Being a trainee under 18 for about a period of 8 weeks, I have worked on the Economic Feasibility of Tele-Shopping at Home Shop 18 Ltd and thereby the way as to how the company will maintain its financial transactions transparency & free from any fraud. It also helps the financial executives to keep an eye on the transactions occurring and also provides a way the transaction can be ascertained or tracked during requirements.
I would include the set procedures followed by Home Shop 18 for recording its financial transactions and how these procedures helps the organization to control and make decisions at various levels.
INTRODUCTION
PURPOSE OF THE REPORT
To analyze the economic feasibility of a business based on the concept of teleshopping by studying the feasibility of home shop 18 which is essentially a tele-shopping business relating to virtual retail. By analyzing the economic feasibility of home shop 18 it helped me understand the profitability of such a business as well as analyze their potential customers.
LIMITATIONS OF THE REPORT:
LIMITED COVERAGE:
Since I am operating in the Noida office of the company therefore my scope of collecting data is limited to this premise only. Hence the available information can only be used in order to prepare the report.
- LACK OF DATA:
- LACK OF COMMUNICATION : The interaction would not be possible with Executives of all the departments, as there are different offices situated in different cities so it becomes very difficult to gain information from different departments./li>
� Since the organization has just started with only 1 year of operation so the availability of ample data was difficult.
SCOPE OF THE STUDY
- The main purpose of analyzing the economic feasibility of home shop 18 is to know how profitable is a business which is based on the concept of home shopping as home shop18 is related with home shopping in form of virtual retail.
- It also aims to understand the working of their business or their business model to know how such businesses based on such a concept operate.
- The report also attempts to show the SWOT analyses of the company.
- It attempts to provide a brief insight into the future plans of the company.
- Lastly it attempts to define its potential customers and the factors that drive these customers to purchase their products in such a manner. .
GROUP PROFILE
HomeShop18
is a venture of the
Network18 Group
, India’s fastest growing media and entertainment Group.
Network18
is one of India’s leading full play media conglomerate with interests in television, internet, filmed entertainment, mobile content,
print, magazine
and allied businesses. Through its holding in Television Eighteen India Ltd (TV18), Network18 operates India’s leading business news television channels – CNBC TV18 and CNBC Awaaz. It also runs India’s leading Internet company Web18, as well as one of India’s leading real-time news terminal providers, Newswire18. Through its holding in Global Broadcast News Ltd (GBN), Network18 operates in the general news and entertainment space with general news channels CNN-IBN, IBN7 &IBN Lokmat and has a joint venture with Viacom christened as Viacom18. This JV will operate the MTV, VH1 and Nickelodeon channels in India – as also Studio18, the Group’s filmed entertainment operation & will be launching a Hindi general entertainment channel. The Group has recently announced forays, organic and inorganic, into event management, regional news and other areas.
It has a team of over 3500 people spread across 30 bureau locations (3 of which are overseas). It has established 220,000 sq. ft. of fully integrated broadcast & other infrastructure, including state-of-the-art hubs in Mumbai and Delhi.
Network18 is the only media company in the globe to have partnered with three of the world’s largest media conglomerates.
Some of Its major network channels are:
Viacom 18 Media Pvt. Ltd. is a 50/50 joint venture operation in India between Viacom Inc. (NYSE: VIA, VIA.B, world’s leading entertainment content company, comprising brands like BET, MTV Networks and Paramount Pictures) and the Network18 Group. The joint venture includes leading brands across television, film and digital media to build one of India’s leading multimedia entertainment powerhouse. Viacom 18 Media Pvt. Ltd. includes the vibrant youth brand – MTV, the fastest growing kids channel – Nick, India’s only International Music & Lifestyle channel – Vh1 , Studio18, a new-age motion picture brand that produces, acquires and distributes Hindi films and also launched the Hindi General Entertainment channel – COLORS. This apart, Viacom18 also runs Viacom’s consumer products business in India. Viacom18 brings together the unique strengths of two formidable partners, thus forming an entertainment conglomerate that will have a competitive advantage in serving the needs of both viewers and advertisers.
Is India’s No 1 business media brand and reaches out to more people than any business daily, magazine or channel. The channel has single handedly created the business category in the Indian television industry. CNBC-TV18 today is clearly the last word in business news. CNBC-TV18 is a joint venture between Network18 and
CNBC, the global leader in business television.
