Month: October 2011

After recently reverting away from Qwikster, its DVD-in-the-mail extension, and increasing price, many customers have dropped out of their subscriptions on Netflix. In merely four months, its stocks have plummeted from $300 to $87, showing the toll a company will take for failure to utilize market research in its executive decisions.

Netflix is in considerable competition with free online streaming and illegal downloading as substitutes. Therefore, a small price increase had significant adverse effects on its demand. Netflix was praised by Morgan Stanley on its competitive advantage; however, it has strayed far from those noted by the firm. The brand is no longer “iconic” and has positioned itself quite well with other unpleasant things in consumers’ minds.

Not utilizing market research effectively to forecast consumer preferences proved to be a vital mistake.  Quantitatively, the price increase and Qwikster would increase profits for the company. However, secondary data would have shown implications that there were huge risks of losing customer and stakeholder loyalty. Countless subscribers have openly expressed their dissatisfaction towards aspects of the company, and coupling a price hike with changes that address these issues would have been better received by the public. Now, Netflix will have to save its brand image before its permanently tainted, but as always, climbing up is always harder than tumbling down.

In “Will the Housing Bust Produce a Baby Bust” from the Economist blog, S.J. references a research paper by Lisa Dettling and Melissa Kearney that suggests a correlation between housing prices and birth rates. The authors had hypothesized that an increase in housing prices would have a positive correlation to the birth rates of home owners as they see their “wealth” grow. There will also be a negative correlation for those who rent or are first-time buyers, but interestingly, this did not deter the majority from having their first child. The reason for these results is that children can be considered a “normal good” (for economic purposes, not in actuality), and the income effect will encourage more births.

These findings interest me as it may be a new way of understanding the socioeconomic tensions present in some countries around the world. Living in an area of high housing prices such as Vancouver, this may put strain on the public school system and our health care system, considering these findings are valid. However, it is also important to consider the make-up of the population who owns the houses as well as those who don’t, as the price hike may have more of a negative impact on birth rates than a positive one.

As noted by Katrina Ma, the long-awaited arrival for the “new” iPhone ended as a disappointing extension of the last. I agree that the lack of innovative pizzazz will definitely give other competitors a chance to gain market share; however, let’s not overlook the iPhone 4S. Rather, view the packaged iOS 5 as a further implementation of Apple’s most powerful concepts: brand community, connectivity and user-friendly.

Apple has created its own brand community where users proudly stand by their brand’s products. This creation of an elite network is unmatched by any other company, which justifies its rightful place atop Forbes’ World’s Most Valuable Brands. Furthermore, it has executed what Google has been struggling to achieve; the new iCloud allows for flawless integration of information between personal Apple devices. And let’s not forget the upcoming Siri that builds upon the company’s reputation of convenience and user-friendly functions.

Innovation, in this case, does not require a new digit after a phone model; Apple has strengthened its pioneering brand image by doing what it does best. But in the competitive mobile industry today, that may be enough for it to lose footing and allow the next best thing to reach its “prime”. The spotlight has now turned to Samsung, who teases consumers on the possible release of the “Ice Cream Sandwich” and the Nexus Prime within a week’s time.

Grievances to Steve Jobs and his family. Your creativity lives on. 🙂