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A Market Entry Proposal Into Japan Marketing Essay

With more than 16 million customers in america and Canada, Netflix. com Inc. is the world's largest online service company for streaming videos and TV-series online and sending Dvd disks by mail.

Founded in 1997 by Reed Hastings and Marc Randolph in California, Netflix. com handled as an Internet-based unrestricted rental registration service for movies in Dvd and blu-ray format. As a simple online DVD rentals service, Netflix. com provided same-day shipping with customers receiving their DVDs within two or three days for sale or accommodations period of a week. In Feb 2010 Netflix. com became the "number one ecommerce company for customers satisfaction". Within the last 10 years, Netflix. com has "revolutionized" just how of renting videos for people: with few simple clicks, customers can stream videos online, watch them via devices on Tv set or own it the common way: get a Dvd and blu-ray within one working day watching it on Television without worrying about due dates and later fees.

Company Background

The Movie format, introduced into the market in 1997, was able to "store a high quality copy of a whole feature film on a single five-inch disc". Despite having the chance of few Americans running a DVD-Player by that time, Hastings and Randolph could start to see the probable of the disk replacing the videotape. Taking advantage of the newly presented DVD and the "small size and light weight of the discs", they could send the Dvd videos cheaper than VHS-Tapes.

After getting its economics of scale in September 1999, NetFlix presented the subscription arrange for its customers. Having a monthly fee of $15. 99, customers could rent four DVD's at exactly the same time with the probability of renting a new one each time they return a title and put themselves over a queue list in case a desired DVD was not available.

In December 2000, revenue showing agreements were made out of Warner Home Training video and Columbia Tri-Star. NetFlix received a better price for huge amounts of DVDs in exchange for a percentage of their rental receipts with the movie studios. Immediately after, Dreamworks and Artisan signed up as well.

After attaining a membership body of 500. 000 in February 2002, NetFlix travelled general population and sold 5. 5 million shares in later May, raising a more than expected amount of $82. 5 million fund. Together with its IPO, the business improved the name to Netflix, Inc with a lower circumstance "F".

As Netflix gained more success and marketing attention, competition began to form.

With the frequent growing of subscribers, Netflix announced in January 2008 to provide unrestricted movie streaming for his or her more than 7 million associates without any additional fee. Members could watch unrestricted movies or Tv set - Series on the PC. This year 2010, Netflix announced partnerships with Funai, Panasonic, Sanyo, Sharp and Toshiba to provide customers to see their loading content via a device on Television set.

Netflix released its expansion to Canada on Sept 22nd 2010, in the beginning offering its loading service outside the US. Netflix Canadian users "can instantly watch movies and popular shows right on their TVs via Nintendo's Wii, Sony's PS3 game console, and coming later this land, Microsoft's Xbox 360 360, as well as models from Sharp, VIZIO, Haier and Best Buy's Insignia brand. Plus, they can instantly watch via Apple's iPhone or iPad and on PCs and Macs. "

Market Research

Targeting Country and Market Conditions

The rationale for exporting is to attain new customers and use economies of size. Netflix already has some international experience from when they came into the Canadian market. So we think Netflix is ready for the next step; to go abroad.

The main reason for targeting the Japanese market is that Japan is the second biggest film entertainment market in the world after the United states. What this shows is that we now have enough potential prospects for the loading and DVD rental service.

The internet acceleration in Japan is 61 megabits per second, nearly 30 times faster than the broadband quickness in america. Which means buffering prior to the customer can observe a movie or program will be short. This can help satisfy the streaming subscriber's expectation to watch the program immediately.

Japan also has a high internet penetration rate of 78%, which is almost 100 million potential clients for the Netflix on-demand video recording streaming.

Paid streaming is not yet well-established in Japan. There are a few webpages but they offer loading for a higher price than Netflix. In the event the streaming business raises, Netflix has a good chance to be number one in Japan, particularly if Netflix is able to bring the nice quality service and cheap price to Japan that they give in america. However, you will see more competition soon; Apple, YouTube and Yahoo declared that they can enter the loading business, and Netflix should expect more Japanese companies to enter in the marketplace as well.

The systematic governmental factors can also be valuated as positive. The overall economy is secure even though Japan is struggling with the deflation of the 1990's. The market segment of video streaming is likely to grow highly. Japan has an operating legal system and japan law about illegitimate downloads has improved and was put into effect in January 2010. Despite the fact that the law continues to be not very demanding, it might be enough to capture those who download and stream illegally, and convert them into legal users as our future customers.

