1. + Wireless Telecommunications Providers Meghan Brown, Kathryn Buchan, Nicole Grover, Elizabeth Reamer

2. + Table of Contents Industry Structure Industry Background Barriers to Entry Advertising Strategies Primary Advertising Strategies Top 3 Company Profiles Data Analysis Advertising Intensity Analyzing Advertising Patterns Prisoners Dilemma Case Study Analysis and Recommendations

3. + Industry Evolution Motorola brick phone sold for $3,995 in 1983

4. + By the end of 2012 the number of mobile connected devices will exceed the number of people on earth

5. + Industry Products Total Industry Revenue (2011): $195.8Billion

6. + Industry Competition ~1600 companies Highly Concentrated HHI = 2714 CR4 = 94.7%

7. + Table of Contents Industry Structure Industry Background Barriers to Entry Advertising Strategies Primary Advertising Strategies Top 3 Company Profiles Data Analysis Advertising Intensity Analyzing Advertising Patterns Prisoners Dilemma Case Study Analysis and Recommendations

8. + Barriers to Entry High and Increasing High cost of Spectrum Licenses High cost of network infrastructure Market nearing saturation 96% of US population currently subscribes to cell phone services

9. + How do these issues affect current players?

10. + Firms have attempted to lower the cost of spectrum licenses and infrastructure through consolidation In 2011, AT&T made an attempt to acquire T- Mobile FCC ruled NO. Consolidation in the industry has reached its limit http://hothardware.com/newsimages/Item16626/Wireless_Carriers.jpg

11. + Firms are seeking new ways to limit costs employment outsourcing

12. + Customer churn Churn rate- # of customers an industry player loses over a given period of time Most user surveys rate quality issues as primary reason for changing carriers Most firms have an average monthly churn rate of 1.5%- 3.5% This indicates high level of competition in industry

13. + Open Access Requirements Any Phone, Any Service Decrease Provider Differentiation Decrease Subscriber Loyalty Increase Subscriber Churn http://rmc.library.cornell.edu/ezra/imag es/ezra2_w.gif

14. + Increasing Consumer churn?

15. + Table of Contents Industry Structure Industry Background Barriers to Entry Advertising Strategies Primary Advertising Strategies Top 3 Company Profiles Data Analysis Advertising Intensity Analyzing Advertising Patterns Prisoners Dilemma Case Study Analysis and Recommendations

16. + Combative Advertising Shift consumer preferences, but not expand category demand, in a mature market Product differentiation creates inelastic demand Could just be undercutting profits

17. + Combative Advertising Comparative advertising – a form of combative advertising

18. + Combative Advertising Prisoners Dilemma is a possible outcome Optimal strategy = no one advertises Dominant strategy = advertise

19. + Informative Advertising Differentiate providers on the basis of: The variety of phones that are compatible with the service The speed and range of the networks Data storage capabilities Payment plans

20. + Informative Advertising Reducing consumer search cost may have pro- competitive consequences In wireless telephone service provider industry: Very concentrated Mature market Informative advertising instead leads to advertising war

21. + Informative Advertising Expanding primary demand? Signaling high quality rather than increasing competition Only efficient, high quality firms can afford expensive ad campaigns

22. + Table of Contents Industry Structure Industry Background Barriers to Entry Advertising Strategies Primary Advertising Strategies Top 3 Company Profiles Data Analysis Advertising Intensity Analyzing Advertising Patterns Prisoners Dilemma Case Study Analysis and Recommendations

23. + #1 wireless phone operator in terms of sales and subscribers informative advertising showcase the capabilities of network and devices Its not just about putting a device and a price in the advertising.

24. + Rethink Possible Its What You Do With What We Do ads showcase how mobility helps power human ingenuity in creative and entertaining ways Lumia 900 released April 8 At all levels, this is a notch above anything we've ever done first Spanish language commercial aired on April 9th

25. + Brand Names: Sprint PCS, Clear, Boost, Virgin Mobile All. Together. Now. offers unlimited data usage for smartphone users

26. + Table of Contents Industry Structure Industry Background Barriers to Entry Advertising Strategies Primary Advertising Strategies Top 3 Company Profiles Data Analysis Advertising Intensity Analyzing Advertising Patterns Prisoners Dilemma Case Study Analysis and Recommendations

27. + High Advertising Spending 1. Procter & Gamble 2. AT&T 3. General Motors 4. Verizon Communications 5. Comcast High market concentration high advertising elasticity Advertising as barrier to entry Prisoners Dilemma? Top 5 Advertisers in 2011

