Appendix A: HOW TO DEVELOP A
WINNING NEWS/PROGRAMMING
STRATEGY IN LOCAL TELEVISION
Preface
Even though this paper is
written primarily for local television stations, the competitive strategy and
marketing principles can be applied to other media, especially radio, cable, magazines,
and Interactive.
Introduction
The continuing fragmentation of the television
advertising economy, coupled with dramatic changes in the overall structure of
the television business environment and the convergence of technology have
caused local TV stations to place greater emphasis than ever before on
marketing strategy. These changes have
included: (a) Increased competition from cable, (b) increase in the number of
networks, (c) increased grazing or zapping using remote controls, (d) increased
sophistication of the viewing audience, (e) consolidation of station groups,
(f) higher costs of syndicated programming, (g) changes in network compensation
arrangements, (h) the increased availability of barter syndication programming,
(i) new digital and compression technology, (j) the threat of personal video
recorders (TiVo, i.e.), and (k) increased time spent
on the Internet.
Another trend in television mirrors
a trend in other industries—product parity.
As weak competitors drop by the wayside, two or three gigantic companies
dominate an industry. In their efforts
to please consumers and push quality production, these dominating companies'
products become more and more alike—they reach product parity. In television and radio, dominant networks
and stations are becoming less dominant as tough competitors chase them. In the new era of product parity, marketing
is king. Marketing is what
differentiates products.
In the past, television stations have too
often depended on their facilities, networks, ingrained viewing habits, or star
personalities for their success and not on strategic planning or creating a
strong competitive position through marketing.
In the future television stations must develop strategic marketing plans
that put them either alone in serving a profitable market niche (usually a
narrow demographic segment) or be number one or number two with demographically
targeted programming. Just as businesses
in other industries have discovered, television stations that are number three
or below in their core target audience will probably fail to be profitable.
Furthermore, the television
broadcasting business, a business that distributes its product--programming--by
means of an outmoded, buggy-whip technology, is clearly on the decline slope of
the S curve that charts the life cycle of every business (start-up, growth,
maturity, and decline). In every
business that reaches maturity and begins to decline, the overall strategic
emphasis must focus on marketing more than at any other stage of the
cycle--finding new markets, focusing the efforts of all of a business's
resources on serving the customer better than competitors do, and finding new
revenue streams.
Television stations, if they are to thrive, must redirect their focus from being in "broadcasting" to being producers of local news, information, and community service content. This new definition will give them the opportunity to develop new sources of non-cost-per-point- oriented revenue and develop a strong presence on the Web.
What Is
Strategy?
Strategy, as defined by Davis & Smith (1984) is "How do I get more than my fair share?" Any company can get its fair share, but it takes a sustainable differential advantage to gain the upper hand and get more than a fair share.
Strategic planning, or planning how to
get more than a fair share, is not an arcane science, it is simply the
coordination of the activities and policies of all of the departments in a
station so that they are directed toward achieving a station's stated goals
(long term) and objectives (short term).
Strategic planning requires the following process, as suggested by Day
(1990):
1. Scanning
the overall environment
2. Scanning
and researching the industry/market environment
3. Researching
direct competitors
4. Researching a station's skills and resources
5. Analyzing
current strategy
Peter Drucker
(1954) defined the purpose of a business with the brilliantly simple statement
"to create a customer." Thirty
years later the renowned
In the dual-product business of
television, there are two customers: consumers who use the product (viewers)
and customers who buy the product (advertisers). The primary objectives for the team who
markets to the audience is to attract viewers (get ratings), to keep them
(getting them to watch longer and more often), to enhance the station's (brand)
image, and to achieve the lowest PDCPM (programming demographic
cost-per-thousand). Attracting and
holding viewers forces stations to face the necessity of figuring out what
viewers really want and then catering to those wants in a way that is in
keeping with and augments a station's image and credibility.
It requires marketing and strategic planning. The primary objectives of the sales team who
markets to advertisers are: to get results for advertisers, to develop new
business, to retain and get increases from current advertisers, and to increase
customer loyalty.
The two different marketing focuses
of these teams (viewer oriented and advertiser oriented) within a station must
be integrated into an overall, coordinated marketing strategy for a
station. In the modern, budget
crunching, and rapidly changing television business environment, the two focuses
must be totally integrated. The old days
of news-versus-sales are over, as the two departments must now work together to
uncover new revenue-and audience-generating ideas based on what customers and
consumers
want. As McKenna
(1991) writes:
Marketing is not a function; it is a way of doing
business. Marketing is not a new ad
campaign or this month's promotion.
Marketing has to be all-pervasive, part of everybody’s job description,
from the receptionists to the board of directors. (p. 69)
Strategic Planning
The
success of strategic planning is determined by how well a station aligns itself
with and continually adjusts to its external environment and direct
competitors. Strategic choices are
determined by the following elements, according to Miles & Snow (1978):
1.
The dominant coalition: The top decision-makers who have problem-finding and
problem-solving responsibilities.
2.
Perceptions: A station responds to what its management perceives. Those environmental conditions that go unnoticed
or are deliberately ignored have little or no effect on management's decisions.
3.
Scanning
Activities: The dominant coalition is
responsible for constantly surveying the rapidly changing environment. The dominant coalition can be reactive
(waiting for events to happen before reacting) or proactive (anticipating the
shape of events and acting quickly).
4.
Dynamic
Constraints: Decisions constrained by
a station's past and current strategy (or lack of it), organizational
structure, and performance.
The Dominant
Coalition
The dominant coalition consists of those who actually
have the greatest influence on making strategic decisions for a station. The composition of this dominant coalition
will determine what kind of decisions are made. For example, a management coalition dominated
by corporate or local financial people will tend to take few risks, keep
expenses for advertising and promotion low, and have analysis paralysis. Or coalitions dominated by sales types will
tend to emphasize the salability of programs and promotions regardless of their
compatibility with a station's overall image.
A common problem for television
stations is what Levitt (1983) calls the bull-fight
syndrome. He makes the point that down
in the ring in the heat and confusion of combat, things may not be seen
clearly, but this does not mean that what the combatants do is any less
right. He says that nothing is as
certain as what is directly experienced.
Many television station general managers are
painfully aware of the bull-fight syndrome.
They often proclaim in frustration about corporate executives, "everyone wants to be a General manager." Levitt's (1983)
message to company presidents and group heads is clear: let the fighters in the
ring decide on the strategy for fighting the bull.
