Marketing Information Systems

Marketing Information Systems at DirecTV

The DirecTV Group is the largest DBS (Direct Broadcast Satellite) provider and the second-largest pay-TV operations in the U.S., with a market share of 16.3% at the close of 2006. DirecTV is structured into two main operating units including DirecTV Latin American (DTVLA) and DirecTV U.S. The U.S.-based operations contributed 93% of total company revenue in 2006, the remainder coming from DTVLA. The company's business model concentrates entirely on subscription charges from multi-channel television packages, supplementary premium channels, in addition to customer premises equipment (CPE) rental fee model as well. Figure 1 provides the growth of the DirecTV U.S. subscriber base and market share.

Figure 1: DirecTV subscriber base and market share

Source: DirecTV (2007)

While the company has consistently been able to achieve 16% market share in is projected to maintain this level of performance from 2004 through 2006, according to the company's Securities and Exchange Commission filings (DirecTV, 2007) and HSBC Global Research (2007).

Figure 2: DirecTV Churn Rate

Source: (HSBC Global Research, 2007)

What is significant from a Marketing Information Systems perspective are the market and competitive forces that are impacting DirecTV. Figure 2 shows the annual churn rate for the company's customer base from 2004 projected to 2001 (estimated). This comes from analysis completed by HSBC Global Research (2007). Clearly DirecTV has significant challenges ahead from a customer churn standpoint. This, along with global expansion of DTVLA and the continual monitoring of developments in global Direct Broadcast Services (DBS), Digital Video Recording (DVR) and wiMAX technologies all underscore the need for excellent Marketing Information Systems to be put into place.

Defining a Marketing Information Systems Strategy for DirecTV

Given the velocity at which DirecTV's customers' preferences and as a result the company's core businesses are changing, it's clear that the company could benefit greatly from a Marketing Information System. In this system the need for integrating market research data, internal customer sales, service and marketing programs data, marketing intelligence both on industry dynamics and competitors into a comprehensive decision support system could be accomplished. The intent of this section of the paper is to recommend how a Marketing Information System could be created for DirecTV to provide the company with an increased ability to compete in the rapidly changing markets the company competes in.

Marketing Process Definition and Systems Integration Is Critical

As the first step in creating the Marketing Information System for DirecTV, the company needs to first focus on the most critical customer objectives. Clearly alleviating customer churn while increasing the number of options in existing services while adding new ones is critical. To accomplish these strategic objectives, the Marketing Information System needs to include the following key components:

Development of process workflows to include all relevant internal data on customers, prospects, pricing, and marketing strategy plans and results - What needs to happen is that first the many processes that rely on marketing information must first be analyzed and charted, and then the databases and all other forms of information be mapped to these marketing processes. By aligning the many sources of marketing information from internal records, competitive intelligence databases and systems, in addition to integration of the Marketing Information System to the Customer Relationship Management (CRM) system, marketers and senior managers will be able to quickly get the information they need to complete the planning and execution of strategies.

Real-time integration between the Marketing Information System and the Market Research Systems(s) in place throughout DirecTV is also critical. By far the largest percentage of DirecTV's budget is in the purchase of syndicated research services and spending on primary research programs. It is common for companies the size of DirecTV to spend well over $5M per year on market research subscriptions and primary research studies. Ironically much of the research never gets used to its fullest extent. That's why it is critical for DirecTV to work very quickly to create real-time integration links between its broader Marketing Information System and the Market Research Systems and processes in place throughout the company. What needs to become a critical objective in this integration is to develop the ability to provide anyone who needs access to both syndicated research and research result access on a 24/7 basis.