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Strategic Marketing in Indonesia

Executive Summary Astro All Asia Broadcast is a satellite pay TV service operator formed in Malaysia in 1996. In mid 2006, through a joint venture with a local entity PT Direct Vision, Astro commenced its operation in Indonesia, with its initial offering of 48 channels. In this relatively untapped market, Astro seeks to gain a foothold in the industry. To date Astro Indonesia has garnered 216,000 subscribers, dominating 21% of the market. The Indonesian pay TV industry is a flourishing with revenues of USD9. 8 million.

The market remains untapped with a meagre 2% of the 31million households subscribing to pay TV. The industry is promising, with only 5 key players and the biggest being Indovision dominating 63% of the market share. Astro faces some key challenges in establishing a foothold in the Indonesian market. The preference for local freely available programming, extensive government regulation, piracy and low purchasing power are all barriers to growth. On the other spectrum, there is a significant unmet need in the market.

Pay TV operators, predominantly offer similar content as there is a lack of differentiation in the channels offered by the various pay TV operators. The key to survival in the market is financial strength or synergy in acquiring content that are sought after by the customers. Astro’s business strategy thrust is product differentiation through innovative content. This is achieved through its sustainable competitive advantage which resides in its synergy with AK vision, a premier production house in Indonesia and Astro Malaysia in developing and acquiring unique content..

In growing its business, driving subscriber acquisition is key in delivering the results. The success of this will depend on attracting prosperous Indonesian household from the upper and middle segment. This is achieved through market penetration strategies such as intense advertising and promotion to stimulate trial, development of unique distribution channels to effectively reach the market and outperforming the competition on customer service. To ensure successful implementation of its business strategy, it is pertinent to ensure that all business units are aligned.

Control measures using the balanced scorecard are key to ensure effectiveness of the strategies implemented. Together with continuous offering of uniquely distinctive content and an clear strategic direction and implementation of the business strategy, the concept of offering consumers a unique viewing experience will ensure that Astro achieves phenomenal growth in the Indonesian market. . 1. 0Background3 2. 0Strategic Marketing Plan Framework4 3. 0 External Analysis5 3. 1 Customer Analysis5 3. 2 Competitor Analysis 7 3. 3 Market Analysis12 3. Environmental Analysis16 4. 0Internal Analysis18 5. 0 SWOT Analysis20 6. 0Business Mission and Marketing Goals22 7. 0 Sustainable Competitive Advantage24 8. 0 Business Strategy25 9. 0 Generic Strategy 28 10. 0 Growth Strategy29 11. 0 Positioning Strategy30 12. 0 Strategic Marketing Mix33 13. 0 Assumptions and Contingency Plans34 14. 0 Sales Forecast and Financial Projections35 15. 0 Implementation36 16. 0 Reviewing strategies38 17. 0 Conclusion40 18. 0Appendices41 19. 0 Bibliography and References42 1. 0 Background

Astro All Asia Broadcast is a satellite pay TV service operator formed in Malaysia in 1996. Astro’s multi-channel TV service offers 110 multi-lingual, multi-genre channels. The Asian region continues to provide immense, relatively untapped opportunities. As domestic growth has reached plateau over the past year, Astro seeks to tap into large under-penetrated markets in the region in an effort to expand its market. In mid 2006, through a joint venture with a local entity PT Direct Vision, Astro commenced its operation in Indonesia, with its initial offering of 48 channels.

The business model and operation in Indonesia mirrors one of the domestic operations. To date, Astro Indonesia has garnered 164,850 subscribers or 21% of the total Indonesian TV homes. In this relatively untapped market, Astro seeks to gain a foothold in the industry. In view of this, a medium term strategic marketing plan has been developed to achieve this. 2. 0 Strategic Marketing Plan Framework A strategic Marketing Plan for Astro Indonesia from 2009 until 2011 will be established by adapting Aaker’s (2005) model as illustrated in Figure 2. 0 3. External Analysis 3. 1 Customer Analysis As illustrated by Aaker (2005), customer analysis can be usefully partitioned into an understanding of how the market segments, an analysis of customers motivations and an exploration of unmet needs. 3. 1. 1 Customer Segments The target market is segmented using the demographic and geographic variables. Demographic Segmentation – Income The key market comprise of consumers within the monthly income range of USD500 to USD900 which are classified in the A1, A2, B and C SES group as illustrated in Figure 3. 1. 1 below. SES |Household Expenditure (Rp million) | |A1 |> 3,000 | |A2 |2,000 – 3,000 | |B |1,500 – 2,000 | |C1 |1,000 – 1,500 | |C2 |700 – 1,000 | |D |500 – 700 | |E |< 500 | Source : Statistics Indonesia at www. bps. go. id Figure 3. 1. 1 : Indonesian population socio-economic groups Geographic segmentation The potential market consists of 10. 8 million TV households in 10 main cities as illustrated Figure 3. 1. 1(a). Source : AC Nielsen Research Consultants, 2007 TV Population Figure 3. 1. 1(a) : TV population in 10 main cities 2. Customer motivations The primary reason customers subscribe to pay TV service is the choice and control factor.

