Tuesday, October 15, 2013

Portland State University American Marketing Association Event: Meet the Faculty

By Lisa A M Bauman
On Wednesday, October 9, 2013 I attended the American Marketing Association (AMA) event titled Meet the Faculty at Portland State University (PSU). The event was attended by many PSU cohorts and business professors and presided by my good friend Rachel Krauss. I had the pleasure of attending presentations by both Lauren Skinner Beitelspacher and Dr. Robert Harmon.
Harmon, the first speaker, spoke about the interesting field of technology marketing and suggested that students should consider understanding technology to further their career. He said that marketing is one of the top paying business fields and that technology marketing is a booming industry. With over 20 years of high-technology consulting experience in technologies that include software services, e-commerce, renewable energy, mobile location-based services, healthcare technology, semiconductors, and more, he certainly had the right credentials to speak about the subject.
Beitelspacher, the second speaker, spoke about a subject that was especially exciting for me as an outdoor enthusiast. She explained that PSU’s Center for Retail Leadership is launching a certificate program aimed at preparing students to work in Oregon's athletic and outdoor industries to target Oregon’s more than 800 athletic and outdoor industry companies where the average wage, is more than $80,000 annually; a 70 percent higher than the statewide average for all workers! She spoke to her audience very enthusiastically but warned that first impressions are very important to her. She advised that students always pay attention in class, put away their cellphones, and send professional quality emails when corresponding with professors.
The three things that I took away from this event were a better understanding of the resources available to me though professors at PSU, the opportunity for becoming part of the AMA, and my potential fit in the outdoor marketing zona. With a lifetime of outdoor enjoyment behind me and nearly four years of leadership rolls in the National Speleological Society and related organizations, I could see myself being very happy promoting goals that fall in line with companies like Columbia, Nike, and REI. On Thursday, the day after the event, I sat down with the SBA Honors Track Program advisor, Haley Holmes, to make sure that my educational goals were being met. She too suggested that I consider the outdoors industry to practice my marketing skills and advised me to contact professor Beitelspacher for a clear insight to what a career in the industry might look like. 

  ** For MGMT 388, Professional Selling, Portland State University, Fall, 2013-2014

Monday, May 20, 2013

Netflix's Product Management, Branding and Pricing Strategies

By Lisa Bauman, Nina Deal, Peter Ishak, Steven Johnson

            In this report our team introduces Netflix’s branding strategy and how the service it provides has performed in the market. We look at the customer adoption cycle, competitive strategy, and pricing strategy.
Product Life and Customer Adoption Cycle
Growth or Maturity?
Netflix dominates market share at 55 percent; a decline from its peak at nearly 60 percent (Chang). This decline is mainly due to competition spurred on by Netflix's success since the beginning of 2012 which appears to have pushed the market closer to maturity in the product life cycle. Still, simply looking at market share might not be the way to understand the product life cycle of Netflix since it offers two very different services: streaming and physical media delivery. Netflix was one of the first to enter the online video rental industry in the introduction stage. The company gained more than 25% of market share within its first ten years and is currently experiencing both growth and maturity in the product life cycle (Netflix Revenue). If we separate the products, we see that the streaming market shows a pattern of growth while physical DVD and Blue-Ray rentals show a pattern of maturity.
The Future for Netflix
Within the next 12-18 months Netflix will work in the growth stage of the media streaming product life cycle. Netflix will use its well-known national brand name to satisfy the needs of its 30 million patrons and draw new customers (Company Timeline). It plans to develop and introduce new streaming technology to the market that will increase revenue and market share; especially in the international market (Segal, Wilhelm). Netflix will do this by offering more licensed internet TV and even producing its own content to strategically differentiate itself from other streaming services and compete with cable providers (Pepitone, Segal). It will do this while phasing out the weak performing video media delivery service that has declined in subscriptions since 2011 and appears to be on the tail-end of the maturity stage (Nakashima). 
Branding
Branding Strategy
            Netflix is a national brand that has positioned itself using simple and consistent brand name association with white print, a black border, and a red background. Netflix relies on pure name recognition with their austere logo and netflix.com. It aims to evoke classic images of theaters with black-bordered white projection screens and rich, red curtains but in a home setting (Appendix A). No consistent slogans, jingles, symbols, or characters have been used. Netflix has built brand identity on convenience for "one low monthly price;” first through media home delivery and now, as the market is changing, media streaming (Investor Relations).  
Repositioning and Netflix’s Corporate Identity
            Netflix has been repositioning itself to move away from media delivery since 2011. It has tried several methods; one of these very unsuccessful. In 2011 Netflix quickly responded to customer dissatisfaction with Quikster, a separate website service Netflix developed to create individual brands by splitting streaming service and home delivery service (Woo). Fortunately Netflix seems to have found a good repositioning strategy that provides customers’ media needs using the right mix of technology and packaging. Brand awareness efforts rely heavily on Netflix’s revolutionary streaming service that provides perceived value to the customer with suggested options and marketing accuracy. Netflix now describes itself as an "internet subscription service” and does not expressly mention media delivery (Company Facts, Company Overview). The stated goal of Netflix’s future development shows that Netflix aims to associate itself with productions of original media such as "House of Cards," that will reach a new market of consumers seeking exclusive programs (Segal).
Competitive Positioning
Pricing Beside Key Competitors
            Earlier research revealed that Netflix’s two key competitors are Amazon and Comcast. Amazon poses the largest threat to Netflix but the company appears to stay committed to offer its streaming service mainly as a way to attract new and keep current customers. Should Amazon decide to directly compete, Netflix should be concerned as content growth increased by 70% in 2012 with between 3 to 5 million loyal subscribers (The U.S. Netflix Story). Comcast's Xfinity offers less content but is more motivated to compete directly with Netflix and possesses established relationships with media companies that will soon gain the leverage needed to gain access to licensing rights that allow content to mimic its competitor (The U.S. Netflix Story).