28. + Ad-to-Sales Ratio Depends on the type of product, advertising elasticity of demand, and the price elasticity of demand: Industry ad-to-sales ratio is moderately high differentiated products, a low price sensitivity of consumers, and/or a high advertising sensitivity Mergent Online, 2011 Company NameTotal Revenue (Million $) - 2011 Advertising (Million $) – 2011 Ad to Sales Ratio (%) - 2011 Verizon Communications 110,8752,5232.3 AT&T Inc.126,7232,3591.9 Sprint Nextel Corp.33,6791,4004.2 Industry Average39,1111,1352.9

29. + Ad-to-Sales Ratio Industry NameAd/Sales Ratio % 2011 Wireless Providers 2.9 Grocery Stores0.8 Beverages5.1 Commercial Banks 0.4 Hotels1 Motocyclces1.6 Fairly high ad/sales ratio for wireless telephone service providers compared to other industries http://www.seattletimescompany.com/advertise/a dtosales.htm

30. + Number of TV Ads Aired Sprint Nextels ad/sales ratio is the largest, yet comparatively small number of ads Incredibly concentrated industry 2011 Data from Prof. Liaukonyte

31. + Table of Contents Industry Structure Industry Background Barriers to Entry Advertising Strategies Primary Advertising Strategies Top 3 Company Profiles Data Analysis Advertising Intensity Analyzing Advertising Patterns Prisoners Dilemma Case Study Analysis and Recommendations

32. + Analyzing Advertising Patterns – Day Part AT&T 1. Prime 2. Late Fringe 3. Afternoon Daytime 2 Sprint 1. Prime 2. Overnight 3. Late Fringe Verizon 1. Prime 2. Overnight 3. Late Fringe The day part in which you choose to advertise corresponds with how many people see your advertisement which is related to how much you will pay for that time slot.

33. + Why does Day Part Matter? Three Reasons 1. Competitive Industry 2. Similar Services 3. Similar Target Market

34. + Analyzing Advertising Patterns – TV Programs AT&T 1. Slice of Life 2. Feature Film 3. Situation Comedy

35. + Analyzing Advertising Patterns – TV Programs Sprint 1. Slice of Life 2. Feature Film 3. Sportscast

36. + Analyzing Advertising Patterns – TV Programs Verizon: 1. Slice of Life 2. Feature Film 3. Sportscast

37. + Why does Program Type Matter? Consider the conditions that allow for combative advertising. We see that the only way to differentiate from competition is to advertise. Prisoners Dilemma ensues.

38. + Table of Contents Industry Structure Industry Background Barriers to Entry Advertising Strategies Primary Advertising Strategies Top 3 Company Profiles Data Analysis Advertising Intensity Analyzing Advertising Patterns Prisoners Dilemma Case Study Analysis and Recommendations

39. + Prisoners Dilemma Case Study: Sprint is attempting to engage AT&T and Verizon in prisoners dilemma advertising. Why? Beneficial if you can get others to play. Truly Unlimited campaign.

40. + Advertising Patterns 2011

41. + Will it Work? Maybe, but combative advertising making false claims is heavily monitored by the NAD. Is Sprints Truly Unlimited Ad enough to get you to switch wireless providers?

42. + NAD as a Deterrent to Prisoners Dilemma Since 2008 there have been 9 cases brought before the NAD that involve AT&T, Sprint and Verizon. 3 of which were Verizon challenging Sprint over its claim as Americas most dependable 3G Network.

43. + Table of Contents Industry Structure Industry Background Barriers to Entry Advertising Strategies Primary Advertising Strategies Top 3 Company Profiles Data Analysis Advertising Intensity Analyzing Advertising Patterns Prisoners Dilemma Case Study Analysis and Recommendations

44. + Analyst Recommendations – Verizon (VZ)

45. + Current Analyst Recommendations (VZ) Verizon (VZ) holds the #1 market share (36.5% of wireless market). Current stock price as of April 16, 2012 is $37.30. Overweight = Buy Investors believe Verizon will outperform other stocks. Feasible since they hold #1 market share over AT&T by about 4%.

46. + Analyst Recommendation: Investment Opportunities Mobile advertising cellphone is the third screen Spectrum chasers Clearwire LightSquared

47. + Firm Recommendations 1. Shift spending from advertising to customer retention. a. Customer loyalty programs b. Customer service 2. Invest in wireless infrastructure.

48. + Any Question? Thank you!