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Ami Kothari firstname.lastname@example.org +91-9820672221 Palak Sood Swathi Velisetty
PalakSood09@jbims.edu email@example.com +91-98925 97890 +91-98205 62709
Jamnalal Bajaj Institute of Management Studies
Environment Analysis - Porter’s 5 forces Bargaining Power of Supplier - High DTH relies on three major suppliers: Customer Premise Equipment – Satellite dish, Set top box and Access card, Ku Band Transponder and content. Bargaining power of DTH operator with CPE supplier has increased due to supply. Transponder is provided by Astrix, ISRO hence dependency exists and due to no regulations in channel pricing, DTH operators are at mercy of Broadcasters. Bargaining Power of Buyer-High Consumer has the power to choose in this industry with variety. Unless players can differentiate against each other, the market shall remain mostly homogeneous. Customers will have high bargaining power and will be influenced by costs versus services. Threat of Substitutes- Medium DTH faces major competition from Terrestrial, Cable & IPTV.
Doordarshan is world’s largest Terrestrial broadcaster with over 1400 transmitters and covering 88% of India geographical area. They offer Digital service in collaboration with BBC resources. This wide reach and low cost approach are offset by its lack of attractive content. Cable TV operates in 2 modes: CAS<Metros>which requires separate set top box and Non Addressable system. The cost varies from Rs. 100 – Rs. 350 to customers depending upon location. Due to its phenomenal reach, there is bound to be a resistance from Local Cable operators.
DD offers free service but has a very small bouquet of channels. Getting a license is relatively low but issues related to pricing of CPE and getting required transponders.Medium With 7 players established in the market inter firm rivalry is intense. Competitive Rivalry. Even with strict regulations (not yet enforced) it is a considerable threat due to its new level of interactivity. Threat of New Entrants. MTNL & BSNL plan to tap this line. There are also regional discrepancies. Dish TV got first movers advantage and has a highest market share in the market. The new players have very big brand names and have started with extensive publicity. 2 .Low With 7 players in the DTH space.IPTV is service where television signals are digitally sent over Telecommunications line. There is also competition with respect to acquiring content. threat of new entrants is relatively low due to enough competition. Also first mover advantage exists in this industry.
Currently Does not offer free Set Top Box like Dish TV 4. Growing demand for quality of service in the form of DTH over Cable 8. Larger disposable incomes with India 2. CAS being made Compulsory would encourage switch.Current Situation . Rural penetration through ITC E-Choupal and Godrej Aadhar 7. Litigation due to issues related to sports channels which it lost 5.SWOT Analysis Strengths 1. Interactive advertising – Tie up of with Samsung 5. Innovative Product offering Tata Sky Plus Weaknesses 1. Tapping niche markets with Better service and Product offering 3. Increase in the geographical boundaries with Rural Market untapped 7. 3 . Superior Picture quality 4. Leveraging on brand TATA and High brand recall 2. Cannot match free service like DD 3. Expansion of distribution network through exclusive stores 4. Customer service 6. Second Mover after Dish TV who captured Market Share 2. Dependency on broadcaster and had issues with Sun TV Opportunities 1. Interactive channels and program guides 8. Increase in number of TVs sold 6. Leads in introducing new packages & Services 5. Technological expertise with Newscorp’s DTH arm Sky 3.
Dependency on CPE suppliers to some extent 5. No Exclusivity in Content and Rule of ‘Must Carry’ 9. 8. Interoperability Regulations 11. Dependency on broadcasters for their channel content and thus increase in cost 7. IPTV provides superior technology if implemented 2. Threats 1. High dependence for transponders on ISRO 6. Cap on Investment (20%) 10. Value Added Services are gaining steam. Cap on foreign Investment (49%) 4 . Increasing Competition internally 4. Videocon may enter DTH by building its own set top boxes.9. Cable Set top Boxes provide easy switching due to negligible switching costs 3.
Product Matrix TATA Sky’s target customers include various strata of the society. Current situation: • • • • • • • Tata Sky crossed the two million connections mark in a period of 20 months. The marketing budget that TATA Sky begun with was 15% of sales. TATA Sky has a tie up with ITC International Business Division. With this in mind. including advertisements in TV. we have tried to suggest various strategies based on what will suit demands in the Indian market and its consumer behaviour to increase TATA Sky market share. 7% discounts and promotions and 1% sponsorships.Pay per View service for exclusive events. Adding to it. But these initiatives presents challenges. Target: Tata Sky hopes to have about eight million connections by 2012. sporadic nature of demand. thus retaining its position as the fastest growing direct-to-home service provider across the globe. Tata Sky has adopted a 360 degree marketing campaign approach that encapsulates television. which TATA Sky is currently facing squeezed by rising costs. To improve its performance in the competitive DTH market. Tata Sky plans tie-ups with Sony Pictures. Also for its distribution. TATA Sky should try to be rapid-paced and highly competitive. This included around 5% for advertisements. TATA Sky management should assess its brand positioning among its target segment by establishing a distinctive image for the company compared to competing companies. print and radio. tie ups with ITC E-Choupal and Godrej Aadhar give it wider rural reach. print. and higher interest rates are not welcome signs for it. with different service packages available to each one. Fox for content.Strategy .com has joined hands with TATA Sky to provide content for Active Learning. Aamir Khan would feature in all TATA Sky brand and product communication. outdoor and radio along with on-ground activities and marketing on the digital platform. To counter these challenges and still be profitable. Currently TATA Sky has roped in Aamir Khan as its brand ambassador. 5 . and relentless downward pricing pressure due to competition. Further. slackening of demand. The 24X7 guru.
