1. Executive Summary
This plan is expected to deliver the following key results by year 3:
– Turnover of £ 10m.
– Profit of £ 10m, contributing 10% towards company’s profits.
– An additional market share of 14% among the UK’s SVOD industry.
– 15% of market share of the UK MOOC sector.
The strategy is as follows:
– Launch the advertising campaign on the social media, academic institutions and Netflix website.
– Contacting recognised higher education institutions and outstanding academic YouTubers in the UK in order to establish commercial agreements to deliver learning content in collaboration with Netflix producers.
– Produce 500 educational online tutorials.
– Introduction of the Educational Segment in UK’s Netflix Online Platform.
– Process algorithm results and customers’ feedback with the purpose of making changes as needed.
– Keep on producing content as well as analyzing outcomes and decide segment extension within time and further approach.
This plan requires an upfront investment of £ 10m to create and produce 500 online tutorials. The same budget also includes promotion costs and platform’s adjustment expenses.
The key assumptions, risks and contingencies are listed below:
– UK demand for Netflix matches forecast growth.
– UK Universities’ enrollment statistics keep growing at rate of 1.9% annually.
– ‘Young Adults’ population matches forecast growth.
– Education will remain as the best-performing spending category for the following decade.
– Competition remains constant.
2. Introduction
In a world where information is only a click away from our reach, sometimes it seems to be more than difficult to find quality content. Searching is usually time consuming and, in the end, video material is easier to process and interiorize. Not for nothing, the common saying “an image says more than a thousand words” is widely accepted. So, where and from whom can I obtain reliable information that really suits customer’s needs?
Along the technology revolution, recent efforts from some of the giants make us believe that a solution is closer than ever. In instance, companies such as Netflix and Spotify have made significant progress. By using algorithms, the entertainment and media you actually want to consume is easily discoverable and personalized to customer’s interests.
Now, the question that arises is: how feasible would it be to implement the same framework for knowledge management and learning development applications? (https://techcrunch.com/2017/07/04/in-the-knowledge-economy-we-need-a-netflix-of-education/)
In fact, some similar approaches have been designed to meet customers’ expectations towards online education and they are known as MOOC (massive open online courses). Although MOOCs are increasing their presence in the educational market (see Figure X: https://www.class-central.com/report/mooc-stats-2017/), they do not enjoy the technological advantage that Netflix has regarding its cutting-edge learning and recommending algorithm.
Parallelly, institutions have started understanding how essential online education is for the development of their businesses, they see technological advancement as an opportunity to break down geographic barriers to reach students around the world. By adapting their courses with online content, universities would be able to:
– Bring unlimited educational content access to individuals who are not yet enrolled in formal institutions.
– Reinforce topics taught in formal institutions (students’ additional source of information).
– Promote alliances between MOOCs developers and Universities to provide certified courses (e.g. online degrees, specializations).
– Deliver skilled training to corporations (vocational and technical).
– Globalize teaching.
– Expand Universities’ brands.
Institutions interested in being involved in MOOC programmes, definitely must embrace big data in the same as Netflix does. Algorithms development is the key to classify and understand the customer’s (students) need and then to recommend and enhance their experience regarding information online searching.
Part I – Strategic Context
3. Plan Objectives
Provide online quality educational content to higher education students in the UK by creating a new segment for Netflix. By year 3, the plan calls for:
– 500 educational online tutorials.
– Turnover of £ 10m.
– Profit of £ 10m, contributing 10% towards company’s profits.
– An additional market share of 14% among the UK’s SVOD industry.
– 15% of market share of the UK MOOC sector.
4. Environmental Analysis
By 2017, 15.7% of the UK population belongs to the ‘Young Adults’ group (aged 17-30 years old). That means approx. 10.4 million of youngers who are either already enrolled in a Higher Education institution or thinking about taking a formal course.
The complexity of socio-economic and political environments are determinants in universities’ intake processes. Along with the limitation related to the number of institutions in the UK (162 by 2017 https://www.universitiesuk.ac.uk/facts-and-stats/Pages/higher-education-data.aspx), dynamism is what characterizes the universities industry. Some of the factors that constantly impact education are income and expenditure rates, unemployment levels, levels of financial aids available, technology, among others (Universities in the UK). The following facts sum up the current industry conditions in the UK:
– Courses’ fees have been frozen for 2018-19 and 2019-20 (budgets cuts).