Levitt
(1983) also stresses the importance of the experience, feelings, intuition, and
imagination of those closest to the consumer (viewer) in making strategic
decisions. Therefore, a station's
dominant coalition should consist of the general manager, program director,
news director, sales manager, and promotion director. Others can help with their input, but the
final strategic decisions must be made by those fighting the bull down in the
ring, by those whose careers will rise or fall with the decisions they make
about how to get and keep viewers.
However, as Mintzberg
(1989) suggests, strategies need not be deliberate--they can emerge. Action can drive strategic thinking. For example, a minor improvement in a
newscast can work, followed by more, similar small improvements, which can
develop into a strategy. Reis &
Trout (1989) refer to this process as bottom-up marketing, or letting strategy
bubble up from small things that work.
By taking advantage of little wins, a station can build confidence and
often accomplish more than with purposeful top-down planning. Thus, it is vital that station management
constantly challenge assumptions ("why do we put sports after weather in a
newscast?" e.g.) and look for strategic ideas from everyone.
Perceived
Problems
Managers respond only to problems they perceive. They are too often complacent and do not take
an imaginative look at opportunities; the tendency is to search in their
neighborhood--to look in familiar and traditional places--for solutions. Another dangerous perception is "we know
it all." Too many television
executives believe that their station's success and the 30%-60% profit margins
(typical in the past) are due to their own brilliance and expertise.
Often successes, by their very
nature, contain the seeds for their own destruction. This tendency
is labeled as the Icarus paradox by Miller
(1990). As was the case with Icarus, whose powerful wax-and-feathers wings melted when he
flew too close to the sun and plunged to his death, the greatest asset of every
successful business contains the potential for destroying the company. As Miller writes about people who were once
quality-conscious craftsmen but become nit-picking tinkerers:
(They) get
so wrapped up in tiny technical details that they forget that the purpose of
quality is to attract and satisfy buyers.
Products become over-engineered but also overpriced; durable but
stale. Yesterday's excellent designs
turn into today's sacrosanct anachronisms. (p. 12)
That passage could have been written
with several once-dominant network and local news organizations in mind.
Another perceptual problem that can crop up is
Defender Hubris, as defined by Foster (1986). Leaders in any product or service category not
only tend to become complacent, but also to develop a hubris, or arrogance,
about their current strategy (or presumed strategy, which is often more like
drifting with the tide than purposefully sailing). The five areas of Defender Hubris are:
1.
To assume that an evolutionary approach is good enough
2.
To assume that they will have early warnings of
changes because they understand current technology, customer needs, and
competition
3.
To be convinced that they understand consumer needs
4.
To have wrongly defined the market (market definition
is extremely difficult in changing times)
5.
To believe they understand their competitors (when in
reality they don't know which competitors to watch).
Scanning
Activities
A station must
constantly monitor the external environment in order to stay in touch with
regulatory, economic, social, technological, industry, market, demographic,
competitive, and audience trends in order to stay ahead of its competitors. Thus, stations must continually be on the
lookout for threats of new competitors coming on the scene or for opportunities
caused by the weakening of current competitors.
Stations must be proactive (change fast) rather than reactive (change
too late, after competitors have changed) to continue to be successful.
Dynamic
Constraints
Too often managers invest their egos in a decision and
will not change because they are afraid to admit they are wrong. Or, they will not admit that their current
strategy is not working. Also, a
company's structure often gets in the way of making effective strategic
decisions. For example, in television it
might make sense to have a community affairs director and creative services
director report to a marketing director rather than directly to a general
manager, which has been the tradition-l structure in the past.
The point is that structure should
follow strategy. This axiom means that
managers should change the organization of their stations to meet the needs of
the strategy they have selected, and not let some outmoded organizational
structure dictate strategy. For example,
a general manager of a television station might have all department heads who
deal with external communication (community affairs, public relations) report to
the news director (who might also be the station manager, who the general
manager might feel has the most expertise at the station in communicating, or
to the marketing director, if there is one.
Past performance constrains strategic
decisions, too. It is virtually
impossible to resurrect a product with a poor brand image (the Pinto,
e.g.). In television it is usually
better to bury a failing newscast and to come up with an entirely new newscast
title, set, and approach than to try to resuscitate a failing newscast slowly
in small increments. Reinforce success,
but "shoot the losers," as Reis & Trout (1989) suggest. Reis & Trout also indicate that it takes
too much time and money to change perceptions, so change strategy.
Another dynamic constraint is the
over-reliance on traditional television financial practices such as revenue
projections, forecasts, and overall station budgets. As McKenna (1991) suggests, "Forecasts,
by their very nature, must be unreliable, particularly with technology,
competitors, customers, and markets all shifting ground so often, so rapidly, so radically."
The emphasis must be on the tasks and activities that will carry out the
strategies that will get more than your fair share, which will require a new
forecast every time you overachieve, which, hopefully, will be
continually. In a business environment
where the future cannot be predicted, the only chance a television station has
is to react faster to changes than the competition.
Another problem with conventional
television financial practices is that there is no practical way to take
account of the opportunity cost of not investing in new technology,
programming, or ideas.
Creating
Possibilities and Contingency Plans
Finally, the most challenging and creative act of
strategic planning and decision-making is to dream up the possibilities from
among which choices can be made, and a possibility has to be created before it
can be chosen. Brainstorming is an
excellent way of stimulating creative juices and coming up with a wide variety
of strategic possibilities (see the end of this Appendix for the Rules for
Brainstorming).
Creating possibilities also means
creating contingency plans for several scenarios that might come about in the
future. Although no one can accurately
predict the future, it is possible to guess what might happen
if current trends continue and determine several directions the future might
take. Developing contingency plans for
these possible future scenarios is not only fun and stimulating (it is often
referred to as gaming), it is also a way to prepare an organization to make
lightning fast strategic moves when something close to one of the scenarios
occurs. Without contingency plans, when
something happens that calls for an intelligent response, an organization has
to slow down and plan.
Contingency plans should also be
developed for possible moves a competitor might make. Competitive "what-if" scenarios
should be developed that outline what your response to competitive moves might
be.
Types of
Strategy
There are two basic overall competitive strategies in
television: differentiation and focus.
