An analysis of data and formulating a direct marketing strategy for a cable provider.

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TEAM 2
An Analysis: Cable/Satellite Service
Mary-Nevin Gauthier
Whit Garland
April Sheppard
Jessica Liu
Larry Lowe

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Agenda
 Introduction
 Industry Landscape
 Current Television Ownership
 Porter’s Five Forces
 Data Insights
 Customer Segments
 Strategy – Master Plan
 What tactics?
 Competitive Landscape
 Differentiation
 Experiment
 Conclusion/ Q&A

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Introduction
Objective: Examine the customer database of a cable service
provider to uncover insights and segment those insights into
customer profiles to determine the best direct marketing strategy for
the company going forward
 Examine customer database
 Find insights
 Determine customer segments(target)
 Plan a DM strategy to reach those segments
 Test
 Recommend

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Industry Landscape
 Television has a strong ―life‖ component in the US – despite the
recession , 2010 saw the largest jump in TV’s per household
since 2006
 Facts from Nielsen:
 55% of homes have 3 TV sets or more
 28% have 2 sets
 17% have 1

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Current Television Ownership

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Industry Landscape
Cable TV distribution in the U.S. is controlled by a short list of large
cable system owners and satellite operators that include:
 Adelphia
 Charter 1. 2.
 Comcast Comcast Time
Warner
 Cox Communications
 DIRECTV 3. * by subscribers
Cox
 EchoStar Communications
 Time Warner Cable

7. Video Streaming is becoming
+ increasingly popular
Both industry & consumer Total ad spending is down
have evolved in past years 10%
Cable Television NEEDS Direct
Marketing
Spending on Cable is up 16%
Technological advances along
with wider programming choices
serve as engines for growth
DVR’s are more common –
advertisements can be skipped

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Porter’s 5 Forces
 Bargaining Power of the Customer: High
 See notes in summary about the new power of the consumer
 Bargaining Power of Suppliers: Low
 Threat of Substitutes: High
 Threat of New Competition: Medium
 Cable Providers vary from region to region based of a number of outside
circumstances, such as. Atlanta has 5 options while small towns often
have just 1.
 Intensity of Competitive Rivalry: High
 The Cable TV industry is extremely fragmented but this can be addressed
by securing high levels of differentiation, innovation and value the
company offers

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Data Insights
 Who bring in more revenue to the company?
 Living in single family house
 Earning higher household income
 Male
 Homeowner
 Married
 Computer owned/internet access
 Photography
 More number of rooms
 Younger customers

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Data Insights
 Total revenue is around 50 million from 26,257 customers
 99% of the company’s revenue comes from the total revenue from all
the receivers
$60,000,000
$49,548,600
$50,000,000
$40,000,000
99%
$30,000,000
$20,000,000
1%
$10,000,000
$62,721 $68,490 $278,080
$0
total rec total PPV Total HD total DVR
Series1

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Data Insights
 The highest 25% of the customers contributed 39% of total
revenue
The Percentage of Total Revenue in
Each Segment
13%
1
39% 2
20%
3
4
28%

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Customer Segments/
Target Market
 We divided all customers into 4 segments by Quartile.
 The critical points are Q1, Median, and Q3.
Q1 Median Q3
25% 25%
25%
25%

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Customer Segments/
Target Market
 The upper 50% of all customers bring in 67% of the total
revenue
Median
33%
67%

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Customer Segments/
Target Market
 Segment 1: total revenue is from $0 - $1210
 Segment 2: total revenue is from $1211 - $1800
 Segment 3: total revenue is from $1811 – $2420
 Segment 4: total revenue is from $2421 - $5742

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Information about Segment 1
 The total revenue from the segment 1 is 12.79%
 The mean of the number of receivers is 3.19
 Over 95% of customers do not have DVR & HD service
 76.53% of customers are female
 61.12% of customers are single
 81.23% of customers’ education level are high school and
some college
 The mean of income is $34,158

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Information about Segment 2
 The total revenue from the segment 2 is 29.54%
 The mean of the number of receivers is 4.98
 55.83% of customers do not have DVR service
 93.8% of customers do not have HD service
 61.62% of customers are female
 55.87% of customers are single
 80.99% of customers’ education level are high school and some
college
 The mean of income is $36,403

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Information about Segment 3
 The total revenue from the segment 3 is 27.99%
 The mean of the number of receivers is 6.76
 78.39% of customers have DVR service
 Only 22.57% of customers have HD service
 57.35% of customers are female
 51.77% of customers are single
 79.92% of customers’ education level are high school and some
college
 The mean of income is $37,647

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Information about Segment 4
 The total revenue from the segment 4 is 38.68%
 The mean of the number of receivers is 10.69
 86.64% of customers have DVR service
 79.84% of customers have HD service
 53.85% of customers are male
 50.87% of customers are married
 23.48% of customers’ education level is completed college
 The mean of income is $39,721

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Strategy – Segment1
 Customer acquisition – not going to acquire
 Customer retention
Up-selling HD & DVR service
Target: male, living in a single family, having 6 rooms or less, high
school or some college
DVR: homeowner, married
HD: homeowner, home business, or computer
 Communication
Direct mail and email

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Strategy – Segment1

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Strategy – Segment 2
 Customer acquisition – not going to acquire
 Customer retention
Male customers:
Up-selling HD service
Target: homeowner, gourmet food, or computer
Cross-selling DVR service
Target: homeowner, upscale, or computer
Female customers: Incentive to keep current female renew contract and
get 3 months of premium service free
 Communication
Email, in-program message, incentive

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Strategy – Segment 3
 Customer acquisition
Target new customers with similar customer profile, some college to
college, male/female, near the age 42 who lives in a single family house that they
own
 Customer retention
Up-selling HD service:
Target: homeowner, upscale, married, or computer
Increasing the retention rate:
Free HD service for a year with 2 years contract
Partnership with local stores to provide HD service bundle
 Communication
Direct mail, email, in-program message, Direct Response TV advertising, and
telemarketing.

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Strategy – Segment 4
 Customer acquisition
Target: male, married, education level in college, higher number of
rooms in household
 Customer retention
Cross-selling
New package bundle to customers who are about to renew contract
Free credit to use PPV service
 Communication
Direct mail, email, in-program message, Direct Response TV
advertising, telemarketing, and face to face marketing.

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Differentiation
 Exclusive contracts with apartment
complexes, condos, townhome communities as well as new
build communities.
 Partnership with retailers for HD service.
 Offer PPV credit for the most profitable segment in the
company
 Tracking customers through the company’s website, digital
magazine, and newsletters
 Face to face marketing to partnership with local franchises
such as TV network

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Field Experiment
 Conduct a field experiment for segment 3 & 4 testing rather or not
there is a difference in the response rates between direct-response
TV marketing and direct mail.
 Period: 6 months
 2 Suburban Areas, one is testing group another is control group
 Determination: Response rate from each Direct Marketing strategy.
 Separate our sample segments into the following:
 Direct-response TV marketing
 Direct mail
 Both direct-response & direct mail
 Control—neither direct-response or direct mail

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Q&A