Case Study: Marketing Implications of Netflix & Sirius XM's Deal

This assignment analyzes Netflix's partnership with Sirius XM to launch the "Netflix Is A Joke" comedy channel. The case study explores the implications of this brand extension strategy, including its merits and demerits, such as increased market reach and potential brand dilution. The analysis examines the reaction to the new brand, advantages like cost reduction and customer trust, and disadvantages like potential damage to the existing brand image. The assignment also delves into the concept of brand excitement and proposes other potential brand extensions for Netflix, such as partnerships with studios and Amazon. The conclusion highlights the importance of balancing market expansion with maintaining brand integrity and fostering innovation to stay competitive in the entertainment industry. The assignment is based on a provided case study and supporting research materials.

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Introduction
Netflix is a global internet forum that provides services for entertaining its subscribers.
The company was established in 1997 by Reed Hastings and Marc Randolph Scotts Valley,
California. Netflix enables its subscribers to watch movies, television live shows, documentaries
and films in different kinds of languages while connected to devises that use internet (Summers
et al.,2016 p.1-12). In the recent past, Netflix made a decision of availing its contents to other
media services. It has partnered with Sirius XM’s to form” Netflix is a joke” comedy station that
will be aired on Sirius XM’s channel 93. The main objective for the partnership was to capture
many audiences for their product since their partner was not their direct competitor in the
industry. This assignment will focus on the implication of the partnership, merits and demerits of
brand extension, the impact of appreciating brand excitement and other brand extensions that
could be done by Netflix Company.
Reaction of the new brand
The idea of forming a partnership with a new brand name will attract new potential
customers for Netflix entertainment services. The customers will be interested in enjoying the
new services after the merge. Original shows and contents from the likes of Adam Sandler,
Trevor Noah among others that will be broadcasted on new studios on a daily basis will make
known celebrities and comedians to have an interest of spending their time at the new studio.
Due to the known contents that will be dealt with by the new brand, it will also attract new
subscribers and this will highly increase net profits that Netflix will earn as a result of
introducing the new brand through partnership terms.
Brand extension
It is a marketing strategy that involves launching of a new product under existing brand
name of a related or unrelated product (Broniarczyk, and Alba, 2014 p. 212-228). For the case of
Netflix, the existing brand name is of the related product nature.
Advantages of brand extension
Benefits the parent brand

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Extension of product brand enhances the image of the parent brand. The strategy can also
revive the parent brand and increase the market size due to the entry of new customers in the
purchasing of new products from the existing brand (Huang et al., 2017, p.59-69).
Cost reduction
The cost incurred by launching brand extension strategy is much lower than the cost
incurred while launching is a new product. This is the result of the already established image of
the existing brand image. For instance, money that will be incurred for services like
advertisements and promotion budget for the new product is foregone.
Building customers trust
If the existing product brand is well known for its quality and its uses are legit then, the
new product will have an added advantage from the good reputation of the parent brand.
Customers for existing brand will have the zeal of trying to use a new product from the brand
that they have known for a longer period of time.
Satisfy consumer variety
Brand extension has the merit of fulfilling the needs of customers who want to change
and use different movies or television shows due to boredom. These customers will be able to
select other television shows of their choice without necessarily having to leave the parent brand.
Disadvantages of brand extension
Damage of existing brand image
All the negative reputations that may be received from the failures of the new product
may tarnish the image of the parent brand. This will result in the reduction of customer which
will eventually reduce the market size thus lowering the sales of Netflix products. Unless good
reputations are maintained, customer will quit using products associated with the parent brand.
Cannibalization
It mainly occurs when markets for existing and original brand are in very close in
location and sale of new product outweigh the sales of the parent brand (Li et al., 2017 p. 1372).

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When this happens, the extension strategy will have failed its role of expanding Netflix’s overall
sales.
Discourages innovative opportunities
Introduction of brand extension strategy by Netflix will make the company to continue
producing products that are similar such that they will fail to embrace the idea of producing new
and different products from what they produce (Brexendorf et al.,2015, p.548). This will weaken
their competitiveness in entertainment forums.
Goal of increasing brand excitement
Brand excitement refers the feelings that customers have towards Netflix products in
terms of daring, imaginative, up-to-date, lively and playful (Sung, and Kim, 2010 p. 639). Brand
excitement can only be achieved when customers get satisfied with services that they receive
from the company. Once buyers are satisfied with unique and quality product, they will be
retained in the company. The company will also be able to attract new customers due to a great
reputation that is built by the services that they provide.
Other brand extension by Netflix
Netflix should consider partnering with studios since they are in a better position of
controlling DVD rights and release dates. Netflix can also engage in brand extension with
amazon.com for the purpose of spreading markets for their products (Wayne, 2018 p. 725-741).
Partnering with other distributors or studios who have already acquired licenses will have an
added advantage on Netflix business in the long run (Jenner, 2016 p. 257). Cost requirements for
licenses will be foregone when Netflix merge with already registered studios or distributors.
They will only focus on creating awareness for the merged products. Netflix should upgrade its
Findflix extension by Google Chrome to enable its original contents to be available for smart
televisions.
Conclusion
Netflix entertainment platform offers a variety of products that are used globally by their
customers. They have developed brand extension technique for attracting many customers and
increase their total sales. Although the strategy will boost their markets, the strategy may destroy

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the image of parent product if the new product records issues low qualities issues. In efforts to
reach many customers, Netflix must organize how to create product excitement among its
customers. Brand excitement boosts the image of products offered any a particular company. All
these strategies are meant to keep Netflix entertainment forum ahead of other companies
producing similar entertainment services. Netflix should join other brand extensions including
companies that have already established with valid licenses to avoid incurring costs associated
with launching new products from their categories. Netflix should embrace research in new
innovation to continue get ideas of inventing new products to add on its existing varieties.

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References
Brexendorf, T.O., Bayus, B. and Keller, K.L., (2015). Understanding the interplay between
brand and innovation management: findings and future research directions. Journal of the
Academy of Marketing Science, 43(5), pp.548-557.
Broniarczyk, S.M. and Alba, J.W., (2016). The importance of the brand in brand
extension. Journal of marketing research, 31(2), pp.214-228.
Huang, Y., Jia, Y. and Wyer Jr, R.S., (2017). The effects of physical distance from a brand
extension on the impact of brand‐extension fit. Psychology & Marketing, 34(1), pp.59-69.
Jenner, M., (20160). Is this TVIV? On Netflix, TVIII and binge-watching. New media &
society, 18(2), pp.257-273.
Li, B., Li, X. and Liu, H., (2017). Consumer Preferences, Cannibalization and Competition:
Evidence from the Personal Computer Industry pp.119
Summers, J., Brecht, T., Eager, D. and Gutarin, A., (2016), September. Characterizing the
sworkload of a Netflix streaming video server. In 2016 IEEE International Symposium on
Workload Characterization (IISWC) (pp. 1-12).
Sung, Y. and Kim, J., (2010). Effects of brand personality on brand trust and brand
affect. Psychology & Marketing, 27(7), pp.639.
Wayne, M.L., (2018). Netflix, Amazon, and branded television content in subscription video on-
demand portals. Media, Culture & Society, 40(5), pp.725-741.