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A Mediated Culture

23 Tuesday Nov 2010

Posted by Gregory Dean in Marketing Philosophy

≈ 11 Comments

Tags

advertising, advertising media, class-dominant theory, conflict perspective, culturalist theory, functionalist, Gregory Dean, Marketing, Marketing Strategy, Marketography, Mass media, Role of Mass Media, sociological perspectives

Mass media has a direct affect on modern culture. This is especially true in the United States where the majority of mass media originates. The moods and attitudes of our society are influenced by messages delivered through mass media channels. Mass media and advertising affect our actions, thoughts, and values. We are at the point where mass media creates and reflects our culture–a mediated culture.

Society controls mass media and vice-versa

A look back through the history of our society will reveal that we were not always influenced by mass media. This is due largely to the fact that our current level of media saturation has not always existed. Television, the most popular mass media medium, was less predominant in the 1960s and 1970s. Even if you were one of the fortunate families to own a television set, only three main channels existed. Additionally, a few public broadcasting and independent stations were in operation. Radio and television shows in the 1960s were targeted to an audience with very high moral values. The audience demographic consisted primarily of two-parent, middle-class families. The programming was a reflection of everyday life. Families living three decades ago would never have tolerated a reality show. Television shows such as, “Leave it to Beaver” was a representation of actual middle-class life in the early 1960s. The same families gathering in front of a television set to watch a 1960s situation comedy would have never accepted the programming of today. Our moral values in the early days of television dictated content and influenced advertising. We controlled mass media by our level of acceptance.

Still photography, motion pictures, telegraphy, radio, telephone, and television were all invented between the years 1860 and 1930. Mass media emerged into a capitalization of the leisure industries to eventually become the dominator of mental life in modern society. Adolf Hitler used radio for propaganda sparking concern that mass media could be used for mind control. Early studies of mass media by sociologists proved that media effects were direct and powerful. However, the level of influence on an individual depended on certain factors such as class and emotional state.

C. Wright Mills defines mass media as having two important sociological characteristics: first, very few people can communicate to a great number; and, second, the audience has no effective way of answering back (The Power Elite, 1956). The introduction of the internet into mainstream mass media has changed communication into a bidirectional process. Responding to email advertisements and answering messages in a chat room change Mills’ definition of mass media. The internet reaches a broad audience but has less of an impact on shaping society.

The majority of research in the 1960s was concentrated on television. Television was believed to be the most pervasive medium. The Mass Communication Theory provides research on the cultural quality of media output. D. McQuail identifies cross-media ownership, and the increasing commercialization of programming by a few select large corporations as a pattern of control. The conflict perspective aligns with this theory.

Media output is controlled and regulated by government. History has shown restrictions ranging from complete censorship to a lighter advisory regulation.

Everyone agrees that mass media is a permanent part of modern culture. The extent of the influence mass media has on our society is the cause of much debate. Both legislature and media executives combine efforts and produce reports showing that mass media is not responsible for shaping society. Sociologists and educators debate these findings and provide a more grounded, less financially influenced theory. Sociologists have three perspectives on the role of mass media in modern culture. The first, limited-effects theory, is based on the premise that people will choose what to watch based on their current beliefs. According to a study by Paul Lazarsfeld, media lacked the ability to influence or change the beliefs of average people (Escote 2008). Individuals living through the early days of mass media were more trusting of news stories. This is evident in the famous radio broadcast, “War of the Worlds.” A startling one out of six people believed we were being invaded by aliens. While the limited-effects theory, also known as the indirect effects theory, was applicable 40 years ago; society is not as naive today. Competing newscasts give us the opportunity to compare stories and accept only what is common between them. Unless the “War of the Worlds” was carried on every major mass media station, society today would recognize it as fiction. Even then, we would be skeptical until our President addressed the nation.

The class-dominant theory argues that the media is controlled by corporations, and the content–especially news content–is dictated by the individuals who own these corporations. Considering that advertising dollars fund the media, the programming is tailored to the largest marketing segment. We would never see a story that draws negative publicity and emotion to a major advertiser. The class-dominant theory in a newsroom extends beyond corporate control. A journalist with a specific agenda can alter or twist a story to suit their own needs.