Apart form the wide range of programmes, pay TV offers customers the control to watch the programmes they want to watch at any given time. 3. 1. 3 Unmet Needs Pay TV operators, predominantly offer similar content as there is a lack of differentiation in the channels offered by the various pay TV operators. There is also a significant demand for local content and efficient customer service. 3. 2. Competitor Analysis 3. 2. 1 The Competitive Arena As illustrated in Figure 3. 2. 1, Astro competes with 5 key players in the pay TV industry . The competition comprise of Indovision, First Media, Telkomvision, IM2 and Oke Vision. Astro’s direct competitors are Indovision and First Media.

Indovision remains the market leader with 53% of the market share. Source : AC Nielsen Research Consultants, 2007 TV Population Figure 3. 2. 1 : Indonesian Pay TV market share a. Indovision Indovision has pioneered the pay TV industry with 56 channels on its platform and an entry price of Rp149. 000. Indovision’s customers predominantly reside in urban metropolitan cities in the Indonesian archipelago. Sales growth has been the prime objective for Indovision leading to intense promotional activities throughout the year to garner subscription. b. First Media First Media or previously known as Kablevision uses the cable infrastructure to transmit its content.

Due to this, coverage is limited to areas in Jakarta, Surabaya and Bandung. First Media offers 66 channels with the entry price of Rp 99. 000. The cable infrastructure also doubles up as a broadband connection, offering high speed internet access up to 3000Kbps. First media has used its broadband offering to drive subscription, bundling broadband with its pay TV services. 3. 2. 2 Strategic Groups As illustrated by Hooley, Saunders, Piercy (1998), understanding the dynamics of existing strategic groups can be productive to understanding future strategies of competitors. In understanding the competitive arena, 3 strategic groups are apparent as illustrated in Figure 3. 2. 2

Figure 3. 2. 2 : Strategic Group Map of Indonesian pay TV Industry As illustrated in the strategic group map in Figure 3. 2. 2, the Direct-to-Home players remains dominant as the service coverage spans across the Indonesian archipelago. This creates a larger customer base for this group. Group B and C operate with a smaller customer base as coverage is limited to prime regional areas. Expansion is limited due to the to large infrastructure investment to expand market coverage. As growth is limited, protecting the turf is critical and resorting to flanking strategies are likely if turf is violated. 3. 2. 3 Evaluating the competition Figure 3. 2. summarises the competition’s capabilities by evaluating the strength and weaknesses of Indovision and First Media based on the assets and competencies relevant to the industry success. |Competitor |Characteristics / Strategies |Strengths |Weakness | |Indovision |Overall market leader and pioneer in |Strong awareness and brand name |Inferior service – long cycle time| | |the industry |recognition due to pioneer status |from subscription to installation | | |Perceived as a trusted brand due to |Extensive sales force and |Lack of differentiated content. | | |pioneer image.

Positioned as the 1st |distribution with 13 retails outlets| | | |Indonesian Direct |and 130 authorised dealers outlets | | | |Commitment to sales growth and market |in shopping malls and electrical | | | |share |outlets. | | | |Targets key markets such as Jakarta. |Aggressive sales promotion | | | | |strategies to drive acquisition | | | | |Digital quality transmission | | |First Media |Slow sales growth despite 10 year |Digital transmission quality. Lack of brand recognition due to | | |existence in the market | |low marketing spends | | |Strong brand association with broadband| |Limited sales force and | | |offering | |distribution network | | |Product differentiation strategy via | | | | |its triple play service | | | | |Key markets are Jakarta, Surabaya and | | | | |Bandung | | | Source : Corporate website: www. firsmedia. com and www. indovision. tv Figure 3. 2. 3 : Characteristics, Strength and Weaknesses of competition 4. Benchmarking against competition