AWAAZ is India’s first channel focusing on consumer related information. AWAAZ has become the choice of the Hindi speaking affluent masses, small businessmen, entrepreneurs, and a cross section of people with varied information needs. AWAAZ is fast becoming the single authoritative source for making informed decisions on investing, saving, purchasing and career choices.
A service of Network18 and Time Warner, CNN-IBN is India’s first and very own world class English news channel, headed by one of the most credible faces of news journalism, Rajdeep Sardesai. CNN-IBN is a melting pot of some of the bravest minds and top reporting talent from India and across the globe. The channel has become the English News leader within six months of launch. The channel is committed to do whatever it takes to bring the viewer face to face with the truth
IBN 7 has the most respected Hindi news team under the leadership of Rajdeep Sardesai and Ashutosh. IBN 7 has doubled its viewership within six weeks of launch and is set to become the leading Hindi news channel of the country. IBN 7 is redefining the news genre by providing hard news with an in-depth perspective.
Yatra provides travel-related information, pricing, availability and reservations for airlines, hotels, railway, buses and car rentals across 5000 large cities and small rural areas throughout India. Yatra’s multi-language customer service center enablesbusiness and family/leisure travelers to make well-informed and cost effective bookings 24 hours a day or night, 365 days a year, through its online, call center and mobile support.
COMPANY PROFILE
HomeShop18 is the Group’s online & on-air retail marketing and distribution venture which has launched India’s first 24 hour Home Shopping TV channel on April 9′ 08.
HomeShop18 is on a
Mission
to drive India’s most comprehensive virtual business that helps customers make informed choices and extract best value for money.
HomeShop18 operates in a multimedia environment including television, web, catalogue and print to reach high quality products and services directly to customers across the country.
It aims to provide superlative quality and exceptional value from the stage of product selection, to placing the order & all the way to the final delivery to the customer.
COMMITMENT TO DELIGHTFUL CUSTOMER EXPERIENCE
HomeShop18 is committed to providing a delightful customer experience, through entertaining and outstanding content on TV & the Web and its high quality captive customer sales centre. Its highly customer-centric practices, including free home delivery, multiple payment options that include interest free EMI, cheque/demand draft pick up and cash on delivery ,15 days no questions asked money back guarantee, make shopping with HomeShop18 a smarter and more intelligent experience. . Customers also have the option of sending products to multiple shipping addresses while placing a single order
A 24-hour call center also allows customers to call in and book orders as per their convenience. It will deliver products to over 1,600 cities free of cost.
The convenience of ‘anytime shopping’ incorporates a wide-array of products across various product categories like electronics, health & beauty, home décor & kitchen, kids & toys, jewelry, gifts, services etc. Utmost importance is given to quality assurance and assessment of products, in sync with Network18’s strong brand attributes of trust and credibility. Aided by a dedicated team of dynamic professionals, HomeShop18 is committed to providing cost effective and innovative products to discerning consumers across India
Network 18 acquired equity funding of 21 million dollars for Home Shop 18. Out of the said 21 million dollar, about 16 million dollar was raised from SAIF Partners, a private equity firm that provides growth capital to companies in Asia and about 5 million dollar was raised from Capital 18, an affiliate of Network18
The channel that allows customers to call and book order as per convenience has over 200 reputed brands on board, including Motorola, Whirlpool, Philips, Sanyo, Tata, AIG, Disney, Gitanjali Gems and Tanishq.
OVERCOMING OBSTACLES
Since one of the biggest problems for the channel was the perception that existed in this category. Over the years, teleshopping networks in India had earned a very negative image. Most of these networks were looked upon with distrust and skepticism.
However, HomeShop18 soon realized that the negativity is because of the brands that are sold on the networks, and not for the network itself. This is why the company decided to collaborate only with established brands and avoid magical products offering miracle solutions.
However, even this wasn’t an easy task for the channel. For the initial months, none of the known brands were ready to be associated with a shopping network. So, it initially decided to pitch in smaller or newly launched products, and then, depending on the performance of those brands on the channel, the company pitched bigger brands.
Once the big brands saw the success stories of the other models, they were ready to start doing business with Home shop 18. Right from the time the channel was launched, there has been a steady increase in the number of customers coming to Home Shop 18 every month.
