Marketing Strategy for

Background
• Incorporated in 2004
• Joint Venture between the TATA Group and
STAR
• The SKY brand, owned by the UK-based British
Sky Broadcasting Group
• Tata Sky Ltd is the First Indian DTH provider to
be awarded the ISO 27001:2005 accreditation
 Marketing Objectives
• Volumes & Profits : Company wants to double its
customer base by 2012.
• Image: Projecting itself as an “Edutainment” service
rather than just an entertainment service provider.
• Average Revenue Per User (ARPU) : The company
intends to gain value market share and increase its
ARPU
• Regional and remote area: Capture new areas and
increase the reach
 The Product
• Packages are provided to suit the customer
needs
• Services provided by TATA Sky e.g. active
series
 Competitors
• Dish TV: Market leader amongst private players
• Sun Direct: Price warrior, Strong Brand equity in south.
• Airtel: Presence of a strong telcom infrastructure
• Big TV: Strong brand image and superior telcom infrastructure
• Videocon DTH: riding on its strength in television
manufacturing and distribution. Company wants to integrate
set top box with television.
• Doordarshan: National presence (90% reach), free service.
• Local cable operators: In market for close to 20 years and have
high market penetration
 SWOT ANALYSIS OF TATA SKY (1/2)

• Strengths
• Superior quality hardware and machinery used
• High picture and sound quality and superior customer service
provided
• Use the brand TATA for brand imaging
• Established player in the market helps for the visibility of the product
• Weakness
• High operating expenses
• Higher service charges and installation charges compared to cable T.V
or other DTH providers.
• Small distribution network limited to the urban; hassled by
distribution issues.
 SWOT ANALYSIS OF TATA SKY (2/2)
• Opportunities
• The share of the wallet of Indians have been increasingly moving towards education and
entertainment as a consolidated function which TATA SKY can very aptly fulfil.
• Higher disposable income with the Indian population.
• Rural market has huge potential.
• Growing demand for customised television viewership.
• HDTV services provide an opportunity with the Commonwealth Games and World Cup
around the corner.
• Threats
• Online live streaming – Offers superior services and at much lower costs (effectively almost
free).
• Established competitors like Dish TV who are majority market share holders.
• Traditional cable TV has improved services which eat into the consumer share of DTH.
• High dependence on individual channels foe fixation of price reduces their bargaining power
and making TATA SKY prone to frequent price changes due to arm twisting tactics.
• IPTV provides superior technology if implemented.
 Market Share
2%
8%

13% 32% Dish T.V

Sun Direct
Tata Sky
Big T.V
Airtel
21% D2H

24%
 Market Distribution of TATA Sky(%)

19% 12% Maharashtra

11%
Gujarat
4% Karnataka
Uttar Pradesh
4% Tamil Nadu
7% Punjab
Orissa
5% West Bengal
Kerala
5% 7% Andhra Pradesh
5% 6% Rajasthan
5% 5% 7% Assam
Madhya Pradesh
Others
 The present scene
Number of subscribers availing of DTH Services
Year WiseRevenues
2000
1800
1600
1400
1200 Revenues
1000
800
600
400
200
0
FY2008 FY2009 FY2010

Year Wise PAT

-440
-460
FY2008 FY2009 FY2010
-480
Profit after tax
-500
-520
-540
-560
-580
-600
Growth potential
Porter’s Five Forces Analysis (1/2)
• Threats of new entrants
– Proper distribution network: Distribution network takes time to mature so
an immediate threat from a new entrant is low.
– License and regulation issues: TRAI regulates the players of the DTH industry
and hence entry into the sector is highly monitored. Besides the pricing
Consumer Premise Equipment (CPE) like the set-top boxes and the
positioning of transponders is patented. Hence this too makes the threat
from new entrants low.
– Established players: The existence of established players in the market like
TATA SKY, Airtel Digital TV, etc creates high entry barriers for new entrants.
• Bargaining power of buyers:
– Presence of seven established brands in the market in the form of Airtel
Digital TV, Big TV, Dish TV, Sun Direct, etc provides the consumers with a lot
of options
Porter’s Five Forces Analysis (2/2)
• Bargaining power of suppliers:
– Three major types of supplies – CPE (Customer Premise Equipment) like set-
top boxes, transponders and content.
– The transponders are supplied by ISRO and the absence of proper regulation
in the pricing of bandwidths.
• Pressure from substitutes: The threat to the DTH sector is three-fold:
– I/P TV: They provide a lucrative option for the buyer as they come with free
set-top boxes and promise HD quality pictures. Besides they also have the
added advantage of offering Internet services along with the television
services.
– Traditional terrestrial cable TV: The market penetration of DTH players have
still been slow because people have been showing a lot of inertia while
involved with the switch. There is still a huge portion of the people who use
the traditional cable TV services.
 Environmental Factors
• Political
• Political opposition
• Content regulation
• Coalition governments
• Political connections
• Economic
• Impact of economic policies
• Higher disposable income
• Social
• Aspirations
• Vernacular Vs National channels
• Peer pressure
• Technological
• Bandwidth- restricted usage
• Advancements
 Company and Competitor Analysis

