Data Driven Decision-Making Process

Netflix is ​​an organization in the DVD, games and rental industry. Originally founded in 1997 as a DVD rental company in California (McAlone, 2016). In 2007, Netflix launched its streaming service in the United States, and by 2010 it had spread to many countries around the world. Headquarters are currently located in Lisgatos, California. Netflix is ​​now a multi-million dollar company that offers subscribers the ability to stream and rent their favorite TV shows, movies, and lots of original content (McAlone, 2016). The business situation on which this study focuses analyzes the potential for Netflix to enter the global market. Netflix expands its global market, it will consequently increase its client base and its stability in the event of any sudden changes in the United States. The analysis will feature the feasibility of the expansion of Great Britain. The primary consideration of this study is the analysis of the price needed to break even at the projected level of market penetration, compared to the best possible projection of what customers in the new country will be willing to pay. In order to study the analysis of the price needed to break even at the projected level of market penetration, this study will analyse whether Great Britain’s customers are willing to pay above the current standard rate of $13. Results will be obtained by determining a figure that these clients are willing to pay for each member.

1.Describe the relevant data you collected:

The Netflix expansion to Great Britain study was conducted on 100 households among British households with a streaming service who were offered a free trial by Netflix. The study mainly chose Households with an alternate streaming service primarily because they are the most likely to become Netflix’s loyal customers. After 30 days, Netflix consequently asked them to complete a survey, giving their likelihood of becoming a loyal customer, and the amount of money that they would be willing to pay for the service, in order to become a loyal customer. This study was looking for potential consumers from Great Britain to pay at least $13 per month for its streaming services, and this is used as the standard. According to the survey, 54 out of 100 households were willing to pay more than the standard $13 per month. 31 of these households were willing to pay at least $ 13 per month for Netflix’s services.

C. Describe the analysis technique, chosen from the following approved list, that

you used to appropriately analyse the data:

The analysis technique used in this study is the two independent samples t-test. This analysis is an inferential statistical test employed to establish whether there is any statistical major difference between the means in two groups that are not related. This study preferred using the two independent samples t-test in order to determine trends in data, regarding whether their willingness to purchase a Netflix subscription at the current standard price or at a higher price, is an indication of How successful Netflix’s expansion to Great Britain would be. Out of one hundred selected British Households, 54 households were reportedly willing to pay above the standard subscription rate of $13, while 31 households were willing to pay at the standard subscription rate of $13. Since the average number of potential households that would subscribe to Netflix is required to indicate how successful Netflix’s expansion to Great Britain would be is more than $ 13, a statistical test was calculated to ensure the average is significantly more than $ 13.

Step 1: Write the hypothesis.

HO: The average number of potential households that would subscribe to Netflix at or above the standard rate is less than or equal $ 13

µ ≤ $ 13

H1: The average number of potential households that would subscribe to Netflix at or above the standard rate is more than $ 13

µ > $ 13

Step 2: Write the critical value statement.

Since the value of A is more than the t-critical value, H0 will be subsequently rejected. It will be calculated at the 95% confidence level.

Step 3: Calculate A. The amount each household is willing to pay will be entered in column B and the $ 13 in column C.

Variable 1 is amount willing to pay and variable 2 is standard rate. Alpha is .05 because we are testing at the 95% confidence interval. 1-.95 = .05.

The t-statistic of 4.312 is greater than the critical value of 1.66. (the t-critical is a positive number because this is a right (> in H1) tailed test. Reject H0. The p-value is 1.91 which is greater than alpha 0.05, further supporting that we can reject the null.

References

McAlone, M. (2016). 4 things that could hurt Netflix in its quest to take over the world. Retrieved from http://www.businessinsider.com/4-challenges-to-netflixs-international-expansion-2016-7

T-test definition and examples (2017). Statistics how to. Retrieved from http://www.statisticshowto.com/probability-and-statistics/t-test/