Differentiation is the strategy to employ if a station has competitors
for a target audience. Virtually all
highly successful television stations (as is the case with most successful
consumer products) have highly differentiated products and brand images. Focus is the strategy to employ if a station
has no competition for a particular target audience (Hispanics, for example).
Differentiation
This strategy is the more difficult of the two as it
requires strong marketing ability, creative flair, strong research
capabilities, excellent promotion, excellent live program (especially local
news) execution, and highly skilled people.
Focus
This strategy is easier to execute than
differentiation because there are no direct competitors fighting for market
share. The focus must be on a market
niche that is sizable (big enough to make a profit) and measurable (definable
by some research or measurement method).
Because television is currently a
mass-market medium with broad appeal to virtually all demographic groups, most
stations in the past have depended on a differentiation strategy. The major differentiating elements for local
television stations are their network affiliation, community service image, and
local news programming. Some stations
have been successful at a focus or niche marketing strategy, especially those
in foreign language telecasting. If a
station uses a focus strategy, its target audience in a niche must be
continually researched and super-served in order to discourage any competitive
entry.
Cable networks have been successful in
pursuing a focus strategy: CNN with news and ESPN with sports, e.g. However, CNN didn’t switch its strategy to
differentiation fast enough when Fox News started to compete aggressively,
especially with its brilliant positioning statement, “Fair and balanced. We report, you decide”
(which, of course, is as false as it is brilliant).
Crafting
Strategy
Mintzberg (1989) suggests that crafting strategy is like a
potter at a wheel—the hands and the mind must work together in tandem. Thus, experienced day-to-day operating people
must work in tandem with strategy planners--they are inseparable. Surveying the external and internal
environment is a fundamental element in crafting strategy, and research must be
conducted in order to gather data about the environment, the target audience,
the competition, and the internal strengths and shortcomings of a station in
order to expand the possibilities from which strategic choices can be
made. This creation of possibilities is
where imagination comes into play. The
two vital ingredients of imagination, or creativity, are information and
intuition.
Imagination creates new programming ideas, and
new is vital. Psychological research has
shown that people are drawn to novelty and variety. It is imperative to be first with any new
product, for as Reis & Trout (1989) point out, copy-cat products usually
lose. Original products such as Ivory,
Intel, and Coca-Cola have to screw up to lose (which has happened
often--consider CBS News and CNN). As
Reis & Trout write, "you never get a second chance to make a first
impression," so when introducing an innovation, get it right the first
time and promote it big.
Also, when crafting strategy,
remember to plan to strike hard and quickly, as Reis & Trout (1989)
suggest, "look for one bold stroke."
Mintzberg
(1989) also recommends a single, large, and bold stroke, which he calls a
quantum leap. His research indicates
that in most successful organizations, strategy is stable for a while as the
current strategy is implemented and improved in small increments, then a major
change is introduced in which the organization takes a quantum leap. He suggests that occasional strategic
revolutions are necessary in every successful organization to avoid the Icarus paradox and stagnation. He suggests a cycle of
"stability--revolution--stability" must exist. In times of stability, there must be kaizen
(a Japanese word meaning constant, small, and incremental improvements). In times of revolution, there must be a major
strategy shift along with a major change in an organization's culture,
structure, and often people.
Finally, strategy must be crafted
in order to create a discernable and sustainable competitive advantage. For example, in a smaller market, a
television station that has a strategy of building its news image around an
attractive anchor who might soon leave for a larger
market would be attempting to build a non-sustainable advantage.
Research
Research is the process of gathering information about
a market, an audience, competitors, and your own station. Research can be conducted by outside
suppliers or internally by a station itself.
If a station goes outside to a reliable research company or consultant, there
are the advantages of knowing that the research will be done under professional
supervision, with technical precision, and without insider, perceptual
bias. Responsible research suppliers and
consultants can also help stations examine a wider range of possibilities than
might otherwise be considered, can help stations look outside the neighborhood
for more strategic alternatives, can help stations develop contingency plans
and competitive scenarios, can help stations examine ingrained assumptions, and
in some cases can help stations overcome management hubris.
However, there are some problems with
buying external research and hiring consultants. First, it can be quite expensive, and for
many stations evaluating the tradeoffs can be painful. Should a station pay $50,000 for a marketing
study or invest that money in a promotion campaign? Next, who is going to interpret the research
and consultants' advice? Strategic
marketing research seldom comes up with absolutely clear-cut, black-and-white answers. Data and advice have to be interpreted, and
it is here that local market knowledge, programming experience, and intuition
are important. For instance, research
will always show that viewers like "positive news." Those inexperienced in news programming might
interpret this information literally and emphasize too many soft news
stories. Knowledgeable pros know this
reaction means that people do not want only positive stories, but that they
want the hard news (most of which would be considered negative) presented in a
style that is not overly sensationalized.
Also, research companies and
consultants, no matter how reputable, are sometimes influenced by the
preference and prejudices of their clients—they
do not stay in business designing research studies and giving advice
that proves how stupid their customers are.
Finally, any research that deals with people's intentions or tries to
predict their future. Tastes and actions
(especially if it is based on what people say they are going to do) is virtually worthless.
Video disk manufactures in 1980 gave credibility to research that
reported people would buy expensive video disk playback systems on which they
could not record programming. Video
disks flopped, and VCRs, on which people could record, were a smash hit.
Research that is conducted internally
by a station, if it is thorough and well designed, can be as penetrating and
enlightening as research conducted externally by professional suppliers and
consultants and a lot less expensive. On
the other hand, research consultants can give benchmark advice as to what works
and does not work in other markets—a major benefit of consultants.
Both externally and internally
produced research can build what McKenna (1991) calls experienced-based
marketing, which emphasizes interactivity, connectivity, and creativity. With this approach, companies spend time with
their customers, constantly monitor their competitors, and develop a
feedback-analysis system that turns this information about the market and the
competition into important new product intelligence. At the same time these companies both
evaluate their own technology to assess its currency and cooperate with other
companies to create mutually advantageous systems and solutions. These close encounters—with customers, competitors,
and internal and external technologies—give
companies the firsthand experience they need to invest in market
development and to take intelligent, calculated risks.
