Brand bites EP 1 : Netflix

In this inaugural episode of Think Brand, we dive deep into the art of target market identification. We'll explore real-world examples of companies like Netflix, Shopify, and Tesla, who have mastered the art of pinpointing their ideal customers.

We'll delve into the specific strategies Netflix employed to target their audience, from understanding their preferences to creating personalized content recommendations. By the end of this episode, you'll have a clear understanding of how to identify your target market and develop a targeted marketing strategy to attract and retain your ideal customers.

Transcript

SPEAKER_00 0:11

Hello and welcome to my very first episode of Think Brand Pod. Welcome, welcome. I'm very thrilled to finally launch this platform that I've been thinking about for a while to connect thoughts, ideas, observations about marketing and brand strategy, which is the core of what I do. And interrelate that to all the powerful forces that drive business forward. As you know, my brand is Think Brand Forward, and this is obviously a branch out of that that I want to talk more about. And I know a lot of people write, but I think in who I am, I talk. So this is why my podcast is here to share ideas, observations, insights on the marketing mix that has uh I think fueled meaningful outcomes for businesses over the past decade. Um what I will really have in mind for each episode is to dig deep into strategies that have shaped success, stories, and transformed brand identities by you know brand identity with strategies that don't just tick the boxes but actually genuinely resonate with their target audience. Uh, whether it's through innovative content, brand positioning, or scaling with precision. Uh, what I will try to do here on Think Brand Pod is explore what truly worked or what works as of today. So, on that note, let's dive in today's topic. Honestly, um, today I wanted to start something with something very basic, but I think um a lot of companies are missing the mark on this as I see around me, even when I discuss with my clients or potential clients about what they're what is the market that they're addressing, right? Like sometimes our view is such a total vision of who we are addressing, and um I guess that is something that is very interesting uh based on different founders and executive members, how they look at the market. And obviously, one of the some famous terms of um addressing a big market is TAM-sampsal. Uh, and that is not a psalm, of course. So today I'm starting with a foundational concept, yes, for uh every marketing and business leader who needs it out there, and which is TAMSAM and PSOM. So, um, if you're in business and marketing, you have heard these acronyms a lot of time thrown around in pitch meetings, strategic sessions, or even investor presentations. Uh, but knowing what they mean and knowing how to leverage them in the real world, I think that's the context that I really want to bring out entirely. And let's break it down. I mean, TAM is obviously total addressable market, um, which is essentially the total revenue opportunity that we see out there for the product or service that you're working in. And it's the big picture. I mean, the entire market uh that you're looking at, right? It's the big universe. Um, SAM is uh, you know, the servicer, serviceable available market, and that narrows it down to the segment that you are actually targeting in that universe, right? It's like one of the galaxies in the universe uh that your business is uh modeling or considering. Uh it could be the model, it's good, it could be the geography, um, it could be the demographic in that universe that you want to target, right? Um and Som obviously is the obtainable market because uh that takes it a little bit further. Um is the serviceable obtainable market, which is uh the portion of the SAM that you can actually realistically capture uh given your specific resources, competitions, current positioning. And together these metrics always offer a structured opportunity, uh sizing of the opportunity, actually. How can we prioritize the resources and setting realistic growth expectations? So, very interestingly, I obviously want to now not give any further explanation to the very well-educated audiences who's listening to this. Um, I really want to focus on some companies uh who kind of nailed it, you know, uh, really in the last decade um on how they addressed it, addressed this. And this is where it gets interesting because these are the exchange of ideas of what worked and what really could really even work today, which I really am very excited to share. Uh, did some digging and I think the top uh company that I want to cover today is Ha in Netflix, you know, incredible, incredible company. Um, how did they transform or translate that opportunity into growth? Um when Netflix pivoted from uh DVD rentals to streaming, uh they re-evaluated their TAM essentially, right? Because they found a massive uh opportunity, a potential beyond the traditional rental services, and which is so easy to think that that's your market, total addressable market, is just that is your TAM, but that didn't, that is not what Netflix did. Uh the TAM wasn't just about movie rentals, it expanded to encompass the entire entertainment industry and look where we are today. So um I think they identified an addressable market consisting