Data Driven Marketing Management
Blue Ocean Company- Netflix
Identify a Blue Ocean company and explain how they created a new value curve by using the four actions
framework.
Founded in 1997, Netflix is an example of a Blue Ocean Company, by mailing movies to customers, this
changed the movie rental industry. Before Netflix, customers rented movies through brick-and-mortar
stores, usually at high costs and additional late fees. Netflix’s approach was consumer-focused and
dismantled the movie renting industry. Netflix’s 4 Actions Framework was as follows:
1.
Netflix eliminated the need for brick-and-mortar stores, allowing customers to choose movies
online, which kept costs down for Netflix and its customers. The lack of physical stores greatly
reduced costs and saved them from needing to have staff in stores, as well as paying rent and
utilities. The money that was saved by doing this was able to be reallocated to different
departments to make the operations run smoother and offer other benefits to their customers.
Because movies were mailed to customers, this eliminated customers having to drive back to
stores to return movies. Late fees were also eliminated, and movies could be kept as long as
customers wanted. Netflix also eliminated the pay “per movie” aspect, creating a monthly fee,
which gave customers more value. Introducing the streaming viewing experience, eliminated the
time that customers spent sending DVDs back, and issues with movie availability.
2.
With the new style of renting movies and videos, Netflix was able to reduce cost and time for
both the company and its customers. They offered a different model of payment than the typical
pay-per-movie, Netflix used a subscription model to entice customers. Netflix had a set price per
month and their customers paid this base price and could rent as many movies as they wanted,
which in turn raised the value of the subscription. Consumers were able to get much more with a
Netflix subscription at a much lower price than a traditional movie rental store. Netflix reduced
the difficulty of selecting movies, by offering “recommendations” for consumers. They also
reduced wait times by allowing movies to be streamed online. Netflix adopted a data-driven
approach which reduced the time needed to choose movies, they were able to create a
personalized layout that would suggest movies that the customer might like due to the history of
movies watched.