In a time of exploding choice and
unpredictable change, marketing--the
new marketing--is the answer. With so much
choice for customers, companies face the end of loyalty...But the real
solution, of course, is not more marketing, but better marketing. And that means marketing that finds a way to
integrate the customer into the company, to create and sustain a relationship
between the company and the
customer...The relationships are the key, the basis of customer choice and company
adaptation. After all, what is a
successful brand but a special relationship? (pp. 67-68)
Scan the Overall
External Environment
Examine the
following external environmental elements to look for potential threats and
opportunities:
1.
Political/regulatory
2.
Economic
3.
Social
4.
Technological
Research the
Industry and Market Environment
Examine the
following external elements to look for threats and opportunities:
1.
Audience size and potential
2.
Audience behavior
3.
Audience viewing segments
4.
Potential competitors
5.
Industry and market revenue and profit trends
Audience research.
Gathering information about a station's potential audience can be done
in a number of ways: with internally or externally generated call-out research,
with focus groups, with mall surveys, etc.
What the research is seeking are key success factors.
Viewer assessment. Viewer research must answer the following
questions:
1.
Who is the audience?
2.
What benefits are they seeking?
3.
How well does a station deliver these benefits
compared to the competition?
4.
What are the sources of these perceived differences?
The
underlying premise must be that perceived differences between a station and its
competitors are not meaningful unless the differences can be converted by the
audience into:
1.
Benefits - "Why should I view--what's in it for
me?
2.
Benefits to a large enough audience segment to be
Profitable.
3.
Benefits that are meaningful
enough to the audience to keep them from turning to competing stations or from
turning off the television set.
4.
Benefits the audience cannot get elsewhere.
The goal of audience research in the
form of focus groups, call-out research, mall surveys, or simply talking to a
lot of viewers is to isolate four, five, or six main benefits that a station
can provide effectively (key differentiators).
Once those benefits/key differentiators are isolated, a station should
concentrate only on them and not try to be all things to all people.
First
and foremost, a business must set itself apart from its competition. To be successful, it must identify and
promote itself as the best provider of attributes that are important to target
consumers. (Day, 1990, p. 164)
Research
Direct Competitors
Competitors' strengths, weaknesses, and
vulnerabilities must be defined and understood.
Research becomes likes spies in wartime.
As the Chinese general Sun Tzu wrote, "Spies are a most important
element in war, because upon them depends an army's ability to move." Competitive intelligence and analysis (not
illegal spying) includes detailed descriptions of the following elements, as
recommended by Michael Porter (1980)in his
groundbreaking book Competitive Strategy.
1.
Future goals. What drives competitors; where do they want
to go? Some stations that have very low
debt are run by owners who are often satisfied, complacent, ego-involved, stubborn
about sticking with comfortable programming and personalities, and selling at
under-priced rates. If this type of
station is attacked, the owners are apt to hunker down, not promote much, and
try to wait it out in a war of attrition because they can afford it and are
uncomfortable in the unfamiliar territory of competitive battles. On the other hand, stations financed by money
from investment bankers (leveraged buy-outs and highly leveraged transactions
especially) usually have a go-go outlook and need excellent short-term
results--bankers allow stations two or three years to make it--then they tend
to get crazy if financial
projections are not met. Save money during
an initial push and then come back strong after they have blown their wad and
cannot defend themselves—they rarely go back to the bankers for more money.
2.
Assumptions. What is a competitor's perception of its
relative position and what are the historical or emotional identifications it
makes (with show business or with the television industry)? It is usually pretty safe to go after a
station whose owners have strictly a bottom-line orientation and are used to
large profit margins--they will cut sinew to keep margins high. Does the general manager of a competing
station have a sales background and are his or her financial rewards based on
one-year profit figures? If so,
defending an attack from a competitor by cutting back inventory available for
sales and substantially increasing promotion is unlikely by this type of
manager. Does a competitor rely on
extensive news research or assume that a news director's gut feel is
adequate? Always attack a news director
who runs the newsroom by gut feel, by his or her sense of what the public needs
to know, or the anchors' personal tastes.
Thus, attack this type of competitor with heavy promotions of news
programming or news feature franchises.
3.
Current strategy. A strategy does not have to be
explicitly stated, it can be implicit in actions. A competitor's strategy is best described by
the major operating policies in each department and, most important, by the
management style and values of its key executives. A general manager who is an insensitive
autocrat, whose only focus is on the bottom line, who does not feel serving the
community is important, or who does not produce a quality product is vulnerable
to a station whose management has opposite values.
4.
Capabilities. How good is a competitor's top
management? General managers
(GMs) are more critical to a station's success than any single department
head. An ignorant GM will not let a good
news director (ND) do what must be done to win, will take few risks, and will
blame the news director for failure. Eventually,
any good news director will leave. A
smart GM will hire a good ND, take intelligent risks, take responsibility for
setbacks, and give the ND credit for winning.
In stations like the latter one, a ND will probably stick around for a
while. How big is a competitor's
coverage area, how good is its sales department (can it bring in enough
business at high enough rates to generate profits that will sustain a defensive
effort), and how effective are its operating people who organize and execute
the competitor's strategy? Does a
competitor conduct on-going market and news research, including focus groups,
to keep up-to-date on market trends?
What is a competitor's financial position? Can it afford to do research or mount an
expensive counter-attack? How good is
the track record of a station's corporate owner? Ask what a station's competitors are best at
and worst at. Are they likely to change
what they are doing in order to react to a competitive assault? Do they have the ability and talent to adapt
to changes in audience tastes and to respond?
How quick is their response to changes and competition likely to
be? What is their staying power?
5.
Competition's response profile. Is the
competition happy with its current position?
What likely moves will the competition make and what strategy, if any,
are they likely to respond with? Where
is the competition most vulnerable? What
actions will provoke the greatest and most effective retaliation from
them? Obviously avoid taking these
actions.
It is vital to have a well-organized
and thorough competitor-intelligence-gathering system in order to collect,
compile, catalog, digest, and evaluate complete, detailed information about a
station's main competitors. Scenarios
about competitors' likely strategic moves can then be developed as well as your
possible responses to their strategies.
Scan the
Internal Environment
Research a
Station's Skills and Resources
The next step in strategic planning is to conduct
internal research to examine a station's strengths and weaknesses. Strategic thinking starts with your basic
skills, and considers how to use them, according to Dixit
& Nalebuff (1991). Marketing audits must be conducted to get an
objective appraisal of what a station is good at and what it is not so good
at. This type of evaluation is difficult
to conduct because of the potential of stepping on individual and collective
toes. Everyone overestimates a station's
strengths, and no one wants to admit that any weaknesses exist.
