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Q: How does promote their product? ( Answered 5 out of 5 stars,   1 Comment )
Subject: How does promote their product?
Category: Business and Money > Advertising and Marketing
Asked by: jpbischke-ga
List Price: $4.00
Posted: 02 Nov 2003 16:50 PST
Expires: 02 Dec 2003 16:50 PST
Question ID: 272000
I'm studying's business right now and I'm looking for some
more information about their marketing.  What I would like to know is
the various channels that they are using to promote their service. 
Some of the ones that I am currently aware of are:

-Pop-up advertising
-E-mail advertising in services like Yahoo! groups
-Ad cards included with purchases of new DVD players 

I'm sure there are others but I'm wondering if anything has been
written about these various techniques and in addition, which of them
might have been the most effective.

I would consider a satisfactory answer to be a source (or combination
of sources) that mentions a least a half-dozen on Netflix's online
marketing methods.  Bonus points if there is any discussion of the
effectiveness of various methods or any additional details about them.
Subject: Re: How does promote their product?
Answered By: tar_heel_v-ga on 02 Nov 2003 20:51 PST
Rated:5 out of 5 stars

Thanks for an interesting question.  Netflix success has been, in my
opinion, driven by one primary thing:  people hate returning videos. 
I once saw a comedian who had a routine about returning videos.  The
line was a friend was going to the store and his buddy asked him to
return a video for him.  His response? "I would rather help you move".

There have been several marketing schemes that have driven Netflix
success.  Below I have provided some quotes as well as the links to
information about their various marketing ideas:

Online Portals
"Marketing was key in the early adoption and success of Netflix. By
getting the word out through major portals, Yahoo, MSN, and AOL, and
through its relationship with BestBuy, consumers were deluged with
information about the Netflix service"

Free Trials
"Free trials addressed the skeptics of a radically new service, and
resulted in high conversion rates to continuing customers. The
recurring transaction model helped consumers adopt the discipline of
selecting films each week but without pressure."
NETFLIX Free Resources

Internet Affiliates
"Both Netflix and will take advantage of Be Free's
BFAST affiliate marketing technology platform and Outsourced Program
Management (OPM) service. Used by many of the largest merchants on the
web, OPM is a full-service option where online merchants can rely on
Be Free's expertise to help optimize the management of their affiliate
marketing programs."
Affiliate Marketers Netflix and Select ValueClick's Be

Word of Mouth
""We have benefited enormously from the rapid growth in word of mouth
(publicity) ... It has taken us to (SAC) levels that we thought we
would not soon see," said Chief Financial Officer Barry McCarthy."
Netflix reports first quarterly net profit

"- some 40 percent of signups come from word of mouth, said a Netflix

Retail Partnership
"The alliances with Best Buy were critical to launching their portal,
as new DVD users were the most likely consumers to try a new rental

"Theatres became a preferred method of advertising the Netflix
service, and added revenue to a film from avid movie patrons, rather
than cannibalizing ticket sales."
Netflix Analyzed via the Value Framework

"The Company markets its service to consumers primarily through
pay-for-performance marketing programs, including online promotions,
advertising insertions with most leading DVD player manufacturers and
promotions with electronics and video software retailers. These
programs encourage consumers to subscribe to the Company's service and
include a free trial period of typically 14 days. At the end of the
trial period, subscribers are automatically enrolled as paying
subscribers, unless they cancel their subscription. Approximately 90%
of trial subscribers become paying subscribers. All paying subscribers
are billed monthly in advance by credit card. The Company stocks
almost every title available on DVD, excluding mature and adult
content.", Inc. (NFLX)

Affinity Marketing
"One of the easiest methods to accomplish this is through the Affinity
Marketing programs provided by Leader Technologies. Leader has
established independent relationships with multiple service providers.
These include...DVD movie rentals from Netflix..."

Each affinity partner pays a fee or "bounty" to the manufacturer based
on certain criteria such as receiving free issues of magazines or
signing up for a trial subscription to a service. Bounty fees are
collected from the affinity partner on behalf of the manufacturer and
credited each month to the manufacturer's account. For this printer
manufacturer, on average, more than $72,000.00 in bounty fees are
generated each year that are used to defray costs of the registration
Affinity Marketing Programs Significantly Lowers Cost to Collect
Product Registrations!

"Best Buy Co., Inc. (NYSE: BBY), the nation's number one specialty
retailer of consumer electronics, personal computers, entertainment
software and appliances, and Netflix (, the largest online
DVD rental source, today announced a strategic marketing alliance
designed to make the purchase and rental of DVD movies easy and
accessible to consumers nationwide. As part of the agreement, Best Buy
and Netflix have launched a co-branded DVD rental service that is
accessible through,,,
Best Buy and Netflix Offer Co-Branded Online DVD Movie Rental Service

Thanks again for your question and I hope the above information is
helpful. If you need any additional clarification, please let me know.



Search Strategy:
netflix marketing
netflix marketing costs
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jpbischke-ga rated this answer:5 out of 5 stars and gave an additional tip of: $4.00
Great answer.  Exactly what I was looking for!

Subject: Re: How does promote their product?
From: apteryx-ga on 02 Nov 2003 21:33 PST
I'd love to add a plug for Netflix.

I read about them in a local magazine at the hair salon.  I was full
of skepticism (my usual view of anything that sounds too enticing),
but two lines got to me.  One was something like this:  "No late
fees--ever.  My kids have had Toy Story out for six months."  (If you
never return it, they have, in effect, sold the DVD for a lot more
than retail value; and they continue to collect on it month after
month.)  The other was about the author's postman saying, "You mean
I'm running your video store errands for you?"  I read this article
right around the time that we had just paid $17 to Blockbuster for
late fees on three movies, and I thought, "With what we spend on
rentals every month, and about a third of it being in late fees (which
is the same as paying +50% for every rental), this deal would cost us
less, and we'd get to see more movies."  So I decided to give it a
try, and we have been happy customers ever since.

Whatever Netflix does to attract customers, I think it holds them by
being an outfit that TRULY delivers what it says it will do.  These
days, a company that treats customers honestly and fairly, lives up to
its promises, makes very, very few errors, and resolves problems
quickly is a treasure indeed.

To me the only down side is that you have to think ahead a little; you
can't go out this afternoon and pick up a movie for tonight.  (You
*can* still run over to Blockbuster for that, though I never do.)  But
we handle that pretty well by managing our queue of upcoming rentals
to balance mood and theme and consider all family tastes in rotation
so there's usually something around for everyone.  Now and then we
stagnate and don't return anything for weeks (and Netflix cheerfully
collects two months' rental on the same discs without having to handle
them at all), but usually we cycle them through fast and get to see
lots of different things for what I think is a bargain rate--and we
prowl the list of offerings only at the computer, with no line to wait
in, no crying kids running into us, and no duds picked in haste on the
basis of two sentences on the back of a box.  You can be their steady
customer without ever leaving your house.  I think it's a brilliant
concept, brilliantly executed, and I don't pass up opportunities to
say a good word for them.


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