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Pages:
3 pages/≈825 words
Sources:
1 Source
Style:
APA
Subject:
Business & Marketing
Type:
Case Study
Language:
English (U.S.)
Document:
MS Word
Date:
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Topic:

Netflix Pricing of 2011: Customer Backlash, Pricing Decision, and Potential Ramifications

Case Study Instructions:

You need to write the case analysis in a report form addressing the discussion questions as a guide to what needs to be covered in the analysis NOT in the form of Q&A. Refer to the rubric for mark breakdown.
Netflix: Pricing Decision 2011
Discussion Questions: Customers had a bad reaction to the announcement of monthly fees for streaming video; compared to previous prices for movies on disk, (which are necessarily constrained by the time to mail back and get new disks) the price seems fair - why was there a backlash?
General Tips in Case Study Analysis
Step 1: Problem definition. What is the major challenge, problem, opportunity, or decision that has to be made? If there is more than one problem, choose the most important one. Often when solving the key problem, other issues will surface and be addressed. The problem statement may be framed as a question; for example, How can brand X improve market share among millennials in Canada? Usually, the problem statement has to be re-written several times during the analysis of a case as students peel back the layers of symptoms or causation.
Step 2: Alternatives. Identify in detail the strategic alternatives to address the problem; two to three options generally work best. Alternatives should be mutually exclusive, realistic, creative, and feasible given the constraints of the situation. Doing nothing or delaying the decision to a later date are not considered acceptable alternatives.
Step 3: Criteria. What are the key decision criteria that will guide decision-making? In a marketing course, for example, these may include relevant marketing criteria such as segmentation, positioning, advertising and sales, distribution, and pricing. Financial criteria useful in evaluating the alternatives should be included—for example, income statement variables, customer lifetime value, payback, etc. Students must discuss their rationale for selecting the decision criteria and the weights and importance for each factor.
Step 4: Analysis. Provide an in-depth analysis of each alternative based on the criteria chosen in step three. Decision tables using criteria as columns and alternatives as rows can be helpful. The pros and cons of the various choices as well as the short- and long-term implications of each may be evaluated. Best, worst, and most likely scenarios can also be insightful.
Step 5: Decision. Students propose their solution to the problem. This decision is justified based on an in-depth analysis. Explain why the recommendation made is the best fit for the criteria.

Case Study Sample Content Preview:

Case Report on Netflix Pricing of 2011
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Case Report on Netflix Pricing of 2011
Introduction
Netflix is a streaming and DVD rental service company founded in 1997 by Reed Hastings and Marc Randolph. It is the world's leading internet entertainment service, with over 130 million subscribers in over 190 countries enjoying TV series, documentaries, and feature films across various genres and languages (Kweon & Kweon, 2021). Netflix is known for its innovative business practices, such as its decision to start offering streaming content in 2007 and raising prices in 2011. The 2011 pricing decision caused a significant backlash from customers due to the perceived unfairness of the new prices compared to the previous prices for movies on disk. In this case study, we will explore the reasons behind the customer backlash, examine the pricing decision, and analyze the potential ramifications for Netflix.
Background and Problem Definition
In 2011, Netflix decided to increase prices for customers who had both a streaming subscription and a DVD rental subscription. This price hike separated the streaming and DVD rental services so that customers who wanted both services would have to pay a separate fee. This move was intended to increase the company's profits and make the pricing structure simpler and easier to understand (Kweon & Kweon, 2021). The new price structure was met with a significant backlash from customers, who felt that the new prices were unfair compared to the previous prices for movies on disk. Customers argued that the new prices were too high, especially considering that streaming services have no time constraints, unlike DVD rentals which require customers to wait for the movie to be shipped and returned.
Alternatives and Criteria
In order to prevent a similar public backlash in the future, Netflix needs to ensure that its pricing decisions are communicated clearly and transparently (Kweon & Kweon, 2021). Customers should be aware of potential changes affecting their billing or subscription. Additionally, Netflix should ensure that its prices remain competitive and justifiable to customers. If customers feel that Netflix is providing them with an affordable and valuable service, they are more likely to be accepting of any changes. The criteria for decision making in this case is based on pricing, transparent communication and marketing. Netflix’s competitors will obviously take advantage of the backslash to gain a competitive advantage. Therefore, Netflix must engage is additional advertisement to their target audience.
Analysis
In order to understand the customer backlash, it is ess...
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