Cable TV segments their market by customer’s interest and need. They provide wide variety of TV plans to customers according to their interests. In short, Cable TV adopts the psychographic segmentation which divides buyers into different groups based on social class, lifestyle or personality characteristics. Variety of TV programs to suit different lifestyle and personality. For example, financial channel broadcasts up-to-date financial news is of investor typical interest. National Geographic and Discovery channels provide natural and geographic news to target on audience who like to acquire knowledge by watching TV.
And most people watching Cable TV are on the purpose of entertainment only. So this is the largest and biggest segment. Also, Cable TV divides buyers into active buyer and passive buyer. It segments the market by imposing different price strategy in these two groups. For example, the price is cheaper if the sales are conducted by road show or outbound calls which they are segmented as passive buyers. In contrast, active buyers have to bear the basic price which is slightly higher then special price if it the customers directly contact Cable TV to apply for pay TV service.
Targeting Cable TV mainly targets on the customers who are interested in the news, movies and sports. Nowadays, as there are an increasing number of customer demands for the informative programs, and a large number of male customers would acquire cable TV because of the broadcasting of live-sport programs while female customers would like to acquire it due to the 24 hours non-stop broadcasting of more up-dated movies and all these explain why cable would have such targeting. Product Positioning Cable TV positions its service as “Pay TV equals to Cable TV”.
When people think of pay TV service, they would immediately think of Cable TV. To broadcast largest number of TV programs, it maintains as an industry leader in Hong Kong. Moreover, Cable TV positions its service as the best home entertainment to encourage more families to subscribe Cable TV. Marketing Mix Product The main advantage of Cable TV is provide consumer friendly service. It provides 67 24-hours non-stop broadcasting and less advertisement shown. Various channels are provided to suit different needs of users. The channels can be divided into several categories and basic and premium channels.
(Exhibit 2)The main categories are sports, news and movies. Other fields include entertainment program, documentary, adventure program, adult program, and composite program for different countries. The variety programs can initiate people to acquire Cable TV service. Cable TV offers different plans for users. They are Cable TV Basic Package, Super Family Pack, Super Movie Pack, Super News Pack, We-Wet Entertainment Pack, Discovery Mega Pack, International Pack, Zee Pack and CAT6 pack. (Exhibit 3)However, these plans are not flexible and consumers cannot their favorite programs only.
News channels are popular and can retain many current users due to its continuous updating and broadcasting. These news channels provide latest news and financial information in many countries. The updated information provided is extremely useful in nowadays world because of the increasing importance of service and information industry. Movies channels broadcast local and international movies. These movies are comparability new and they can satisfy many people who like watching movie. Cable TV wants to target on people who are interested in sports.
It has many sports channels showing different sports events all over the world. The most attractive part of the sports channels is ‘live and exclusive’ football matches of the four biggest soccer leagues in the world to satisfy user’s interests. Besides these three aspects, Cable TV notices people tend to know more about other countries, it introduces many international channels in recent years. There are 2 types of converters, analogue and digital converters. The rental fee is for both is the same but some of the channels can only be watched with the use of the digital converter.
The variety of channels can satisfy consumer but the inefficient hotline dissatisfies consumers as it is very difficult to have direct connection to the customer service representative. Price Cable-TV offers a special monthly price for users if they prepaid one-year fee. And it offers discount to the Basic Package users to acquire other packages and premium channels. Larger discount is offered for first time users to attract them to try. For example, new users only pay $198 instead of $298 for the Basic Package in the first year of service. For different packages, they are with different prices.
(Exhibit 3)However, the price of the packages is too high and this will discourage lower income group to install Cable TV. Besides the package fee, new customers need to pay rental fee of $30 for the converter. Customers can pay extra to watch the premium channels. If customers want to have one more ‘Cable TV’ in their home, they need to pay extra fee for this additional outlet. The amounts of charges paid depend on the package used by customers. They need to pay extra half of the original price if they are using Basic Pack, Zee Pack, International Pack and all premium channels. They need to pay double if they use other packages.
If customers want to terminate the service, Cable TV will offer a discount to attract them not to do so. This is useful as many consumers are concern with price. Promotion Booths Cable TV sets up a lot of temporary booths on new residential area to attract new customers. Very often, plans promoted from the booths are with a promotional discount, as an attraction. Owing to the large promotion coverage of the booths in Hong Kong, this promotion channel could impress consumer most. Unlike promotions on media, booths could actively reach consumers and won’t be bound by media constraints.
The performance of booths is fair. Although some consumers are attracted to the promotion or discount provided by these booths and initiate them to acquire Cable TV, some consumers have negative feelings toward them. Sometimes consumer may think that salesperson is annoying, as there are too much salespersons approach them in a short distance. Some say that the salespersons are immoral, they boost sales by providing untrue information induce consumer to purchase which in turn avoid consumers from renewing the contract. Door to door Promotion
It is an active promotion launched occasionally in residential area, especially before big events like World Cup and Olympics. Each successful visit last around 15 to 30 minutes. It allows salesperson to have a better communication and contact with consumers, enable them to understand consumer better and take appropriate promotion words. It also enables cable TV to target those families who are not using cable TV according to the customer record. This is more cost and time effective, as only people who are interested would let salesperson to have a further conversation with them.
Door to door promotion also allows information approach and stimulates consumers’ need at the right time. Before World Cup and Olympic, many consumers have the short-term need of getting cable TV. In addition, in home, consumer would have a better sense of security and would be more open and comfortable which constitutes a good environment for them to listen and talk to the salespersons. However, the coverage of this method is rather small, and the time cost is very high. Advertisement on Media Advertisement on media is a passive promotion. Consumers could select what they want to pay attention to and what they want to avoid.
