The article I found for this blog is on Netflix, and it talks about the strategies Netflix is using to not only attract customers, but to also keep those customers coming back again and again. This article came out in late 2005, which I found interesting because it was a year in which they grew tremendously and it was interesting to see how the growth all started. We know from the news today that Netflix has basically taken over the online and overall movie rental industry and is, to some, looking like a monopoly within that business. Recently Blockbuster has been on the hot seat due to their 964 million dollars worth of debt and has been said to be near filing bankruptcy multiple times. One huge reason for this 200 million dollar cut, closing stores and cutting expenses, by Blockbuster is the online movie industry and the concept of no late fees. To some Netflix has been the parasite that has given Blockbuster this big blow and has forced other franchises such as Movie Gallery to file for chapter 11 bankruptcy.
Netflix has created a whole new industry when it comes to movie rentals. Netflix uses a myriad number of information systems and technologies that have put them above and beyond their competition over the past ten or so years. They have created a competitive advantage unlike any others in their field. One example of this is their creating the Friends network online. This is where you become friends with people you know on the Netflix network and this gives them access to see what movies you have been renting and what might be interesting to them. This is a way for users to get connected to other users as well as invite people they may know to use Netflix. “The Friends network gives Netflix a way to more deeply engage customers in its service. But someday, it may also help Netflix detect possible spikes in movie demand so that it can avoid DVD shortages. People with lots of friends, after all, have the ability to affect a lot of movie watching. Friends is just one of many ways online DVD pioneer Netflix is building on its technology roots to continue enhancing the customer experience.”
Also in 2005 Netflix spent 8 million dollars to further automate their high tech distribution centers. This effort was to keep costs low and speed up their shipping time, which is a good thing for customers to hear. Along with that, they added their own RSS feeds, sending updates on new releases to customers on a real time basis. Within this, Netflix programmed their software to allow multiple accounts within users, separating what the kids rent from the parents, if need be. All of these additions made to better serve the customer. “The Friends network and profile capabilities, for example, are testaments to how well Netflix listens to customers: Each was added in response to consumer demand.” Netflix is also heavily an employee innovator company as well, which doesn’t relate as much to information systems but the article did talk about this as well.
Something that we have talked about a lot in class is an online site recommending different products or services to repeat customers. Netflix uses a software system called Cinematch, which “urges customers to go through a rating exercise, tuning the system to find movies they will like.” The more movies that are rated the more accurate their recommendations are. Netflix makes the site an experience that is truly tailored to the user. “In a sense, Cinematch is one-to-one, mass-customized, cocreated customer-relationship management, all rolled into one. If the Starbucks secret is a smile when you get your latte, ours is that the Web site adapts to the individual's taste." Even Amazon, which does personalization so well, doesn't consider reviews of past purchases when giving recommendations”.
The article talks about some other strategies that Netflix uses to gain their competitive advantage in the movie rental industry, but the ones I have mentioned related directly to what we have talked about in class or incorporate some information technology within them. Netflix truly is taking over the market, one movie rental at a time… with no late fees of course.
http://www.fastcompany.com/magazine/99/open_customer-netflix.html?page=0%2C0
Netflix has proven to be a leader in the movie rental industry. They saw a whole in the market early enough where they could jump in and take over. Once NetFlix established themself in the internet movie rental indutry, no other company was able to gain access. They have not only taken advantage of the internet, but have also put other companies out of business quickly.
ReplyDeleteAbout 2 years ago, the local video retal store in my town went out of business. A year later, the BlockBuster in the town next to me also closed. My family has been forced to use NetFlix as a result. It is definately starting to grow on me, but I miss being able to go to the store whenever I want to rent a movie. While the internet service is great, fast, and easy, I can not always get exactly what I want on a day's notice.
Netflix has benefited greatly from the use of the internet and modern IS. Ten years ago, if asked the most popular movie rental you would say Blockbuster,but now you would say Netflix. The key to Netflix's success is their customer compatibility. When you log onto Netflix, it suggests movies that would interest you and shows you their ratings. Another great pro of Netflix is that you can rent movies right from your home. With just the click of a button from your computer you can have the DVD mailed to you. In addition, you can watch movies right on your computer with the "Watch Instantly" button. People don't have the time anymore to go out and rent movies, so Netflix is a perfect substitute for Blockbuster. Netflix will continue to be the leader in the movie rental industry with their use of IS.
ReplyDeleteI do not think that Netflix has monopolized the industry of renting movies. I think they have been incredibly smart over the years in order to grow at the rate in which they have. Personally, my family is a member ofboth Netflix and Blockbuster as well. Although Netflix has created a great, inexpensive ways to rent movies, like Jackie said, renting movies at a moment's notice in a retail location is still unavailable. I agree, online businesses are extremely convenient to consumers, but I believe that if Netflix wanted to expand even farther, they should begin to open retail sotres to compliment their online sucess.
ReplyDeleteI do believe Netflix is dominating the movie rental industry. Yet, just as the new technology of the internet allowing click and mortar businesses to slowly eliminate the brick and mortar businesses, Netflix may need to watch out for the next faster, more convenient tech that is introduced that could eliminate them. Today video streaming is becoming more and more popular. There is no longer the wait of the postal service but now immediate access to the video you want, when you want it. Netflix has realized this and begun to allow streaming for a certain amount of movies for free as long as one is a subscriber to them. Technology is constantly innovating to newer and faster versions of everything and even though Netflix is at the top now, it may not be for long.
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