Time Warner Cable Strategy written report

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The written report for Time Warner Cable strategies.

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Time Warner Cable Strategy written report

  1. 1. Time Warner CableMission Statement:“Connect people and businesses with information, entertainment and each other.Give customers control in ways that are simple and easy.”Outlook:According to the company’s annual report, the following represents their plan for the future. “In2011, as in 2010, our focus will be on developing additional ways to give our customers accessto any content they want, any time they want it, and, increasingly, anywhere they are and fromany device they choose. In addition, we will continue to look for strategic, prudent ways to helpgrow our existing businesses and focus on new business opportunities as appropriate.”Vision:To become the premier service provider of internet, phone and television by leading the marketin innovation while enhancing the overall customer experience and satisfaction.Time Warner Cable has relied heavily on its brand name and strives to maintain its strong marketposition and claim as number two in the broadcasting and cable market. These are heavy claimsand burdens that TWC must carry and despite their strong brand name they have been losingtheir grip on the market. They have no explicit vision statement listed on their website or 10-Kwhich could explain their lack of direction and genuine innovation from the company. The visionstatement we formed is intended to embody what it seems that they are striving to become basedupon their annual report and mission’s statement.Strategic Objectives:We plan to increase our overall market share by 10-15% in the next 5 years. This will helpTWC move closer to its vision and mission statement. We plan on doing this through a variety ofstrategies. We also want to increase our programming content and offer a wider selection ofpackages (perhaps this should also be a part of our defensive or offensive strategy). This willhelp us penetrate the market more and increase our subscriber base thus increasing our overallrevenue. Through our strategies we would also like to increase our overall customer satisfactionand surpass Comcast in overall customer satisfaction. This will be done mainly through ourdefensive strategies. As TWC continues to grow and innovate we will attain our vision ofbecoming the premier service provider and connect consumers to entertainment and with eachother.
  2. 2. Financial Objectives:We plan to increase our overall revenue by 20-25% in the next 3-5yrs. This will help us tomaintain our debt in a better manner and get it under control. The industry is also experiencingsignificant increases in video programming cost so we need to continue to increase our revenueso we aren’t adversely affected. Our company has the lowest programming costs and throughconsistent revenue growth we can maintain that ratio. We also want to increase our profitmargins we currently have the lowest profit margins of 9.2% and would like to see that increaseby 1-3% in the next 5 years. Generic StrategyBest Cost ProviderThe generic strategy we have chosen is the best cost strategy. We chose to be a best cost providerbecause there is a huge need to differentiate, but at the same time, there is a need to becompetitively priced. The industry has stiff price competition, which is especially true with thebig industry members, when offering bundles and standalone services that offer individualservices at cheaper prices. TWC needs to differentiate and change its pricing model to be morecompetitively priced. One of the weaknesses identified by our SWOT is that we are tooexpensive to be competitively priced with the competition. The industry has become verystandardized, especially with the rapid change in technology and how easy it is for industrymembers to copy other competitors’ new services or innovations. This is why it is immenselyimportant for TWC to be able to differentiate itself by offering superior services at competitiveprices. This will also help bring in subscribers particularly because of the weak economicconditions the nation is experiencing. Consumers are looking for the best value, which makesoffering something beyond the perceived price value to be very important for all industrymembers. The best cost strategy works best for us because we do not want to be the lowest costprovider since that is not economically or logically feasible in this industry. Our debt level is alsosignificantly high and we would not be able to sustain our financial stability by reducing ourcosts drastically lower than competitors. Broad Differentiation would not be effective eitherbecause, although the industry does call for a company to be differentiated, price is somethingthat can not be ignored and is a significant factor amongst top competitors. Standard and Poor’smentions the stiff price competition, referring to it as the “battle of the bundles,” becausecustomers want the best service at the best price. Broad differentiation requires companies to tryand raise the prices, which is something TWC cannot do since raising our prices any higherwould very likely decrease revenues and make our company unattractive to consumers. Thefocused or niche market would not work for us because there is not a huge or significant nichemarket that we can rely on to notably increase our revenue or market share.
