Assignment 2 Q1: Analyze the environment in which tele-shopping was attempted. Ans1: First let us know what is teleshopping – “The basic concept of telemarketing is that you should be offering what is not available in the retail market. With the growing popularity of satellite and cable television in the late 1990s, changes in lifestyle and a general improvement in the standard of living, teleshopping picked up momentum. By 2001, the total teleshopping network business in the world amounted to over $ 5.
By 2000, the teleshopping market in the US was valued at around $2 billion. This becomes a lifestyle moment as it starts to gain its popularity from west towards east. Thus the environment aspect and way used by companies to grow this business is mentioned below in detail but in country like India, where the development is just started at that period and purchase power start increasing, this is not an easy business module as it restricted to elite segment linked highly with lifestyle but late with price and promotion correction, it got place in market.
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Now detail analysis of environment: During the early 1990s, Indian laws prohibited customers to import products, without acquiring prior permission from the regulating authorities. These laws also restricted the repatriation of money (out of India), without the prior permission of the country’s central bank, the Reserve Bank of India (RBI). This was a major reason for the evolution of teleshopping in India, unlike the US, where teleshopping evolved due to the changing societal norms. During the mid-1990s, Telebrands India, a 100% subsidiary of Telebrands Corp. pioneered the concept of teleshopping in India and soon grew into a leading teleshopping network in the country. In mid-1995, TSN (another major US-based teleshopping network) and Asian Sky Shop (ASK), owned by the media giant – Zee also entered the market. The other major players in the Indian teleshopping market were TVC, TSNM and Star Warnaco. All these networks adopted the following way to gain popularity to gain advantage in Indian environment: • Buying time slots on popular channels that had high penetration and enjoyed good viewership among the target customers. Providing a special product code for every product and displaying it along with its price. • Setting up call centers in various cities, on the basis of the scale of operations and the extent of penetration expected. • Providing viewers with telephone numbers of these call centers and asking them to call their nearest call centre for further enquiries or to order the product. However, the Indian teleshopping network grew at a very slow pace, on account of factors such as 1) the lack of education and awareness among people, 2) low standard of living, 3) low rate of women employment, ) And low penetration of TVs/telephones. Moreover, unlike the Western countries, shopping for an average Indian had traditionally been an occasion for ‘social outing’ and enjoyment. Q2: What were the strategies adopted to take on Michael Porter’s 5 force model? Ans2: The five forces which one must consider to analyze any industry are the rivalry between the firms within the industry being analyzed, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products or services, and the threat of new entrants (also known as barriers to entry).
Each of these five forces is analyzed in further detail in their respective links above. The Five Forces framework has been accepted as a strategic framework which one can apply to analyze any industry. To deepen the analysis, a three by three buyer-supplier matrix has also been provided which depicts the interplays between buyers and suppliers, two of the Porter five forces. The major analysis from this porter principle is: * The Analysis provides a framework to analyze the forces that reduce the profits of an industry. * The Analysis focuses on whether or not a force is sufficiently strong to reduce or eliminate the profit of an industry. The Model has the following limitations: * It doesn’t account for the magnitude of demand * The model focuses on an industry as a whole – not on individual firms * The industry and the markets must be well defined * The stronger these forces are, the more likely the profits will be less for the particular industry Porter Recommends 3 Generic Strategies to Outperform Competitors 1. Overall cost leadership: * Produce same/better quality at less cost than anyone else. * Enjoy greater profits. * Or, in a price war – stay in profitably with reduced prices. 2.
Differentiation: equating products with desirable quality standards. 3. Market Niche Segmentation: focusing on a section or group of an industry or market, a segment of a product line or a geographical segment. 4. Variety based Positioning – can be based on producing a subset of an industry’s products or services. 5. Needs-based positioning – serving the needs of a particular customer group. 6. Accessed-based positioning segmenting customers who are accessible in different ways. The details of strategies adopted are: Competitive Advantage: Creating and Sustaining Superior Performance.
