Marketing

Strategy
For

Group No. 9
Debraj Nasker B10077
Inderjeet Singh B10081
Nayan Goswami B10091
Pinaki Majumder B10095
Souvik Halder B10112

1|Page
Contents
Introduction................................................................................................................................4
A. Objectives:.....................................................................................................................6
a. Corporate Objectives:......................................................................................................6
b. Marketing Objectives:.....................................................................................................6
B. Situation Analysis..........................................................................................................8
a. The Product8....................................................................................................................8
b. Competitors:....................................................................................................................9
c. Analysis of Direct-To-Home Market in India...............................................................11
D. Category Factors...........................................................................................................16
e. Environmental Factors..................................................................................................18
C. Company and Competitor Analysis..........................................................................23
a. Product Feature Matrix9.............................................................................................23
b. Strategies...................................................................................................................23
c. Marketing Mix...........................................................................................................24
d. Profits........................................................................................................................26
e. Value chain................................................................................................................26
f. Differential Advantage for each company................................................................27
g. Expected future strategies..........................................................................................28
D. Customer Analysis......................................................................................................29
a. Segmentation Strategy..................................................................................................29
1. Demographic Factors:...............................................................................................29
2. Geographic Factors:...................................................................................................29
3. Lifestyle:....................................................................................................................29
b. Consumer Behaviour.....................................................................................................30
c. Targeting.......................................................................................................................31
d. Positioning.....................................................................................................................32
E. Assumptions in Planning Process..................................................................................34
a. Market Potential............................................................................................................34
b. Forecast Assumptions...................................................................................................34
F. Strategy............................................................................................................................35
a. Core Strategy.................................................................................................................35

2|Page
 b. Customer Targets..........................................................................................................35
c. Product/Service Features...............................................................................................35
G. Strategy-Marketing Communications Programmes................................................37
a. Integrated Marketing Communications Programmes................................................37
b. Pricing Strategy.........................................................................................................39
c. Channel Strategy.......................................................................................................39
d. Customer Management Strategy...............................................................................40

3|Page
 Introduction
Television industry in India took birth with the launch of Doordarshan in 1959 1. Back then,
television was regarded as a luxury item which only a few people could afford. In 1992 cable
industry came into existence which went down as the biggest revolution in the history of
Indian Entertainment Industry.

Cable TV changed the way the average Indian watched TV. Suddenly the entertainment
starved part of the population got more options as a huge influx of foreign and new domestic
channels flooded the market. However this tremendous growth saw continuous tariff hikes in
cable TV which didn’t go down too well with the middle-income mass market of consumers.
People craved for better quality picture and wanted to watch regional language channels
which they preferred. Hence there was a vociferous demand and willingness to pay for
quality and what one desired.

The stage was perfectly set for the introduction of satellite TV – Direct to Home (DTH)
broadcasting. Location and accessibility to the cable line didn’t matter anymore in DTH
scenario. DTH Digital TV system receives signals directly from satellite through the dish,
decodes it with the Set-Top Box and then sends stunningly clear picture and sound to TV.
Better addressability, quality of service and increased number of channels ensured that this
technology was here to stay.

Tata Sky is a DTH satellite television provider in

India, using MPEG-2 digital compression technology, transmitting using INSAT 4A at 83.0°.
Tata sky was incorporated in 2004; Tata Sky is a Joint Venture between the TATA Group
and STAR 2. Tata Sky DTH endeavours to offer Indian viewers a world-class television
viewing experience through its satellite television service. Vikram Kaushik is present CEO of
Tata Sky Ltd.

1. http://india.gov.in/knowindia/television.php

4|Page
2. http://en.wikipedia.org/wiki/Tata_Sky

The SKY brand, owned by the UK-based British Sky

Broadcasting Group, brings to Tata Sky the reputation of more than 20 years experience of
satellite broadcasting. SKY is well known for the innovative products and services launched
by BSky, such as DTH broadcasting in 1989, digital satellite broadcasting in 1998, interactive
television services in 1999 and the SKY+ personal video recorder in 2001 3. Tata Sky Ltd is
the First Indian DTH provider to be awarded the ISO 27001:2005 accreditation, the ultimate
benchmark for information security 4.

In October 2008, Tata Sky announced launching of DVR service Tata Sky+ which allowed
90 hours of recording in a MPEG-4 compatible Set Top Box. Tata Sky was selected as a
SUPER BRAND for the year 2009-2010 by an independent and voluntary council of experts
known as Super brands Council. It is the only Indian DTH to have won this distinction 2.

