Dth Services In India Marketing Essay

DTH means Direct-To-Home. It typically refers to “reception of satellite programs with a personal dish in an individual home”1. Exhibit 1 shows the functioning of the DTH.

DTH can reach remote areas as it does not require intermediate step of cable operator and the cable wires. Signals come directly from the satellite to the DTH dish. With DTH a user can scan almost 800 channels1!

DTH subscribers in Indian market at the end of 2011 were almost 44.4 million. As per MPA (Media Partners Asia), this is equivalent to 25-30 per cent average market share. Dish TV leads the market with 28.2% market share, followed by Tata Sky (19%)2.

In this report, we are going to analyze Tata Sky from the marketing point of view.

PESTLE Model for DTH Industry in India

Political: GOI has a cap of 20% on FDI in DTH business. However, a combination of FDI, NRI, PIO and portfolio investments can go up to 49%. The entry route to this sector is through the government.

Economic: Indian economy is expected to grow around 6.7% in the year 2012-2013, and by 8% in the next two years3. The inflation has been high in India and interest rates have been hovering around.

Social: With the lifestyle getting faster and more stressful, people prefer to socialize less and spend more time at home in front of televisions. Time is a premium for the working population and they are ready to pay a little bit extra for hassle free service.

Technological: With India being an IT hub, hi-tech products are almost always well-received.

Legal: Entertainment and media rules are stable in India. Ministry of Information and Broadcasting has been controversy free. There is clear demarcation between the channels which can be aired in India and which cannot be aired.

Environment: Environmental factors are conducive for a DTH player to operate in India. The environment is not so harsh that the equipment such as dish and cable needed for the service requires regular replacement.

PORTER’S Five Forces Model

Major Competitors (Existing competitors):

Differentiation in offerings by various firms in industry to its customers

Low

Switching cost for customers

Low

Fixed cost (as proportion of total cost) for the players in the industry

Medium

Shelf-life of products

High

Concentration of players in the industry

Fragmented

Industry growth rate

High

Capacity utilisation in the industry

High

Proportion of assets used by players in the industry that cannot be deployed in other industries

High

Government policy on exit by players

No major restrictions

Potential Competitors (Threat of new entrants):

Supply-side economies of scale

Low

Demand-side benefits of scale

Small

Customer switching costs

Low

Product differentiation

Medium

Brand identity

High

Capital requirements

Medium

Access to technology

Easy

Access to raw materials

Easy

Access to other production inputs like location

Easy

Prevalence of learning from experience

Medium

Access to distribution channels

Easy

Protection from government policy relating to entry of new players in the industry

Low

Various DTH Players in the Market (Exhibit 2)

Dish TV

Tata Sky

Videocon D2H

Airtel Digital TV

Sun Direct

Reliance Digital TV

TATA SKY

Tata Sky, a JV between TATA Group (80%) and Star Group (20%), is a broadcast satellite television provider incorporated in 2004 and launched in 2006. In 2010, Sun Microsystem got into partnership with Tata sky to provide IT infrastructure solution and support for direct-to-home launch.

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In 2010, it launched two new products – Tata Sky+, a premium set-top-box, HD-PVR (high definition personal video recorder), with the facility of video recording and having 500GB hard disc space that can record up to 625 hours (Exhibit 3 – Competition Specific – 1); Tata Sky HD with a special feature of casting HD channels that made use of MPEG-4 technology (a digital compression technology).

Customer base of Tata Sky has always shown a steady growth since its beginning. It had increased to 8.43 million in 2011 (Exhibit 4). The major competitors for Tata Sky are Dish TV owned by Zee group, Airtel DTH, Reliance Big TV, Sun-Direct owned by Sun Network and Videocon D2H. Below is the SWOT Analysis of Tata Sky:

Strength

196 channels and 5.1 CH surrounds sound

Provision for 625 hours of recording with 500 GB hard disk in Tata Sky HD set-top box (Exhibit 3 – Competition Specific – 1)

Leads in introducing new schemes and packages

Steady increase in customer base (currently being 8.43 million)

Tata Sky is the first DTH to get accredited by ISO-27001:20054

High level of customer satisfaction (Exhibit 3 -People Specific – 6)

