Netflix: A Promotional Campaign Plan

📄 Words:	3976
📝 Subject:	Company Analysis
📑 Pages:	14
💼 Companies:	Netflix

Introduction

In the 21^st century, the global competitive landscape across various industries is defined by a set of dominant trends. First of all, the contemporary business and social environments have been subject to intense globalization that is conditioned by the development of communication and transportation tools. Under these circumstances, the exchange of information has become quicker and more efficient. From a business perspective, companies see a better selection of markets with an extended audience. However, the competition is equally on an increase in this highly globalized environment. Each segment of the economy experiences a surge in the presence of both global and local players who engage in a continuous competitive process.

Thus, even the most prominent companies of today have little or no room for mistake, as the demand remains finite and does not always correlate with the growth of supply. In this regard, the efficacy of promotional activities is a matter of utmost importance. It is related directly to another prominent trend in the current environment, which is represented by the intense digitalization. Accordingly, modern marketers benefit from an extended arsenal of digital solutions that help to encompass a broader audience. This idea is particularly important for Netflix, which is a web-based content distributor with mostly digital activities at its core. This report focuses on the case of Netflix, outlining the primary aspects of its promotional campaign plan in light of the present reality.

Background

Netflix rightfully holds the status of one of the locomotives of the digitalized economy, leading one of its most innovative sectors. More specifically, the company specializes in web-based content streaming, both original and secondary. The history of Netflix dates back to the later 1990s, when its founders first had the idea of remote video content distribution among subscribers (Netflix, 2021). However, at that point, the emphasis was on the distribution of licensed DVDs through mail, which was justified by the level of progress at the time. The innovative approach of the company could not yield immediate results, as Netflix struggled to overthrow the persistent paradigm of content consumption.

Nevertheless, as the technological progress of humanity advanced in the 21^st century, the company was among the first to utilize the new avenues of video distribution in the digital environment. Having taken this risk, Netflix shortly became a disruptive innovation that redefined the image of the industry (Jenner, 2018). As a result, a new image of television and video content industry, in general, was born through the utilization of new, convenient forms of distribution. The wide audience responded positively to these opportunities, contributing to the immense commercial success of Netflix (Burroughs, 2018). In a way, the name of the company became synonymous with the very concept of video content streaming.

Issues

On the other hand, today’s competitive environment has become highly changeable across various industries. The immense technological reliance of Netflix and its business model has its downsides, as the progress within a sphere contributes to its higher changeability. As can be inferred from the discussion surrounding the company, the success of Netflix was ensured by its willingness to pioneer in an uncharted territory. More specifically, this platform was among the first ones who provided viewers with an opportunity to enjoy high-quality, on-demand content at home via digital solutions. Another key feature of Netflix comprises an effective combination of popular secondary products and its original content. However, as the resounding success of this model became evident, other major players began to seek new opportunities in the sphere. The recent decade has seen a major surge in the number of streaming platforms who attempt to replicate or even improve the model of Netflix. Amazon Prime and Hulu constitute the core of the older platforms that opposed the undisputed domination of Netflix on the market.

Next, a number of prominent companies from the adjacent spheres became interested in creating their own streaming platforms. As such, Apple TV+, HBO Max, Disney Plus and others engaged in the competitive pursuit of viewers’ attention. The key common feature of all these platforms is related to their colossal financial opportunities and reputation of the parent companies behind them. Thus, they are not merely ambitious entrants who would need a certain degree of luck to prosper in the Netflix-dominated sector. On the contrary, Apple, Disney, Amazon, and HBO possess the required funds to produce quality content and allocate considerable budget to their marketing activities.

Risks

The primary risks faced by Netflix in this highly competitive landscape are directly related to the finite nature of the market demand. When it was the pioneer of video streaming, it had the undisputed attention of most streaming platform users. Moreover, the inevitable emergence of the first competitors, namely Amazon Prime, was not an inherently negative phenomenon. On the contrary, the presence of several rivals helped Netflix improve its marketing and positioning strategies and promoted healthy competition. In the end, the end consumers benefited from this fair race for their attention, as all players felt promoted to design better offers. However, as the number of competitors grew, the pressure on Netflix increased, as the number of digital content enjoyers remained limited (Lobato, 2017). For a long time, video streaming remained the prerogative of the active Internet users willing to test new avenues of pastime.