3. http://www.tatasky.com/corporate-info.html

4. http://en.wikipedia.org/wiki/Tata_Sky

5|Page
A. Objectives:

a. Corporate Objectives:
i. To be the leading Direct-to-Home (DTH) service provider in India,
offering DVD quality picture and CD quality sound along with new age
interactive services.
ii. To be the leading round-the-clock air-time provider, creating customer
value.
iii. To establish the company as the creator of entertainment and edutainment
products and services. Through these services, the company intends to
become an integral part of the global market. As a corporation, company
want to be profitable, productive, creative, trend setting and financially
rugged with care and concern for all stake holders.

b. Marketing Objectives:
i. Volumes & Profits 5: Company wants to double its customer base by 2012.
Currently it has 45 lakh of the total 2 crore DTH customers in India, which
is also predicted to reach 4 crore by 2012. Also in India there are
approximately 13 crore TV sets of which only 2 crore is catered by the
DTH service. There is a huge potential to tap this reserve. In terms of
profit, Company reached break-even after 4 years of its start-up. Now it
aims to double its profits every year.
ii. Image: The Company wants to project itself as an “Edutainment” service 6
rather than just an entertainment service provider. For this it has launched
interactive services like Active English, Active WizKids and others. Now
it plans to expand this initiative and grow on this front.

iii. Average Revenue Per User (ARPU) 7: The company intends to gain value
market share and increase its ARPU when compared to other DTH
providers through quality value added service and customer service.
Comparing with Dish TV who is having ARPU of 135 Rs, Tata Sky
currently has an ARPU of 270 Rs which it intends to increase to 300 Rs.
Internationally, the ARPUs are quite high when compared with India. This
indicates that there is a potential upside in the ARPUs.

5. Article on News Center, 10th March 2010

6. Excerpts of interview with Mr. Vikram Mehta (Chief Marketing Officer, Tata Sky) published in Business
Line, 7th January 20107.

6|Page
7. http://business.rediff.com/report/2010/apr/06/tata-sky-strategy-to-attract-more-customers.htm

iv. Customer Retention: Company believes that its long term sustainability
and viability depends on how long the customer remains loyal to the
company. Company believes that by targeting customers who go for the
cheapest product, it is putting itself at a risk as these customers can churn-
out any time.
v. Customer Delight: By providing services like movies on demand, Active
Mall, Active Darshan, Active Cooking, company wants to provide extra
value added service at a premium cost. Company has currently 3 call
centers catering to the different regional needs and it plans to expand on
this initiative. It is also looking to improve distribution channel and track
customer services efficiently.Company is targeting 30% savings by cost
cutting measures through vendor and dealers channels improvement.
vi. Technology Upgradation: The company targets to shift all of it existing
customers to the latest technology (Tatasky+) at the earliest. Currently
only 10% of the customers have shifted 7. It also plans to provide HD
services in all channels, currently is has started with “Discovery” and “
National Geographic”.
vii. Regional and remote area: Currently more than 50% of the volume are
from outside top 50 cities in India 7 and it wants to capitalize on the
beginning. Also it is targeting remote areas like Siachen, Burma, Indo-Pak
border.

7|Page
B. Situation Analysis
a. The Product8
i. 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. Recently Tata Sky Plus with Personal
Video Recording technology has been launched. Latest entrants are the
HD channels of Discovery and NGC.
ii. Enjoy over 190 Channels and services in DVD quality picture and CD
quality sound.
iii. Various packages are provided for the customer to choose from. These
include:
1. Super-Hit pack (67 channels)
2. Super-Value pack (102 channels)
3. Super-Saver pack (127 channels)
4. South-Starter pack (76 channels)
5. South-Value pack (99 channels)
6. South-Saver pack (110 channels)
7. South-Jumbo pack (143 channels)

8|Page
8. http://www.tatasky.com/

iv. Various services provided by TATA Sky include:

1. Active English: Enhance your English conversation skills.
2. Active Mall: Save time and money, shop on your TV !
3. Active Showcase: Your private multiplex at home
4. Active Cooking: Get your favourite recipes when you want
5. Active Stories: Enjoy your story book on television
6. Active Starnews: Go directly to your favourite news section
7. Active WizKids: Make your child a genius
8. Active Learning: Take Daily quizzes covering Math, GK and
science on your Television.
9. Active Games: Interactive games for all ages
10. Active Darshan: Get 24x7 darshan of the following temples: Shirdi
Sai Baba, Mumbai’s SiddhiVinayak, ISKCON and Kashi
Vishwanath.
11. Zeetos rewards: Earn through fun on TV
v. Parental Control
vi. Search and Scan Banner: Find out what’s palying on other channels
without changing the channel you are watching
vii. Guide (including Hindi Display) with 4 day listing of all programs with
reminder facility
viii. Customer Service- 24 x 7 help. Support in 11 languages.
b. Competitors:
i. Dish TV: Market leader amongst private players
ii. Sun Direct: Price warrior, Strong Brand equity in south.
iii. Airtel: Presence of a strong telcom infrastructure
iv. Big TV: Strong brand image and superior telcom infrastructure
v. Videocon DTH: riding on its strength in television manufacturing and
distribution. Company wants to integrate set top box with television.
vi. Doordarshan: National presence (90% reach), free service.
vii. Local cable operators: In market for close to 20 years and have high
market penetration.

9|Page
 SWOT ANALYSIS OF TATA SKY
Strengths:

 Ability to use the brand TATA for brand imaging.

