The Netflix marketing strategy is rather mysterious, many speak on how the company became successful. By revolutionizing the world of video content consumption. But they don't really talk about the marketing strategy that Netflix took to become what it's today. In this article I'm going to dive deep into that, let's have a look.
In the Beginning
Netflix is a Streaming Video On-Demand (SVOD) provider, the platform streams video content such as TV Shows, Movies and etc. Now, this article is about the marketing strategy of Netflix. But Marketing is still a part of a business. The best rule of marketing is to let the product sell itself to the customer. Here's how Netflix did exactly that in the late 90's.
It all started when Reed Hastings and Marc Randolph met whilst working together at Pure Atria (Co-founded by Reed Hastings). While they traveled to work and back, they would share ideas. About what would be the next big thing in the internet.
Randolph had always had the idea that the next big thing would be in e-commerce. He knew that he had to start selling something. In short it would be the Amazon.com of selling something, besides books. Hastings had also plans on figuring out how consumers react to direct-mail catalogs. And thought how an Online Store would reflect on these needs to be more Inviting to the consumers. Which would later go on to become the foundation for the marketing strategy of Netflix. So they got the idea of the business, and started working on it from August, 1997.
Change, an inevitable factor in a Marketing Strategy
Netflix, initially was a single-rental e-commerce store. Where you could rent a movie title in a DVD. There would be no due dates, late fees or shipping charges. Initially, there was a Pay-per-item pricing, with a first-class shipping model. Later, this too was replaced by the monthly subscription. Where you could rent three titles at a time. This method proved to be more successful for the growth of Netflix.
Although, they were successful, Netflix wasn't making much profit during these days and had minor shortcomings. But, it was able keep its Key Performance Indicators growing each year, which gave investors satisfaction. And this in turn, would help the marketing strategy of Netflix later on. Pivoting the business model and ultimately introducing the SVOD, helped to set the scene for more growth.
Now then, shall we find out how this helped with marketing.
The Netflix Marketing Strategy introduced by Marc Randolph
Marc Randolph was a genius in the field of Marketing, and was the first CEO of Netflix. Marc had designed the user interface. Which as i mentioned earlier setup the marketing strategy foundations. By acting as a data collection platform. They had an online catalog of movies which they had used to test out different versions of the user experience.
The data that they had collected from performing market research and analysis of these reports. Had allowed the company to gather information. Which made it possible to model three concepts into their business.
- Subscription-based model with no due dates, late fees and unlimited access to content.
- A Queuing system to deliver orders accordingly.
- Next item in queue sent, when previous item was returned.
By taking his time to understand the users, and what their needs were. Randolph was able to get a grasp of the core concepts that lead the Netflix marketing strategy. Even today, this method is used to deliver their service to their consumers.
Randolph had also introduced the Cinematch program, which gives recommendations based off of subscribers tastes whilst also being high in-stock. This prevented customer satisfaction from going down. While also saving Netflix from meeting logistics nightmares, A Win-Win on both ends.
How to sell, The essential factor of the Netflix Marketing Strategy
Fine-tuning your business model and your marketing strategy to match the needs of the users is great. But how Netflix did this was very simple, they targeted their efforts to only those who'd buy their product. A Pretty simple concept right? But it really isn't. There are many businesses that fail to find the right audience for their product and promote it to them accurately. If you can find the right way to sell your product, then you're already successful. This is how Netflix, had their moment of achievement, let's have a look at how they did it.
Multi-Channel Video Programming Distributors Promotions
Netflix had also used Multi-Channel Video Programming Distributors such as a Satellite or Cable TV Broadcaster. If you had ever used Roku, you might have seen the Netflix tile on it. These distributors would help to stream your content via their network to their consumers. Again, The Netflix marketing strategy was to target those who're consumers of video content. When you're working in Marketing, it's important to strategize your promotions to meet th right audience. By targeting users on MVPD. Netflix had strategized on creating awareness amongst the industry for its business. And also promoting itself in a general platform for consumers.
Now this is not a revolutionary strategy and is pretty commonplace for a Video On-Demand Service Provider. But, It was this that made Netflix a trusted source of content. Remember, not every customer is friendly and quick to take action. When you create a brand, Always try to get it to a platform where other trusted brands exist as well. For Netflix, services from HBO, BBC and Disney were the competition. They had to gain the reputation that these brands had already received. So becoming a part of a platform in the same environment as your competition brings you recognition. And makes your brand trustworthy.
Now this is not really a marketing strategy that Netflix took. This is more of a service to provide convenience to their users. But I personally feel like it could be considered a part of it. Here's why, making your product easy to consume and available is what makes customers more dependent on your service. In fact, part of this infrastructure is what allowed Netflix to increase their prices recently. Even when it was faced by threats from competition, such as Disney+ and HBO Max.
Internet Service Provider Agreements
Netflix has a sharp understanding on their marketing strategy, when it comes to consumer needs. They know how to make it easier for a consumer to access their platform. The most common reason why users don't, in fact, is due to their Internet. In countries such as Australia, India and other places. Internet Service Providers (ISPs) provide limited data plans with F.U.P (Fair Usage Policy). To limit the bandwidth speed of their users, when they overuse the monthly data cap. So users couldn't afford to pay for the data charges along with the data plans. This is why Netflix had partnered with many ISPs across these nations. Among which, is Vodafone India. Vodafone had offered a famous package there. Known as Vodafone Red, along with a free Netflix Subscription for it's users. So you can worry less about budgeting and enjoy their services. You can read more about it here.
Netflix Marketing Strategy for Social Media Promotion
Netflix has had a strong marketing strategy for promoting itself on Social Media. They take YouTube seriously, and have got channels from Netflix Latinoamérica to Netflix Anime and Netflix Is A Joke. These channels along with its main channel help promote the company's upcoming series both original and licensed. By consecutively receiving feedback from it's community in YouTube via polls, posts and etc. It gets an opinion and gathers the data. This helps to improve the platform in an overall spectrum, and gets the users excited for upcoming titles.
Netflix also has recently removed their free trial to replace it with overall free content that's available to anyone. A move that they say would help grow user interest in their content and help with content development as well. I personally loved watching the video that explains the Stock Market on their YouTube channel. Which showed to me that Netflix was capable of producing high quality documentaries as well as entertainment series.
Although, Netflix does advertise and manage other Social Media platforms such as Twitter, Facebook, Instagram and etc. But I decided to highlight on YouTube, because it was a more relatable platform. And it shows, how even now the Netflix marketing strategy would source its audience. From a service provider that offers the same type of service, that they offer.
Netflix has used many different strategies to grow its subscribers from the time it had started in 1997. It had used multiple methods of data gathering and consumer interest analysis, to find what makes the platform convenient. If they hadn't pivoted their business model and changed to a subscription model. They might have sometimes, not even made it this far, or grown to the extent they're today.
Netflix knew the best marketing strategy is that which you do to help alter your product, to sell itself. Convenience plays a major role in sales, marketing is not only about promotion. If you think running ad campaigns alone would bring you success, you're heavily mistaken. Netflix had realized, long ago that convenience was as its soul. So the next time your CEO asks you, the question. "What do you think we can do to promote our company?", answer with "Let's try making it more convenient to use". This is the formula that Netflix took to higher levels, it might do you some good too.