Marketing Situation and Launch of New Products in the Australian Digital and Streaming Industry - Case Study Example

New product Name: Course: Lecturer University Department Date Executive Summary The Australian online streaming industry is under exponential growth. There have emerged new entertainment companies in the wake of the year 2015. These companies include Presto, Stan, and Netflix. Their arrival has introduced stiff competition within the industry. This has come along with numerous benefits to consumers. Stan, which is also a new arrival in this industry, is planning to launch a new product line. Known as Sportiff, the new product is a package of 12 channels dedicated to sports. The new product is aimed at providing entertainment to sports enthusiasts in Australia. Stan will face stiff competition from Fotlex, which is the dominant entity in the delivery of sports. Stan has various opportunities that it will use to its advantage. With an appropriate set of goals and objectives, Stan will implement effective marketing strategies including the use of marketing mix to ensure the success of this new product. However, it is expected that Fotlex will respond to this competition by re-structuring its marketing strategies. Introduction The Australian digital and streaming industry until recently was largely dominated by various companies like the internet protocol television (IPTV), EzyFlix, pay TV, and several free to air platforms of content playback like the ABC (Elbourne, 2013). Foxtel was the only company with streamable content and a library of channels. However, the wake of 2015 has seen the emergence of three major player, Netflix, Presto, and Stan. The emergence of these services will lead to high competitiveness in the Australian streaming industry. This will be able to meet the increasing demand for subscription video on demand services (SVOD). Currently, there are 1.5 million households in the country who are subscribed to streaming services referred to as pent-up demand (Communication and Media Authority, 2012). Despite the recent launch of Netflix in Australia, there were already 200,000 people accessing streaming services from the Netflix based in the US. Due to the stiff competition arising from the emergence of these streaming companies, the companies are implementing different strategies to acquire the largest market share, including offering a variety of products/services to consumers. Stan, which is a recently launched company, aims to introduce a new product to attract more clients and to attain a competitive advantage in the market. With regards to this, this paper is going to provide a report on the various aspects related to the launching activity of this new product by Stan, with regards to Fotlex, which is its major competitor. The new product Since after its launch, Stan has been offering various services to its consumers. These services include exclusive programs (like Mozart in the Jungle and Better Call Soul) and library deals for television programs and films from CBS, ABC, MGM, and BBC (Kidman, 2015). In order to remain competitive in the market, this company is planning to launch a new product to its subscribers. Stan is going to introduce a new line of service with 12 sports channels, referred to as Sportiff. With regards to this new product, Fotlex is considered the most-fierce competitor because it already provides the service with 9 sports channels. Situation Analysis In preparation for the upcoming launch, there is a need to understand the general situation of the Company. In order to carry out a comprehensive situation analysis, Stan Company engaged in both PEST and SWOT analysis, and the findings were as presented below (Sehgal, 2011). Political: The political environment reigning in Australia will determine the success of the newly launched product. Concerning this, the internet regulations and policies will either facilitate or limit the development of this new service by Stan (Strangelove, 2015.). The delivery of the new product to be launched will rely on Australia’s network neutrality. This is because network neutrality is the key principle of operating internet services within a given country and it provides the guideline of operations between the internet service providers and the government. Network neutrality refers to the idea of giving equal treatment to the data available over the internet. Despite this need, the Australian government engages in the discrimination of data based on the type of equipment, content, or the application (Watt, 2014). The government has not put strict policies that discriminate on data used to air sporting activities. Therefore, Stan’s new project will benefit from this. Economic: the success of this new product depends on the economic status of the target market within Australia (Nilsson and Rapp, 2005). The level of income of the target population is a major factor to be considered here. This is to enable Stan to set affordable monthly subscription package. Normally, the target population is made up of individuals with different levels of income. A research on the income level of the target group of this new line of service revealed that the target markets are likely to afford the subscription charges of $ 5 per month. The major target group of Stan’s new product is sports enthusiasts within the age gap of 15 - 40. Within this age group, there are many dependants, for example, sports enthusiasts who are still in school and college. They form the largest percentage in this category, hence may negatively affect the success of this product. Despite this, a good number are working class individuals who are likely to afford this subscription fee. In addition, the economic growth and gradual increase in the GDP of Australia, it is expected that more people will subscribe to this new product. Social: The social activities of the Australian market who are targeted by this new product will determine its success. These are the leisure activities of the target market. Whether the target population is sports enthusiasts or not will influence the performance of this product. A quick research on the target group showed that a high percentage (75%) of the targeted population is sports enthusiasts. Another key factor here is the availability of leisure time among the target population. The more the leisure time, the higher the chances that the target group will subscribe to this service. Therefore, the likelihood of successful implementation