Marketing Doctor John Tantillo’s Winner and Loser of The Week
Winner: Paranormal Activity 3
The success of the third installment in the Paranormal Activity horror-movie franchise tells us a lot about how powerful branding can be.
Remember the first movie? That one was made for a reported $15,000 and quickly grossed more than 100 million dollars worldwide.
Now, Paranormal Activity 3 has come along and again dominated the box office.
One, unlike most studio movies that cost tens of millions of dollars to make, this movie has followed the pattern of the first two movies and been made for relative peanuts: five million dollars.
Two, unlike the mistaken strategy of taking a successful, but homespun product (Paranormal Activity 1 shot on the cheap), and then turning it into a high-production value “masterpiece” and losing the brand –the studio in this case was smart enough to keep things pretty much the same.
But the most important point is this: once you have reached your target market and delivered a product that they want, you have a brand whose characteristics you must respect. That’s what the studio did with the 2nd movie in the series and because of that the audience knew that they could expect more of the same in the 3rd.
Hats off to Paranormal Activity 3.
Here’s what I wrote about Netflix back in July when they alienated many customers by abruptly raising their prices.
Folks, since that time they lost hundreds of thousands of customers and received a lot of bad press. Then they announced a split of their DVD mail service and their streaming video service into two separate companies only to reverse that decision.
The New York Times has a great description of that fiasco and an analysis of Netflix here. I’ll quote a bit:
Reed Hastings [Netflix’s CEO] was soaking in a hot tub with a friend last month when he shared a secret: his company, Netflix, was about to announce a plan to divide its movie rental service into two — one offering streaming movies over the Internet, the other offering old-fashioned DVDs in the mail.
“That is awful,” the friend, who was also a Netflix subscriber, told him under a starry sky in the Bay Area, according to Mr. Hastings. “I don’t want to deal with two accounts.”
Mr. Hastings ignored the warning, believing that chief executives should generally discount what their friends say.
Now, the company has warned that the decline in subscribers is going to continue into next year and the stock lost 15 percent in one session.
Bottom line, Netflix needs to regroup and focus on their brand. Raising prices might have meant accounting sense but the way they did it doesn’t make brand sense.
Worst of all for the Netflix brand is the impression that they have forgotten their customers.
Luckily for Netflix is that they have a great brand. Abrupt price rises aside, Netflix has excellent customer service and meets the needs of its customers expertly.
What Netflix needs to do now is… nothing.
Netflix’s problem in the last four months has been about making changes that they either didn’t need to make (breaking up the company then not breaking up the company) or didn’t need to make the way they did (raising prices without warning or explanation).
Now is the time for the company to simply keep doing what it has been doing for the past decade: building subscribers and keeping them happy as they expand Netflix brand globally. And when they have a message or a change to make, Netflix needs to think it through and then implement it by keeping all their Target Markets on board.
If they do this, their brand will likely quickly heal the damage of the last few months, if they don’t that damage could become permanent.
And remember, it’s always easier when you keep marketing and branding in mind.
TODAY’S TANTILLO TAKEAWAY – If your brand is working, don’t tinker.