  3. 3. Offensive StrategiesWe choose to use offensive strategies to supplement our generic strategy because we arebeginning to lose market share and our strong market position as the 2nd largest cablebroadcasting company in the industry. We need to introduce some new services and adopt someof our competitor’s services and improve upon them. This will allow us to overtake ourcompetitor’s market share and help set ourselves apart from industry members by improvingupon their own services and marketing those improvements.Adopt and Improve competitor’s ServicesPay Per View Mobile AppThe Pay per View app will allow our subscribers to access the content they already love on theirtablet and Smartphone devices. We offer subscribers access to pay per view events already but,this will allow them to access that content on the go. We would make the price between $2.99-$3.99, we based the price on the table below which shows what percentage of adults buy appsand at what price.
  4. 4. Strategic Rationale:The amount of revenue pay per view events bring in is between $150-$200 million dollars forjust one event. These events are usually seasonal but can allow for a new revenue stream that wecan count on periodically through the year. Our SWOT also mentions an opportunity forstreamlined content and this is an opportunity to appeal to the rising Smartphone and tabletgeneration. One of the major trends in the industry is a push for more wireless capabilities andthis is a way to reach that segment of the populous in order to keep up with the rising TVeverywhere concept taking over the industry.Objectives and Vision:Releasing this pay per view app will help us to increase our customer retention from year to yearby staying on top of the trends and services customers’ desire from industry members. There hasbeen a big push for TV everywhere and we must give the consumer what they want so we canstay ahead of the competition. This will increase our subscriber base and our overall revenue bystaying on top of current societal trends and make use of new technological capabilities.The amount of revenue pay per view events bring in is Implementation Strategy (not sure whatyou mean by this): 1. Phase 1 a. Consumer research on the most popular pay per view events 2. Phase 2 a. Acquire the licensing rights to the specific pay per view events we found to be very popular b. Allow subscribers to view the event live 3. Phase 3 a. Release the app to subscribers in the 5 major states we operate b. Make it free for current customers and offer it at a discount for new customers 4. Phase 4 a. Monitor progress of the app in the 5 major states and begin to release the app to subscribers in other states.Sports Package mobile AppThis App will provide the opportunity for subscribers to access a variety of sports content ontheir mobile devices. There are services like DirecTV’s NFL Sunday Ticket and Comcast’s MLBextra innings that allow subscribers to watch a vast amount of live sporting events on their TV orlaptop. This will allow them to take that same entertainment and make it available on mobiledevices so that subscribers won’t miss a game. The subscriber would have a choice of whatsports package they would want to pay for and the app would come with that package of theirchoice for an extra $2. We plan to offer the sports we have licensing rights to and begin to
  5. 5. expand into other sports that could deem a profitable venture. This also allows us to reach a morediverse American population by branching out to sports not highly favored in the US. Thisallows TWC to keep up with the trend of diversity in society and opens up the door to possiblyreach to an international market.Strategic Rationale:One of the opportunities that our SWOT analysis presented was streamlined content whichallows us to target a huge niche segment. According to Pew research 74% of people whodownload apps; download apps that allow them to regularly get updates on sports, news, weatherand stocks. This will allow us to stand out and offer something that other competitors aren’tdoing at the moment. There is also another statistic from Pew research that shows 43% of peopledownload apps that allow them to watch TV and movies. The demand is there for morestreamlined line content not only on laptops but also for tablet and smart phones.Objectives and Vision:This will help fulfill our strategic objective of improving our programming content and offeringa wider selection. This will also in turn increase our subscriber base which will help us increaserevenue because revenue is heavily dependant on our subscriber base. TWC’s least profitablesegment is mobile strengthening, therefore increasing the revenue stream in that segment will
