Market Case Analysis for Verizon Fios TV

¶ … market case analysis for Verizon FiOS TV offered by Verizon Communications. The analysis consists of product, pricing, promotional, and distribution strategies which Verizon Communications should follow in order to operate in the industry in the most competitive and profitable way. The analysis of industry and competition is also given as a part of marketing research strategy.

Verizon Communications is one of the leading communication services providers in the World. Its major products and services include Verizon FiOS TV, FiOS Internet, FiOS Digital Voice, set-top box, and receiver sets. This paper presents a marketing analysis for Verizon FiOS TV -- one of the most successful communication services offered by Verizon Communications in the United States and some other countries. Verizon FiOS TV is a high quality fiber optic cable network for home television entertainment. Verizon Communications offers its Verizon FiOS TV in all the major cities and towns of the United States. However, there is a room for improvements in its current business and marketing strategies.

This paper aims to recommend marketing strategies to Verizon Communications which can help it in targeting its customers more effectively, beating the competition more competitively, and grow in the industry more profitably. The paper starts with an introduction to the company and its major products; and then introduces Verizon FiOS TV with its major features, benefits, and possible extensions or improvements. The paper proceeds by recommending pricing strategies, promotional strategies, and distribution plan for Verizon Communications which are essential for designing the marketing plan for the FiOS TV in short run.

The promotional strategies section gives a recommended time schedule and marketing budget which can be allocated to different marketing mediums like electronic, print, social media, and displays. Finally, the analysis of industry and competition gives a brief snapshot of the company's current market position. It also recommends how Verizon Communications should move forward in its industry in the presence of this hard competition. The paper concludes with a brief overview of the whole discussion and analysis.

Introduction: Verizon Communications

Verizon Communications is an American multinational corporation engaged in providing fiber optic communication services. It was established in 1883 by Chesapeake and Potomac (C&P) with the name of "Verizon Washington." Verizon Communications has spread a large network of fiber optics in the home and international markets. It offers communication services for both individual and corporate clients through its super-fast internet and high quality cable network system. FiOS is the largest and the most successful fiber optic network of Verizon Communications in the United States. This network is also available for both home and business clients from all over the country at very competitive rates (Verizon, 2013).

Products/Services

Verizon Communications currently offers Verizon FiOS TV, FiOS Internet, FiOS Digital Voice, set-top box, and receiver sets. Verizon FiOS TV and FiOS Internet are the major services of Verizon Communications whereas FiOS Digital Voice is comparatively newer in the U.S. market. Verizon FiOS TV is recognized as one of the highest quality fiber optic cable network for television entertainment. Due to this highest quality fiber optic cable, the consumers enjoy crystal clear High Definition (HD) display on their television with 0% chances of data loss. Verizon FiOS TV is also preferred over satellite television networks which give poor display results in bad weather conditions. Verizon FiOS TV is also cheaper than most of the satellite television networks due to its easy installation, networking, and maintenance costs for the service providers. At present, Verizon FiOS is the market leader in home entertainment and business communication technologies in the United States (Verizon, 2013).

Product Features:

Verizon FiOS TV is available with almost 300 High Definition television channels broadcasted from all the corners of the world. Verizon Communications provides television channels from all the categories including sports, news, entertainment, music, movies, information, cartoons, etc. With its 0% data loss technology, Verizon FiOS TV is able to give superfine display quality which makes the television watching experience more enjoyable for the viewers. The fiber optic used in the Verizon television network does not allow bad weather conditions like rain or storm to disrupt its display quality. Moreover, its durable underground networking system safeguards it from external distortions, damages, heat, or sunlight. Verizon FiOS TV is available with different subscription packages including Select HD, Extreme HD, Ultimate HD, Prime HD, etc. Unlike satellite television networks which use Internet Protocol television (IPTV), Verizon FiOS relies on Optical Network Terminal (ONT) and Super Head-End (cable television head-end to receive TV channels from cable system). However, some features are delivered through Internet Protocol Television (IPTV) (Verizon, 2013).

Product Extension Possibilities:

As a part of product extension/improvement strategy for home entertainment services, Verizon Communications can upgrade its existing fiber optic cable with a thicker and better quality cable. It will improve the signal and display quality for the home entertainment services and support greater number of television channels. Moreover, it can improve its interactive features like video on demand, sports packages, pay-per-view channels, widgets, programming guide data, etc. In order to attract more and more customers from the market. It can improve its high definition supporting equipments like FiOS HD set-top box, DVR, and cable card supporting equipments to provide the best quality television display for premium HD customers (Verizon, 2013).

These product extensions will help Verizon Communications in making its Verizon FiOS TV brand stronger and more competitive among its satellite and fiber optic network service competitors (Kurtz, MacKenzie, & Snow, 2010). Being a pioneer in fiber optic networking for the home entertainment industry, Verizon Communications has to keep itself innovative in its business strategies and marketing approach. The new fiber optic cable and innovative features will enable it to achieve its strategic aims in a more effective and efficient way (Verizon, 2013).

Pricing Analysis for Verizon FiOS TV

Currently, Verizon Communications charges comparatively lower price for its FiOS TV service as compared to satellite television systems. However, it has not yet achieved cost leadership in the industry due to the presence of numerous small scale fiber and ordinary cable network providers that have quite low costs of operations due to their lower quality cable systems. On the other hand, Verizon FiOS TV services are rendered using highly advanced communication technologies like Optical Network Terminal (ONT), Super TV head-end, and Internet Protocol Television (IPTV). The top industry rivals of Verizon Communication are also charging very competitive prices for their fiber optic cable networks (Verizon, 2013).

