Magazine article Marketing

Finding Cable's Target

Magazine article Marketing

Finding Cable's Target

Article excerpt

The cable industry must make sales quickly to fund its growth. Nick Fuller of CCN is helping cable find its market

On the face of cable's future rosy: research suggests consumers prefer it to satellite, and household connections in 1992 are 73% up on 1991. By the end of the century 50% of all households should have access to cable TV, and cable will challenge satellite's market share. And new services and opportunities, including a cable-based telephone service, are developing.

But severe difficulties stand in cable's way.

The product itself has a lot to offer. Cable television is a mass-market entertainment product providing a wide range of consumer choice and it can cater for specific niche markets, such as ethnic communities.

It offers cable-exclusive programming and carries a wide range of satellite channels, including all of BSkyB, as well as BBC1, BBC2, ITV and Channel 4.

The same fibre optic cable that carries the television programmes can provide a full telephone service, telephony. And because cable telephony suppliers offer cheaper service and call rates and a wide range of service features, demand is already strong from consumers and business.

Despite all these product pluses, cable operators' marketing challenges are formidable.

First, costs are very high. Cable serves local areas on the basis of operational franchises, of which more than 130 had been awarded by July 1990. Franchise terms state that all homes within the allocated region should be offered the service, and that pre-determined goals for network development must be met.

The Independent Television Commission has in some cases relaxed the deadlines allowing operators more time to raise the necessary revenue. But the high cost of installing cable underground -- around |pounds~40 a metre -- still represents a huge capital investment. It is already nearing |pounds~1bn, and the final cost is likely to be |pounds~4bn.

The clear priorities for all operators are to meet their network building targets and to sell the service as quickly as possible to recoup some of their massive investment. Achieving these two aims at the same time is difficult.

It is vital to have a major capital investment to fund the build-up. Equally important is the need to sell the service quickly so the returns flow in to fill the investment gap. But this means marketing to large and diverse target groups.

Nick Caunter is marketing director of Videotron, which has recently started to overlay telephony on all its London franchises. He says: "The mix of demographics, ethnic background and lifestyles in our area of London is about as diverse as you could imagine.

"Our area includes the high-rise council blocks of Peckham and the fashionable town houses and mews properties of Kensington. Residents of the former readily take up the cable TV service; the latter are more hesitant about cable TV but are generally eager to link up to the cable phone service.

"Expatriates and ethnic minorities also figure strongly in our area, and have special programming needs that only cable can serve.

"We recognise that the level of our success will depend on how well we identify these different types of consumer, their characteristics and their needs."

The crucial need for marketing intelligence to drive strategy and campaigns has been highlighted by the introduction of telephony to households and businesses. It is a double-edged sword.

On the other hand, telephony is attracting consumers who might otherwise have no interest in what cable has to offer. …

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