A PROJECT REPORT ON A Study on Marketing Plan of TATA SKY for 2012-13 Submitted in partial fulfillment of the requirement for the award of degree of Masters of Management Studies (MMS) under Mumbai University Submitted by AMOL P. KHADKE ROLL NO: 20 BATCH: 2010-2012 Under the guidance of PROF. Dr. D.Y. PATIL Bharati Vidyapeeth Institute of Management Studies & Research Sector 8, CBD-Belapur, Navi Mumbai –400614 1
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A
PROJECT REPORT
ON
A Study on Marketing Plan of TATA SKY for 2012-13
Submitted in partial fulfillment of the requirement for the award of degree of Masters of Management Studies (MMS) under Mumbai University
Submitted by
AMOL P. KHADKE
ROLL NO: 20
BATCH: 2010-2012
Under the guidance of
PROF. Dr. D.Y. PATIL
Bharati Vidyapeeth Institute of Management Studies & Research
Sector 8, CBD-Belapur, Navi Mumbai –400614
1
ACKNOWLEDGEMENT
I express my deepest and most sincere thanks to my project guide, Dr. D.Y. Patil for
providing me with all the facilities that have made working on my projects much easier than
what it would have been otherwise.
I would also like to express sincere thanks to Dr. D.Y. Patil, Director, Bharati Vidyapeeth’s
Institute of Management Studies & Research (BVIMSR) for extending his support
throughout our project work.
I am thankful to all the respondents who spend their valuable time, by providing us with the
required information, and I appreciate the respondents for putting forth their suggestions
which helped us to gain more insight for this project.
2
EXECUTIVE SUMMARY
This project i.e. “Marketing Plan - TATA SKY (2012-13)” is purely focused on all the
marketing activities for the financial year. Nowadays, more and more companies are coming
up with their new DTH services to entertain the people in their life so there is cut throat
competition in this industry.
The introduction of the DTH market includes some vital detail about the growth, trends and
needs of DTH Service. Soon after the beginning of the DTH service, in the opening only DD
direct plus and Dish TV was successively doing their business but at the moment TATA SKY
is also second-hand as DTH services.
The objective of the project report is to prepare marketing plan for a year forecasting future
growth of the DTH industry and also finding marketing strategies to meet the financial
objective.
We studied DTH industry growth and marketing strategies used by DHT service providers in
previous years. We have collected secondary data which have analysed; tabulated which is
then utilized in making strategies.
Analysis and findings includes tables and graphs which were followed by meaningful
interpretation.
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CERTIFICATE OF THE GUIDE
This is to certify that Mr. Amol Khadke of Bharati Vidyapeeth’s Institute of Management
Studies & Research has successfully completed the project work titled “Marketing Plan -
TATA SKY (2012-13)” in partial fulfilment of the requirement for Master in Management
Studies as prescribed by Mumbai University.
This project report is the record of authentic work carried out by him under my guidance.
Date:
Signature
Faculty Guide: Prof. Dr. D.Y. Patil
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TABLE OF CONTENT
Ch.
No.
Chapter Name Page
Number
1. SITUATIONAL ANALYSIS 6
1.1 MARKET SUMMARY
1.1.1 MARKET GROWTH
1.1.2 MARKET TRENDS
1.1.3 MARKET NEEDS
1.1.4 MARKET DEMOGRAPHICS
1.2 SWOT ANALYSIS
1.3 COMPETITION ANALYSIS
1.4 PRODUCT OFFERING
1.5 KEY TO SUCCESS
2. MARKETING STRATEGY 26
2.1 MISSION
2.2 MARKETING OBJECTIVES
2.3 FINANCIAL OBJECTIVES
2.4 TARGET MARKET
2.5 POSITIONING
2.6 MARKETING STRETAGIES
2.7 MARKETING MIX
2.8 FINANCIALS
2.9 HR
3 CONTROLS 39
3.1 IMPLEMENTATION
3.2 CONTINGENCY PLANNING
4 BIBLIOGRAPHY 41
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CHAPTER - 1 SITUATIONAL ANALYSIS
1.1 MARKET SUMMARY
1.1.1 MARKET GROWTH
The direct-to-home (DTH) industry in India, which currently has about 30 million subscribers
and six players, is poised to grow to 60 million subscribers by the end of 2013, despite the
fact that the industry faces several issues such as low ARPU (average revenue per user), high
cost of acquisition of content and subscribers, and various taxes such as entertainment tax and
service tax.
