79646625 Marketing Strategy

MARKETING STRATEGYGaining and maintaining competitive advantage

MARKETING STRATEGY ....................................................................................................... 1 Analysis of the UK Digital Television Industry ........................................................................ 2 INDUSTRY STRUCTURE ...................................................................................................................... 2 S.W.O.T. Analysis ITP within the DTV Industry ..................................................................... 4 Strengths ................................................................................................................................... 4

ISLAMIC TELEVISION PROJECT COPYRIGHT ℘ 2003 .................................................................................................................................................. 1

CUSTOMERS AND TARGETING .......................................................................................................... 6 Weaknesses ............................................................................................................................... 6 Opportunities ............................................................................................................................ 6 Threats ..................................................................................................................................... 7 CONSOLIDATION .............................................................................................................................. 7 The Future ................................................................................................................................ 8 FORECASTS 2001 TO 2004 .................................................................................................... 8 How Islamic television project will Gain and Maintain a Competitive Advantage ................... 9 Extension of the Product life cycle ......................................................................................... 11 Marketing Strategy ................................................................................................................. 11

Islamic Television ProjectCopyright2003

Registration Number 4138904


Analysis of the UK Digital Television Industry

This section of the report introduces the UK Digital Television industry by giving a

brief introduction to the way it has developed since 1998, and cites a few of the

benefits that digital television brings over analogue. Furthermore an analysis of

the current industry situation will be given, highlighting areas in which a new

entrant like Islamic television project Ltd. can capitalise on in the future. The

report will conclude with recommendations on a number of strategies available to

Islamic television project, to be able to gain and maintain a competitive

advantage within the DTV industry.

Industry Structure

October 1998 saw the introduction of digital TV in the UK — a more efficient way

of transmitting TV pictures than the existing analogue system, which it will

eventually replace. The benefits of digital TV include greater choice of channels,

better quality of pictures and sound, widescreen format and interactive services.

Analogue transmissions however, will continue for some time. Viewers will still be

able to receive BBC1, BBC2, ITV, Channel 4 (S4C in Wales) and Channel 5 as

they do now, although these services are also being made available in the digital

format. The Government will decide when analogue services are to be `switched

off’; this will depend, in part, on how quickly digital services are taken up.

Currently the government has set a target of 95% take-up of digital before the

proposed switch off. This target is hoped to be reached by 2010, but some

analysts suggest this target is too optimistic. Currently digital TV take-up stands

at approximately 33% of UK households, according to the latest ITC figures.




The existing analogue services from the BBC, ITV, Channels 4, 5 and S4C, are

also broadcast simultaneously (`simulcast') via digital terrestrial TV and they are

free. Extra services provided by these broadcasters may also be free, although a

number of the additional DTT channels and services will have to be paid for.

Digital cable or digital satellite services are charged in a similar way to the

existing cable and satellite services.

Competition amongst the service providers of DTV is a three way split between

Sky Digital, ITV Digital, and the Digital Cable operators ntl: and Telewest. This

three way split is marked by three different technologies used to broadcast and

receive the digital signals. Sky Digital offer their service in almost the same way

as it used to (using satellite dishes) but is now using digital receivers and smaller,

less unattractive digital dishes. ITV Digital has its own technology of a set top box

that receives digital signals through existing aerials. The Digital Cable services

are transmitted through underground fibre optic cables where there is almost a

nil chance of the signal being disrupted. This is as opposed to the services that

Sky and ITV provide through the airwaves, which can be affected by adverse



PlatformPlatformDTV

Households

DTV Househol

ds

% of UK household

s

% of UK household

s

5.3 million5.3 million 22%22%

1.14 million

1.14 million 4.7%4.7%

564,000564,000 2.3%2.3%

951,300951,300 3.9%3.9%

UK DTV Penetration, Quarter 2, 2001


weather conditions such as thunderstorms, which can sometimes block out the

signals completely.

S.W.O.T. Analysis ITP within the DTV Industry

Strengths

Niche Market: Islamic television project is dedicated to provide its services

to a untapped niche market, which by very nature will allow the channel to

sustain its market presence and gain an advantage over firms targeting a

wider audience. Secondly, Islamic television project has positioned itself to

become the market leader in the industry of broadcasting for its targeted

market segment. Finally, by offering Islamic programming (which is a

unique selling point for the channel) that is not offered by the mainstream

media, the company will be avoiding direct competition and also prevent

conventional risks involved in such projects.

Market segmentation, the market segment that is targeted by Islamic

television project fulfils the vital requirements and is definable, sizeable,

reachable and relevant. This enables the company to maximise its

effectiveness and efficiency of the long-term market offering. (See

customer & targeting illustration below).

Advertising is a source of revenue almost monopolised by terrestrial

commercial TV but their stranglehold on the market is slowly being

withered away as more and more channels enter the digital arena.