PARTNERS
The channel successfully turned the brands towards itself. Today, it partners 300 known brands, which include respected ones such as Samsung, Canon, Nikon, IFB, Philips, Motorola, Apple, Kaya, Godrej, Tanishq and Jagdamba Pearls.
Not only did the channel manage to change the credibility of this domain by bringing respectable brands under its umbrella, it has also managed to do some real business. According to the company officials, HomeShop18 receives about 20,000 calls every day, out of which 35 per cent get converted to sales. To put things into perspective, every 20 second, a purchase order is placed. Interestingly, about 60 per cent of the shoppers at HomeShop18 are men.
The web version of the channel, launched in 2007, gave the brands a familiarity with the channel. In the first one-and-a-half months of the launch of HomeShop18, associations with big brands finally started taking place. Also, the money back guarantee and cash on delivery system helped in building the trust of the consumers regarding the network.
HomeShop18 has multimedia presences in television, web, catalogue and print. Currently, the channel is available on cable television but is in talks with DTH players including Tata Sky, Digital TV, Sun Direct, Videocon and Dish TV, to expand its presence
CURRENT BUSINESS STATUS
The three biggest selling product categories on the channel are consumer electronics, home appliances and jewellery. For promotions, the channel plans to start radio spots and mobile shopping to increase the sales.
HomeShop18 sells about 15,000 products across 15 product categories. Now, the channel doesn’t want to restrict itself with just products. It plans to delve into services. Very soon, HomeShop18 will sell insurance and holiday packages on television.
The channel presently delivers the products to 2,300 small and big towns in the country. It is working towards expanding its reach and distribution target from 4.5 million households to 40 million households by the year end.
.HomeShop18 is becoming highly popular across the country and has been growing at a pace of 30 per cent month-on-month since its launch.
To leverage the viewer ship of its network channels, HomeShop18 has some of its programme’s running on channels such as MTV and CNBC Awaaz, and has also started ‘Shopping Hour’ on Colors.
The channel is currently adding a customer every 21 seconds and the estimated number of visits per day by people on its website is 147852. The success of the new shopping destination is attributed to its exciting channel content, wide product portfolio, exceptional on-call service backed by a 24 hour call centre and 2000 city logistics reach.
PRODUCTS OFFERED BY HOME SHOP 18
Approximately 20,000 products are offered to the customers of Home Shop 18 which are categorized under the following broad categories:
- Electronics and computing
– includes DVD players, telephones, laptops, printers, scanners etc. - Cameras and mobiles
– this includes the digital cameras, cam recorders, GSM mobiles etc. - Books, movies and music
– includes various types of books, DVD s and cd’s of various movies etc. - Jewellery and watches
– it includes gold, diamond etc and watches for men and women - Fashion and accessories having men, women apparels, women shoes etc
- Health and beauty
– includes perfumes, cosmetics, sports and fitness equipments etc.
Home and Kitchen which includes home décor, and furnishings, and kitchenware
- Household appliances including air conditioners, kitchen appliances etc
- Kids and toys like sports accessories, school accessories, apparels etc
Flowers
What are the top selling products at Homeshop18?
These are the broad categories that are top selling:
- Consumer Electronics:
Camera [Homeshop18 claims that 5% of camera sold in India are thru’ HS18 channel], Mobile Phone and Microwave Ovens. - Home Appliances
- Jewellery , and
- Home & Kitchen products
It’s quite a unique model given that it stands between the retail and virtual world. What’s interesting is that the company is interested in present in all consumer channels, except retail and is the first one to break into full time TV programming.
SCOPE OF TELE-SHOPPING
Teleshopping also known as Home shopping is one form of direct marketing. Under this type of a business model the marketer displays his product on the air and the consumer watches it on his TV screen as ads of sixty or one twenty seconds long that describes the product, phones up the marketer usually a toll -free number for ordering and buys his requirement
This direct response advertising is being applicable for all kinds of products especially new products as it permits full demonstration. In short the customer will receive the product of his wish in his door steps. The products offered ranges from consumer durables to products which safeguard the beauty of its customers
The success of the concept depends highly on the ability of marketer to deliver the goods on time to his valued customer along with other stipulated parameters. Even though Teleshopping as a concept is at a very nascent stage in India where people still prefers the touch and feel concept. Twenty -four hour dedicated Full-fledged, Teleshopping channels like Home Shop 18 shows that forthcoming avenues still persist.
