Reference no: EM132221339
Case Assignment: Sprint Corp. and Verizon Communications Inc.
From 2002 through 2011, commercials featuring the tagline “Can you hear me now?” aired as part of Verizon’s most memorable ad campaign promoting themselves as the gold standard for network quality. Paul Marcarelli’s character, known as “Test Man,” would travel the country in the commercials, checking that the person on the phone could hear him, even in some unusual locations.
Fast forward to 2016, and Marcarelli is appearing in another commercial for a mobile carrier. This time for Sprint. “I used to ask if you ?can hear me now' with Verizon. Not anymore,” Marcarelli says in his first Sprint commercial. “I'm with Sprint now, because guess what? It's 2016 and every network is great. In fact, Sprint's reliability is now within 1% of Verizon, and Sprint saves you 50% over Verizon, AT&T and T-Mobile's rates.”
Sprint’s aim with the commercial is to rebuild their reputation. For years the brand has been known for slow data speeds, dropped calls, and spotty coverage. But after their disastrous merger with Nextel in 2005, Sprint has been working to turn around its network quality.
“We've invested billions of dollars in our network. Times have changed. You can barely tell the difference [between networks] now,” said Marcelo Claure, Sprint CEO. “We figured Paul would be the best person to tell everyone all networks are the same, but only Sprint can give you 50 percent off. He was pretty excited.”
Sprint had been targeting competition with price. The price ad campaign commercials showed customers destroying their bills with chainsaws and other equipment, claiming Sprint would “cut their bill in half.” But Sprint faced criticism from the Better Business Bureau for this campaign, claiming it was misleading because it didn’t take into account activation charges, taxes, and other fees. The 50 percent off campaign concluded with the start of the campaign featuring Marcarelli.
“Now we're emphasizing not just our price but also a great product,” Claure said.
Verizon did not sit quietly by as Sprint went after their customers. “Sprint is using our 2002 pitchman because their network is finally catching up to our 2002 network quality,” Verizon spokesman Jeffrey Nelson said, noting that Verizon is the “most awarded wireless network ever.”
Continuing to go after Sprint, Verizon then released a commercial featuring actor/singer/comedian Jamie Foxx saying, “It ain’t about if you can hear me now. It’s about if you can see me now.” Verizon followed up with another commercial starring Foxx, focusing on the network’s LTE coverage. Foxx stands in front of two maps comparing Verizon’s and Sprint’s LTE coverage, explaining that Verizon had three times the LTE coverage of Sprint. Then, “Jamie Foxx for Sprint” enters, saying that it is mostly the same coverage “if you squint.” (“Jamie Foxx for Sprint” is shorter and less muscular than the real Jamie Foxx, and he is wearing an ill-fitting suit with a less-polished appearance—another jab at Sprint.)
Claure responded to the new commercial on Twitter, posting, “This is how @verizon reacts to getting beaten by @sprint every single day. Lies, lies and more lies.”
Customers paying close attention will note that the commercials are not even speaking in the same terms. Sprint commercials speak to their reliability (whether your network is working when it is supposed to), whereas Verizon commercials focus on their LTE coverage across the country.
Verizon posted lower-than-expected second-quarter customer growth in 2016, while Sprint reported better-than-expected customer growth. But with mobile devices being a must-have for most Americans, the back and forth between mobile phone carriers is not likely to stop soon.
TRUE/FALSE
1. Sprint’s target market with the Marcarelli campaign was Verizon customers.
2. Mobile devices are not an important part of the component lifestyle.
3. By featuring a popular nonwhite American in their campaign, Verizon was able to both market to African Americans and maintain broad appeal.
4. Sprint’s prior marketing campaign highlighted the lower prices they offered over the competition. This was a smart approach as the country was exiting a bad recession.
5. If a consumer’s income increases, their standard of living is guaranteed to also increase.
MULTIPLE CHOICE
1. For Sprint or Verizon to succeed over the other, they must do all of the following EXCEPT:
a. understand current customers
b. promote unfavorable facts about the competition
c. identify the most value customers and understand their needs
d. understand how consumer decisions are made
2. Owning a mobile device with reliable services appeals to which American value?
a. self-sufficiency
b. upward mobility
c. work ethic
d. equality
e. All of these
f. None of these
3. The population demographics for mobile phone users include all of the following EXCEPT:
a. tweens
b. teens
c. millennials
d. generation X
e. baby boomers
f. All of these are demographics of mobile phone users.
4. Aside from targeting Verizon customers, Sprint could pursue __________, as they make up the largest group to use mobile devices for any type of transaction.
a. African Americans
b. Native Americans
c. Hispanic Americans
d. Asian Americans
5. If Verizon and Sprint decided to end the feud and merge into one company, they would be required to notify the government due to which law?
a. Hart-Scott-Rodino Act of 1976
b. Sherman Act of 1890
c. Federal Trade Commission Act of 1914
d. Celler-Kefauver Antimerger Act of 1950