Brand Rewind For Netflix

We consumers get very attached to our brands.  We bond and even form relationships.  So when a brand suddenly changes direction, without fair warning, it can be like a spouse springing some kind of big news on you.

Imagine coming home and finding your husband or wife decided to take up smoking? Or they completely altered their wardrobe and are now cross-dressing.

That may seem extreme, but now imagine if Target changed their color from red to green?  You’d be a little confused…right?

Because consumers form such strong bonds with brands, we expect consistency from them.  Brands are promises built on a trusting relationship and if they abruptly veer in another direction, we feel jilted.

So when Netflix made the announcement last month that it was going to spin off the DVD-by-mail service and name it Qwikster (yet keep the Netflix moniker for streaming video), loyal customers were confused, outraged and nixed their Netflix pact in droves.

Moreover, this announcement came on top of a July pronouncement that they were jacking up their subscription plan from $9.99 to $15.99 a month.

At a time when family budgets are looking for all sorts of ways to tighten and save a little money and frivolous entertainment is tops on the chopping block, their timing was tone-deaf to the times.

But with this news came an enormous outcry that rang throughout the land, from the web to Wall Street including a precipitous 40% drop in their stock since the September announcement.  They didn’t need a bright red envelope to get the message. As they cut their subscriber forecast by 4%, the red ink was starting to bleed. To quell it, on Monday they announced a reversal of their misfortune and will stick to one brand: Netflix.

For guidance, they could have looked to another brand that dons the bold red packaging and made a monumental branding blunder that haunts the company to this day.  It is the case study of trying to fix what’s not broken. It was back in 1985, when New Coke was announced and quickly flopped evidenced by the company receiving some 400,000 calls and letters disapproving the decision.  Now exponentially magnify that relatively antiquated, though numerically significant protest, by today’s Twittersphere and you can see why Netflix CEO Reed Hastings feared the next red he’d see would be when his head got handed to him.

Last year at this very time, Gap attempted to debut a new logo doing away with the old blue box. In this case, the outcry wasn’t over price or distribution but over something as simplistic as typeface.  Yet after only one week of brand disparagement, the company rescinded the new and went back to the previous blue.

In some of these cases, in particular Coke’s, there was plenty of consumer research and testing to back up the move to change.

Yet, what CEOs and their brand stewards need to rely on when venturing forward, especially in light of the remarkable job Steve Jobs did in predicting the predilections of consumers, are intuitive matters of the heart and not just tests of the head.


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