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CASE STUDY: MARKETING THE ‘LOST’ TV DRAMA ABC’S Integrated Marketing Strategy MODULE TITLE: MARKETING MANAGEMENT AND STRATEGY WORD COUNT: 1999 1. EXECUTIVE SUMMARY The objective of this report is to critically analyse the case “Marketing the ‘Lost’ TV Drama Series” applying the relevant concepts of Marketing Management and Strategy. ABC has introduced the show in 2004 and since then legions of fans follow the adventures of the survivors of a plane crash in a deserted island.
The network seems to have covered all angles on an extensive and innovative marketing campaign that integrated several media and benchmarked this segment of the TV shows in the United States. Although challenging and barely attractive (Porter’s Five Forces), the TV show segment can be very rewarding to the successful companies daring enough to enter it. With an unique product, a fundamentally intelligent marketing campaign and the demonstrated knowledge of its customer’s behaviour, it is obvious that ABC’s success was not incidental.
They relied heavily in extensive market research in order to segment, target and position the show with unprecedented accuracy. However, an ethical question was raised. This sophisticated campaign, based to a large extent in viral marketing, was heavily criticised by analysts that accused ABC of blurring the line between reality and fiction. Nonetheless, this is the very competitive edge the company has built to differentiate itself from rivals. 2. INTRODUCTION Innovation, maximisation, creativity and risk are adjectives easily associated with the ABC integrated marketing campaign employed to launch the TV series “LOST” (LOST).
Innovative strategies, some borrowed from Hollywood and the film industry, marked the launching of the series in the US. The company maximised the exposure of the show to the target market by using new and creative ways of delivering their product. Additionally, the network accepted a very high level of risk when it took the decision to conduct such a sophisticated (and successful) marketing campaign. However, pioneering usually entails criticism, and some analysts consider that ABC was responsible for hazing the border between show business and the real world.
Nevertheless, that is the company’s biggest achievement: to mingle reality with marketing feats to make the series fans involved all year long. This report will cover some of the strategies used to market LOST and discuss the impact of the innovative actions that culminated in the benchmarking of this segment of the television in the US. Analyses of External and Internal Environments and a Marketing Mix design were used in order to describe and criticise the main features of the company’s marketing campaign.
Such a care and focus on the customer denotes a Market Concept approach driven by and refined for the end-customer rather than an Industry Concept one. 3. DISCUSSION 3. 1 EXTERNAL ENVIRONMENT According to Porter’s Five Forces theory (Kotler and Kelly 2006), the TV shows segment is unattractive for the following reasons: a. Threat of intense rivalry among competitors: This segment has large, strong and aggressive competitors (TV Networks) with fair access to financing. b. Threat of new entrants: Both entry and exit barriers are very high. This is a high investment segment to entry.
Reputation plays a significant role when considering dropping a show. Thus, considering the new entrants’ aspect this is a relatively attractive market to enter. c. Threat of substitute products: There are plenty of substitutes for this TV show. Seasonality can reduce LOST’s awareness and almost every form of entertainment can be a substitute for watching television. d. Threat of buyer’s growing bargaining power: The viewers of LOST have an overwhelming degree of power. They can choose which show to watch, when to watch it, in their preferred media.
They can even opt for seeing the commercials or not. e. Threat of suppliers: Until recently few would consider this to be an issue. However, the Hollywood writers strike shows how dependant this segment can be from its suppliers. Casting and extras can be a problem. Additionally, costs of locations in Hawaii are probably high. Figure 1 depicts Porter’s Five Forces diagram applied to ABC Network and the ‘LOST’ TV show. Figure 1: Porter’s Five Forces applied to ABC’s ‘LOST’ TV drama. If the TV show segment is unattractive why is the availability of new TV shows growing?
Part of the answer to this question resides in how ABC carried out its strategy to launch LOST. The trend initiated with LOST paved the way to other networks and became the benchmark for other TV shows’ campaigns. The segment’s significant growth during the last decade is becoming to be perceived by analysts as a threat to the Hollywood industry (Table 1). 3. 2 INTERNAL ENVIRONMENT 3. 2. 1 MARKETING MIX Product LOST is an unique product. Its storyline was designed to create speculation among fans and bring more awareness to the show. ABC developed a new product to enter an existing market.
This is one of the strategies for intensive growth, according to Ansoff. Therefore, a horizontal strategy was established and one can assume that the company can benefit from marketing synergies, i. e. co-operating marketing teams to run similar TV shows within the same company. Although limited, there is a considerable level of risk to launch a new product following this model. Moreover, ABC made sure this was not an ordinary product launch by investing heavily in a pre-launch campaign that included a myriad of innovative actions. Therefore, the risk involved was extraordinary.
Although targeted to a specific but broad audience, LOST is a mass market product with a differentiation strategy (Porter’s generic strategies). Product Life Cycle Launching campaigns of this magnitude (to be discussed under The Promotion) are typically employed during the introductory stage of a product, when the company’s marketing objectives, sales promotion and advertising are focused on generating brand awareness and inducing trial. According to Rogers, innovators are the potential costumers. Currently in the third season LOST is most likely to be in the growing stage of the PLC (Kotler and Keller 2006).