Porter called the generic strategies “Cost Leadership” (no frills), “Differentiation” (creating uniquely desirable products and services) and “Focus” (offering a specialized service in a niche market). He then subdivided the Focus strategy into two parts: “Cost Focus” and “Differentiation Focus”. These are shown in Figure 1 below. The Cost Leadership Strategy Porter’s generic strategies are ways of gaining competitive advantage – in other words, developing the “edge” that gets you the sale and takes it away from your competitors. There are two main ways of achieving this within a Cost Leadership strategy: * Increasing profits by reducing osts, while charging industry-average prices. * Increasing market share through charging lower prices, while still making a reasonable profit on each sale because you’ve reduced costs. The Differentiation Strategy Differentiation involves making your products or services different from and more attractive those of your competitors. How you do this depends on the exact nature of your industry and of the products and services themselves, but will typically involve features, functionality, durability, support and also brand image that your customers value.
To make a success of a generic Differentiation strategy, organizations need: * Good research, development and innovation. * The ability to deliver high-quality products or services. * Effective sales and marketing, so that the market understands the benefits offered by the differentiated offerings. The Focus Strategy Companies that use Focus strategies well concentrate on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers in it, develop uniquely low cost or well-specified products for the market.
Because they serve customers in their market uniquely well, they tend to build strong brand loyalty amongst their customers. This makes their particular market segment less attractive to competitors. As with broad market strategies, it is still essential to decide whether you will pursue Cost Leadership or Differentiation once you have selected a Focus strategy as your main approach: Focus is not normally enough on its own. Q3: Identify products and services well suited for teleshopping and justify your choice. Ans3: The products and services which are well suited for teleshopping in India are as follows: * Beauty products Beauty creams * Sun creams * Moisturizer etc. * Health Care products * Gyming and body building products. * Nutrients substitutes * Body toning products * Electronics Goods * Microwaves * Dryers * Heat setters etc. * White Goods * Coolers * AC’s * TV’s etc * Toys * Kids playing toys * Interacting & learning toys. * Home care Goods * Bed linen’s * Insect killers * Cleaning items like vacuum cleaner, duster etc. * Beauty services * Beauty clinics like VLCC * Beauty solutions * Relaxation spa ; Massage’s etc. Are the few product categories, which are suitable in teleshopping but with some modifications as: * Price correction Wider Distribution network * Continuous innovation * Proper advertising using local face rather than International to establish a link with people. * Quality control While these are best suitable product and services because the purchase power parity of Indian rural as well as urban customer increases continuously. Urban are more tech savvy , thus market is low for them but Rural public is getting educated and there demand increase continuously and getting better product in reasonable prices at there place , which will take then towards better prosperous route is best way out.
These all are lifestyle based products and suit to that category. Thus these are most reasonable one. Q4: What are your views on the future of teleshopping in India for consumer goods and services? Ans4: Indian economy is one of the best growing economies of the world after china. The growth rate as well as purchasing power parity of each classes increasing on continuous pace. The future of Teleshopping in India for consumer goods and services based on following factors which contribute positively are: 1) Market growth – Rs 250 crores in 10 years, projected to double in next 10 years. ) Earlier Female-Male shopper ratio was 90:10, now ratio is 60:40. 3) Increasing Living standard of Indian middle class people. 4) Increasing number of Nuclear families (both husband and wife are working – less time for shopping). Where as the major problems, which cause the growth restrictions, are: 1) Lack of education and awareness among people. 2) Low standard of living. 3) Low rate of women employment. 4) Low penetration of TVs/telephones, which is now around 100 millions as of 2008. 5) ‘Feel –and-touch’ concept is of great importance. ) Abundant supply of Imitation products. Thus by overcoming these factors growth factor, still this sector is unexplored and growth chances are more, if explored in right manner for consumer goods as well as services across a pan India level. Now not only urban areas, rural areas are also growing on faster pace and they are the best way out in this problem and targeting that area with right price and perfect distribution system with best quality is create win-win situation for these companies.