Marketing Strategy

MARKETING STRATEGY Gaining 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 Project Copyright2003 Registration Number 4138904

MARKETING STRATEGY Gaining and maintaining competitive advantage 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.



UK DTV Penetration, Quarter 2, 2001

Platform Platform

DTV DTV Househol Househol ds ds

% %of of UK UK household household ss

5.3 5.3million million

22% 22%

1.14 1.14 million million

4.7% 4.7%

564,000 564,000

2.3% 2.3%

951,300 951,300

3.9% 3.9%

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



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

programming can be raised in line with investment.


up

by

high

quality

MARKETING STRATEGY Gaining and maintaining competitive advantage  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.


MARKETING STRATEGY Gaining and maintaining competitive advantage Customers and Targeting

Segment Selection

Target marketing

To target Customers

Communicated via a promotional mix

Total Product Positioning

Achieved by suitable Offer mix

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



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.


MARKETING STRATEGY Gaining and maintaining competitive advantage Advertising and Subscription Revenues to Digital and Satellite TV providers 4,000 3,000 Revenue £M illions

2,000 1,000 0

2000

2001

2002

2003

2004

Year

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.


MARKETING STRATEGY •

Gaining and maintaining competitive advantage 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 distancelearning 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

Sales (£)

Terrestrial bandwidth services Globalisation of broadcasting bandwidth

Sky UK Launch

New market

Rage extension

Growth

Time

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:


MARKETING STRATEGY Gaining and maintaining competitive advantage 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

MARKETING STRATEGY Gaining and maintaining competitive advantage 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.


Marketing Strategy

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