In the early 1990s the telecoms market was deregulated in the UK permitting perfect competition in the marketplace where the monopoly powers of BT had ruled for decades. By the start of the new millennium, many franchise holders were providing digital technology in competition with BT for telephony services and Sky for television services.
In order for the franchise holders to maximise market penetration quarterly campaigns would be formulated to support a door-to-door and telesales team sell subscriptions.
- Free installation
- No minimum contract duration
- Free movies for three months
- Pay for two months and get a third month free
- Free Sky Sports for a month
- Subscribe to cable telephone and get add-on telephony features free of charge
The company had reached a dilemma – depite high levels of subscription and installations there was also high levels of ‘churn’ (customers not paying bills and cancelling subscriptions). The company reached a decision, they needed to grow and sustain their customer base without having to resort to short-term gains.
The one overriding objective was to formulate a marketing strategy based on the ‘bundling’ of digital services to create an added value proposition. Internal brainstorming sessions developed a list of attributes to enable questionnaire development. The following were agreed as being the key attributes in the buying decision:
- Services subscribed to
- Installation charges
- Contractual obligations
- Monthly subscription rate
- Solus or dual offer (i.e. TV or phone or both combined)
This resulted in 216 permutations of the proposition. To be able to effectively evaluate the interrelationship between all these combinations we would require a fractional design of 16 permutations.
All respondents were interviewed face-to-face with a questionnaire which presented these 16 choices.
Analysing the data:
The conjoint analysis approach resulted in some interesting findings:
- The combined phone and TV offering was the most important attribute mirrored by the fact that the dual subscription achieved the highest level of preference.
- The phone services derived higher preference that the TV service.
- Respondents appeared to perceive value in the digital service irrespective of its packaging with the cheapest price not having much influence on preference.
- A fixed contract of 12 months minimum was preferred to the other two options
- The installation charge was the least important attribute.
Reflection on learning:
Once the information collected was analysed the commonalities between the results are:
- Dual subscription service (Cable TV and phone)
- £29.99 per month subscription rate
Two variable elements are:
- Installation fee
- Duration of contract
Upon deliberation, the final package had the following elements:
- Basic and Sky Sports and Movies
- £10 installation fee
- 12 months minimum contract
- £29.99 dual subscription per month (TV and phone rental)
This package was launched and within one month 10,000 units had been sold.