Netflix's Pricing Increase

KU Jour 820 – Marketing Fundamentals What’s the Buzz – Pricing Strategies – Nov. 9, 2011 Danny Kim and Peggy Lim

Netflix Videos ,[object Object],[object Object],[object Object],[object Object]

Video Quiz: ,[object Object],[object Object],[object Object]

Netflix Price Increase: Play by Play ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Hitler spoof: http:// youtu.be/EpKGHOvqsFc

Netflix Price Increase: Play by Play ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],South Park "I'm Sorry" spoof

Netflix Price Increase: Play by Play Stock prices fell about 74 percent in value from $300 per share from July 13, 2011 to $77.37 on October 25, 2011.

Source: “Netflix Business Opportunity: Some Background for Candidates,” Reed Hastings Slideshare PowerPoint http://www.slideshare.net/reed2001/netflix-business-opportunity-5854575

6 Steps for Setting a Pricing Policy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Step 1: Select a Pricing Objective ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Step 1 : Select a Pricing Objective ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Step 2 : Determine Demand Sources: 2011 Pearson Education, Inc., Q3 2011 Netflix Letter to Shareholders ,[object Object],[object Object],[object Object],- 66% - 5% Elastic or Inelastic?

Step 3: Estimate Costs ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Sources : 2011 Pearson Education, Inc., Q3 2011 Netflix Earnings Conference Call

Step 4: Analyze Competitor Costs, Prices and Offers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: “Netflix Business Opportunity: Some Background for Candidates”

Step 4: Analyze Competitor Costs, Prices and Offers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Step 4: Analyze Competitor Costs, Prices and Offers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: “Netflix Business Opportunity”

Step 5: Select a Pricing Method ,[object Object],[object Object],[object Object],Sources: 2011 Pearson Education, Inc.

Step 6: Select the Final Price ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Sources: Q3 2011 Netflix Letter to Shareholders

Source: “Netflix Business Opportunity: Some Background for Candidates”

Video Timeline: 1970s to present ,[object Object],[object Object],[object Object],[object Object]

Step 3: Estimate Costs Source: “Netflix Business Opportunity: Some Background for Candidates” “ Virtuous Cycle”

Netflix's Pricing Increase

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Netflix's Pricing Increase