Sales Mgmt Final

7/31/2019 Sales Mgmt Final

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DTH Industry

TATA SKY AND AIRTEL 1

EXECUTIVE SUMMARY

Over the years back we all know cable TV was everywhere, but 2-3 back a new technological

revolution happened and directed to home satellite television came into existence and as days

passes by DTH sector in India has developed with the availability of more brands, better quality

products and better service

Our research facilitates designing an overall sales and distribution management strategy for

DTH sector after an in-depth study and analysis of two established brands in DTH business

sector: TATA Sky and Airtel DTH(India)

The objective of our research will be:

To compare sales and distribution effectiveness ( Quantitative research) To carry out a detailed study of Logistics Network To design a comprehensive sales system

The data collected for research involves the use of both primary and secondary resources.

Primary data are based on the findings from the company personnel with the use of tools like

questionnaires and discussion. This data is further sustained by the use of appropriate

secondary resources like internet and books.

In this project we went through interviewing the retailers, distributors and management

officials of TATA Sky and Airtel DTH covering most of the regions of Delhi & NCR.

After all the research and analysis work done during the course time of this project we came to

the conclusion that TATA Sky sales is more effective that of Airtel DTH, but even then there is a

great room for improvement available for them.


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DTH Industry


Sales And Distribution Effectiveness Of DTH Services (Tata Sky And Airtel Digital TV)

INTRODUCTION

Overview of the Industry

The history of Indian television dates back to the launch of doordarshan, Indias national TV

network in 1959. The transmission was in black and white. The 9th

Asian Game which was held

in 1982 in the countrys capital New Delhi heralded the mark of colour TV broadcasting in India.

In 1991, Indian economy was liberalized from the license Raj and major initiatives like investing

FDI, deregulation of domestic business emerged. This led to the influx of foreign channels like

Star TV and creation of domestic satellite channels like SunTV and ZEE TV. This virtually

destroyed the monopoly held by doordarshan . In 1992 , the cable TV industry started which

lead to revolution.

Every city in India had a complex web of co-axial cables running through the streets with a new

breed of entrepreneurs called as cablewallahs or Local Cable Operators (LCO) taking in charge

of distribution. The film industry was shocked by this sudden growth and there were even

organized protests for calling of the cable TV industry. There were simply too many cable

operators in the country and the channels had a difficult time in getting its return as the

existing system was a non-addressable and the operators could simply give a reduced number

of subscribers to amass profit. This lead to the emergency of the new breed of firms called as

Multi System Operation (MSO) who had heavy financial muscles to make capital investment.

The MSO industries become highly monopolistic this warrants government participation to

ensure competition.


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DTH Industry


Later on, the united Front Government had issued a ban on use of ku band transmission. After a

change of Government, the ban got lifted finally in 2001 and TRAI issued the guidelines for

operating DTH. Countrys first private DTH license awarded to Dish TV in 2003 which started

operations in 2004. Prasar Bharti also started its product DD-Direct+.

DTH Digital TV system receives signals directly from satellite directly through the Dish, decodes

it with the Set-Top box and then sends stunningly clear picture and sound to TV which is the

business undertaken by some company by observing the rate of growth and scope for business

and opportunity in the Indian market which has 120 million viewers of TV.

With the Indian economy growing at GDP growth rate of 7.4%, there is a sense of growth

prevailing everywhere. The average Indian disposable income and purchasing has risen to never

before levels. The Indian entertainment and media industry is not far behind. It is currently

established at a worth of Rs. 450 Billion with a CAGR of 18% over the next 5 years. Terms which

were alien to Indians like capital DTH, digital cables, IPTV are suddenly finding the presence of

countrys journals

Television holds an important place in our lives. Its impact is being seen amongst all sections

and groups of the society. Digital Television is rural India is three-fold higher than in urban

areas. Nearly 80 per cent of households in urban areas have television sets, more than double

the 38 percent in rural areas; the adoption of technology has been much faster in the latter.

Digital TV penetration is 34 per cent in rural areas and 11.9 per cent in urban India, here were

23.5million digital TV households as on June 2010, of which 13.8 mn were in rural areas as

compared to 5.6 mn in urban areas. The findings are on the basis on a survey conducted across

250910 households between January 2008 and June 2010.

Nearly 90 per cent of the digital TV market was dominated byDirect to- Home (DTH) service

providers. The rest were being catered to by digital cable operators. The Indian DTH market has

reached the

inflexion point and is set to overtake the United States earlier than expected, in another two

months.


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DTH Industry


India has a total television population of close to 135 million, out of which 80% have access to

cable and satellite (i.e. 108 million). The total DTH subscribers are close to 22 million. Thus the

DTH has a market share of approximately 20%. The subscriber base for DTH in 2006 was meager

1 million. Now for an industry which is just 5 years old, it is a great achievement.

Lets have a look at how the DTH industry has grown in these 5 years. In 2005 Dish TV was the

only player in the DTH industry and was registering subscriber growth mainly in the areas where

cable TV was not available. The subscribers were not ready for the cost of set top box. In 2007

CAS mandate was introduced in selected metro cities, where users had to invest in a set top box.

Though the initiative was not very successful, it gave a wider acceptance to the DTH and

consumer became ready to pay for the set top box. Spotting the opportunity Sun Direct launched

its services in 2007 with a drastically low one time cost involved for DTH subscriber. Followed by

this Reliance, Big TV and Air-Tel and Videocon launched their services. The market became

competitive. Every player came with innovative offerings, Dish TV offered Movie on Demand free

worth the cost of set top box, Air-Tel and Big TV offered free subscription for first few months

etc. All these things were coupled with aggressive marketing campaigns. Tata Sky gained the

maximum subscribers during this period.

Today the market shares of various players are as follows

DishTV : 30% Sun Direct: 25% Tata Sky: 22% BIG TV : 13% Airtel : 8% D2H : 2%


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So where is the real growth happening for the DTH industry. Is it the urban areas or rural?

