Posted by: jessica | April 15, 2012

Market Research and Crisis Prevention

In my research for this week’s case study, I came across an opportunity to combine our reading for the week with our crisis plan analysis.  To summarize the article linked below, if companies invested in market research before making any major moves, it appears that many a crisis could be prevented.  In the example given, if Netflix had invested in market research up front, millions of dollars might have been saved.  This case study demonstrates the value of market research and the potential return on investment that strategic research can provide.

Netflix Demonstrates the Value of Market Research

Netflix recently demonstrated the value of market research when it rolled out a disastrous new product line strategy. In his blog, Chip Levinson discusses how market research could have saved Netflix from this costly mistake that according to one study, will cost Netflix 10% – 30% of its customer base. In just two short months after the announcement, Netflix stock has plummeted 57% wiping out nearly $9 billion in market capitalization. A well-designed conjoint study costing approximately $100,000 would have predicted the market’s reaction to the new strategy. When debating the value of market research, consider how a $100,000 investment could have saved Netflix from $200 million – $600 million in lost annual revenues and a loss of $9 billion in shareholder equity
 
 
See this link for more information regarding the Netflix fiasco:
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