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Pitch Exclusive: Marketers & teleshopping: The Live Deal

08-June-2011
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Pitch Exclusive: Marketers & teleshopping: The Live Deal

Idiot box is bringing some serious business for marketers. It’s no longer just sauna belts and beauty products that are being sold through TV. In 24-hour home shop channels, marketers have found a new distribution platform that they are not only using as a selling point but also as an effective brand building opportunity.

Three years back, Homeshop18 started with delivering flowers and gifts through a toll free number. Today, such channels sell branded products from different categories that is worth more than Rs 500 crore annually. According to HomeShop18, it alone accounts for 4.5 per cent of all digital cameras sold in the country.

So, what makes marketers use this platform? “It is simply the kind of reach that TV has in India. It is really exciting for any marketer to showcase his product to millions of consumers simultaneously,” says Sriram Krishnamurthy, Vice President (Corporate Strategy), Onida.

Given a large number of TV households (over 13 crore) in India, even established brands are experimenting with this distribution medium to add a few more numbers to their top lines. Nokia, Reebok, Samsung, LG, Cannon, Motorola, Lee, Fabindia, Fuji, Olympus, Whirlpool, Lenovo, Videocon, Benetton, Onida are a few big brands already utilising this emerging distribution medium.

Even service brands are flirting with this platform. In fact, Homeshop18 has tied up with insurance brands like Bajaj Allianz, Tata AIG and ICICI Lombard.

Marketers, who initially tried these platforms as an experimental one, are hooked to it given the wide reach it brings to them. “As these platforms emerge credible, trust-level among consumers has grown and we are getting orders for high-ticket items like LCD TV,” says Krishnamurthy.

Donald Kwag, Head, Marketing, Star CJ Network, describes the distribution channel as a unique standalone mall on TV to access millions of households.

The wide reach of the medium sometimes also brings in unexpected consumers to marketers. “We sometimes get orders from far-flung areas where we are still to reach through our traditional retail. So, in this way these channels bring us diverse set of consumers from across the country,” says Amit Gupta, Director, Sales, Samsung.

Timing the Target
Though this platform marketers are tapping into different consumer segments through different time slots. For example, while product category like home decor and cookware mostly opt for day-time slots targeting housewives, electronic items like mobile and laptops prefer timing during evening hours when the entire family is watching TV.

“There are actually two prime times during the day. One is 12-3 PM where we target housewives and then there is 8-11 PM where we target the whole family as they watch TV together during these hours,” says Kwag.

According to Sundeep Malhotra, CEO, HomeShop18, “Peak time is the late evening when the entire family is back home and decision making takes place.”

Building Brand Awareness
Do brands use this channel beyond selling purpose? Experts suggest that 24-hour home shop channels bring brands an opportunity to directly communicate with consumers in a cluttered market. “It is not about selling always. Sometimes it is about making consumers aware and educating them about product features,” says Kwag.

While established brands use the channel to reach to those consumers who are difficult to reach, new labels use this as a brand building opportunity.

Cost and Convenience
What makes the platform work is the combination of ‘convenience’ for consumers and ‘cost’ to marketers. “There are consumers who look for convenience and don’t want to go out shopping,” says A Rajkumar, Country General Manager, Fujifilm, adding, “Here comes the role of TV channels which facilitate us in reaching those customers.”

On an average, it takes 5-7 days for orders to be delivered. For marketers, the channel reduces hassles of a multi-layer distribution network and saves cost; and for consumers, it’s convenience. In lieu of that, marketers have to pay to channels as per a pre-arranged agreement or fixed per cent of MRP on every unit sold.

With no middlemen in the supply chain, a percentage of cost benefits are passed on to the customers too. As marketplace gets cluttered with brands finding it difficult to get a physical presence due to increasing space constraints on retail shelf, the new platform also solves the puzzle of inventory.


What’s the Deal?
So, what exactly is the deal? While renowned brands, with their established image, promise to sell volume and offer good revenue in terms of commission on units sold, they stand in a better position to negotiate with these channel to get airtime on relatively low cost or sometimes for free. Relatively smaller brands have to cough up more money to book airtime for their product demonstration, and a higher commission ranging from 40 to 50 per cent of the MRP.

“Despite paying a high percentage of MRP as commission on every unit sold, these channels prove to be a good platform as it provides us unparalleled visibility,” says a spokesperson from Padmini, a brand which sells its cookware and other items through these channels.

The Hiccups
Industry experts feel that the biggest challenge for the brands utilising this medium will be to be more prompt on delivery and post-sale services so that consumers can develop a trust level and go for repeat purchases.

Though e-commerce is still bigger in terms of size and volume, marketers feel that selling through TV will emerge bigger in the next couple of years. “Selling through internet is also a good idea. But then you have very low penetration of internet in India. While you can reach a vast population through TV,” says Krishnamurthy.

Also, some experts feel that this platform is more relevant for certain categories but not useful for others. As Sanjay Tripathi, Head, Marketing and Direct Channels, HDFC Life says, “The platform may work for consumer products and white goods. But I feel it may not work equally well for a service product category like financial services as there is nothing tangible to showcas.” Another drawback of the distribution platform is that it lacks the ‘touch and feel’ experience of shopping.
Despite the challenges, marketers are warming up to this emerging distribution and brand building platform and TV networks are gearing up to capitalise the most on it. With two channels – Homeshop18 and Star CJ Alive, currently on air, a couple of more players like Reliance Industries and Future Group too are gearing up to launch home shopping channels.

Undoubtedly, the medium has huge potential to flourish as a strong distribution medium, provided the brands ensure the same quality and service delivery as given in the other distribution mediums.

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