Latest the Tata Sky Plus with Personal Video Recording technology has been launched. A set top box and network access card per television. Customer Services: Tata sky offers an excellent website and dedicated customer line. This may be an irritant for existing customers. 6 . based on consumers preferences: Program Choices New Technology 50 40 30 20 10 0 1 2 3 4 5 6 Reception Technical Support Price Customer Services Factors Affecting Consumer buying Behaviours: 1. But their Customer service lines are always busy and the waiting period is usually very long. DTH operator Tata Sky is introducing a new Rs 99 package — Super Hit Pack 2. They have the concept of registered mobile number providing easy communication. Later variant like Community dish for entire building were launched.Product Tata Sky launches itself as a DTH services requiring a Dish.24 x 7 help. Support in 11 languages Considering a survey result. In search of newer audiences in smaller towns. Price: Tata Sky has offered competitive pricing but has been on the higher end and its due to promotional campaigns it has added in incentives leading to increase in customer base. Various services provided by TATA Sky include: Active Services Active Cooking Active Stories Active Newsroom Active Darshan Active WizKids Active Sports Active Learning Active Games Active Astrology Parental Control Search and Scan Banner Guide (including Hindi Display) Customer Service.
Further to enhance the product. Interactive Video Games (with consol) 7. Tata Sky as a product has evolved from the time to inception. Program Choices: After litigations. They should ensure extensive program choices to induce switching from Cable to DTH 5. But during monsoons and Cloudy days they are affected. Voice over in Multiple Languages (Currently limited availability in for some programs) 6. 8.3. Common Dish per house for Multiple Television sets 2. Combined Product with Television . new services and technologies can be imbibed like: 1. especially and Niche Segment Targeting if Combined with LCDs 3. Special channels for Songs Request like Jukebox could be launched 10.Rural Areas . Guide can be displayed in Multiple Regional Languages 5. Tata sky is able to offer huge bouquet of channels but it is still less compared to the Cable TV. This technical problem should be sorted. New Technology: Tata sky Plus is an initiative in this direction. Inclusion of Radio Reception. 6. Reception: The reception is usually excellent in comparison to existing cable TV. Hollywood and Regional Channels 9. Development of Visual Radio service. If a 24 hrs limit can be provided for all complaints and work on ‘holidays’ when people are generally home could be sold as a USP. 4. The rate of signal distortion is more for Community dishes in comparison to Individual dishes. Stock Market related interactive service on Active 7 . Technical Support: Technical support system of Tata sky is well establishes. Various services under Active are part of this Technology game. Being a interactive and dynamic offering would increase its appeal. Variety in Movie Listing with Bollywood. Connectivity with other digital Monitors like Laptops for Commercial Usage 4.
Regional Disparity: Provide free regional packs in local areas to ensure switch from Cable TV to DTH service. 3. Payment Options: Allow multiple points of payment. which may lead to a short term loss but a medium term break even and profit: 1. Continue with current strategy of providing 2 months free on payment of 10 months services.e. 6. i. thus inducing update to next level. Pre Paid cards from Retail shops to be activated using Telephone (Implemeneted) and Drop Boxes at Societies. Lock in of 1 year: Ensure long term lock ins by providing incentives for pre payment of long term charges. 2.Price Competition has increased may fold with completion providing freebies and slashing prices. Multiple Connections: Provide discounts for consumers buying second Tata Sky Connection (up to 50% off) 4.e. provide free south Jumbo pack for customers in all Southern States. ensuring timely payment and convenience to the customer – Credit Card through Website (implemented). The following price related strategies could be adopted. Postpaid: Some clients depending upon few background check criteria can be given Billing service i. Encourage References: Provide discounts on Monthly charges if reference from existing consumer becomes a new customer. Set top Boxes can be given free while ensuring lock in by providing base pack free for limited time duration. Community Dish: Provide Incentives in the form of Free Months charges for first 3-6 months and reduce the Installation charges per flat. 7. Free Set Top: Following the line of Dish TV. 8. Payment at end of Month 8 . 5.
there is a lot of scope of increase in the number of customers across all the states.4 5.6 4.8 100 Clearly.0 3. Looking at the current distribution system that Tata Sky has adopted: 9 .1 10.9 6.6 4.8 18.5 4.7 4.5 7.3 4.Place State Maharashtra Gujrat Karnataka Uttar Pradesh Tamil Nadu Punjab Orissa West Bengal Kerala Andhra Pradesh Rajasthan Assam Madhya Pradesh Others Total Share (%) 12.2 6.6 6.