In India, approximately 12 million set-top boxes are sold annually.
While the DTH industry is working on new ideas, one of its areas of concern has been the
availability of sufficient bandwidth, which would allow a DTH operator to telecast more than
500 channels. Some companies are working with DTH operators to develop two-three
satellites to increase their capacity. However, it takes two-to-three years to build and launch a
satellite and the cost of production is very high, taking about US$250-350 million.
Currently, the industry faces various taxes such as license fee, service tax, entertainment tax
and the additional value-added tax levied by certain state governments such as Andhra
Pradesh and Madhya Pradesh. The DTH industry has a total turnover of Rs 6,000 crore and
about 35 per cent of it is paid as tax by the industry. It is about time that the government
recognised DTH as a sector similar to any other sector and not as a niche category.
While it is true that the DTH industry is slowly spreading its roots, there is still some time left
before the industry turns into a profitable venture. Nevertheless, it seems that investors have
recognised the potential of the category.
Currently, the game is about subscriber acquisition. As soon as the operators move beyond
the acquisition mode, it is expected that the industry will be about retaining the consumer
base and the game will change from there.
Despite the global sinking of economies, the Asia Pacific market is healthy and the decline in
growth will not derail the industry. With 1.7 million digital cable subscriptions, the digital
pay-tv market is finally taking off and this degree of penetration represents a tipping point for
our industry in Asia.
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The Indian DTH growth scenario bodes well for the advertising industry as well with over Rs
30-40 crores being earmarked by these companies annually for advertising revenues.
Key factors affecting DTH in India -
1. Low ARPUs (Average revenue Per User)
Heavy taxation (>50%) has lead to lower ARPUs (as low as Rs. 140/month) in the industry.
As competition increases, falling prices will put further pressure on ARPUs.
Sources of incremental revenue like movies on demand is minimal and hasn’t picked up yet.
Indians still prefer to watch a pirated movie on cable or wait for its premier on TV channels.
2. High cost of acquiring subscribers
While superior technology of DTH leads to a superior viewing experience, the high price is a
prohibiting factor. Therefore, to get the consumer hooked, companies subsidize the cost of
the set-top boxes (STBs) needed to access DTH telecasts, which according to industry
estimates is approx Rs. 4000 (including expenses for the cable, STBs and others per
connection)
The industry is at an early stage of growth and the primary focus of DTH operators is
acquiring customers. It is estimated that the major growth could be witnessed in semi-urban
areas and smaller towns and villages where cable services is not as advanced as in the metros
and large cities
Due to huge infrastructural costs, DTH players are currently undergoing losses. According to
industry estimates, only on achieving a subscriber base of 7-8 mn, will the private operators
break-even. However, with the advent of new competition, current operators are reducing
their prices to capture the market by offering huge discounts thus increasing the pressure on
Clearly, there is a lot of scope of increase in the number of customers across all the states.
Looking at the current distribution system that Tata Sky has adopted
Including the local cable operators as distributors would be an extremely useful way of
reaching out to the target market.
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Place State
Share
(%)
Maharashtra
Gujrat
Karnataka
Uttar Pradesh
Tamil Nadu
Punjab
Orissa
West Bengal
Kerala
Andhra Pradesh
Rajasthan
Assam
Madhya Pradesh
Others
12.1
10.5
7.2
6.2
6.6
6.4
5.3
4.7
4.6
4.6
4.5
4.0
3.8
18.8
Total 100
PROMOTION:
In order to stay ahead of its competitors, Tata Sky has always followed an aggressive
promotion strategy. When Tata Sky was about to be launched, it earmarked approximately Rs
1.5 billion for marketing the DTH service across all platforms, traditional and non-traditional.
They invested not only in the pilot MDU (multi-dwelling unit) projects in some cities of India
but also planned to educate an average Indian about the advantages of a DTH service
supported by the Tata’s and Star.
