Company Development - The Rate of Television Advertisements - Case Study Example

Company Development ID Number & Total Number of Words 249 Background The product that will be examined in this study is the service of a television commercial production company. This type of business aims to provide creative video services for companies who want to advertise their products in television. The rate of television advertisements is based on per second or per minute contract (i.e. 10-second spot, 1-minute spot etc.). Therefore, television commercial production companies should produce infomercials that are effective in conveying the product or service benefits offered by their clients without consuming too much time. PEST Analysis Even though it is legal to use television commercials for political campaigns, television advertisements in this country are heavily regulated by the Federal Communications Commission and the Federal Trade Commission (FCC, 2012; FTC, 2012). To avoid legal or technical problems, television commercial production companies should be familiar with the technical standards implemented with regards to products, claims, and contents (Cheap TV Spots, 2012). For instance, the advertising of cigarettes on television is totally restricted or banned in the United States. Therefore, television commercial production companies in the United States should observe and up-date themselves with the on-going changes with regards to television commercial restrictions. Likewise, television commercial production companies are obliged to observe the laws on IPR. The U.S. economy is still under recovery. Therefore, television commercial production companies may encounter delay in the payments for their service. Eventually, this will negatively affect the companies’ cash flow. To maintain their competency in the market, television commercial production companies should cut down their fixed monthly operating cost without sacrificing the quality of their television commercial videos. There are social implications with regards to the production of television commercials. To avoid offending the viewers, television commercial production companies should avoid producing offensive commercial programs that can adversely affect its reputation. With regards to technology, television programs in the United States is accessible through on-air broadcast, unencrypted satellite, cable services, direct broadcast satellite, or internet protocol television (FCC, 2010). On the other hand, television advertisers are using various technologies such as video software, hard ware, digital cameras, digital video cameras, etc. Since the capital requirement in putting up this kind of business is low, the number of existing television commercial production companies is continuously increasing over time. This makes the market competition in television commercial production industry very tight. Market Research A market research aims to gather relevant information with regards to a company’s target customers (McQuarrie, 2005, p. ix). In general, it is important to conduct a market research to enable a company gain a better competitive advantage as compared to its close competitors. Often times, market information should include not only the specific needs of its target market but also closely examine the size of the market and its market competition. Specific Needs of its Target Market The needs of the modern companies are no longer limited to the use of some music or jingles. Because of the continuous development in technology, most customers are looking for more effective and unique mediums that can be used in producing a television advertisement (Taylor, 2007). Today, potential customers are looking for more interesting digital videos that apply the use of humor, computer animation, or a series of sitcoms in advertising. Therefore, to satisfy the specific needs of each target customer, a television commercial production company should not only gain expertise in the use of new technologies but also have a sense of creativeness. Market Segmentation Market segmentation is important in assisting the company owner make sensitive business decisions (Rogers 2005, p. 19). Since the target customers of a television commercial production company are those companies who are looking for creative video services for their television advertisements, this company should conduct a business-to-business market segmentation analysis (Boone & Kurtz, 2010, p. 171; Powers & Sterling, 2008; Palmer & Millier, 2004). With regards to the target market of a television commercial production company, the company may consider the company size and geographic location of its target customers. For example, the television commercial production company may target all companies situated in different states of the United States. It is also possible for the television commercial production company to limit its target customers based on geographic segmentation. Instead of offering its service to all companies situated in different states of the United States, the company may choose to limit its services only to companies that are situation in New York or California. It is also possible on the part of the television commercial production company to limit its target customers based on the company size. Instead of serving the advertising needs of the small-scale companies, the television commercial production company may choose to focus on serving the advertising needs of the large-scale companies. Market Opportunities To open new market opportunities, the television commercial production company can widen the scope of its target geographic market. Instead of limiting its services to companies that are situation in New York or California, the company may choose to offer its service to all companies situated in different states of the United States. By widening the company’s target market, there is a higher chance wherein the company can serve the television advertising needs of US-based companies. Likewise, instead of limiting its target customers to large-scale companies, the television commercial production company may decide to serve the advertising needs of small- and large-scale companies. Competitive Analysis To remain competitive within this particular industry, a television commercial production company should be able to produce advertisements based on the U.S. broadcasting standards. Aside from meeting the customers’ target air-time, the company should gain expertise in producing high quality commercial videos. As a universal rule, a television commercial production company is obliged to meet the required technical and content broadcasting standards in the United States to avoid being rejected by the television networks. As mentioned earlier, the target market of a television commercial production company are companies who are looking for creative video services for their television advertisements. For this reason, it is more logical on the part of the advertising company to conduct their own market segmentation analysis with regards to its customers’ target consumers (Albert, 2003). Through the use of this particular marketing strategy, the television commercial production company can increase the chances wherein they can successfully create an advertising video that is effective in capturing the attention of its customers’ target consumers. In the end, this strategy will help create competitive advantage on the part of the television commercial production company as compared to its close competitors. For example, the customer of a television commercial production company is Frito-Lay in North America and the product this company wants to advertise is Lay’s Classic potato chips. Therefore, except for the fact that it is unlikely for infant and children between the ages of 1 to 3 years old to be eating Lay’s, the market segmentation of this product is generally not sensitive of demographic, psychographic, or even demographic segmentation (Rogers 2005, pp. 19 – 24; Kotler 2000, pp. 263 – 266). Conclusion and Recommendations A television commercial production company is serving the advertising needs of other companies. Therefore, television commercial production company should conduct a business-to-business segmentation analysis to learn more about its target market. In the case of a television commercial production company, the target markets should be the big- and small-scale companies who are looking for creative video services for their television advertisements. By limiting its target customers based on the companies’ size and geographic location, television commercial production company is limiting its market opportunities. References Albert, T. (2003). Need-based segmentation and customized communication strategies in a complex-commodity industry: A supply chain study. Industrial Marketing Management , 32(4), 281-290. Boone, L., & Kurtz, D. (2010). Contemporary Marketing. Mason, OH: South-Western Cengage Learning. Cheap TV Spots. (2012, January 3). Retrieved October 25, 2012, from Advertiser Guidelines: Advertiser Content Policies & Guidelines for All U.S. Television Advertising: http://cheaptvspots.com/adguidelines.html FCC. (2010, April 21). Retrieved October 25, 2012, from NOTICE OF INQUIRY. Before the Federal Communications Commission Washington, D.C. 20554. FCC 10-60: http://www.reelseo.com/wp-content/uploads/2011/02/FCC-10-60A1.pdf FCC. (2012). Retrieved October 25, 2012, from What We Do: http://www.fcc.gov/what-we-do FTC. (2012). Retrieved October 25, 2012, from About the Federal Trade Commission: http://www.ftc.gov/ftc/about.shtm Kottler, P. (2000). Marketing Management - International Edition - The Millennium Edition. Upper Saddle River, New Jersey: Prentice Hall International Inc. McQuarrie, E. (2005). The market research toolbox: a concise guide for beginners. 2nd Edition. Thousand Oaks, California: Sage Publication. Palmer, R., & Millier, P. (2004). Segmentation: Identification, intuition, and implementation. Industrial Marketing Management , 33, 779-785. Powers, T., & Sterling, J. (2008). Segmenting business-to-business markets: a micro-macro linking methodology. Journal of Business & Industrial Marketing , 23(3), 170-177. Rogers, E. (2005). Learners Resource: Certificate IV in Business (Marketing) Profile the Market. Melbourne: Australian Training Products Ltd. Taylor, T. (2007). The Changing Shape of the Culture Industry; or, How Did Electronica Music Get into Television Commercials? Television & New Media , 8(3), 235-258. Read More