of cord cutters and streamers, a growing demographic, seeking flexible on-demand content. And similarly, I think uh Netflix's obtainable market initially just focused on uh the US market, right? Which uh where broadband penetration was higher. Now that's how they played it so smartly about um you know going from TAM to sum, uh, where you know it was easier for them to scale on international markets later on uh when the infrastructure allowed, but that's where they started from. That's where they knew that this is the obtainable market that could they they could go for. Um I think this calculated approach really helped them to gradually dominate a huge market segment and eventually compete directly with traditional TV and cable. So I really think that's from the prime examples. How do you look at your TAM? Uh it's not just the whole universe, it's really the galaxy, and then from that galaxy, which is what you want to narrow it down to. Um, I think another big example in this context would be Shopify. Um, you know, it really is, was founded in 2006, and I think initially they targeted a total address market that included all entrepreneurs in small businesses. But I think they very quickly realized uh that you know having such a greater impact, um they would have a greater impact if they really, really went off to specific uh addressable market, which for them was e-commerce entrepreneurs. Uh, you know, a segment that needed accessible, affordable online storefronts. And I think from there their their obtainable market, however, honed into these small to mid-size e-commerce businesses looking for easy-to-use platforms. By focusing on the smaller segment, uh, I think they really grew trust, loyalty, and gained significant market share. Uh, of course, all of us know over time Shopify has expanded its uh you know, it's addressable market. It's not just to the ones that it initially started with. Uh now they're also offering solutions to larger businesses, scaling from small merchants to enterprise-level clients. Um, I think probably one of the biggest players in e-commerce uh market today, I'm probably a huge community of merchants. So, again, um I think um looking at the whole universe of people who wanted to use a platform to narrowing it down to such precision is what helped Shopify become who they are, and they they didn't do it overnight. They, you know, from 2006, we are in 2024. It's been 20 years for them to keep refining their their strategy. Um, ending the episode with the example from Tesla. Yes, finally, let's talk about Tesla. Uh, I think Tesla's stamp initially included the entire automotive uh automotive and um clean energy industry, right? Um, I think that is a market worth trillions, if not billions. Uh but Tesla organized that to succeed, right? Um they really recognized they needed to refine that uh huge market to a more addressable market and then start with a very obtainable market of electric vehicle buyers. I think their approach was to create luxury electrical vehicles which capture early adopters very soon to bring a strong brand perception, right? And that was a really smart strategy. Um over time, Tesla scaled up to a broader uh addressable market, which of course went into uh you know uh mid-market customers and vehicles like Model 3. Uh then further to renewable energy solutions with products like Powerwall. Um, entirely speaking, the serviceable market uh gradually Tesla was able to secure a firm footing in one segment before going into new ones. Today they are not just a car company, they are leaders in sustainable technology. How cool is that okay, welcome back. Um, I think now that we've discussed some really uh, you know, examples of different kinds of companies uh which used the knowledge of their market so well. Um I wanted to further go down the rabbit hole for just one of them, which is Netflix, because definitely most favorite um service that I used in the last 10 years, and I really wanted to dig deep and see how did they actually come about. I mean the stories are known, but as we always say, there are no new problems, they're just new solutions. So I let's look at the problem solving that they used to create this big massive company and how did they come about? Because those are the things that actually open up the ideas of the ca the kind of problems we are facing today and and what led them to actually make the decisions that they did. So if we were to look back at uh the incredible story of Netflix, which totally revol revolutionalized the way we see entertainment today. Um in 1998, I think Hastings and uh Madoc, when they started this uh company together, uh there was a real deep pain point that Hastings had with the VHS market, which was big in back then in 1998. I mean VHS, VCR, as a 90s kid, that's what we know. Um obviously today many people don't even know what that is, but it was a huge form of consuming content at that point of time. And uh I think one of the ways that most biggest solutions or companies today exist is somebody felt the pain point really deeply. Even today, when we are crafting messages for marketing or really solving business problems, the deeper you go into understanding the problem, or even better if you faced it yourself, that's how the real gems come out because you feel the pain so deeply, so intensely that you know that the solution is something which will not just become uh