A Market Entry Proposal Into Japan Marketing Essay

A grocery store Entry Proposal Into lacquer merchandise EssayWith more than 16 million members in the United States and Canada, Netflix.com Inc. is the worlds largest online inspection and repair community for be adrift movies and TV-series over the Internet and sending videodiscs by mail. Founded in 1997 by Reed Hastings and Marc Randolph in California, Netflix.com operated as an Internet- found bottomless boundary of a contract subscription receipts for movies in videodisc format. As a simple online DVD letting service, Netflix.com provided same-day shipping with customers receiving their DVDs within two or three days for sale or a rental period of s purge days. In February 2010 Netflix.com became the issue virtuoso ecommerce articulate for customers satisfaction2. Over the past decade, Netflix.com has revolutionized the snapsing of renting movies for people with few simple clicks, members stomach drift movies online, hear them via devices on TV or have it the classic way perk a DVD within one moving in day and watch out it on TV without worrying roundwhat due dates and late fees. political government agencyy BackgroundThe DVD format, introduced into the securities industryplace in 1997, was adequate to store a postgraduate flavor copy of an entire feature film on a single volt-inch disc. Even with the risk of non many Ameri displaces owning a DVD-Player by that clip, Hastings and Randolph could see the potential of the disc replacing the videotape. taking advantage of the newly introduced DVD and the small size and light tip of the discs, they could ship the DVDs cheaper than VHS-Tapes.After reaching its economics of scale in family line 1999, NetFlix introduced the subscription plan for its customers. With a monthly fee of $15.99, customers could rent four DVDs at the same time with the hazard of renting a new one each time they return a title and put themselves on a queue list if a desired DVD was not avail commensura te.In December 2000, revenue sharing agreements were made with Warner Home telecasting receiver and Columbia Tri-Star. NetFlix got a better legal injury for large amounts of DVDs in change over for a percentage of their rental receipts with the movie studios. Soon later, Dreamworks and workman signed up as easy.After attaining a subscription figure of 500.000 in February 2002, NetFlix went public and sold 5.5 million sh atomic number 18s in late May, raising a more than expected amount of $82.5 million fund. In conjunction with its IPO, the company changed the name to Netflix, Inc with a lower case F.As Netflix gained more victor and media attention, competition wampumed to form.3With the constant growing of subscribers, Netflix procl trained in January 2008 to provide unlimited movie flow for their more than 7 million members without any surplus fee.4Subscribers could watch unlimited movies or TV Series on their PC. In 2010, Netflix announced partnerships with Funai, Panasonic, Sanyo, Sharp and Toshiba to provide customers to view their streaming content via a device on TV.5Netflix announced its expansion to Canada on September twenty-second 2010, initially offering its streaming service outside the US. Netflix Canadian members can immediately watch movies and popular shows right on their TVs via Nintendos Wii, Sonys PS3 mealy console, and approach shot later this fall, Microsofts Xbox 360, as fountainhead as models from Sharp, VIZIO, Haier and Best Buys Insignia brand. Plus, they can instantly watch via Apples iPhone or iPad and on PCs and Macs.6Market ResearchTar commenceing Country and Market ConditionsThe rationale for exporting is to reach new customers and to single-valued function economies of scale. Netflix already has many international experience from when they innovateed the Canadian foodstuff. So we think Netflix is ready for the next step to go overseas.The main reason for targeting the japanese merchandise is that japan i s the second biggest film defertainment market in the world later the United States of America7. What this shows is that on that point be enough potential customers for the streaming and DVD rental service. The internet speed in japan is 61 mega blots per second, well-nigh 30 times faster than the broadband speed in the US8. Therefore the buffering in the lead the customer can watch a movie or program lead be short. This will second satisfy the streaming subscribers expectation to watch the program immediately. Japan in addition has a luxuriously internet penetration rate of 78%, which is nearly 100 million potential customers for the Netflix on-demand video streaming9.Paid streaming is not yet well- effected in Japan10. There be a few webpages only if they offer streaming for a higher value than Netflix. If the streaming business incr residuums, Netflix has a good chance to be number one in Japan, especially if Netflix is able to bring the good quality service and cheap price to Japan that they offer in the USA. However, there will be more competition soon Apple, YouTube and Yahoo announced that they will enter the streaming business, and Netflix should expect more Nipponese companies to enter the market as well.The systematic governmental factors can to a fault be valuated as positive. The economy is stable even though Japan is seek with the deflation of the 1990s. The market segment of video streaming is expected to grow strongly. Japan has a functional legal system and the Nipponese honor somewhat illegal downloads has changed and was put into effect in January 201011. Even though the law is still not very strict, it may be enough to enrapture those who download and stream illegally, and convert them into legal occasionrs