Teleshopping benefits the customer in the sense that it will save considerable amount of their precious time and they will get products at lower prices than the existing market rates, along with the gift offers attached with the product. Also many discounts are offered to the customers. Manufactures are been saved from costs incurred on the conventional marketing through various marketing channels, boost up their sales and be able to give the margins saved as discounts to his customers. The Marketer, i.e. the Teleshopping network get good distribution margin. For the Television channels it is an attractive source of revenues it is totally commercial.
Teleshopping business is considered to have a great deal of growth potential as it has manifold benefits some of which can be described as follows:
Practicality, convenience and time saving-
Buying through direct methods eliminates all the problems associated with the consumer having to travel in order to make the purchase. This benefit is particularly positive for consumers whose age or physical disabilities prevent them from going to sales outlets and also for users with severe time restrictions due to work and/or family obligations.
Nowadays, the emphasis is on free time, leisure and entertainment and on personal development through such activities. Certain collectives such as working women try to improve their quality of life, for example by reducing / economizing on the time used in shopping. Convenience, practicality and ease of ordering from home attracts those consumers who demand more free time and who see shopping as yet another monotonous domestic chore.
Advantageous prices-
The growing increase of home sales has been attributed to consumer reluctance to paying traditional prices in retail shops. The prices offered by the teleshopping business are low as compared to traditional retail businesses. These low prices seem to lure the customer thus attracting them to make a purchase from the company.
Product exclusivity and variety-
The success of distance selling largely depends on the characteristics of the offer, with one of the most valued aspects for the customer being the opportunity to purchase new, exclusive products. Most companies in the sector specialize in large groups of products, which they diversify by extending the range and including new products. The offers are wider and there are many ranges.
Guarantees-
The consumer is always able to evaluate the product and reject it within 7 days after receiving the order. This right may be exercised without having to give any reason, in other words, when the goods received are totally as promised or advertised by the company and even if the company has faithfully and scrupulously fulfilled the contract.
In some direct selling systems, there are also money back guarantees even after the product has been used and the consumer is not satisfied with it. The consumer may use the product for 30 days and if dissatisfied, return it and obtain a full refund.
Thus, companies are extending their guarantee periods from 7 to 30 days helping their customers to reduce considerably the perceived risk on the purchase decision.
Different payment methods-
Payment must take place on receipt, as advance payments are not, in principle, allowed by law. . However, products can be paid for by credit card.
It should be noted that there is a great deal of mistrust among consumers over the use of credit cards, as they are concerned that their personal details may be used fraudulently. To alleviate the problem, the law protects the card holder by recognizing the right to cancel the charge made to the card account, and stipulating that the customer’s account should be reimbursed as soon as possible. Furthermore, the option of cash on delivery also helps to reduce the perceived risk of the purchase decision.
Customer service –
Most companies which sell directly to the consumer have a customer service department able to provide any type of information their customers may require, especially when the products are new, clarifying any doubts and any problems which may occur after placing the order. This service is offered to the customer both before and after making the purchase and means that offers can be personalized and adapted to customer needs.
Interactiveness-
Interactiveness is, nowadays, one of the main advantages offered by some of the most successful direct media over recent years. The use of interactive purchase channels makes the purchasing process easier, reducing the cost of finding information on the different categories of product and/or service on offer. These new channels provide a large amount of information, answering customers’ doubts, needs or wishes, providing an efficient information system and a better fit between offer and demand
Business Plan
A business plan of an organisation covers the following aspects:
Description of Business
Home shop 18 is based on the concept of virtual retail as it uses the website which focuses on the middle and upper middle class, the print media which includes the regional newspapers like the Lokmat, Dainik jagran etc focussing on the lower class and the company’s 24 hour channel displaying their products which also focuses on the middle and upper middle class. The business of the company is essentially related with the work of those as the intermediaries.The company is an intermediater between the customer and the vendors with whom they have entered into a contract with and have signed the
Memorandom of Understanding
Which is different for different vendors and is maintained in their computer system for all the vendors which contains the following:
- The percentage of the commission to be received by the company on the products of the vendors offered by the company to the customers.
- The terms and conditions related to the delivery of goods i.e the whether the freight charges are to be borne by the company or the vendor will be present in the MoU.
