The three circle analysis
The three circle analysis is a business analysis technique that looks at products and services offered by a business and those offered by competitors from the perspective of the consumer. When the analysis is done, the company or business can see how their products and those of competitors are able to meet customers' needs, where products and services are duplicated and what needs of customers are not met. The analysis also gives a perspective on areas where collaboration can be explored (Pearce and Robinson 275).
Netflix Inc.
Netflix Inc. is a company that provides streaming of television shows and movies through the internet and also sends DVDs through the mail. The company has divided its services into three segments. Domestic online streaming, Domestic DVDs sent by mail and the International online streaming segment. The domestic segments for streaming and DVDs derive its revenue from the United States market through monthly subscriptions and purchases of DVDs delivered by mail. The International streaming segment covers all operations outside the United States.
Customers' needs from Netflix Services and Products
The first circle of the three circle analysis represents the consumers need or want of the services offered by Netflix. The services Netflix offers are streaming of television shows and movies through the internet and delivery of DVDs by mail to the homes of subscribers. Consumers do increasingly prefer zero advertisements in between TV shows and movies. This trend is driving consumers to subscription services such as Netflix. In this market segment, Netflix is already a market leader. Netflix's strategy is to shift from licensed content to rely more on original TV shows. This strategy shows how Netflix is focused on satisfying its consumers' needs rather than just increasing subscriber base.
Customer Perception of Netflix Services
The second circle of the analysis represents how customers perceive the services offered by Netflix. Netflix's competitive advantages are its unlimited streaming of TV shows and Movies at the cheapest market rates as well as the timely delivery of DVDs to the homes of subscribers. Moreover, Netflix's position on the basis of its brand name and customer service rating are also major factors that determine how consumers perceive it. Netflix is a famous company that is associated with a large number of movies and TV shows that are rated highly.
Netflix is also popular because of its shift to original content which has made it increase its subscriber base significantly. Netflix's original series House of Cards has a rating of 4.5 out of a possible 5-star rating, which implies that Netflix is on the right track.
Customer Perception of Netflix's Competitors
The third circle represents how Netflix's customers view the services offered by its competitors. Netflix's major competitors are Amazon, Blockbuster, and Vudu. Most of these companies offer entertainment services by providing access to TV shows and movies in a different way. Redbox employs the use of retail kiosks, placed in various locations around the world. Vudu, on the other hand, offers online streaming but has a different payment model. Consumers only pay for what they have watched after a certain period. Vudu offers newer episodes than Netflix but its major disadvantage is the numerous advertisements shown (Walker et al 12).
Netflix's Competitive Advantage
Netflix is reported to be in the process of adding at least 700 new original shows in 2018. The company says this strategy is part of its plan to improve the content of its current and prospective subscribers. To achieve this growth Netflix intends to pump in an estimated $8 billion in 2018. This industry has few players and competition is fierce. Major networks have developed their own streaming services on websites and streaming devices. However, there is low product differentiation among the players in this market. Competition for viewers in the original content segment is likely to increase further in 2018 with Apple being rumored to be in the process of entering the market.
Works Cited
Pearce, J. A., and Robinson, B. R. Strategic management: Planning for domestic & global competition. McGraw-Hill/Irwin, 2013.
Walker, R., Jeffery, M., So, L., Sriram, S., Nathanson, J., Ferreira, J., & Merkley, G. Netflix leading with data: The emergence of data-driven video. Kellogg School of Management Cases, 2017, pp.1-19
Halal, William E. "Business strategy for the technology revolution: competing at the edge of creative destruction." Journal of the Knowledge Economy, no.6, 2015, pp. 31-47.
