Analyzing Competitive Networks Broadband Networking Retreat San Diego, October 23-24, 2000 Michael...
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Transcript of Analyzing Competitive Networks Broadband Networking Retreat San Diego, October 23-24, 2000 Michael...
Analyzing Competitive Networks
Broadband Networking RetreatSan Diego, October 23-24, 2000
Michael Richarme, Vice President Decision Analyst, Inc.
2 ©2000 Decision Analyst, Inc.
Session Focus
Evaluating competition End user perspective Distinctive competencies
Identifying profitable areas Switching behavior Price sensitivity
Research aided decision making
3 ©2000 Decision Analyst, Inc.
Decision Analyst overview
22 year old full service marketing research firm 65 position CATI telephone center 1.6 million member Internet panel 20,000 member High Tech business panel High volume mail center
250 employees in Arlington, TexasAbout 1/3 of our business in high techClients include a “Who’s Who” of broadband providers (LEC, CLEC, CATV, ISP, etc.)
4 ©2000 Decision Analyst, Inc.
Broadband Definitions
Two major categories of BroadbandCable Modem – shared bandwidth on 2-way CATV systemsDSL – high bandwidth transmission on telco copper wire local loopsGenerally 200Kbps in at least one directionExclude SDSL, T-1, Fiber from this discussion
5 ©2000 Decision Analyst, Inc.
Useful Secondary Data Sources
FCC Reporthttp://www.fcc.gov/Bureaus/Common_Carrier/News_Releases/2000/nrcc0040.html
Cable DataCom Newshttp://www.cabledatacomnews.com/
Technology Boardhttp://www.technologyboard.com
6 ©2000 Decision Analyst, Inc.
Market Size – end of 1999
Cable modems – 1.4 million consumersADSL – 400,000 consumersOther includes commercial T-1, fiber connections, and other broadband
Cable Modems
ADSL
Other (T-1, Fiber)
7 ©2000 Decision Analyst, Inc.
Market Size – mid-2000
Cable modems – 2.3 million consumersADSL – 850,000 consumersOther – moderately slow growth
Cable Modems
ADSL
Other (T-1, Fiber)
8 ©2000 Decision Analyst, Inc.
Market Penetration
Cable modems Cable passes 94% of US households Networks 52% cable modem capable now Networks 84% capable in 5 years
ADSL Doubling of US Internet households in 5
years from 33% to 67% About 80% of local loops within 18,000 foot
distance from telco central office
9 ©2000 Decision Analyst, Inc.
Market Penetration - current
Cable modems – about 4-5% of households that have compatible cable systemsADSL – about 3% of households with dial-up Internet connections
10 ©2000 Decision Analyst, Inc.
Growth Rates – near term
Cable Modem – 150% unit growth last yearDSL – 380% unit growth last yearApproximately equal size markets at the end of 2004Will each have about 15 million subscribers at the end of 2004
11 ©2000 Decision Analyst, Inc.
Key Competitors
CATV AT&T/Media One, Time Warner, Cox, Charter Top 5 have about 60% of subscribers
LEC SBC, Verizon, BellSouth, Qwest/US West about 80% of ADSL lines
CLEC about 17% of ADSL lines
Other – wireless, ISPs, IXCs
12 ©2000 Decision Analyst, Inc.
Some Consumer Issues
Availability in my areaPricingInstallation tasksFirewall/securityPortabilityInflated speed claimsMultiple users
13 ©2000 Decision Analyst, Inc.
Measure Issue Importance
“How important or unimportant to you are each of the following factors when selecting a high speed Internet connection?
Highly HighlyImportant Important Neither Unimportant
Unimportant5 4 3 2 1
14 ©2000 Decision Analyst, Inc.
Measure Provider Rating
“How would you rate your high speed service provider on each of the following factors?
Very VeryGood Good Neither Poor Poor
5 4 3 2 1
15 ©2000 Decision Analyst, Inc.
Performance Grid
Importance
Rating
Very Low Very High
Very Good
Very Poor
Below Expectations
Over Spending
TABLE STAKES
FIX IT REAL FAST !
42
2
4
FAMILY JEWELS
16 ©2000 Decision Analyst, Inc.