- The payment cycle to the vendors by the company is also mentioned.
- The losses to be borne by which party related to the products depending on whose fault it is will be mentioned in the MoU.
It has a tie up with around 350 vendors offering around 20,000 products to the customer which are offered through their channel and are displayed on their website.
The customer queries and the converting of a query into an order which is dependent on the skills of the employees is handled by their call centre which has 300 employees.
It aims to offer good quality at the lowest price possible at the least time thus making convenient shopping possible for its customers.
Technology Plan
Since the company Home shop 18 belongs to the industry and business of virtual retail so it is based on the business of e-commerce whereby the operations of the company are carried out on the internet.
As in case of Home shop 18 the company offers its products on its website , the payment of which can be given through credit card through the gateways which are handled by the banks with which the company has tie -ups with. It has major tie -ups with HDFC, Axis bank, ICICI, Yes bank etc. for collection of its credit card payments by the customers which are then recorded by the finance department in their records and the order is then sent for delivery to the customer.
It also uses the technology of media since it also offers the products through its 24 hour channel named Home Shop 18 .
It also uses the information technology as it has various softwares as part of its MIS management for various departments for handling their day to day operations in a simplified manner.
For the finance department they have the OMS i.e order management system for handling the order receipts, payments, shipments etc . It also uses Tally for maintaining their journals, legders, etc and the Sun microsystems for consolidated reports.
Marketing Plan The marketing plan of Home Shop 18 involves the distribution of channel in as many states and cities as possible, thus trying to expand its customer coverage through local cable distributors.
Their channel is distributed through the setpro distributor which distributes the channel to various other distributors in other states all over India.
The marketing plan of the company is also involved with attracting a large number of vendors to offer their products through the company and also it is advantageous for the vendors to offer their products through them.
The department of marketing is divided into various heads according to the categories of products offerd by the company like home appliances, electronics and computing etc. who look after their respective orders.
They handle the customer orders placed with the company of their category and also try to get more vendors for their respective categories.
Financial Plan
The financial plan is to look after the revenues and expenditures of the company .
99% of the revenue is earned by the commissions charged to the vendors. Since the company is an intermediary between the customers and the vendors ,offering products of vendors through the company’s channel or website, so its major revenue earnings are through the commission offered by the vendors which is agreed upon by both the parties and entered into the terms and conditions of the MoU.
The expenditure of the company involve the following expense heads:
Selling and distribution expenses
– the expenses involved in distributing the channel to various cable distributors across the country.
Administration expenses
– these are the expenses related in handling the various expenses of carrying out day to day activities.
Salary expenses
– expenses involved in paying the salaries of employees.
Telephone expenses
– this is a major expense for the company as the numbers are toll free for the customers and are paid by the company for any call made by the customer.
The financial plan includes managing all the finances of the company such that the expenses are accounted for and are under control in a certain limit and the remaining profits are invested in some mutual funds to earn additional interest income besides revenue but these account for only 1% of the revenue with the major revenue being earned by the commission.
The prices are set by the marketing department after taking into account their minimum margin and comparing the market prices are finally approved by the finance department.
WORKING OF THE BUSINESS MODEL OF HOME SHOP18
To understand how feasible is a business based on the concept of home shopping which is growing at a faster rate we understand the business concept of Home Shop 18 as it is basically an e-commerce business as it has a website which offers products of the vendors with whom the company has contracted for selling their products and also a 24 hour channel which shows the products on TV.
All the products are classified under various categories and displayed on the website under these categories with various payment options for the customers like cash on delivery, cheque and credit cards.
The business model of the company can be depicted as:
The company acts as an intermediary between the suppliers or the vendors and the customers. The company deals with the customers and the vendors with the two having no direct contact with each other. The customer places an order for the product with the company where the company furthers the order to the vendor and product which is given by the vendor to the company is delivered by home shop 18.
The backward linkage of the business model is associated with the vendors whose products are offered by the company through their channel, website or advertisements in the local newspapers. There are around 300 vendors whose products are offered for sale to the customers and there are around 20,000 products under their different categories. The vendors enter into a contract with the company to offer its products for sale to the customers. When the order is placed the vendor gives the product to home shop 18 which further supplies it to the customer and collects payments from them. These payments are then given to the vendors at a specified time after deducting their commission, courier charges and packaging charges.