Weakness

Dish TV has a better market share

Not leading in terms of channels, customer base

High prices – unable to penetrate small town areas properly

Cannot provide free service as provided by Doordarshan DD

Dealers prefer to sell competitor’s products because of lower profit margins (Exhibit 5)

Opportunity

Large and increasing TV users in India

Large and increasing DTH users in India

Growing demand of DTH over cable among the TV viewers

Expansion of distribution of installing new stores

Threat

IPTV is technologically superior than DTH

Cable is still cheaper than DTH

Increasing competition. Lack of barriers to entry by GOI

Marketing Mix

Product

Tata Sky provides three kinds of products to its customers, each targeted at a different segment of the market (Exhibit 3 – People Specific – ). Below is the brief description of its offerings to customers:

Tata Sky SD DTH – SD (standard definition) has resolution with aspect ratio of 4:3 and resolution of 520i.

Tata Sky HD DTH – HD (High Definition) has resolution of 1080i and aspect ratio of 16:9. This improves picture quality.

Tata Sky+ HD DVR – Video recorder technology – can record, pause and rewind live programs.

Features of the product

Series link record option

Parental Control

Reminder

Favorites

Search & Scan Banner

Customization

Services

Tata Sky has been the most aggressive on value-added services, which on average contribute a relatively high 9-11 per cent to its monthly subscription revenues2. 

Video on Demand (VoD) – Tata Sky’s own video library offers more than 1000 movies available online which can be accessed using broadband connection.

Interactive TV – Tata Sky provides interactive services for all the members of the family. (Exhibit 6)

Multi-TV Connection – Different channels can be watched on different TVs at the same time using the same connection (up to 4 multiple connections5 allowed per set-top box).

Price

Tata Sky has a wide range of offerings designed to cater to the varying needs of subscribers. Packages consist of a wide array of channels in CD and DVD quality sound, and a host of interactive services like Actve Music, Actve English, etc. Showcase allows subscribers to watch the latest blockbusters from the comfort of home with high quality picture and sound, and without any break, at Rs. 75 per movie6. Tata Sky+ has also made it possible for customers to record, pause and rewind live TV programs.

Tata Sky has an aggressive pricing strategy to attract customers from all segments. It offers different channel packages to ensure that customers can choose their favorite channels and need to pay for only those that they want to watch.

However, the price offerings made by the firm are for high end customers. Below is the starter kit’s price comparison of Tata Sky with Dish TV

TATA Sky SD – Set Top Box + Standard Installation – Rs. 16907

Dish TV Connection – Set Top Box + Standard Installation + 1 month any pack – Rs. 13158

TATA Sky HD – Set Top Box + Standard Installation + 1 month Supreme Sports Kids Pack + 1 Month HD Gold Pack – Rs. 30407

Dish TV HD Connection – Set Top Box + Standard Installation + 1 month any pack – Rs. 29158

TATA Sky HD+ – Set Top Box + Standard Installation + 1 Month Supreme Sports Kids Pack + 1 Month HD Gold Pack – Rs. 64407

Recharge Packs

TruChoice: With this option, customers can subscribe to one of the Base Packs (Minimum cost – Rs. 1559) and opt for any add-on Pack depending on their requirements.

Make My Pack: Customer also has an option of choosing their channels on a la carte basis, or mix-n-match by adding individual channels to their existing genre based packs9.

Place

Tata Sky aims to connect every television home and empower every viewer.

Distribution Network – Company has created a distribution network through consumer electronic stores and mobile phone outlets for selling Set Top Box and recharge coupons.

Tie-ups10

ITC’s e-Chaupal

Godrej Aadhar

ITC International Business Division

Indian Oil Corporation

B2B tie-ups10

Infiniti Retail’s Croma

Tata Indicom

Pantaloon Retail in urban India.

Promotion

TATA Sky has launched several advertising campaigns to support its product. In order to educate its consumers about DTH services in India, company used 360° approach of advertising campaign. Along with television commercials (Ad Agency: Ogilvy India), it also laid emphasis on outdoor, radio, and Internet advertising.