Accordingly, ABC has licensed product extensions such as games, memorabilia, clothing, etc (www. everythinglost. co. uk). As usually expected to the growth stage, the number of competitors adopting the same strategy outlines is increasing. The TV show Heroes (NBC Network) applies similar tactics. Primatech is a fictitious company that is central to the show’s storyline (www. primatech. com). However, some characteristics of a mature product are also present, e. g. high profit market and line diversification, such as mobisodes and online games. BCG Matrix
LOST has high audience levels and therefore it is reasonable to assume a high market share associated. Moreover, this is a high growth market. Thus, LOST is a “STAR” product. Consequently, a correlation between the PLC and the BCG matrix can be drawn. Price There are two main price aspects associated with a TV show: (1) The price the episodes are offered to viewers (if applicable) and (2) the price the network charges advertisers for insertions during the TV show or internet transmissions. Obviously, in the open channels the show is free of charge for viewers.
However, the full episodes can be bought through iTunes as early as 12 hours after it has been aired on TV. The price is USD1. 99. This price is coherent to the PLC phase in which the show is situated and is therefore a market penetration price strategy, with low initial prices to gain market share. These episodes have a secondary set of commercials. Thus, the network can earn extra revenue from different advertisers. Due to its high audience companies accept to pay a high price to advertise during the show on TV. The fact that this is an unique product helped ABC to sell the rights of transmission to over 200 territories very rapidly.
Licensing of merchandising and DVD sales also amounts to considerable revenues. Place Several distribution channels were utilised by ABC to market the show and maximise its exposure to the target market. Obviously, as a TV show the main marketplace was the primetime TV. In addition, ABC stimulated the spreading of a ‘LOST sub-culture’ using the internet as an effective medium. The internet is possibly the closest channel to part of the show’s target market. Therefore, official and unofficial sites were created in order to draw attention to the show. Some of these web sites belong to fictitious ompanies, helping to build a conspiracy climate around the show. Podcasts are also within close reach to the target audience. As depicted in the SWOT analysis (Table 1), more than 200 territories acquired the licenses to broadcast the show. Promotion The marketing integration campaign for LOST has only seen similarities with a few Hollywood blockbusters. Probably due to its technological inspiration, The Matrix Trilogy (Warner Brothers 1999) pioneered in extending its franchise into other media, which included games, animations and the internet. The introductory period was characterised by heavy investment in advertising.
The integrated campaign included the placement of empty bottles in beaches with messages referring to the show, the creation of official and unofficial web sites preparing the market for the up-coming launch. Moreover, they ran a market test where 3000 potential target viewers were invited to the premiere during a popular comics convention. This was the first step into a viral marketing campaign. Viral marketing campaigns rely on existing social networks to augment brand awareness during the promotion of a product. The use of the internet is a key factor to this technique.
Some of the organisations pictured on the show were recreated in the real world, such as Oceanic Airlines and The Hanso Foundation. They counted with websites, notes on newspapers and even acknowledgments on the credits of the blockbuster Mission Impossible 3, that has among its viewers a considerable portion of LOST’s audience. Such actions helped building awareness to the show. ABC used efficiently the internet in its campaign. The online game had great impact and, in order to play online, fans had to harvest clues in several different media, including the show itself, the commercials, internet sites, text messages, etc.
The strategy stimulated fans to be engaged with the show even during its summer break and guaranteed the continuous support from advertisers. Then an advertising innovative breakthrough took place when the commercial breaks begun to introduce clues to the mysteries of LOST’s storyline. This is a sensible advance considering that viewers now have total liberty to fast forward the commercials. In simple words, the only way to keep viewers tuned to the commercials is by making them interesting. Therefore, ABC retained the interest of the show’s advertisers and guaranteed its advertising revenues while building even more epth to the show. Insertions during the show also generated extra cash, e. g. the Bad Twin book that became an instantaneous best-seller. Strengths Weaknesses ABC’s knowledge of the market Strong promotional budget ABC in sync with technological advances Unique storylineSeasonal show Specific segment of the audience Expirable storyline OpportunitiesThreats Brand product extension Licensing to other territories worldwide High number of advertisers Alternative media developmentHollywood industry New shows from competition Criticism (fiction x reality) DVRs Table 1: SWOT Analysis 4. CONCLUSIONS
The marketing mix for the show is so stringent and the levels of innovation and marketing expenditure are so high that these factors by themselves constitute a barrier to the entry of new players. The day to day products used on the island where LOST takes place (foods and drinks) are from a single brand, Dharma Corporation, which is related to the show’s storyline. ABC could stimulate merchandising by making insertions of real products. The drawback to be considered is the loss of authenticity of the storyline. The case study mentions that the internet sales of the episodes 12 hours after the first run do not impact the audience level.
It is very difficult to fathom the real extent of this information considering that the target audience is so intimately related to the internet. The fact that this modality still carries commercials balances an eventual migration of audience from one medium to another. Viral marketing campaigns are regarded sometimes as non-elegant marketing techniques, especially when stealth marketing techniques are associated. These techniques rely on the fact that the consumers do not realize they are being marketed to. There is a chance that the customer, feeling deceived, repel the product and consequently the strategy can backfire.
There is but a thin line between ethical marketing and competitive advantage. ABC may have crossed that line a few times during the launch of its new concept of marketing. However, the only consequence so far is the accomplishment of one of the most successful marketing campaigns ever. REFERENCES 1. ICMR (2007). Marketing the ‘LOST’ TV Drama. ECCH 2. Armstrong, G and Kotler, P (2005). Marketing: An Introduction. 7th Ed. New Jersey: Pearson Prentice Hall 3. Kotler, P. and Keller, K. , (2006). Marketing Management. 12th Ed. New Jersey: Pearson Prentice Hall 4. www. everythinglost. co. uk (2007) accessed in 09DEC2007.