This case study talks about the rise and downfall of Netflix. It shows the several problems faced by the company within their microenvironment. The problems are : * Announcement – the members did not like the way the CEO Reed Hastings announced the new plan of splitting the dvd rental business from the online streaming business and the increase in price. They thought it was harsh and the email did not clearly explain as to why they were increasing the price. The members were outraged at this and discussed about cancelling their Netflix subscription.
Their customer base were not happy about their price increase. They could have avoided this problem first by providing specific details for the price increase and secondly involving their customers and asking them if this plan would work. That way they could have gotten the important information about what their members are thinking. * Seperating both the business – Instead of managing one account to watch the movies the customers will have to manage two accounts, they will have two different subcriptions, billed by two separate companies.
The creation of qwikster alongside Netflix created extra work for the members who would like to continue receiving dvds by mail plus also the ability to stream movies online. The solution to this problem would be to keep both the services under one brand Netflix. By doing so it would be much easier for the subscribers to manage their account. * Increase in price – the price for both the accounts was becoming to expensive for the customers.
It would be much better idea to offer discounts to those customers who were using both the services. * Qwikster – Customers complained about the name as it was not new and was used before. They should have never separated Netflix into two business. * Competitors – there were more and more alternatives to Netflix in the market and the customers were turning towards it due to the price increase and the splitting of business. Competitors have taken advantage of this due to which Netflix has lost a large customer base.
The management should have seen it coming and tried to solve this situation before hand. * Variety – the customers complained that there was no variety provided by Netflix and it was the same old stuff and none of the new movies were uploaded and the customers found other services which would give them variety. Netflix should try and offer more variety and maybe go beyond Hollywood. They should try and distribute more obscure movies that attract smaller audience and overtime the customer base will increase.