Though DTH is comparatively expensive than cable service, the growth is coming from the rural

area. If we see statistics the growth for the digital segment in rural areas were 34%, 49% and

64% in the past three years.(source:- TAM Annual Universe Update 2010). The growth in the

rural segment can be attributed to frequent power cuts in the rural areas. DTH platform gives

the rural consumer access to their favorite programs, with the help of generator/ invertors,

which is not possible with the cable service in most of the areas.

Though DTH has certain advantages such as better picture/ sound quality, better customer

service. It also has a disadvantage of price. The DTH player have to pay various taxes such as

Adjusted gross receipts @ 10%, service tax @ 12.36%,VAT @ 12.5%,CST@3%,corporate tax,

Excise duty@ 16%, Customs duty, CVD ,customs duty etc. Whereas the local cable operators

easily get away with government taxes by underreporting the subscriber base. Thus gaining a

clear cost advantage. The regulator should take a note for the same and provide regulations for

the same.

DishTV 30%

Sun Direct 25%

Tata Sky 22%

BIG TV 13%

Airtel 8%

D2H 2%


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DTH Industry


At the same time in Indian market One size fits all strategy doesnt work for long. So, the DTH

players have to design packages suitable for rural consumer enable them to enjoy the digital

content (For eg. Levis jeans had enabled consumers to buy their jeans with an EMI scheme).

The DTH industry is expected to grow at a CAGR of close to 24% .The future of DTH industry will

largely depend on innovative marketing tactics adopted by the DTH players.

DTH Industry Market Share 2008*

BrandPromoter

Market

Share

Dish TV Zee group 53%

TataSky Tata Sons & Star TV 30%

Big TV Anil Dhirubhai Abani Group 15%

Others (Sun Direct, AirTel Digital

TV )

Sun by SUN TV

AirTel by Bharati telemedia2%


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Private DTH players in India

DISH TV A division of Zee Net Work Enterprise Launched operations in

2005 Number of Subscribers: More than 9 Million.

TATA SKY A Joint Venture of Tata News Corps STAR Launched operations

in 2005 Number of Subscribers: About 5.5 Million.

SUN DIRECT A part of Sun Network Launched operations in 2007. Number of

Subscribers: About 6.4 Million

RELIANCE BIG TV A part of Anil Dhirubhai Ambani Groups

Reliance Communications Launched operations in 2008 Number

of Subscribers: About 3.00 Million

AIRTEL DIGITAL TV A part of Bharati Airtel Launched operations in 2008 Number ofSubscribers: About 4.7 Million

VIDEOCON D2H A Part of Videocon Industries Launched operations in 2009

Number of Subscribers: More than 2 million


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DTH Industry


COMPANY BACKGROUND

TATA SKY

History:

TATA Sky, an 80:20 joint venture between TATA Sons and the Star group, provides satellite

television services to Indian viewers. The company was incorporated in 2004 and offers a range

of media and entertainment options to customers.

The TATA Group is one of Indias largest and most respected business conglomerates. It

comprises diversified businesses in sectors such as materials, engineering, services, energy,

information systems & communications, consumer products and chemicals.

The group and its enterprises have been steadfast and distinctive in their adherence to business

ethics and their commitment to corporate social responsibility. This is a legacy that has earned

the group the trust of many millions of stakeholders in measure few business houses anywhere

in the world can match.

Areas of business

TATA Skys direct to home satellite platform delivers more than 100 television channels, movies

and interactive services for games, learning, recipes, news, chat rooms, etc. It has state-of-the-

art digital infrastructure and a retail network that covers more than 4,500.

Location

Based in Mumbai, the company has three call centres (Pune, Chandigarh and Hyderabad)


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Revolutionise Television viewing

TATA Sky is set to revolutionise television viewing in India through its superior digital quality

picture and sound. The service aims to empower the Indian viewer with Choice, Control and

Convenience through its wide array of programming choices and interactive features. TATA Sky

offers viewers a variety of channels ranging from entertainment, sports, movies and music to

news and documentaries in DVD quality picture and CD quality sound.

VISION

TATA Sky aims to revolutionise Indian entertainment by offering superior DVD quality picture

and CD quality sound. TATA Sky envisions:

Connecting every television home

Empowering every television viewer

Revolutionizing home entertainment

Extensive Customer Service Network

TATA Sky has established and 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 at everysubscribers home, thereby ensuring the highest levels of customer service.

TATA Sky retails its hardware and prepaid recharge vouchers through popular consumer

electronic stores to enhance customer convenience.


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OFFERING

In addition to new channels and exciting interactive features, TATA Sky offers all popular

television channels, thus becoming a one-stop for all the television entertainment needs of

customers.

PARTNERS

TATA Sky has partnered with the global leaders in the space of digital technology to bring a

state-of-the-art satellite television service to India.

Satellite :

TATA Sky has leased all 12 Ku-Band transponders on ISROs Indian satellite, INSAT 4A, the

most advanced and high powered KU- Band communication satellite in the region,

developed keeping in mind local requirements. The satellite enables TATA Sky to offer

superior picture and sound quality with a wide range of channels.

Business Support Software:

NDS: TATA Sky has partnered with NDS, the leading provider of technology solutions for

pay television. NDS systems has played a key role in the end-to0end system architecture

and launching the nationwide digital service. The NDS Video Guard conditional access

solution provides superior broadcast security, and enables TATA Sky to offer multiple

programming and pricing packages.

Siebel: TATA Sky has selected Siebel, leaders in Customer Relationship Management (CRM)software, to support operations across the areas of call centre and field service operations,

customer order management and product configuration.


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Kenan: Comverses Kenan FX billing software has been selected to support billing for all

residential, institutional and commercial customers. The Kenan software has been

enhanced specifically for TATA Sky, to support a first in industry prepaid billing capability

which will provide customers convenient payment options.

