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Principles of Marketing

The Story Behind ABS-CBN’s Successful Marketing Strategy

Before it was shut down, ABS-CBN is a dominant player among the Philippine television networks. But it was not always this way. In fact, once upon a time, it started life as the least-watched television network in the country!

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Before it was shut down, ABS-CBN is a dominant player among the Philippine television networks. But it was not always this way. In fact, once upon a time, it started life as the least-watched television network in the country!

This is a brief account on how the least-popular television network transformed into a media powerhouse and how they used marketing strategy to get there.

In 1986, after the People Power. revolution, ABS-CBN was practically a reborn TV network having finally been freed from nearly 14 years of government control under Martial Law. Immediately, they put together a pool of local and international television shows and began broadcasting.

But by the end of 1986, ABS-CBN was the last placer among the five TV networks back then. It was a severe blow to the company’s pride and they vowed to turn the tables from then on. In fact, they wanted nothing less than to be the number one network in the country.

To better understand their circumstances back in 1986, it would help to understand the environment then. For one thing, cable TV was nearly unheard of. It would be years before the advent of VCDs, much less DVD players. There were no mobile phones and home computers were a rarity. Everybody went to the movies if they wanted a treat (and air conditioning). Home video was a. luxury that was only available to the upper-income earners (via videotape players). For much of the country, home entertainment options were limited to TV, radio, and reading materials.

It will also help to know who the key players were in the television industry. These were:

  • GMA-7. This television network was the acknowledged darling of the upper and middle class. It provided them with quality TV shows especially top-rated programs from Hollywood. By all intents and purposes, GMA-7 was the market leader for the middle- and upper-middle classes.
  • RPN-9. This television was the runner-up for the middle-class viewership. They also provided local and international programming that was similar to that of GMA-7.
  • PTV-4. The government network. People joke that nobody watches its public service programming and that it only gains viewers whenever there is a basketball game or a boxing match. It is because they have broadcast rights to the games of the Philippine Basketball Association and regularly bid for the rights to broadcast popular boxing matches.
  • IBC-13. The undisputed market leader. While GMA-7 dominated the upper-class viewership, IBC-13 dominated the mass market. It was the popular channel among the so-called “masa” thanks to its predominantly local TV shows that featured the most popular actors and actresses.

So ABS-CBN entered an industry that was essentially dominated by two networks: GMA-7 for the upper end and IBC-13 for the broad market. The problem was that ABS-CBN had no clear identity and no clear message to tell TV viewers that could answer the question of “Why should I watch you in the first place?” To get out of this rut, the network needed to formulate a marketing strategy.

The first step for them was to do a SWOT Analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is a way of cataloging the environment that will allow you to spot potential avenues for strategy formulation. ABS-CBN first drew up a list of their strengths, which included:

  • Nationwide reach
  • Huge financial resources, courtesy of its parent company

Of course, they would also draw up a list of their weaknesses, which included:

  • Lack of clear position or identity in the market
  • No loyal advertisers

The basic framework for any marketing strategy is summarized by the mnemonic of STP: Segment, Target, and Position. First, identify the available market segments. Next, select or target the most promising market segment among the available options. Finally, position your product to that best suit the needs of the targeted market.

Because ABS-CBN wanted nothing less than market leadership, they really had only two possible courses of action: compete directly with GMA-7 for the higher income class segments or compete directly with IBC-13 for the broad market. This was the segmentation phase.

A quick scan of the strengths and weaknesses of these two competitors revealed that:

  • GMA-7 was well managed and cash-rich, which means that any attempt to compete with them would be a long and arduous battle.
  • On the other hand, while IBC-13 was very popular with the viewing public, things were not so good behind the scenes: artists were unhappy because they were not being paid enough or even on time, a lot of complaints versus the management and the production quality, so the shows were pathetic.

Therefore, in terms of which network to target, it became clear that ABS-CBN would have a better chance if it competed directly with IBC-13. This was the targeting phase.

Finally, with a clear market segment to target, ABS-CBN addressed the key question: What does the broad market, the “masa,” want?

The answer came through market research which quickly revealed a key insight: the broad market watched IBC-13 simply because their favorite stars were all there. In fact, this market did not even care whether or not the TV shows were good or not, so long as their favorite stars were there. It was a star-oriented behavior. This led to the final peg in the marketing cycle, the position. ABS-CBN realized that they had to position themselves as the network of stars.

Now that the core marketing strategy was in place, it was time to plan the details and the tactics that would flesh it all out.

By matching their strengths with the opportunities that the competitor scan revealed, ABS-CBN soon came up with a strategy for competing against IBC-13:

  • Use its key strength, namely its huge financial resources, to lure the unhappy stars of IBC-13 toward its own camp with very attractive compensation packages.
  • Use its financial resources to build better quality programming.
  • Relaunch itself as “The Star Network,” the network that you go to in order to see your favorite stars.

The strategy worked. Through shrewd negotiations and promises that they would become stars in their own shows, ABS-CBN managed to practically siphon all of the most important TV stars of IBC-13. Soon, almost literally, there was nobody left in the once-popular network.

As the revamped channel rebuilt itself, it also took advantage of an opportunity that it had: the ability to ride on the success of its sister radio station, DZMM, which was a popular medium for getting news. By turning its popular radio newscasters into TV news personalities, they transformed TV news—which used to be a stodgy and droll affair among all the TV channels—into a popular infotainment medium. Viewers finally got to see what their favorite radio newscasters actually looked like. These newscasters too became TV stars in their own right.

In 1986, ABS-CBN finished the year in the last place. By 1987, they became the number two network in the country and by 1988, they became the number one TV network. From the last place to number one in just two short years. This was a truly amazing turnaround and it was made possible through the shrewd use of the principles of marketing.

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