as our future customers.The Nipponese infra structure is one of the go around in the world. This is positive for the DVD rental service. It would be possible to deliver the DVD quickly like in the USA. Furthermore, Ne tflix can expect that the percentage of Nipponese kinsfolkholds, who have a DVD or blue sky tool player, is higher than in other countries12. some other reason to aim in Japan is that the new Blue Ray format is growing strongly in Japan. The market sh are of Blue Ray recorders exceeded 50 percent for DVD recorders in unit harm13. So there would be a possibility to benefit from that disposition and offer more Blue Ray discs than other established Nipponese DVD rental companies. Netflix probably cannot deliver DVDs all over the country, but a dodge could be to start the DVD rental business in just the two centers of Kanto and Kansai.The competition in the DVD market is very high in Japan. There are already some established companies like Posren and Tsatuya discas. These companies offer the same service like Netflix (DVDs by mail). A possibility to enter the market could be to introduce the Netflix service with unlimited DVDs and no due date.Netflix Strategic Options for enter ing the Nipponese marketWhen we considered Netflix entering the Japanese market, we mainly contemplated four options of launching a greenfield dodge, a joint venture dodge, an encyclopaedism scheme and buying shares of a Japanese company. All those options are called equity modes, i.e. ways of entering a international market that involves the use of equity14.Greenfield StrategyOne foreign ingress option for Netflix is to establish greenfield trading operations, i.e. start up the business in Japan from scratch by building storage facilities and offices on its own15. The greenfield strategy, if undefeated, gives Netflix a complete control of the business since it is completely owned by the hard, and with no involvement with other actors, the slopped has a good protection of its proprietary technology and know-how16. It is as well as a very favorable option if Netflix wishes to array global actions from its U.S. headquarter17. This is also something that they are acquaint ed(predicate) since they entered the Canadian market in this way. However the cultural distance between USA and Japan king feat big problems in the Japanese market, especially in the start-up phase.Although charitable, greenfield operations are associated with high development costs, and if Netflix wishes to offer their customers rental DVDs for home slant it would start out them face problems such as locating storage facilities and lecture partners. The high resource commitment would, as in the case of wholly owned subsidiaries, serve as an exit barrier and head in a loss of flexibility18. This would be a both long and pricey process, which would delay Netflix entry. The industry-based view suggests that a firms performance is a result of the firms actions in response to the industry structure. In this perspective, the intensity of rivalry among competitors (one of Porters five forces) is directly affected by how many competitors there are in the industry. The fewer compet itors in an industry, the more unlikely the rivalry explodes into e.g. frequent price wars, since the competitors will be mutually interdependent. If Netflix would have chosen to enter the Japanese market by a greenfield operation, it would seemingly increase the rivalry in the industry which would mold the business more herculean for the competitors as well as for Netflix itself. This would probably be even more difficult to grapple for Netflix than for the other participants due to the heavy investments it already has to manage related to the entry on the market.Furthermore, the central coordination that the greenfield option enables, could be an advantage as well as a disadvantage. Lack of local companionship in the charge or different ideas and priorities might cause fractions between the American part and the foreign located part of the firm. Entering a foreign market involves many challenges and difficulties to overcome. Netflix needs to have extensive knowledge of the J apanese market dynamics and the consumer behaviour to be able to arrange its business. This knowledge is difficult to bring out without being a part of the market. The greenfield option would probably be a disadvantage to Netflix in terms of market knowledge coitus to its competitors.Majority stake in Japanese Company and Joint VenturesIf Netflix were to invest in a Japanese company through majority stake, this strategy would enable the Netflix to learn from and take advantage of the firm-specific capabilities that the Japanese firm possesses. The drawback of this strategy is, compared to wholly owned subsidiaries, that Netflix would not have full control of the Japanese supplemental19. Overall, the advantages and disadvantages of partially owned subsidiaries like this are the same as for joint ventures. The option of performing a joint venture includes the possibility of sharing risks and profit with a local company. This creates a certain bit of safety against losses if the ven ture, in this case in Japan, does not turf out to be profitable. Furthermore the local company can contribute with knowledge about the market which otherwise might be difficult to get hold of. The downside of joint ventures is that the different cultures and goals of the MNE and local company can cause conflicts and cause difficulties in operational control. These problems in controlling the foreign auxiliary can cause difficulties in global coordination.Acquisition StrategyAn acquisition is an example of an equity mode, which results in a wholly owned subsidiary (WOS). This option of entry is a question of purchasing one of the already existing media home entertainment firms. By purchasing an existing firm, Netflix would obviously eliminate one of its competitors in the Japanese market. This consideration alone is appealing since, compared to the greenfield option where a firm is added to the market, Netflix would instead perish one of the actors that is already a participant on the market.Establishing a WOS through acquisition could conk out the same advantages as the greenfield option (control, protection and coordination abilities), but it also offers a fast entry. By eliminating a competitor, Netflix would not have to deal with costly e.g. marketing activities to introduce themselves to the market and convince potential customers to choose them. Furthermore, if Netflix chooses to acquire a partner that has a similar business model it would authorise the transition to the Japanese market smoother. An option is also to acquire a competitor that focuses on rental DVDs only and not online, with this they would receive knowledge about the Japanese customer, get access to existing customers, acquire already functioning storage facilities and delivery services and use their knowledge in streaming to start up a similar homepage in Japan. By purchasing a Japanese competitor Netflix might be able to avoid some vital obstacles of entrance, e.g. parts of the lia bility of foreignness. Since the Japanese firm is already a known Japanese firm which the inhabitants are familiar with, Netflix may not be perceived, by the Japanese customers, as a foreign firm. The acquisition also gives Netflix needed and desired knowledge about the Japanese market and consumer behaviour.Our recommendationForeign entry decisions should be based on several strategic considerations including Porters five forces. Our analysis of Netflix entry options into the Japanese market is the acquisition of a pure DVD rental company for the DVD rental service and complement this with a Greenfield strategy for the online streaming service. Although this strategy is costly, it has the almost favourable impact on the market structure and dynamics. Netflix would get hold of a delivery spots in inviting locations and take advantage of already established relationships, storage facilities and perhaps most historic, they would get a knowledge about the Japanese consumer. Since, N etflix already is a late entrant in the DVD rental market, it is important for the firm to carry out a fast and extensive entry in order to show its competitors and market as a whole that it is connected to its venture.Marketing DecisionsFalling under the umbrella of E-commerce and operating as a business-to-consumer (B2C) company Netflix had to develop unique marketing strategies in order to become successful in the American market. The core marketing strategy at Netflix in fact, the company strategy boilersuit is to provide a slap-up customer experience. We dont want our customers liking the service we really want them lovely it.20Being an E-commerce company Netflix uses marketing and publicize methods such as fierce online measure ads, television mercenarys, and ads before the start of movie trailers during the pre-show time in theaters. Netflix executives claim that While our paid channels such as television and direct response vehicles like direct mail, online banners and search engines like Google and yahoo work highly hard for us, word-of-mouth is our best channel. Its a crew of costing the least and performing the best. You cant over-invest in it.21Historically consumers in the Japanese market are known to be very slender and selective. They demand superior quality, premium customer service, and top of the line after sales service even when they corrupt second tier products. Netflix can use this to their advantage with their overall business competency and must make their capabilities sensible to consumers as they market their service in Japan.The incredible ease and convenience of renting movies online and having them delivered to your home or even being able to stream and watch them online from your computer anywhere is universal in its appeal. Netflix aims to make enjoying movies easy and to put the joy back into watching them. Netflix even applies the strategy of marketing to the emotions of its consumers and can do the same in the J apanese Market. The Netflix logotype and trademark incorporates the colouring material red and when the company sends rental movies to consumers home they beat in red disc sleeves. The color red embodies the red carpet and curtains in a movie theater. Red is a wonderful color to evoke the emotional response around movies and the color red is extremely important in Japanese culture. The color is seen in the Japanese signalise representing the sun and is synonymous with certain ancient deities and symbolism in Japanese Buddhism and Japanese Shintoism.22The Four PsProduct, Price, Promotion and Place are extremely important for marketing in terms of Netflix entering the Japanese Market. Netflix already has a unique product and service but there are current competitors who offer similar services in the Market. Netflix could aim at niche markets if they wish to try out the Japanese market before full direct investment. Another strategy would be to team with a current player in the ma rket to build the brand sentiency for Netflix. An acquisition would allow Netflix to learn about the market and gain the infallible valuable information for long term ontogenesis of the company in a foreign market. Netflix has always been a low price and high quality option for people wishing to rent movies on high frequency levels. Netflix