 Superior quality hardware and machinery used (Newscorp’s DTH arm Sky).
 High picture and sound quality and superior customer service provided.
 Ability to provide service even during power-cuts through generators as opposed to
traditional cable lines.
 Against the prevailing “One size fit all” strategy. Customised services for every
customer.
 An established player in the market helps for the visibility of the product.
 Inroads into the rural market through retailing avenues, working with Godrej Adhaar,
ITC's e-choupal, Tata Chemicals and Rallis initiatives.

Weakness:

 Is not very financially healthy.

 High operating expenses hence break-even point seems a far cry.
 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.

Opportunities:

 The share of the wallet of Indians have been increasingly moving towards education
and entertainment(see illustration)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.
 Implementation of CAS has increased the need for DTH services like TATA SKY.

Threats:

 Online live streaming – Offers superior services and at much lower costs (effectively
almost free).

10 | P a g e
  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.

Shift in spending patterns

We can see a potential market increase as indicated by the increase in the spending of the
Indian household for the education and recreation segment. Tata Sky has real opportunity to
tap this growing market.

c. Analysis of Direct-To-Home Market in India

i. Present market situation

Since the launch of the CAS Mandate in 2007, the DTH Industry has grown
from a paltry 1 million in 2006 to 22 million households at present. This
DTH viewership forms close to 20% of the total television audience of
India. This massive increase is due to customer dissatisfaction with existing
cable operators across India. Arbitrary tariff increases, frequent loss of
services, nonexistent customer services and selective broadcast were the
major cause of dissatisfaction.

9
McKinsey Global Institute

11 | P a g e
 This opportunity was taken up the DTH service providers. In 2005 Dish TV
was the only player in the market. They were followed by Sun Direct in
2007. Along with TATA Sky, Reliance with Big TV, Bharti with Digital
TV and Videocon have also joined in the race to grab the eyeballs of the
increasingly demanding Indian TV Viewership. Among the late comers
TATA Sky gained the maximum number of subscribers.

Present Market Distribution between DTH Service Providers

Market Share
Dish T.V
8% 2% Sun Direct
13% 32% Tata Sky
Big T.V
Airtel
21%
D2H
24%

10

The spectacular growth in viewership seems logical with increasing disposable

income in urban India, but the real growth has come from the rural market.
70% of DTH connections in India are from rural and small towns (population
of 1 million or less) according to a report by a marketing research firm
(Francis Kanoi).
The growth in digital segment in rural areas were 34%, 49% and 64% in the
past three years (source: - TAM Annual Universe Update –2010). The DTH
platform gives the rural customer to overcome the problem of frequent power
cuts. With the help of generators/ invertors they have constant access to their
favourite programs, which was not possible with the existing cable television
networks.

ii. Growth potential

There is an immense potential for the DTH industry in India. And in a
linguistically diverse country like India, the potential is manifold. For every
channel there is a scope to broadcast the same in many regional languages.
Presently TATA Sky broadcasts its interactive “Active Stories” feature in
six different languages- English, Hindi, Tamil, Telugu, Bengali and
Marathi.
10 http://www.pluggd.in/dth-industry-in-india-analysis-297/

12 | P a g e
 iii. Stage in Product Life Cycle

The Indian DTH industry is still in its early years. Though there is huge
competition to grab the subscriptions since there are essentially three major
players who control three-fourth of the market.

Number of subscribers availing of DTH Services

11

The total number of households owning a Television in India is estimated

close to 135 million. This represents a 54% penetration of Television in
Indian households. Among the households which do not subscribe to DTH
it faces competition from regional broadcasters, Cable TV Operators and
other TV Signal providers.

T he DTH industry is expected to grow at a Compound Annual Growth

Rate (CAGR) of close to 24% .The future of DTH industry will largely
depend on innovative marketing tactics adopted by the DTH players.

iv. Profits

From the new entrants in the DTH industry, TATA Sky has shown the fastest growth rate.

State Wise Market Distribution of TATA Sky

11 http://www.scribd.com/doc/26464799/MRP-DTH-Industry-in-India-Direct-to-Home-Service

13 | P a g e
 Market Distribution of TATA Sky(%)
Maharashtra Gujarat
12% Karnataka Uttar Pradesh
19% Tamil Nadu Punjab
4% 11%
Orissa West Bengal
4% 7%
5% Kerala Andhra Pradesh
7% Rajasthan Assam
5% Madhya Pradesh Others
5% 7%
5% 5% 6%
12

Year Wise Revenues and Profits

Year WiseRevenues
2000
1800
1600
1400
1200 Revenues
1000
800
600
400
200
0
FY2008 FY2009 FY2010 13

Year Wise PAT

-440
FY2008 FY2009 FY2010
-460
-480
-500 Profit after tax
-520
-540
-560
-580
-600 14

12 http://www.scribd.com/doc/8494250/Tata-Sky-Marketing-Plan

13 http://www.scribd.com/doc/8494250/Tata-Sky-Marketing-Plan

14 http://www.scribd.com/doc/8494250/Tata-Sky-Marketing-Plan

14 | P a g e
 A.

