Marketing Plan: Netflix Popcorn and Food Delivery Service
Marketing refers to the process of communicating the value of products or services to customers (Bennett 1997). However, sometimes the term might be defined as the art of selling products or services; though, the act of selling is only a small portion of marketing. Because the term marketing might replace advertising it is, therefore, the overall function and promoting products or services to customers. Various authors, such as Borden, have also advanced another definition of marketing as a set of activities, institutions and processes for creating, communicating and exchanging products, and services that have value for customers, partners, and the society in general (Borden 1984). From a societal perspective, marketing is a link between material requirement of the society and its economic patterns of response. As such, marketing meets these needs and wants via building long-term relationships and the exchange of goods and services for money.
The process of communicating the value of a product or service is achieved through strategic position. Brunner (1989) also looks at marketing as an organizational function and collection of processes that create, deliver, and communicate value to consumers. In addition to this, Goi (2009) points out that it also involves managing customer relationships in manners that benefit the business. Having reviewed the various definitions of marketing, this marketing plan adopts Borden’s (1984) definition. He defines marketing as the science of selecting, target markets via market analysis and analysis as well as comprehending the consumer buying pattern and offering superior customer value.
Netflix Popcorn and Food Delivery Service Company predominantly sell popcorns, various types of chicken sandwiches, hamburgers, French fries, breakfast foods, desserts, and soft drinks. In many markets, the company also provides salads, wraps, vegetarian items, and other localized fare. On seasonal basis, Netflix offers the crisps. Some people have speculated that the seasonality of crisps adds to its appeal. Various regions, particularly in Asia, are presently consuming soup. This local deviation from the standard products is a characteristic for which the company’s chain is particularly recognized and one, which is deployed either to conform to the regional food taboos or to make available products with which regional markets are familiar. One instance of regional food taboos is evident in India through the religious prohibition of beef consumption. With regard to this, this paper develops a marketing plan for Netflix Popcorn and Food delivery Service Company.
Netflix Mission and Objectives
Netflix’s brand mission is to be the customers preferred place and way to eat. The company’s international operations are aligned around a worldwide strategy called the plan to become the best that focuses on an exceptional customer experience: people, products, promotion, place, and price. The company is channeled efforts towards continuously enhancing its operations and customer experience.
Current Marketing Strategies
Marketing plans are created to fulfill certain objectives that guide marketing actions. In addition, the objectives can also indicate how well a plan is effective. The objectives of Netflix can be associated with sales, market share, goals, reaching the target customers, and creating awareness in the market place. These objectives communicate what the company’s marketing department wants to attain within a given time. Netflix’s management breaks down the long-term objectives into short-term and measurable targets, which the company deploys as milestone on its way to success. The evaluations of the outcomes of these objectives take place regularly to see if the company meets its objectives. Consequently, this enables Netflix to alter its marketing plan, therefore, proving flexibility. Once, the company sets the objectives, the next stage that follows is the definition of how to achieve the objectives. This marketing plan examines Netflix objectives from four different angles that include product, price, promotions, and place.
With regard to product, the first objective of Netflix is to emphasize on providing a wide range of products that customers want. The company’s market research has enabled it to establish the various needs of customers that other food companies such as McDonalds have failed to satisfy. In order to fulfill this objective, Netflix has strategized on launching new “blue ocean” products. With regard to price, Netflix has strategized on providing goods at the lowest price while making profits. The company’s marketing department understands that the perception of customers about the value is a significant determinant of their price. According to M?ller customers tend to draw their own mental picture of what the product is worth (M?ller 2006). Nevertheless, Netflix Popcorn and Food Delivery Service Company faces one crucial problem since low prices as marketing technique might compromise the quality of their products. On the other hand, high prices substantially reduce the demand of the company’s product. Consequently, it will be important for the company to deploy the forces of demand and supply to find the most appropriate price for its product.
With regard to promotions mix, Netflix strategizes developing campaigns that deploy various marketing communication methods in a manner that yields effective results. For instance, the Company uses both television and press advertisements. TV advertising makes people aware of their popcorn products as the press advertising provides more details. According to M?ller (2006), the objective of many marketing communications is prompt the target audience to take some type of action towards increasing the sales of the company. As such, Netflix’s key objective is to make people aware of the product offered and to develop a positive perception.