The competitive grid strength as illustrated in Figure 3. 2. 4 is used to benchmark Astro against the other players in the market based on their capabilities. |Assets & Competencies |Astro |IndoVision |First Media |Telkomvision |IM2 |Oke Vision | |Key For Success | | | | | | | |Financial Capability / Synergy | | |Households |53,662,646 | |Average HH size |4. | |TV Households |31,313,332 | |PAY TV Households Q1 2008 |785,000 | |PAY TV % penetration |2% | |No of Channels on PAY TV Platforms |150+ | |PAY TV ratings |Private (AGB NMR) | |PAY TV Adex | | |TV Panel Size (FTA Homes) |2080 | |Share of Viewing in Pay TV Homes |N/A | Source : Cable and Satellite Broadcasting Association (CASBAA) at www. casbaa. com Figure 3. 3. 1: Pay TV market size 3. 3. 2 Market Growth According to CASBAA (2008), with just 2% of approximately 31 million TV households, Indonesia’s pay-TV market penetration remains low compared with other Asian markets. Pay TV has found it difficult to establish a foothold in the Indonesian market. The preference for local freely available programming, piracy and lack of product differentiation and purchasing power are all barriers to growth.

However, pay TV growth in Indonesia has been brisk over the past 12 months with legitimate pay TV subscriptions doubling to 785,000 in the first quarter of 2008. The market continues to grow at an average rate of 30% annually as illustrated in Figure 3. 3. 2. * Projected for Year 2009 Source : Cable & Satellite Broadcasting Association (CASBAA) at www. casbaa. com Figure 3. 3. 2: Pay TV industry revenue growth The market remains promising. According to The Jakarta Post (2009), only about 7 percent of the potential market has been penetrated, the potential market for the industry is around 10 million users, while only 700,000 of them have subscribed to pay TV. 3. 3. 3 Factors Affecting Sales Level Indonesia is the fourth most populous country in the world with a population size of 230 million.

It’s population is growing, the number of nuclear families is increasing rapidly and those households are becoming wealthier through the fruits of a booming economy. GDP is projected to grow by and average of 5. 5% per annum over the coming decade. Over time, growth in the Indonesian economy will raise income levels and create greater affordability for the service. 3. 3. 4 Key Success Factors The key success factor for the industry are financial strength or synergy in procuring or developing content that are unique. Content costs, primarily first release or exclusive content are relatively high. Thus financial strength in securing exclusive content is the path to success in the pay TV industry.

Brand name recognition are also pertinent as consumers tend to gravitate towards brand names that they are familiar with. Apart from that, quality broadcast transmission and quality service are key to success in the industry. 3. 3. 5 Competitive Forces Porter (1985) illustrated that the basic idea is that the attractiveness of an industry of market as measured by the long term return on investment of the average firm depends largely on the five factors that influence profitability. These 5 forces are analysed to understand the industry profitability. 1. Rivalry among existing firms Astro competes in a pure competition environment where products offered are almost parity.

Being a late entrant, in a relatively mature industry, Astro faces aggressive competition from Indovision, the pioneer player in the industry and First Media. 2. Threat of new entrants Likelihood of new entrants entering the market are low as broadcasting licenses are controlled and regulated by the government. Compounding this, barriers of entry are high due to the exorbitant capital expenditure cost. 3. Threat of substitute products There’s a strong broadcasting tradition, with 12 free to air (FTA) stations that have exposed viewers to an extremely wide variety of programming produced both domestically and internationally. Compounding this, the relatively low price of DVDs (approximately USD1) and high levels of piracy has reduced the need for pay TV. 4.

Bargaining power of suppliers Programme suppliers and technology vendors have high buying power. Channel partners offer content to all operators in the industry and decide the level of support given to the various pay TV operators. Often the operators with the higher number of subscribers are given the preference. Astro has a significant buying power from technology vendors and programme suppliers because of the strength of what they’ve achieved in Malaysia. 5. Bargaining power of buyers As product / content are parity across all players, consumers have a choice from the 5 key players to choose from. Hence, there is high bargaining power of buyers.

In analysing the competitive forces, the market outlook remains attractive and extremely promising with potential long term profitability. 3. 4. 1 Environmental Analysis Political and Legal Environment Astro operates in an industry that is subject to extensive regulation and supervision by relevant authorities. Issuance of broadcasting licenses are controlled by the government. The conditions of ASTRO’s licenses to provide direct-to-home (DTH) satellite TV services in Indonesia could be varied, modified or revoked at anytime. The operations in Indonesia are conducted with partners through joint-ventures where under local laws require majority shareholding of the local entity.

This limits Astro’s control of the management of the operations and performance of these ventures and consequently decreases their ability to manage risks and costs. Economic environment Indonesia has comparatively low income levels. Per capita GDP in Indonesia is only a third that of Malaysia with an average household monthly income of USD500 as compared to Malaysia which stands at US840. Affordability of the service will be a major barrier of adoption. Demographic Environment Indonesia’s population is growing, the number of nuclear families is increasing rapidly and those households are becoming wealthier through the fruits of a booming economy.

