Posts Tagged 'Netflix'

New marketing templates for Gen Y consumers

As the size and consuming power of Millennials grow, so do the words of wisdom from a lot of “experts,” including BrainTrust panelists on RetailWire. Here’s a recent example that I posted, realizing that generalizing is always risky:

Of course, anybody who comments about marketing to Millennials (including me) will be guilty of punditry, too! But there are two key issues that jump out:

1. First, Gen Y consumes news and entertainment in tech-enabled formats that make “old media” a tougher sell for marketers and media planners. Instead of drive-time radio, they listen to Pandora or XM during drive time. (Assuming they actually live in the suburbs and drive to work, which is not a safe assumption.) Instead of watching TV on the networks’ schedules, they fast-forward through ads while binge-watching series on Netflix. And the drop in print newspaper circulation is an irreversible trend, with a big impact on the power of circular advertising.

2. Second, there has been a lot of comment about Millennials being more “tribal” than their Baby Boomer parents. This affects not only location strategies (the “new urbanism”) but especially the impact of word-of-mouth advertising. Social networking has become the tech-enabled “back fence” where virtual neighbors can share opinions and recommendations about all sorts of goods and services.

Both of these issues point to the growing empowerment of the consumer. Again, this is a trend that will onlly gain strength with time, and which any marketer or retailer needs to manage more effectively.

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Netflix starts to push its pricing higher

There were plenty of opinions last week at RetailWire on the subject of Netflix. The company announced that new members will need to pay 8.99 or 9.99 per month, but existing members will be “grandfathered” at the current rate of 7.99 for its streaming service. I took a contrarian point of view, because I feel this is a way for Netflix to test the limits of existing customers’ price resistance, too:

The price increase for new members is the “canary in the coal mine” for Netflix. They should be able to measure price resistance at 8.99 or 9.99 per month, in order to decide when and how fast to raise subscription rates on existing members. It’s only a matter of time.

It’s hard for Netflix to maintain pricing while committing to improving the product. Netflix needs to pay carriers like Comcast for higher speeds, it wants to develop more original programming, and it needs to make its movie catalog more competitive with Amazon and Apple. (Right now, the movie selection is awful.) The only realistic way to do this, and to maintain margins, is to raise prices in increments.

Netflix continues to stall

From RetailWire, a recent comment about Netflix — a company staking its future on video streaming but facing increasing (and more nimble) competition:

Netflix is the “big box store” of video streaming, and I would equate competitors like Apple and Amazon with “warehouse clubs” in the business of selling multiple categories. And Netflix continues to struggle with poor selection of movies and video compared to its bigger, more nimble competitors. If you want to catch up on season 1 of “Homeland,” good luck with Netflix — I am doing my viewing on Amazon Instant Video, and I’m sure they are glad to collect more revenue and data from me.

What if the postman forgets to ring at all?

The U.S. Postal Service has been in the news recently, announcing planned service cutbacks as part of a survival strategy. Most RetailWire panelists agree that retailers have seen this coming for years, and have adjusted their strategies accordingly to deliver goods to customers on a timely basis. I’m focused on the retailers still heavily dependent on direct mail to drive their marketing message:

The writing has been on the wall for many years at the USPS. Reed Hastings of Netflix said several years ago that prospects of postal service declines kept him awake at night…and this was during the heyday of Netflix’s mail order service. Whether you agree with some of Netflix’s marketing missteps or not, they have at least moved fast to a streaming model in part due to USPS service cuts.

As to the question of direct mail, retailers depend on this medium as consumers turn away from reading the print newspaper. It’s not just a question of timing and creative, but also cost management in light of higher USPS fees to deliver mail. Retailers would be wise to reallocate their marketing resources to online and mobile at a faster pace because the long-term trend is irreversible.

Netflix (or Qwikster)…what were you thinking?

RetailWire panelists recently had an opportunity to weigh in on the much-publicized travails of Netflix. In particular, their recent announcement about separating (and re-branding) their DVD business from their streaming business raised a lot of eyebrows, including mine:

I might as well pile on … I got the e-mail from the CEO yesterday and was scratching my head after reading it. Netflix has managed to mess up great brand equity in record-breaking time, and now compounds the problem by changing the name of the part of the business that worked in the first place. (There’s nothing in the “mea culpa” about the lousy selection of streaming movies, which is the underlying challenge.) Would any retailer moving from single-channel to multi-channel (which is essentially what Netflix is doing) drop the brand name from the core business that built its reputation in the first place?

Netflix: From hero to goat?

Netflix’s recent (and surprising) round of price increases drove a lot of commentary at the RetailWire blog site. Here’s my opinion:

The biggest issue with the Netflix move is the lack of any offsetting strategy to improve its service levels as the company migrates from DVD rentals to live streaming.

As a longtime subscriber, I’ve noted two big problems: The delays in release dates compared to pay-per-view operators, and the amazingly thin selection of live-streaming movies. The price increase may beintended to turn the DVD rental business into a “cash cow” that can help solve the streaming-assortment issue, but Netflix also loses its competitive-pricing edge vs. Amazon, iTunes and local cable operators by jacking up its fees.

If Netflix isn’t careful, it can turn quickly from a well-respected e-commerce innovator into an online Blockbuster. Only “best in class” service is going to placate longtime subscribers.

 

JCP shifts marketing resources to “new media”

From a recent RetailWire comment about Penney’s reallocation of its marketing budget — away from catalogs and toward e-commerce and mobile apps — my vote is “it’s about time”:

Sales are migrating rapidly from catalogs to e-commerce and mobile apps, so it makes sense for big retailers with static marketing budgets to shift their resources. Although the catalog business hasn’t disappeared completely (if my mailbox is any indication), it’s threatened long-term by the rise of e-commerce and the collapse of traditional postal delivery. (Just ask the CEO of Netflix what he thinks about the future of the USPS.) If JCP is smart, it will maintain direct mail as part of its marketing mix but “micromanage” the mailing lists more efficiently to targeted customers or regions.

 


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