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Good Market Research Really Could Have Helped Reed Hastings, CEO of Netflix

 

I was surprised to open up Reed Hastings‘ email and see the opening lines, “I messed up. I owe you an explanation.” You see, before the cost hikes, I was a loyal Netflix customer. I subscribed to Wii streaming and DVDs by mail. But, when I heard that costs were increasing and there wasn’t an explanation of why that was occurring, I quickly cancelled my subscription over the summer. 

Maybe I shouldn’t be so quick to judge what is being defended as a necessary business decision. Business decisions, though, are not only about what you decide, but how you implement and communicate those hard decisions.  

To be fair, I don’t know if any consumer research was conducted on the Netflix/Qwikster price hikes and brand separation. Although, personally, I can’t imagine that it was, given the unfolding of events this summer.

In a situation where the brand has pre-existing knowledge of something that may, or in the case of large price increases – will, impact consumer perceptions, good market researchers strongly recommend being proactive and conducting research (both qualitative and quantitative) to understand consumer impact.   

Things happen. The marketplace changes. It often forces businesses to make hard decisions. How you deal with your consumers makes the difference. Reputation management is the key. What will all of these changes (cost hikes, online vs. mail separation, Netflix red envelope replaced with Qwikster red envelope) mean for my brand? How does this change the consumer-brand relationship? How will competitors respond and how can I battle that? And, of course, what are the opportunities?  Ultimately, market research can help guide you to the big questions: How do I minimize the negative impact on my brand? 

How do you think market research could have helped Reed Hastings?

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  • Mishy Sanz

    He’s not be trusted. He already tried to take money from consumer’s wallets to create a new idea in this economy. Money is hard to keep these days, there is no excuse. I will not go and rent DVDs from him anymore, I shall try another company. The new company will grow on me just as Netflix did without paying high price. Soon enough there will be more choices in streaming also. Netflix will be a brand of the past like Enron and so many others.

  • Cheri Tabel

    Interesting point, Mishy. Netflix broke your trust and the trust of many others with their business decisions. Exploring the thoughts and feelings of their customers before making a crucial business decision like this, could have saved them the negative backlash they are experiencing now. Thanks for reading!