However, honest, candid, and
objective internal analysis is crucial to the success of strategic
planning. Therefore, conducting a
strengths and weaknesses assessment is often best accomplished by outside
consultants: programming, marketing, promotion, sales, and management
consultants.
Organizational assessment typically
is, and should be, a major function of group or corporate management. However, this assessment must be based on a
variety of factors, including people, human relations, and qualitative
elements, and not merely on ivory-tower, bottom-line-only judgments.
The same type of detailed descriptions of the
elements examined in competitive research must be developed for a station's
skills and resources, as follows:
1.
Ability to conceive and design programming and
promotion. Does the station have the creative, innovative
people necessary to develop new programming and promotion ideas that will
clearly position a station to have a differential competitive advantage? A candid assessment of strengths, weaknesses,
and capabilities is vitally important to the success of any strategy. Is current
management and other personnel open and objective enough to make valid
assessments?
2.
Ability to produce and execute programming and
promotion. Does a station have the type of people who
can execute a strategy day in and day out?
A new news format or promotion can look good on paper, but if the people
on the air and others responsible for execution or are not committed to it or
might soon become bored with it, the format will probably fail.
3.
Ability to get and keep advertisers. The costs of
any programming and promotion strategy must be covered by the revenue generated
by the sales department. Does a station
have effective, intelligent enough salespeople to sell the strategy to
advertisers and to bring in the revenue to support the strategic plan?
4.
Ability to finance. Does the company and station
have the financial resources to carry
out the strategy in the long term?
Quick-fix strategies rarely work, so a station must have sufficient
resources not only to implement a strategic plan but also the persistence to
stick with it long enough to allow it to work.
5.
Ability to manage. How good is management at all
levels? What are they best at and worst
at? What are their areas of expertise? This strengths assessment is crucial because
strategy must be built on strengths--doing the things that a station does best.
6.
Commitment. Without the full and enthusiastic commitment
of corporate, group, and station
management to a strategic plan, it will probably fail. Does the organization have the commitment and
the persistence to make the plan work?
Does the organization trust and completely support the people who are
responsible for implementing the strategy?
Many well-conceived strategic plans have failed because someone in
management for political reasons did not want it to succeed.
Key success factors (KSFs) or core competencies.
One of the main goals of internal assessment is to identify a station's
key success factors. According to Day
(1990), KSFs are the handful of skills and resources
that will exert the most leverage on competitive advantages and results. Hamel & Prahalad
(1990) refer to these elements as core competencies.
For a KSF or core competency to be a
useful concept to a station, it should identify a source of advantage where a
change could have a large impact on that advantage, and where differences
between it and competitors are sizable.
The key success factors must be aggressively nurtured and protected, and
"managed obsessively to ensure success." (Day,
1990). KSFs
must be written down and distributed to everyone at the station so they can be
continually monitored.
Examples of key success factors are:
a popular anchorperson or team, a highly visible and credible news department,
a network affiliation, an established reputation for community service, or an
image for showing good movies.
Furthermore, KSFs
must be continually monitored and up-dated because shifts in competitive forces
will eventually neutralize old KSFs. Also, these KSFs must
be based on customer-oriented assessments, not on what management perceives
them to be. A recent study by a leading
television news consulting firm revealed that news management (including
producers) had completely opposite views of the most interesting or
"best" stories in a newscast from those of a focus-group audience—a
situation that must be guarded against.
Analyzing
Current Strategy
Examine a station's current strategy based on the
following elements to look for strengths and weaknesses:
1.
Description of current strategy
2.
Current performance vs. objectives
Once the above descriptions and
evaluations have been made, two questions should be asked: "What went
wrong and how can we avoid making the same mistakes again?" and "What
went right and how can we repeat these successes?"
Be Best At A
Few Things
Finally, only a relative few KSFs
must be selected—those that a station can execute brilliantly. As Davis & Smith (1984) suggest, it is
vital to be the best at a limited number of things and only those things that
internal research has indicated you can do better than your competitors. These things you do best and are recognized
by the audience as the best are often referred to as franchises. Developing and expanding your franchises are
imperative, because the real goal of marketing, according to McKenna (1991), is
to own a market, not just to make or sell products. Smart marketing means defining what portion
of the market you want to own--where you can lead.
Develop a Game
Plan
After research has been conducted and analyzed, a
strategy—a game plan—can be developed.
In The New Thinking Man's Guide to Pro Football, Zimmerman (1984)
quotes Bill Walsh, the ex-coach of the
In other words, thoroughly attack
weaknesses in the competition—weaknesses in terms of what target audience
preferences and needs competitors are not satisfying well or what programming
competitors are not promoting effectively.
Go after competitors that do not conduct research, that do not have
enough money to or will not retaliate, that have a track record of ineffective
corporate interference, that are slow to move, that are apt to react
emotionally to competition, who leave ineffective managers in their jobs too
long, or who continually hire low performers and underpay them.
Developing a game plan also means
having some understanding of game theory, which is the purest form of strategic
thinking. Two excellent books on game
theory are: Thinking Strategically by Dixit
and Nalebuff and Game Theory at Work by James
Miller.
Intuition
Intuition is a
combination of imagination and experience.
However, in order for the creative imagination to function, it must be
thoroughly absorbed in the subject--it must have lots and lots of
information. The ability to absorb large
quantities of research data, synthesize it, and then come up with an unusual
approach is at the heart of creative thinking.
Imagination comes from being able to think of a large number of
alternatives analyzing them all, and then making an unusual, unique connection. Imagination also involves taking risks, in
doing something new. However, just
because something is new, different, or “creative” does not mean it is right or
that it will work. What works is keeping
up on industry trends and viewers' tastes and then using imagination to give
people what they want. Experience is
essential in knowing how to interpret research and in understanding what
alternatives have not been successful in the past and why. It is in this area that research and news
consultants can be of great help.
Final Steps
in Defining a Strategy
1.
Position a station for competitive superiority. Day (1990) writes: “The essence of competitive advantage is a
positioning theme that sets a business apart from its rivals in ways that are
meaningful to the target customers.”
Successful themes in television are built on some combination of two or
three thrusts:
a.
Better. A perception
or image of better programming, information, entertainment, or personalities.
b.