The third, of the three main sociological perspectives, is the culturalist theory. As the newest theory, the culturalist theory combines both the class-dominant and limited-effects theory to claim that people draw their own conclusions. Specifically, the culturalist theory states that people interact with media and create their own meanings. Technology allows us to watch what we want and control the entire experience. We can choose to skip certain parts of a horror movie and even mute content on live news casts. People interpret the material based on their own knowledge and experience. The discussion forums in an online classroom is one example of the culturalist theory. Although all the students read the same text and study the same content, each student produces a different view based on experiences outside of the classroom. The result is a widely divergent group of posts and many opposite opinions open for discussion.

The Functionalist Perspective

Functionalists believe that mass media contributes to the benefit of society. Charles Wright (1975) identified several ways in which mass media contributes to creating equilibrium in society. He claims the media coordinate and correlate information that is valuable to the culture. The media are powerful agents of socialization. Through the media, culture is communicated to the masses. Serving society through social control, the media act as stress relievers which keep social conflicts to a minimum.

The functionalists idea of equilibrium is evident in news broadcast as well as late night drama programs. In both instances, all human acts lacking morality are reinforced by showing them as unacceptable and wrong. Crimes, such as murder, robberies, and abuse are shown as deviant behavior. Mass media make our world smaller. People gather in groups to watch, they talk about what they see, and they share the sense that they are watching something special (Schudson 1986).

Functionalists view mass media as an important function in society. Mass media can influence social uniformity on scale broader than every before. The internet reaches more individuals in most social groups more often than television or radio. Mass media has been accused of creating dysfunction. Postman (1989) argued that popular media culture undermines the educational system. Claims have been made that there is a link between television viewing and poor physical health among children.

The Conflict Perspective

Conflict theorists believe that mass media is controlled by corporations with the intent of satisfying their own agendas. News casts and sitcoms are not designed to entertain and inform, but rather to keep our interests long enough to deliver a well paid advertisement. The conflict perspective views mass media as a conduit for social coercion. The controllers of mass media use programming and advertising to influence certain social classes. Trends are introduced through mass media and mimicked by the public lending credence to the theory that coercion, domination, and change in our society is partly due to television, radio, print, and the internet. From the conflict perspective, modern mass media are instruments of social control (Sullivan 2007). While functionalists and interactionists agree that mass media is necessary, followers of the conflict perspective view mass media as a necessary evil. As instruments of social control, mass media plays an important role in shaping our society.

The Interactionist Perspective

From the interactionist perspective, mass media is used to define and shape our definitions of a given situation. This perception of reality seems to evolve as our everyday values and cultures change. A definition of the average American family from the 1950s and 1960s is drastically different from what we expect today. The mass media portrayal of family life has always been a benchmark to compare our own lives and successes. Mass media serves as our social acceptance gauge by providing symbols representing what is proper and what is unacceptable. The interactionist perspective shares similarities with the functionalist perspective. Both theories agree that mass media symbolizes a perfect society that individuals strive to emulate. Celebrities, athletes and other role models promote clothing, brands, and behavior while sometimes encouraging values and moral guidelines.

Mass media is defined as “the channels of communication in modern societies that can reach large numbers of people, sometimes instantaneously (Sullivan 2007).” Only recently has technology been advanced enough to realize so many methods of communication. Television, radio, and print were the original members of mass media. The internet brought chat-rooms, email, and the idea of social networking to an already media saturated society. Television and radio represent “push” communication. The consumer has little choice over the content streamed through the cable and onto their television. They can choose to change stations or turn off the television. The internet, specifically web sites, can only be delivered to a consumer if they have made a request to “pull” the content. Mass media has completed a paradigm shift from content and programming we chose to accept, to content designed to shape our society. In the 1960s and 1970s, society controlled mass media. Today, mass media has the single largest impact on our culture.  Guidelines for behavior, major beliefs, and values are all influenced by mass media. Every sociological theory concludes that mass media affects modern culture–a mediated culture.