  6. 6. help make them a stronger company in all areas. We desire to be the premier service provider ofinternet, phone and TV and we can’t do that without improving and strengthening our phonesegment. Continuing to innovate and increase our market share ties back to the vision ofbecoming the number one company in this industry.Implementation Strategy: 1. Phase 1 a. Acquire the licensing rights to allow mobile access 2. Phase 2 a. Test the mobile app in states we primarily operate 3. Phase 3 a. Implement the mobile app to all subscribers b. Allow current subscribers access to the mobile app if they have purchased a sports package c. New subscribers offer sports packages at a discount for a limited time with first release of the app 4. Phase 4 a. Monitor the results and add new sports that would be profitableNew Services MarketDown to EarthThis is a service based upon what Ultraviolet is doing at the moment. The service will allowconsumers to manage, watch and purchase movies, music and TV shows. The subscriber wouldfirst need to start a cloud account with us for $15. This will allows subscribers buy the movie ororder a season of the TV show they’re watching with their Smartphone or tablet while watchinga TV show or movie. When the subscriber hears a song or some music they want; they’ll be ableto buy it immediately from their wireless device. There will be a notification on the top of theirmobile device when they access our app so that when various songs, TV shows and movies comeup on the screen they’ll be able to drag it down and buy it. All of the devices (up to ten) that areregistered with us will share the same pool of information that can be accessed from any mobiledevice. Customers will be able to share, manage, purchase and watch TV shows, music andmovies.Strategic Rationale:This is one big opportunity from our SWOT, it combines several opportunities includingstreamlined content, strategic alliances and cloud computing. This also capitalizes on a servicewe kind of already offer to consumers as well. Our EBIF service allows subscribers access tocoupons and special offers as they watch TV this would be improving that service and taking itto another level. We are also capitalizing on a service that DirecTV and Ultraviolet offer which
  7. 7. reduces the amount of R&D we have to do for this service. This also can open up new revenuestream opportunity. No other competitor is doing this in the industry so this allows us to be thefirst one’s in the market to offer this type of service.Objectives and Vision:This is an immense opportunity for TWC to become a premier service provider by trulyenhancing the customer experience. This will open up a new revenue stream and allows us newopportunities with the strategic alliances we’ve formed. This will let us fulfill our strategicobjective of expanding our programming content. We also wish ?Implementation Strategy: 1. Phase 1 a. Form a Strategic Alliance with Amazon and Time Warner Inc b. Begin to work together 2. Phase 2 a. Test it in the market b. Improve and adjust any areas of error 3. Phase 3 a. Implement it to the market b. Monitor resultsCustomer Loyalty ProgramsThe customer loyalty program we would like to introduce involves satisfying our currentsubscribers and attracting new ones. The initial introduction of the loyalty program would be tooffer a premium service or cash discount to subscribers who have been with us for 1-2yrs.Subscribers who have been with us for at least 2 years or more would get the same discount orpromotion offer that they may have initially enticed them to pay for our services. To attract newsubscribers we would market our new loyalty program and let them know about the variousincentives. We would offer them a cash discount or premium service for at least 6 months to ayear of continuous service. We also want to give our subscribers several benefits and discountsto pass along to friends and family, customers would be able to refer a friend and both partieswould receive benefits. This can allow us to reach increase our subscriber and improve our brandloyalty among consumers.Strategic Rationale:One of the Key success factors for our industry was customer relations. Our SWOT also showedthat one of our prime weaknesses was our customer service. A customer loyalty program issomething Time Warner Cable, as well as other top competitors in the cable, satellite, andbroadcast industry, do not have. By having a customer loyalty program, Time Warner Cable will
  8. 8. be able to achieve an advantage by being the only one to have a program which helps andrewards customers. A customer loyalty program assists in customer retention and relationsthrough providing customers with incentives, free products/services, discounts, etc. which wouldmake the customers want to continue being a customer of whatever company is utilizing thisprogram. Time Warner Cable would be able to increase its customer base by keeping itscustomers from going to other competitors like Comcast or DirecTV through such a program andultimately increase revenue. Along with this, a good customer loyalty program will generallybring in new subscribers by word-of-mouth from current customers who were satisfied by theprogram and would also increase revenue for Time Warner Cable through the increase insubscriber population. Finally, a customer loyalty program will reflect upon the image of acompany and if