More. A perception
or image of more news (24-Hour News, e.g.), more special assignment reporters
(environment, medicine, e.g.), more movies, more cartoons, or more game shows.
c.
Closer. A perception or image of being more human, warmer, friendlier,
more caring, or "more like me."
2.
Write a brief, two- or three-sentence positioning statement. A positioning statement is not a slogan, it is a description of the three or four most
important benefits a station provides to its viewers. For example: "WBBB is a full-service
television station that provides reliable, credible, and fast news coverage of
local, national, and international events in a context that gives them meaning
to our audience. WBBB provides a unique
service to its community by offering intelligent, informed, and
service-oriented information programming on current issues. WBBB and the Fox Television Network are the
sports leaders and we provide play-by-play and call-in sports programs hosted
by nationally recognized experts."
3.
Develop a one-, three-, and five-year strategic plan. Revenue and profit budgets usually do not
have strategic components, and, therefore, do not show in detail how the
budgets are going to be achieved. A
strategic plan should include marketing, advertising, promotion, and
programming elements. In 1990, the year
the Honda Accord became the number-one selling car model in America, Honda
unveiled its 100-year plan. The two
occurrences are not coincidental.
4.
Develop a current
marketing plan. Keep a notebook or
computer file in which the following columns are included for each project: (a)
Strategic goal ("to develop interesting, salable community affairs
programming," e.g.); (b) team members; (c) who does what specifically
assigned tasks and activities to each team member); (d) deadline; and e) results expected. Update the plan weekly, and when each project
is completed, conduct a debriefing as described under Analyzing Current
Strategy above, by asking the questions: "What went wrong and how can we
avoid making the same mistakes again?" and "What went right and how can we repeat these
successes?"
5.
Look for new
competitive space. A station must
continually analyze its core competencies to look for opportunities they create
for new products and new markets that do not currently exist and then to stake
them out before competitors do.
A company will strive to create new
competitive space only if it possess an opportunity
horizon that stretches far beyond the boundaries of its current business. This horizon identifies, in broad terms, the
market territory senior management hopes to stake out over the next decade, a terrain
that is unlikely to be captured in anything as precise as a business plan. (Hamel & Prahalad,
1991, p. 81)
Thus, in the search for new products, stations
must go beyond asking what their audience wants, and through experience and
intuition come up products that the audience will want before it knows it wants
them. This creative clairvoyance is the
only hope for long-term survival.
Stations might look for opportunities in corporate training video or
providing audio news services, for example.
Potential
Traps
When crafting a strategy, there are several traps to
avoid:
1.
Meaningless differentiation. For a benefit
to be a key differentiator it must make a real difference to viewers, not to the
news reporters, assignment editors, or syndication salespeople. Subjectivity (“that’s what I like”) has
killed more strategies than inadequate promotion dollars have.
2.
Getting greedy. How many stations have done well programming
to a particular market segment then have tried to broaden their appeal out of
their niche and fail? They got greedy.
3.
Group-think. Group-think occurs
when people (department heads or the news department) get together and start
talking about how great they are and how awful the competitors are. Successful stations and football teams
usually begin to lose when they underestimate their competition. Group-think also occurs in a meeting or among
a group when they do not encourage dissension, and subsequently everyone agrees
with an idea. A popular member of the
group will throw out an idea and
someone else will agree with it.
Suddenly everyone begins
agreeing and reinforcing everyone else, and dissention is squelched.
4.
Throwing money at a problem. The
best money spent to support a strategy is for good managers. The right strategy that is prudently and well
executed will eventually win. No amount
of money spent in promotion or advertising can rescue a poor strategy, lousy
programming, or awful execution.
5.
Lack
of commitment. Some companies have a
track record of giving up easily and not fighting a challenge--always pick on them. Some
companies have an enormous amount of pride and commitment to their people,
values, and the quality of their product--avoid picking on them. Stations and managers who have the proper
goals of providing an excellent service to their viewers and executing well are
virtually impossible to overtake.
Whom to Attack
It is best to be an attacker, as the attacker always
has the advantage (Foster, 1986). The
defender is at an inherent disadvantage, according to Foster. In fact, a defender may not even know it is
being attacked until the attack is well along.
The attacker can hide in a niche, can be more powerful than it appears
at first glance, and can be, and usually is, more motivated. Foster also points out that defending is
difficult because a defender must be both a defender of old technologies
(positions, strategies, programming, or formats) and an effective
counter-attacker with new technologies (positions, strategies, programming, or
formats). In order for a defender to be
successful as both defender and attacker, the defender must develop a new
strategy and culture—it cannot hang onto the past, which is why CNN lost to a
brilliantly positioned, attacking Fox News.
When deciding how to craft a strategy
and how to position a station, attack a competitor based on the following
priorities:
1.
Weak management
2.
Weak financial resources
3.
Weak execution
4.
Weak corporate commitment
5.
Weak signal and facilities (although signal alone is
not as important a factor as it once was due to the increase of cable
penetration).
Many attackers make a fatal mistake early in
their attack, according to Foster (1986).
They get too worried about a defender’s ability to improve, so they
decide to bet their whole wad on one major move. They often hold off unveiling their new
strategy until they have designed what they believe is the ultimate product. By the time the attacker comes out with its “killer”
product, the defender, by improving incrementally, has protected its market,
its customers, and its image. Thus, when
attacking, it is imperative to make a preemptive strike, strike hard and fast
from apparently nowhere, to pour it on, and to go faster (more advertising and
promotion).
Strategic Moves
The brilliant Chinese general Sun Tzu wrote 2,500
years ago:
Thus we may know that there are five essentials for
victory:
He
will win who knows when to fight and when not to fight.
He
will win who knows how to handle both superior and inferior forces.
He
will win whose army is animated by the same spirit throughout its ranks.
He
will win who, prepared himself, waits to take the enemy unprepared.
He
will win who has military capacity and is not interfered with by the sovereign.
If you
know the enemy and know yourself, you need not fear the result of a hundred
battles. If you know yourself but not
the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy
or yourself, you will succumb in every battle. (p. 17-18)
Every manager who is serious about learning
strategy and strategic moves should read Sun Tzu's The Art Of War. “A
strategic move is designed to alter the beliefs and actions of others in a
direction favorable to yourself.” (Dixit
& Nalebuff, 1991).
