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Legendary Marketing Blunders: New Coke, PS3 and More

marketing-blunders

With Netflix’s poorly planned and received announcement of Qwikster – as discussed in this iMedia blog – we thought it would be a good time to revisit some famous marketing blunders. The point here is not to poke fun. Most companies and brands that find themselves in hot water with the press or public, like the ones included below, often have good intentions and just make honest mistakes; understanding what went wrong and how they dealt with it may help others avoid the same pitfalls in the future.

New Coke. This is, of course, the big one. Based on feedback from focus groups and marketing research, Coca-Cola decided it was time to update its legendary soda (read: make it much sweeter) in the face of competition from Pepsi and other beverages. So, in 1985, Coca-Cola introduced “New Coke.” What it didn’t count on was the fact that people would miss the original Coke – a brand and taste that they grew up with – and the backlash was intense. Coca-Cola quickly pulled New Coke from the shelves and released “Coca-Cola Classic” – a new branding that told people the original formula was back, and would help them forget this whole New Coke thing ever happened. In the years since, Coca-Cola has introduced new sodas and variations on its classic formula, but in smarter ways, including unique logos and names for each (see “Coca-Cola Zero”), while keeping its flagship drink front-and-center.

PS3 announcement. The videogame market seems to go in cycles. One brand dominates for a generation (or two) of consoles, gets arrogant, and then falls from grace. Sony signaled to the gaming world that it was ready for its turn down the slide with the unveil of the PlayStation 3. Revealed at E3 2006, the price was infamously announced onstage as, “599 U.S. dollars” – higher than most had predicted or expected. The number then became videogame fan shorthand for “terrible idea” in gaming message boards around the world. To make matters worse, the price was explained by Sony execs in mind-boggling ways, like then Sony Computer Entertainment CEO Ken Kutaragi’s much-ridiculed, “[Our goal is] for consumers to think to themselves, ‘I will work more hours to buy one.’ We want people to feel that they want it, irrespective of anything else.” Just a couple of years after launch, the PS3 was rebranded, redesigned, reduced in price, and Kutaragi was gone. Today, the PS3 is still going strong.

Kevin Smith Vs. Southwest Airlines. Kevin Smith was on board a Southwest Airlines flight when he was asked to leave the plane, told he was too obese to fly safely. (Southwest has a “Customer of Size” policy, requiring heavyset customers to buy two seats if they can’t fit comfortably with both armrests down.) According to Smith, no one around him was complaining, and he was indeed able to fit in his seat with both armrests down. Southwest, not knowing who Smith was – he’s the director of Clerks, Mallrats and Chasing Amy, geek hero and frequent Twitter user with a massive following – removed him from the plane. Smith took to Twitter, firing off a barrage of angry messages detailing the situation and eviscerating Southwest. In the end, Southwest offered an apology, but stood by its policy.

NBC Vs. Conan O’Brien Vs. Jay Leno. It’s hard to believe that things got as bad as they did for NBC during 2009’s late night programming reshuffle, but then again, maybe it isn’t. In 2004, with the contracts for both Conan O’Brien (host of Late Night) and Jay Leno (host of The Tonight Show) on their way to expiration, NBC announced that it would hand over The Tonight Show reins to O’Brien in 2009. O’Brien’s dream was coming true, and while Leno wasn’t thrilled, he played ball, even inviting his future replacement onto his show to pass the baton. Not wanting to lose him to a competitor, it was later announced that Leno would stay with the network and act as O’Brien’s lead-in, with 10pm’s The Jay Leno Show. Everyone was happy – for awhile.

Historically, local news broadcasts have been very profitable for affiliate stations, and this new late night format – which would make Leno the lead-in for the 11pm news – had station owners worried. They were soon validated; both shows struggled with ratings – Leno in particular was tanking – and the local affiliates revolted. Trying to squash the unrest, NBC honcho Jeff Zucker suggested moving Leno to 11pm and The Tonight Show to after midnight – making it, in effect, The Tomorrow Show, and showing an odd disregard for the show’s legacy – while O’Brien took to lampooning NBC on the air, making for some electrifying television.

Ultimately, NBC really just wanted one of the two hosts to leave so they could get back to the old format ASAP. As it played out, O’Brien left and started a new show at TBS, wrote a heartfelt op-ed in the New York Times about the whole situation, and ended up looking better than any of the other players; Leno went back to The Tonight Show, saying it was all just “business”; and NBC returned to the old late night schedule that pleased everyone, but probably suffered the most damage to its image in many, many years, for both its treatment of O’Brien and its inability to manage the crisis.