            The online streaming industry appears to operate within an oligopoly, where each firm tries to position prices closely to competitors. Although several competitors do not appear at first glance to hover at the market rate of $8, these competitors do not offer a product that closely compares to Netflix’s service (Table 1 and Table 2). The most similar offerings to Netflix are Hulu and Redbox and they are only pennies apart in price. Only Redbox provides consumers with both online streaming and physical media rentals but physical media rentals are purchased individually rather than through membership and both devices the quantity of media are limited. Amazon is $1.48 cheaper than Netflix per month, but content is lacking and physical media is only available to purchases (which can cost more than $20 each). Finally, Dish Network and Xfinity charge steeper prices for a slightly, but importantly different service.

Pricing Comparison

Streaming Service Comparison
Direct Competitors
Membership Fee
Indirect Competitors
Membership Fee
Netflix
$7.99 / mo
Youtube
FREE
Comcast Xfinity
$29.99-$199.99 plus $0-$5 fee per
Media Piracy
FREE
Amazon Prime
$6.58/ mo ($79/yr)
Hulu
$7.99 / mo
Coin Star/Redbox
$8/mo
Dish Network
$24.99-$74.99/mo


Table 1 by Lisa Bauman and Peter Ishak



Media delivery Service Comparison
Direct Competitors
Membership Fee
Indirect Competitors
Membership Fee
Netflix
$4.99 to $19.99/mo
Youtube
N/A
Comcast Xfinity
N/A
Media Piracy
N/A
Amazon Prime
N/A
Hulu
N/A
Coin Star/Redbox
$1.20 each title/3 free with streaming membership
Dish Network
N/A

  Table 2 by Lisa Bauman and Peter Ishak

   
Customer-Oriented, ELDP Pricing

            Netflix has used two main pricing strategies since it entered the market. At $14.99, a cheaper by comparison price for similar services in 2002, Netflix exhibited market penetration pricing. In 2007 Netflix moved to Everyday Low Pricing (EDLP) to keep market share after Red Box gained popularity. Since then Netflix has successfully continued to lower its membership fees in an effort to stay at the current low pricing for the market (Hulu.com Opens to Public).
Conclusion and Recommendations
            Netflix is operating in the growth stage of the customer life cycle for its streaming service and the maturity stage for its media delivery service. It will see growth in the streaming service as it produces more unique media to serve an international market. It is a national brand that relies heavily on its brand name, website, and competitive price to market its product. In the last few years Netflix has repositioned itself from a home media delivery service to a streaming service maintaining a customer-oriented EDLP price strategy that has been very successful. For this reason our group suggests that Netflix keep its current branding and pricing strategies.
APPENDIX A
            When many consumers think of Netflix they picture their distinctive red envelopes. Netflix emphasizes images of happy families enjoying programming together; connecting brand value to content rather than the medium that delivers it.