The Japanese infrastructure is among the best in the world. That is positive for the Dvd and blu-ray rental service. It might be possible to deliver the Movie quickly like in america. Furthermore, Netflix can get that the ratio of Japanese households, who have a DVD or Blue Ray player, is higher than in other countries. Another reason to invest in Japan is that the new Blue Ray format keeps growing strongly in Japan. The market talk about of Blue Ray recorders exceeded 50 percent for Dvd movie recorders in device terms. So there will be a possibility to reap the benefits of that trend and provide more Blue Ray discs than other established Japanese DVD local rental companies. Netflix probably cannot deliver Dvd disks all over the country, but a strategy could be to start the DVD local rental business in just both centers of Kanto and Kansai.

The competition in the Dvd movie market is very high in Japan. There already are some proven companies like Posren and Tsatuya discas. These companies offer the same service like Netflix (Dvd disks by mail). A opportunity to enter the market could be to create the Netflix service with endless DVD's and no due date.

Netflix Strategic Options for coming into the Japanese market

When we considered Netflix coming into the Japanese market, we mainly contemplated four options of accessibility: a greenfield strategy, a jv strategy, an acquisition strategy and buying shares of any Japanese company. All those options are called equity modes, i. e. ways of entering a international market which involves the utilization of equity.

"Greenfield" Strategy

One foreign admittance option for Netflix is to determine "greenfield" operations, i. e. set up the business in Japan from nothing by building storage facilities and office buildings on its own. The "greenfield" strategy, if successful, offers Netflix a whole control of the business since it is completely owned by the firm, and without engagement with other actors, the organization has a good protection of its proprietary technology and know-how. It is also a very favorable option if Netflix wishes to organize global activities from its U. S. headquarter. That is also something that they are familiar given that they moved into the Canadian market in this way. However the ethnic distance between USA and Japan may cause big problems in the Japanese market, especially in the start-up period.

Although interesting, "greenfield" businesses are associated with high development costs, and if Netflix wishes to provide their customers rentals DVD's for home delivery it would make sure they are face problems such as locating storage facilities and delivery lovers. The high source of information commitment would, as in the case of wholly had subsidiaries, serve as an leave barrier and lead to a loss of flexibility. This would be considered a both time-consuming and costly process, which would postpone Netflix admittance. The industry-based view shows that a firm's performance is because the firm's actions in response to the industry structure. In this point of view, the depth of rivalry among competition (one of Porters five causes) is straight affected by how many rivals there are in the industry. The fewer rivals in an industry, a lot more unlikely the rivalry explodes into e. g. repeated price wars, since the competition will be mutually interdependent. If Netflix could have chosen to type in japan market by way of a "greenfield" operation, it could obviously boost the rivalry on the market which would make the business more difficult for the competitors as well for Netflix itself. This would probably be even more difficult to handle for Netflix than for the other participants because of the heavy investments it already has to take care of related to the entry on the market.

Furthermore, the central coordination that the "greenfield" option permits, could be an edge and a disadvantage. Insufficient local knowledge in the management or different ideas and priorities might cause fractions between the American part and the foreign located part of the firm.

Entering a overseas market involves many troubles and issues to overcome. Netflix will need extensive knowledge of japan market dynamics and the consumer behaviour to have the ability to set up its business. This knowledge is difficult to get without being a part of the marketplace. The "greenfield" option would probably be a downside to Netflix in terms of market knowledge relative to its opponents.

Majority stake in Japan Company and Joint Ventures

If Netflix were to purchase a Japanese company through bulk stake, this strategy would allow the Netflix to learn from and take benefit of the firm-specific capacities that the Japanese firm possesses. The downside of the strategy is, compared to wholly had subsidiaries, that Netflix would not have full control of japan subsidiary. Overall, advantages and negatives of partially possessed subsidiaries like this are the same as for joint ventures. The option of doing a joint venture includes the likelihood of sharing risks and income with a local company. This creates a certain little bit of safety against loss if the project, in this case in Japan, will not end up being profitable. Furthermore the neighborhood company can add with knowledge about the marketplace which often might be difficult to obtain. The disadvantage of joint projects is that the various cultures and goals of the MNE and local company can cause conflicts and cause issues in operational control. These problems in controlling the overseas subsidiary can cause complications in global coordination.

