New marketing practices: NetFlix -A good example of co creation

New marketing practices: NetFlix -A good example of co creation: "Netflix, Inc. is the world's leading DVD (Digital Video Disc) rent-by-mail company. The firm has more than 1.1 million subscribers who typic..."

NetFlix -A good example of co creation

Netflix, Inc. is the world's leading DVD (Digital Video Disc) rent-by-mail company. The firm has more than 1.1 million subscribers who typically pay a monthly fee of $19.95 for unlimited rentals, provided they have no more than 3 discs out at one time. The company offers more than 15,000 titles and maintains an inventory of more than 5 million discs. To speed delivery, Netflix has opened more than 20 regional shipping centers around the United States, and most DVDs are received by customers a day or two after ordering them on the company's Web site. More than a third of the publicly traded company is owned by Jay Hoag's Technology Crossover Ventures.
In February 2000, NetFlix introduced a new service, CineMatch, which compared rental patterns among its customers and looked for similarities in taste, using this information to recommend titles to people whose profiles were similar. It could also be programmed to combine the attributes of two users, such as a married couple, and recommend titles that both might like. The information gleaned from the CineMatch system, which required customers to rate 20 films using a five-star scale, was also shared with movie studios to help them plan marketing campaigns. Early the next year, the company changed the Marquee Program to offer unlimited rentals for $19.95 a month, with a maximum of four titles out at a given time, though this was later dropped to three. Shipping and handling were included in the price. At the same time, the firm phased out single-title rentals, as 97 percent of its business was now derived from the Marquee Program. The company was currently distributing more than 100,000 DVDs per week

In January 2001, NetFlix signed a deal that gave it exclusive distribution of the DVD version of a recent arthouse hit, Croupier,which it would have for three months before the title was available elsewhere. Other such deals were reportedly in the works. An important aspect of NetFlix's business was the availability of titles that were not found in mainstream video stores like Blockbuster, and the company had great success tapping into the underserved markets for independent and foreign films. One particular area of success was in renting so-called "Bollywood" films from India. The firm offered about a thousand titles in this category, and these circulated frequently. NetFlix also found that subscribers were renting many lesser-known films after they had been suggested by the company's recommendation system. Because they were not paying for each movie individually, NetFlix customers could take a chance on an interesting-sounding title that they didn't already know.In the end, I do remain unconvinced although I would say that I tend more to be long Netflix (NFLX) at the moment, but would love to hear your thoughts on this name!

co-creation is the need of company in present market place

Businesses in today’s economy have to continuously reinvent
themselves in order to adapt to increasingly complex and dynamic
market realities. Standardisation makes it difficult for companies
to differentiate themselves from competitors. Markets are more
fragmented than they used to be; and consumers have unprecedented
access to information and networks. At the same time technologies
have created new modes of production and innovation that enable
and encourage greater degrees of participation and collaboration.

The aim of co-creation is to enhance
organisational knowledge processes
by involving the customer in the creation
of meaning and value. Co-creation
blurs the boundaries of the firm by
‘outsourcing’ innovation and value
creation to the customer. Co-creation
transforms the consumer into an active
partner for the creation of future value.
This mutual relationship affects both
consumer and company. It re-shapes
the way in which we think, interact and
innovate. Customers are increasingly
becoming change agents of the firm,
as well as the actual owners of
organisations’ main means of production:
knowledge. For the firm, involving
consumers in the value-chain leads
to a blurring of boundaries between
research and development.

Co-creation is an active,
creative and social process,
based on collaboration
between producers and
users, that is initiated by
the firm to generate value.


Ref.Prahalad & Ramaswamy (2000) , op. cit., p. 83

Case study -launch of Oreo cookies in India

                                                                                                                                                                                Cadbury India was launched Oreo cookies, a billion dollar brand owned by its US-based parent Kraft Foods, as it looks to gatecrash into the Rs 13,000-crore biscuits market dominated by Parle and Britannia. The locally-manufactured Oreo was  launched in April, almost a century after it was introduced in the US market. "Oreo is the No.1 biscuit brand in the world by value and enjoys leadership in several markets including the US and China," Anand Kripalu, president, Kraft Foods for South Asia & Indo-China , said in a media statement.Kraft has slashed its price tag to Rs 5 for 3 biscuits; Rs 10 for 7 biscuits; and Rs 20 for 14 biscuits so that it is within the reach of a wider consumer base. Yet it won't be easy for the world's largest selling biscuit to attract price-obsessed Indian consumers, feel industry experience.                                                                                                                                                                                               The  Oreo cookies have  focused on children, youth,women and should promote the new colors for the crème filling and change the round shaped cookies into rolls, which would generate new interest amongst children, who would in turn convince their parents to buy the new cookie.