In a way, the onset of the COVID-19 and corresponding restrictions alleviated some parts of the issue. Indeed, the home confinement amid the pandemic prompted more people to explore digital leisure opportunities, enhancing the customer base of the streaming platform users to record-high levels. However, the market supply increased simultaneously, as both the existing players and new entrants relied on the remote streaming paradigm on content distribution (Luo, 2020). Thus, the primary risk consists of the finite number and resources of the target audience. More specifically, today’s consumers may find it inconvenient to maintain an increased number of paid subscriptions, which prompts them to limit their choice to few select platforms (Fagerjord & Kueng, 2019). In 2021, Netflix already lost 31% of its market share in the United States (De Wit, 2021) Thus, the overarching objective of Netflix is to convince the audience that its platform is worth being selected. Within the current competitive environment, this objective extends beyond the production of high-quality content. In fact, marketing campaigns become the key to winning the ongoing race to the pedestal of the audience’s attention.

Competitive Analysis

Within the discussed environment, Netflix continues to face increasing competition. In this regard, it appears vital to investigate the current position of the company in terms of its competitive advantage potential. For this purpose, a SWOT framework has been utilized and presented in Table 1. According to Gurl (2017), this model is descriptive and qualitative in nature, which allows it to provide an in-depth insight into the current status of an organization within a competitive environment. The industry exhibits strong rivalry, but most viewers maintain multiple subscriptions, which renders them exhausted and financially depleted. Thus, the examination of Netflix from this perspective will be crucial in designing an effective approach to digital marketing activities.

Table 1. The Competitive SWOT Analysis of Netflix.

Strengths	Netflix has a long history in the industry of video content streaming in the United States and across the globe. The company became one of the pioneers of this sector, developing along with the industry itself. For many users, the name of the company is associated with the concept of high-quality streaming and does need additional presentation. Thus, Netflix becomes embedded in the cultural code of the generation and serves as the face of video content streaming. In addition, Netflix maintains a global presence in 190 countries, producing content in different languages and engaging in partnerships with local content-makers (Netflix, 2021). Finally, the company was the first to introduce the idea of original and exclusive streaming shows.
Weaknesses	Outside of the original content, Netflix holds limited copyright to many entries of its libraries, which has a negative effect on its financial performance. The affordable pricing policy equally contributes to the continuously accumulated debt of the company. In addition, in spite of its global presence, Netflix demonstrates a strong reliance on its North American customer base, and the competition in this region is the highest. In addition, many overseas users may feel on the margins of the America-centric customer service framework of the company (Wayne, 2020).
Opportunities	The core of Netflix’s opportunities is associated with its strong brand name. More specifically, the company feels more freedom to explore new projects and unusual approaches to video content, as its reputation will negate the lack of public confidence in the format. In addition, the strong brand name may help Netflix launch new initiatives in adjacent spheres of digital leisure.
Threats	The increasing competition within the sphere of digital content streaming appears to be the most serious threat to Netflix’s sustained growth. As more platforms offer their exclusive products, a portion of the audience opts for alternatives (Wayne, 2021). At the same time, this tendency increases the stress on Netflix’s financial and production resources, as the company cannot afford to stagnate. COVID-19 is another major risk factor due to its complex impact on society. From one perspective, it introduced many new customers to the world of streaming. On the other hand, the production of new live action content has been highly complicated due to the pandemic-associated risks and restrictions. In addition, the pandemic instilled economic crises in many areas of the world, undermining the purchasing power of the global population (Lozic, 2021).

Digital Market Analysis

The competitive analysis of Netflix as a company is to be discussed within a broader context of the digital content streaming, as a whole. From this perspective, the well-established paradigm of Porter’s Five Forces analysis has proven instrument in establishing a comprehensive understanding of the operational context (Table 2). More specifically, it investigates the industry’s susceptibility to internal and external factors that may affect the performance of all companies within its scope (Bouraqia et al., 2020). This information is to be equally crucial when determining the direction and the nature of marketing activities within the sector.

Table 2. The Analysis of the Digital Content Streaming Market.

Threat of new entrants	In the current environment, the sphere of digital content streaming demonstrates a moderate-to-high threat of new entrants. The recent years have highlighted the immense potential of the industry, prompting new companies to explore these opportunities. However, for the streaming activities to become profitable, the level of investments is to be on par (Snyman & Gilliard, 2019). Thus, the increased financial requirements of the industry introduce a certain threshold that eliminates a great number of potential entrants. Nevertheless, their number and performance remain considerable, posing threats to the statuses of the current players.
Bargaining power of buyers	In the digital sphere of content streaming, subscribers remain the primary stakeholders whose engagement determines the commercial success or lack thereof. In other words, the profits and revenues of Netflix and its competitors rely directly on the viewers who purchase subscriptions and other paid services of the platforms. Therefore, their engagement and perspective on the product becomes the key aspect of the industry, granting to them an immensely high bargaining power.
Bargaining power of suppliers	The key to commercial success in the video content streaming industry lies in the high quality of content. However, the number of production companies that can supply the required materials remains inherently limited. Thus, the choice of suppliers is a task of paramount importance for Netflix and its competitors. The lack of good content will leave the viewers dissatisfied, prompting them to cancel subscriptions. Accordingly, the suppliers’ bargaining power in the video streaming industry is equally high.
Threat of substitute products	From the perspective of the streaming industry, the threat of substitute products can be seen as moderate-to-low. Such products include more conventional forms of media, such as DVD rentals, movie theaters, and traditional television. In this regard, Netflix and similar companies offer better opportunities for viewers. As a result, an opposing trend is observed, as streaming companies win larger shares of the entertainment industry.
Competitive rivalry	The intense competition within the segment of video content streaming has become the reality of the current decade. Netflix faces a strong rivalry from other players on the market, including Amazon, HBO, Apple, and Disney as the most prominent ones. All major companies of the sector are engaged in a constant pursuit of high-quality content, both original and secondary, further dividing the limited market of streaming.