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A major part of the Rs 1.5 billion marketing budget was planned to be spent during the
festival season in India, starting late September and lasting till Christmas-New Year, when
consumers have a tendency to splurge on goodies.
Meanwhile, apart from Zee Turner family of channels, most other major TV channels found a
place on the Tata Sky platform
INTERACTIVE ADVERTISING is a new stream of revenue that DTH operators are now
eyeing. DTH operator Tata Sky has made the first move in this direction by tying up with
consumer electronics major, Samsung.
The company is also had talks with several mutual funds and financial services firms to
advertise through its interactive services. The DTH operator believes that 68% of its
consumer base belongs to the SEC A category and, therefore, represents consumers with high
disposable income.
A DTH user can access advertising content by clicking on an active button and can then
access the information brochure on TV. If she/he needs more information, the consumers can
then text to customer care. Industry players believe that DTH interactive advertising may
work out to be the cheapest way to reach out to a targeted set of consumers and is likely to
generate more interest in the future.
One of its major competitors, Dish TV is also exploring its options. Tata Sky has also
launched an interactive game quiz featured around Mahendra Singh Dhoni to coincide with
the Twenty20 World Cup.
In the past, the DTH operator has been test-piloting feature by running several contests
around programmes and the interactive features were made available to its customers. For
instance when the movie Dhoom was offered on its pay-per-view service, consumers were
offered free goodies by participating in a contest.
Recently Tata Sky signed Aamir Khan, one of India’s highly acclaimed actors, as a brand
ambassador. The company believes that the actor makes a perfect fit with the Tata Sky brand
values of trust, high-quality entertainment and innovation.
As the brand ambassador, the actor will be instrumental in communicating the benefits of
Tata Sky to consumers across the country. Aamir Khan will feature across all Tata Sky brand
and product communication including advertisements on TV, Print, Outdoor, Radio and other
mediums.
Earlier also the company used various Bollywood celebrities for different campaigns like
Hritik Roshan, Kiron Kher, Boman Irani and Paresh Rawal. Thus the company has followed
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an intensive promotion and advertising strategy. Its tag line “ Isko laga dala, toh life jingalala
“ has become quite popular.
1.5 KEY SUCCESS FACTORS
Tata Sky hopes to have about eight million connections by 2012. How should Tata Sky
increase its customer base faster given that DTH is a virtually homogenous product with very
little content differentiation possible. The only differentiation is the picture quality. Tata Sky
is similar to cable however they charge a premium because of taxes and also because the
cable operators under declare subscribers. (Over coming barriers for growth and becoming a
leader)
The 3 anchors for growth that can be explored are
a. Superior Picture quality
Unlike analog cable, Tata Sky subscribers can view TV through superior digital DVD quality
picture and CD quality sound
b. Wide array of interactive applications
In order to empower the Indian viewer with choice, control and convenience Tata Sky has a
wide array of programming choices and interactive services like Actve Cooking, Actve
Wizkids, Actve LearningActve StoriesActve GamesActve NewsroomActve STAR
NewsActve AstrologyActve Darshan , , Actve Sports, , , , , and Actve Doordarshan that can
be ordered with any of the basic packages. The customer is not going to stay forever with the
package he subscribed to initially, he should be encouraged to subscribe to other packages
and value added services quickly to increase revenues. These applications are expected to do
well given that in India TV viewing in India is done as a family.
c. Unparalleled customer service
Tata Sky has established an extensive customer service network across the country. It has
engaged a field force of approximately 3000 service engineers who are complemented by
high-end 24x7 call centres, manned by multi-lingual customer service associates, trained to
solve all customer problems.
Tata Sky takes direct responsibility for installing and servicing the hardware for periodic
problems that exist at every subscriber's home, thereby ensuring the highest levels of
customer service.
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Tata Sky retails its hardware and prepaid recharge vouchers through popular consumer
electronic stores to enhance customer convenience.
• India’s first and only DTH service to have made a joint venture with a reputed
international DTH brand, sky, which is famous for its exquisite technology.