Its creative advertising lets the brand enjoy recognition and top-of-mind recall by consumers. Tata Sky comes up with several promotional offers (e.g. Family and Friend referral scheme), and new products (e.g. Tata Sky+) to encourage target customers for making mental commitment for buying their products which increases brand purchase intention of customers. In 2008, it also introduced geography specific advertising to enhance interactive advertising11.

A Tata Sky subscriber can also access advertising content and information brochure by clicking on an active button on their television. This may be one of the cheapest ways among all the advertising options used by the company, to reach their targeted customers. Its innovative offering of Interactive Services for every member of the family (like Actve Education, etc) is another success towards reaching out to customers.

It also provides special online offers to consumers wherein if consumers apply for new installation through the company’s website, they get special discounts (Exhibit 7).

In 2008, CEO and MD, Mr. Vishal Kaushik signed actor Aamir Khan as the brand ambassador for the brand, and has since then come out with some brilliant ads. In 2011, TATA Sky bagged two international awards – Stuff Gadgets Award and Zero1 Award12.

Branding and Positioning

Tata Sky is a combination of the trust of TATA and the technology of Sky.

TATA Brand

TATA Group, India’s one of the largest and most respected corporate, is a well-known brand commanding trust and respect among consumers. It comprises of 93 operating companies. The Group has been steadfast and distinctive in its adherence to business ethics, and commitment to CRS (Corporate Social Responsibility).

SKY Brand

SKY is owned by a UK based British Sky Broadcasting Group. It brings to Tata Sky the reputation of more than 20 years of experience of satellite broadcasting. SKY is known for its innovative products and services such as digital satellite broadcasting in 1998.

Using the two brand names, Tata Sky has positioned itself as a quality DTH provider service firm. Also, by offering various segment centric packs, brand has positioned itself according to suitability and affordability of consumers. Its creative advertising lets the brand enjoy top-of-mind recall by consumers which further enhances its brand image in the market.

Competitor’s analysis

DTH services have 11% of market share of entertainment industry, facing tough competition from Terrestrial TV and Cable TV services (Exhibit 8). Though the current government regulation related to DAS (Digital Addressable System) is giving added advantage to DTH service providers in comparison to Cable Operator but competition among the DTH players cannot be ignored. Among DTH service providers Tata Sky with 19 per cent market share is the leading player after Dish TV (Exhibit 9). Tata sky is facing tough competition from Airtel and Videocon.

Videocon D2H

Fastest growing service provider.

Introduction of Videocon Television with built-in Set Top Box (STB).

Uses MPEG-4 for better picture quality but still has pixilation problem especially during rainy seasons.

Airtel Digital TV

Has best picture and sound quality

Has switched to new satellite SES7 through which it can provide more number of channels

Has good STB software leading to reduction in rain-fed issues

Poor interactive voice and customer services

Sun Direct

Market penetration by providing services at lower prices

Market is almost limited to South India.

Currently does not pose as threat for Tata Sky but in coming years it can be

Recommendations for Tata Sky

Tata Sky has very good reputation for customer care service but package prices are higher. Following points should be considered as recommendation for the company.

It should introduce packages at lower prices with reduced channels especially for penetrating the rural and small town market of India.

It should utilize the weaknesses of competitors as the opportunity along with introduction of technological innovation.

The ministry of Information and Broadcasting has licensed to 800 TV channels but the most of the DTH platforms do not have capacity to carry more than odd 250 channels. Tata Sky can work on channel capacity to be the industry leader.

Exhibit 1: Functioning of DTH

Exhibit 2: Various Players in the Market

Exhibit 3: Response received from the Varun Anand Menon, Regional Sales Manager, Tata Sky

(Email ID: varunmenon81@gmail.com)

Generic Questions

What is TATA Sky’s Market share at India and at various states levels (would be of great help if it is divided on the basis of products)?

Market share of the company at pan India level is 26% and 35% in Mumbai.

What are your short term and long Term goals? How are you balancing these goals in the current recession-driven economy of India?

Short term goal of the company is to acquire 35% market share by end of FY 13 and long term is to be EBITA positive by 2015.

Who are your suppliers for the Dish antennae and other equipments? Do you maintain a stock of set-top boxes in different cities? Or is it sent from a major city to a minor one as and when required? What are the usual difficulties you face with regards to these supplies?

Providing suppliers name would not be right in terms of integrity, they are imported from Taiwan and china.