Advertising provides an attractive source of revenue because the marginal

costs are low. Subscription charges are also another source of revenue for

digital television channels; which if backed up by high quality

programming can be raised in line with investment.




Islamic television project’s advertising and subscription charges are 55%

below the industry average and could help the channel gain market share

quickly, amongst the Muslim community in the UK.




Customers and Targeting

Weaknesses

In comparison to Sky, the programming budgets for the other digital

channels and services are relatively small, lacking the financial strength of

Sky. The sums that regular digital channels can afford to pay for films and

sporting events are considerably less than Sky.

A serious weakness of the new digital channel broadcasters is their relative

inexperience in the pay-TV market as opposed to Sky who has dominated

the scene for over a decade in the UK. Islamic television project has

developed very naturally over the past two years but of course, still lacks

experience. This is something that is being addressed through contacts

within the industry, and the employment of media experienced personnel.

Admittedly Islamic television project’s programming budgets are not equal

with the likes of companies like Sky, but if a substantial portion of the

market is won early on, the quality of programming will certainly improve,

as the company acquires the sums of money needed to pay for footage

libraries and the necessary production and editing facilities needed to

deliver cutting edge programming.

Opportunities

Islamic television project hopes to be the first professional and truly

Islamic, English-speaking channel catering for Muslims and non-Muslims in

the UK and beyond. This represents the greatest opportunity for Islamic



Segment Selection

Target marketing Total ProductPositioning

Achieved by suitable Offer mix

Communicated via a promotional mix

To target Customers


television project to seize, before another channel is setup that will

probably distort the true image of Islam (e.g. Ahmadiyya TV).

Islamic television project will be producing unique and dedicated

programming for its targeted audience. As Islamic content is not yet a

mainstream product, the specialist programmes produced by Islamic

television project will be of added value. Thus these programmes could be

sold to other channels seeking Islamic content, especially on seasonal

demands, such as during the month of Ramadan. Therefore an extra

revenue stream can be realised.

The main opportunities for Islamic television project will arise through the

exploitation of its expertise and excellence in programme production using

the facilities available to it. The ownership of valuable and extensive

programme libraries could also give a significant and rising proportion of

income from programme sales in the future. This source of income will be

gained at a market level, such as through Islamic organisations and retail

outlets. Whereas the above mentioned revenue opportunity is based at an

industry level.

Threats

As new advertising outlets become available to marketers over the next

few years, competition for advertising revenue is bound to increase. It is

quite possible that this will drive down the price of advertising airtime

even further.

Because Islamic television project will be the first channel to cater for

English speaking Muslims, the likelihood of future competition from a rival

channel cannot be ruled out. So to counter this, Islamic television project

must excel in all areas of digital TV broadcasting, and constantly be aware

of the changing needs of its customers, to tailor its services to meet them,

so as to remain one step ahead of the competition at all times.

Consolidation




With consolidation occurring throughout the UK broadcasting market, the

industry is facing an almost complete overhaul that will affect and bring

change to all sectors of the market. However, impacting pressures will

affect individual sectors in different ways. The number of already existing

analogue channels switching their services to digital as well as the number

of new entrants into the digital TV market year on year is immense. It is

predicted that due to the sheer number of channels that will be available

to the consumer in a few years time, that almost inevitably there will be

waves of mergers and joint operations to consolidate the market.

Unless a channel has sound financial backing and high enough viewer

ratings, it may be forced to consolidate and merge with most probably a

like for like rival channel, as the competition becomes too intense for any

one channel to survive alone.

The Future

Only time and technology will tell what happens with digital television.

New services are being thought of every day. Widescreen TVs, flat panel

TVs, computers capable of HDTV are here now. Digital Television can only

get better. Islamic television project will have to keep up with the pace of

technological development within the DTV industry, to be able to sustain

its competitive advantage over any subsequent rivals that may emerge,

and not to be left behind in such a fast changing business environment.

FORECASTS 2001 TO 2004

• Key Note anticipates that, between 2000 and 2004, the value of the UK

Digital and Satellite TV market in the UK will grow by 24.9% at current

prices, to £3.19bn. Much of this growth will be at the expense of the

terrestrial analogue format. Free-to-air TV may well be facing a period of

steady decline in the face of increased competition from rival broadcasters

and, over the period 2000 to 2004, the new digital platforms will drive

such growth as does occur.




0

1,000

2,000

3,000

4,000

Revenue £Millions

2000 2001 2002 2003 2004Year

Advertising and Subscription Revenues to Digital and Satellite TV providers

Source: Keynote

Islamic television project will need to invest heavily in its marketing, in

line with the potential growth of the DTV industry, to be able to capture as

much of the untapped market of Muslim viewers of Digital TV in the UK.