The youth population really high in the metro and tier 1 cities.Women are reguarlly going in supermarket in cities with their children.As India is developing, people now are becoming aware of various new brands which are attracting them to explore and investigate things. Women here are obsessed about shopping and show a favorable attitude and interest towards the different brands.They are also considered as heavy users when it comes to brand loyalty.                                                                                                                                                                                   As Oreo is a biscuit, and biscuits are food, so the most important need the Oreo biscuits satisfy is Hunger.

But if we further narrow down the needs, Oreo can be satisfying more than just the drive (hunger).

*Oreo satisfies the nurturing need example, a mother having difficulties in feeding her 4 to 6 years old child with some nutrition food, can consider Oreo to feed her child with a sip of milk.

*Oreo satisfies the imitation need example, kids watching the Oreo ad on TVs while the other kids are enjoying twisting, licking and dunking the cookie into a glass of milk. This forces the kids to want that cookie right away and imitate the same steps.

*Oreo also satisfies the fun need, and in this case not only kids will want to have fun and enjoy Oreo even adults like to have fun once in a while individually or even with their kids.

Females have been given permission by the government to work which resulted in the increase of purchasing power.Driven by changing lifestyles and population growth the impact on the food market has been positive. The market therefore witnessed rapid growth over the review period.The consumers in India market are seen as active switchers with a medium brand loyalty level.The food industry in kingdom is really wide and the competitions exist at a high range. Biscuits, cookies or sandwiches have a large market which makes it a tensed environment for Oreo.There are a lot of competitors in the same industry providing the same products but the most competitive companies are:-parle,brtania,itcWhen the customers recognize the various needs of hunger, nutrition, imitation and fun they enter the first step of decision making process.Now, they come across various cues of different products to satisfy those needs for example TV commercials, billboards, information from friends or relatives or their own previous experience.In the next step, customers evaluate the various alternative ways and brands that can satisfy their specific needs. (Here customers also compare the different products and brands based on benefits, price, quantity, etc.)

Finally, the customer decides on either purchase of OREO or rejection

If the customer after consuming OREO sandwich feels dissatisfied then he is said to have entered cognitive dissonance.

Suggested Marketing Mix

Product:

• Develop new sandwiches which contain less calories, less fat, less cocoa powder and less salt.
•  package should be given a new look to attract more customers.
• The labeling should be clear and nutritional information should be specific and not hypothetical such as “May contain milk protein”!!!

Price:

• Lower down their current prices because competitor already kept lower price.
• Maintain a fixed price for all specific products overall the India market.

Place:

• Oreo should improve their market existence. Example: Malls,supermarket,Schoool1`s canteen,
• Ensure availability of product in kirana shop in metro as well as tier 1 and tier 2 cities than expan its market in rural areas.

Promotion:

• Promotions through TV commercials ,flyers pamphlets , newspapers now a days social media campign is very successful.So advertised it through Facebook,orkut,Myspace etc.
• Improve their marketing campaign by sponsoring bill boards. Because kids want to see their favorite Oreo in Bill board rather than TV ads.

Contingency Plan

·          “A future forecast plan” for the entrance of competitors into the market, price inflation, and changes in the external marketing environment.

·         Technology plays a vital role and directly affects businesses. To increase sales and to provide quality products, Oreo may take the advantage of the latest equipment available.

Essential for a marketers

For marketing to meet this challenge demands a change in its focus and practices. These are a few Checking feels are critical:

·         Deeply know your customer. Success will increasingly be based on an information advantage. The more you know about your consumer, your competitor and your market, the better you’ll succeed.

·         Value the relationship. As the consumer becomes more powerful and less susceptible to marketing influences, protecting the relationship a company has with its consumer will become more crucial. An essential element of any relationship is trust.

·         Create personal relevance. Customization along relevant criteria will be increasingly demanded. Those who can deliver individualized experiences of their products, services or brand will do far better than those who only offer one-to-one marketing.

·         Push presence, not image. With so many options available, only the distinctive will prosper. Design will play a far greater role than it has in the past. Design that integrates all aspects of a company’s offering into an integrated experience will do contribute even more value.

·         Think link. Mass media can’t provide sufficient reach anymore, but linkage through the Internet and other digital medium can. Word of mouth and grass roots campaigns can thrive in those mediums.

·         Evolve quickly or die slowly. Companies and brands capable of accepting and flourishing in a condition of relentless, continuous change will prosper while their more hidebound competitors fade away.

New practices in marketing

  We live in a creative society people are moving beyond products and services that merely satisfy their needs .They are now looking for experience that touch them at Emotional and Spiritual level.The 4 P`s are being replaced by co-creation .communitization ,is phasing out STP and Brand Building is passes .Brands talks about character building now.Brands need to ingrains the values that can deliver and wish to portray. The Values should be lived up to  at each and every platform the consumer is coming in touch with them .Be it social media ,beit shop,the salesman ,the advertisement ,or the end product.  Marketers now have reduced influence in shaping their brand image.It is the consumer who play the role of creating the value through Co-Creation of product and services.

At the end companies need to move beyond the consumer and look at him as a whole human with mind,heart and spirit.