Netflix’s Red Ocean Strategy
According to Bennett (1997), red ocean strategies refer to competition-based strategies. As such, this section of the marketing plan will give the strategy used by Netflix to be ahead of competition in the extremely dynamic business environment. Netflix’s strategy towards its customers and market segment can be said to be relative pricing strategy, which would outshine its competitors such as McDonalds. According to Borden (1984), a company might opt for in the industry five distinct generic strategies. These strategies include the broad low-cost provider, focused low-cost provider, broad differentiators, focused differentiators and best-cost provider. Netflix has various advantages of being one of the largest food companies in the international market. One such advantage is that the company enjoys economies of scale. Netflix has an advantage of producing at a very low cost unlike other companies. However, the company rarely attempts to price out its competitors. Competitors are also having low-priced products similar to Netflix’s value popcorn. Consequently, none company in the food industry, including Kettle Crisp and McDonalds, is willing to get rid of competitors by taking the low-cost leadership. Nevertheless, it is presumable that Netflix is among the companies taking the low-cost leadership on their production side due to their large economies of scale.
Netflix’s Blue Ocean Strategy
However, having only red ocean strategies appears traditional as once it was claimed by Aldridge, Forcht & Pierson (1997). It is from this perspective that the company deploys blue ocean strategies. According to Borden (1984), the term blue ocean refers to a market space created through the identification of unserved market customers. Consequently, it is justifiable to affirm that blue ocean strategies are strategies targeting at exploring new markets in order to increase the company’s market share. Netflix Popcorn and Food delivery service has put in place both present and future strategies targeting emerging markets such as India.
The present blue ocean strategy deployed by Netflix emphasizes on product consistency. The development of sophisticated network of suppliers and distribution system, the company has experienced consistent product taste and quality across some parts of the world. This has resulted in an increased market share and positive customer perceptions. The future blue ocean strategy that Netflix needs to adopt as soon as possible is the franchise strategy. This strategy will enable the company to own about 20 per cent of the total number of its fast food restaurant. The other 80 per cent will operated by franchises. Through this strategy, the company will gained a substantial market in other regions such as India. This approach will require the company to conform to a comprehensive approach of training and controlling the franchises in order to ensure that they provide quality services and maintain cleanliness. The same franchise model used by McDonalds in the acquisition of European market will be applicable in India, which is one of the world’s developing economies.
The blue ocean product that Netflix can offer to the Indian market should be related to vegetables. This is because the Indian religion does not allow the consumption of beef or pork. Consequently, offering vegetable related foods will substantially increase the company’s sales and profitability. In addition, the provision of food delivery services is still a raw opportunity in India. The company needs to provide such services to seize this opportunity before other multinational companies rush to grab it.
Porter’s five forces can be of great significance in influencing the company’s competitive strategy. The model demonstrates the five forces that include supplier power, threat of new entrants, buyer power, threat of substitutes, and rivalry affect the competitive landscape in an industry. The degree of rivalry or competition is the core of this model, as the other forces tend to stem from it. Every force in this model influences the nature of competition in the food industry. In addition, organizational strategies are frequently affected, because companies adopt their strategies in order to react to the dominant competitive force in the market (Aldridge, Forcht & Pierson 1997). The diagram below summarizes Porter’s five forces (Gutierrez & Dalsted 2010).
The supplier’s bargaining power can be described as market inputs. The suppliers of labor, raw materials and expertise services have power over industries. According to Allen & Fjermestad (2001), this force affects the competitive landscape of an industry through the price for the raw materials required in production. Many companies in the food industry have a plethora supplier offering the necessary raw materials, though some lack suppliers.
Although, the power of suppliers is usually weak, it still majorly affects the food industry. Most restaurants including those of Netflix acquire their raw materials from farmers, butchers and packaging companies. For instance, in the US there are many suppliers throughout the country. As such, there are many food companies to choose from and this determines the price at which Netflix sells its product. However, this might not be the case in India. India has relatively few food companies to choose from, as compared to the US and UK. Consequently, Netflix can determine the price at which it sells its popcorns and hamburgers, and other services such as food delivers.
The bargaining power of customers plays a pivotal role in the food market. When the buyers have a strong power, they are able to set the price. The customers of the food markets demand high quality food and unique experience together with reasonable prices. Though Netflix can raise its prices, it should do so in a way that does not significantly exceed its competitors or violate the expectations of customers. This is because it should maintain a price lower than other companies in the industry in order to increase demand for its popcorns. According to (Allen & Fjermestad (2001), high prices might cause customers to stop unquestionably making purchases from Netflix and venture to other companies. Since the Netflix has been capable of maintaining a reasonable price, it was able to maintain a substantial growth even during the 2008-2009 economic downturns. To compete effectively, Netflix uses the power of demand and supply to set the price of its product. This ensures that customers get their products at an affordable price while at the same time staying ahead of competition.
The threat of new entrants seems to be extremely high in the food market. This is because there are very few barriers to entry. It is relatively cheap for other investors to set up new food companies. For instance, in a recent research, an average cost of starting a restaurant for offering fast foods costs about 225 thousand US dollars. This cost is comparatively inexpensive; therefore, making it easy for individuals to acquire capital for starting popcorn production business. According to Allen & Fjermestad (2001), it is not only the food that separates any company from its competitors, but also experience. Therefore, if an individual can transfigure his or her experience, it would extremely very easy to enter into this industry. This is perhaps the best reason why Netflix needs to take note of any probable competition that might threaten its operation in the newly identified blue ocean market in India.