Differential Advantages
What highly important things do you do extremely well that no other competitor does?These tend to cluster into areas of technology, service, price, comfortUse to build a value proposition to the customer
17 ©2000 Decision Analyst, Inc.
Evaluating User Profitability
80-20 rule Some segments are much more
valuable than others
Pipe or pipe-and-applicationsIs $39.95 per month the end goal?
18 ©2000 Decision Analyst, Inc.
Customer Value Analysis
Typical broadband customer is worth $20,000 to $50,000 over their lifetimeThis is a function of time and dollarsSome customers are more attractive than others
19 ©2000 Decision Analyst, Inc.
Customer Value Model
Value = ƒ(Loyalty*Profit)This is impossible to measure directlyIndirect measure of loyalty is propensity to switchIndirect measure of profit is revenue (even better is contribution margin)
20 ©2000 Decision Analyst, Inc.
Propensity to Switch
Proxy measures (LD Service switching)Awareness of alternativesCompetitive intensity
21 ©2000 Decision Analyst, Inc.
Revenue Projection
Pull a reasonable price out of the airPrice it at the same price as everyone elsePrice it to deliver certain returnsOr, price it based on the consumer willingness to pay
22 ©2000 Decision Analyst, Inc.
Price Elasticity
A methodology for gauging price What would be a reasonable price… What would be the highest price… What would be the lowest price,
without worrying about the quality… If this was available at a price of
$x.xx, how interested would you be in buying…
23 ©2000 Decision Analyst, Inc.
Simplifying the Research Stage
Don’t get too caught up in industry subscription numbersUnderstand key assumptions of your business model and test themStay close to the customer and their (fickle) needsStay current
24 ©2000 Decision Analyst, Inc.
Session Speaker
Michael Richarme, Vice President - Client Service, is responsible for leading a
major account team that concentrates on companies working in rapidly changing
and highly competitive markets.
With over 20 years of marketing planning and research experience, Michael has
developed a knowledge base of strategic theory and fundamental tactics that he
applies to client projects. Michael also has significant experience in business
development and international business. He has a keen appreciation for
numbers, but his inherent curiosity always seeks to uncover the underlying story
that the numbers represent.
Michael has both bachelor’s and master’s degrees in marketing from the
University of Texas at Austin, with postgraduate work at the University of
Pennsylvania’s Wharton School of Business. He is currently working on his
Ph.D. in marketing and information systems at the University of Texas at
Arlington.
25 ©2000 Decision Analyst, Inc.
Company SummaryDecision Analyst, Inc. is a leading national marketing research firm, serving a number of major U.S. corporations and advertising agencies. The firm is a recipient of the Advertising Research Foundation’s David Ogilvy Award for marketing research excellence, the top honor bestowed in the field of marketing research. The name, Decision Analyst, reflects the company's decision-oriented, analytical corporate philosophy. Decision Analyst, Inc. is a vertically integrated, full-service marketing research firm. Through its National Survey Center (with 65 interviewing positions presently), its National Field Department, and its American Consumer Opinion Online panel with over 1,600,000 members, and large mail-survey systems, the firm conducts national studies on an array of topics, spanning industries from packaged goods to high technology. The firm places great value on hard work, meeting deadlines, and staying within budgets. The focus of Decision Analyst’s energy is decision-oriented, action-oriented marketing research. Research must lead to decisions, to actions, to results. The education and training of our staff reinforce this decision-analytical emphasis. Decision Analyst, Inc. seeks the synergy inherent in combining qualitative and quantitative research techniques, as required by the objectives of each research project. Decision Analyst, Inc. is a corporation chartered in the State of Texas in 1978. The company is totally owned by employees, and most employees own stock in the company. Decision Analyst, Inc. is an active member of the Council of American Survey Research Organizations (CASRO) and subscribes fully to the Code of Quality Standards for Survey Research specified by CASRO. Also, Decision Analyst, Inc. fully subscribes to and supports the survey research quality standards set forth by the Advertising Research Foundation, the American Marketing Association, the Marketing Research Association, and ESOMAR (the European Society for Opinion and Marketing Research).
26 ©2000 Decision Analyst, Inc.
Questions and Discussion
Decision Analyst, Inc.604 Avenue H East
Arlington, TX 76011www.decisionanalyst.com
800-ANALYST
Michael [email protected]