Why segmented pricing is effective strategy for netflix

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Reference no: EM132237683

NetFlix offers viewers access to stream movies and television shows through its subscription-based service. When it first offered a standard standalone streaming package in 2011, a large share of consumers were delighted that for $7.99 per month, they could receive all the content NetFlix has to offer. In 2014, NetFlix decided to raise the price of the standard plan to $9.99 per month. In 2017, the price again increased to $10.99 per month. Despite these price increases, NetFlix remains popular.

1) Consider the introduction of NetFlix’s standard streaming package in 2011 to be a new product. Explain in detail, which new product pricing strategy NetFlix adopted and the reasons for its success.

Netflix currently offers three streaming plans. With the Basic streaming plan, consumers can watch on 1 screen at a time in Standard Definition for $8.99 per month. With the Standard streaming plan, viewers can watch on 2 screens at a time and have the option of HD available for $10.99 per month. With the Premium streaming plan, viewers can watch on 4 screens at a time and have the option of HD and Ultra HD available for $13.99 per month. Despite the price differences in these plans, the actual product (unlimited TV shows and movies) is the same for everyone.

2) Which segmented pricing strategy (could be more than one) do NetFlix’s three streaming plans represent? Explain in detail.

3) Explain why segmented pricing is an effective strategy for NetFlix.

4) Do you think NetFlix should adopt dynamic pricing and charge every consumer differently based on how many minutes of content they watch every month? Why or why not?

Reference no: EM132237683

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