How Do Consumers Perceive Corporate Mergers?


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How Do Consumers Perceive Corporate Mergers?

  1. 1. How Do Consumers Perceive Corporate Mergers? Anjali Lai, Community Manager Kristopher Arcand, Community Manager June 20, 2014
  2. 2. © 2014 Forrester Research, Inc. Reproduction Prohibited How do consumers perceive corporate mergers? In the past six months alone, we have witnessed a series of announcements indicating potential mergers between large telecommunications companies. From Time Warner Cable’s deal with Comcast to AT&T’s merger with DirecTV, these companies are changing the face of the industry landscape in swift, sweeping steps. With such major shifts on the horizon, business leaders and consumers alike are debating questions such as:  What will these mergers mean for the customer experience?  How will these mergers affect overall brand perception?  Will consumers respond by changing their behavior? Forrester Research tracked consumers’ reactions to the series of merger announcements by tuning into relevant online conversations as they unfolded over the past six months. Forrester also leveraged its ConsumerVoices Market Research Online Community to get a pulse on consumer awareness of the news, interest in the potential changes, and opinions about what these mergers will mean to individuals.
  3. 3. © 2014 Forrester Research, Inc. Reproduction Prohibited Regardless of whether they are current customers of a company that is proposing to merge, consumers are generally wary of such corporate shifts because they fear: Increased Costs Consumers are concerned about the mergers’ potential for increased costs, reduced market competition, and decreased service quality Fewer Choices Loss of Quality “As a stockholder I like it. As a consumer, not as much. If these types of companies had fair pricing I would give them my support [but] I fear they will use their power to raise rates.” “I do not view big mergers like this in a positive way because it reduces competition. Mergers might give you more bells and whistles in your packages… but most people don’t need the bells and whistles anyway.” “I think this is just more bad news for customers. These companies, from what I hear, really don’t care about their customers.” “I don’t think a bigger company will do anything better, more likely it will be worse.” Source: Forrester’s ConsumerVoices Market Research Online Community, Q2 2014 (US)
  4. 4. © 2014 Forrester Research, Inc. Reproduction Prohibited On the other side of the coin, consumers do appreciate the opportunities for innovation that the mergers afford Source: NetBase Aggregated Social Listening Data, April - June 2014 (Global); Forrester’s ConsumerVoices Market Research Online Community, Q2 2014 (US) While consumer-generated online conversation about each individual company is characterized by neutral or negative sentiment, dialogue addressing both companies in combination is significantly more positive: Conversation Topic: Consumer-generated social chatter that includes insight-rich text about the topics listed below. Sentiment: A score representing how positive or negative commentary is, where -100% is extremely negative, 0 is neutral and 100% is extremely positive. AT&T 13% DirecTV 18% AT&T and DirecTV 23% Time Warner Cable -2% Comcast -23% Time Warner Cable and Comcast 40% “The idea of the innovations that might arise from combined services is intriguing. It would be wonderful if this [merger] advances technology and [results] in more features for users.”
  5. 5. © 2014 Forrester Research, Inc. Reproduction Prohibited By being transparent about the real advantages at hand, companies can capitalize on consumers’ appetite for innovation “Opponents of the [AT&T and DirecTV] merger who fear reduced competition in pay-TV services are missing the bigger transformations that are reshaping the telecommunications landscape… This step is only a means to a bigger end… to build a ubiquitous digital platform.” - Jim Nail  While consumers respond to the idea of a large corporate merger with uncertainty, few also recognize and appreciate the potential for more innovative service.  Therefore, companies that effectively communicate the benefits of such mergers and set expectations about potential changes in cost up-front take the first step in quelling consumer fears and pivoting the conversation to address the imminent improvements.  To learn more, see the May 2014 report: Quick Take: AT&T Buys DirecTV To Launch Its Digital Platform Ambitions.
  6. 6. © 2014 Forrester Research, Inc. Reproduction Prohibited How we can help you DATA-DRIVEN INSIGHTS THAT PROVIDE A 360° VIEW OF THE CONSUMER Technographics Survey Data Who are they? What do they say they do? Technographics Behavioral Data What, where, and when are they doing things? Technographics Qualitative Data Why are they doing it? Why are they saying it? Technographics Social Listening Data What are they talking about? How are they talking about it? Want to learn more about Forrester’s data offerings, take a look at Data Services.