Competition among food firms is extremely. It trickles down to acquiring a competitive advantage over other rival companies. Netflix can obtain a competitive advantage by using any of the following ways: improving the differentiation of their popcorn products, changing prices, creative use of distribution channels and utilization of customer relationships. The competition in the food industry will increase since large number of firms competes for the same customers and comparatively same market share that include everyone who eats food. Very many casual food restaurants are trying to look like fast food companies and very many fast food companies that have not yet been franchised. The slow market growth has also posed additional threat of competition to Netflix, because all these firms compete for the same market share. However, the company can increase its revenue due to the expanding blue ocean markets. As aforementioned, the market for popcorns comprises of people who eat food. This market can grow based on consumers attaining the age of eating the food provided by Netflix. The market can also deteriorate due to deaths of past consumers. In general, these two factors seem to factor each other out causing Netflix to have a constant market share.
The threat of substitutes is the products from outside the company that satisfy the same needs as those of Netflix. The threat of substitutes comes into existence when the demand of a product is affecting the price change in a substitute product. In Porter’s five forces model, the threat of substitute often affects the competitive landscape via price competition. Netflix does not have to compete with other popcorn producers in the industry when it comes to price. For instance, if the average checks per individual vary from 7 to 11 dollars, and the company stays within this range, then it will not lose its customers. This is because the prices of other companies producing popcorns companies will fall within the same range. The threat of substitution occurs when people decide to consume other foods or to go to eat at home. Consequently, the threat of substitute is extremely high. However, Netflix can fix this threat by offering low priced commodities that will make consumers prefer them to other companies. In addition, during tough economic times, consumers have a tendency of shying away from consuming fast foods and eating from restaurants. Netflix still has an advantage since it provides good popcorn preparation and food delivery services. The company can reduce this threat by staying in tune with changing tastes of customers. If Netflix can provide different food products that conform to consumers’ tastes, then it will be capable of maintaining a competitive advantage over its competitors.
Comparison between India and UK Consumers
The operations and products of Netflix in UK (red ocean market) and India (blue ocean market) are very different. This is perhaps due to the different cultures of Europeans and Indians. The difference in these two cultures stems from a religious perspective. For instance, in India, religion influences what they consume. As aforementioned, the Indian religion prohibits the consumption of beef or pork. On other hand, the culture of Europeans is widely diversified. Consequently, they have diversified tastes. Netflix has to satisfy many consumer needs in the European market that is also competitive. On the contrary, in India, the company needs to conform to the religious requirements to acquire a considerable market share. In addition, it was not until recently that Western multinational companies such as McDonalds decided to invest in Asian economies. This might be because of their reserved culture and religious beliefs. Similar to McDonalds, Netflix structured its menus and food deliveries to include vegetables in order to compete effectively. In the UK, food deliveries and menus are different from that of India. This is because UK comprises of a good number of individuals meat consumers. This differences in culture coupled with religious issues has caused Netflix to propose vegetable salads for popcorn consumers in India. In the UK, Netflix proposes more beef and pork products for its popcorn producers. The strategy behind this proposition in India is to develop an entirely positive perception that the company does not violate any of the Indian norms. Accordingly, this is very true since consumer’s belief is one of the external factors that a business cannot control.
To say the least, getting a thriving fast food chain in India, where religion and culture influence what people eat, is a challenge. However, Netflix is gradually finding stability in India. The company’s global and quick-service nature has not taken India by a storm. According to research findings, the company opened its first branch in 2004 and has since increased to about 99 units. This indicates that the company is dedicating time to developing other branches to satisfy the needs of this blue ocean market.
Netflix Marketing Mix in India
Netflix needed to come up with a marketing mix after curving out the Indian market. The 4P’s of marketing mix used by Netflix include product, price, promotion, and people. The product mix deals with how the company should design and manufacture their products in order to improve customer experience. A product refers to the physical commodity provided to the consumers. According to Chan Kim & Mauborgne (2005), products include various aspects such as guarantee, packaging, and looks among other things. The recommended product mix for Netflix should examine the limits of the product in terms of width and breadth. As such, the company has to analyze the behavior of Indian customers to provide an entirely different menu as compared to other worldwide provisions.
The marketing mix deals with the place where the product and the role of distribution channels should be made available. This marketing mix majorly comprises of distribution since it is crucial in availing the products to customers at the right time, place, and quantity. As such, Netflix needs to locate its business close to consumers to enable easy accessibility by customer. There are some value propositions that the company should offer to its consumers based on their demands. For instance, hygienic environment, great service and good ambience are some of the value propositions.