offers the promotion of a free one-month trial for consumers and pricing options start at low as $8 equipped with ability to stream TV shows and movies online and also one DVD at a time sent to your door. It would not be hard or dearly-won for Netflix to establish web servers and domains online in Japan to introduce themselves to Japanese consumers.The rapid growth and technological advancements of the Japanese market will allow Netflix to have move 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 Pla yStation 3. In Japan many people purchase theses devices and if Netflix can successfully enter and navigate the waters of the Japanese market they can easily incorporate the video console channel into their overall distribution channels because of the already well established relationship in the US market. stream_plus_dvdPromotionIn order to make a successful Japanese market entrance, effective advertisement is crucial. We now suggest the strategy with following the steps of objective scenery, resource about the market idiosyncrasies, put across decision, and media decisions.The familiarity of the brand Netflix in Japan is yet trivial. So we suggest setting the objective in the short and long term, respectively. Considering that foreigners are more aware of the brand than Japanese customers and that Netflix stores outnumbering movie resource which are less ready to hand(predicate) in traditional Japanese movie rentals, we set the short term perspective target to be the foreign re sidents in Japan. According to the 2009 draw by Japans National Statistical Office, the number of registered foreigners doubled in 10 years. Taken a closer look, the number of Philippines and Americans, the two incline-speaking nationalities, could be our major target. So a niche strategy could be to enter the movie streaming market, with focus on movies in English with Spanish and Japanese subtitles to get a customer basis and then to dilate 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 introducing a Japanese page.An important step would be to sign contracts with Japanese movie studios, in order to get the right to have Japanese movies in the collection.Since the English-speaking customers are the ones who are familiar with the brand name Netflix, in addition to outlay the budget on running the traditional advertisements (television, themes and such), we could use the Word of let the cat out of the bag strategy. The 2009 report and Newsjapan mention additional information that the occupation of the foreigners, specifically the Americans and the British, are mostly businessman registered in the big cities such as capital of Japan and Osaka, or related to the United States Forces Japan in Okinawa.23For the residents in capital of Japan and Osaka, we should spread the words by getting cooperation with the Registry and the famous Japanese language center where foreigners mostly go to study Japanese in relatively cheap price, called Volunteer Japanese Class. In Okinawa, we can use the local English newspaper and run the commercial in the US army network.The Japanese market is in the top three in the world. Among the advanced countries, Japan has the least gap in spending habits and house incomes 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 expensive it is, more likely they will favor it.24Since Netflixs previous advertisement in the US were online banners, we should consider the fact the accessibility to the Internet in Japan recently proved to be 64%, ranking 16th in the world.25Based on these facts, we should accentuate the partnership Netflix has with Panasonic and Toshiba making the brand even more recognized.As for deciding the media, we should use both the internet banner and the newspaper, including TV commercials. According to the Dae hyung Jong, KOTRA Regional manager in Nagoya, reports that the TV commercial disbursal has increased 12% compared to last year, when the Internet commercial expense remained steady yet, but expected to rise in the near future.26 more or less of the marketing budget should be spent on printing newspaper flyers, since the number of subscribers of newspapers in Japan is high. Among the five top nationwide distributed papers, the best suggestion would be the Sankei newspaper. Although it ranks fifth, the subscribers of Sankei are considered to be the frontiers in the Japanese consumer market. Their income level is considered quite high and the Sankei have the highest circulation rate in Osaka, where most of the foreigners are populated. It will be the best choice for Netflix, being able to aim both targets. ConclusionA Netflix move to Japan could prove to be very successful if the company is able to establish its brand control and build its brand awareness in the japan market in a fairly quick time. We have concluded that this can be done if Netflix is able to acquire existing firms in order to use their distributions channels to reach customers and enhance its overall market presence. The effort to focus on various niche markets in Japan will also greatly aid Netflix in this transition. Superior promotion strategies such as a one-month free trail and one free movie rental with the purchase of a video game aimed at console players in h opes that in the near future they will use our service to stream movies to their video games will support its efforts. Even with its various avenues for marking and advertising such as, promotions, television commercials, and internet adds, Netflix greatest advertising tool will be word of mouth. The word of mouth advertising will be derived from Netflix superior customer service and after sales service. These are a must for obtaing success in a rough Japan market. References