done well, will provide an excellent image of the company that will bring inmore customers and keep current customers happy, ultimately leading to an increase in revenueand image recognition amongst the general population. Overall, a customer loyalty program willprovide Time Warner Cable an advantage over other top competitors by increasing its revenuethrough customer retention, bringing in new customers, and helping to provide a better image ofTime Warner Cable in order to spread its name more and more throughout the country.Objectives and Vision: One of the key phrases from our vision is enhancing the overall customer experience andsatisfaction. This will help show our subscribers that we care and we appreciate them for theirloyalty and commitment. We also want to build upon our brand name and increase brand loyalty.This will help increase our customer retention which will increase our revenue from year to yearbecause we won’t be losing as many customers. We have the lowest customer satisfaction amongthe top industry members so we must change the customer experience. The customer loyaltyprogram will also allow us to surpass Comcast with customer satisfaction. This will help us tofulfill another part of our strategic objective. Our market share will continue to grow as well aswe increase our subscriber base and revenue. This will help us become the premier serviceprovider in the industry and enhance our customer’s experience with our company. 1. Phase 1 a. Consumer Research b. Look at current subscribers to see who bought during a promotion period 2. Phase 2 a. Interpret and Analyze the data b. Which promotional periods brought in the most customers c. Begin to structure a loyalty program 3. Phase 3 a. Implement the loyalty program to subscribers b. Begin to market the program to consumers 4. Phase 4 a. Keep improving because it will constantly change
  9. 9. b. Continuous consumer research Defensive StrategiesWe choose to use defensive strategies because we’ve been experiencing a loss in our marketshare and in the amount of subscribers we’ve been losing each year. We need to defend ourposition against stand alone services and other smaller competitors in the industry. We have sucha strong brand name we need to continue to make sure that image isn’t blemished because we’vebeen lacking in certain areas. This will allows us to defend the market share we do have andcontinue to strengthen our brand name among consumers.Customer Service:Increase customer care center locationsWe would like to open more customer care centers so that we can readily meet one on one withour customers. This will allows us to personally handle any problems or issues that may arise.We want there to be a face to our company and not just a symbol or slogan. This will help toincrease brand loyalty as they build relationships with our staff. We primarily operate in 5 statesand this will allows us to branch out our operations and establish our presence in other states andincrease our brand name penetration. The customer care centers will be equipped to handle anytechnical issues and be strategically located in the state to establish convenience and allow ourstaff to be readily available to handle any issues with a speedy response.Strategic Rationale:Having many different customer care centers in more locations in the U.S. will help to increasecustomer satisfaction by being able to meet with customers one-on-one, discuss possibleproblems, and find solutions to answer those problems. Not only will having more locations withcustomer care centers increase customer satisfaction, it will also help in expanding Time WarnerCable’s brand name by being spread out more across the U.S. It will also help in keeping morecustomers as well as since customer service will become more personal with the option of a one-on-one conversation and will increase satisfaction. This increase in customer satisfaction willhelp to bring in more customers because customers are being satisfied and their issues are beingresolved efficiently, which will bring in more revenue. Overall, more customer care centersequals increased customer satisfaction, and satisfied customers equal more revenue.Objectives and VisionTWC must strive to become the number service provider and that cannot be done if ourcustomer’s aren’t satisfied. We must also handle any and all technical issues so that customerscan continue to enjoy the best our company has to offer them. Enhancing the overall customerexperience and satisfaction means speedy responses and less technical issues and problems. The