We have store house across india from which its supplied to SSD/ISP. Eg in Mumbai we have store house facility in Bhiwandi.

Yes we maintain a certain stock level in all cities where we have a SSD/ISP (SSD – sales & service distributor, ISP – Installation & Service Provider) and they place orders as per their requirement.

Generally the procurement team places the order with the suppliers looking at the current and past trends.

What are the general feedback and complaints usually received from Distributors and Customers?

General feedback – Installation delays and online pricing issues. Also loss of signal during monsoons specifically in high rain fall areas of the country.

Competition Specific

How do you pitch against other brands? Where does TATA Sky score over other brands and cable networks? Or, what is the differentiating factor that TATA Sky offers and others don’t?

TATA SKY has always been concerned about the service and the quality of the material that is used for providing services to the customer. It is usually observed that the customers never complain about the faults in the Set Top Boxes they are using.

TATA SKY has a very strong brand name in the DTH industry and has the best Recorder Set Top Box known as HD-PVR (high definition personal video recorder). It has a 500 GB hard disc and can record up to 625 hours. It can record 2 programs at a time and the recording can also be done using an internet or mobile (if you are not at home) provided the STB is in switch on condition. It has a 7.1 Digital Dolby and has 1080i resolution and is also 3D ready for future.

TATA SKY has a unique VOD (video on demand) feature where in a customer can choose movies and programs from a library which has a collection of 1000 programs including movies and TV shows.

How severe is the competition from local cable networks and other DTH service providers?

Local cable operators are giving tough times to all the DTH players and so to Tata Sky. They are providing STBs to customers at a lower rate and are also offering monthly packages at a very low price. Also with CAS (Conditional access system) not been implemented is not giving level playing field to DTH operators as most of the customers of cable industry uses analog signal. November 1st 2012 is the deadline given by government in metros to convert all analog signal to digital signal and 2014 march across India it will be digital signal. It will definitely help the DTH industry as a whole.

Product Specific

Is TATA Sky coming out with IPTV in near future? If yes, then what will be the differentiating factor from Airtel’s?

Don’t have any clarity on this but to tell you Reliance and Airtel have this product currently. Airtel is providing this services in Delhi only and Reliance has launched it is some places only.

Is there scope for B2B selling in TATA Sky offerings? If yes, please provide with an example.

Yes we do have a team which sells to corporates and to the business houses as per their requirement and our feasibility.

How successful are these special online offers? How many installation requests come through organized (Online or tele-call requests) and unorganized sector (customer indirectly approaching through others like through a pawn shop or other dealers)?

Online offers are very attractive and a good amount of sales come through this channel. This channel is very active in all metro cities and not so prominent in non metros. In metros it contributes to 15% of the total sale. Normal unorganized sector in urban centers(Mumbai and delhi) contribute to about 50%, direct sales 25% and Modern trade 10%. But figures differ in upcountry markets, A class town etc, major contribution comes from normal trade.

Is there any loyalty program which TATA Sky offers (like Pantaloons offer pantaloons green cards)?

Yes TATA SKY offers Long Duration Packs (LDPs) to the customers, if a customer wishes to recharge his connection for a year then he has to pay only for 11 months and he gets subscription for 12 months. As on date we are yet to launch loyalty programmes other than this due to financial implications.

Price Specific

Are there price changes based upon regions/states?

No there are no price changes based upon region and states but there are certain packages only applicable in Southern India because of some specific reasons.

Place Specific

DTH service is very popular in rural and small town areas of India where the cable network has still not managed to reach. Is TATA Sky targeting these customers?

Yes Tata Sky is trying to make the most of it and is doing so many activities in rural India, like VAN activity, road shows in bazaar areas etc. Its manage locally by the sales team.

Promotion Specific

What are the various initiatives taken by the firm to create awareness of the product offerings among its huge customer base?

TV ads, newspaper ads and brand promotional activities both ATL & BTL are being conducted every now and then to keep the customer aware about the offerings. Any present customer do get offers for certain packs on TV and through sms to the customer mobile number. Like presently we are running JHINGALALA SATURDAY SPECIAL to our existing customer to buy new packs are cheaper rate.