Several creative TV ads could successfully impress consumers. One interviewee could memorize the TV ads with a man singing “Free Super Offer” which is one year ago. Distribution Channel The distribute procedure is the consumer register first. Then salespersons will help consumer to call for installation and delivery of necessary devices. There are four ways of acquiring the service: Phone More than half of the interviewees acquire Cable TV actively by phone. Consumers reflect that the procedure is generally smooth, except they could not be directed to customer service officer when they make the call.
Online download of form In Cable TV website, application form is in PDF form. Consumers could only print out the form and sent or fax back to Cable TV. This is not a user-friendly channel. Booths Except promotion, booths on street are also act as a distribution channel. As mentioned in the promotion, quality and quantity of booths should be controlled and adjusted. Door-to-door promotion Like booths on street, if the salesperson could successfully initiate consumer to acquire service through visiting their homes, they distribute the product. Recommendations
Immediate actions: To increase its market shares in the industry, some strategies are applied in order to attract potential customers. Potential customers: Online Application This kind of application is very convenient and easy for the customers to use which would increase the sale by attracting more customers to apply for the services. In addition, the cost of this kind of distribution channel is also very low. But the problem is that, some strategies should be used to motivate the customers to apply Cable TV online. Promotions which can initiate consumption decision
According to the survey, most of the users consider the variety of programs offered and price are the most important factors for their buying decision. As a result, it can stress on these aspects when launching promotions. Moreover, special discount period should be provided to an extent that above Just Noticeable Difference so that potential customers’ intention to acquire Cable TV will be increased. However, providing discounts will lead to decrease in profits and so it cannot be used as long-term strategies. Upgrade to digital converter
This can help Cable TV prevent unauthorized user to free ride the pay TV service. There are some unlicensed TV converters that enable to watch Cable TV illegally. It is because the use of unlicensed TV converter will decrease current user or decrease customer intention to acquire Cable TV service. Current customers It is far more easy and profitable to retain current customers than attracting new customers. As a result, achieving customer satisfaction is very important. To achieve this, react to customer needs and so following recommendations are advised.
Improve customer service As the majority of the customers dissatisfy with the customer service according to the findings. It is suggested that the number of staffs answering for phones should be increased and more training should be provided to staff to fasten the serving time and be consumer friendly. Introduce paid local film channel The findings show that the local movie channels are criticized as out-dated and repeated too frequently. However, providing latest film is costly, so it is suggested to introduce paid channel to satisfy consumer need and balance the costs.
However, it has the direct competitors such as cinemas, which can give the audience better atmosphere. In addition, VCD is also anther competitor and it is very cheap and the latest films are also available. Yet, by introducing local film channel, it has the competitive advantages of convenience as the audience can just stay at home and enjoy the movie. The time and cost of searching information of customers reduces. Change to digital converter Analogue converters cannot watch some of the programs in basic plan nowadays which will dissatisfy current customers.
Nevertheless, changing all converters is quite expensive and not all the users are willing to pay for the charge. Quantity of advertisements From the survey, most of the users thought that one of the advantages of Cable TV less advertisements. However, the amount of advertisements about Cable TV is increasing within the channels. It should pay attention to the quantity of advertisements to retain the customers. Launch female-favored channel Cable TV should launch a new channel targeting on the female. Programs that suit female include local shopping discount guidelines, or beauty news should be broadcasted.
Long term Directions: In long run, Cable TV should improve its overall service include: Provide video-on-demand (VOD) service Video-on-demand service is a system based service that audiences can select watching any programs in any time. The new service can allow customers to enjoy a variety of programs on the interactive platform by offering more interactive application channels. The advantage of this service is that it can eliminate the restriction on the time schedule of different programs, thus it can satisfy audience instant gratification of specific TV program and they need not to wait for any time slot.
In Hong Kong, people have an “instant- need noodle” culture which means that they demand instant food fulfillment with minimum cooking time. As the rhythm of their lifestyle is very fast, they are impatient to wait for a TV program on schedule. The disadvantage of this action is that it requires a higher cost to develop and apply this technology and Cable TV also need the technical support by other countries such as Japan and US. Channel based selection plan Consumers can acquire particular channels instead of paying a lump sum fee for a basic plan which included many channels.
Base on the research, as many current basic plan users only watch a few channels and hence they would like to complain for pay the lump-sum fee. If Cable TV charges their price by the number of channels watched, people from lower income group would also apply for pay TV service due to the lower fee charged. As there are more combinations of customer to choose, Cable TV consumption plan become more flexible and consequently their market share in the pay TV service would be enlarged.
However, as Cable TV provide many channels with different TV programs; consumer may not have a better understand of the nature content of that channel. So it requires more promotion effort to introduce to customer. For example, they can adopt a trail one time policy to let the potential consumer to try Cable TV service. Develop High Definition TV (HDTV) High Definition TV (HDTV) provides high quality TV picture. Now, the picture of Cable TV is restricted to 480I resolution. They can increase to 1080I resolution which is just the standard of TV resolution in Japan.
Include more exclusive programs Cable TV should buy more patent from foreign TV channels and productions. To remain their high competitiveness and uniqueness, they need to provide more exclusive channels and productions which can not be broadcasted by their other direct competitors. Conclusion Cable TV, having the largest market share of pay TV service in Hong Kong, is facing increasingly keen competition since the introduction of Now Broadband TV. The main competitors changed from free TV service in the past to the broadband and other pay-TV services now.
By our in-depth interview and literature review, pay TV users has an interesting characteristics and behaviours which enable us to base on the findings to suggest recommendations to help Cable TV fight against other pay TV service companies. Many competitors build up their marketing strategies from the aspects that Cable TV underperformed. Therefore, Cable TV has to revise its current marketing strategies and implements short term and long term actions that are recommended in order to maintain the market share and to the industry leader.