15 | P a g e
 D. Category Factors

The category factors influencing the market conditions of TATA SKY can be succinctly
described by the Porter’s Five Forces Model Analysis:

 Threats of new entrants: The threats from new entrants can be analysed from the
perspective of the following:
o Proper distribution network: A DTH subscriber in order to be successful
needs a proper distribution network, like those of Airtel Digital TV or TATA
SKY. Such a distribution network takes time to mature so an immediate threat
from a new entrant is low.
o 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.
o 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: The 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. Hence competition in the sector leads to there
being a high bargaining power of the buyers. So product differentiation achieves a lot
of importance.
Besides, the switching cost of users from one subscriber to another is not very high as
it includes only a change in a subscription. DTH players have been trying to reduce
this by ensuring that their set-top boxes are backward compatible.

 Bargaining power of suppliers: The DTH suppliers like TATA SKY depend on
three major types of supplies – CPE (Customer Premise Equipment) like set-top
boxes, transponders and content. As there is an issue of backward compatibility of
set-top boxes, thus the services are at the mercy of the set-top box suppliers. The
transponders are supplied by ISRO and the absence of proper regulation in the pricing
of bandwidths; the players are at the mercy of the suppliers.

 Pressure from substitutes: The threat to the DTH sector is three-fold:

o 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.

16 | P a g e
 o 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.
o Introduction of CAS by the government: The introduction of CAS by the
government is aimed at providing the normal cable operators with the ability
to provide the channels subscribers want to view – the ability which was the
USP of the DTH players.

http://www.scribd.com/doc/8494250/Tata-Sky-Marketing-Plan

 Category Capacity: Category capacity refers to the overall growth capability of the
industry and the sector as a whole. The tight regulation in the government department
regarding the compulsory usage of INSAT satellites behaves as a restrictive force
with respect to demand. Besides the number of takers for Ku-band, the transponders
used for the DTH service industry, is a low right now. However it is forecasted that in
the near future the number will increase. With respect to this there should be
initiatives in behalf of TATA SKY in order to help the consumers overcome the
inertia and join the DTH revolution in numbers.

a.

17 | P a g e
 e. Environmental Factors

The external market environmental conditions in which TATA Sky operates can be described
under the following heads.

 Political
 Economic
 Social
 Technological
These are not the only heads under which all the factors can be categorized. In case of a
highly regulated industry where the factors such as FDI and Entry/Exit conditions are
defined, a separate head for Legal is also considered.

The above combination of factor categories is known as PEST or rearranged as STEP. With
addition of other heads as Legal and Environment, it is also known PESTEL.

We shall closely look at each of the factors that influence TATA Sky as well as the DTH
industry as a whole.

i. POLITICAL

 POLITICAL OPPOSITION

In early 1997 Star TV was set to launch its DTH Service, Indian Sky
Broadcasting (ISkyB). But the Central Government banned the Ku-
Band equipments that were to be used in the DTH service. Eventually
due to political decisions the launch was suspended.

Finally after long deliberations in 2000, regulation for DTH services

were formulated. But this doesn’t mean that the service providers are
content with the present situation. There are ongoing discussions to
increase the FDI limit from the present 49 % and 20% for Broadcasting
and Cable companies to the proposed 74%.

The implications of the increase in FDI limits are manifold. Increase in

availability of funds would help the DTH service providers to reach
profitable operations. Quality of Infrastructure and Skill would
increase.

18 | P a g e
  CONTENT REGULATION

The programmes being broadcasted are regulated by the Information

and Broadcasting Ministry. As the service provider they also come
under their purview. Also the DTH service providers are not allowed to
beam exclusive content. The same set of channels means that there is
no differentiation in the content, and the services are the only things
that differ.

 COALITION GOVERNMENTS

The current Indian scenario is that one of Coalition Politics. The

Government at the centre is a mix of regional and a one or two major
national parties. Coalition also means that the stability is suspect to the
common interests of the coalition. Each Government comes with its
own set of rules and regulations. This instability to regulations, Tariff
laws create an unfavourable situation for business.

 POLITICAL CONNECTION

Most of the six DTH players in India have connections with people in
the upper echelons in political circles. Some even have holdings
through relatives. This sometimes gives an unfair advantage and a high
entry barrier for new players.

ECONOMIC

Factors such as Inflation, Growth Rate, Banking Interest Rate, Foreign Exchange Rate,
Budget allowances have a cumulative effect on the DTH players.

 IMPACT OF ECONOMIC POLICIES

As most of the equipment for the setup, such as the Set Top Boxes
(STB) are imported. Exchange rates therefore play a big role here.

Inflation often dictates the amount of money left with the customer to
spend on something as non-essential as DTH. In times of high
inflation, the industry will experience less number of new subscribers.

With high GDP rates and FDI allowances the industry will be affected
positively.

Import duty on STBs was removed from Budget 2008-09. Such liberal
decisions will help the industry to grow rapidly.