of this new product is high. Technological: in this context, technology refers to the extent at which the target population is using a computer and other technologically assisted devices (Dixon, 2013). A target group that widely embraces technological devices and digital content is likely to subscribe to this new service. A high percentage of the target population embraces digital content and is already subscribed to the initial programs offered by Stan. In addition, the level of digital literacy among the target group is a significant factor here because it dictates the consumption habits of the target market. Therefore, in the event that this new service is launched, it will be very easy for members of the target group to subscribe to it. SWOT Analysis Every business operates in an environment and is affected both by internal and external factors. With regards to this, external factors are those influences that the management of the company involved does not have direct control over, while, on the other hand, internal factors are those that the management of the business has a considerable amount of control over. SWOT is an acronym for Strength, Weaknesses, Opportunities, and Threats. In order to determine these factors, a SWOT analysis ought to be carried out on any new business before its establishment. This will enable the management to learn how to maximize the strengths and opportunities of the company, while also dealing with the challenges presented by the threats and weaknesses. Strength i. The parent companies of Stan (Nine Entertainment Co. and Fairfax Media) have been in the streaming industry for quite a long duration (Screen Australia, 2014.). Therefore, they possess skills and knowledge regarding this industry. This knowledge will be useful in the successful establishment of the new product. ii. Stan, as an online streaming company is a strong brand. The positive perception that the consumers have on this company will work to the advantage and success of this product. This is because it is already recognized by many people who will subscribe to this new product in Australia. iii. Stan provides a high variety of services with high quality leading to satisfaction of customers. As a result, consumers will easily subscribe to this new service. iv. Stan utilizes the abilities of media convergence. It is able to use various media platforms like computers, smart phones, and television. This ensures a high level of flexibility in the delivery of content to the subscribers. Weaknesses i. There is normally a delay in content delivery by Stan Company. This will make potential consumers in the target population to hesitate from subscribing to this new service. ii. Price fluctuation in the Australian streaming industry may force Stan to increase its prices in order to match the market terms. This may put off potential consumers from subscribing to this new product. A sports enthusiast may opt to subscribe to services offered by other competing companies like Fotlex. iii. In order to launch and successfully establish this new product, Stan will be required to make huge financial investments. This may not work in favor of this company, which is still under a tight budget. Since Stan was launched early this year, it is yet to generate profits from its business activities. Opportunities i. In Australia, there is an expansion and an increase in the number of broadband subscribers. This creates a huge opportunity for the successful establishment of this new product among the target group. ii. Not many online streaming companies are offering sports channels apart from Fotlex. This means that supplying contents to sports enthusiast through online means is not yet fully explored in the country. This provides a great opportunity for this new service to boom. iii. There are many enthusiasts of sporting activities in Australia and particularly the selected age group. Therefore, this new product will find a ready market after it is launched. Threats i. Issues related to network regulation may interfere with the smooth operations of this new product. ii. Stiff competition from Fotlex is a major threat to the success of this new product. This is because the divided market and the issue of customer loyalty may not favor Stan. iii. The incessantly increasing cost of subscription to the streaming services will force Stan to raise its prices in order to realize profits. This may discourage potential subscribers and even drive away those who have already subscribed to the new product (OECD, 2012). Industry background/Analysis The Australian streaming and entertainment industry has undergone immense growth because of the widespread technological use and the increased acquisition of broadband in Australia (Venture Consulting, 2015). Similarly, the emergence of new technological devices that are able to stream online content are key driving forces of growth in the Australian streaming industry. Many industries in Australia are using video applications using broadband for the purpose of entertainment, communication, marketing, and advertising (Ringia, 2013.). Currently, the Australian video streaming industry is not yet saturated. It is still undergoing growth as more companies launch new packages for subscribers. The year 2015 has witnessed the arrival of three online streaming companies, Netflix, Presto, and Stan. The concurrent arrival of these companies has brought competition in the Australian streaming industry to the fever pitch. The US based Netflix Entertainment Company is the major threat to the local streaming companies, which will now be forced to improve the standards of the products and services that they offer (Lusted, 2013). In addition, the local companies will be forced to reduce their subscription prices. The ability to access premium content will incessantly be an issue of concern to companies like Stan, and Netflix because Fotlex widely dominated the Australian streaming market (Tay, 2011). The supply of sports entertainment is also dominated by Fotlex and this will prove to be a major challenge to the new package to be launched by Stan. Competitor Analysis The competition in the Australian streaming industry is very stiff. There are currently four main companies in the Australian streaming industry namely; Fotlex, Presto, Netflix, and Stan (Australian Recording Organization Industry, 2014). These companies supply Australians with various entertainment contents, ranging from films and television