a solution for you, but solution for many. So in 1997, Hastings had a huge problem with the PHS market. Um, you know, there's a lot of discomfort in going, picking things up, taking them back, again going back to return them, huge uh fees for the customers, and also if you there's a delay, then there's a you're the culprit, you have to pay extra for the delay of returning, things like that. So, all of these problems really hit hard, and for them at this point of time, uh DVD has already entered the market and they wanted to start the DVD rental service. And and I really want to highlight something here because it's it's so interesting to note that at that point of time the data present to them was that only 2% of the American households had uh uh you know DVD uh players, um, most of the market was still on the VHS players. So just imagine for them to consider their total addressable market. Of course, here the total addressable market is all these 100% households which are using uh you know VHS players for consuming content, and they are literally focusing on the addressable market of 2% right now. But this is where I think visionary leaders change the game because they know that DVD is a much more flexible way of um you know it's not so bulky, it's small, it's only gonna grow. But when they started, it was just 2%, and to make a viable business out of it, it needed to at least go up to 20%. Uh, and when and which it did, and within a year or so, they were so successful with the DVD uh rental model that they switched the business model to a you know a subscription-based model where you don't just buy or rent as per need, now you it's on a subscription, so you even the hassle of every time going and paying is gone. Like it's amazing to see that the way they were solving these problems from customers' point of view rather than just sticking to their business model, which they think is good for the market. Um, that's something that I even today I feel that whenever we're solving problems, and I speak to founders and I speak to my con uh my clients, and I feel that there's a lot of um I wouldn't say resistance, but there's a lot of belief which is great in the product that they have. But the outside-in approach I think is what differentiates the companies which uh have really made it big versus companies which are struggling to survive because the outsider in is you are really so obsessed with the customer and their comfort and what they need and uh the market that they are dressing, it's they're so intertwined with it that it does not matter exactly how well the current business model did, you keep fine-tuning them, and that's what they did, right? They kept switching the model up to to what to be see today Netflix as right from 1997. And even back then, as I said, that only 2% of the American households had DVD rental, which very soon in the next few years became almost 95% of the households had DVD uh, you know, players and and their rental service really, really uh surpassed all the um uh you know projections that were there. And that's why these this there's such a distinct lesson from here is something that I I really want to uh uh you know take with me and may hopefully you take with you is that sometimes the present data is a good indicator, but it is not an indicator of how things will be in the future. Only visionary leaders have the uh the gut uh I would say to take that step which which kind of propels them to the uh next era of where this industry could go. I mean, this is just amazing, or what Hastings and Murdoch did um in terms of taking those decisions, right? And it's it's amazing because uh something like a Blockbuster, which was like a huge player in the market in the 1990s, where all the VHS uh you know uh they were b majorly focused on that existed already, right? And Blockbuster obviously never paid heed to what Netflix was doing at that point of time, they just kind of you know, as a small um competitor did not pay attention to it, but by the time they kind of rammed up to what the market had changed, the consumer had already moved on, and Blockbuster could never ever catch up to it. So, again, um great great insight on how if you are seeing the changes in the industry, the customers' preferences that really are shifting shifting the the way things are being done. I think um even big uh enterprises uh sometimes lag so way behind. They may have all the resources, they may have all the uh you know uh strategies in place and things like that, but I guess being customer obsessed changes everything, um, and also the fact that you are addressing the pain point so so so well that that nothing else comes closer to it. I think Netflix did it so well, and it was just amazing to to to you know go into that rabbit hole to see how they did it because a lot of time today we're sitting with the pain point problem and it's all superficial, it's like literally a lot of SaaS companies, a lot of other startups fail because they're so obsessed with their business model, which they think is right for the market. Um, but you know, the market is want something else, and something very interesting. I was listening to another podcast very recently, uh, Flowdesk or SaaS company, which is basically just into uh sending email marketing campaigns similar to MailChimp and others, and their value prop was just that we want to make it simplified and make it much