The case study is about the evolution of teleshopping business in India and the problems faced by the industry.

1. Submitted By:- PreetiYadav GurmeenKaur RimpaljeetKaur RohitChanderSingh Teleshopping Business in India

2. Introduction The concept of teleshopping originated in US in mid 1980s to offer the products which are not available in the retail market. It received lukewarm response in its early years but in the mid 1990s, it started gaining popularity. In 2000, the teleshopping market in the US was valued at $2 billion dollars.

3. Contd…. It was not as successful in the other parts of the world as it was in the US because of several problems. In late 1990s it picked up momentum due to change in lifestyle and improvement in standard of living. By 2001, the total teleshopping market in the world amounted to $5 billion.

5. Low standard of living.

6. Low rate of women employment.

8. Solutions During late 1990 the joint families gave way to nuclear families. The networks decided to target the premium end TV viewers with high purchasing powers. New products were introduced constantly to attract customer attention. Now they started using infomercials developed in studios & featured well known personalities such as former film & TV stars.

9. Contd… The special attention was given pricing strategies as they were brought down to make the products more affordable. Focused on franchise base across the country. Started accepting credit cards to encourage customers to respond to their offers.

10. Q 1. Explain the concept of teleshopping and its working mechanism, benefits and factors that contributed to its success? The concept was originated in USA in mid 1980s. It was developed to offer the products which were not available in the retail market. It was a zero-level distribution channel, products were communicated through an electronic media such as TV and internet. Another techniques used such as Catalog, Direct Mail Retailing and Interactive/Online home shopping.

11. Benefits and Factors Convenient shopping. Innovative products which are not available in retail market. There was substantial increase in the number of working couples so they prefer convenient shopping from their homes. Change in lifestyle and improved standard of living.

12. Q1. Discuss the worldwide trends in the teleshopping business and the factors that have contributed to its success in the USA? The concept was not successful in its initial years but it started gaining popularity in mid 1990s. By 2000, US market was valued at $2 billion and world market at $5 billion by 2001. Countries like US and Australia had dedicated 24-hours shopping channels which provide detail information of products and prices. These channel offer products aimed at specific customer groups at different time slots to enable viewers to plan their viewing time accordingly.

13. Q1. Also describe the circumstances that led to the entry of teleshopping networks in India? The main reason for the evolution of teleshopping in India were the restrictions imposed by the RBI. The laws prohibited customer to import products and repatriation of money without the prior permission of RBI. This led to the emergence of Telebrand India, a 100% subsidiary of Telebrand Corp., pioneered the concept of teleshopping in India. In mid-1995, TSN and ASK also entered in the market.

14. Q2. Discuss the strategies followed by major teleshopping networks in India with specific reference to each element of the marketing mix? Product: Main products are utility product- fitness devices, healthcare/autocare, household appliances etc. & value expressive products-jewellery, apparels & home décor. Strategy: The teleshopping networks more focused on offering innovative & value for money products, which are not available in the markets otherwise. New products were introduced constantly to attract customer attention and ward off competition.

15. Contd… Price: The price of the product in the late 90s was as low as 5003, targeting to upper classes. Strategy: the teleshopping networks competed with each other & with local players by offering the same benefits at the lower price. The price of the articles offered ranged between Rs.200 to Rs 12000, with majority of the products falling in the 1000-5000 range.

16. Contd… Place: Initially they have zero distribution channels i.e. they are selling directly to the customers. Strategy: With the entry of local players they have changed their strategy & focused on strengthening the franchises base across the country. Telebrands India extended its network to over 90 cities across the country while ASK extended to 60 cities across the country.

17. Contd… Promotion: Dubbed versions of infomercials were used in the early years. Strategy: As the product range expanded to include domestic product as well the networks developed infomercials in India. These infomercial featured well known film/ TV stars. The network also offers early bird prices, price reduction, money return offers, accessories etc.

18. Q2. Do you think the allegations against products claiming to offer ‘miraculous benefits are justified? Give reasons to support your answer. These were justified as there were host of products that claim to do seemingly impossible task for customers. The analysts questioned the reliability personal care products that claimed to beautify & tone up the body in matter of days. The people shown in infomercials were paid to speak well about the products. These products were eyed suspicion by a majority of Indian customer.

20. Lower rate of women employment.

23. Standard of living also improved and people became receptive towards trying out innovative products and concepts.

25. Current Scenario Rising disposable income, nuclear families and changing lifestyle is not only fuelling the growth of modern retail, but also stoking India’s teleshopping segment. In contrast to conventional and modern retail, today consumers often order for products or services after watching its demo on TV. These demos generally flash toll free lines to enable consumers to place their order, while offering easy payment options.

26. Contd…. At present, the consolidated teleshopping segment is estimated at Rs 2,200 crore annually and is expected to grow further due to the inability of modern retail to reach unserved markets faster. Tele-shopping comprises both dedicated television channels and slots on channels of different genres spanning entertainment, news etc. It is estimated that of the total 220 million households in India, 130 million have cable or direct to home (DTH) TV connection. “The dedicated home shopping channels account for about Rs 700 crore of the total chunk of Rs 2,200 crore”.

27. Contd… They are in process of expanding its distribution network in Uttar Pradesh, mainly central and western region to cater the market quicker. Their target audience is households, whose annual income is upwards of Rs 1,50,000. About 25 per cent of their turnover comes from repeat purchase.

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