Netflix brand management
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Netflix is an internet television network that allows users to stream TV shows and movies. It has grown significantly since starting in 1997 as a DVD-by-mail service. In 2011, Netflix attempted to reposition by splitting its DVD and streaming services into separate brands but it was a major failure that led to a loss of 800,000 subscribers. The company reverted to a single combined brand and services. The document discusses Netflix's branding strategy over time including its positioning, promotions, and lessons learned from the failed repositioning attempt.
Netflix brand management
- 1. BRAND MANAGEMENT Submitted by- Arushi Goel Submitted to- Prof. Sameer Mathur IIM Lucknow
- 2. About the company § Provider of Internet television network § Enables members to watch original series, documentaries and feature films § Allows users to watch TV shows and movies directly on their televisions, computers and mobile devices
- 3. All this, without any commercials or commitments
- 4. The Domestic and International streaming segments derive revenues from monthly membership fees for streaming content. The Domestic DVD segment derives revenues from monthly membership fees for digital video disc (DVD)-by-mail. The Company has three operating segments: § Domestic streaming; § International streaming; § Domestic DVD.
- 5. HISTORY § Incorporated on August 29, 1997 § Started subscription-based digital distribution service in 1999 § IPO on May 22, 2002 § Introduced instant streaming in 2007 By 2009 Netflix was offering a collection of 100,000 titles on DVD and had 12.3 million subscribers. In 2010, they began international operations.
- 6. § Positioned as a national brand § Logo and website § No consistent use of symbols, jingles or characters § Pricing is a major factor to attract customers BRANDING STRATEGY
- 7. Netflix targets a mass market without any segmentation as the service offered is highly tailored to individual needs using complex prediction algorithms and a recommender system. Further, since the price per person is low it will not be profitable going after a single segment. Apart from that the customer base is extremely diverse to be able to achieve any meaningful segmentation. BRAND POSITI- ONING
- 8. Watch what you want, when you want, and at an affordable price BRAND MANTRA
- 9. REPOSITIONING ATTEMPT In 2011, in an attempt to create individual brands, Netflix decided to charge separately for DVD by mail and online streaming leading to price increase and loss of customers. Further, it split it’s streaming service and home delivery service and launched Qwikster. It was a major FAILURE
- 10. In October 2011, Netflix announced it would revert to providing a combined service under one brand. Their Facebook page received 66,000 negative comments, 5000 comments went to their blog By November, the company’s market cap had dropped by 70 percent and more than 800,000 subscribers had fled. Goes QWIKLY
- 11. “I messed up. I owe you an explanation. “ - Reed Hastings CEO & Founder, Netflix
- 12. BRAND ARCHITECTURE LEARNINGS First, right timing is very important. Netflix rightly judged that its mail business was going to be cannibalized by streaming, but it acted to EARLY. Second, customer’s reaction to any change in a company’s value proposition is difficult to know a priori. MARKET RESEARCH is very important. Third, the customers can have intense loyalty to a particular product. Customers were outraged when the company took “THEIR” original name away.
- 13. PROMOTIONAL STRATEGY § Cross-promotional programs with the manufacturers and sellers of DVD players § Theater Tickets § Commercial and radio spots § Banners and popups § Netflix affiliate program § Word‐of‐the‐mouth.
- 14. Its primary marketing tool is offering Free trials to convince potential customers to try the service. It shows high value of services before committing to it.
- 15. CONTENT MARKETING § Personalization of the website– ‘Recommended for you’ § Adding originals such as House of Cards and Orange Is the New Black without sacrificing licensed content § A higher production as well as licensing budget § Trying to add content in local language
- 16. Social Media & Internet Advertisement The biggest advantage is that the customer is taken right to the service with just one click. Netflix has recently decreased the advertisement spending from $143 million in 2013, to about $121 million in 2014 across media like television, radio and Internet display ads. N e t f l i x i s m o v i n g m o r e marketing dollars online where it can better target audiences.
- 17. Maintaining unique and bold tone in their social posts Netflix on Twitter
- 18. They encourage binge-watching to help to market the hype of new shows. SOCIAL MEDIA PRESENCE
- 19. Planned social communications on “Big Releases” Regular tweets about the “Netflix” and “Next Month” in order to make the customers renew subscription every month and minimize the drop outs.
- 20. SUMMARY CONCLUSION Growing and sustaining brand equity requires a proper brand management strategy. Changes in brand architecture without careful planning can lead to a disaster. About Netflix, it’s growth and history Failed attempt to reposition using Qwikster Services Offered are online streaming and DVD by mail Brand revival and promotional strategy Brand’s traditional positioning strategy
- 21. DISCLAIMER These slides have been created by Arushi Goel, during the PGP Brand Management course taught by Prof. Sameer Mathur at IIM Lucknow THANK YOU