Effects Of Big Data Traditional Marketing -Myassignmenthelp.Com

Question: Discuss About The Effects Of Big Data Traditional Marketing? Answer: Introduction The strategies that are adopted by the business play an important role in determining the success of the company in the competitive market. Verbeke (2013) stated that the strategies adopted in business helps in positioning themselves in the competitive environment and carry on its operations in a better way. The preferences of the customers keep on changing, which has to be realized by the companies so that it can help in meeting them. This case study is based on Netflix and Blockbuster with respect to the innovation and development that they had in technology for its success in the market. Brief history of Blockbuster Blockbuster Inc. was the leader with respect to the resting of the video disks. It had around 27 percent of the market share in the United States. The company manages more than 6,000 stores and tends to around 90 million customers on an annual basis. The company is spread throughout the US and in other nations as well. It was established around the mid-1980s and served as an alternative option for the local operations that were going on regarding the selection of video rentals but it expanded rapidly, which led to the business of music retailing as well (Xu, Franwick and Ramirez 2016). The year 1994 saw the company become a wholly owned subsidiary of Viacom Inc., as it provided the necessary financial resources for bidding with Paramount Communications. Viacom had total control over the company till 1999 and retained about 18 percent of the shares of the company (Blockbuster.com 2018). The company became a major hit during the 1980s, as it had a strong base of customers. The company was initially named as Cook Data Services Inc. in the year 1982 and Cook had the knowledge that the idea of renting video was hugely fragmented. The company had around 8,000 tapes, which also covered more than 6,500 titles and was no match for its competitors with respect to the inventory. Brief history of Netflix Netflix is an American company that was founded by Reed Hastings and Marc Randolph in the year 1997. The company specializes in providing videos that are demanded and online streaming of media as well. The year 2013 saw the company expanding in to films and television production as well along with the online distribution of the media (CNN 2018). The headquarters of the company is located in California. The founders of the company mainly focused on DVD rental by mail and later started the Blu-ray renting services as well. The company presently is operating in more than 190 countries. The company paved its way in to the content-production industry by providing its first series known as House of Cards, which became an instant hit. As per the report of 2017, the company has around 110 million subscribers on a global basis where the US accounts for more than 52 million customers (Netflix.com 2018). Changing technology Netflix has a better leadership strategy and the executives of the company understood that the change in the technology with respect to the delivery patterns of movie rentals would result in the success of the company. The management of the company decided tht the strategy of streaming the video over the internet along with a better experience of the customer service would result in gaining a competitive advantage over Blockbuster. The company developed a virtual organization, which helped them in delivering the services at a cheaper cost and in an efficient manner. This helped the company in being ahead in the technological race, which led to the change in the face of the industry (Halal 2015). The people of the United States had very less amount of broadband users in the year 2000 and the company was of the vision that the video cassettes that were being rented would soon be replaced with the streaming of the videos over the internet. The company instantly started working on a box that would require approximately 16 hours in downloading the favorite videos by the customers. Blockbuster on the other hand realized the change in the technology that was going to happen and instead of adopting some better techniques; they expanded their stores and diversified their business into toys, books and other products (Walker et al. 2017). Another important change in the strategy by Netflix with respect to technology was that they avoided the burden of establishing cost for the retail outlets and majorly focused on operating over the internet. The company only had a few offices and warehouses, which led to the creation of virtual organization that means there were no retail outlets for the company. The company did not have any authorized vacations or a fixed number of working hours, which led to the fact that the employees got the choice of getting the job done in any way they want (Chopra et al. 2017). Retail outlets versus operating online Blockbuster was expanding its business by opening up more number of retail outlets that required huge establishment costs. The company was diversifying its business in to books and toys so that more profits can be generated. The primary business of the company that was renting video cassettes got sidelined due to the other activities in which the company was investing. The company did not understand the changing technology that would lead to the change in the customer base (Cavusgil et al. 2014). The company did not have the option of monthly subscription and imposed late fee upon the customers as well, which was hated by them. The company failed to utilize the advantages of the internet and used the old-fashioned model within the business operation. This made it impossible for the company to survive the competitive market, as most of the customers were trying to shift to the internet for streaming of movies and videos (Hill and Hill 