References

Escote, Alixander (April 2008). Limited Effects Theory. http://www.socyberty.com/Sociology/Limited-Effects-Theory.112098

CliffsNotes.com (July 2008). The Role and Influence of Mass Media. http://www.cliffsnotes.com/WileyCDA/CliffsReviewTopic/topicArticleId-26957

Sullivan, Thomas J. (2007). Sociology: Concepts and Applications in a Diverse World. Boston: Pearson Education, Inc.

Wright, Charles (1975). Mass Communication: A Sociological Perspective.

Schudson, Michael (1989). The Sociology of News Production. Sage Publications, Ltd.

Leon-Guerrero, Anna (2005). Social Problems: Community, Policy, and Social Action. Pine Forge Press

Mills, Charles Wright (1956). The Power Elite. Oxford Press

Netflix: An Online Business Beyond Genius

10 Wednesday Nov 2010

Posted by Gregory Dean in Internet Marketing

≈ 4 Comments

Tags

e-commerce, Gregory Dean, Leading Edge, Marketing, Marketing Strategy, Marketography, Movie rental, Netflix, online business, Reed Hastings

Most businesses—regardless the core offering—begin as a simple vision. Sometimes, as with the case of Netflix, a frustrating situation exposed a need and at the same time inspired an entrepreneur. A video rental late fee was the trigger that motivated Reed Hastings to develop one of the most successful click-and-mortar businesses to date—Netflix.com (Jayalath & Wood, 2005). Creating a lucrative e-commerce business requires many of the same basic components as a traditional business—including a cohesive business model, compelling marketing plan, and strong implementation strategy.

A perfect storm of advances in technology, adaptation of DVD media over VHS, and an unmet consumer demand is responsible for the successful launch of Hastings’ vision.

Netflix began its journey of trail-blazing business process innovation in 1997. Reed Hastings, along with partners Marc Randolph and Mitch Lowe, decided to disrupt the traditional video rental business by introducing a new twist on the home movie service (Thomas, 2010). A perfect storm of advances in technology, adaptation of DVD media over VHS, and an unmet consumer demand is responsible for the successful launch of Hastings’ vision. Not unlike other innovative start-up companies, Netflix has undergone several strategy shifts. Each change in focus or direction has assured the company remains dominate in the movie rental industry.

Success is never guaranteed, but a strong business strategy and cohesive implementation plan will increase the odds. Hastings began his business by declaring a simple yet effective mission statement, “our appeal and success are built on the most expansive selection of DVDs; an easy way to choose movies; and fast, free delivery (Brill, 2003).” While the original concept remains the same, the business strategy has evolved to satisfy new market opportunities. Notwithstanding slow adoption by the Internet user community, Netflix has become the perfect model from which all eBusinesses could learn.

Finding the Sweet Spot

Translating market opportunity into business opportunity requires a seven-step process. Hastings followed the seven-step framework to create the original company, but also continued to leverage individual steps to re-evaluate the Netflix position in the changing market. There are four key environments to consider when analyzing a market opportunity—customers, company, technology, and competition (Rayport & Jaworski, 2004).  If the four key environments were signified by using overlapping circles of a Venn diagram, the market opportunity sweet spot would be represented in the area where all four circles intersect.

The first step of the seven-step process used by Netflix involved the identification of the unmet or underserved customer needs. Hastings, being a customer himself, was able to draw upon personal experience to help establish the opportunity nucleus. This set of unmet or underserved needs stemmed mostly from processes dictated by traditional video rental businesses. The movie rental industry had already established methods surrounding video rental, late return policies, and membership rules. Hastings believed that without competition, these brick-and-mortar movie rental companies would never have a reason to change.

Following the problem recognition step, a company needs to identify the target audience. Part of this process includes grouping customers into segments. Rayport & Jaworski (2004) refer to the most basic form of segmentation as the distinction between must-have and nice-to-have customers (pgs. 86-87). Segmentation for Netflix includes identifying customers using geographic, demographic, and behavioral segmentation approaches. The target audience for Netflix expands beyond the regions and primary market areas that typically define traditional brick-and-mortar businesses. The Netflix target audience is not limited by geography, but rather bound by technology.