JetBlue strands passengers. JetBlue was kind of the Netflix of airlines for most of the 2000s: it was perceived as the young upstart, customer-friendly, and more fashionable than its bigger competitors. But a lot of that goodwill was lost with the February 2007 ice-storm debacle that saw passengers left waiting on tarmacs and not allowed to disembark from their planes for over 8 hours, or stranded at airports with little to no info on the status of their flights. (JetBlue had a policy of never canceling flights, which resulted in a lot of the confusion.) It was a real black eye for the airline, whose CEO went on a damage-control tour – including a classic David Letterman appearance – and issued a Customer Bill of Rights in response. JetBlue remains popular today, having mostly recovered from this incident, and has become more pro-active in regards to weather (“Travel Alerts” are clearly posted on its homepage), flight-status, and customer relations (see the “Speak Up” link on its site) than ever before.

If the mood should strike you, tell us about another interesting marketing snafu in the comments section.

Netflix Increases Prices: Reason to Get Angry?

netflix-increases-prices

Much has been made over the last few weeks about Netflix’s announcement that prices would be increasing: unlimited streaming and unlimited DVDs (one at a time) combined in one plan has gone up from $9.99 to $15.98, or you can get either for $7.99. Netflix was always seen as a trustworthy underdog, cutting-edge and young. The Apple to Blockbuster’s Microsoft. But now, people are mad. Many feel the price increase is too steep, too soon, and with no major additions to the streaming library, too unjust. Has Netflix become everything it once set out to destroy, or at the very least, that we hoped it would destroy?

The reaction online – Twitter, Facebook, news sites, and seemingly everywhere it was covered – was pretty vitriolic. Here are some selections from the Netflix blog (grammar kept in the posts’ original form):

“Dear Netflix,

Individually your DVD and steaming services do not offer enough to justify their expense. As a bundled service they supplement each other and provide the value that made Netflix wonderful. DVDs allowed you to view newer releases in a fairly timely manner. Streaming allowed for viewing of the older catalog of movies that come up when you think of it but might not be worth waiting for to arrive in the mail.

I average 5 DVDs a month. I can replace these rentals with RedBox for $5 and save $3 based on your subscription prices. This replacement would also remove the 28 day wait that comes with most new releases available through Netflix. Likewise, I can replace your streaming service with Amazon Prime and save an additional $2 a month. Again, this would eliminate the unnecessary delay in availability of newer releases.” – Willie Williams

“Dear Netflix,
After 3 years, I’m sorry but it’s over. If I switch to blockbuster I will have a greater streaming selection, with newer movies, plus games, and it will cost me only 75% of your new rates. Its been great, but its over. It’s not us, its you. Enjoy the bankruptcy.” – Adam Lundquist

“You can spin this any way you want, Netflix, but it comes down to simple greed. With limited new content on your streaming service, I will be definitely be canceling that and will probably cancel DVD service as well just on principle. Time to sign up for Hulu Plus! Go ahead and change your name to Blockbuster, because with more stupid decisions like this, it’s only a matter of time before you go by the wayside like they did.” – Anonymous

And now some comments from The Onion AV Club (again, grammar kept in its original form):

“Their streaming catalog isn’t nearly vast enough to justify dropping the physical disc aspect of the service. There’s too much content only available in disc form, including most new releases. People aren’t going to go for a streaming only service until they add more worthwhile content.” – realmike15

“we can start our own company! we’ll call it Webfilmz. we’ll be the little guy at first, pounding the pavement for sales, but with lots of hard work and luck, our plucky company would succeed in bringing affordable entertainment to everyone!

then, once we have the trust of our clients, we can jack up the prices and live like kings! it’s the american dream!” – Or

“I, for one, have decided to switch to gulp Blockbuster Online for Blu-ray rentals and Amazon.com for streaming. You can join Amazon Prime for $79/yr and basically get the same old crap that Netflix streams plus you get free 2-day shipping from Amazon. I’ll still come out a few dollars ahead of the new Netflix rate.” – The Jewish Brad Pitt

My opinion? The price hike is annoying, but it’s no reason to storm the castle in the way we’ve seen. $15.98 isn’t a bad deal for the selection provided; in fact, while it’s 60% higher than what we used to pay, it’s actually still a pretty good deal. I can catch up on Breaking Bad via discs, while at the same time stream every season of Futurama, weird Troma horror movies, and Wet Hot American Summer whenever I want, for less than what I pay for HBO and HBO On Demand? That’s not bad. As Willie Williams mentioned above, I can combine different services to save a couple of bucks compared to this new pricing structure, but A) I’m too lazy for that, B) the convenience of having it all come from one place outweighs the money I’d be saving, and C) I can stream Netflix on my PS3, which I do almost daily. Plus, I still like the company. I don’t think Netflix has gone to the Dark Side yet (I blame the cost of shipping and the movie studios as the main culprits in the price increase) and when this all gets to where it’s going – a complete, streaming library – my hunch is that Netflix will be leading the pack in terms of content and affordability. They’re really the ones who’ve led us this far, and I still respect them for offering an easy, enjoyable alternative to the old ways.

So, I’m still on board with Netflix. Just so long as they don’t remove Futurama from streaming. Then I might have to grab my pitchfork (which is weird that I have one, considering I live in an apartment in Brooklyn).