GDP is projected to grow by an average of 5. 5% per annum over the coming decade. Over time, growth in the Indonesian economy will raise income levels and create greater affordability. Technology Technology in the satellite TV and media industry is slowly evolving, along with new applications and innovations. New technologies such as IPTV and mobile broadcasting are emerging in Indonesia. This change may require Astro to make investment in untested products or greater-than-expected capital expenditures in order to avoid obsolescence and remain competitive. Competitive environment Astro faces competition within the industry as well as from other leisure ctivities competing for the customers’ wallets. Piracy is emerging as a major problem. According to CASBAA (2008), there are 1 million homes receiving illegal pay television. Although the Broadcast Law and Copyright Law of 2002 provide a degree of protection for broadcast signals, enforcement to date, however has been virtually non-existent. 4. 0 Internal Analysis Internal analysis seeks an in depth understanding of the organisation. The Performance analysis framework by Aker (2005) is used to evaluate the current performance, strength, weaknesses and capabilities of Astro. 4. 1 Performance analysis Figure 4. 1 below illustrates the current performance of Astro. Financial Performance – Sales and Profitability | |Sales |Subscriber base has grown from 35,000 in 2006 to 164,840 in 2008. A 78% increase in sales| | |posting USD2,307,760 in revenue | |Market Share |Ranked second in the market with 21% market share | |Performance Measurement – Current Performance | |Customer Satisfaction |Low churn rate of 2% indication high levels of customer satisfaction. |Product / Service Quality |Content are clearly differentiated against competition with high level of professionalism| | |in service | |Brand Associations |Strong association with exclusive local and sports content | |New Product Activity |Continuous development and production of new programmes, channels and packages. | |Manager / Employee Capability and |Pool of experienced human resource that have sound knowledge in the business due to | |Performance |secondment from Malaysian operations. | Figure 4. 1 : Performance Analysis of Astro 4. 2 Determinants of Strategic Options Using the framework illustrated by Aker (2005) , determinants of strategic options are described in Figure 4. 2. Past and current strategies |Strong positioning as the provider of exclusive content primarily | | |local content. | | |Heavy investment in building the brand to enhance brand recognition. | | |High emphasis on customer service efficiency | |Organisation Capabilities / Constraints |Synergy with AK Vision production house and Astro Malaysia in | | |developing and acquisition of exclusive content. | |Financial Resources and Constraints |Strong financial resources due to backing from Astro Malaysia. |Organisational strength and weakness |Strength reside primarily the superior content differentiation, | | |quality workforce, strong financial backing by parent company | | |,customer base with strong brand loyalty, high brand awareness and | | |recognition and superior customer service. | | |Weakness stem predominantly on its technological capabilities. | 5. 0 SWOT Analysis Strength a.

Special propriety channels / Exclusive content Astro has 12 special propriety channels which are available only on the Astro platform. Astro also owns exclusive rights to big tickets content such as the British Premier League (BPL) and the World Cup which has been the key driver in subscriber acquisition. b. Strong local content Through synergy with AK Vision production house (a business unit of Astro), Astro produces five Astro-branded, Indonesian language channels, some of which are most watched channels among Indonesian households. In a country that craves for quality local content, this has set Astro apart from its competitors. c. Competent human resource capital

In recognizing the relative importance of customer service, Astro has invested and developed a competent team of sales force, installation team and customer service personnel. Apart from this, there are 38 retail outlets around the country to service customer needs with installation time shortened to 1 week. d. Strong buying power leverage Astro has a significant buying power from and programme suppliers because of the strength of what they’ve achieved in Malaysia. Weakness a. Technological capabilities Astro’s Ku band transmission provide digital quality broadcast but it is susceptible to rain fade. Although it only happens 0. 3% in a year, this has been an area of attack by Indovision through various campaigns. There is lack of R in enhancing its technological capabilities in search of new applications.

There is a threat of technological obsolescence in the long term. b. Limited distribution Astro’s distribution network is limited to 8 retail outlets nationwide and 30 authorised dealers, inferior to the wide cast network of Indovision. Opportunities a. Regional Untapped markets The Indonesian market is still relatively stagnant and untapped, despite the large presence of pay-TV operators. The existing pay-TV companies mainly operate in the capital and big cities in the Jabodetabek area. Second level metros such as Bandung, Semarang and Medan where entertainment options are limited remains untapped and poses tremendous potential. b.

Demand for exclusive and differentiated content In a highly commoditised environment, there is little or no differentiation of content offered. There is a high demand for quality local content and exclusive content that are not available on the FTA platform. Threats a. Lack of education on the product category Current pay TV operators have promoted themselves without promoting the category. They have not convinced people of the value and benefits of pay TV resulting low adoption rate as people do not see the need for pay TV. b. Free-to-air (FTA) 12 free-to-air (FTA) stations have exposed viewers to an extremely wide variety of programming, reducing the need for pay TV. c.