2012). Netflix on the other hand operated entirely through the online process. The company did not invest in opening up of retail outlets, as they utilized the internet in a better way. The company is providing the customers with the choice of monthly subscriptions along with no late fee. The main focus of the company was to provide better experience to the customers through their services so that it would provide the products to the customers in an efficient manner (Wakefield, Bayly and Scollo 2014). The company also developed the best software so that it can help in inviting the customers in viewing the movies through the online portals. The website that was being offered by Netflix was clean and had clarity in its operations, which catered to the responses of the customers according to their individual preferences. The company also offered a prize of $1 million to the person who can help in improving the system of rating for the organization (Varley 2014). Pricing strategies Netflix was successful in taking over Blockbuster due to the innovative strategies with respect to pricing that it implemented within the organization. Blockbuster used to charge $5 from the customers for returning the cassettes late, which accounted for a major share of their profit. This was ignored by Netflix, as the company developed the strategy of monthly subscription that was provided to the customers. It also provided the customers with unlimited access of the rentals with no late fee being levied on them. Thus, it can be stated that the pricing strategy that was adopted by the company provided convenient and easier services to the customers apart from renting of movies. Thus, the customers were provided easy opportunities in renting the movies through the online portal, as the company was able to produce the best software within the industry (Nagle, Hogan and Zale 2016). Netflix provided its customers unlimited streaming of online video and the amount was kept only at $7.99 where as Blockbuster charged $9.99 from the customers for the purpose of streaming of videos. At an amount of $7.99, Netflix provided the customers unlimited access to the movies and the television shows along with the option of becoming a member of their services. Moreover, the company also provides a subscription of $15.98 on a monthly basis so that they can have access to unlimited video rentals. The company also provides the customers Blu-ray discs with an additional cost of $2 on a monthly basis. However, it was seen that Blockbuster charged the customers $2.99-$3.99 for the rentals, $9.99 for renting one disc and $14.99 for renting two discs. Thus, the price that is being offered by Netflix is feasible for the customers and is more preferable within the industry (Xu, Frankwick and Ramirez 2016). The price has been increased by Netflix for the services that are being given by them, which has also led to the improvement of the quality as well. The company had entered the consumer market with an innovative product and the pricing strategy adopted by them was also innovative in nature. The company introduced a flat rate of subscription fee against the penalty pricing strategy that was adopted by Blockbuster, which was a fault in then pricing strategy. The CEO of Netflix went on to state that the company incurred losses on a short-term manner for cancelling the subscriptions but was helpful in the long run, as the customers did not like the option of DVD-by-mail (Adhikari et al. 2012). Netflixs Innovation In the beginning, the company used to take the help of postal services so that the DVDs can be distributed in the market and help in the growth of the organization. Nevertheless, the company realized that this strategy that is the system of renting the video cassettes would go out of the market within the upcoming years. The success of the company was due to the better techniques of leadership coupled with the technological knowledge that was present within the company. The company also provided its customers with television boxes that needed approximately 16 hours of downloading time for the movies or the videos that were being demanded by the customers. Blockbuster had the knowledge that the renting of video cassettes would become outdated but they did not take any effort in developing their business strategy in a better way (Gomez-Uribe and Hunt 2016). Netflix understood that they can provide better quality by compressing the video, which was being used by YouTube as well. The com pany decided to change its strategy and use the idea of online video streaming instead of the business of renting DVD to the customers. The company tried to increase its acceptance in the market by providing new services to the target customers, which was an easier way of influencing and attracting the customers towards the company (Villaroel, Taylor and Rucci 2013). The other innovation for the company that helped in surpassing Blockbuster was avoiding the extra costs of opening the retail outlets. Blockbuster on the other hand carried its operations in the retail outlets, as the customers were not allowed to use the services as per their preferences. Moreover, the opening up of the retail outlets was a major factor that caused bankruptcy for the company. Netflix on the contrary carried its operations through the services that were available online. The company did not invest heavily in offices and warehouses and tried to serve its customers by creating a virtual organization. This helped the customers in using the services in their convenient manner (Euchner and Ganguly 2014). Netflix stumbles: The demise of Qwikster The company was successful in establishing itself in the entertainment industry and declared that they would be operating the DVD-by-mail and the online video streaming in a separate manner. Thus, Qwikster was formed, which looked only after the DVD-by-mail for the