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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.

posted @ Monday, September 26, 2011 by Chip Levinson

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