Target Market

The selection of the target market and audience is an equally topical objective for the contemporary promotional activities. The exact scope of the target is to depend entirely on the nature of a company’s operations and its industry features. The vast majority of Netflix’s operations remains within the digital environment, which extends the range of potential customers to a considerable degree. In addition, the world has been experiencing an unprecedented level of globalization, which both complicates and facilitates marketing activities.

For Netflix, the selection of the target market for promotion relies on dichotomy of the domestic North American segment, namely the United States and overseas markets. While the United States accounts for one of the 190 counties of operation for the company, it places a strong emphasis on this region (Iordache, 2021). North American subscribers often represent the focus of Netflix’s attention, leaving foreign markets with a secondary status. This tendency is reflected, for example, in a lower number of foreign language translations of the new content, which is often presented with local subtitles instead of full dubbing (Lotz, 2020). Thus, the overseas markets wield more potential for the improved audience engagement through enhanced promotional campaigns. However, the American segment presents a higher number of competitors, meaning that the lack of attention to it poses risks of losing a portion of the customer base to competitors. In this regard, the distribution of the budget is proposed to be 40/60 between North America and overseas platforms respectively.

Unique Selling Proposition

The envisaged promotional campaign of Netflix is to rely on its specific and unique features that may contribute to the sustained competitive advantage of the company. First of all, the presence of a secondary content library is not an unusual feature in the current environment. On the other hand, the production of original content is fresher and more interesting. Indeed, the competitors of Netflix follow a similar path in terms of producing their own films and shows. However, the company in question was the pioneer of this pursuit, which allowed it to introduce well-established and recognized franchises. Such original titles, as Stranger Things, House of Cards, The Crown, The Witcher, and others are well-known across the globe. In addition, Netflix increases the original content production in partnership with local producers with such shows as Money Heist and Lupin (Limov, 2020). This nexus of local expertise, global quality, and Netflix Originals insight may serve as the unique selling proposition of the company.

Thus, for unseasoned video content enjoyers, Netflix can present itself as the “platform that brought you Stranger Things” with an emphasis on different shows for specific audiences. In fact, many viewers may have heard about these popular titles, having no idea they were Netflix Originals. Presenting the list of the most prominent original library entries may serve as a convincing factor, which would illustrate the unparalleled variety of choice. The absence of hidden payments is another advantage that can be promoted, as a single subscription opens access to the vast library described earlier: “You are one click away from [various titles for the specific audience]”. This combination of the two key advantages is likely to become a promising instrument of customer acquisition and retention.

Digital Channels

At the same time, the efficacy of the promotional activities is to depend equally on the digital channels of promotion. At this stage, it is critical to assess the userbase of each channel in order to outline the key strategies for the campaign. Being a web-based company of digital content distribution, Netflix relies on the users of the Internet as the core of its viewer base. However, in the 21^st century, this audience have been showing an increased diversity in terms of age, background, and interests. For example, the range of viewers of The Crown or House of Cards is unlikely to have major intersections with the subscribers who prefer Riverdale. Thus, the variations in the design of web promotion materials appear indispensable for the maximum efficiency of the campaign.

Digital Marketing

The digital environment of the 21^st century possesses immense opportunities in terms of promotional campaign organization. First of all, the majority of the Internet users continue to rely on Google’s search engine as the main source of information on new services and opportunities. According to the data provided by Whatsmyserp (2021), the search results for “Netflix” return the main page of the platform, followed by Wikipedia and other sites’ entries on it. It appears possible to work with Google Ads and keywords in order to transform these search results for the better efficiency (Google, 2021). More specifically, the main search result page should indicate some of the most popular titles along with the link to the main page.

This way, users from casual traffic will see familiar titles, feeling prompted to follow the link and explore the website. These search results are to be area-specific, including at least one global show and a popular local title. In addition, a Google Ads promotion is to appear alongside these search results, indicating more popular entries of Netflix’s library. Subsequently, the platform will have a more recognizable face among casual viewers who may not know the specific Netflix Originals due to their limited engagement with the industry. An adaptation of the search results through Google’s extended user analytics tools is likely to enable certain user-specific modification in the appearance of the page, as well.