19 | P a g e
  HIGHER DISPOSABLE INCOME

With increase in the discretionary spending of the ever growing Indian

Middle-Class, there are more demands from the service providers. The
ease of switching always keeps the providers on their toes to keep their
base intact.

SOCIAL

Factors such as Social and Cultural aspirations, buying and consumption behaviour affect the
business for DTH players and are categorized as Social.

 ASPIRATIONS

The growing middle class and their aspirations to reach the next social
strata in terms of income and status are becoming very important. This
can be seen by some of the special services provided by the players.
TATA Sky recently came up with a service called Active English,
which caters to the category which eager to learn English. Also the
easy availability of affluent lifestyle in forms of broadcasted channel
gives them easy access.

 VERNACULAR vs NATIONAL CHANNELS

The number of channels being broadcast in India is 423, including

English and Hindi. The rural DTH customer is the big consumer of
these regional channels.

 PEER PRESSURE

As DTH is slowly transforming from a luxury to necessity, its absence

is becoming more and more conspicuous. Driven by the need to
maintain a standing, a part of the population become DTH consumers.

20 | P a g e
TECHNOLOGICAL

 BANDWIDTH- RESTRICTED USAGE

According to ISRO, the provider of satellite services to the DTH

industry, the industry is wasting spectrum on the Ku Band, and have
advices pooling of resources. With the increase in the number of
channels, the DTH players have been asking for more and more
bandwidth. Some players have converted to MPEG-4 from MPEG-2,
but the cost associated restricts other players from doing the same.

 ADVANCEMENTS

To differentiate their service and create more value for the customers
the players are banking on visible technological advancements.
Services like Mobile and Internet Program Recording is an attempt to
converge customer experiences. TATA Sky, SUN Direct have
launched High Definition (HD) broadcast channel and others are
expected to follow soon. Videocon have introduced DVD players and
TVs with integrated DTH STBs.

LEGAL

The legal requirements to get in the DTH industry have been in place since 2000. As a whole
there has not been too much displeasure in the role of TRAI as the regulator in the DTH
industry. But the long gestation period, experienced by all players to reach profit has caused
several voices to rise for more reformation.

 CHANNELS ON A-LA-CARTE BASIS

According to a recent order from TRAI, DTH subscribers will have the
chance to pick a list of channels as they wish, but pay only 150
minimum. The DTH operators have estimated that this will increase
their earnings.

21 | P a g e
  TAXATION ISSUES

Tax burdens are a popular area of complaints. With a cumulative

taxation of over 40%, it is one of the most heavily taxed sectors in the
country.

 License Tax – 10% of Gross Revenue

 Service Tax – 12.36% of subscription and rental income from STBs
 VAT – 12.5% provision of STB to the consumer
 Entertainment Tax – 10-12% (varies in States)

Deliberations are ongoing for reducing the License Tax to 6%. A

uniform Goods and Services Tax (GST) from April 2011 would
somewhat lessen the burden.

 LEVEL PLAYING FIELD

The cause of the DTH industry in India is advocated by the DTH

Association of India (DOAI). Recently TRAI told Broadcasters that
they can charge DTH service providers only 35% of the fee that they
charge regular Cable TV operators. Also

22 | P a g e
 C. Company and Competitor Analysis
a. Product Feature Matrix15
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

b. Strategies

The current DTH players are trying to win the market share by
employing varied strategies that play to their strengths. Tata Sky is
focused more on value added services like active series of channels.
Through this it plans to develop a dedicated and loyal customer base
which can be exploited to reach its BEP (break even point) at the
earliest. Videocon DTH is attracting its customers through schemes
such as an integrated TV and set top box. Airtel and Reliance are
banking on their established infrastructure to promote their services.
This gives them an opportunity to save on costs incurred during their
establishment and subsequent development. Others like Sun Direct
have played its cards on the regional sentiments of the public. With its
attractive packing of the South Indian channels it has swept the entire
southern region. Others are resorting to price reduction wars as a
means to promote their services and gain a strong foothold in the
current market share.

15. http://hubpages.com/hub/Tata-Sky--Dish-TV-Airtel-DTH--Reliance-Big-TV-DTH-Comparison/

23 | P a g e
 c. Marketing Mix

1. Pricing
Some players are using price to attain customers while
others are relying on value services. Comparison on this
basis is difficult as it varies on what packages the DTH
provider gives. But on a whole Tata Sky is deemed to be
expensive and Sun Direct to be cheapest.

2. Promotion
Most of the DTH providers have banked on the Bollywood
X-factor to promote themselves.

TATA Sky

24 | P a g e
 Airtel DTH

Videocon DTH

Apart from these the also try to take advantage of the sport
frenzy nation like ours. Time and again special offers are
announced before sporting events like FIFA World Cup,
Commonwealth Games, Delhi and may be in the 2011 ICC
World Cup. Tata Sky plans to launch its HD package for
sports along with one of these events. These opportunities
provide a good launch platform for the providers to kick
start their operations.

