Sudeep Bir Tuladhar

Conduct a critical analysis of the case "Tata Sky" and prepare a written analysis of the case which addresses the following issues. Examine the growth strategies of Tata Sky over the years. Analyze the marketing mix of Tata Sky. Identify the challenges that Tata Sky can face in the near future and what are your recommendations for Tata Sky to overcome those challenges.

Launched in August 2006, Tata Sky was one of the leading players in the Indian DTH industry. Through its DTH service, the company offered more than 170 channels on entertainment sports, movies, music etc. along with interactive services through its different channel packages. In October 2008, Tata Sky launched Tata Sky +, a premium set- top box which had special features like recording, pausing and rewinding live TV programs. Tata Sky adopted an aggressive pricing strategy to attract consumers. By offering different channel packages, it ensured that consumers could choose their favorite channels and pay only for those they wanted to watch. Tata Sky also launched several advertisement campaigns to support its product launch. Along with its television commercials, it also laid emphasis on outdoor, radio and internet advertising. Besides, it also announced several promotional offers to attract consumers. With aggressive marketing strategies, Tata sky was able to cross a subscriber base of one million within 11 months of its launch. It took another nine months to reach two million customers and another seven months to cross three million customers and this trend continued as a result of their efficient marketing strategies.

Analysis of Growth Strategies of Tata Sky: The immense success of Tata Sky was possible only because of various well planned growth strategies followed by it. Those strategies are as follows: Market Penetration Strategies:

This strategy refers to seeking a larger market share in a market in which the organization already has an offering. Tata Sky saw massive potential in the current market for their products to increase its market share. In order to increase the market penetration, they tried to increase both the number of customers as well as number of uses or consumption. To increase the number of customer, they conducted ad campaigns like 360o ad campaign using Tele Vision Commercials, Radio, internet etc, several promotional offers like 50% discount on installation, recharge and win offer, friends and family program. Besides, Tata Sky also offered 20% discount on new Tata Sky connections for those who had already booked Tata Nano and they offered three months free subscription of channel packages for those consumers who bought Tata Sky before April 15 2007. Similarly, to increase the number of usage they introduced many value added services like interactive gaming, VoD (video on demand-Pay Per View) service etc. Similarly, they are also showing new usage of DTH to their customers by showing DTH is not just for TV product but also like computer/game console. As the result, by introducing new usage they are attracting more customers converting non users to users. Market Development Strategies: This strategy refers to introducing its existing offerings to markets other than those that the organization is currently serving. In case of Tata Sky, their initial target segments were urban customers but they soon realized that extending their segment would further add increase their customer base. So they started extending their services to villages and suburban areas throughout India, from North to South, from East to West. In order to reach rural consumers, Tata Sky entered into agreements with ITCs, e-Choupal, Godrej, Indian Oil Corporation etc and to cater to urban consumers, it tied up with Tata Indicom, Pantaloon, Infiniti Retail Croma etc. As a result, they strengthened their distribution network to 35,000outlets and 5,000 towns across India. Moreover, they started SSD (sales and service dealer) across semi urban and rural markets. These activities helped Tata Sky increase its market share covering urban as well as rural market. Product Development Strategies: It refers to developing new products targeted to its existing market segments. It can be achieved through product innovation, product augmentation or product line extension. In product innovation, Tata Sky launched a new product in October 2008 called Tata Sky+, where consumers could record their favorite program (up to 45 hours) while watching another channel

with the provision of ,recording, pausing or rewinding live programs. Moreover, they introduced a premium set top box with a personal video recorder (PVR), first time in India. They also introduced pay per view model which attracted a lot of customers. Similarly in product augmentation, they upgraded their picture format to latest MPEG4 technology in Tata Sky+ by introducing innovative interactive services like Active Sports, Active Khabar, cooking, matrimonial, games and bilingual programming guide. And finally in product line extension, Tata Sky offered consumers a variety of channel packages. Consumers could also opt for any of the base packages such as Super Value Pack, Super Jumbo Pack etc. Thus incorporating these features, Tata Sky has successfully implemented product development strategies. Integrative Growth Strategy: Integrative growth strategy refers to that strategy in which a company increases its sales and profits through backward, forward, or horizontal integration within its industry. It is seen that, Tata sky was involved in forward integration i.e it acquired distribution channel as Tata Indicom (a subsidiary of Tata group) in urban area.