People Specific

Customer

Define your target audience as per different services/plans offered (for TATA Sky and HD and HD+).

The company looks each household as a prospective customer and designs its offer keeping in mind the ability to pay for monthly charges. We focus more on HD AND HD + customer as the ARPU(average revenue per user) is high for this segment.

HD-PVR is a differentiator which is designed in such a way that it is affordable and also user friendly for the customers. Earlier tatasky was very popular among high end consumers but presently we are focussing on low end markets in urban areas through low entry cost and reducing minimum subscription amount.

Can you give me a rough estimate on what percentage of total customers use TATA Sky SD, HD and HD+?

It’s again area specific, in Mumbai its 5% HD PLUS, 21% HD 74% STANDARD. I don’t have data for other regions.

What is the frequency customer request for change in plans?

Customer changes his plan usually after the first month is over and frequency depends on the needs of the customer, promotional offers of the company given to the customer.

Is the Customer care service outsourced? If yes, how do you manage to remotely solve customer issues? Also, how do you communicate between the outsourced company and the local technician?

We have our own customer care division (inhouse) and outsourced centres at many places across the country and there is a software which is used by the CC team and the field service team which helps to resolve the customer queries. This software works on pin codes. Every pin code is mapped to an ISP and every time a customer complains at the call centre the request goes to the ISP in which the customer’s pin code is mapped.

What is the level of customer satisfaction? How do you manage Customer satisfaction?

The customer satisfaction is high as the % churn is lowest in the industry as Churn arises out of dissatisfaction.

Employees

Do you train Dealers and Salespersons on a regular basis? Is it outsourced or a self-driven plan of the firm? What forms the most important criteria for training apart from the technical training?

We train the dealers and sales persons on a regular basis and this training is given to the on roll employees by a trainer of the company and to the dealers and salespersons by the frontline employee.

Soft skills and objection handling skills are focused in the training sessions and if there are any special problems that are faced by the salesman/dealers, they are also focused on.

Process Specific

What is the time gap between the request made by customer for installation and the actual installation performed? Do you require multi-installation sessions?

There is no time gap between the request made and the installation that happens as the customer gets a call immediately as the work is booked for installation and the customer is asked for an appointment and as per the customers requirement the installation is done. The installation is done in one go except for some special cases where some special mounts or society permission is required. Seasonality also decides the installation time, as during festival time there are more sales. Generally the time lag is 24 hours.

Can you give your model for the chain of events if a customer approaches TATA Sky from different routes?

Dealer Bookings

Customer Approaches – Dealer explains packages and cost – books a work order for installation – customer gets a welcome message instantly – coordinator at the ISP calls up the customer for appointment – customer gives time – installer reaches the customer premise ( in a bracket of 1 hour of the given time ) depending on the conditions – checks for the line of sight – (yes) installer does the installation – activates the connection and gives demo / (no) explains the customer for not being able to install the dish, suggests for the possible location – if customer agrees installation is done and activated, demo given and if he disagrees call is cancelled and customer is asked to get the money refunded from the dealer.

Exhibit 4: Calculation of Number of Tata Sky Subscribers at the end of 2011

Total Subscribers in Industry = 44.4 Million2

Per Cent subscribers for Tata Sky = 19%

Total number of Tata Sky Subscribers = 44.4 X 19% = 8.43 Millions

Exhibit 5: Note from dealer on Tata Sky (Name unknown, Soda Shop Owner, near Gupshup)

  “Tata Sky is one of the most demanded DTH in the local area and it provides the best service. We as dealers prefer selling other services to customer who comes forward without asking for a particular product. Because the profit margin provided by Tata Sky is lower than those of other services, roughly we get about 450 Rs per sale from Tata Sky and around 650 Rs for other services… but generally most of the above middle class families come asking for Tata Sky”.

Exhibit 6: Interactive Services

Exhibit 7: Price Comparison of Direct Installation and Online Installation

Product Description

TATA Sky SD (Direct Installation)

TATA Sky SD (Special Online Offer)

Rates

Rates

Set Top Box

Rs. 2040

Rs. 1740

Standard Description

2 months Grand Sports Pack

4 Showcase Movies

Exhibit 8: Players in the Entertainment Industry

Exhibit 9: Competitors within DTH Industry