The forward linkage is associated with the final customers to whom the products of the vendors are offered for sale. The customer can make the payment either in form of cash, cheque or through credit card by visiting their website.
BUSINESS MODEL
Key statistics of
Homeshop18
business:
- 51% of the business comes from TV channel ; Internet consstitutes only15%
- 35% of buyers are from the metros;
65% Tier II and Tier III cities
- 60% of buyers are males ; 40% females
- 350 brands; 20,000 SKUs (Stock keeping units)
The company raised $21mn from SAF Partners and Network18, in July of 2008 and now reaches out to over 2,000 cities in India.
Share some background of Homeshop18.
1.5 years ago, definition of virtual ebay was either ecommerce or teleshopping
Ecommerce
in India still does not have more than a few million userbase and most importantly, the user base hasn’t grown exponentially.
Teleshopping
has been all about selling particular category of products (spirituality/health/wellness). Driven by short term mindset – sold ‘magic’ more than genuine products.
Both these industries left a lot to be desired.
Homeshop18, in it’s 2 years of existence has created a market of virtual retail (present in all channels, except retail):
- Print : 20/30 alliances
- Internet
- Catalogue
- Future plans include radio as well as mobile.
Top selling products at Homeshop18
These are the broad categories that are top selling:
- Consumer Electronics
: Camera [Homeshop18 claims that 5% of camera sold in India are thru’ HS18 channel], Mobile Phone and Microwave Ovens. - Home Appliances
- Jewellery
- Home & Kitchen products
Key statistics regarding Homeshop18’s userbase:
- 1.3mn customers
- 18% are repeat customers.
- New transaction every 13 seconds.
- Run-rate of Rs. 1 crore a day.
ECONOMIC FEASIBILITY
WHAT IS ECONOMIC FEASIBILTY
The Economic Feasibility for any project is identified based on the cost benefit analysis. To conduct an economic feasibility study an analyst must identify the proposed costs and benefits of the proposed system. The project will be Economically Viable only if the benefit obtained is greater than the cost invested. To find out the costs that are likely to be invested in a specific category of any System, it is essential to find out the direct cost and the indirect cost associated with the project.
The list of Direct Cost and Benefits associated with the investments in Electronic Commerce Systems are identified as following.
COSTS OR EXPENDITURES
- The capital cost associated with the purchase of computers, peripherals and necessary software
- Cost associated with additional space like rent, furniture etc. for the newly proposed Electronic Commerce System.
- Cost to be paid for necessary software required to be designed and developed for the proposed Electronic Commerce System.
- Cost associated with the operational materials like stationeries, floppy disks, toner, ribbon etc
- Cost associated with Internet access.
- Cost associated with the Web hosting Services (Web Server).
- Cost associated with logistics operation
- Cost associated with training the employees and system analyst to operate the System.
- Other Indirect cost like discussing and solving the problems that may arise due to the operational modalities
BENEFITS
The benefits of the Electronic Commerce System can be classified as :
(i) Tangible benefit and
(ii) Intangible benefit.
The Tangible benefits are:
- Savings made due to the reduction in the inventories.
- Reduction in cost of production and operation related to the business.
- Additional Cost generated due to increasing volume of trade with the same human resource
The Intangible benefits are:
- Expanded market reaches for the product.
- Possibility of more visibility for the product.
- Strengthening business relationship between the customers and partners
- Shorter time to market the product and subsequent fast response time from the customers and the business partners.
- Improved customer loyalty and services through easier access to latest information.
ECONOMIC FEASIBILITY OF HOME SHOP 18
In order to understand the feasibility of a company we need to know their revenues and expenditures as this enables to know the profitablity or feasibility of a business. For a project to be feasible the benefits should be more than the costs.
Thus it becomes essential to analyse the revenues and expenditures of Home Shop 18 which are depicted as follows:
REVENUES OF HOME SHOP 18
Its major revenue earnings or the benefits for its business are derived from the following:
COMMISSION
Its major revenue earnings are derived from the commission it gets from the vendors whose products are sold by Home Shop 18 to the customer through their website and channel.
99% of its revenue earnings is being derived from commission.
Rest 1% of the revenue earnings is derived from these:
INVESTMENT IN FIXED DEPOSITS
WEBSITE SUBSCRIPTION FEES
Website subscription fees are the fees which are earned by the company for lending space to the vendors whose products are displayed on their website.
