marketing management - product presentation
TRANSCRIPT
Time Warner Cable: Revolutionizing Cable
Television(offering “a la carte” program packages)
Presented by: Kevin DunsmoreBrian KorverMatthew ReynoldsInga Shivers
Time Warner Cable TWC Mission – “to connect people and businesses with information,
entertainment and each other and give customers control in ways that are simple and easy”
Products/Services Offered: Cable television service Internet service Telephone service
Strengths Experience in industry Infrastructure No annual contracts for customers (unlike competition)
Weaknesses A long history of bad customer service (very true) Reputation for inferior products and services (not true)
Competitors Comcast, AT&T/Direct TV, Verizon & Dish Network
Similar pricing structures Offer special intro pricing with contracts Try not to compete with one another
Geographic availability Unwritten/publicized agreements to divide up territories
Force customers to pay for programming they don’t want or need All are afraid to change the status quo
Customers Need access to live programming (news) Want access to specific entertainment (personal tastes) Tired of paying high monthly costs for unwanted content Switching to online streaming services for specific content
Problem Online streaming services do not offer viable option for live content Streaming service competitors cannot get contracts with networks
to offer such content (don’t want to rock the revenue boat)
Opportunity/Solution TWC to use its current subscriber base as leverage to break the mold of cable
television TWC to introduce new streaming device (comparable to Apple TV and others) TWC to offer “a la carte” program packages through an app within the new
device (customers choose only the channels they want and reap the savings) TWC revolutionizes cable television
ProductStream:• Sets users free – allows them to choose
what they want to watch and simply pay for that
• A simple app – access the app through the Stream Box
• Live-streaming – never miss your shows! Watch them as their showing live, or DVR them for later
Stream Box:• Designed to look and feel premium –
charcoal aluminum finish• Access all your apps - YouTube, Amazon
Instant Video, and Netflix available for download
• Required to access Stream
Price The Competitors: Time Warner Cable Verizon Fios
Pricing
Starter TV ($20/month)Standard TV ($40/month)Preferred TV ($50/month)
Preferred TV HD-DVR Service ($65/month)Preferred TV Whole House Service
($80/month)
Preferred HD ($75/month + $30 after Year 1)
Extreme HD ($80/month + $30 after Year 1)
Ultimate HD ($90 + $30 after Year 1)
Channels
Starter TV - 20+Standard TV - 70+
Preferred TV - 200+
Preferred HD - 245+Extreme HD - 325+Ultimate HD - 435+
AT&T Uverse Dish Sling
Pricing
Select ($20/month for 12 months with 24-month agreement)
Choice ($30/month for 12 months with 24-month agreement)
Ultimate ($40/month for 12 months with 24-month agreement)
Best of Live TV ($20/month)HBO ($15/month)
Additional Channels ($5/month)
Channels
Select - 145Choice - 175
Ultimate - 240
Best of Live TV - 20
PlayStation Vue
Pricing
Access ($50/month)Core ($55/month)Elite ($65/month
Channels
Access - 50+Core - 60+Elite - 85+
Time Warner’s Plan:
• Stream Box – Sell for $99, or rent for $9.95/month• Channel Plans:
• Starter Pack ($25/month) – Pick 20 core channels (mandatory)
• 40 Pack ($35/month) – Pick 40 core channels• 60 Pack ($45/month) – Pick 60 core channels
• OR Purchase Channels a la carte:Core Channels ($1/month each)
Premium ($15/month each)
ABC ABC Family CBS FOX HBO
NBC AMC Animal Planet BET Starz
Boomerang BravoCartoon Network CNBC Showtime
CNN Comedy Central DiscoveryDisney Channel
Disney XD E! ESPN ESPN 2 Food Network Fox Business Fox Sports FX
MTVNational Geographic Nick JR Nickelodeon
Nicktoons OWN Oxygen Syfy TBS Teen Nick TLC TNT Travel Channel TCM USA
Promotion/Advertising Segments Current Switchers: Customers who are on the verge of leaving
or have just left TWC. Approximately 110,000 customers in FY2014. Targeted during Introduction Phase Brand awareness thru targeted mail Brand imaging of putting “customer wants first and loyal to our
customers” through new channel packaging options and HBO Go promotion.