• Introduction of new and unique features• Introduction of schemes• Improvement in picture and sound quality• Better customer care service than before• Appointed Amir Khan in his advertisement• Easy availability or Good distribution network.• Easy availability of recharge voucher.• Good relation with distributor and retailer.• Innovative advertising• Only Tata Sky gives its users an exclusive access to some authentic
international channels which includes BBC Entertainment and Celebes
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CHAPTER - 2 MARKETING STRATEGY
2.1 Mission
Tata Sky is set to revolutionise television viewing in India through its superior digital quality sound and picture.
The service aims to empower the Indian viewer with choice convenient and control through its wide array of programming choices and interactive feature.
Tata Sky endeavours to offer Indian viewers a world-class television viewing experience through its satellite television service.
Tata Sky hopes to have about 12 million connections by 2012.
2.2 Marketing Objective
1. After investing around Rs 3,000 crore since its inception in August 2006 and clocking
a 20 per cent market share in the DTH space.
2. Tata Sky Ltd plans to pump in more funds and launch new programmes to expand its
reach across India, where the DTH customer base is projected to double to four crore
by 2012.
3. Currently, we have 5.5 million subscribers and we are aiming to achieve total
subscriber base of 9.5 million by 2012.
4. That means Tata Sky to add 4 mn more subscribers by 2012 so that it can cover 25%
of total DTH market in India.
5. Company will also give more focus to those state where its presence is not good like
Rajasthan and Uttar Pradesh which have strong customer base.
2.3 Financial Objectives
1. Increase Revenue growth by growing number of customer base
2. Our projected revenue for FY 2012 is 5745 cr.
3. Projected sales growth by almost 50%.
4. Increase EBDIT margin by 35%
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5. Increase profit to 1235 cr.
6. Debt equity ratio 1:2
2.4 Target Market
For the next year company’s new target market will be rural areas.and untapped city & State and increase the presence in current market.
A snapshot of the rural market:
a. 199 million total household in India
b. 119 million (60% of total house holds) TV households
c. 50 million are having Cable
d. 55 million TV sets in rural area
e. Rural TV households growing by 3-4 million each year.
f. 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. Customizing offering
b. Combination of various national channels with regional channels
c. Educational Package
d. Appointing the village head as Distributor and the promoter as the villagers tend to listen to village head
e. This can be supplemented by giving the connection to village head free for initial period.tie ups with ITC E-Choupal and Godrej Aadhar give it wider rural reach. Also for its adopted a 360 degree marketing campaign approach that encapsulates television, print, outdoor and radio along with on-ground activities and marketing on the digital platform.
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2.5 MARKET SEGMENTATION
Geographic segmentationIn terms of geographical location, North India and Western India together contribute over 8 million DTH subscribers, while the southern market contributes 3 million. The states of Maharashtra, Goa, Punjab, Uttar Pradesh, and Rajasthan are the leaders in DTH subscription, contributing over 6.5 million DTH connections to the overall base.
Urban and Rural:In order to cater to the diverse taste and needs of both urban and rural people operators provide entirely different range of services and offerings. In rural areas, fleet of vans for demos, installation as well as selling hardware and pre-paid vouchers are being used. Most players are building up their subscriber base by targeting viewers outside the big cities, which suggests that about 60 per cent of DTH subscribers reside in rural areas and towns with a population under a million.
Region and States:DTH service providers give special offers where regional and sports channels are viewed the most. Silver subscription available in Tamil Nadu, Kerala Karnataka & Pondicherry only, ultimate sports bonanza offer - Rs 2490 with 12 Months of Silver subscription available in Andhra Pradesh only.
Demographic segmentationAGE and GENDER:Most of the players in DTH offer niche channels to create a unique and exciting offering for its viewers of every age and gender segment. DTH industry mainly concentrates on women who don’t like missing their daily soap and news more ever women are able to learn English speaking which is a very special feature of DTH. DTH also concentrates on children also by providing them games, dictionary, some discovery videos specially inbuilt, math’s, and science and social knowledge. It also focuses on old people as it has updated videos of various holy and religious places. Example- Dish TV recently launched ‘Children Films Festival’ with a bouquet of over 25 super-hit films across various categories priced at Rs. 25/- per movie. thus targeting the children segment. Besides this value added services like Games Active, Bhakti active services etc carters to needs of customers from various age groups and gender.