When deciding on what strategic moves
to make, the fundamental rule is: “Look ahead and reason back.” (Dixit & Nalebuff,
1991). The idea is to anticipate
where your initial decisions will ultimately lead and then use this information
to calculate your best strategic choice.
Since strategic decisions usually involve a sequence of your own and
your competitors’ decisions, it is imperative that you create a Decision Tree
showing the various options that you will face along the way as your
competitors make their possible moves (See the Appendix for an example of a
Decision Tree).
Several strategic moves to consider
in modern broadcasting warfare are: trial
balloons; prior announcements; false
announcements; secrecy; preemptive strikes; threats, warnings and promises;
fighting brands; and guerrilla marketing.
Trial
balloons can
be sent up (announced) to see if they fly.
The White House under several presidents has used trial balloons to test
ideas on congress and the public before committing to implementing
programs. Major manufacturers sometimes
announce a price increase (such as in the steel industry) and then wait and see
if competitors follow; if not, they roll back the increase. A trial balloon is like sticking your toe in
the water to see how warm it is—it is clearly a test.
Prior announcements can
preempt a competitor's move and show commitment to a position. Of course, if the prior announcement meets
with highly unfavorable reactions, you can back off, but you can’t do this
often, because you will lose credibility.
Prior announcements should not be used as trail balloons; they should
only be made with every intention of carrying them out.
False announcements can throw
the competition off and delay defensive responses, particularly in producing
promotion spots and in purchasing advertising (e.g. announce when it’s
purchased, “We’re running “Seinfeld” from
Secrecy
cuts the lead time for competitive defensive reaction. False announcement and secrecy can harm a
station's credibility and allow little time for a sales department to pre-sell
programming changes to advertisers.
These above
strategies must be selected carefully, weighing the relative importance of the
sales department's need to maintain a station’s credibility with advertisers
and to pre-sell changes against the news department’s need not to let
competitors know what's going on and to prevent competitors from reacting
before your change is implemented.
Preemptive strikes can be extremely
effective in cutting into a competitor's planned strategic maneuver. For example, if a station finds out that a
competitor has added a producer to its staff in preparation for doing news
around the clock, a station would implement and announce before the competitor
does its new “24-Hour News” format consisting of up-dates on the hour, every
hour. Preemptive strikes motivate a station's
staff and de-motivate the competition—practically nothing is more demoralizing
than having someone else execute your new strategy first. Preemptive strikes occur when you make the
first move and they must be unconditional and irrevocable, otherwise you will
lose credibility in the future.
Threats, warnings, and promises
can be made in advance of a competitor's anticipated move in order to deter the
competitor from making the move. Threats
involve punishment, and promises involve rewards. In other words, if you know a competitor is
thinking about doing 24-hour news, you could issue a threat of doing it the
same week the competitors does (which increases everyone’s news costs) if it
proceeds. On the other hand, you could
promise not to do 24-hour news if the competitor doesn’t (and save money). Often threats and promises can keep talent
salaries or news costs from escalating.
If you issue a threat, you must follow up to remain credible. A threat would be, “If another station does
24-hour news, we will.” A warning is
less emphatic and does not require a response.
A warning would be, “If another station does 24-hour news, we would
consider doing likewise.”
Using a fighting brand is a
strategic move that pits a new product of yours against a newly designed
product of a competitor or a competitor's planned new product. The fighting brand is intended to take
ratings (market share) away the competitor's new or planned product without
cannibalizing your established product.
An example of a fighting brand was MTV's VH1 all-adult-music video
channel that was designed to fight Ted Turner's planned launch of a new
music-video channel, which it did.
Turner's planned launch was scuttled.
Another example would be a situation in which a major network affiliated
television station produces an hour-long news program using its own call
letters and anchors and runs it on the Fox affiliate on and independent station
at
Guerrilla marketing involves
conducting quickly conceived and executed one-time, low-cost event promotions
and inexpensive, highly targeted, and short-term advertising campaigns, among
other hit-and-run tactics designed to confuse, upset, and hurt the competition.
Finally, when making strategic
moves, it is vitally important to mix your tactics as a great quarterback mixes
plays in football. When mixing your
moves, unpredictability is the key; otherwise your opponents can observe and
exploit any systematic pattern almost as easily as they could if there were an
unchanging repetition of a single strategy (Dixit
& Nalebuff, 1991).
Executing a
Strategy
Determining the right strategy is the easy part of
marketing a television station. The hard
parts are gathering the right information and executing the strategy. Doing the necessary research which collects,
compiles, and catalogs information is usually boring drudgery, like watching
endless game films is for professional football coaches. Executing the strategy is often painful and
tiring, like trap blocking and tackling are for pro football players. However, all the boredom and pain are
forgotten when it is done right and a station wins.
In football and in business,
executing the basics is a requisite for success. The axiom is even more appropriate in
television for several reasons. First,
talent’s popularity or a new program concept is virtually impossible to
pre-test. Therefore, a new format or new
talent needs to be put on the air and then a station must wait for a month
(depending on the frequency of rating and research reports) to see if the
strategies are working. The only
security a station has under these circumstances is precise execution of its
strategy and a commitment to make it work.
Second,
television is free to its customers.
Since viewers do not have to pay to view, there is no penalty or cost
involved with switching stations. Thus,
in television it is not a case of making a sale of a product just once—stations
have to sell constantly. They have to
deliver their very best product continuously, because it is so easy and cheap
to go elsewhere. Maintaining excellent
execution in these circumstances is crucial.
Third, television is an intangible
product, a service. One of the unique
things about intangible products is that customers are rarely aware when they
are being served well. They are only
aware when they are being served poorly or until they are aware of the
availability of something better. Even
if they are aware of something that offers more benefits, they are not apt to
switch unless they are dissatisfied, because they are usually more comfortable
with a current, habitual choice.
Television stations must concentrate on
executing their locally produced programming consistently well so that viewers
do not have any reasons for feeling dissatisfied. Good, consistent execution keeps people
viewing and minimizes the reasons for going elsewhere.
There are
relatively few new programming ideas in local television, thus the execution of
the few viable program types is important.
It has all been done before in one form or another. What Zimmerman (1984) says about pro
football—that nothing is new, only new applications to old principles—is just
as true in television as it is in football.
And the principle holds true for stations whose strategy is focus as
well as those who are differentiating.