SOURCES CITED
Chang, Veronica. "Netflix Could Sink $40 By 2014." Seeking Alpha: Read. Decide. Invest. Seeking Alpha, 24 May 2012. Web. 24 Jan 2013. http://seekingalpha.com/article/613841-netflix-could-sink-40-by-2014.
"Company Facts." Netflix. Netflix. Web. 19 Feb 2013. https://signup.netflix.com/MediaCenter/Facts.
"Company Overview." Netflix. Netflix. Web. 19 Feb 2013. https://signup.netflix.com/MediaCenter.
"Company Timeline." Netflix. Netflix. Web. 15 Jan 2013. https://signup.netflix.com/MediaCenter/Timeline.
"Netflix Revenue." Macro Axis: Simple Personalized Investing. Macroaxis.Inc. Web. 26 Jan 2013. http://www.macroaxis.com/invest/ratio/NFLX--Revenue.
"Hulu.com Opens to Public, Offers Free Streams of Hit TV Shows, Movies and Clips from More Than 50 Providers Including FOX, NBC Universal, Metro- Goldwyn-Mayer Studios Inc. and Sony Pictures Television." hulu.com/press. hulu.com. Web. 21 Feb 2013. http://www.hulu.com/press/launch_press_release.html.
"Investor Relations." Netflix. Netflix. Web. 19 Feb 2013. http://ir.netflix.com/.
Nakashima, Ryan. "Redbox Instant streaming plan takes on Netflix." CNN Today. CNN, 12 Dec 2012. Web. 15 Jan 2013. http://www.usatoday.com/story/tech/2012/12/12/redbox-instant-netflix/1762989/.
Pepitone, Julianne. "Netflix scores Cartoon Network, Adult Swim and more Time Warner content." CNNMoney: A Service of CNN Fortune, & Money. Cable News Network, 14 Jan 2013. Web. 15 Jan 2013. http://money.cnn.com/2013/01/14/technology/netflix-time-warner/.
Segal, David. "The Netflix Fix." The New York Times Style Magazine. Feb 08 2013. The New York Times Company. Web. 10 Feb 2013. http://tmagazine.blogs.nytimes.com/2013/02/08/the-netflix-fix/
"The U.S. Netflix Story: Evolving Competition Threatens Growth." Trefis: What's Driving the Stock. Trefis, 16 Oct 2012. Web. 1 Feb 2013. http://www.trefis.com/stock/nflx/articles/146469/the-u-s-netflix-story-evolving-competition-threatens-growth/2012-10-16
Wilhelm, Alex. "Despite ‘very successful’ Nordic launch, Netflix plans slow international expansion in 2013." TNW: The Next Web. The Next Web Inc., 23 Jan 2013. Web. 14 Feb 2013. http://thenextweb.com/insider/2013/01/23/despite-very-successful-nordic-launch-netflix-plans-on-cooling-its-international-expansion-in-2013/
Woo, Stu. "Under Fire, Netflix Rewinds DVD Plan." The Wall Street Journal. Oct 11 2011. Dow Jones & Company, Inc. Web. 10 Feb 2013. http://online.wsj.com/article/SB10001424052970203499704576622674082410578.html

** For BA311, Marketing Management, Portland State University, Winter Term, 2013

Leadership: Learning, Risk, and Relationships

By Lisa A. M. Bauman
 
This essay was written in MGMT 410 class where 11 speakers spoke on the subject of leadership and in reference to the PSU MBA program’s definition of leadership below:

"Effective leaders believe they are shaping the future and act in ways that model this belief. They think with the future in mind and act with strategic intent.  Risk-taking is embraced and failure accepted as a necessary part of learning and growth. Effective leaders also act with diplomacy, demonstrating the willingness to change their own behavior in order to remain viable and achieve their purpose(s) within the larger system. Conflict is understood as a window into the leader’s own personal development and is viewed as an essential part of team participation and team management.  Ultimately, leadership is defined as bearing accountability for expanding scope of consciousness."

Speakers
April 12, 2013
Rich McBee, CEO, Mitel
Scott Lewis, CEO, Brightworks
Kevin Waddell, CFO, Brightworks, consultant
Prashant Dubey, President and CEO, The Sumati Group
James McDermott, CEO, Lytics
May 10, 2013
Floyd Chadee, Sr Vp and CFO, The Standard
Katherine Durham, VP Marketing and Communications, The Standard
Shelley Gunton, Chief Make it Happen Officer, Chez Marie
Marie Jensen-Osmunson, Founder Chez Marie
Linda Lucas, Design Operations Director, Nike
Michelle Sosinski, Executive Coach


Leadership: Learning, Risk, and Relationships
            The Portland State University Masters in Business Administration (PSU MBA) program’s definition of leadership is broadly defined as “bearing accountability for expanding scope of consciousness.” While considering this statement, it was my pleasure to meet 11 insightful and talented speakers on the subject of leadership. I noticed three common themes in the speaker’s advice for our class as we become future leaders: learning, risk, and relationships.



