsis:
In the face of changing technology and shifting customer preferences with respect to movie distribution, video rental giant Blockbuster fell to its competition. Meanwhile, Netflix has grown to become the top rent-by-mail and video streaming company, while other strong competitors have emerged to dominate movie distribution via kiosks (Redbox) and online (Apple, Amazon, Hulu, and others). Looking to the future, Netflix’s survival depends on its ability to adapt to and adopt new technology and marketing practices—issues Blockbuster failed to navigate due to its reactive, rather than proactive, stance toward a rapidly changing market. Netflix faces an uncertain future as the DVD rental sector approaches the end of its life cycle. However, the company is poised to dominate the video streaming sector for the foreseeable future. The problem is, the future changes rapidly in this industry.
Questions
What role will Redbox play in the development of Netflix’s strategic plans? How threatening is Redbox to Netflix’s future?
How will new competition from digital content providers force Netflix to alter its strategy?
What new opportunities do you see in the movie streaming business, or the entertainment industry as a whole?
Do you think Netflix will remain the dominant force in both streaming and movie rentals? Why or why not?
What could Netflix have done differently to ensure Qwikster’s success?
Case #16: Gillette: Why Innovation May Not Be Enough
Synopsis:
Gillette has long been known for innovation in both product development and marketing strategy. In the highly competitive, but mature, razor and blade market, Gillette holds a commanding worldwide market share. The peak of its innovation occurred in 2006 with the introduction of the Fusion 5-bladed razor. Today, innovation in razors and blades is thwarted by a lack of new technology and increasing consumer reluctance to pay for the “latest and greatest” in shaving technology. Gillette must decide how to put the razor wars behind them and maintain or increase its share of the global razor market.
Questions
Evaluate product innovation at Gillette throughout its history. Has Gillette been a victim of its own success? Has product innovation in the wet-shaving market come to an end? Explain.
What do you make of the razor wars, first between Gillette and Schick, and now with online competitors? Does Gillette face a serious threat from competitive inroads? Explain.
What actions would you recommend over the next five years that could help Gillette maintain its worldwide dominance in the shaving market? What specific marketing program decisions would you recommend? Should Gillette be worried about its pricing strategy? Explain.