Therefore, Verizon FiOS TV has to face two major challenges in its pricing strategies: First, the service competition with satellite TVs; and second, the price war with ordinary and fiber cable network service providers. In order meet these challenges in the most effective way; Verizon Communications will have to focus on controlling its costs of operations and winning the customer loyalty in the largest possible consumer segment in the U.S. Market. The first strategy is to control and minimize the costs of operations which can be achieved through service efficiency, research and development, and protection measures for fiber optic cables so that they remain durable and free from data loss for the longest period of time (Verizon, 2013).

The second strategy is to win the price war with the satellite television networks and other ordinary and fiber optic cable networks. Verizon Communications can win this war by keeping its profit margins at the lowest possible for its Verizon FiOS TV service and give major focus on competing on the basis of its customer base (Kurtz, MacKenzie, & Snow, 2010). That is, it should try to attract more and more customers from the U.S. household market to buy its Verizon FiOS TV service (Verizon, 2013).

Promotional Strategies for Verizon FiOS TV

For its FiOS TV, Verizon Communications will have to use a holistic approach in its marketing efforts, i.e. It will have to focus on each and every aspect of marketing and promotional strategy if it wishes to grow in a fast paced environment. First of all, it will have to identify the U.S. households that can become the most potential customers for its Verizon FiOS TV. It can be done by defining the target market for this particular product (Kotler et al., 2010).

i. Defining the Target Market for Verizon FiOS TV:

Verizon Communications will provide FiOS TV in all the small and large cities of the United States. The fiber optic network will be spread across the country and will be available for every type of households. The target market for Verizon FiOS can also be categorized on the basis of income groups and social classes. Generally, only those families wish to install HD television network in their homes that live modern lifestyle and can afford to pay the premium subscriptions and periodical maintenance charges of this supreme television entertainment service (Verizon, 2013). However, Verizon Communications will offer its FiOS cable-based TV at a comparatively lower price than satellite-based HD Television service. Therefore, its target market will consists of households from middle to upper level of income groups. It means Verizon Communications will aim to persuade its target consumers to buy Verizon FiOS TV if they wish to enjoy crystal clear television entertainment at very affordable price (Luther, 2011).

The demographical segmentation of the target market will distribute the U.S. households into different age groups and circles of life. Age wise, the target consumers will constitute school going children and teenagers, college youngsters, housewives, professionals, and aged people. Verizon FiOS TV will provide more than 300 HD television channels from different categories like sports, news, music, entertainment, cartoons, informative, etc. Therefore, Verizon Communications will have to give an equal emphasis on promoting FiOS TV to consumers from every age group and life cycle category. Since U.S. has been observing a rapid population shift from rural to urban areas, the potential for growth in the highly populated areas is more attractive for Verizon Communications to promote and sell its FiOS TV (Verizon, 2013).

ii. Selection of Promotional Mediums for Verizon FiOS TV:

After defining the potential target customers for its FiOS TV, Verizon Communications will have to identify the most effective promotional mediums which can give it high return on marketing investments in a short period of time. Generally, television network service providers use their own TV channels and websites to promote their products and services. But Verizon Communications will also have to use some other mediums to attract new customers from the market. These mediums include radio, newspapers and magazines, bill boards, social media, etc. Moreover, Verizon Communications can take the services of business promoters, distributors, and other marketing agencies to promote its FiOS TV in all existing and new markets in the United States (Mu-hlbacher, Dahringer, & Leihs, 2006).

iii. Setting the Marketing Budget for Verizon FiOS TV:

Once the promotional mediums are selected for a product, the nest step is to allocate the available marketing budget to each of these mediums according to its effectiveness and significance for the product. For Verizon FiOS TV, the most effective medium of promotions would be television, radio, and newspapers. Reason being, these mediums have the greater rate of exposure and frequency by the general public. Secondly, they reach in every small and large area of the country regardless of its population density, available facilities, or infrastructure (Kotler, Brown, Burton, Deans, & Armstrong, 2010). Secondly, social media networking sites are also an effective medium to target the students and professional people category of the society.

iv. Marketing Planning:

The marketing planning process for Verizon FiOS TV will pass through the following four steps:

Conduct preliminary research to explore the potential target customers according to their demographics and frequency of exposure to different marketing mediums.

Run marketing campaigns on selected TV channel(s), magazines, and social media networking sites.

Conduct marketing audit at the end of every quarter.

Conduct a final marketing audit at the end of the year (Waterschoot & Bulte, 1992).

The Marketing Budget:

The Marketing budget for Verizon FiOS TV should be divided according to the following proportion:

Electronic Mediums (Television and Radio): 30%

Print Mediums (Newspapers and Magazines): 15%

Bill Boards and Displays: 15%

Social Media Networking Sites: 5%

Business Promotional Firms: 20%

Distributors: 15%

The proposed time schedule of marketing campaigns for the next 12 months is as follows:

Time Schedule for Verizon FiOS TV

Activity

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Preliminary Marketing research

Promotional Campaigns on Television Channels

Promotional Campaign on Newspapers and Magazines

Promotional Campaign on Social Media Networking Sites

Promotional Campaign on Bill Boards and Displays

Periodical Marketing audit (After every 3 months)

Annual Marketing audit (At the end of the year)

Distribution Strategies for Verizon FiOS TV

Verizon Communications will provide its FiOS TV service in all the rural and urban areas of the United States. However, it will target only large cities and town in the initial phase; and continue to expand the fiber optic network with the passage of time. The new and improved fiber optic will take time to spread across the country. Therefore, Verizon Communications will have to see a steady growth in the initial 12 to 18 months period. In order to promote and distribute its service in all the major locations of the country, it will have to make contracts with the large scale and renowned distributors (Luther, 2011). In addition to expanding the fiber optic network across the United States, Verizon Communications will also have to increase the number of customer service and facilitation centers. In the initial phase, it should open these centers in some large cities of the country (Lancaster & Withey, 2007).