Philippine Christian University

Sampaloc 1, Dasmariñas City, Cavite

Graduate School of Business and Management

CASE STUDY OUTLINE

The US telecommunications industry has seen

SUMMARY OF THE CASE significant changes, with telephone providers upgrading
to fiber optic technology to offer digital services.
Approximately 46.4 million households have access to
these services, choosing between telephone providers,
cable companies, and satellite providers. Verizon and
AT&T are the major players:

Verizon focuses on wireless (69.7% of its

business), FiOS (fiber optic network), and traditional
home services.
AT&T competes with cable through DirecTV
(acquired in 2015) and U-Verse (fiber-optic network).
Other companies like Consolidated
Communications and Cincinnati Bell also offer services.
Google Fiber entered selective markets with TV and
internet services in 2013, but as of January 2016, it had
limited subscribers and market presence. Legal disputes,
such as the one between ESPN and Verizon in 2015,
can affect service offerings and pricing. Keep in mind
that this industry is dynamic, and the landscape may
have changed since this information was provided.
 In April 2016, the U.S. Department
of Justice's Antitrust Division announced its
approval of Charter Communications'
acquisition of Time Warner Cable and Bright
House Networks, albeit with certain
stipulations. This decision came after Charter
pursued the deal following the cancellation of
the Comcast/Time Warner merger. Charter,
I. TIME CONTEXT a cable company serving 6.2 million
customer relationships across high-speed
data, video, and telephone services, aimed
to combine these entities for a total of $67.1
billion. The merger faced regulatory scrutiny
due to concerns about the resulting 17.8
million high-speed data customers and the
potential influence of a dominant cable
company on content distribution, particularly
towards online video services.

Charter Communications

II. VIEW POINT

The problem is identified as that many of the VoIP

telephone service users are getting declined because of
the wireless plans that are in use and customers are
III. CENTRAL PROBLEM finding it hard to maintain the home phone for it adds up
to the expenses of the customers.

1. To offer a significant discount to customers

considering canceling their service may incentivize them
to stay, resulting in higher retention rates.
2. To maintain the service for at least three months at a
discounted rate can provide a short-term revenue boost.
IV. OBJECTIVES 3. To enhance customer loyalty by demonstrating a
willingness to accommodate their needs.
 Strengths:

Short-Term Retention: A notable strength of the

proposed selective discounting strategy lies in its
potential to retain customers in the short term. Offering a
substantial discount (25 to 30 percent) can act as a
compelling incentive, encouraging some customers to
maintain their loyalty to the service, especially when they
are seeking immediate cost savings.
V. AREAS OF
CONSIDERATION Immediate Revenue Boost: Implementing this plan has
the potential to deliver an immediate increase in revenue.
As customers commit to sustaining their service for at
least three months at the discounted rate, it can provide
a timely financial boost to the company.

Weaknesses:

Profit Margin Vulnerability: The primary weakness of the

strategy lies in the potential vulnerability of profit
margins. Offering substantial discounts to retain
customers carries the inherent risk of profit erosion,
particularly if a significant number of customers opt for
the discounted rate. This could adversely impact the
overall profitability of the service.

Short-Term Focus: Another significant weakness is the

strategy's short-term orientation. While it may effectively
retain customers for a limited period, it does not address
the fundamental issue of customers seeking cost-
effective alternatives in the long run. Customers may
continue to contemplate canceling their service after the
discount period concludes.

Customer Expectations: Customers who benefit from the

discount may develop the expectation of receiving similar
offers in the future. This could influence their willingness
to pay the regular rate once the discount period expires,
potentially affecting long-term revenue.

Areas for Consideration:

Long-Term Sustainability: A critical area for consideration

is how this strategy aligns with long-term business
objectives. While it may offer short-term customer
retention benefits, a more sustainable solution is
imperative to tackle the underlying challenge of cost-
effectiveness over the long haul.

Alternative Strategies: Exploring alternative strategies,

such as competitive pricing plans, service bundling, or
enhancing the value proposition of the VoIP service,
should be a focal point. These approaches can play a
 pivotal role in attracting and retaining customers while
preserving profitability.

Monitoring and Adjustments: Continuous monitoring of

the strategy's impact on customer retention and
profitability is essential. The company should be
prepared to make timely adjustments based on the
strategy's effectiveness and customer feedback to
ensure it aligns effectively with business goals.

In conclusion, the proposed selective discounting

strategy demonstrates strengths in terms of short-term
customer retention and the potential for immediate
revenue enhancement. However, it is not without its
weaknesses, particularly the risk of profit margin erosion
and the short-term nature of its impact. Careful
consideration of alternative strategies and a persistent
focus on long-term sustainability are paramount for
making informed decisions aligned with the company's
broader business objectives.