programs. The presence of these other players presents a challenge to Stan entertainment because they divide the market. The major threat to local providers in this industry is the arrival of the American based online streaming industry; Netflix early in the year 2015 (Ipsos MediaCT, 2011). Being a well-known online provider of entertainment, Netflix is going to present a fierce competition in terms of prices and the products offered. Other players in the industry already took measures to cut their prices as a counter-measure to the competition brought about by Netflix. These players are also forced to improve the quality of services they offer, and as a result, consumers are the beneficiaries. Despite the stiff competition in the supply of movies, films, and television programs, the particular market that is targeted by this new product lacks stiff competition. The delivery of sports entertainment is a function performed by Fotlex entertainment. The Fotlex entertainment has 9 channels dedicated to sports. Therefore, Fotlex is considered the major competitor of Stan in the supply of entertainment to sports enthusiasts. Apart from Fotlex, Stan expects competition from other local television channels in the delivery of sports entertainment to Australians (Plunkett, 2009). Critical issues in “new” product launch a. The Marketing Strategy (the 4Ps) Product: In addition to other forms of entertainment already on offer, Stan is planning to introduce a new package of 12 channels dedicated to sports. This package is known as Sportiff. Price: Stan is going to offer unlimited streaming of the new package at an affordable price of $5 per month. The set rice was selected based on the need to make profits in order to sustain the project after its launch (Hitt, Ireland, and Hoskisson, 2009). Distribution (Place): In order to distribute services to customers, Stan will work together with ISPs to deliver content to its consumers at high speed, and at any place, any time. Promotion: i. Free trial period: A means of promotion Stan is going to offer this package to its target market a free trial period of two months. This will be to test the reliability of Sportiff and also to win the confidence of subscribers. During this period, Stan will deliver its message of commitment to quality and value. The period will give consumers an experience of the new product, and this is useful in winning the loyalty of subscribers. The major strategies of promotion that will be implemented in communicating the promotion messages about Sportiff include: ii. New mobile devices: In Australia, there are many people who are using new mobile devices i.e. smartphones. Therefore, advertisements with promotional messages will be done over the new mobile devices to create awareness of the product among the target population. iii. Internet and Social Media: A large percentage of the Australian population is subscribed to social media platforms. Therefore, promotional messages concerning Sportiff will be posted on the social media so as to reach the target population. iv. TV and radio commercials: Commercial adverts with promotional messages concerning Sportiff will also be aired on national televisions of Australia. The same messages will also be aired on radio stations to reach as many consumers as possible. Marketing Objectives a. To promote Stan’s Sportiff package in Australia b. To promote sports as a major source of entertainment in Australia. c. To establish Stan as a brand in the minds of the target population. d. To increase the market share of Stan entertainment in Australia. Recommendations for “old” Product Strategy As indicated in the previous sections, Fotlex entertainment is already offering a package of 9 channels dedicated to sports, which in this context is considered as the “old” product. Stan entertainment is coming on as a strong competitor in this market niche. Therefore, as expected in the phase of the competition, Fotlex will have to make new strategies to ensure that their “old” products remain competitive and relevant in the market. Fotlex will have to come up with new marketing strategies to ensure that they retain their current subscribers and also to win new customers a discussed below. Firstly, Fotlex will have to make the adjustments of its prices. In order to retain its huge customer base, Fotlex will have to reduce the prices at which they offer their sports channels to their subscribers. This is because Stan entertainment will be offering the sportiff package at $ 5. Secondly, Fotlex will have to engage in a lot of promotional activities to increase the popularity of its sports package. This strategy will help Fotlex to expand its market share and maintain its normal revenues. Thirdly, Fotlex may consider the option of increasing the number of channels dedicated to sports in their package from 9 channels to 15 channels. Fourthly, Fotlex may employ the strategy of partnering with other multinational entertainment companies with dedicated sports channels like Super Sports Company. Conclusion In conclusion, the Australian video streaming industry is still growing. With the emergence of new players in the market, stiff competition in the industry is expected. In the midst of competition, subscribers are set to be the major beneficiaries. This is because there will be a wide variety of streaming options to choose from. Subscription charges will also be relatively low since the companies will be aiming to outdo one another. In addition, the quality of products and services will be high. The launch of Sportiff; a new package from Stan entertainment, will add value to the Australian sports streaming industry that has been dominated by Fotlex. In response, Fotlex will reformulate its marketing strategies in order to counter the competition from Stan. Therefore, prior to the launch of Sportiff, Stan needs an in-depth understanding of the market as discussed in the industry and competitor analysis section. In order to successfully establish Sportiff among the target group, Stan will be required to exploit its strengths and opportunities as discussed in the situation analysis section. References Australian Communication and Media Authority., 2012. Communications Report 2011-2012 Series: Report 1- Online Services in Australia. Latest Development in the Supply and Use of Professionally Produced Online Content. Melbourne, VIC: ACMA. Australian Recording Organization Industry., 2014. 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