Acquisition Strategy

An acquisition is an example of an equity method, which results in a wholly held subsidiary (WOS). This option of access is a question of purchasing one of the already existing advertising home entertainment companies. By purchasing a preexisting firm, Netflix would clearly eliminate one of its rivals in japan market. This concern alone is interesting since, set alongside the "greenfield" option where a firm is put into the market, Netflix would instead become one of the stars that is already a participant on the marketplace.

Establishing a WOS through acquisition could deliver the same advantages as the "greenfield" option (control, coverage and coordination abilities), but it also offers an easy entry. By eliminating a competition, Netflix wouldn't normally suffer from costly e. g. marketing activities to introduce themselves to the market and convince potential clients to choose them. Furthermore, if Netflix chooses to get a partner which has a similar business design it would make the changeover to the Japanese market smoother. An option is also to acquire a competitor that targets local rental DVD's only and not online, with this they might receive knowledge about the Japanese customer, get access to existing customers, acquire already functioning safe-keeping facilities and delivery services and use their knowledge in streaming to begin up an identical homepage in Japan. By purchasing a Japanese competitor Netflix could probably avoid some essential obstacles of entrance, e. g. elements of the liability of foreignness. Because the Japanese firm is already a known Japanese organization which the inhabitants are familiar with, Netflix may well not be identified, by the Japanese customers, as a overseas company. The acquisition also offers Netflix needed and desired knowledge about the Japanese market and consumer behavior.

Our recommendation

Foreign access decisions should be predicated on several strategic considerations including Porter's five pushes. Our examination of Netflix entry options into the Japanese market is the acquisition of a real DVD local rental company for the Dvd and blu-ray rentals service and go with this with a Greenfield strategy for the online loading service. Although this plan is costly, it has the most favourable impact on the market framework and dynamics. Netflix would get hold of a delivery areas in attractive locations and take benefit of already established romantic relationships, storage facilities as well as perhaps most important, they might get an understanding about the Japanese consumer. Since, Netflix already is a later entrant in the DVD rental market, it's important for the firm to carry out a fast and extensive accessibility in order showing its opponents and market as a whole that it is focused on its venture.

Marketing Decisions

Falling under the umbrella of E-commerce and functioning as a business-to-consumer (B2C) company Netflix got to develop unique marketing strategies to be remembered as successful in the American market. "The primary online marketing strategy at Netflix - in fact, the company strategy overall - is to give a great customer experience. We don't want our customers liking the service; we want them adoring it. " As an E-commerce company Netflix uses advertising methods such as extreme online banner advertisings, television advertisements, and ads before the start of movie trailers through the pre-show time in theaters. Netflix executives declare that "While our paid channels - such as television set and immediate response vehicles like direct email, online banners and search engines like Google and yahoo - work extremely hard for us, word-of-mouth is our best route. It's a combo of costing the least and executing the best. You can't over-invest in it. " Historically consumers in japan market are regarded as very critical and selective. They demand superior quality, high grade customer support, and top of the line after sales service even when they purchase second tier products. Netflix may use this with their advantage with the overall business competency and must make their functions aware to consumers as they market their service in Japan.

The incredible easiness and convenience of renting films online and having them sent to your home or even being able to stream and watch them online from your personal computer anywhere is universal in its charm. Netflix aims to make enjoying films easy and to put the happiness back into observing them. Netflix even can be applied the strategy of marketing to the feelings of its consumers and can do the same in japan Market. The Netflix custom logo and trademark contains the colour red and when the company transmits rental videos to consumer's home they get to red disc sleeves. The colour red embodies the "red carpet" and drapes in a cinema. Red is an excellent color to evoke the emotional response around films and the color red is extremely important in Japanese culture. The colour is seen in japan Flag representing the sun and it is synonymous with certain traditional deities and symbolism in Japanese Buddhism and Japanese Shintoism.

 

The Four P's

Product, Price, Promotion and Place are extremely important for marketing in conditions of Netflix entering the Japanese Market. Netflix already has a distinctive product and service but there are current competitors who offer similar services in the Market. Netflix could aim at niche markets if they would like to try out japan market before full immediate investment. Another strategy is always to team with a present-day player in the market to make the brand awareness for Netflix. An acquisition would allow Netflix to learn about the market and gain the necessary valuable information for long term growth of the business in a foreign market. Netflix is definitely a low price and high quality option for folks wishing to rent movies on high consistency levels. Netflix offers the promotion of a free one-month trial for consumers and costs options start at low as $8 equipped with capacity to stream TV shows and films online and also one DVD at the same time sent to your door. It would not be hard or expensive for Netflix to establish web servers and domains online in Japan to bring in themselves to Japanese consumers.