SAP: SAP the leading Enterprise Resource Planning (ERP) application suite, has been

selected by TATA Sky to support the companys materials management, sales and

distribution, finance and control and human resource requirements.

IT: Sun Microsystems: TATA Sky has selected Sun Microsystems to provide world-class

technology infrastructure, which helps the company to deliver high-level service

standards for its satellite television service. The servers ensure maximum up-time, fault

recovery and load management. Sun has also provided TATA Sky with installation,

engineering expertise and support.

Digicomp: TATA Sky has partnered with Thomson and Humax, world leaders in digital

broadcast technology for building top-of-the line digicomps, customised specifically for

the Indian markets. The technologys feature rich designs enables TATA Sky to delivermultiple programming, pricing packages and interactive services to its customers.

Systems Integration: TATA Consultancy Services (TCS) is a System Integration partner

for TATA Sky Ltd. It supports IT operations in the areas of billing, ERP and other

customer care and employee related internal facing applications.

Service Support: SerWizSol: SerWizSol provides TATA Sky with three high-end callcentres offering round-the-clock support in 11 different languages in Pune, Hyderabad

and Mohali.


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Inception and Heritage

Incorporated in 2004, TATA Sky is a JV between the TATA Group and STAR. TATA Sky

Endeavours to offer Indian viewers a world class television viewing experience through its

satellite television service.

TATA Brand

The TATA Group is one of Indias largest and most respected business conglomerates. It

comprises 93 operating companies in seven business sectors: information system and

communications, engineering, materials, service, energy, consumer products, and chemicals.

The TATA Group has operations in more than 40 countries across six continents and its

companies export products and services to 140 nations. The Group and its enterprises have

been steadfast and distinctive in their adherence to business ethics and their commitment to

corporate social responsibility. This is a legacy that has earned the Group the trust of many

millions of stakeholders in a measure few business houses anywhere in the world can match.

SKY Brand:

The SKY brand, owned by the UK-based British Sky Broadcasting Group, brings to TATA Sky thereputation of more than 20 years experience of satellite broadcasting. SKY is well known for the

innovate products and services launched by BSkyB, such as DTH broadcasting in 1989, digital

satellite broadcasting in 1998, interactive television services in 1999 and the SKY+ personal

video recorder in 2001. TATA Sky joins an international group of DTH businesses that includes

platform as far apart as the UK and Italy in Europe and Mexico and Brazil in Latin America.


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FINANCIAL IMPACT

Assumptions:

ARPU increases from Rs 190 to Rs 470 in 2010-11

Revenues increases @ CAGR of 112% till 2010-11

Expenditure reduces from 180% to 75% till 2010-11

Debt : Equity reduces from 2:1 to 1:2 till 2010-11

TATA SKY (Rs Million)

FY

2007

FY

2008

FY

2009

FY

2010

FY

2011

Revenues 190 403 854 1810 3838

Expenditure 365 666 1183 2023 2878

Operating Income 175 263 329 213 959

EBITDA Margin 92% 65% 39% 12% 25%

Depreciation 100 133 177 235 300

Finance Expenses

(12%) 80 106 85 94 120

PBT

Less: Provision for tax 0 0 0 0 182

Profit after tax -355 -502 -591 -542 358

Total Assets 1000 1330 1769 2353 3000

Debt 667 887 708 784 1000

Equity 333 443 1061 1568 2000


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Impact

Subscriber base expected to increase 1 million each year to reach 8.0 million by 2011 DTH business is expected to grow from Rs 0.19 billion in FY2007 to Rs 3.84 billion in

2011

Likely to achieve EBITDA margins of 25% by 2011, from negative EBITDA margins inFY2007 of

Rs. 0.18 billion Funding over the next 4 years Rs. 20 billion through a mix of debt and equity Break-even expected by FY2010-11


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AIRTEL DTH

History:

The businesses of Bharti Airtel have always been structured into three individual strategic

business units (SBUs) Mobile services, Airtel Telemedia Services & Enterprise Services. The

mobile business provides mobile & fixed wireless services and has recently launched a Direct-

To-Home (DTH) service, Airtel Digital TV. The company provides end-to-end data and enterprise

services to the corporate customers.

The Product: Airtel Digital TV:

The Airtel Digital TV consists of three components:

1. Dish antenna2. Set Top Box3. Remote

It has increased its channel base to 183+ channels. Airtel Digital TV is now amongst the fastest

growing DTH brands in the country and is available across 5000+ towns in India. It has also been

ranked as the best DTH service by Living Digital magazine.

Features Airtel Digital TV

Airtel Digital TV uses 20% larger dish antenna that offers better performance duringrain.

It comes with a universal remote for both Set Top Box and TV that offers enhancedviewer convenience.

Highest Set Top Box memory enabling more interactive applications. World space Radio


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Interactive application such as iMatinee (Book cinema tickets), iTravel (Browse and booktravel packages), iShop (Shop on TV for your favorite brands), iCity (Get your citys

information) and Widgets (Update yourself with latest stock news), 8 screen iNews, 2/4

screen iSports.

Games with high quality graphics, refreshed every 6 weeks. Audio gain control for uniform audio levels across all channels Simple and intuitive search On screen account meter Last viewed channel in case of power disruption/switch off Low battery indicator on the screen

Marketing Strategies Of Airtel Digital TV:

The following are the marketing strategies followed by Airtel Digital TV. Since its inception

Airtel Digital TV has followed a very aggressive marketing strategy. It has roped in the highest

number of high profile celebrities when compared to the competitive products. Also it has lent

in numerous promotion schemes to increase its market shares and fasten its penetration. The

ad slogans used and a brief history of the marketing strategies followed since its inception is

described below:

Come Home to The Magic:Airtel Digital TV started of its marketing campaign as a very high quality service provider. Its

tag line Come home to the magic was to symbolize the fact that Airtel Digital TV is indeed a

magic. It started its marketing campaign primarily targeting the higher income viewers. It

introduced itself as a very classy product using a lot of celebrities for advertisement

campaigns along with exquisite use of colors and a very handy as well as well mentioned

website. This marketing campaign helped in creating a niche for it projected it has the best

DTH service provider available in the country in terms of the quality of picture sound and

after sales service is concerned.