Emerging piracy Piracy is emerging as a major problem. There are around one million homes receiving illegal pay TV broadcast. d. Emerging new technologies Emerging new technologies in the industry such as IPTV threatening the obsolescence of DTH technology. 6. Business Mission and Marketing Objectives 6. 1 Business Mission Hooley, Cox and Adams (1992) discuss the elements that go to make up an effective statement of mission. This is illustrated in Figure 6. 0 [pic] Source : Hooley, J. G. , Piercy, N. F. (1998). Marketing Strategy & Competitive Positioning (Second Edition). Prentice Hall Europe Figure 6. 1 : Components of a business mission

Astro isn’t selling a box, or a dish, a channel portfolio or even about watching TV. It’s about providing entertainment, education and enlightenment: an everyday window to an extraordinary world. In summary Astro’s mission statement can be illustrated as follows: Astro strives to be the provider of entertainment, education and enlightenment / inspiration to every Indonesian household through unparalled distinctive content. 6. 2 Marketing Objectives The marketing objectives are as follows a. To increase market share from 21% to 50% by end 2011 b. To grow customer base from 164,000 to 500,000 by end 2011 c. To grow sales revenue from USD2,296,000 to USD7,000,000 7. Sustainable Competitive Advantage According to Aker (2005), synergy between business units can provide SCA that is truly sustainable because it is based on the characteristics of a firm that are probably unique. In the case of Astro, its sustainable competitive advantage resides in the synergy between AK Vision and Astro Malaysia. AK Vision is a premier production house in Indonesia known for its quality local programmes. AK Vision produces content for Astro which are not made available on other platforms. Astro Malaysia has a strong leverage in securing broadcast rights to big tickets sporting events (BPL, Olympics, World cup) and new programme releases.

These synergies contribute to production and acquisition of distinctive much sought after programmes. 8. 0 Business Strategy Alternatives 8. 1 Business Strategy Figure 8. 1 by Aker (2005) identifies the four dimensions that define a business strategy. Source : Aker, D. A. Strategic Market Management. John Wiley and Sons, Inc, 2005 Figure 8. 0 : A Business Strategy 8. 2. Strategic Options In developing the business strategy, the following strategic options have been identified : a . Product Differentiation through innovative content Apart from its ability to gain exclusive rights to big ticket events, Astro also offers more local content than any broadcaster.

Its alliance with AKV (a local production house) has allowed Astro to produce quality local content which are exclusive to Astro’s platform. This will differentiate its offering from the competition. a. Customer Intimacy The multi-channel market has been available for some time, but has failed to connect with the wider audience. Pay TV operators have commonly only expressed the functional benefits. Astro has created and experience that connects the offering to the customer on a more involved and passionate level through high level customer service and promotional campaigns that has created a beyond TV experience. Figure 7. 1 specifies the business strategy components based on the identified strategic options. Product– market investment decision |Astro competes in the Direct-to-Home market, offering superior content to Indonesian | | |households. | |Functional strategies |Procurement strategy of securing big ticket programmes. | | |CRM strategies to enhance brand loyalty and consumer experience. | |Assets and competencies |CRM, e-subscription and billing system leading to shorter lead time from subscription to | | |installation. | | |Extensive and competent, customer service and installation team | | |Synergy with production in the development of exclusive local content. | |Leveraging on buying power of parent company (Astro Malaysia) in securing exclusive rights to| | |content. | |Value proposition |Astro offers superior choice and content to Indonesian households that seek a unique viewing | | |experience. | Figure 8. 1 : Astro’s business strategy components 9. 0 Strategic Thrusts In deciding on a strategic thrusts using Porter (1980) generic strategies, 2 possibilities remain plausible: a. Cost Leadership The cost leadership approach entails Astro to compete on price.

Lower prices will allow Astro to increase sales and further penetrate the existing market leading to an increase in market share. However the feasibility of this strategy is limited as lower prices will lead to a pricing war amongst tiger competitors such as Indovision, lowering overall profitability. b. Differentiation The differentiation strategy entails emphasis to a particular element that is seen by customers to be important and that as a result provides a meaningful basis for competitive advantage as illustrated by Wilson, Gilligan (1997). In this case, Astro’s superior content is key to the differentiation strategy. In selecting the key strategy, differentiation is the most plausible strategy. This strategy is the current strategy pursued by Astro and is the est approach due to the following reasons: a. Creates a major competitive advantage in a market which products are the most part physically indistinguishable. b. Reduces customers’ bargaining power as competitor’s offerings are less attractive. This allows prices to be increased in due time once Astro has gained a foothold in the market. c. Creates a higher entry barriers for potential competitors. 10. 0 Growth Strategy 10. 1 Ansoff Strategy Market penetration strategy is selected based on this matrix (Ansoff, 1965). In pursuing this strategy the marketing actions include. a. Stimulating demand by continuous launch of new content, packages and channels. b.