Learning: The Long-term Focus

            PSU MBA describes a leader as willing “to change …behavior … to remain viable and achieve their purposes within the larger system.” There must be willingness to shape actions through learning with the long-term goal of benefiting a “larger system” or community. Leaders must strategically act in ways that model the belief that they are “shaping the future.” Floyd Chadee, Senior Vice President and CFO at the Standard stood out when speaking about this concept. His career path was formed in a way that he describes as “meandering.” This path was a large benefit for his success as a leader because of the learning he experienced. Chadee said "Some people take a straight career path, but for me the meandering path was important. You learn about yourself and your ideas change over time."
 


           Part of this learning process requires conflict. PSU MBA describes conflict as a “window into … personal development and … an essential part of team participation and team management.” Rich McBee the CEO at Mitel experienced heavy conflict in his new position. He was given the task of beginning a full restructure as the new fiscal quarter was approaching in less than a month. Mitel had recently acquired Intertel. Because of this he had to make hard choices and some long-term employees had to be laid-off. He explained that “When two companies are coming together, they can only be one. You cannot have these guys [both companies] competing on the market.” In the end he was able to build a sustainable and efficient culture in the company by taking charge in the face of conflict.
 
Risk: Taking Action to Lead

            McBee’s bold strategy brings to light our second topic in leadership: risk. McBee, a first-time CEO, knew he had to make big changes and keep important players cooperating in the process. He held a board meeting and set down the playing rules. Board members surprisingly responded positively to his direction rather than resentfully. His leadership gave direction, focus, and purpose to his company but this could not have happened without risk.



            Katherine Durham, VP Marketing and Communications at the Standard agrees that risk is key to being a good leader. “Leadership is taken, not given.” she said after explaining that her career took off when she took the riskiest job offer available to her in an already shaky market. James McDermott, the CEO of Lytics is a good example of a risk-taker. He boldly describes himself as a short-term employee. "I love starting businesses, but dislike the process afterwards." His career has been varied with many exciting positions and even sometimes traveling the world. He advises students not to “wait for the perfect opportunity. Just jump in."


            Sometimes risk means failure but not a total loss. As PSU MBA explains “failure [should be] accepted as a necessary part of learning and growth.” McDermott experienced failure after building the beginning blocks of a travel information website. The project was discarded by his company and sold. Later McDermott’s idea became the very successful Travelocity.com that we know today but no credit was saved for him. Although McDermott’s failure caused him distress in the short-term, it influenced him to earn a law degree and paved the way for his career in starting several successful businesses.
 


Relationships: Communication, Diplomacy and Listening
            By far relationships appeared to be the number one element that was repeated by all 11 speakers. Kevin Waddell, CFO and consultant for Brightworks explained that "The elements of leadership really have so much to do with people." Chadee claimed that leadership is really not an option, but good leader is dependent on relationships. He said "No matter what field you are in... at the end of the day you are in a leadership position. It's all about how you relate to people."

            After reading the MBA statements and listening to all 11 speakers I can see that relationships require three major elements: diplomacy, communication, and listening. Durham explains that "if you can communicate in a way you can be heard and not piss people off, that is a sign of a real leader." This reflects the PSU MBA statement that “leaders … act with diplomacy.” Linda Lucas, Design Operations Director at Nike suggested taking understanding and communication to an academic level. She explained that she sought understanding through reading literature on gender differences in the workplace to better communicate with her male counterparts. Prashant Dubey, President and CEO of the Sumati Group explained that leaders must "seek to understand before you seek to be understood." And Scott Lewis, the CEO of Brightworks agreed saying that leaders must “really listen. You have to be really able to get in to the head of the guy cross the room."
 

            All of these elements will create an accountable leader who seeks to expand the “scope of consciousness” through learning, risk taking, and relationship building. A leader must learn with a long-term focus in the face of conflict, take risks while counting failure as a learning opportunity, and value relationships through diplomacy, communication, and listening.

** For MGMT410, Executive Perspectives on Leadership, Portland State University, Spring 2013