25 | P a g e
 3. Placing
The best examples of placing can be seen in Sun Direct.
They have concentrated on South India and have penetrated
the market by their cheap and attractive packages especially
for the regional (south Indian) channels. The rest have a
pan-India presence where they are not able to connect to the
local people as well as Sun Direct has been able to do in
south India. So the providers concentrate on customer
satisfaction as a whole to place their product.

4. Product
The scope for product differentiation is not much in such a
market. The after sales service is one area where the players
can pitch in to lure their customers. Also much depends on
the value added feature and services that sets your product
different from others. Such as live recording, active series
in Tata Sky.

d. Profits
The DTH sector is relatively a new field and it requires high capital
investment. The gestation period is also high. It takes about 5-6
years and about 6 million customers before profits begin to show
up in the balance sheets. Most of the companies are running in
losses. Only Dish TV and Tata Sky will be posting profits soon.

Consumer acquisition costs could vary between Rs 1,700 and Rs

8,000 per subscriber15. The industry average is more like Rs 2,400-
4,000 per subscriber. The biggest part of this cost is the set-top-box
(STB). Hence, the focus is on how to retain customers so that the
BEP is reached soon.

e. Value chain
The value chain for this service can be divided in segments like
Technology, content provided, delivery (customer service), price
and post sales services.

In the technology part Tata Sky was the 1st one to launch the
concept of recording live TV in India. After which rest followed
suit. Now it has also lined up the launch of HD services (NGC and
Discovery). These initiatives play a crucial role in developing a
positive feeling about the company amongst the customers and the
company could have a good customer base.

15
DTH industry: A glimpse of profits at last! Vanita Kohli-Khandekar / New Delhi November 9, 2009

26 | P a g e
 On the content front the DTH players don’t have many variables to
play with as it is dictated by the channel providers and the market
preferences. The content preferences differ from place to place and
hence it has to trade-off at certain places.

On the delivery front all players are equally strong with delivery
promised within 24 hrs. So anyone lagging on this bench mark has
to pay heavily.

f. Differential Advantage for each company

a. Ability to design new products:

As discussed earlier in this field the product development is not
much and more depends on value added feature, Tata sky is the
leader as of now when it comes to value added services.

b. Ability to deliver the service:

All the players are on an equal footing with online facilities being
provided by all.

c. Ability to market:
Marketing medium is usually through electronic showrooms/
retailers for most of the DTH companies. Marketing is also based
on the targeted segment like regional markets or pan-India
presence e.g. Sun Direct Vs the Rest.

d. Ability to finance:
This basically depends on how the brand in viewed by the public if
it has to source its money from the people. In case of Tata Sky. The
brand of Tata gives it huge credibility and it also has the backing of
the SKY group of companies. For providers like Big TV and Airtel
DTH, the parent company (reliance, bharti) itself can take care of
the finances.

e. Ability to manage:
The fact that many of the DTH players have a huge parent
company with years of experience behind them gives them an edge
to manage their activities pretty well.

27 | P a g e
 g. Expected future strategies
With the DTH market set to double by 2012, all the players will be
looking to consolidate their position and would like to see the
profits go green from red. For this one key area will be the
customer retention plans and new value added services being
provided. Price wars may also be a way to win the market share.
Players could also look to expand their foothold in rural areas and
remote areas of India to expand their market.

28 | P a g e
 D. Customer Analysis

a. Segmentation Strategy
Marketers have generally been moving from serving large mass
markets to specifications of smaller segments with customized
marketing programs. The choice in front if the marketers at Tata Sky
for the segmentation were:

 Mass Market
 Market Segment
 Market Niches
 Individuals

Tata Sky has gone in for the market segments category as it doesn’t
want to be viewed as an everyday product.

The general descriptors used for the segmentation of the market as

used by the marketing team of Tata Sky are:

1. Demographic Factors:
The DTH industry on India has been found to be favourably
inclined towards the middle aged working class individuals (DINK
and DIOK families). The recording option that comes along with
the DTH providers seems to be agreeable with the lifestyle of the
working class.

2. Geographic Factors:
The urban and rural markets have to be treated separately because of
the level of disposable income. DTH industry has a distinct footprint in
the rural market.

3. Lifestyle:
The customers should be profiled based on the type of lifestyle they
lead. Tata Sky can be segmented as a lifestyle product wherein it
becomes a symbol of a thriving lifestyle.

Besides the basic descriptors segmentation could also have been done
on the basis of the customer’s behaviour or relationship with the
product.

29 | P a g e
  Benefit based segmentation: Performance , Versatility or Price
 User status: User vs. Non-user
 TV usage rate: Light , medium or heavy user

b. Consumer Behaviour

Results of a survey showing what consumers consider as the most determining factors for the
assessment of the DTH players over the years.