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It also roped in a galaxy of stars like Saif Ali Khan, Kareena Kapoor, Madhavan, Zaheer Khan,

Gautam Gambhir and none less than A R Rehman as its brand ambassadors for its ad

campaign.

Stars come home (March 2009)In order to increase its penetration as well as the market share, it started several innovative

promotion packages. One of them is the stars come home package, where in one or more

celebrities would visit the homes of the winners of the contest held among Airtel Digital TV

owners. This was a unique marketing strategy followed by Airtel Digital TV and was not

been adopted by any other DTH service providers till date. In fact Airtel Digital TV has the

highest number of elite brand ambassadors, thereby making it a natural choice for thehigher society, high income groups, as well as the fashion conscious people.

DTH Picture ClarityAs of today, its advertisement campaigns are primarily based on highlighting its superior

picture quality. It is also highlighting the fact that the technology used by it is far superior to

that used by others. It is advertising its MPEG-4 encoding a lot thereby showing that it is

better than TATA Sky and Big TV, which use MPEG-2 encoding.

Promotion Strategies:

Various promotion strategies have been adopted by Airtel digital TV to fasten the increase

in their market strategy. One of the strategies which were quite successful wss that of giving

the set-top box and 3 months free subscription of DTH free to customers who purchased

Samsung LCD TVs. This strategic partnership with Samsung helped it get the right kind of

customers using its product. It is inevitable for an LCD TV user to use a DTH service and in

such a case by distributing the hardware for free it has made the choice of the user simple

in choosing Airtel Digital TV. Such an user would use the DTH service for quite a long time

and thereby would bring in much more revenue than what the hardware would have cost.


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This was indeed a very successful and innovative strategy. This promotion strategy of tying

up with LCD TV manufacturers have been soon followed by other DTH service providers.

Market Opportunities and Challenges:

DTH Industry A booming market in India

Lot of potential still to be realized- The fact that the DTH service sector with all theservice providers combined still occupies only 20% market share clearly implies that

there huge scope for penetration in this market.

Main Competition with the cable operators Although there is a significant competitionamong the DTH service providers themselves but still the real competitor remains the

cable operators who still hog the major market share of as high as 80% though their

product is inferior to that provided by the DTH providers.

Key to increase market share and penetration It is very important for the DTH serviceproviders to device their marketing and promoting strategies such that they increase

their market share and tap the still largely open market.

Competition from other players Although the market is widely open, the competitionfrom other players cannot be ignored and this regard it is essential to create a niche and

unique identity for your own product while clearly identifying the target audience and

devising the product and service in accordance with them.

Pricing Strategies:


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Airtel Digital TV has both monthly as well as annual pricing packages. When the fact that

this provides the best quality of product among the competitors the price of it is very

competitive and is infact more less equal to that of its rival who offer much less services.

Monthly, quarterly as well as annual plans Like other service providers, AirtelDigital TV also offers monthly, quarterly as well as annual plan to its customers.

The price is reduced with increase in the duration of the plan.

Top Ups It provides very attractive top up plans to go with the base packages.The top ups plans are more flexible and consumer friendly when compared to

those offered by other DTH Services.


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METHODOLOGY

Business Sector:In order to study the sales and distribution effectiveness of two organization we decide to take

the DTH Industry.

Organizations identified for the study:

Under the DTH Industry the two organizations which we are going to study are:

TATA Sky Airtel DTH

OBJECTIVE:

The main objective of the study can be divided into following heads:

To compare the Sales and Distribution Effectiveness (Quantitative Research) To carry out a detailed study of Logistics Network, Mode, Costs and Monitoring system. To design a comprehensive sales reporting system for the choosen business sector.

Data Collection:

Data collection will be done from both Primary as well as Secondary sources.

Primary Data Collection: It will be collected by In-Person Interviews as well as telephonic

Interviews of various personals/managers working in the organization and detailers/retailers

etc.

Secondary data collection:

From newspaper,

Magazines

Libraries

And websites


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o www.airtel.como www.tatasky.com

Research Design:

The research is descriptive type and accordingly the design is formulated so that precise and

relevant information may be gathered.

Data Collection Tools:

Structured Questionnaires

Sample Design:The research will be conducted by interviewing various Organizational officials and the Dealers,

Retailers and franchisees.

Sampling: Convenient sampling Method Adopted: Personnel Interviews Field: Delhi and NCR regions

Sample Size:

1. The target will be to interview at least 4 distributor of each company and as manyofficials as possible.

2. The target will be to interview at least 10 retailers of each company.3. The target will be to interview at least 20 consumers.4. The target will be to interview at least 1 personnel from Top management of each

company.

Data Analysis and Technique:

Graphical method (Bar graph)
http://www.airtel.com/http://www.airtel.com/http://www.tatasky.com/http://www.tatasky.com/http://www.tatasky.com/http://www.airtel.com/


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DISTRIBUTION SYSTEM OF AIRTEL

1. Organization (C & FAs)2. Distributor3. Retailer4. Customer

Organization

C & FA

DISTRIBUTOR

FOS FOS FOS

Different retailers Different retailers Different retailers

DISTRIBUTOR


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AIRTEL DTH

Manufacturing unit

Warehouses

Distributors Exclusive Showroom Demo at Shopping malls Exclusive Retailers

Product Area Distributor

Dealer

Retailer

Customer


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TATA Sky DTH

Manufacturing Unit

Warehouses

Distributors

Dealer Exclusive Showrooms (Experience Zone) Corporate Sales

Retailer

Customer


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Criterion and Condition for selecting Channel Members:

The criterion followed for the selection of channel members is almost same in case of both

Airtel DTH and TATA Sky DTH. The various conditions based on which the members are selected

are:

1. Financial Capacity : The financial condition of the member must be sound and he shouldposses a neat and clean past market record.