Intensive sales promotions such as discounts on subscription to encourage trial. Sales promotions such as free 3 month’s subscription directed to competition’s subscribers to encourage switching. c. Outspend the competition on advertising and promotion to create more visibility in the market, enhance brand recognition and awareness. Advertising to stress product’s superiority. d. Building unique distribution channels to more effectively reach customers such as SMS and online subscription. e. Outperform competition on customer service such as shorten lead time from subscription to installation through usage of electronic order processing. f. Increase usage of current customers through up sell of new packages.

Marketing efforts to be skewed to untapped markets such as the regional market centers of Medan, Semarang, Bandung, Surabaya, Makasar, Palembang and Yogyakarta. 11. 0 Positioning Strategy 11. 1. Target Market Selection Astro’s marketing objective is to garner 500,000 subscribers by end 2011, The success of this will depend on attracting prosperous Indonesian home owners to its service that will help deliver growth as their propensity to buy will be high. Thus, affordability of the service will be the key determinant in the target market selection. As illustrated in section 2. 0, income levels will be the basis for segmentation. The market segments are illustrated in Figure 10. 1 below.

In most markets, subscription costs account for 1. 5 percent of the household income. The diagram below illustrates the affordability level of the service among the socio-economic groups. |SES Group |Household Expenditure (monthly) |Estimated Household Income (monthly) |US$10 Astro Subscription Cost as % of | | | | |Income | |A1 |US $225+ |US $900+ |1. 1% | |A2 |US $172-225 |US $700-900 |1. % | |B |US $ 125-175 |US $500-700 |1. 7% | |C1 |US $80-125 |US $ 320-500 |2. 4% | |C2 |US $60-80 |US $240-320 |3. 6% | |D |US $40-60 |US $160-240 |5% | |E |US $40 less |US $160 less |6. 3% | Source : AC Nielsen, TV Population 2007 Figure 11. : Estimate of subscription costs as a percentage of household income by socio-economic group in Indonesia SES Group A1, A2, B and C1 have the best affordability level, indicating the key target segment for Astro. In looking at the geographic segmentation, 10 main cities remain the key target for Astro as illustrated in Figure 11. 2. Total A, B, and C1 households in these 10 cities amount to 5. 95 million households as portrayed in Appendix 18. 1. The breakdown of target market are illustrated in Figure 11. 2. Source: AC Nielsen Research Consultants, 2007 TV Population Figure 11. 2 : Total A,B, C1 TV households in 10 main cities Concentrated Marketing

In directing is marketing efforts, a concentrated marketing strategy is chosen where segment A is the prime target. As illustrated by Wilson, Gilligan (1997) this will help control costs by advertising and distributing only to the primary market. Hence achieving the intended revenue and profitability. 11. 2 Positioning According to Cravens, Piercy (2006), positioning concepts may be functional, symbolic or experiential. Astro is a significant improvement of the current offer in terms of customer service and content differentiation The perceptual map illustrated in Figure 12. 2, shows the ideal positioning strategy which are unchartered territories by the competition.

Other pay TV operators, sit on the right quadrant where products offered are parity and undifferentiated. There left quadrant remains unchartered and the ideal space for Astro that offers unparralled choice and exclusive / differentiated content. Figure 12. 2 Perceptual map of Indonesian pay TV operators 12. 0 Strategic Marketing Mix Product Astro’s channels offerings are value added with differentiated content including local and exclusive content such as British Premier League which are not available on any other platform. The 12 special proprietary channels bearing exclusive local and international content are to be the key point of differentiation. Price

Entry pricing to be comparable to Indovision. Prices to be increase in the long run once Astro has gained a foothold in the market. Place The objective is the is to make Astro easily accessible. The key strategy are as follows: a. Increase the retail outlets from 15 to 21. Outlets to be skewed in prime locations such as Jakarta, Medan, Semarang and Surabaya b. Expansion of the distribution channel via strategic alliances with electrical outlets nationwide where consumers can opt to subscribe via this outlet. c. Ease the subscription process, via e-subscription and SMS subscription to allow customers to subscribe online or via SMS Promotions

