Pricing Comparing the Pricing Strategies of Media

Pricing

Comparing the Pricing Strategies of Media Distributors (NetFlix)

And Canned Food

Pricing strategies vary significantly by the type of product or service, its supply chain, timeliness of delivery and consumption constraints (as is the case with live events) and the value-based costing used as the basis of creating the product or service. All of these components must also be coordinated together to create a unified message to the market, strengthening the position of the product or service with the pricing strategy. Pricing is the most powerful marketing variable or strategy there is in defining a brand's value over time (Jarmon, 2009).

Analyzing the Pricing Strategies of Media Distribution and Canned Food

The pricing strategies for media distribution are significantly different than any other good as the value of the product (entertainment) has a much more rapid product lifecycle compared to durable goods or consumables. While a media distribution company including Netflix must define their pricing strategy to gain as much market share for their service, the pricing strategy must also take into account optimization of pricing for a given entertainment experience or product and the audience. An example of this would be the release of a very popular children's movie, Tangled, which just came out on DVD. Priced at $18.99 for the DVD in most stores, Netflix would need to include a premium price as a rental to differentiate this latest release from others. Pricing optimization strategies need to intermediate between market positioning, defining a unique value proposition of the product or service, and connoting the urgency of consumption for time-based services such as entertainment and events (Lieberman, 2011). Pricing optimization therefore needs to concentrate on creating a sense of urgency to buy while also communicating the inherent value of the product or service at the same time (Lieberman, 2011). This is exceptionally challenging to do well, which is why many enterprise software vendors are applying constraint-based technologies to the areas of pricing optimization and predictive analytics to time-based products and goods (Carricano, Trinquecoste, Mondejar, 2010). For Netflix to attain the highest levels of profitability they will need to synchronize all of these factors together and define a highly unique and urgent value for consumers to act on and purchase.