The pricing mix comprises of the company’s list price, financing options available, and discount functions. The recommended price mix for Netflix should consider the possible reaction from the competitors such as McDonalds. According to Gutierrez & Dalsted (2010), this is the most significant component of the marketing mix since it generates revenue. However, the company’s price must consider the interplay of demand and supply.
The promotion mix deals with what is the most appropriate strategy and promotion channels of a product. The diagram below shows the marketing communications that Netflix Popcorns and Food Delivery can incorporate in its promotion mix to realize profits (Healy et al. 2001).
Three main objectives of advertising for Netflix should make consumers aware of their product, develop positive perception about it, and recall the product. The promotion mix of the company should ensure that the right message reaches the right people via the right media. An advertisement attracts masses it reaches (Wu & Wu 1998). Consumers usually perceive goods advertised, because they assume they are right and effective. The advertising communication mix fulfills the main objectives of the promotion mix.
Personal selling is one of the most efficient tools for establishing buyers’ tastes, convenience and actions (Wang, Head & Archer 2000). Through personal interactions at stores located in India, Netflix will be able to get instant feedback and make necessary adjustments. Consequently, Netflix should encourage personal selling in various outlets by appointing staff that can perform the task (Vignali & Davies 1994).
The sales promotion communication mix comprises of activities that promote the company through organizing and coordinating various functions, programs, and distribution of free coupons (Turnbull, Ford & Cunningham 1996). These activities attract the attention of customers and provide strong purchasing motivations. It will be important for Netflix to organize such activities in the identified blue ocean market.
Direct marketing is also a significant tool for promoting the company’s product. This tool can help Netflix in offering home delivery services. The company can deploy various forms of direct marketing: direct mail, telephone marketing, and online marketing (Rousey & Morganosky 1996). As a recommendation, Netflix should utilize the internet perform some of the direct marketing activities.
The branding of products and effective communication is necessary in determining successful marketing and developing value for commodities (Rousey & Morganosky 1996). The creation and management of great brands need exceptional insights, creativity, and highly focused communications strategy. Netflix should realize that there are some common qualities that can guarantee success. These qualities should appeal to both reasons for the product and emotion.
Public relations are also a crucial tool for promotion. Netflix should consider itself as socially responsible and channel its efforts towards complying with its duties (Owen & Humphrey 2008). Some of the plans that the company can adopt in developing public relations include placing customer experience at the center of all the business activities, commitment to customers, and giving back to the community (India). The company should also envision a production process that profitably gives high quality and safe products and services without the interruption of the supply chain. Concerning health, the company needs to purchase raw materials from suppliers who conform to health standards (Melewar & Saunders 2000).
Netflix Popcorns and Food Delivery Service Company announced that the worldwide sales increased by approximately 2.5 per cent after the company had posted its first decline in sales a decade ago (Evans & King 1999). Nevertheless, this growth appeared slower when compared to the previous year. The increase in sales in the previous year was about 7.4 per cent. The growth in sales is associated to the identification of the blue ocean market in India. The India market was among the largest contributor to the increase in sales.
Other regions such as Europe and Africa contributed about 1.5 and 0.6 per cent of the total growth respectively. According to marketing researches, Netflix is a destination for more than 30 million customers every day since the company offers great-tasting and high-quality food products (Allen & Fjermestad 2001). India results for the year benefited from the ongoing popularity of the company coupled with balance across daily offerings, menu options and appealing restaurants. The company also prospects to launch a new menu on the forthcoming year.
According to Netflix’s recent report, it had about 20000 stores globally and a total fixed costs of 1.6 million dollars. The average selling price of one packet of popcorns in Indi is about 2 dollars and the average variable cost is about 0.65 dollars. The formulas below calculate the break-even point for Netflix
Contribution=sale price –variable cost=2 – 0.65=1.35 US dollars
Break-even =1600000 million dollars/1.35 dollar=1185185
This indicates that Netflix needs to sell 1185185 products annually to make the break-even.
The paper has developed a marketing plan for Netflix Company. The red ocean strategies refer to competition-based strategies. As such, this section of the marketing plan will give the strategy used by Netflix to be ahead of competition in the extremely dynamic business environment. The present blue ocean strategy deployed by Netflix emphasizes on product consistency. With regard to product, the first objective of Netflix is to emphasize on providing a wide range of products that customers want. Three main objectives of advertising for Netflix should make consumers aware of their product, develop positive perception about it and recall the product. According to Netflix’s recent report, it had about 20000 stores globally and a total fixed costs of 1.6 million dollars. This indicates that Netflix needs to sell 1185185 products annually to make the break-even.