2. Market Reputation: He should have a good reputation in the market and also with thecustomers.

3. Space and Location: In case it is a distributor the factor taken into consideration is spaceand in case of retailers it is location.

4. Experience: He should have been in the field for a minimum period of 5 years.

Average Inventory Size:

Airtel DTH: The average inventory size kept by airtel is of almost 15 set-top box for each set of

set-top box sold.

TATA Sky: The average inventory size in case of TATA Sky is of 20 set-top box for each set of set-

top box sold.

The order processing of TATA Sky is same as that of Airtel.


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PERFORMANCE APPRAISAL

Airtel DTH: The performance appraisal of channel members in case of Airtel is done on half-

yearly basis. The major criterion for appraisals is the net increase in terms of sales compared to

that of last time, the incentives provided varies from gifts to free foreign trips.

TATA Sky: In case of TATA Sky the evaluation is done on a quarterly basis and the appraisal is

provided annually.

The reason for high satisfaction of the channel members of TATA Sky can be understood from

this, as they are duly appraised on a regular basis and their problems are duly solved.

Assigning of targets:

Airtel DTH: In Airtel DTH the targets are assigned to the sales personnels based on the

following criterions:

i. Population of that areaii. No. of distributors in that areaiii. Potential available in that territoryiv. Back history of individual sales personnel

TATA Sky: In TATA Sky the targets are assigned to the sales personnels based on the following

criterions:

i. Total area to be coveredii. Past performance of the individualiii. No. of distributors in that region.


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LIMITATIONS OF THE STUDY

While working on this project we had to face some difficulties while conducting the survey.People were not interested in giving their actual information about their family income and

airtime, as they were extremely scared about the income tax some people have difficult to take

them in confidence so that they can give correct information.

Some of the limitations are:

Not at home Refusal to cooperate Respondent bias Cost Time

Market Research:

Airtel DTH: They do market research through questionnaires which they ask to fill from their

customer after they install their set top box

TATA Sky: They do not conduct and individual market research but they get desired information

from the same method as they ask the customer to fill a questionnaire during the installation of

the product.


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SALES SYSTEM DESIGN

On the basis of data collected from the retailers, distributors, etc an approximated comparison

of the two is shown below:

Overall Effectiveness

Interpretation:

The Figure shows the overall effectiveness of sales & distribution.

It shows that out of 4 distribution which are rated on the basis of likert scale i.e., from 1-9. For

TATA Sky they feel it has got 8 or 90% overall effectiveness as compared to Airtel DTH service

which has just scored 6 or 80% rating.

0

1

2

3

4

5

6

7

8

9

TATA Sky Airtel DTH


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Quality Maintenance

Interpretation:

The above graph shows the overall Quality maintenance done by the company in respect to

their product, which means that at how much rate consumer is facing problem with the

product.

It shows that out of 4 distributors which are rated on the basis of likert scale i.e., from 1-8, for

TATA Sky they feel it has got 7 or 87% overall quality maintenance which is same as compared

to Airtel DTH product which has also scored 7 or 87% rating.

0

1

2

3

4

5

6

7

8

TATA SKY Airtel DTH


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Customer Orientation

Interpretation:

The above shows the customer orientation in which the company is engaged in respect to their

product, which means that how much are the companies care about their customers.

It shows that out of 10 distributors which are rated on the basis if likert scale i.e., from 1-9, for

TATA Sky they feel it has got 8 rating or 100% in customer orientation as compared to the Airtel

DTH product service which also scored 5.5 or 68%.

0

1

2

3

4

5

6

7

8

9

TATA SKY AIRTEL DTH


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Delivery Time:

Interpretation:

The above graph shows the delivery time taken by the companies to the installation of the

product plus the inventory management of the companies.

It shows that out of 4 distributors which are rated on the basis of semantic scale i.e., form 0-48

hrs, for TATA Sky they take 47 hrs for delivering the service as compared to Airtel DTH product

service which takes around about 47.5 hrs.

46.7

46.8

46.9

47

47.1

47.2

47.3

47.4

47.5

47.6

TATA SKY AIRTEL DTH


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Promotional Activities:

Interpretation:

The above graph shows the promotional activities done by both the companies

TATA Sky claims that they does more promotional activities does as compared to Airtel DTH

which does around 97% as compared to its competitors.

7.7

7.75

7.8

7.85

7.9

7.95

8

8.05

TATA SKY AIRTEL DTH


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Finding from Retailers & Customers

Preferred Subscription

On the basis of the data collected from the customers, comparison of the preferred

subscription is shown below:

Interpretation:

Fig shows the kind of subscription customer prefers.

It shows that out of 20 customers, Tata sky have nice yearly offers than Airtel DTH so werecommend Airtel to design more lucrative & attracting packages in yearly & quarterly

segment.

13

21

4

16

21 1

0

5

10

15

20

Monthly Quaterly Semi annualy Yearly

Tatasky Airtel


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Time taken to Solve The Customer Complaint

On the basis of the data collected from the customers, how fast customer complaint is solved is

shown below:

Interpretation:

Fig shows how fast the customer complaint is solved.

It shows that out of 20 customers, 10 customers of TATA Sky get their complaint solved within

24 hours and 5 customers of Airtel DTH get their complaint solved within 24 hours.

5 customers of TATA Sky get their complaint solved within 2-3 hours and 8 customers of Airtel

DTH get their complaint solved in 2-3 hours. TATA Sky is better in getting their customer

complaint solved quickly.

0

2

4

6

8

10

12

24 hours 2-3 days 1 week More


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Purchase Experience

On the basis of data collected from the customers, how fast customer complaint is solved is

shown below:

Interpretation:

This figure shows from where the customer purchased his DTH service. It shows that out of 20

customers, mostly the customers of TATA Sky and Airtel DTH purchased the product from the

dealer near their home or from a known dealer.