The relative advantage to Netflix competitors begins with the use of technology. An Internet-based system allows a user to find movie titles easier than strolling the aisles of a video rental store. The entire supply-chain of the Netflix mail-order fulfillment system is more desirable than issues surrounding weather, store hours, and drop boxes. Netflix began its business with a distinct competitive advantage.

The next few steps—in the case of Netflix—were overlapping. Step four of the seven-step process involved assessing the resources necessary to deliver the benefits. Step five required an in-depth look into the technology required—including the impact of new technologies. The technology available in 1997 was primitive compared to what is available today. Broadband is commonplace, making the online users’ experience many times better than before—also positioning Netflix for the future. After distilling the opportunity into concrete terms, step six of the market opportunity analysis framework, Netflix justified their position in the market and identified the sweet spot of opportunity for their business.

Defining a Business Model

The value proposition, online offering, resource system, and revenue model combine to define the business model. The Netflix market position as described by Susan Verghese (2005) boasts “an easier way to choose movies, fast and free shipping, and no late fees or due dates.” The value proposition is comprised of three components—segment choice, benefit choice, and resource choice.  Netflix’ segment choice encompasses all existing competitors’ customers as well as individuals beginning to desire movies-on-demand. The benefit choice revolves entirely around the convenience of making movie selections online. The resource choice is based on a strong distribution network and supply chain that rivals the competition.

The online experience of Netflix is their differentiator in the market. Following the membership model of other movie rental businesses, Netflix expanded the scope of their offering to include several levels of membership. Rounding out the business model, Netflix created an online community where member could contribute by offering and sharing reviews. The online business model developed by Netflix has become a beacon for others to follow (Venuto, 2010).

Creating the User Experience

Rayport & Jaworski (2004) identify seven design elements of a customer interface (pg. 151). Netflix follows best practices across all 7Cs—context, commerce, connection, communication, content, community, and customization. The context of Netflix’ site follows basic rules for ease of use and navigation standards for the web. Netflix.com uses a clean, uncluttered design to present an online movie rental experience second to none. The color scheme and graphic elements remain true to the corporate brand.

Content on the Netflix website consists mostly of movie imagery, descriptions and storylines, and member posted reviews. A non-member is presented with content designed to encourage enrollment, while the member community enjoys a user-specific experience. The movie titles presented to each member are relevant to his or her likes and dislikes—based on individual movie reviews. The content includes static information regarding the Netflix organization, its affiliates, career listings, and social networking links.

Netflix provides a robust community design element to their site. Members are invited to participate in reviews, forums, and blogs. Additionally, the tell-a-friend option creates a viral element useful in word-of-mouse marketing. The community element of Netflix.com falls short of providing functionality that allows member-to-member communication. The user provided movie ratings are real-time, but the written reviews are moderated before posting live to the site.

Every member can manage his or her own personal movie queue. Much like a playlist, the Netflix queue is used to control and manage the titles and order that the movies should be delivered to the member. The site uses this customization element to provide a member-specific experience to the user. Other customization features include the movie suggestion section. Every member receives an interactive list of movie titles that can be added to their playlist. Analyzing the member’s previously watched movies and the associated ratings provide enough information to create a suggested playlist.

Netflix has mastered the challenges associated with integrating their website and other communication channels. For example, each time a movie is returned—an email is delivered to the member. The member is asked to review the movie and offer additional comments if desired. Periodically, the member receives an email asking for information regarding the timing and condition of a DVD once delivered. This information is used to monitor the quality of service of the fulfillment centers.

The Netflix website offers no external links. The connection design element is not used on the Netflix member site. However, in the non-member and public areas within the website, Netflix offers external links to the websites of major publications, well-known critics, and other movie review sites. Netflix banner ads can be found on many popular sites. Each banner ad links to the Netflix main page.

Netflix’ commerce capability is limited only by its business model. The site, framework, and infrastructure can accommodate a full e-commerce shopping cart—but the only transactions are one-time enrollments and subscriptions to the monthly service. A member only revisits the commerce section of the site if a subscription needs to be changed. Transactions are automatic and recurring. Members spend the majority of their time within areas of the Netflix website that offers movie reviews and search capabilities.