Print, TV and radio advertising will be used to promote the content, sales promotions to drive acquisition and on-ground events will be used to create off-air experiences. Detailed marketing action programmes and timeline are further illustrated in Appendix 18. 2 and 18. 3 13. 0 Assumptions and Contingency plans Indonesia’s GDP is projected to grow by an average of 5. 5% per annum over the coming decade. There is a possibility that the global market slump will have a direct effect on this figure. In the light of this circumstance, Astro needs to direct its effort in increasing the ARPU of the existing subscriber to achieve its financial projections. 14. Sales Forecast and Financial Projections A Profit and Loss statement is tabulated as illustrated in Figure 13. 0 for the current FY2008 and the projected Fy2009 until FY2011 (Birt, e. al. , 2008). This statement is parallel with the objectives illustrated earlier. Here are some projected key results: 15. 0 Implementation Phillip Kotler (2003), a great marketing strategy can be sabotaged by poor implementation. Thus it is important that the all business units are aligned to achieve the organizational goal. The McKinsey 7-S Framework by Peters and Waterman (1982) are used to illustrate the implementation strategy as portrayed in Figure 15. 0. Strategy |Product differentiation through procurement of exclusive content | | |Unparalled customer service | |Structure |A matrix structure with decentralised decision making to foster employee empowerment and | | |cross-fertilisation of ideas | |System |Implementation of the following systems to increase effectiveness. | | |CRM system for customer acquisition, retention, database management and churn modeling. | | |Programme procurement system to monitor, develop and procure latest key content. | | |E-processing to reduce subscription to installation cycle time. |Style |Egalitarianism culture to encourage sharing of ideas | |Staff |Training and development of frontliners primarily sales force, customer service personnel and | | |installation team. | | |Usage of HR consultants in hiring key personnel such in the research, customer service and programming | | |planning team | |Skills |Skills set and competence to be centered around the following key functional areas. | |Research – consumer and programme research to study channels preferred by consumers. | | |Programming – strategic planning of types of programme to procure and develop | | |Distribution – planning of the distribution strategy or routes to market. | | |Customer service | |Shared Values |Always original and entertaining in a way things are done. | | |Always innovating, always bringing new content and new ideas to the market. | | |Always looking for out for each other and looking after the customers . | Figure 15. : McKinsey 7-S Framework for Astro’s implementation strategy 16. 0 Reviewing Strategies According to Cravens and Piercy (2008), a strategic marketing plan needs to be responsive to changing conditions. The strategic marketing plan also needs information from continuous monitoring and assessment of performance. Thus, this will ensure that the strategies are on track to the goals and demonstrate when any adjustments are needed. There are 4 key steps in initiating a strategic control and evaluation program for Astro as portrayed in Figure 16. 0. Source: Cravens, D. W. & Piercy, N. F. (2008). Strategic Marketing. (9th ed). McGraw Hill. Singapore. pp. 482 – 487. Figure 16. Strategic Marketing Plan Evaluation and Control for Astro 16. 1 Balanced Scorecard In evaluating the performance, the Balanced Scorecard as illustrated in Figure 15. 0 will be used as a benchmark. | |Strategic Objectives |Measurements |Targets | | | | |Year 1 |Year 2 |Year 3 | |Finance |To increase total sales revenue |US Dollar | | | | | | | | | | | |To achieve cost per unit | | | | | | | |US Dollar | | | | | |To increase gross margin | | | | | | | | | | | | | | |Percentage | | | | |Customer |To improve customer satisfaction |(1-10) 10 being the best customer |7 |8 |9 | | | |satisfaction index | | | | | |To increase brand loyalty | | | | | | | |Percentage of churn |5 |13 |1 | | |To increase Take-up of add on | | | | | | |packages |Average Revenue Per Unit (ARPU) | | | | | | | |14 |18 |20 | |Internal |To shorten subscription to |No of days |7 |6 |5 | |Process |installation process | | | | | | | | | | | | | |Increase distribution efficiency |No of outlets |17 |19 |21 | | | | | | | | | |Increase procurement and production | | | | | | |efficiency |Percentage |85% |88% |91% | |Leading & |Employee turnover |Percentage |3. 5% |2. 5% |1. % | |Growth | | | | | | | |Marketing effectiveness |ROI Percentage |80% |85% |90% | | | | | | | | | |Sales force and customer service | | | | | | |competency |Training hours |40hours |50hours |60hours | Figure 15. 0 : Balanced Scorecard for Astro 17. 0 Conclusion