AIRTIME SELLING OR ADVERTISEMENTS
This is related to advertisements not related to their products on their 24 hour channel.
EXPENDITURES OF HOME SHOP 18
Its expenditures can be divided into the following heads:
VARIABLE COSTS
These costs include the following expenses
- Freight
- Packaging
- Gateway expenditure for credit card payments
TELEPHONE COSTS
This is one of the major expenditure for the company since all the telephone calls made by the customer relating to any enquiry about the product are toll free i.e their costs will be borne by the company.
DISTRIBUTION COSTS
Distribution expense is related to distributing their channel to various cable networks across the country.
This involves 20% of their expenditure.
ADMINISTRATION COSTS
These costs are related with some of the following expenses
Rent
Salaries
Electricity etc
MARKETING COSTS
These are related with promoting the company to the customers and the vendors which involve introducing discount schemes, offering benefits to vendors etc.
Now we calculate the economic feasibility of the company. At present the company is incurring losses but it expects to break even by 2010-11 where TR=TC.
Table showing the achievement of break even:
HomeShop18 |
|||||
Particulars |
Amount |
Yr |
Sales growing @30%p.m |
Yr |
Yr |
|
In crores |
2008-09 |
2009-10 |
2010-11 |
||
|
INITIAL INVESTMENT- 100 CR |
100 |
||||
|
REVENUES- RS 4,00,00,000 per month |
4 |
48 |
14.4 |
62.4 |
76.8 |
|
EXPENDITURES- RS 6,00,00,000 per month |
6 |
72 |
72 |
72 |
|
|
Profits/Loss |
-24 |
-9.6 |
4.8 |
||
|
BREAK EVEN EXPECTATION – 2010-11 |
|||||
|
CALLS PER DAY- 12000, CAPACITY TO TAKE 60,000 CALLS PER DAY |
|||||
|
ORDERS – 3000 |
|||||
SWOT ANALYSIS
StrengthsIndia’s first 24 hours Tele-Shopping Channel.Wide geographical presenceExcellent service & support.Strong customer relationshipsSignificant alliances and partnerships.Strong distribution network.Fast paced and flexible work culture |
WeaknessesCustomers Faith.Variations in Product Prices.Always emphasizes on numbers and fast results.After sales services.Less promotional campaigns. |
OpportunitiesPotential for growing internationally.Booming Virtual Retail Industry in India. |
ThreatsEmerging Competitors.Increasing competition.Dynamic technological environment.Government instabilities. |
Strengths
India’s first 24 hours Tele-Shopping Channel
HomeShop18 is the Group’s online & on-air retail marketing and distribution venture which has launched India’s first 24 hour Home Shopping TV channel on April 9th 08.
TV18 group has taken its virtual shopping brand HomeShop18 to the web. It has launched an e-commerce portal www.homeshop18.com
HomeShop18 aims to represent a one-stop shopping destination for all segments including youth, men, women and children. Customers can choose from a range of branded products across various categories along with value-added propositions.
A 24-hour call center also allows customers to call in and book orders as per their convenience. It will deliver products to over 1,600 cities free of cost.
Wide geographical presence
HS18 urge to excel has paid rich dividends outside India too. As a true technology leader, HS18 enjoys wide global presence at 24 locations in 16 countries, with operations growing to a phenomenal $100 million, making it the second largest software exporter from India. Its cutting-edge solutions have helped it acquire an enviable client list of technology leaders and Fortune 500 firms.
Excellent service & support infrastructure
HS18 has a team of over 3500 people spread across 30 bureau locations (3 of which are overseas). It has established 220,000 sq. ft. of fully integrated broadcast & other infrastructure, including state-of-the-art hubs in Mumbai and Delhi.
HomeShop18 is committed to providing a delightful customer experience, through entertaining and outstanding content on TV & the Web and its high quality captive customer sales centre. Its highly customer-centric practices, including free home delivery*, multiple payment options and 15 days money back guarantee, make shopping with HomeShop18 a smarter and more intelligent experience.
Strong customer relationships
HS18 believe in maintaining long-term relations with its clients/customers. One of the cornerstones of HS18 strategy has been a very strong customer focus. Its excellent research in servicing a varied range of customer requirements has given domain knowledge of the customer’s business. As a result of this HS18 is able to provide exact solution to customer’s needs.