56

45

6

8

5

1

Authorized

Dealer

Exclusive Shop Dealer nerby

you

A known

dealer

From where you prefer to buy DTH

Connection?

Tata sky Airtel


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The customer chooses to purchase the service on the basis of the convenience.

Customer Satisfaction:

On the basis of data collected from the customers, the level of satisfaction is shown below:

Interpretation:

This figure shows the level of satisfaction of the customer after buying and using the DTH

service.

It shows that out of 20 customers, most of the customer of TATA Sky are fully satisfied in

comparison to Airtel DTH. The quality and service of TATA Sky is better than Airtel DTH.

0

2

4

6

8

10

12

14

Fully Satisfied Partially Satisfied Not Satisfied

TATA Sky

Airtel DTH


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FINDINGS FROM TOP-LEVEL MANAGEMENT

TATA Sky, a direct-to-home joint venture company between TATA group and Star is getting big

on value-added services such as PVR (personal video recorder) and is ready to pump in another

Rs 20 billion as it eyes a subscriber base of eight million by end of 2012.

The focus is on building a strong brand with heavy spending on advertising. While rival network

Dish TV has used Bollywood star Shah Rukh Khan, TATA Sky has Aamir Khan as its brand

ambassador. Occupying a premium position in the mindshare has been part of the strategy as

the company has the technology support of News Corp and the trusted name of the TATAs.

The DTH game has got tougher with competitive entries from Sun Direct, Reliance Big TV and

Bharti Airtel Digital TV. This has meant a rise in project expense from Rs 30 billion to Rs 40

billion, lower ARPUs and high customer acquisition costs.

Cable TV, which has a strong footprint across the country, is also offering stiff competition to

DTH operators.

Q.1 Has TATA Sky revised upwards the project cost from Rs 30 Billion to Rs 40 Billion?

When we first formulized our business plan, we were looking at an investment of Rs 12 Billion.

Then we came up with a realistic estimate of Rs 30 Billion. We revisited that plan and now

believe our funding requirement for the venture would be Rs 40 Billion. We have already

invested half of this amount.


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Q.2 Has the project cost gone up because of the higher element of subsidy in the Indian DTH

market?

When we first did our business plan, we didnt expect so many DTH operators to come in. there

is a lot of activity in the category and the price war has come at an early stage of the game.

Competitive entry and explosive growth in volumes means higher costs. Customer acquisition

accounts for a significant percentage of the costs.

Q.3 Will this mean that the gestation period for profitability will go up?

I wouldnt like to comment on when we reach the break-even situation. DTH is an infrastructure

business and requires high business and long gestation periods. We have no illusion of that.

Generally, the break-even for this kind of business is in excess of five years. Industry estimates

put TATA Skys losses at Rs 8.15 Billion in FY09 and a little more than that in FY10. Do these

losses fall in line with your business plan?

I cant talk on financials.

Q.4 Are you in line with the projected subscriber growth?

We have touched 2.7 million subscribers and we are targeting at least 8 million connections by

the end of 2012. When we were at the drawing board, our broad plan was to add a millionsubscriber every year. We are growing faster than that.

When we first formulized our business plan, we were looking at an investment of Rs 12 billion.

We revisited that plan and now believe our funding requirements for the venture would be Rs

40 Billion.

Q.5 But are ARPUS (Average Revenue per user) in place?

I can reveal where our ARPUSs currently stand but there are definite efforts to push ARPUs upwith the launch of Value Added Services such as PVR (Personal Video recorder). This technology

allows subscriber to watch particular advertisement show while recording another. Viewers can

also pause, rewind live television programs. We have priced the set-top boxes (STBs) for PVR,


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which will use MPEG-4 compression technology, at Rs 8999. For our existing subscribers we will

be offering at discounted rates.

Q.6 Isnt the pricing on the higher side?

Being below Rs 10000, it is very completitively priced. We are aggressively marketing Tata Plus.

In just a couple of days since launch, we have already sold 2500 PVRs. It took BSKyB 3-4 years to

convert 50 percent of its eight million subscribers to Sky Plus.

Our priority is to make this really big as the product is very powerful and also addresses the

ARPU issue. We realized that people in India are investing in high quality entertainment at

home as out-of-home is becoming expensive. The PVR is a recognization of this trend and we

want to capitalize on it.

Q.7 Are you looking at niche content for lifting your ARPUs?

Unless we have a critical mass, we cant slice the market that thin in India. The Indian DTH

market is endemically short of satellite capacity. We have 12 Ku-band transponders on Insat 4A,

but want more and nothing is available at this stage. We can address niche audiences and offer

more channels to consumers if we have more transponders available.

It is, however, possible to offer premium content like lifestyle within large segments. On our

interactive service, we have NDTV Good Times offering specialized cookery. Segmentation in

the marketplace is also possible. And we have interactive services like Active Wizkids (for

children and pre-schoolers), Active Darshan (24-hour darshan of Sai Baba, SiddhiVinayak, Iskon

and Kashi VishwaNath) and Active Matrimony, But the problem with interactivity is that it is

very bandwith hungry.


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Q.8 What is the premium content you are lining up?

We are in talks with movie producers like Sony pictures, UTV, Eros and Fox for sourcing their

movie content. We are looking at recent Bollywood, international and Hollywood content for

our pay-per-view service. The challenge is how to get into revenue share deals as we cant pay

high MGs (Minimum Guarantees) and it is not attractive for the content suppliers if there are

not high volumes.

Q.9 How about getting premium content channels?

For premium content channels, we are at an early stage of development. There is also the

transponder capacity issue. One area we are looking is at HD channels.

Q.10 Are you planning to strengthen your content line-up?

Regional markets are integrated into the overall content plan. We have national, regional,

international and eclectic consumers.

Q.11 Sun direct has mopped up over one million subscribers in a short span of time because

of its aggressive pricing. How has that impacted you in the southern market?