– Unemployment rate is expected to rise in 2018-19 due to Brexit uncertainties.
– Upcoming barriers to free movement of students throughout the European Union due to Brexit (restrictions to study and work).
– New migration policies may affect international students to study in the UK.
According to HESA (Higher Education Statistics Agency) in its UK Student Numbers and Characteristics Report, 2016/17, 2.3 million is the total quantity of students who attended a higher education programme in the UK, which corresponds just the 21% of the ‘Young Adults’ population described above (age distribution among students was considered, see Appendix X). Additionally, Universities’ enrollment statistics have been growing at a moderate pace of 1.9% annually since students recognise the value of reaching a diploma and the importance that this has to obtain rewarding and well-paid jobs.
Considering the willingness of the UK citizens to spend, education is forecast to remain the best-performing spending category for the following decade (Income & Expenditure). (see figure #X),
On the other hand, Netflix’s most valuable watcher profile segment is also ‘Young Adults’ group. From nearly the 7.5 m of subscribers registered in 2017, 86% were aged between 16 – 34 years old (Figure X) which corresponds to 6.5 m of ‘Young Adults’ watchers in the UK.
It is believed that Netflix’s capacity to produce original content along with its privileged position in the entertainment industry and the successful results obtained from the algorithm implementation could improve students’ need to find academic quality content. Situation that is expected to continue growing according to UK’s universities enrollment statistics.
5. Competitors
As it can be observed in the table below, the market is very competitive. However, Netflix’s strategy is based on the price (lower than competitors), ability to produce content in 50 different languages and most importantly, its experience as an original content producer which relies in gran proportion on its sophisticated and accurate algorithm recommendation system.
6. SWOT Analysis
Now, it is presented the competitive advantages of the company regarding the new segment proposed, as well as its opportunities and threats by using SWOT analysis. Even though the market is highly competitive, there is still unlimited ways to deliver high quality academic content to UK customers, therefore, business growth is still in its early stage.
7. Key Assumptions
Part 2: Marketing Strategy Formulation
8. Customer Segmentation Analysis
Bases for consumer market segmentation for Netflix Education can be summarized as follows:
8.1 How do you find online quality academic video content?
Academic video content is found online in the following ways:
– YouTube: perhaps the most well-known platform for VOD. Includes vast quantity of material but most of them low reliable. Additionally, customers report difficulties in finding any recommended content, as well as time-lag, freezing and buffering issues. (https://www.digitaltveurope.com/2018/05/23/svod-customer-satisfaction-far-exceeding-that-of-pay-tv/).
– MOOCs (Massive Open Online Courses): Platforms such as Coursera, Lynda, Udemy and FutureLearn (UK Open University) among others, are disrupting the UK formal education system by making quality content accessible to anyone at any time. All of them offer different pricing models depending on the characteristics of each course (unlimited access, assessments, certification upon completion, etc.).
– Formal Institutions: UK Universities are working hard on implementing their own online platforms (intranets) according to the academic requirements. These robust systems allow students to complete their programmes with success. However, content is no longer available once the course is achieved and most importantly, the quality of the information might be biased depending on the institution’s culture.
8.2 Who searches for online quality academic video content?
To address this question, consumer segmentation bases approach was used.
– Vocational learners: professionals looking to maintain or explore their knowledge in order to develop their careers through flexible and lower cost learning channels (online courses).
– Higher Education Students: enrolled students accessing MOOCs as learning and teaching resources. Here we also identify ‘sampling learners’, students who watch video lectures for short periods of time either at the start or when the class is already fully under way.
– Potential students: Prospective students who look for inspirational content available and free on online platforms to embark on formal studies.
8.3 Customers’ expectations
In the same way Netflix delivers entertainment, what customers need is a platform that can make education more accessible and relevant. In instance, customers want:
– Easy access: information must be available at anytime and anywhere. Able to provide opportunities for learning to individuals who could not otherwise access that learning (not disposable income, tight schedules, distance learning, etc.).