In the ever-evolving landscape of telecommunications, a

noteworthy challenge has emerged on the horizon. It
appears that a considerable number of customers,
those who have embraced Voice over Internet Protocol
VI. ALTERNATIVE COURSES (VoIP) telephone services, are increasingly opting to
OF ACTION terminate their subscriptions. The reason behind this
trend is a growing unease stemming from the additional
costs associated with maintaining a home phone service
alongside their wireless plans. This dilemma has
spurred telecom service providers into action as they
endeavor to find an effective remedy to retain their
valued customer base.

The proposed solution on the table involves the

strategic application of discounts. Specifically, the plan
calls for offering a substantial discount ranging from 25
to 30 percent to customers who indicate their inclination
to discontinue their VoIP service. However, the
approach does raise certain pertinent concerns.

First and foremost, it is crucial to recognize that this

strategy serves as a temporary remedy. While it might
succeed in keeping customers engaged for a brief
period, it does not address the fundamental issue at
hand—customers actively seeking more cost-effective
alternatives for the long term.

Moreover, there exists a palpable financial risk

associated with the proposed solution. Providing
substantial discounts carries the potential of significantly
diminishing the revenue stream of the service provider,
especially if a substantial portion of customers opts for
the discounted rate. This could have an adverse ripple
effect on the overall profitability of the service.
Furthermore, it's essential to acknowledge that
customers are well aware of the temporal nature of the
discount being offered. Typically spanning a duration of
three months, this knowledge might lead customers to
reconsider their commitment to the service once the
discounted period inevitably comes to an end. In
essence, while the plan may temporarily retain
customers, it may not necessarily translate into enduring
customer loyalty.

To grapple effectively with the core issue of customers

seeking more cost-effective solutions, it becomes
incumbent upon the service provider to explore more
sustainable alternatives.

One such avenue is the reevaluation of pricing plans. By

making these plans more competitive within the market,
the service provider can potentially attract and retain
customers more effectively. This could involve a
reduction in the base price or extending introductory
discounts for a more extended duration.

Additionally, bundling services is another strategy worth

exploring. By combining the home phone service with
other offerings, such as internet or television services,
the service provider can offer added value to customers.
This bundling approach can serve as a compelling
incentive for customers to retain the home phone
service as part of a bundled package.

Enhancing the value proposition of the home phone

service is also a critical consideration. By scrutinizing
the features and benefits of the service, service
providers can identify opportunities to make it more
appealing to customers. The introduction of unique
features or functionalities can contribute significantly to
enhancing the perceived value of the service.

Furthermore, the invaluable insights derived from

customer feedback and preferences can guide service
providers in customizing their offerings. Surveys and
feedback collection mechanisms can serve as a
treasure trove of information to better align service plans
with what customers truly desire in a home phone
service.

Lastly, as a long-term retention strategy, it is imperative

to look beyond short-term discounts. Introducing loyalty
programs, rewards, or incentives that encourage
customers to maintain their subscriptions over an
extended period can be a game-changer.

While offering discounts the company may provide a

temporary respite in customer retention, the ultimate goal
VII. RECOMMENDATION is to address the underlying concern of cost-
effectiveness in the long run. By delving into competitive
pricing, service bundling, value proposition
enhancement, and long-term customer engagement,
service providers can chart a course toward more
sustainable solutions to effectively retain their cherished
customer base.

Their plan of action reflects a resolute commitment to

revitalizing customer retention in VoIP telephone
services. It's more than a mere chapter; it unfolds as an
epic narrative characterized by resilience and
transformation. With a comprehensive and versatile
VIII. PLAN OF ACTION strategy in hand, they set sail on this journey, driven by
the unwavering belief that their efforts will not only retain
their customer base but also reaffirm their standing as a
leading force in the telecommunications industry.

This multi-faceted plan encompasses customer

understanding, competition analysis, pricing and service
plan adjustments, bundling strategies, value
enhancement, and long-term loyalty programs. It is
marked by effective communication, customer education,
and ongoing evaluation to ensure relevance and
effectiveness.

As they navigate through challenges and opportunities,

they do so with a clear vision of a brighter future, one
where they continue to set industry standards and
exceed customer expectations. Their readiness to seize
this future is a testament to their dedication to excellence
and customer satisfaction.

In sum, their plan of action is a testament to their

determination to not only retain customers but also to
redefine their role in the telecommunications arena,
ultimately paving the way for an even more promising
future.
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