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INCOME:DTH service provider gives various recharge options to consumer according to the income like silver pack, golden pack, diamond pack etc.
Behavioural SegmentationOCCASIONS:DTH operators come out with new offers of channels or new buyer schemes at relatively cheaper rates on occasions of festivals or major sports events. For example it offers benefits to customers like: In a cricket match choosing the language of the commentary, camera angles, know player statistics and watch match highlights at our will
2.6 Positioning:
A premium brand and the low-entry price is an attempt to cater to the bottom-of-the-pyramid subscribers. Being premium is not synonymous with being expensive
Tata Sky has always taken the position that it is not interested in shoring up subscriber numbers at the cost of profitability. Company executives have also never missed the opportunity of claiming that it has the highest average revenue per user (ARPU) in the industry where Dish TV is the clear market leader in terms of subscriber numbers. Tata Sky is, however, convinced it has taken the right path and its pricing strategy isn’t something that it has adopted for the first time. “We were the first to break the Rs 100 price barrier in packaging; first to introduce HD service at an unimaginable price point and now, the first to provide a world-class quality DTH service at an affordable price point. Our service will now be affordable for consumers across all strata of the society. The company claims a subscriber base of 5.5 million, making it the third largest DTH player after Dish and Sun.
Reducing the price of hardware does not mean the company, a joint venture between Tata Sons and News Corporation, will reduce the price of channel packs as well. The company has left the minimum subscription charges unchanged at Rs 160 per month.
A huge increase in subscription to the DTH provider’s value-added services. Unlike other DTH operators who offer interactive services free, Tata Sky charges a fee. There is no reason to assume, new subscribers (after the reduction in set-top box prices) will not pay for interactive services. Interactive services like ACTIVE English and ACTIVE Cooking, for which the operator charges Rs 30 per application, have more subscribers in Tier II and Tier III cities than in urban areas. “With our differentiated content, we will continue to earn sizeable revenue than competition,”
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2.7 MARKETING STRATEGIES
To Make Most of This Opportunity, we need to…
1. Play the volume gameAddress the mass market with a volume-led strategyValue based pricing will be the key to success
2. Innovate to differentiateAdoption of global success…Red button applicationsPayment modesInteractive programmingNew VAS & Products
3. Execute Effectively Address market complexity Rapid scale up
4. Engage and advise the government / Regulator Develop a pragmatic regulatory frameworkCorrect current policy anomalies
5. Market Penetration
Tata Sky can penetrate the market by:
1. Proving Competitively Priced Services2. Innovative and Superior Technology3. Interactive Services4. Customer Support
6. Market DevelopmentTata Sky can enter new markets by entering:
1. Rural Markets2. Entering Neighbouring Countries (provided license available)
a. Enter Commercial Space – Offices , Coffee Shops, etc.3. Enter Travel Area
a. Long Distance Buses –e.g. Tie up with Raj Travelsb. Niche Car Segment
7. Product DevelopmentThe product can be further developed with evolving time:
1. Combined with TV2. Combined Dish for multiple Television (Society or Each Flat)3. Tata Sky Plus is already a step in that direction4. Target at educational needs in Rural areas where it could be used.5. Stock Market Ticker and analysis can be included in Active
2.8 Marketing Mix
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1. Product
Tata Sky launches itself as a DTH services requiring a Dish, A set top box and network access card per television. Later variant like Community dish for entire building were launched. Latest the Tata Sky Plus with Personal Video Recording technology has been launched.
We will be providing TATA Sky active services specific to different region. various services provided by TATA Sky include:
1. Active Services2. Active Cooking3. Active Stories4. Active Newsroom5. Active Darshan6. Active WizKids7. Active Sports8. Active Learning9. Active Games10. Active Astrology11. Parental Control12. Search and Scan Banner13. Guide (including Hindi Display)14. Customer Service- 24 x 7 help. Support in 11 languages
We will be launching new active services for educational guidelines – Active Shiksha.And Active Agri which will be available in regional language
Price
Competition has increased may fold with completion providing freebies and slashing prices. The following price related strategies could be adopted, which may lead to a short term loss but a medium term break even and profit:
1. Free Set Top: Following the line of Dish TV, Set top Boxes can be given free while ensuring lock in by providing base pack free for limited time duration, thus inducing update to next level.
