The Blockbuster Mistake


Breaking The Rules: Blockbusters-No More Late Fees

Breaking The Rules. Blockbusters makes a serious misstep with late fees

No more late fees. The listing of the 10 rules for a brand promise is worth the read all by itself.  

It explains why Blockbuster failed. In 2008, Stealing Share took a look at a marketing ploy by Blockbuster.

Using the rules of branding, it was easy to see Blockbuster heading down a bad path.

late fees

The value of a brand can be measured by the extent by which the target audience cares about the brand as an integral part of their self-identification.

Once that attachment has been created, it needs to be supported, built upon, and managed.

Blockbuster lost credibility

A breach of that faith by the brand is an opportunity for the competitive set to grab market share. It is as simple as that.

A few weeks back, Blockbuster informed their legions of customers that there would be no more late fees at Blockbuster.

Such an announcement by a category leader is the sort of move that cements the brand in the fabric of their target audience.

It is the sort of move that signifies first-mover initiative and creates tremendous barriers to market entrance. Or so one would think.

late fees

Blockbuster did not get it

Anyone who has kept a movie past its due date quickly recognizes what a cash-cow late fees represent to the Blockbuster business.

However, some marketer at Blockbuster understood the message that the elimination of late fees would send to valued customers — “I am important enough to be forgiven.”

They believed that eliminating late fees would change the playing field to such an extent that current customers would increase their brand loyalty and potential customers might switch patronage — a great idea.

“Increased market share will make up for losses in late fee revenues,” they must have said while hatching the plan.

Why then is the new announcement the very chink in the Blockbuster armor that Hollywood Video and the other challengers to the throne were waiting for?

10 Cardinal Brand Rules

To understand this, it might help to look at ten important rules Stealing Share follows when developing brands.

We always ask ourselves if the brand and its marketing tactics fulfill each criteria. In order to be effective at stealing market share, the brand needs to answer all of these in the affirmative.

  1. Thrust: Does the brand demonstrate an active competitive advantage? This advantage must answer the question of “why should I care” from the perspective of the end-user.
  2. Gravity: Does the brand have a powerful relevance to the target audience? Is their interest and receptiveness piqued?
  3. Definition: Is the brand distinctive? Does it set the brand apart from the competitive set?
  4. Density: Is the brand single-minded? Does it, with clarity, illuminate the target’s main precept?
  5. Synthesis: Is the brand fused together in an emotional bond with the target audience? Does it grab them in the gut?
  6. Integrity: Is the brand believable? Does the message (even if it is true) raise suspicion? Are barriers raised?
  7. Precision: Does the brand speak to the target that is best positioned to make a choice?
  8. Convergence: Does the brand convey the same message in all the ways the consumer touches the brand?
  9. Momentum: Does the brand build upon (but never mimic) the equity of past communications to leverage any residual positioning equity?
  10. Acceleration: Does the brand keep pace with the changing markets to evolve constantly, making it increasingly effective each day?

The new marketing ploy by Blockbuster does very well in our checklist until it reaches number six — integrity.

Here it falls apart in a fatal tailspin that can, and should, be exploited by nimble competitors. In many ways, the sixth rule is critically important because it looks at the emotional relationship developed between the brand and the customer who values it.

While the first five rules talk about the brand’s meaning, the sixth gets to the heart of the customer’s self-description.

In this case, Blockbuster’s “no more late fees” promise to the customer is, quite simply, a lie.

The value of integrity is in the simplicity of the promise. On its surface, Blockbuster’s offer seems quite simple.

If the customer forgets to bring the rental back on its due date (something we all do all the time), Blockbuster will not charge them for their delinquency.

It is Over for Blockbuster

This seems quite simple until the lines form behind the checkout counter while the teenager hired by Blockbuster to be its brand standard bearer tries to explain what “no late fees” really means.

late fees“If you are late with the return of the rental, beyond a two day grace period, Blockbuster will charge your credit card for the full cost of purchasing the movie,” he or she explains.

“If you later return the rental, we will refund the purchase cost and charge you a $1.25 restocking fee.” “Oh,” says each customer, one after another in a sinister marketing version of the whisper down the lane. “You still charge me late fees.”

The dike has been broken, and the life expectancy of video/DVD/game rental late fees can be measured in weeks for sure.

However, every Blockbuster competitor that announces that late fees are REALLY gone will win the affection, attention, and loyalty of countless renters. The Blockbuster bard has made a serious misstep.

They have communicated to their brand devotees that there is a deep chasm between the brand and the customer. Instead of occupying the coveted place of “everything entertaining for me,”

Blockbuster now looks like a greedy business. It looks like a business that assumes that their customers are stupid and naïve. A brand’s value can be measured in the strength and promise of the customers’ self-identification with the values it delivers. Customers should look at a brand and say to themselves, “Yes, I want to be that.” Stupid and naïve? I don’t think so.

(Read about the REAL process for creating preference here)

(Read more about Blockbuster here)