Moreover, customer service also played a major role in the growth of Tata Sky. It established an extensive customer service network across the country. It engaged a field force of approximately 3000 service engineers who are complemented by high-end 24x7 call centres, manned by multilingual customer service associates, trained to solve all customer problems. Tata Sky took 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. Moreover, it retailed its hardware and prepaid recharge vouchers through popular consumer electronic stores to enhance customer convenience

Analysis of marketing mix of Tata Sky: Tata Sky emphasized on all 4 Ps of marketing which have been discussed separately. Products and Services:

Tata Sky offered the DTH service based on three Cs i.e Choice, Control and Convenience. It offered consumers a choice of more than 170 channels with DVD picture quality. It offered various interactive services like Active Mall, Active Learning etc.

Moreover viewers had better control over what they could watch as it was possible to set up to 20 channels in order of their preference. After pressing fav button, it led to already set favorite channels. With the help of search and scan banner, one could find out whats playing on other channel without changing the channel he/she is watching.

It also offered convenience to its consumers by giving a program schedule for all the channels and reminder for favorite program. Consumers could know their subscriber number, status, due date for recharge by using the remote control. Tata Sky also launched Tata Sky + where customers could record, pause live programs. More importantly, these products and services were supported by dedicated customer care. Price: As far as pricing is concerned, Tata Sky reduced the price of its digicomp as well as the subscription fee to make it affordable to the consumer. However, it drew wide criticism from consumers and industrialists. Consumers actually felt that it had increased the price rather than decreasing it. It also reduced the price of various channel packages such as Family Pack was available for Rs 200 per month which was Rs 250 earlier and Super Saver Packer was available for Rs 250 which was priced Rs 300 earlier. Moreover, consumers had to pay a monthly subscription fee depending on the channel packages they chose. If consumers chose the Annual Mega Pack, they had to pay an annual subscription fee of Rs 5000.Consumers opting for any base packages had to pay subscription prices on a monthly, semi annually or annual basis. Tata Sky offered four different options for paying charges via credit card, auto debit, recharge voucher and cheque payment. Place/ Distribution: Tata Sky had a wide distribution network across the country to sell its digicomps and prepaid recharge vouchers. Consumers could buy these digicomp and prepaid recharge vouchers from

the nearest Tata Sky authorized dealer. The company made sure that prepaid recharge vouchers were available at popular consumer electronic stores and mobile phone outlets.

In order to reach the rural consumers, Tata Sky entered into agreement with Indian Oil Corporation, ITCs e- Choupal etc and to cater to urban consumers; it tied up with Pantaloon Retails, Tata Indicom etc. As a result of its effort, it had 35,000 outlets in 5000 towns across India as of October 2008. It also started setting up sales and service dealers which increased its presence in semi-urban and rural markets. Promotion: Tata Sky focused on advertising its services as it became clear that there was lack of awareness about the service among consumers. To educate consumers, it launched a 3600 advertising campaign stressing the benefits of the service rather than describing the complex technical specifications. For this, Tata Sky displayed its services at airports, railway stations, shopping malls etc. It also started airing TVCs specific to services like how Tata Skys Active Wiz helped children to continue their learning at home. It also announced a promotional offer of three months of free subscription of the channel packages if they bought it before April 2007. Similarly, it signed Amir Khan as its brand ambassador launching various campaigns with him. Promotional offers like 50% discount on installation Recharge and Win, the Friends and Family Program etc also helped in promoting Tata Sky.

