A company brand is essential for its success on the market. While almost everyone today recognize all the known brands right away, recognizing different tree leaves is a harder challenge. This proves that selecting a good idea for a brand name and design is a significant step for a company. Once it gets popularity, the brand becomes its face and helps create a set of regular customers. On the other hand, without a recognizable brand, a product turns into a plain commodity. Most people think that brand is just a name or a symbol of a company. However, it is much more than that. It represents the set of values a company stands for (Shimp, 2010). Thus, Volvo is virtually a synonym for safety, Sony – for high quality and dependability, Rolex – for sophistication, and so on.
Since the brand is so important for a company, it needs to be considered and analyzed whether it conforms to the company’s set of values or not. Let us take such company as Netflix as an example and examine what it does, what it offers to its customers, how it keeps its promises and so on. In addition, the role of the brand image and its competitive power will be taken into consideration.
Netflix claims to be “the world’s leading internet subscription service for enjoying movies and TV shows.” (Company Facts) It was founded in 1997 as a DVD rental-by-mail company by its current CEO Reed Hastings. It has headquarters in Los Gatos, California, USA. The company employs 900 workers at corporate headquarters and has more than 33 million subscribers worldwide. Netflix promises that “for one low monthly price”, its members are able to watch unlimited TV shows and movies streaming over the Internet to a wide range of devices, such as personal computers, TV-sets, and so on.
In order to analyze whether the brand of Netflix works in a successful way, such important notions as brand equity, brand awareness ad brand image will be examined. Brand equity is a brand’s power derived from the name recognition it has earned over time. It is usually reflected in a higher sales volume and a higher level of profits in comparison to competing brands. It is believed to be strategically crucial. Brand awareness, in its turn, is referred to the way a brand name comes to mind when customers think about a particular category of products. Thus, it is about the brand recall and recognition, which is the basic dimension of brand equity. Brand image is also significant. It represents the associations evoked in the memory when people think of a certain brand. Such terms as type, favorability, strength and uniqueness are essential for that (Shimp, 2010).
Obviously, the marketing communication program of Netflix saw the increase of sales and profits as the most desirable outcome, as well as the further development of the company known all over the world. Thus, it plays an important role in independent film distribution and is referred to as one of the most successful dot-com companies. The company growth was determined by the quick spread of DVD players in households, when almost all the families started purchasing DVD players. Netflix capitalized on this and integrated the potential of the Internet and e-commerce to deliver services their competitors never provided before by launching new programs and growing from a simple DVD-rental service to a streaming, which allows members to watch TV shows and movies on their computers (Company Facts).
The brand awareness and brand image of the company also became successful. A word ‘Netflix’ written in white capital letters on a bright red background is a rather simple and recognizable brand design. Hearing about Netflix, people tend to remember what kind of company it is and how its brand looks like. In addition, the company announced that the number of its subscribers increased by 10 million from 2010 till 2012 (Company Facts).
This created a recognizable brand for Netflix. However, one of the decisions of the company management led to the deterioration of the brand equity and brand image. In 2011, the company announced its plans for re-branding and re-pricing, which alienated its users. There are various reasons why it became harmful for Netflix. First of all, it is the primary decision to separate its DVD and streaming services into two brands, which disclosed the company managers’ lack of comprehension of their competitors and of their business as well. They did not pay attention to customer research and forgot about their brand equity by making this decision. Seeing the discontent of the customers, Netflix quickly recombined the two businesses, which was done rather hastily. Due to that, a number of customers, as well as the number of contracts with prominent companies were lost for Netflix (Garcia, 2011).
After that, Netflix saw the need to remain loyal to the brand. Even though the company kept gaining new subscribers, customers began to be less content with their services after 2011. Thus, according to a research, 37 percent of Netflix members give a negative opinion to the brand and 51 percent say that they would be willing to change the service (Fadner, 2012). Therefore, the reputation of the company became much worse after their decision to separate the brands. In addition, the appearance of a number of new competitors, such as Amazon, also creates hardships for them.
It is believed that Netflix built an exemplary model, but they need to fight hard now in order to sustain their position as a market leader and their brand loyalty (Fadner, 2012). This experience made the company understand how important it is not only to create a recognizable brand, but also to support its reputation. There is a hope that they will learn from their mistake and gain the stability again, because they truly have a recognizable brand.
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