Our growth has not stopped in the south because of Sun Direct. We have the right kind of sharein the right kind of segment. Suns pricing is unavailable and we are at 30% premium over them.

Their strategy seems to reflect the pressure of their cable TV business while pricing their DTH

proposition. The danger is that you can attract the wrong kind of customers and you are

vulnerable to a high degree of churn. In DTH business, this is a recipe for disaster because of the

high subsidies involved in customer acquisition.

The south has been a high pay- TV penetration market because of pricing. In this blood bathsituation, one has to be cautious and keep away just adding subscriber numbers.


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Q.12 Isnt market leader Dish TV also involved in the price war?

More than Dish TV, it is Sun Direct which is acting as a discounted brand. The DTH market in

India is open to segmentations. We are also offering subscription at Rs 99. But the question is

how much at the bottom of the market you can afford to go.

Q .13 Why hasnt the TATA Sky brand been able to stop Dish TV from mopping up a high

number of incremental subscribers?

Dish TV has followed discounted brand strategy. We have operated at a Rs 1000 premium over

them from the moment we launched. Dish TV has also picked up the low hanging fruit in

smaller markets. Besides, they continue to work as an integrated media company and have

leveraged that advantage as a vertical player.

Q.14 Has regulations worked against the DTH players?

Regulations relating to the broadcast industry have been largely progressive. The problem has

been the lack of a level playing field across the different addressable platforms. Why should

cable operators get channels capped at Rs 5 in the Cas (Conditional Access System) areas?

There is a structural inconsistency in this. Besides, the tax burden on DTH is scandalous. Around

40 percent of our revenue goes towards taxes and licence fee. When our national objective is topush digitalsation, lets lower the barriers and incentivize the sector.

Q.15 Hasnt the Telecom Regulatory Authority of India provided some relief to the DTH

operators by way of directing broadcasters to offer their channels at 50 percent of analogue

cable TV rates besides making them available at a carte pricing?

When we started, there was no RIO (reference interconnect offer). In fact, it is amazing that

most of the content deals were done in the court. New players like Reliance, Bharti and Sunwould have found it tough if the RIO regulation hadnt come about.

But even now there is an anomaly. Why should we get content from broadcasters at 50 percent

of what they offer to analogue cable when the TRAI and the Information Broadcasting ministry


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have formally admitted that the cable sector operates on 20 percent declaration of their

subscriber base?

Besides, DTH should get content from broadcasters at Cas rates since we are an addressable

platform.

Q.16 But arent cable operators offering set-top boxes even below the regulated price

because of competition in the marketplace?

Pay TV in India is subverted by cable prices which are artificially depressed because of under-

declarations. DTH operators have had to drop prices because they have to compete with cable.

Today the gap is higher between the two because cable TV pricing is artificially suppressed. If

some DTH operators decide to go as low as cable, then it becomes unviable.

Q.17 But why is Tata Sky opposing the inter-operable clause then?

The regulator can say that the inter-operability clause was a mistake and just do away with it.

We are asking for more clarity on the issue. If we are to switch over, then we want some

amount off subsidy which the government can give from the revenue share that we part with

them.

Q.18 There has been a drive to reduce the revenue share with government. What is the status

on this?

The Telecom Disputes Settlement and Appellate Tribunal have ruled that the license fee for

DTH services should be based on adjusted gross revenue- and not on the basis of gross revenue.

But the government has not yet issued any notification on this.


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Q.19 After Tamasek Holding took a 10 percent stake in Tata Sky for $55.5 million, have we

seen a rise in DTH valuations?

I cant talk about valuations or the price at which we got Tamasek to invest in. But Tamasek has

10 percent while Stars holding is untouched at 20 percent and the Tata Groups stake has come

down from 80 percent to 70 percent.


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Bharti Airtel

Directto-home (DTH): DTH consumers receive digital TV channels signals through satellite on

their dish antennae which are then transmitted to TV through a set top box (STB)

There are seven players and an estimated 20 million subscribers. Dish TV is the market leader

the others are Tata Sky, Sun TV, DD, Big TV, Airtel digital television and the latest entrant,

Videocons D2H.

The industry expects at least 40% C&S homes to turn DTH subscribers by 2015.

DTH offers pay per view where consumer gets access to the latest movies for just Rs 75-100.

Conditional Access System (CAS) & digital cable: Cable operators use CAS to compete with DTH,

where content I beamed to consumers through STBs. But it is limited to parts of New Delhi,

Mumbai and Kolkata. The government is yet to come out with a policy to extend it to other

cities.

The cable industry remains fragmented. Large multi system operators include WWIl, Hathway

and Incablenet besides new generation firms, DEN and Digicable.

The government recently announced a headed-in-the-sky policy, allowing MSOs to send signalsto local operators through satellite. While it will expedite digitalization, there are still some

loose ends.

IPTV: Internet Protocol Television allows subscribers to get television content through

broadband internet; MTNL, BSNL and Bharti Airtel are offering this service. IPTV is also a digital

service offering more channels and interactive services. It is yet to catch up in India.

In early 1992, South Mumbai received the first beams of satellite TV and suddenly there was acable sneaking into house through window. There were suddenly four new channels to tune

into (BBC World, MTV, Prime Sports, Star TV) apart from DD and Metro and by the end of the

year Zee and the * cablewala*s local channel had filled up all the 8 slots on my National TV set.

Since that moment in 1992 when I joyously watched World Wrestling Federation action ( and


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DTH Industry


mocked the do not try this at home disclaimer whilst pinning down my younger brother in a

choke hold), the next seminal shift in my TV watching habit only happened 15 years later when I

got DTH (Direct-to-home) installed. This time, I actually KNEW what trash I was surfing on the

idiot box, thanks to the built-in program guides. I was empowered with information, though I

still didnt have much control over the schedule.