The majority of communication from Netflix to their membership community falls within the generalized online framework for marketing communications (Rayport & Jaworski, 2004, pg. 197). Netflix uses several communication strategies for prospecting and acquiring new members. Of the four categories of communication—direct, personalized, mass marketing, and general approaches—Netflix relies mostly on the general approach of banner ads, email, and viral marketing. Members opt-in to receive special notices, offers, and incentives.

Netflix uses banner advertising to direct traffic from sites with a similar audience demographic as their current target market. Several years ago, Netflix made several attempts to create an additional revenue stream by including third-party advertisements in their own DVD mailings. This concept started when Netflix realized an opportunity to promote an upcoming movie by including imagery on the famous Netflix red envelopes (Anderson, 2005).

Company Culture and Considerations

Reed Hastings defined his approach to managing expectations within his organization as “freedom and responsibility” (Conlin, 2007). Netflix allows its managers to structure their own compensation plans, but expects ultra-high performance in return. Netflix operates as a single organization—with only an online presence. The supply chain, however, extends into many market areas. This model allows for low-cost, quick distribution of the movies.

The satellite fulfillment offices also present challenges with human resources. The turnover in the fulfillment centers is high. The culture at the corporate office level is revolutionary. However, the lack of culture at the lower levels presents challenges associated with recruiting, hiring, training, and retaining employees. Netflix’ culture has evolved over the years, but the underlying message remains the consistent—reward the employees that contribute the most.

The culture of Netflix is unique and proprietary, but effective. The company might struggle to service sixteen million members if a rigid traditional culture were adopted. The processes developed and enforced by the Netflix management team are the true strength of the organization. While the recent addition of streaming on-demand movies from a Wii console or PC reduces the demand of physical media, the rapid growth of the member base offers a balance.

Conclusion

Netflix has reported 550 million in revenue for the third quarter of 2010. The Netflix business model is a chameleon to technology. As new technology becomes available, such as faster connection speed, Netflix finds new opportunities. With the adoption of new products and services, Netflix can continue their rapid rate of growth—with no end in sight. Netflix has had a negative impact on several mainstream brick-and-mortar movie rental chains. Additionally, if Netflix’ streaming video service gains momentum, the U.S. Postal Service could feel a decline in service.

Netflix has managed to operate in a space free and clear of regulations. Their competitive advantage revolves around their supply-chain and fulfillment processes. Technology plays an important role in the distribution system of Netflix. Every order is automatically queued to the fulfillment office closest to the delivery address. A cohesive business model, compelling marketing plan, and strong implementation strategy is the only common ties between Netflix and other successful online businesses. Their success comes from technology, vision, and innovation. While difficult situations sometimes inspire genius solutions—Hastings vision to eliminate movie rental late fees has proven to be far beyond genius.

References

Anderson, D. (2005). Netflix stirs up excitement for ‘Geisha Girl.’ BrandWeek. [Electronic version]. Retrieved November 8, 2010, from http://www.brandweek.com/bw/news/recent_display.jsp?vnu_content_id=1001524775

Brill, R. (2003). The Brill report: Netflix. Retrieved November 6, 2010, from http://www.tcf.net/netflix.html

Conlin, M. (2007). Netflix: Flex to the max. Retrieved November 4, 2010, from http://www.businessweek.com/magazine/content/07_39/b4051059.htm

Jayalath, H. & Wood, A. (2005). The outlook for online DVD rental: A strategic analysis of the US and European markets. HighBeam Research. Retrieved November 6, 2010, from http://www.highbeam.com/doc/1G1-182523311.html

Thomas, J. (2010). When was Netflix founded? Retrieved November 8, 2010, from http://www.life123.com/technology/home-electronics/netflix/when-was-netflix-founded.shtml

Rayport, J. & Jaworski, B. (2004). Introduction to e-commerce. Boston: McGraw-Hill

Venuto, D. (2010). A better business model from Netflix. Retrieved November 6, 2010, from http://www.minonline.com/minsiders/Domenic-Venuto/A-Better-Business-Model-From-Netflix_11158.html

Verghese, S. (2005). Can Netflix play David to the Goliaths entering the DVD online rental space? Retrieved November 7, 2010, from http://www.virtualstrategist.net/Issue7/7-1-1.HTM

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