  10. 10. less our customers call us, the better it is for everyone. This will help increase customer retentionand strengthen our brand name. It will also help us meet our strategic objective of increasingmarket share growth by acquiring and retaining more customers year after year. It has the addedbenefit of helping us surpass Comcast in customer satisfaction and in the years to come, be at thetop of the industry in overall satisfaction. Our financial objectives will also be met by increasingsubscribers our revenue will continue to grow and we should be able to increase our profitmargins. 1. Phase 1 a. Look into the states with our highest subscriber base 2. Phase 2 a. Expand and build customer care centers in our next 4 biggest states b. Expand more into the Midwest open location in Chicago 3. Phase 3 a. Monitor results and continue to expand and open up new customer care centers every 6 months to a yearRevamp current websiteStrategic RationaleRevamping our current website may prove to be very important because our website, as it isnow, is ineffective in relaying information, especially in comparison to our competitors. At thispoint in time, it is not possible for a prospective customer to quickly view pricing information onthe packages we offer. When we were first researching this company, we realized that we wereunable to obtain pricing information from their website and so we had to Google it in order tofind out the information. We later learned that the information is available on the website;however, it is difficult to find and this issue is definitely something we want to correct. While itis important to us that customers are able to find pricing information, this is certainly not the onlything we will change about the website. We will also change the website to make it easier for thecustomer to understand and traverse the information that is on the website so that they will havea better experience. Overall, we just want to make the website very informative and easilynavigable so as to increase customer satisfaction and when we are done, we expect for theaverage consumer to have a much more pleasurable experience from our company’s website. Ifwe accomplish what we want to do with our website, it will also have the potential to obtainmore consumers since more people will be experiencing less irritation and displeasure whentrying to access our information online via our website. In addition, we also plan to obtaininformation about the helpfulness and ease of the website through customer service so that wecan constantly adapt to changing consumer needs.
  11. 11. Objectives and VisionThis will support our vision of enhancing overall customer experience and satisfaction. We wantour current subscribers, as well as the general public, to be able to access our information onlinequickly and effectively without it being a disutility to them. By improving upon our website, wewill be able to draw in more people and satisfy current customers. We recognize the hassle ourcurrent website causes people and will work toward getting rid of anything that dissatisfies thecustomer completely by making continual adjustments. 1. Phase 1 a. Look at other successful competitors 2. Phase 2 a. Scrap current website and begin to rebuild 3. Phase 3 a. Test website b. Make adjustments 4. Phase 4 a. Introduce new website to consumersChange pricing model(should we change this to cost?)One thing we have noticed about Time Warner Cable is that they are quite pricey. In mostinstances, the company charges $20 more than the competition for their packages. Of course, theinnovative services we plan to introduce into the market will likely persuade consumers that theyare paying more for the best services; however, we can do this without being priced so far aboveour competitors. We would like to reduce the price of all of our plans by at least ten dollars if notmore. By doing this, we will make it so that we will be more competitively priced and expect toretain and gain more customers, generating more revenue than before at our new lower price.Strategic RationaleTime Warner Cable has the lowest programming costs in the cable and broadcast industry andbecause of that, we have been able to lower costs in other areas. This is even more reason forTime Warner Cable to lower its prices since we can afford to do so with the decrease in costs andexpenses and we will also be generating revenue with increased customer retention and anincrease in new subscribers due to the lower prices.Objectives and VisionThis supports our financial objective of increasing our revenues by twenty and twenty fivepercent. We expect our revenues to increase by lowering our price while still offering great
  12. 12. services to our customers. By making our packages more affordable, we will draw in morecustomers who may not have been willing to pay such a premium price for the services we offer.This also supports our Best Cost strategy in which our company will shift its business model tofocus on lowering our prices while still continuing to offer innovative services.Lower Prices(should we change this to cost?) 1. Phase 1 a. Look at competitor’s pricing models 2. Phase 2 a. Adjust and build upon our tiered system b. Match prices to be competitively priced with competitor’s 3. Phase 3 a. Implement the new pricing model in the 5 major states b. Monitor results and make adjustments as we see fit 4. Phase 4 a. Implement the new pricing model to all subscribers b. Continue to monitor results

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