company. Qwikster did not have a better impact on the entertainment industry due to a number of reasons. They wanted to survive in the competitive market by introducing video games for the customers, which was a strategy adopted by the CEO of Qwikster. Thus the introduction of the video games by the company resulted in the failure of the organization. This was due to the fact that the consumers did not get the benefit of getting the DVDs and the video games respectively when subscribing to Qwikster. Moreover, the consumers did not like the idea of paying separating for the video games, which decreased the popularity of the website (Bailey 2016). Apart from this, another primary reason for its failure was that Qwikster and Netflix had separate websites where the customers had to pay separately to enjoy the services. The CEO of Netflix had stated that it will help in grabbing equal attention of the customers towards both the companies that is Netflix and Qwikster. Thus, it will help in improving the quality of services for both the companies. However, the plan did not work in a proper manner and the customers found that the separate websites were difficult and complex to manage. This led the customers in two separate accounts for the websites, which led to the fall of Qwikster (Bowers, Hall and Srinivasan 2017). Moreover, Qwikster enforced the users of Netflix in subscribing to the separate accounts for DVD and online streaming of videos. This led to the formation of separate bills for the customers in spite of the fact that it was owned by the parent company. The customers were paying the prices in a double manner, which they found to be unjustified (Ryan 2013). Another reason was that the name of the company was very easy to misspell. Moreover, the new customers could not recognize the fact that both the companies were under the same parent company, which led them to the selection of different mailing services. Thus, Netflix lost many customers due to Qwikster, which resulted in the failure of the company. Qwikster also did not provide the services, which were user-friendly and Netflix had a bigger collection that were preferred by the customers over Qwikster. Netflix rebuilds: Rise of original content Once Qwikster failed in the market, Netflix introduced the idea of using original content so that it can rebuild the company and recover the losses that it suffered from the failure of Qwikster. The company conducted a survey, which showed that streaming original content was gaining better momentum and popularity that the streaming of online videos. They saw that the customers were willing to pay the subscription amount that was being charged by them. The above figure shows that the demand of the original content has seen an upward trend in the recent years, which was gaining great popularity among the streaming enthusiasts. Moreover, most of the subscribers were paying the subscription amount so that the company can issue original content to the. At the end of 2018, the company is aiming to have a library, which will contain at least 50 percent original content with an investment of $8 billion approximately. The company announced that they would be releasing around 30 animated series and 80 original films as well. The figure shows that most of the customers prefer the original content that was provided by Netflix over Amazon. After the successful entry with original content in 2013, the company gained a competitive advantage over the rivals that were present in the market. an example of this would be that the company made original series like House of Cards and Orange is the New Black, which made it easy for the company to gain more subscriptions from the customers. Thus, the introduction of original content by the company helped them in rebuilding the company and be sustainable in the market. Future of Netflix The online streaming of videos is the future of television, which highlights the future of the company to be bright. There are immense opportunities for the company in improving its range for streaming of videos and content. The company also puts more emphasis in the production of original content, which is being demanded by the customers to a great extent. The CEO of the company has went on to state that the use of linear television will be replaced by internet television in the near future, which will provide a competitive advantage to the company. Moreover, the use of subscription services by the company will help them in increasing their revenues as well. Additionally, the introduction of the original content by the company recently has helped them in increasing their revenues as well (Zeng et al. 2013). On the other hand, it can be seen that Netflix has potential threats with respect to the lack in luxurious style that can be provided to the internet users. For , the customers who are kids have to pay a subscription amount as well to enjoy the services that are being offered by the company. This leads to the fact that the business of subscription for the company will not be growing with the population and the company may have to increase the prices of their services, which will help in providing the services to the customers. Thus, the lack of new customers will result in lack of subscription for the company where the new channels may gain an advantage (Tryon 2013). Conclusion Therefore it can be concluded that Netflix had overtaken Blockbuster by the end of 1990s due to the use of the technological advancements that was lacking in the latter company. The company was of the knowledge that television would be declining and the surge in online streaming would increasing in a rapid manner among the customers. This led to the buildup of virtual organization for the company so that they could cater to the preferences of the customers by providing them with better services. 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