Luckily, I didnt have to wait another 15 years for third big shift. Its mid 2009 and for a month

now, Ive been experiencing the nirvana that is IPTV (Internet Protocol Tel evision). I was

skeptical when the folks from Airtel first came knocking with the offer and actually signed up

chiefly for the broadband component of the triple play scheme that Airtels digital TV

interactive division is testing in the NCR region. For thousand bucks a month theyre offering

135 odd channels via IPTV, unlimited wireless broadband at 256 Kbps and a landline

connection. I was a bit annoyed when I didnt hear from them for nearly two weeks after

signing the 4000 rupee setup fee cheque and was expecting the worst. Then, a day after my

cheque actually got encashed, two smartly uninformed technicians knocked on my door with

tons of equipment. They put on some very cool looking cloth-shoes over their actual shoes

before entering and got to work in a manner so professional, that it was unnerving. Cable was

neatly laid and clipped to the walls and brought into the TV room. Two slim boxes were pluggedinto power sockets - one wireless router and one set-top box. I dismissively plugged the

landline cable into my all-in-one printer to use as a fax instead of a phone. The WI-Fi was

working fine at least it delivered the speed they promised, and the only bit left was the TV.

I switched it on and was immediately a bit distraught about the slow start-up-time and

noticeable lag when flipping channels. However, one I discovered the Time -Shift feature, I

was hooked! It basically allows you to go through the schedule of a channel for instantaneously,it also allows you to play pause, forward and rewind. In a way this cannibalizes the Pay per

View movie library that Airtel itself offers since between the dozen movie channels previous

week schedules, I can easily pick enough to keep me occupied without shelling out extra for on-

demand flicks. The only downsides are that all channels arent available in time -shift and for


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those that are; their programme/ movie summaries arent available in the same way as on live

channels. There are lots of other bells and whistles like games and the ability to order Pizza

using the service, but youll probably never use them. Its purely the ability to pull out anything

from the past week that takes IPTV to another level of viewing. I now only feel the need to flip

channels for news and maybe live sports. Movies, music and entertainment in general is no

longer at the mercy of the daily schedule. I thoroughly recommended the Airtel triple play

IPTV product and if you want to actually see it in action, catch *Technoholik* on ET Now, this

weekend.

Ironically, the channel is not (yet) on Airtel IPTV so youll actually have to catch the show at

these particular times:


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RECOMMENDATIONS

1. Airtel should focus more on their promotional activities in more innovative manner sothat they can provide more competition to their competitors.

2. As Tata Sky Plus is targeting a niche market, it should make its products like provoguemore widely available in the market.

3. The availability of DTH is still lacking in the rural.4. Need to capture the regional market: Airtel Digital TV marketing programmes have not

shown enough inclination to capture the regional market. Hence the share of the Airtel

DTH is not very high in those regions of market where regional channel viewing is very

high. Hence it has not penetrated much especially in the southern parts of India.

Another issue is that of including more regional channels. Although this DTH service

boosts of proving a huge number of channels that is providing. New pricing mechanisms

and new packages need to be formed to suit the taste of the regional customers.

5. Need to highlight its unique pay per day of usage feature: all other DTH serviceproviders have rigid monthly plans, wherein if a channel is to be viewed for even a single

day, it needs to be purchased for the entire month. But Airtel Digital TV is the only DTH

service provider which charges customers on daily basis. This is very attractive feature

but it has been marketed well. There should be more ads put up which would highlight

this feature.

6. Penetration into low income group markets: so far it has targeted only the high incomegroups as well and device new cheaper packages for these people. In a country like India

where significant population belongs to the low income group, this is very essential.

7. A few things are assured in the DTH industry even in the face of paradigm shifts. First,the value of transponders is likely to fall as compression allows more and more content

to go though the same satellite, and as more satellite are launched. Second, as

bandwidth explodes, so will demand for content. Obscure sports and the like will

become more valuable; conversely, much of the content that is currently valuable will

face downward pricing pressure. Niche content providers will emerge. The industry is


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likely to be characterized first by a period of fragmentation and then by an increasing

concentration of global consortia as unprofitable participants fold. What is clearer than

ever is that satellite TV is here to stay and will play role in bringing television to mass

around the world.

8. Tata Sky has got very beautiful and classic logo so there is no future need to change it.9. Yes, there can be many better tag lines than Isko laga dala, toh life jingalala Aasma Ke

Sare Sitare Sang Aap Ke TATA SKY, Live Every Emotion, Every Moment with TATA SKY,

Have Total Control On Your Life With TATA SKY, BIG Rakhne Ki Jagha Nahi, WISH Karne

Ka Time Nahi Get Real With TATA SKY.


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BIBLIOGRAPHY

For our project we have referred to the following places for information:

www.tatagroup.com/tatasky www.airteltv.in www.Indiantelevision.com Sales and Distribution Management by Philip Kotler Times of India, Hindustan Times Bharti Airtel set to foray into Indias DTH market, to launch Airtel Digital TV from Oct,9.

International Business Times (08 October 2008). 8 October 2008.

http://in.ibtimes.com/articles/20081008/bharti-airtel-digital-dth-service-satellite-

television.htm. Retrieved 2008-10-13

ADAG & Bharti gearing for massive on air war.
http://www.tatagroup.com/tataskyhttp://www.tatagroup.com/tataskyhttp://www.airteltv.in/http://www.airteltv.in/http://www.indiantelevision.com/http://www.indiantelevision.com/http://in.ibtimes.com/articles/20081008/bharti-airtel-digital-dth-service-satellite-television.htmhttp://in.ibtimes.com/articles/20081008/bharti-airtel-digital-dth-service-satellite-television.htmhttp://in.ibtimes.com/articles/20081008/bharti-airtel-digital-dth-service-satellite-television.htmhttp://in.ibtimes.com/articles/20081008/bharti-airtel-digital-dth-service-satellite-television.htmhttp://in.ibtimes.com/articles/20081008/bharti-airtel-digital-dth-service-satellite-television.htmhttp://www.indiantelevision.com/http://www.airteltv.in/http://www.tatagroup.com/tatasky

Documents

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