Challenges that Tata Sky can face in the near future: Though Tata Sky is doing well but it is bound to face different challenges in near future. Some of the challenges are as follows: The first and foremost challenge it can face is regarding stiff competition. Various players in the market such as Dish TV, SUN Direct, Big TV, Airtel Digital TV etc. are waiting to pounce on any mistakes they will make. Firstly, Tata Sky cannot match free service like DD or offer free Set Top Box like Dish TV. Moreover this intense competition is causing the decline of price of set top boxes as well as subscription charges.Competitors are always bringing in new promotional schemes and Tata Sky has to be on its toe to counter those offers so that they do not lose their customers. Similarly, Tata Sky can also lose customers pretty easily as cable set top boxes provide easy switching due to negligible switching costs.

It is seen that Tata Sky is highly dependent on various organizations. Firstly, it is highly dependent on ISRO for transponders to provide its services across India. It is also solely relying on Thompson for set top boxes and was dependent on broadcasters for its channel content which is increasing its cost. The investment on DTH industry is sensitive and all the players are likely to face losses because of high subsidy given on set top boxes as well as subscription fees. It is believed that all DTH players offered an average of 30% subsidy on their set top boxes.

Similarly, tax and services fee imposed by the government is making things worse. It is said that around 40% of revenues were spent on paying taxes and license fee and another 12% went towards service fee imposed by the government. Due to these reasons, even if average revenue per user is just Rs 75 a month, it will take at least five years to recover that cost of connection. If the government regulations do not improve, the situation may worsen. Recommendations for Tata Sky to overcome those challenges: As explained, Taka Sky is facing lots of challenges and to cater those challenges, the management should assess its brand positioning among its target segment by establishing a distinctive image for the company compared to competing companies. But these initiatives presents difficulty, which Tata Sky is currently facing such as rising costs, sporadic nature of demand, and downward pricing pressure due to competition. Moreover, slackening of demand and higher interest rates are making matter worse. With this in mind, Tata Sky should try to be rapid-paced and highly competitive. To counter these challenges and still be profitable, following strategies have been recommended.

Tata Sky has been doing very well in developing new products as per requirement of the consumers. In order to overcome the above mentioned challenges, it has to continue its strategy of developing innovative products and services. It can combine the product with television or LCDs in rural market. Besides TVs, it also can combine with digital monitors as well. Another change it can introduce is displaying guide in multiple regional languages. Moreover, it can launch special channels for requesting songs like Jukebox.

As far as price is concerned, it has been decreasing as a result of competition which has also reduced the level of profit. However, followings are some of the pricing strategies which could help on the long run. Like 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. Besides, discount can be provided to consumers having second Tata Sky Connection. Encouraging reference by providing discount to the existing consumer, if he/she can bring new customers. Moreover, it also can introduce a concept of post paid services which can attract new customers.

Similarly including the local cable operators as distributors would be an extremely useful way of reaching out to the target market. In order to make this happen, all the distributors can be given the status of Tata Sky employees by giving them attractive offers. It can gain market share by capturing the rural market through customizing offer, combining various national channels with regional channels, appointing the village head as Distributor and the promoter as the villagers tend to listen to village head and giving free trial connections to the villagers. Finally, it has to concentrate on promotion of the products and services. It can be conducted through creating special packages for special events like cricket World Cup. Besides, door to door marketing is also not a bad idea to promote the products. In order to promote the product in a locality, a strategic building has to be identified and providing free connections to households in these buildings will certainly raise the awareness of the product in the region. With these recommendations, Tata Sky can overcome the above mentioned challenges by proper market penetration, market development and product development

References: http://www.scribd.com/doc/8494250/Tata-Sky-Marketing-Plan http://www.indiabroadband.net/tata-sky/20372-tata-skys-strategy-gain-marketshare.html http://www.sify.com/finance/tata-sky-s-pricing-strategy-is-pretty-attractive-news-defaultjegm9wehcjf.html http://www.scribd.com/doc/61743789/Case-Study-1-Tata-Sky Akil Shetty, University Of Mumbai, Consumer Awareness On Tata Sky (2010-2011)