The rapid expansion and technological advancements of the Japanese market allows Netflix to have advanced and unique distribution channels. Currently in America subscribers of Netflix can also stream and download movies on popular Japanese video game consoles such as the Nintendo Wii and the Sony Ps3 3. In Japan many people purchase theses devices and if Netflix can effectively enter and get around the waters of the Japanese market they may easily incorporate the training video console channel to their overall distribution channels as a result of already well established relationship in america market.

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Promotion

In order to make a successful Japanese market access, effective advertisement is crucial. We have now suggest the strategy with following the steps of objective setting, resource about the market idiosyncrasies, meaning decision, and mass media decisions.

The familiarity of the brand Netflix in Japan is yet trivial. So we suggest setting the objective in the short and long run, respectively. Considering that foreigners tend to be alert to the brand than Japanese customers and that Netflix stores outnumbering movie source which can be less accessible in traditional Japanese movie accommodations, we set the short term perspective aim for to be the overseas residents in Japan. According to the 2009 report by Japan's Country wide Statistical Office, the amount of documented foreigners doubled in a decade. Considered a closer look, the number of Philippines and People in america, both English-speaking nationalities, could be our major aim for. So a niche strategy is to type in the movie streaming market, with concentrate on movies in English with Spanish and Japanese subtitles to get a customer basis and then to extend the Netflix business to Japanese movies and programs. So Netflix could first use the same English webpage like in the United States and Canada, before launching a Japanese web page.

An important step is always to sign contracts with Japanese movie studios, in order to receive the right to have Japanese videos in the collection.

Considering that the English-speaking customers are the ones who are familiar with the brand 'Netflix', in addition to spending the budget on running the traditional advertising (television, magazines and such), we're able to use the 'Term of Oral cavity' strategy. The 2009 2009 article and Newsjapan mention more information that the job of the foreigners, specifically the People in the usa and the British isles, are mostly entrepreneur registered in the best towns such as Tokyo and Osaka, or related to the United States Pushes Japan in Okinawa. For the residents in Tokyo and Osaka, we should spread what by getting assistance with the Registry and the famous Japanese words center where foreigners typically go to review Japanese in relatively cheap price, called 'Volunteer Japanese School'. In Okinawa, we may use the local English newspaper and run the commercial in america military network.

The Japanese market is in the most notable three on the globe. Among the advanced countries, Japan gets the least space in spending practices and house earnings nationally, which means that most of the Japanese consumers can afford recreational services. Japanese customers have tendencies to be exceptionally aware of the name of the brand. More costly it is, much more likely they will favour it.

Since Netflix's past advertisement in america were online banners, we have to consider the actual fact the option of the Internet in Japan recently proved to be 64%, standing 16th on earth. Based on these facts, we ought to accentuate the relationship Netflix has with Panasonic and Toshiba making the brand even more known.

As for deciding the advertising, we ought to use both internet banner and the paper, including TV advertisements. According to the Dae hyung Jong, KOTRA Regional administrator in Nagoya, accounts that it commercial expenditure has increased 12% compared to last year, when the web commercial expense continued to be dependable yet, but likely to rise in the near future.

Most of the marketing budget should be allocated to printing publication flyers, since the number of readers of newspapers in Japan is high. Among the five top countrywide distributed paperwork, the best recommendation would be the Sankei newspaper. Though it rates fifth, the users of Sankei are believed to be the frontiers in japan consumer market. Their income level is considered quite high and the Sankei have the best blood circulation rate in Osaka, where almost all of the foreigners are populated. It will be the best choice for Netflix, having the ability to aim both focuses on.

Conclusion

A Netflix move to Japan could end up being very successful if the business can create its brand image and build its brand awareness in the japan market in a fairly quick time. We have concluded that this is done if Netflix can acquire existing companies in order to make use of their distributions programs to attain customers and enhance its overall market occurrence. The effort to concentrate on various niche markets in Japan will also greatly aid Netflix in this transition. Superior campaign strategies such as a one-month free path and one free movie lease with the purchase of a video game aimed at unit players hoping that in the near future they'll use our service to stream films to their video games will support its attempts. Despite having its various strategies for marking and advertising such as, campaigns, television advertisements, and internet brings, Netflix greatest advertising tool will be word of mouth. The term of oral cavity advertising will be produced from Netflix superior customer service and after sales service. These are essential for obtaing success in a harsh Japan market.

References

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