Netflix is a firm that provides digital services like online media streaming or DVDs to its customers who are fond of spending time watching videos and movies. This document is based on the Ansoff Matrix Discussion of Netflix.
Market Penetration
This is the most significant growth strategy of Netflix because it plays a vital role in the growth of business activities and to expand business in the international market. According to Ansoff matrix analysis, market penetration is a method of distributing a large number of the firm’s online services to the market where it is already operating its business. The strategic target associated with this plan is to generate high income and market share by attaining a competitive advantage. The market share of the firm depends upon its generic strategy that how it sustains the level of competitive edge to increase market share and to retain its existing consumers. Apart from this, few other factors affect the company’s growth and market share. For example, how growth and generic strategies based on the online business model are been implemented by the firm. For instance, organizational plans and market penetration strategies are defined through the marketing mix and 4ps of Netflix Inc. Furthermore, implementation of growth strategies helps the firms in strengthening their business which enables the organization to easily penetrate digital markets instead of strong competition (Moore, 2019).
Market Development
This intensive growth strategy works as a secondary growth plan for the development of Netflix organization. The market development plan is based on the introduction of the firm’s online streaming system and authentic information to the customers of other international countries. Market development across international borders may also be considered as a growth opportunity. Netflix has acquired a regional license from 42 states of Central America, South America and the Caribbean, to sell its online media streaming The primary objective of Netflix linked with market development is to increase the growth and revenues of a firm by entering into new markets. The cost-effective strategy of Netflix that is selling at a low price helps to strengthen the intensive growth strategy. The profitability of a firm depends upon the implantation of the effectiveness of the company’s business model that’s why it is important to attain a competitive advantage (Haenliean,2019).
Product Development
Product development plays an important role in the growth and development of business but still, it cannot be considered as the primary intensive growth strategy of Netflix. Professor Ansoff states that the most important target objective of this plan is to manufacture and sell new products in the existing market of the firm. For instance, Netflix is producing new stuff for its existing online subscribers who prefer to spend their time watching movies and videos. The success of Netflix’s product development strategy depends upon its generic strategies that help to attain a competitive advantage for the efficient production of goods and services. Both intensive and generic growth strategies contribute to the expansion of business at a large geographical extent to earn heavy profit and income. The introduction of the latest online streaming method is a major component of the company’s pipeline business model. The proficiency of the company’s product development plan relies on the organizational culture of Netflix that how it supports the relevant innovation activities. Another example of product development is that Netflix is developing millions of DVDs at high production costs. Currently, the movie industry is switching towards the online streaming of the films which may adversely affect the profit margins of Netflix. If aa company will constantly carry out the production of DVDs then the major part of its revenues will be eaten up by operating cost. That’s why it is very essential to phase out the production of DVDs (Moore, 2019).
Diversification
It refers to the creation of new products and services for another unknown market to enhance market share. Due to high-risk nature, diversification is rarely implemented by Netflix. At this time, DVD rentals and online streaming are the two major competitive products in the market. The competition between Amazon, Hulu and cable TV is expected to be increased more in the future. In terms of strong competition, Blockbuster and Red Box pose are the most strong rivals of Netflix. So, Netflix must execute a diversification plan by launching video games, to sustain its competitive advantage (Haenliean, 2019)
References
Haenliean, M. (2019). Digital transformation: A multidisciplinary reflection and research agenda. Journal Of Business Research.
Moore, A. (2019). Netflix’s Generic Strategy, Business Model & Intensive Growth Strategies.