Together with continuous offering of uniquely distinctive content and an clear strategic direction and implementation of the business strategy, the concept of offering consumers a unique viewing experience will ensure that Astro achieves phenomenal growth in the Indonesian market. 18. 0 Appendices 18. 1 TV Population in 10 main cities 19. 0 Bibliography and References Aker, D. A. (2005). Strategic Market Management. John Wiley and Sons, Inc Ansoff, H. I. (1965), Corporate Strategy. McGraw-Hill, New York. Asia Media News Daily (2009). Indonesia : Pay TV Operators feeling good for 2009 despite adverse global economic conditions. The Jakarta Post, 30 January 2009 Birt J. , Chalmers, K. Beal, D. Brooks, A. Byrne, S. Oliver J. (2008). Accounting: Business Strategy Reporting for Decision Making (2nd edition). John Wiley & Sons, Australia pp196-205 Cravens, D. W. & Piercy, N. F. 2006) . Strategic Marketing Eight Edition. McGraw Hill Education (Asia) Cravens, D. W. & Piercy, N. F. (2008). Strategic Marketing. (9th ed). McGraw Hill. Singapore. pp. 482 – 487. Hooley, G. J. Cox, A. J. and Adams A. (1992). Our five year mission – to boldly go where no man has gone before. Journal of marketing Management, 8 (1) 35-48 Kotler, P . (2003). Marketing Management Eleventh Edition, International Edition. Prentice Hall Peters, T. J. , Waterman J, R. H. (1982). In search of Excellence: Lessons from America’s Best Run Companies. HarperCollins Publishers, Inc Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior

Performance. , New York: The Free Press Wilson, R. M. S. , Gilligan, C. (1997) Strategic Marketing Management . Planning, Implementation and Control. Butterworth-Heinemann Online References Cable & Satellite Broadcasting Association of Asia. Indonesia in View. Viewed through the internet on 2 March 2009 at : http://www. casbaa. com/publication. aspx? id=publication10 First Media corporate website. Viewed through the internet on 5 March 2009 at : www. firstmedia. com Indovision corporate website. Viewed through the internet on 5 March 2009 at : www. indovision. tv Statistic Indonesia (2007) . Indonesian 2007 Population Census. Viewed through he internet on 2 March 2009 at : http://www. bps. go. id/pubs/Population_and_Manpower/index. html ———————– STRATEGIC ANALYSIS External Analysis ? Customer Analysis ? Competitor Analysis ? Market Analysis ? Environmental Analysis Internal Analysis ? Performance Analysis ? Determinants of strategic options e. g. organizational capabilities etc STRATEGIC ANALYSIS OUTPUT (SWOT) Opportunities, threats, trends and strategic uncertainties Strength, Weaknesses, problems, constraints STRATEGY INDENTIFICATION, SELECTION AND IMPLEMENTATION ? Identify business strategy alternatives – Product-market investment strategies – Customer value proposition Assets, competencies and synergies – Functional strategies and programs ? Select strategy ? Implement the operating plan ? Review strategies Source : Aaker, D. A. (2005). Strategic Market Management. John Wiley and Sons, Inc, Figure 2. 0 : Strategic Marketing Plan Framework Major Cities Narrowline Broadband & Pay TV Service) Broadline Broadband, Movie Pay TV Services) [pic] [pic] A – Satellite (Direct to Home (DTH)) : Indovision, Astro, Oke Vision B – Cable : First Media, IM2 C – Combination (DTH & Cable) : Telkomvision komvision Limited Pay TV Service National Satellite Towns TABLE OF CONTENTS A0 C Coverage B Sales (USD) ‘ooo 15,400 16,000 14,000 12,000 005 – 2,100,000 2006 – 3,934,000 2007 – 6,300,000 2008 – 9,800,000 2009* – 15,400,000 2,100 3,934 6,300 9,800 2009 2008 2006 2005 2007 2,000 4,000 6,000 8,000 10,000 Market Definition Customer Targets Company Values Guiding Principles Competitive Positioning Differential Advantage Distinctive Competencies Core Skills Mission Objectives & Strategy Strategic Intent Vision of what you want to be First Media Setup balance score card criteria using KPI to evaluate performance criteria on a monthly and daily basis in order to meet financial and marketing objectives in 2011. Assess KPI performance and take necessary action to rectify the gap.

Obtain and analyse the financial and marketing information starting from the budgeting stage to monthly stage until quarter one 2012. Conduct Strategic Marketing Audit in Sales & Marketing distribution and customer service on a bi-monthly basis for 2009 and a quarterly basis for 2010 and 2011 IndoVision ASTRO Telkomvision Differentiated / Extensive Content Undifferentiated / Generic Content IM2 Oke Vision Limited Choice 3 – Above Average 2 – Average 1 – Below Average [pic] Where to Compete The product-market investment decision How to Compete Value proposition Assets & CompetenciesFunctional area strategies & programs A BUSINESS STRATEGY Source : AC Nielsen Research Consultants, 2007 TV Population

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