Universal TV

This info can be shared with the candidate to help them with the big picture.

• The candidate should look into revenue & cost first.
• Secondly, candidates should ask more about consumer behavior and possible competition/substitutes.
• Thirdly, the candidate should define his/her conclusion & recommendation.

Suggested case structure:

Information that can be shared if inquired by the candidate:

• Costs have not changed over the past years.
• All costs associated with cable wire, debt, maintenance, etc. are all proportionally the same, so no difference there.
• The company charges $35 a month for the cable package.
• Out of 4 m consumers, only 1.5 m have signed up so far.
• The company needed at least 2.5 m subscribers to turn a profit.

The candidate should start with revenue & cost to see if they have changed and what type of pricing the client maintains.

It seems that the company hasn't been able to increase its revenues and costs have stayed the same. So the absence of profit is caused by a lack of revenue growth.

Now we need to understand why consumers aren't signing up.

Information that can be shared if inquired by the candidate:

• There are no other competitors offering cable tv.
• Customers who signed up didn't have cable tv before and were using free local tv.
• The American customer seems to shy away from the $35 and prefers local tv which is free.
• Target customer also has a 25% lower income than their Canadian peers.
• There are 16 local tv stations that do a pretty good job at providing the consumer with what they want.
• Target customer doesn't really see the value the extra $35 brings.

The candidate should now get into the second part and ask more about consumer behavior and competition/substitutes.

It seems that the American consumer was alright with the free local tv and doesn't see the value of adding cable. Their lower income also means that they are more critical of spending more on watching TV.

Clearly, there is a lack of market fit with what the client is offering and what the American consumer wants.

The candidate should come up with recommendations. These can include the following, but any other recommendation that makes sense can work:

• The company should focus its offering more with lower prices.
• The company should scale back its operations and focus on one area only.
• If no strategy works, the company should exit the market.