The various factors are:

 Customer Service: The level of customer interaction and the ease of usage of the
DTH service acts as an important factor for consumers viewing this product as
feasible.
 Program Choices: Availability of popular content and programs helps win
consumers. Also the ability to control a variety of programs can be used to woo the
consumers.
 Reception: DTH services usually get disrupted due to inclement weather and during
the rains. Consumers get put off by such intermittent service. Also the quality of
picture provided is a factor.
 Technical support: Technical support required for the services include the set top
boxes, console and satellite dish equipment required. With improved versions of the
product coming out, backward compatibility of the peripherals becomes a reason for
the consumer voting favourably for Tata Sky.

30 | P a g e
  Price: The consumers of the segment targeted are becoming increasingly price in-
sensitive as they want quality product and there emphasis is on performance than n
price. However, for the rural market price still remains an order winner.

c. Targeting

Tata Sky wants to go in for value based targeting in order to increase its footprint
beyond the Tier-I cities and also so that it is able to break even quickly.

Value for money from the working class:

Tata Sky wants to target the DINK and the DIOK categories in the urban sector
because it wants to acquire ‘value’ customers so as to increase the ARPU (Average
Revenue per User). These working class families also miss their TV programs and
thus the recording feature and the playback feature of Tata Sky can be a huge
attracting factor for them. This type of targeting happens mainly in the urban sector.

First time users vs. user

Consumers can also be targeted based on those people who can be converted from the
usage of cable TV and want to be able to dictate the content they want to view. These
people can be wooed with the promise of greater control over viewership and content
management of the programs viewed.

Existing users can be categorised into those who want to go in for sustained
relationships and those who want to ‘trade- up’ to newer versions of Tata Sky like
HDTV and Tata Sky+.

TV viewership in India is lower than the global levels. So on demand movie and
recording facility can be promoted as people usually do not spend hours in front of the
TV. Hence they would want better control over the content they view.

31 | P a g e
 16

d. Positioning
Positioning of DTH services happens keeping in mind the product portfolio of the
brand. The product is mainly presented as a lifestyle product and positioned as an
“Edutainment” package.

The product has also been making inroads into the rural market where it has been
improving its presence. The product is mainly positioned for the middle class so as to
also have returns from the customer and maximize customer equity.

16
http://micamedia.files.wordpress.com/2009/07/time-spent-viewing-tv.jpg%3Fw%3D408%26h%3D302

32 | P a g e
 The channel partners for Tata Sky also help in proper positioning of the product and
add to the convenience of reaching the product for the consumers.

33 | P a g e
 E. Assumptions in Planning Process

a. Market Potential
 India will become the largest DTH market in the world by 2012, overtaking the
United States, and boast of 45 million DTH subscribers by 2014
 Rural TV market to increase by 3-4 million every year

b. Forecast Assumptions
 Monthly ARPUs of DTH players will climb to Rs 220 by 2014
 Players in the DTH Industry will move out of pricing strategy towards value addition
strategy
 Government regulation for expansion in the foreign countries will be relaxed
 Addition of KU bands by the government due to increase in demand
 VAS (value added services), HDTV (high definition television) will provide a boost
as well as the impact of up-selling to new tiers

34 | P a g e
 F. Strategy
a. Core Strategy
Our strategy for Tata sky is on the line of mobile phones. Mobile phone started as a basic
communication device. Due to increase in competition for capturing the market share, the
service providers resorted to price war. This directly affected their profit margins. In
order to capture market share, Players started differentiating their products with added
features like SMS, Mp3 player, Blue Tooth etc. Similarly for Tata sky, we are planning to
go beyond the customer demand and providing them with added features.

These points are discussed below

b. Customer Targets
Tata sky has great potential in entering new markets like

a) Rural Markets
Rural television market is increasing by 3-4 million per year. Only 2-3 % rural market
has access to cable network.

b) Entering neighbouring countries provide license policies of those countries are

compatible.

c) Entering travel area market by collaborating with long distance buses etc.

d) Tie up with hotels and restaurants provides huge business opportunity for Tata Sky.

c. Product/Service Features

 Common dish for multiple flats in a society having multiple television sets.
 Interactive services based on 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.
 Tata Sky can act as a convergence provider bundling services such as fax, voice and
internet.

Ways to improve quality services

35 | P a g e
 Technical glitches aroused due to rain cannot be fully resolved. But they can be reduced
by using water proof coating on the antenna and also increasing transmission power.

While increasing customer base is important for growth of the company, Retaining
customer should be of paramount importance to Tata sky.

Proper customer grievances redressal mechanism should be adopted and issues should be
resolved at the earliest.

Value Proposition

Product Positioning

We are not positioning our product as merely a pure channel provider. We are looking at
combining various services as mentioned below

 Weather Updates
 Exam results
 Stock markets updates.
 Prices of various commodities.
 Condensed course for various competitive exams.

36 | P a g e
 G.Strategy-Marketing Communications Programmes

a. Integrated Marketing Communications Programmes

17

At the most basic level, Integrated Marketing Communications, or IMC,

means integrating all the relevant promotional tools, so as to appear to be in
harmony to the consumer.

Tata Sky is trying to achieve by reaching out to their consumers across various
mediums. Apart from newspaper prints and television ads, they are also
venturing across many social networking sites.

