Netflix is the latest movie-rental company, coming on the scene with a new deal. Customers can rent three movies at a time for a flat fee of $19.95 per month, no shipping charges, and get new movies as soon as theyÆre returned. The biggest attraction of Netflix is that there are no late fees or due dates associated with the rentals. This is a great incentive in an industry where late fees and due dates have been the reigning controllers for years.
A SWOT analysis of Netflix reveals that although it is currently a relatively small business, it has undeniable strengths. The lack of late fees and due dates is a big strength for a number of reasons. First, it conveys a subliminal message to the customer, ôYouÆre okay. YouÆre not late; thereÆs no way you can be wrong. YouÆre accepted.ö This is a seductive message in a time where other video rental stores have the consumer locked in by doÆs and donÆts. Second, the fact that the $19.95 per month is a flat fee encourages customers to rent more movies than they ordinarily would (1). Since it costs them nothing extra to rent more than three, they have the luxury of renting movies they might not otherwise try. Third, the rapid turnaround time is a big plus. In the San Francisco area, where NetflixÆs main distribution center is located, turnaround is one to two days. It used to be slower in other areas, but since they opened 22 more regional distribution centers, which means that most of their customer baseù90% of all U.S. customersùnow enjoy rapid turnaround (1). NetflixÆs fourth strength is the large number of titles they carryù12,000 as opposed to the 1,500 or so that a local Blockbuster would carry. Not only that, ôIt has movies that you can't find anywhere else. And Netflix uses collaborative filtering technology to send you emails that alert you to movies that you might otherwise never considerö (2). Fifth, Netflix developed partnerships with ôthe movie in...