Educational Package d. These Mini – Theatres can be the Point of Sales for Tata Sky 10 . Appointing the village head as Distributor and the promoter as the villagers tend to listen to village head e. 119 million (60% of total house holds) TV households c. c. f. Customizing offering b. Attractive options be given to them to become distributors Another focus could be the rural market. All distributors be given a status of Tata Sky employees c. movies etc. 50 million are having Cable d. A snapshot of the rural market: a. Only 2-3 % of rural household have access to Cable g. Growing focus towards more satellite channels Strategies for the rural sector can be: a. Combination of various national channels with regional channels c.Including the local cable operators as distributors would be an extremely useful way of reaching out to the target market: a. Events like Cricket matches. Rural TV households growing by 3-4 million each year. 55 million TV sets in rural area e. This can be supplemented by giving the connection to village head free for initial period Another avenue that can be explored is Mini – Theatres (Class B towns) a. Staff of cable operators be made the distributors for Tata Sky (familiarity with people) b. Setting up Mini – Theatres in rural sector to promote the Product b. 199 million total household in India b.
etc. 'Ek-pe-Teen and Do-pe-Paanch' the offer entails three months of free subscription on the purchase of one connection. 11. Give the option of instalments and other promotional schemes to the new users 4. In the past. 10. Another new avenue that can be explored is the railway stations: a. Local Games Sponsorships can also be used to increase the awareness levels 7. Use of Internet. Door to door marketing should be used to heighten the awareness levels as well 6. Another way could be using the prominent part of the Building for placing Hoardings of Tata Sky Ads a. Tickers at Major suburban Railway stations 9. Tie up with real estate developers to target the new constructions a. 11 . Finding the strategic building in the locality b. Packages for Special Events like the cricket World Cup 2. the DTH operator has been test-piloting feature by running several contests around programmes and the interactive features were made available to its customers. and five months of free subscription on purchase of two or more connections. Targeting Tata employees could be a useful way pr promoting the product 3. Posters on railway station roofs b. etc. Consideration can be in form of cash payment to the Housing society c. benefits of DTH over cable TV.Promotion The promotional strategies suggested are: 1. Tata Sky launched an interactive game quiz featured around MS Dhoni to coincide with the Twenty20 World Cup. The number of old buildings being demolished and being reconstructed are also on the rise. This could be a major target for promotions 5. Providing free connections to Households in these buildings 8. ibibo.Applications which involve sharing of videos on how one consumes TV. across social networking sites like Orkut.
5. Interactive Services 4. Enter Commercial Space – Offices .Conclusion . Niche Car Segment Product Development The product can be further developed with evolving time: 1. Long Distance Buses –e. Tie up with Raj Travels b. etc. Coffee Shops. Combined with TV 2. Rural Markets 2.g. 3. Enter Travel Area a. Tata Sky Plus is already a step in that direction 4. Target at educational needs in Rural areas where it could be used. Proving Competitively Priced Services 2. Innovative and Superior Technology 3.Ansoff’s Matrix Market Penetration Tata Sky can penetrate the market by: 1. Entering Neighbouring Countries (provided license available) a. Customer Support Market Development Tata Sky can enter new markets by entering: 1. Stock Market Ticker and analysis can be included in Active 12 . Combined Dish for multiple Television (Society or Each Flat) 3.
20 billion through a mix of debt and equity Break-even expected by FY2010-11 13 .18 billion Funding over the next 4 years – Rs. from negative EBITDA margins in FY2007 of Rs. 0.19 billion in FY2007 to Rs 3.Financial Impact Assumptions: • • • • ARPU increases from Rs 190 to Rs 470 in 2010-11 Revenues increases @ CAGR of 112% till 2010-11 Expenditure reduces from 180% to 75% till 2010-11 Debt : Equity reduces from 2:1 to 1:2 till 2010-11 TATA SKY FY 2007 Revenues Expenditure Operating Income EBITDA Margin Depreciation Finance Expenses (12%) PBT Less: Provision for tax Profit after tax Total Assets Debt Equity 190 365 -175 -92% 100 80 -355 0 -355 1000 667 333 (Rs Million) FY 2008 403 666 -263 -65% 133 106 -502 0 -502 1330 887 443 FY 2009 854 1183 -329 -39% 177 85 -591 0 -591 1769 708 1061 FY 2010 1810 2023 -213 -12% 235 94 -542 0 -542 2353 784 1568 FY 2011 3838 2878 959 25% 300 120 539 182 358 3000 1000 2000 Impact • • • • • Subscriber base expected to increase 1 million each year to reach 8.0 million by 2011 DTH business is expected to grow from Rs 0.84 billion in 2011 Likely to achieve EBITDA margins of 25% by 2011.
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