Picture Cost Tech./Features Connectivity Customer

Quality Effectiveness Care and
web service
Tata Sky 5 4 4.5 4 5
Reliance Big 5 4 4 3.5 4
TV
Airtel DTH 5 4.5 4.5 5 2.5
 Strategies
• Tata Sky is focused more on value added services
• Airtel and Reliance are banking on their
established infrastructure
• Videocon DTH is attracting its customers through
schemes such as an integrated TV and set top
box
• Sun Direct have played its cards on the regional
sentiments of the public
 Marketing Mix (1/2)
• Pricing
• Tata Sky is deemed to be expensive and Sun Direct to
be cheapest
• Promotion
• DTH providers have banked on the Bollywood
 Marketing Mix (2/2)
• Placing
• Sun Direct: concentrated on South India
• Rest have a pan-India presence
• Product
• Scope for product differentiation is not much
• Much depends on the value added feature and services
 Profits
• New field and it requires high capital
investment
• Gestation period is also high
• 5-6 years and about 6 million customers
before profits begin to show
• Focus is on how to retain customers
 Value chain
• Technology
• 1st one to launch the concept of recording live TV
• Lined up the launch of HD services
• Content provided
• Don’t have many variables to play with
• Delivery (customer service)
• All players are equally strong
 Segmentation
General descriptors:
• Demographic – age and income levels
• Geographic –urban vs. rural
• Lifestyle –hedonistic or utility
The customer relation with the product has also
been used as a variable:
• Benefit based segmentation – utility vs. price
• User status – new user vs. “trade-up”
• TV usage rate –heavy vs. intermittent
 Consumer Behavior
• The variables that determine the consumer
behavior:
• Customer Service
• Content choice
• Reception
• Technical support
• Price
 Targeting
The segments targeted are:
• DINK and the DIOK middle class families in order to
increase the ARPU (Average Revenue per User)
• First time users and the “trade-up” families
• Rural markets –increase consumers citing advantages of
satellites as compared to traditional cable television
services
• Working parents - “Edutainment” for the children at
home
 Positioning
• HD quality pictures and seamless control
• “Edutainment” package
• Live TV recording up to 45 hours
• Simultaneous viewership
• Ease of installation and usage
 Assumptions in Planning Process
• Market Potential
• India will become the largest DTH market in the world by
2012
• Rural TV market to increase by 3-4 million every year
• Forecast Assumptions
• Monthly ARPUs of DTH players will climb to Rs 220 by 2014
• Shift from pricing strategy towards value addition strategy
• Expansion in the foreign countries will be relaxed
• Addition of KU bands by the government
• VAS (value added services), HDTV (high definition television)
will provide a boost
 Proposed Strategy
• Core Strategy
• Product differentiation by means of value added
features
• Customer Targets
• Rural Markets
• Entering neighbouring countries
• Entering travel area market
• Tie up with hotels and restaurants
 Proposed Strategy
• Product/Service Features
• Common dish for a society.
• Interactive services for stock markets.
• Interactive video games including multi player games (with
console).
• Interactive Rural market services which will give regular updates
about prices of different commodities to farmers.
• Use of regional languages in the guide panel for diverse customers.
• Enhanced compatibility with digital equipments like laptops for
daily use.
• Extensive use of Radio reception as one of its services.
• Introduction of free channel for playing of on demand songs.
Value proposition