more uh good looking as an email marketing tool. And if you hear the founders' journey on how they got there, that made them uh you know a 25 million company um within the first two years, and we are talking about a company which has just launched like now 23, and how did they reach so fast is being so customer obsessed. Like, if you listen to the founder's story, they literally they're not just stick to a business model, they they observed the pain point and they kept going back to the drawing board till they got it right. Something that so stood out to me was that uh they would even sit with a customer listen letting them use the tool that they created, and sometimes uh they would even play out some scenarios. Hey, if you were to click on this button, where would you go? And there will be an instinctive response from the customer of where they wouldn't move the mouse, but that button existed somewhere else, and that's how they got to know that you know this is a sample size of what customers would want if they if this thing really had to succeed, and it's amazing, it's amazing how being customer focused or customer obsessed is uh is literally the greatest piece to this puzzle of having a business which survives you know every every tide that comes in. So, and today Netflix is not just the DVD renter, right? It changed the subscription models ten years later. It was the streaming platform which we know today. Then they you know used uh big data to understand how do we use big data to under to further customize genres to uh ratings to the public uh the personalized effect to each person who was on Netflix. It's the that I think the platform literally was a huge uh inspiration for everything that followed, and to understand that how most of these decisions were taken on a basis of um, you know, where the tide was turning, where the customers felt more drawn to. Uh, it's a huge, huge lesson in the in the way that even can companies today need to kind of be so customer-obsessed about how they are really observing them. Um, I think the transition uh to streaming was very risky for them, but it paid off. Uh, Netflix leveraged advancements in technology to deliver high-quality content directly to viewers' devices. Uh, if you remember, they also then moved into original programming and created shows like House of Cards and Stranger Things, which were like totally captivated the audiences worldwide, right? So I think the shift to streaming just kind of catapulted them into the next league of where they can be, and this whole the up the the all the obsession of outside in looking at the business is is is how this I think this would have happened, right? Another secret sauce, as I said, was data personalization. Like Netflix success is so data-driven approach. Now, earlier when they you know they use really sophisticated algorithm algorithms to analyze um habits and recommended personalized content. Uh, today data is the lifeblood of Netflix. Uh, they use it to understand what their customers want, what they like, what they're likely to watch next. This allows them to create highly targeted content and marketing campaigns. And I think the whole idea of um, you know, how do you address your market if if I have to talk about it like as in conclusion, I really feel that from the humble beginnings of uh you know a DVD rental service to a global giant streaming platform, they have pushed boundaries of innovation and and as I said being customer-obsessed completely, like you have your target market, you know where you what the pain point of the target market you're addressing. But how do you how do you go from what's serviceable and then what's obtainable, right? Like for Netflix, right? From everyone, uh you know what renting this content and entertainment to uh you know who are the people who have a DVD player in there in this whole market that they could. Uh, you know, that they couldn't be prime basically pivot them to uh shift them to this particular business model, and from there again using every every uh opportunity to please those customers, right? Like from the regular model to subscription model. I just completely I'm in awe of everything that Netflix has done so far, and it was such a great uh company to pick to talk about this topic because it was something that gave me the absolute joy and excitement to understand this so well. And uh, I hope whoever is listening, um, it helped you in some way in understanding that how you address your market uh and how you go so custom be so customer obsessed that you can actually turn that opportunity into a great um you know profitable company and a business model. So I hope this helped. Thank you for joining me today. That's all for today, and um, I'm gonna be deep diving into some other companies which have really inspired me, which excite me. All of them at night might not be these big giants because sometimes it's easy to um you know get lost in the fact that these giants, the details and the data totally is available now. But something I I would really want to um also talk about companies which are much smaller. Um, how should they uh you know turn the tide? It's it's going to be very exciting as we go ahead. So, um, more fascinating stories coming up. Um, keep streaming, keep exploring. If you have any suggestions for me, please please let me know. I would love to hear them out. Thank you, take care, bye bye.