Companies are not eternally remaining on the market in a productive way. It is normal to find industries that make wise decisions, but there is also the possibility that the decisions taken have not been the best. Our mission as marketing managers is to discover the wise decision that would mark not only within the industry, but also in the market with the purpose of repeating that decision in a clever and a systematic way. The important strategy to which I am referring is called the blue ocean strategy, which could mean a real challenge for the business. The primary purpose of the blue ocean strategy is to create safe spaces in the market, where the big concern is to decrease sharing the demand by increasing the size of it furthermore setting aside the competition (Kim, 2004).
In the late 90 s Reed Hastings along with two friends, created Netflix. The original idea was that two important services were combined in the movie rental business: that would not have late payment charges, and that could be rented from home (Ryun, 2011); this because Blockbuster who was the leader of video stores; charged this fee.
The Essay on Go To Market Strategy
A go-to-market strategy defines the activities and the participants that connect a firm to its customers and prospects (Zoltners 2001). Within this framework the process of deciding on a go to market strategy usually involves answering four major questions. The first of these questions involve determining how best way to segment the existing market. Since customers are heterogeneous with differing ...
This was a time when Netflix made significant gains; nevertheless Netflix did not stop there, and bearing in mind the big advance of the high speed Internet as well as all the digital media, then began to replace the option of receiving physically DVDs by the choice of online subscriptions, where subscribers acquire the right to consume unlimited audiovisual content that is presented in the online catalogue, all this for a fee of $7.99 per month; providing the customer benefits as they were the price and convenience (Ryun, 2011).
In the year 2005 Netflix had a database of more than 4 million subscribers, which resulted in the conquering of the competition and become the leader of companies dedicated to online movies rental (Ryun, 2011).
This situation resulted that for the year 2010, Netflix obtained more than 160 million dollars profit whereas Blockbuster went into bankruptcy. Also, for that same year Netflix improved the business with the unlimited access to content that not only could be viewed on a computer or a TV, but also in
video game consoles such as PlayStation, Xbox 360, Wii, and Blu-ray devices, or smart phones; Netflix also has an additional advantage and is that they are not needed big time waits for access to content, because the distribution is via streaming making it more agile process (Ryun, 2011).
Netflix represents a blue ocean strategy; since it is sought deploy innovative business ideas that at that time were unknown, and which were characterized by the creation of markets in areas that were not exploited, and that also generated opportunities for long term profitable and sustainable growth; moreover, the competition lacked importance as unique and individuals markets were created, breaking the rules and creating new demand (Brooks, 2013).
However this strategy may become a strategy red ocean, as is the case with the strategy adopted by Blockbuster that with the passage of time as enjoyed the great privilege of being the pioneer rental movies, it fell asleep in his glory and stop allowing competition advance to take advantage of the new technology that was invading the world of communications.
So Netflix, attracted by this new market opportunity went to the front reached outperform the large firm Blockbuster up to the point of getting this out of the market. The problem that exists in a consolidated company as it was Blockbuster, and that is one of the characteristics of red ocean strategy is the fear of risk (Kim, 2004).
The Essay on Major Shifts in Netflix Strategy
Compare Blockbuster’s and Netflix’s profit models and value proposition prior to the establishment of Blockbuster online: Blockbuster’s Value Proposition and Profit Models: • By establishing over 5000 locations to represent “70% of the U. S. population by a 10 minute drive,” Blockbuster’s value proposition is its convenience by geographic location. The physical convenience as well as established ...
Blockbuster had the opportunity to undertaking into new strategies to open new markets, however did not take this option and preferred to handle the situation through a continuous struggle with its competitors. The chances of achieving a winning strategy decrease with the number of competitors increases (Brooks, 2013).
As a conclusion it is important to remark that an established brand as it was Blockbuster, failed to remain at the forefront and not continuously meet the needs of the consumers who demanded updates in accordance with technological communication updates that occurred. The company Blockbuster was defensive and reactive rather than proactive as it should be this situation allowed Netflix took hold of a huge market. On the other hand, the blue waters can go turning into red over time, as other companies may feel very attracted to the new market opportunities that have opened.
References
Brooks, C. (2013, December 17).
What is Blue Ocean Strategy? Retrieved from Business News Daily: http://www.businessnewsdaily.com/5647-blue-ocean-strategy.html Kim, W. C. (2004, October).
BLUE OCEAN STRATEGY. Harvard Business Review, pp. 76-84. Ryun, N. (2011, March 1).
Netflix politics. Retrieved from The American Spectator: http://web.a.ebscohost.com.ezproxy.apollolibrary.com/ehost/pdfviewer/pdfviewer?sid=31038785-37a0-4b50-9402-3b86830c94e8%40sessionmgr4005&vid=16&hid=4204