How Islamic television project will Gain and Maintain a Competitive Advantage

Through our analysis made on the DTV channel industry, we have identified a

number of strategies in which Islamic television project will be able to gain and

maintain a sustainable competitive advantage within the DTV industry. This will

be achieved in the UK initially, and then with a view to internationalisation of the

company’s operations by the end of the five year development plan. The

strategies include:

• Firstly to dedicatedly target a segment of the market that is ideally not

being catered for i.e. a ‘niche market’ or one that has a lot of room for

improvement. The Muslim population of the UK has very little access to

quality Islamic programming in the English language. Due to this gap in

service, which Islamic television project hopes to fill, our targeted market

segment is defined.




• To produce programmes at a lower cost than rivals through all the

necessary means such as outsourcing of production, leasing of property,

hire purchase of equipment etc. to increase profit margins.

• To produce unique and better quality programming than rivals, through

the development and acquisition of excellent production facilities and

footage libraries.

• To attract more viewers than the competition through unique and quality

programming at low cost subscription charges and pay-per-view (PPV)

services, so as to attract as much advertising revenues as possible. Thus

creating a ‘virtuous circle’ of complimentary growth of more viewers and

subsequently attracting more advertising revenues.

• To offer unique services and features as part of a complete package with

the DTV channel, such as interactive features and a linked website. An

initiative in this regard, which is already in the latter stages of

development, is Islamic television project Interactive™, a distance-

learning venture.

• One of the most important objectives for Islamic television project to be

able to achieve all of this, is to inculcate and develop a learning and

innovation based culture amongst the organisation’s employees. To

develop the required skills and expertise and to provide a spring for ideas

that may bring with them other sources of competitive advantage in the

future. To do this will require sufficient investment in the training and

development of all employees.

It will be those companies that invest in their human asset that will attain the

competitive advantage and be capable of sustaining it. The management of

Islamic television project realises the importance of the human asset and is

determined to invest the necessary funds in developing a world-class

organisation. Creating a learning and adaptive organisation will help Islamic

television project to gain the flexibility that will be needed to react to sudden

changes within the business environment. This could prove crucial as the DTV




industry is predominantly a technologically led one, and so liable to more

frequent change.

It should be noted that in an era of increasing buyer sophistication and

market competitiveness, marketing Islamic television project successfully can

only be achieved through developing and managing competitive advantage

through original service offerings and combinations associated with the

‘penumbra’ of the total product and potential it offers for development and

differentiation.

Extension of the Product life cycle

Marketing Strategy

Five forces analysis provides an understanding of the competitive nature of the

business. These factors should be identified and taken under consideration while

drawing the marketing strategy, which will consist the actual implementation of

the company’s five-year development plan.

The Five forces Analysis:



Sky UK Launch

Globalisation of broadcasting bandwidth

Terrestrial bandwidth services

Growth

Rage extension

New marketSales (£)

Time


Competitive Rivalry

There are no significant levels of competitive rivalry that the

company may be exposed to, as there are no other service providers

targeting or catering for this particular market segment. The unique

services, which the company is offering, will attract not only

domestic but also global consumers. This differentiation of the

services offered must be maintained with increasing quality and

value. In the long term, price reductions for advertisers will not be

an issue as the target audience and customer profile is an invaluable

tool for ‘targeting’, as the viewers have shared interests. However,

as operators the importance of retaining business and potential

reduction of customers switching between network channels must be

recognised.

Buying Power

Buying power is limited, as the kind of service provided is unique,

although there may be some reservations on the quality of the

services offered. Therefore, customers will be encouraged for trial

periods, from which their reservations should be resolved. The

company will strive to offer quality services, bench making its quality

against the market leaders. There may be some financial constraints

initially, but the quality of services and programmes should not be

compromised at any moment in time.

Power of Suppliers

The main supplier is BSKYB, its bargaining power is significant.

However this bargaining power is positively diluted by Government

Regulations. The willingness and encouragement of SKY to




specialised channels to broadcast using its platform further proves a

high degree of certainty for the future of the company. This can also

be seen in the mutual interests of the company and the supplier,

SKY, to attain and retain global customers.

Threat of Substitutes

The threat of substitutes exists, as there will be conflict of interests

within households, and also individuals in choosing a channel over

another. However, a discounted subscription, high quality and

variety of programmes will minimise this threat. In the long run, it

will allow the company to establish high levels of customer loyalty.

This threat of substitutes is high and common within the industry.

Threat of Entrants

The threat of entrants is low, obtaining an operator’s licence is the

principle barrier to entry. However, the long-term aim of the

company is to be a market leader within its own segment. The

competitive advantages established will safeguard the company from

any real competitive threats.



79646625 Marketing Strategy

Documents

Transcript of 79646625 Marketing Strategy