Remember, that if the audience niche
a station is alone in serving is big enough to be profitable, someone else is
sure to enter the fray. Once there are
two or more stations serving a market niche, the game turns to differentiation. When competitors enter a niche, clear
differentiation is vital and execution is the key to establishing a
differentiated product. Therefore, even
if a station is alone in a market niche, it had better execute and promote
exceptionally well to discourage competitive entry.
Another reason that television is
unique is that stations produce a product which consists of ingredients or raw
material over which they have little or no control. Movie-oriented stations are at the mercy of
what movies are released, and news-oriented stations are at the mercy of
current events, for example. Thus, if
the ingredients cannot be controlled, all that can be controlled is execution
and promotion. Effective promotion and
advertising are critical if a station hopes to win the battle of the mind, as
Reis & Trout (1989) call it.
The Strategic
Planning Cycle
How often should strategic planning take place? The answer is hourly, daily, weekly, monthly,
quarterly, and yearly. It is vital that
the planning cycle be completely flexible in order to respond immediately to
any environmental, competitive, or internal organizational changes. Scanning activities must be thorough,
constant, and conducted at a rapid pace.
The moment any changes are noticed in the internal, external, or
competitive environment, those responsible for crafting strategy and the
dominant coalition should discuss the change with condor, objectively, and in
depth to determine what, if any, response is appropriate. Strategy shifts, no matter how slight, must
be discussed, agreed upon, and implemented with lightning speed. In the fast-paced television industry,
analysis paralysis is deadly.
The major value managers and their
associates add is not producing a product, but it is the ability to stay ahead
of their competitors. Jack Welsh, ex-CEO
of General Electric, is rumored to have once said at a meeting with managers at
a plant, “I don’t want a news report.
The question is what can we do now?
How fast? With
whom? It’s
war out there--do something!”
Summary
To be successful,
a strategy must be clear, simple, and able to be expressed in no more than a
short paragraph. The strategy must
define how to get more than your fair share, what has to get done, and how to
do it.
Once a station has decided on making
a strategic move, it must communicate to everyone, advertisers and competitors
alike, that it is unequivocally committed to sticking with the move and to
retaliating against any counter move by competitors. Then it must follow through continually on
the commitment and retaliate aggressively against any attack, no matter how
small.
The two keys to developing a winning
strategy are good information and good intuition, both of which will help a
station recognize industry trends early, which is the single most important
requisite to continued success in the highly fragmented television industry.
Furthermore, no strategy is etched
in stone; it must be continually updated and changed instantly in order for a
station to stay ahead of competitors--management's most vital and difficult
task.
Finally, staying ahead of competitors means continually redefining your business. Digital transmission and compression
technologies and the inevitable advent of a nation connected with high-speed
cable modems means television stations must be the best in their market at
producing local information, service, and entertainment programs and other
material that they can sell to any distributor (cable systems or telephone
companies) or to the public to generate multiple revenue streams in order to
supplement declining advertising revenue.
REFERENCES
Davis, R. & Smith, G. 1984. Marketing in Emerging
Companies.
Day, G.S. 1990.
Market Driven Strategy: Processes
for creating value.
Dixit, A. & Nalebuff,
B. 1991. Thinking Strategically: The competitive edge in business, politics, and
everyday life.
Drucker, P. 1954. The Practice of Management.
Duff, W. 1991. Personal
conversation with Willis Duff, managing partner, Audience Research &
Development, a major television research and news
consulting firm.
Foster, R. 1986. Innovation: The attackers
advantage.
Gilder, G. 1991. “Into the Telecosm.” Harvard
Business Review, 69, 2, 150-161.
Hamel, G. & Prahalad,
C.K. 1990. “The Core Competence of the
Corporation.” Harvard Business Review, 68, 3, 79-91.
Hamel, G. & Prahalad,
C.K. 1991. “Corporate Imagination and
Expeditionary Marketing.” Harvard Business Review, 69, 4, 81-92.
Levitt, T. 1983. The Marketing Imagination.
Miles, R. E. & Snow, C.C. 1978. Organizational Strategy, Structure, and Process.
Miller, D. 1990.
The Icarus
Paradox: How exceptional companies bring about their own downfall.
Miller, J. 2003. Game Theory at Work.
Mintzberg, H. 1989. Crafting strategy.
Harvard Business Review, 65, 4, 66-75.
Porter, M. 1980.
Competitive
Strategy.
Reis, A. & Trout, J. 1989. Bottom-up Marketing.
Schultz, Don, Lauterborn,
R.F, & Tannenbaum, S.I. 1992. Integrated Marketing Communication.
Sun Tzu. 1988. The Art of War.
Zimmerman,
P. 1984. The New Thinking Man's Guide to Pro
Football.
RULES FOR BRAINSTORMING
1.
Everyone must contribute.
2.
Let your imagination run wild. You’re after quantity of ideas, not quality
of ideas. Calm down, relax, and let your
brain run free. The more ideas you have
the better. There is no such thing as a
bad idea. Don’t worry about being
silly. Have fun, get crazy, and produce
ideas. Here are some techniques that
will help you expand your thinking:
a.
Think about the ideal or the perfect situation—suspend
reality—think of the ultimate.
b.
Think of the wildest thing in the world—expand.
3.
Do not be judgmental at the beginning. Make absolutely no judgments about your own or
anyone else's ideas or suggestions.
There is no such thing as a bad idea.
Do not challenge or criticize in any way anyone's idea. On the contrary, encourage people to come up
with more and wilder ideas. During the
idea-generation stage of brainstorming, it is imperative that practicality or
feasibility be thrown to the winds; don’t be concerned if it can’t work, out
with it! The more ideas the better.
a.
Push extremes.
b.
Look for opposites.
c.
Utilize free-form
word associations.
d.
Go off on tangents.
4.
Look for combinations.
Pause and look for combinations of words or ideas. Don’t worry about whether the combinations
make sense or are plausible yet. There
is no such thing as a bad combination.
5.
Make connections.
See if any ideas or combinations of ideas connect to another idea or
combination of ideas. Do the ideas
connect to anything you can possibly think of?
6.
Modify. Become
more judgmental. Can you modify an idea
to make it more feasible?
7.
Facilitator should write everything down so the team
can see the whole list.
8.
Select the best ideas.
DECISION TREE
WAAA has the market’s number-two news image and ratings, WBBB has the number-one image and ratings. WAAA has to make a decision whether or not to add an Early Morning News (EMN) program.