Educated Defectors: Individuals who have left cable/satellite competitors all together. Approximately 6,800,000 in FY 2014. Targeted during Introduction Phase Brand awareness thru online advertising Brand imaging of putting “customer wants first” through new
channel packaging options, HBO GO Promotion.
Promotion/Advertising Segments Continued New Starters: Potential customers who are entering the market. There
are approximately 14 million people ages 20-25 who have some some college education. Targeted during Introduction Phase thru Growth Phase Brand awareness thru targeted mail, online advertising. Brand imaging of “forward thinking” through new channel packaging options,
new set-top-box Defectors: Individuals who leave cable/satellite competitors and switch
for a better cable/satellite offer. Targeted during Growth thru Decline Phase. Estimate to peak around year 3 with 3.8 million defectors. Brand awareness thru online advertising, cable/satellite advertisements,
retail store end-cap displays. Brand imaging “of superior deal and forward thinking” through new channel
packaging options, HBO GO Promotion.
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Introduction:HBO GO promotionInternational Trade, Showing for Set Top Box,Heavy Advertising on 20,40, 60 channel option.Targeted Segment: Educated defectors, new starters, current switchers Spending: $47million
Growth:Heavy advertisingTargeted Segment:Defectors, New starters, Educated Defectors Spending: $35 million
Sales
Maturity:Stress product value through continue advertisingTargeted Segment:Defectors Spending: $15 million
Decline:Unveil product updates/new systemTargeted Segment:Defectors Spending: $7 million
Estimated Segment Populations:New Starters: 14 MillionEducated Defectors: 5.6 millionCurrent Switchers: 110k Defectors: 3.8 million defectors at year 3 peak
Promotional Strategy at Different Stages of the Product Life Cycle w/ Targeted Segments & Marketing Spending by Phase
Promotional Budget
Place/Distribution TWC Support Centers: Projected primary distribution method for
current switchers. Hundreds of Support Centers located throughout US.
Online Sales: Projected primary distribution method for new starters and educated defectors. Set-top-boxes will be available online through: TWC Store website Amazon.com Target online store Walmart online store
Physical Retail Locations: Projected primary distribution method for the defector segment. Target Walmart
Long Term Plan & Profitability Projection Customer Acquisition and Financial Revenue Goals Driving Actions
Disruption of the current TWC offerings are time sensitive CURRENT and NEW competitors developing new strategies to compete CURRENT and NEW competitors will have a major impact on “a la carte”
growth in 12 to 18 months
First 12 Months Customer Acquisition – Segment First 200,000 Customers
Drill down into the first 200,000 customers
Segments Include: Current Switchers Defectors Educated Defectors New Starters
Market Research: Big Data Surveys Qualitative and Quantitative Research
Find 2 Target Markets we will pursue
Survey Results
From 128 online respondents and 130 in person respondents
Question: Would You be interested in subscribing to only the live channels you want to watch to save money?
YES 117 45.3% MAYBE 86 33.3%
Projections 3 million new customers the first 12 months 5 year product life cycle
8% growth year 1 10% growth year 2 7% growth year 3 5% growth year 4 3% growth year 5
Average Customer’s Lifetime Value: $1,100
Financials Introduction Phase
Cost to acquire 1 new customer = $23 Penetration Pricing – the practice of offering a new product at a low
cost Break-even Volume = fixed cost/price – variable cost
Fixed Costs: $3,000,000 Variable Cost Per Unit: $18.00 Selling Price Per Unit (average): $32.50 Break-even at 206,897 units
Table Profits Before and After a Price Increase Before
After
Price $25 $26.75
( 7% price increase)
Units sold 100 100
Revenue $2500 $2675
Costs - $2300 -$2300
Profit $200 $375
( 8.75% profit increase)
Our survey found most respondents surveyed, watch 11 to 20 channels. The table above shows, profits before and after a price increase. For our “a la carte” choice of 20 channels, a 7% increase in price, will yield a 8.75% increase in profit. We anticipate that this increase in price will have no effect on sales.
Financials Continued
Questions?