2. Lock in of 1 year: Ensure long term lock ins by providing incentives for pre payment of long term charges. Continue with current strategy of providing 2 months free on payment of 10 months services.
3. Multiple Connections: Provide discounts for consumers buying second Tata Sky Connection (up to 50% off)
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4. Encourage References: Provide discounts on Monthly charges if reference from existing consumer becomes a new customer.
5. Regional Disparity: Provide free regional packs in local areas to ensure switch from Cable TV to DTH service, i.e. provide free south Jumbo pack for customers in all Southern States.
6. Community Dish: Provide Incentives in the form of Free Months charges for first 3-6 months and reduce the Installation charges per flat.
7. Payment Options: Allow multiple points of payment, ensuring timely payment and convenience to the customer – Credit Card through Website (implemented), Pre Paid cards from Retail shops to be activated using Telephone (Implemeneted) and Drop Boxes at Societies.
8. Postpaid: Some clients depending upon few background check criteria can be given Billing service i.e. Payment at end of Month
Place
Clearly, there is a lot of scope of increase in the number of customers across all the states. Looking at the current distribution system that Tata Sky has adopted:
Including the local cable operators as distributors would be an extremely useful way of reaching out to the target market:
a. Staff of cable operators be made the distributors for Tata Sky (familiarity with people)
b. All distributors be given a status of Tata Sky employees
c. Attractive options be given to them to become distributors
Another focus could be the rural market. A snapshot of the rural market:
a. 199 million total household in India
b. 119 million (60% of total house holds) TV households
c. 50 million are having Cable
d. 55 million TV sets in rural area
e. Rural TV households growing by 3-4 million each year.
f. Only 2-3 % of rural household have access to Cable
g. Growing focus towards more satellite channels
Strategies for the rural sector can be:
32
a. Customizing offering
b. Combination of various national channels with regional channels
c. Educational Package
d. Appointing the village head as Distributor and the promoter as the villagers tend to listen to village head
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. Setting up Mini – Theatres in rural sector to promote the Product
b. Events like Cricket matches, movies etc.
c. These Mini – Theatres can be the Point of Sales for Tata Sky
Promotion
The promotional strategies suggested are:
1. Packages for Special Events like the cricket World Cup
2. Targeting Tata employees could be a useful way pr promoting the product
3. Give the option of instalments and other promotional schemes to the new users
4. Tie up with real estate developers to target the new constructions
a. The number of old buildings being demolished and being reconstructed are also on the rise.
This could be a major target for promotions
5. Door to door marketing should be used to heighten the awareness levels as well
6. Local Games Sponsorships can also be used to increase the awareness levels
7. Another way could be using the prominent part of the Building for placing Hoardings of Tata Sky
Ads
a. Finding the strategic building in the locality
b. Consideration can be in form of cash payment to the Housing society
c. Providing free connections to Households in these buildings
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8. Another new avenue that can be explored is the railway stations:
a. Posters on railway station roofs
b. Tickers at Major suburban Railway stations
9. Use of Internet- Applications which involve sharing of videos on how one consumes TV, benefits of DTH over cable TV, etc. across social networking sites like Orkut, ibibo, etc.
10. 'Ek-pe-Teen and Do-pe-Paanch' the offer entails three months of free subscription on the purchase of one connection, and five months of free subscription on purchase of two or more connections.
11. Tata Sky launched an interactive game quiz featured around MS Dhoni to coincide with the Twenty20 World Cup. In the past, the DTH operator has been test-piloting feature by running several contests around programmes and the interactive features were made available to its customers.
Distribution
The company has also built a wide distribution network to reach every household in India. It also entered into agreements with ITC's e-Choupal, Godrej's Aadhar and Indian Oil Corporation to extend its reach to the rural consumers.
Tata Sky has also set up sales and service dealers (SSDs) across semi-urban and rural markets of India. The company adopted aggressive promotional strategies including television commercials (TVCs), outdoor, radio and Internet advertising.