– Content’s quality: by partnering with recognised academic institutions, better quality content can be delivered. Customers expect to find in one website content enough reliable to use as reference in their academic assignments.
– Meaningful tutorials: many students see the importance of having an alternative source of learning when difficulties come up during their daily formal education. Academic VOD is the solution for them.
– Time Saving: through customized recommendations and suggestions, searching time can be dramatically reduced.
– Enjoyable navigation: A truly interactive and impactful learning experience can be achieved if the navigation through the platform is sound and satisfactory.
– Flexibility: Able to find additional features for each course. In instance, certifications, additional material, feedback from experts and so on.
9. The Marketing Mix – 7P
9.1 Product
Netflix Education is a segment, where UK users can have access to enjoy high quality academic content such as tutorials or educational series. What differentiates it from other competitors is their solid experience producing and delivering original content as well as leveraging from its proven algorithm which allows Netflix to understand customers’ preferences by making the most accurate recommendations in terms of what they want to watch.
This approach is key retain existing customers who may be studying any higher education course. Additionally, this strategy targets new consumers aged 17-30 years old who are not attending any formal programme but interested in pursuing professional formation.
To minimise losses, the plan involves the production of educational content in collaboration with higher education UK institutions as well as with the participation of recognised YouTubers or independent tutors who have already published quality video content online.
9.2 Price
Pricing strategy has been estimated considering the following aspects:
– Level of competition (High).
– Netflix’s brand strong presence in the UK.
– Ability to promote the new segment in the current advertising channels.
In order to structure the price for the new segment, the subscription fee considered was only for one screen stream and is summarized as follows:
YEAR Monthly Basis Subscription Fee (£) Monthly Educational Segment Additional Fee (£) Monthly Total Subscription Fee (£)
1 7.99 0 7.99
2 7.99 1 8.99
3 7.99 2 9.99
Competitor promotions or response to Netflix’s entry into the MOOC market should be expected. Pricing may therefore require adjustment in the short-term.
9.3 Place
Through Netflix’s any screen any time feature, customers can easily access Netflix through PC, mobile phone and tablet anywhere. Also, as far as the strategy starts to be developed with the support of educational institutions, content is likely to be watched within universities and colleges.
9.4 Promotion
– Strategic Partnerships: To gain UK students customer bases, Netflix strategically will start partnering with renowned higher education establishments.
– Digital Marketing: attracting new customers through Google Display Network (GDN), AdWords and Youtube Ads through which Netflix gained customer insights on focusing on their target group.
– Free trial: Netflix aims to acquire new customer base by offering one-month free subscription with complete access to online streaming of varieties of movies and TV series including the education segment.
9.5 People
– Independent and associated scholars, teachers and tutors who will work by hand with Netflix producers, willing to transform the educational system into a higher quality format.
– Customer service staff.
9.6 Process
– Easy website navigation.
– Efficient search tool to locate titles by type of course and rating.
– Efficient customer service.
– Easy online payment methods via credit/debit cards or PayPal.
9.7 Physical Evidence
– Netflix’s Brand positioning in universities and colleges. Use of logo in different educational contexts.
9.8 Marketing Strategy
Additional advertising spending will be influenced by the ability to generate competitive advantage through existing marketing activities; however, recognition of competitor spending, in particular Lidl, may requires additional resources to be allocated to promoting the permanent clothing range, of which:
• 50% of expenditure will be allocated to press advertising.
• 35% of expenditure will be allocated to Television advertising.
• 15% of expenditure will be allocated to Internet and radio advertising.
MARKET SEGMENTATION: classrooms are becoming valuable business.
Tech giants are keen on becoming involved with online education, even if immediate prospects of profits are close to non-existent, due to the importance of becoming a leading presence in the industryat an early stage. Once online education does become profitable and tech companies make a determined effort to monetize, those companies who have maneuvered into an advantageous position now stand to gain handsomely. Demand is likely to be substantial once regulations allow full implantation in those countries which have restrictions in place.
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