Situation Analysis

W2. Situation Analysis The situation analysis process begins by asking the question, what sort of product, service, or idea is the company trying to sell? Is the purpose to gain a larger share of an existing market or to create a totally new one? Does this product provide enhanced value to the consumer? What are the distinguishing characteristics? What are the market forces, both internal and external, that may influence the firm's ability to successfully market its product or service? (Porter 1985) The situation analysis can be broken down into three parts: consumer analysis, market analysis, and competitive analysis. We will use a Strengths — Weaknesses — Opportunities — Threats (SWOT) analysis as a way of assessing a company's position in relation to the marketplace. Consumer analysis The consumers of TV Guide are approximately 21 million TV viewers. The consumers of this magazine belong to a group called “Diversely Motivated Market Segment”. This group is the most cultured of the other market segments and has a wide range of interests. They are energetic and adventurous. This market segment is comfortable in a group or in a solitary situation. This group is a good target market for records, cassette tapes, compact discs, periodicals, books, and other cultural products. The Diversely Motivated are difficult to identify but it is known that a high percentage of their income is spent on music. It is likely that this group would be most likely to participate in high school bands and drama activities. Because of their variety of interests, activities such as chess and the more intellectually demanding games such as Trivial Pursuit may be of great interest to this group (Shimp 1997).

The female Diversely Motivated teenager might be reached through such general interest magazines as TV Guide or People. Teenage boys might be reached through TV Guide or Rolling Stone, which offers lifestyle perspectives that are a combination of counterculture and rock music. This group might include politically conscious teenagers who favor listening to the Irish rock band U2. Merchandise preferences of this market segment include tie-dye fabrics, Indian prints, leather sandals, and little or no makeup (Shimp 1997). Market Analysis Today TV Guide publishes 119 editions each week, with plants in Lancaster and Scranton, Pennsylvania; Simpsonville, South Carolina; Cincinnati; Minneapolis; Dallas; Denver; and San Francisco and Merced, California (McDonald 1998). In a relatively brief period of time TV Guide has become the leading seller among periodicals. In a highly competitive market, it maintains its position through cautious, prudent changes that reflect those changes occurring in the television industry. It really is a record of one of the most significant historical events of the twentieth century. Entire generations now relate to television people and places in a way that affects large numbers of individuals more than any other phenomenon ever has. For baby boomers who've come of age in the eighties, perusing the first issues of TV Guide, especially the all-important cover features, is a nostalgic trip. TV Guide has been there almost from the beginning of national broadcasting to chronicle the mass media story (McDonald 1998).

Competitive Analysis Strengths: Easily accessible listings, balanced corporate structure, leading positions on the market that create an atmosphere of stability for the employees, relatively simple content that allows to implement economies of scale and increase the efficiency of production, ability to compete on the digital market. Weaknesses: The magazine is no longer the wrap-around format. Articles are in the front; local listings follow. After local listings come pay-tv movie briefs, the familiar crossword puzzle, and a horoscope for the week. Some observers feel that the articles are more like those in a tabloid than in the traditional TV Guide. Recently, a number of staffers and lower-level editors have resigned; many feel that TV Guide is too much of an advertising vehicle now. Opportunities: The television programs listings field is considered to be one of the most attractive ones in the US for the following two reasons. First, the editorial information is readily available from the TV companies who are interested in getting as much publicity for their programs and thus provide their full support to publications like TV Magazine and Entertainment Tonight. Second, as Television starts occupying a more and more important role in the modern society with every passing day, the market for TV programs listings is also getting much bigger. Threats: As Television enters a new digital era and the era of world wide web, TV Guide will feel an increased pressure from the Internet companies who will provide the same services online.

What is more, companies like Prevue Networks and StarSight Telecast Inc present a serious challenge to TV Guide as they start offering similar services on the onscreen listings market. Finally traditional publications such as Entertainment Tonight continue slicing the pie and getting the TV Guide’s customers. W3: Case analysis A strategic marketing issue that is addressed in this case analysis is the concrete steps that TV Guide has to take in order to increase its share on the growing onscreen listings and online markets. The general response to this case is that of a need for an alternative strategy for TV Guide on the above mentioned markets. In other words, even though it is one of the most successful TV listings’ publications in the US, it faces an increased competition from the ‘non-traditional’ companies that heavily rely on the internet and telecommunication technologies. The proof that can be provided to illustrate the seriousness of the problem and the soundness of the argument in defense of strategy alteration is, basically, the analysis of the TV Guide’s overall performance during the last 3-4 years and comparison of the results to an earlier period in the 90’s when Internet and telecommunications were not as developed. There used to be great profitability in owning fixed assets and running operations based on those assets. Consider airlines, hotels, bookstores, steel mills, computer manufacturers, and many others like TV Guide. Some are still profitable, but many have lost profit or fail to return the cost of capital.

Overcapacity, customer power, and competitive intensity have driven profits away. When profits fade from basic asset-intensive operations, there are numerous opportunities to create profit in new ways: build a unique knowledge position, fill a niche that has room for just one player, or create services built on knowledge so scarce that it makes these services valuable to buyers and sellers alike. Only a few players so far have been able to develop these new profit-making activities, based on the knowledge and experience they gain from running their operations. In some cases, outsiders capitalized on the operations-to knowledge pattern and often generate more profit than the industries from which their information is derived. Both are provided by players from outside the base industry. Airlines and TV networks find it difficult to make money, while the Official Airlines Guide and TV Guide make handsome profits. The only question remains whether TV Guide will be able to win on the Internet and onscreen listings market as easily. In order to manage these risks, it should adopt its traditional strategy to become more effective on these new markets.