In December 10, 2009, the home page of MSN India carried a Tata Sky banner
ad, which was integrated with Twitter. Its twitter page is a personification of
its popular “Active” service.

It also has a presence in the popular networking site Facebook. An interesting

thing about this page is that it is created and maintained by the fans, it is not an
official one. Herein lays an opportunity for them. SUN already has an official
presence; Tata Sky could replicate its twitter experiment on Facebook as well.

17
Integrated Marketing Communications (IMC) Part III: Acquiring and Retaining Customers
Holly Hosford-Dunn, Ph.D., Arizona Audiology Network, LLC, Audiology Online Contributing Editor, Practice
Management

37 | P a g e
18
Banner on MSN India

19
Twitter page of the “Active”puppet

20
Facebook page created by fans
18
http://www.afaqs.com/media/story.html?sid=25760
19
http://twitter.com/actve
20
http://www.facebook.com/pages/Tata-Sky/109676475716872

38 | P a g e
 b. Pricing Strategy

With proliferation of the DTH market and the competitors gunning to capture the
market, all the DTH players have resorted to cutting prices in existing offerings as
well as new offerings as HD services. It has recently launched its HD services at a
very aggressive price of Rs 259921. Compared to others (SUN-Rs 9990, Reliance- Rs
7490, and Dish TV- 5999) it is the cheapest and is expected to give rise to another
price war. But it is also expected to capture a lot of initial market because of the
cheaper positioning.

Apart from aggressive pricing some other options that Tata Sky can consider are:

 Starting Post Paid services where the customer gets a bill at the end of the
stipulated bill period instead of paying up when the balance runs out. This will
ensure that the customer doesn’t stop his viewing experience even for some
time.
 Offer reward for referrals to customers who bring in others to subscribe too.
 Start special packages in the same line as the telecom service providers,
depending on special holidays or festivals.

c. Channel Strategy

Using local talent:

At present TATA Sky can be subscribed from designated showrooms and dealers.
The local Cable TV operators are seen as a threat to the DTH industry. If these
operators can be brought under fold then the existing distribution channel can be
reused. As these people will be well known in the locality, a lot of families will be
easy converts from cable to Tata Sky. The distributors can be persuaded with
favourable terms to become Tata Sky employees.

Using rural structure:

In villages, the village self-government structure is highly respected. The village

administrators can be influenced to experience and further advocate the positives of
Tata sky to the villagers.

21
http://www.thehindubusinessline.com/2010/06/15/stories/2010061551112000.htm

39 | P a g e
 d. Customer Management Strategy

With the number of choices increasing daily and the ease of changing to another DTH
service provider also increasing, focus is increasing more and more on Customer
loyalty and retention. The use of Customer Relationship Management (CRM) as a
strategy for nurturing and managing a company’s interactions with customers is
coming to the forefront.

Tata Sky has selected Siebel, leaders in CRM software, to support the operations
across the areas of call centres and field service operators, customer order
management and product configuration.22

H.References
1. http://www.tatasky.com/corporate-info.html

4. http://en.wikipedia.org/wiki/Tata_Sky

5. Article on News Center, 10th March 2010

6. Excerpts of interview with Mr. Vikram Mehta (Chief Marketing Officer, Tata Sky) published
in Business Line, 7th January 20107.

7. http://business.rediff.com/report/2010/apr/06/tata-sky-strategy-to-attract-more-customers.htm

8. http://www.tatasky.com/

22
http://www.tatasky.com/corporate-info.html

40 | P a g e
 9
McKinsey Global Institute

10 http://www.pluggd.in/dth-industry-in-india-analysis-297/

1 http://www.scribd.com/doc/26464799/MRP-DTH-Industry-in-India-Direct-to-Home-Service

2 http://www.scribd.com/doc/8494250/Tata-Sky-Marketing-Plan

3 http://www.scribd.com/doc/8494250/Tata-Sky-Marketing-Plan

4 http://www.scribd.com/doc/8494250/Tata-Sky-Marketing-Plan

15. http://hubpages.com/hub/Tata-Sky--Dish-TV-Airtel-DTH--Reliance-Big-TV-DTH-Comparison/

5 DTH industry: A glimpse of profits at last! Vanita Kohli-Khandekar / New Delhi November 9, 2009

6 http://micamedia.files.wordpress.com/2009/07/time-spent-viewing-tv.jpg%3Fw%3D408%26h%3D302

7 Integrated Marketing Communications (IMC) Part III: Acquiring and Retaining Customers

Holly Hosford-Dunn, Ph.D., Arizona Audiology Network, LLC, Audiology Online Contributing Editor, Practice

Management

8 http://www.afaqs.com/media/story.html?sid=25760

9http://twitter.com/actve

20 http://www.facebook.com/pages/Tata-Sky/109676475716872

2 http://www.thehindubusinessline.com/2010/06/15/stories/2010061551112000.htm

2 http://www.tatasky.com/corporate-info.html

41 | P a g e