Social Media

Social media platforms present marketers with immense promotional opportunities in the 21^st century. For Netflix, it appears instrument to utilize the capacity of these networks, adapting the campaign materials to each specific media. The core of the social media budget may be allocated to Facebook and Instagram as some of the most popular social media platforms. For the former, the audience is generally more diverse with a higher presence of adult and older adult users. In their case, it is possible to promote Netflix through its more mature titles with intricate plots and profound discussions on topical themes. The placement of the materials is to be executed through context advertisement in specialized communities and in the promotion section of the website. For example, the visitors of the communities that are associated with adult men’s interests, such as hunting, fishing, and cars, will see the banners with the Netflix Originals popular with this segment. For this critical objective, a budget of $600,000-$700,000 is expected for a full-front promotion in different markets of the globe.

Instagram is another platform to consider due to its immense popularity, especially among younger users. The design of this social network focuses on the visual content, making it possible to create convincing, recognizable banners that will appear among photos in the feed. Short video presentation of the latest and the most popular titles of Netflix are to be included in the stories format. This instrument is also highly efficient, as short clip appear in-between the followed users’ Stories when scrolling, achieving a high level of visibility (Martin-Quevedo et al., 2019). The Swipe-Up technology will take the interested viewers directly to one of the Netflix’s pages where it will be possible to create an account for a trial period. The content for these clips can use excerpts from the titles that are popular among younger users of Instagram, such as Riverdale and similar teen shows. The estimate budget for this purpose will amount to $600,000-$700,000, including the expenses for the material creation.

In addition, influencer marketing is another dimension of the campaign to explore. Prominent social media figures, especially those who are openly interested in television and movies, can promote the new features of Netflix to their subscribers. This method it to target younger viewers who may not have formed a habit of subscribing to licensed video content. Through the insight of the opinion leaders, they may feel prompted to try Netflix as their first platform. This way, they may feel a special connection to this service, remaining loyal customers in the long term. In this case, the promotion is to be executed through YouTube and Instagram with the help of famous influencers whose opinions are valid for their viewers. The task is to require a budget within $400,000 stretched across several months.

Marketing

The remaining marketing procedures will complement the social media and platform efforts for a comprehensive effect. First of all, Netflix will benefit from a better variety of the supporting materials that will enhance the impact of the platform’s content and enable an immersive experience in the fictional universe. For example, the company should launch a professional blog that will include additional materials to the shows, interesting facts, production process insights, and plans for the future. This aspect will be related to the SEO optimization, as well, because users searching specific titles will see more official media of Netflix. For example, a person potentially interested in Stranger Things, but still hesitant, will type “Stranger Things cast” into Google. Instead of being taken directly to an IMDB page, they will see a blog entry with interesting discussion and description of said cast. They will visit the content page provided by Netflix with an opportunity to proceed straight to this show or other titles from library, as well as other promotional materials. As of now, search queries such as “watch tv series” or “watch online”, in fact, return mostly pirated content websites (Similarweb, 2021). Netflix is to address this situation through an effective SEO optimization. This way, Netflix will enhance its already considerable presence in the worldwide web.

KPIs and Measurement

The efficiency of the envisaged marketing campaign is to be measured with the help of specific Key Performance Indicators (KPIs). The digital-based design of Netflix’s business model provides the company with better instruments in terms of the metrics collection and analysis. First of all, the number of first-time subscriptions is to become a crucial metric, showing the company’s ability to attract new users. This data is to be presented and analyzed on two levels, global and region-specific, in order to distinguish the potential areas, in which additional efforts may be required. Second, it is equally important to retain the existing customers, while attracting new ones. Thus, the metrics related to the average duration of an uninterrupted subscription will be instrumental. However, to exclude the impact of new users, there is to be a minimum threshold of inclusion, which is estimated to be at least three months. Any fluctuations in these figures will reflect the degree of existing customers’ satisfaction with the service. Finally, qualitative polls are to be conducted on the platform, the results of which will serve as the third element of the crucial KPI triumvirate.

Recommendations and Conclusions

Ultimately, Netflix has been facing an unprecedented degree of competition within the industry it had previously defined across decades. With the emergence of new, strong players on the market, effective promotional campaigns are required to keep the company afloat under the new circumstances. As such, an emphasis is to be laid on the digital promotion avenues with the help of external services, such Google Ads and Google Analytics. However, social media platforms with their immense potential will hold a central place in the new promotional design, appealing to a wider audience of the Internet users. Overall, the projected campaign is to utilize the budget of $2,000,000 efficiently in order to counteract the increasing pressure of competitors within the streaming industry.

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