Today Netflix sent an email to consumers about their most current business decision to completely separate the services and rename the mail service.  Netflix started with the mail service, consumers have been receiving those red envelopes in the mail with the Netflix name and that is the part of the company to get a new name – Qwikster.  Why rename the brand that built the company?  Netflix’s rationale is that you get the DVDs in the mail quickly.

If you stream a video don’t you get it quicker?  Why rename the brand that established you?  Probably because it is no longer as important to Netflix and they see digital streaming as their future.

Netflix’s letter to consumers was all about the company and the company’s reason for separating the two.  The price issues was not addressed except to say (we are finished with that).

So the company founded on the opportunity to fulfill a consumer need and a company that skyrocketed to success by fulfilling this company need in an efficient and convenient way has ignored consumer needs in their price change and in this current letter to consumers.  The price change and division is all about the company and not about the consumer.

My prediction?  This is a great move for their competitors.  I tried called Netflix this morning and there was a 26 minute wait to get through.  Their Facebook entry about this change already had 1400+ posts. Loyal consumers are no longer happy with Netflix.  The consumers are taking time to express their displeasure because they have liked Netflix and would like to stay with Netflix.  If they did not like the company they would not bother expressing their concern.  If Netflix does not respond appropriately it does not make any difference what their new business model is because they will lose the majority of their customer base.

Cost savings was a major motivation for companies to re-examine and streamline their supply chains resulting in lower inventory and more turns. Given the economic pressures consumers are feeling today it is not surprising that cost savings is a major motivation to streamline costs by lowering their inventory and increasing turns.

This is just one of many changes that consumer purchasing is taking. Using historical data to predict future consumer spending is increasingly problematic because past behavior is less likely to predict future behavior in today’s marketplace.

“With the help of dunnhumby, Kroger Co. believes it has more sophisticated data on its consumers than any of its competitors. But chairman and CEO David Dillon also frequently does “shopalongs” alongside core customers, goes incognito on store visits, visits stores unannounced and even visits consumers in their homes to inspect their cabinets.”

Observing consumers while they are confused, considering choices, grabbing the first product they see, or checking prices reveals important elements of their decision making process that are not necessarily revealed by using any other research tool.  In addition, having the opportunity to ask questions while consumers are making choices or appear confused reveals what the issues are when they are in that situation rather than having them remember what they were thinking about when responding to a survey instrument or when in a focus group.

Real time information during that decision making process can reveal deep insight that is critical for determining whether a company is meeting its goals for consumer interaction or what could be done to facilitate consumer decision making.  More companies are embracing this practice.

Social media allows direct access to individual consumers.  Using social media effectively demands deep insight into your consumers.  Walking around observing and talking to those consumers is a great way to develop a personal understanding of their shopping experience.

Apparently if the return is worthwhile, women are not bothered by online sites collecting information about their interests.  I wonder if this true for women across the board and whether it is true for men?  I’ve read one article that says people in the US are willing to give away private information if they value what they get in return.  That behavior is different from people in Europe who are not willing to give away information regardless of what they would get in return.

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