Significant alliances and partnerships
HomeShop18 has partnered with the best brand owners, such as Apple, Motorola, Philips, Kaya, Godrej and many more…… to provide superlative quality and exceptional value from the stage of product selection, to placing the order & all the way to the final delivery at your doorstep – an experience that you can depend upon!
Strong distribution network
HS18 channel has a strong focus on distribution network that led HS18 in devoting few brands exclusively for channel. Today its distribution network helps to take a varied product range to customers in every nook & corner of the country. The product range includes all the possible day to day customer requirements.
The sales and distribution network of HS18 is massive. As a result it has a good presence in the market and manages to cater to deals that no other vendor can. It has a visibility to deals, which no other vendor has.
Fast paced and flexible work culture
With an open and entrepreneurial environment, HS18 is synonymous with passion for performance, high need for achievement and commitment to job. The core values of high integrity with a Never-Say-Die approach are ingrained and visible in all the people, practices and processes of HS18. The working culture includes 4 important elements: learning, growth, owning and enjoyment/refreshment.
Weaknesses
Customers Faith
HS18 has been launched in India with a new shopping concept and will take some time in building its trust among its potential customers.
Variations in Product Prices
Despite of having best prices, HS18 has to face challenges due to the variation in the product prices in the Indian market.
Always emphasizes on numbers and fast results
HS18 has always emphasized on numbers and has always tried to excel in terms of technology. Along with this the strategies most often have been successful for shorter time spans. It has to focus on long-term planning to capture a larger market share in India.
After sales services
HS18 has to excel in providing after sales services to the customers who has not been favored much by the Indian consumers.
HomeShop18 is committed to providing a delightful customer experience, through entertaining and outstanding content on TV & the Web and its high quality captive customer sales centre. It has to make shopping with HomeShop18 smarter and more intelligent experience.
Less promotional campaigns
HS18 has been launched in India as a new business concept but has lesser promotional campaigns. Due to this, HS18 has lost a major mind share of consumers in India. People do not have much idea about HS18 and its contribution to Indian Retail industry.
Opportunities
Potential for growing internationally
With increasing strategic alliances and partnerships, HS18 has great opportunity to expand globally. After excelling in Indian market, HS18 can grab opportunity to diversify in markets where there is scope of growth in Retail sector before any other Indian player taps those potential markets.
Booming Virtual Retail industry in India
HomeShop18 is on a mission to drive India’s most comprehensive virtual business that helps customers make informed choices and extract the best value for their money. These have opportunities in foreign and as well as in domestic markets. HomeShop18 plans to introduce loyalty programs, multi-level marketing and referral marketing where customers can recommend it to other customers and gain points for doing the same. It will also introduce detailed product infomercials and shows on the website thereby enabling customers to view the product demo thoroughly before purchasing the product.
Threats
Emerging Competitors
Star Plus is going to launch its 24 hour shopping channel by the end of this year. Because of which HS18 has to build up a deep relationship with its customers to with hold the market in near future.
Increasing competition
With the launch of competitors in the Indian market HS18 needs to focus more on its customers satisfaction including better quality products with a wide range of variety, cheaply priced and at the top of all, excellent after sale services to keep tied to its potential customers.
Dynamic technological environment
With such a dynamic technological environment in India, HS18 has to keep up pace with the increasing technological advancements. MNCs coming to India also bring their pool of competencies, so to survive in such fast paced technological environment; HS18 has to be on the front foot.
Government instabilities
Government policies play an important role in the functionality of Indian Retail companies. So government instabilities become a great threat to all Indian retail companies including HS18.
FUTURE PLANS OF THE COMPANY
HomeShop18 plans to introduce loyalty programs, multi-level marketing and referral marketing where customers can recommend it to other customers and gain points for doing the same. It will also introduce detailed product infomercials and shows on the website thereby enabling customers to view the product demo thoroughly before purchasing the product.
For promotions, the channel plans to start radio spots and mobile shopping to increase the sales. The company is in talks with DTH players, including Tata Sky, Digital TV, Sun Direct, Videocon and Dish TV, to expand its presence. HomeShop18 will soon launch a loyalty programme by mid 2009 to improve its customer experience.
Investment will continue in the infrastructure and logistical front. The call centre, currently manned by 350 tele-callers, will add another 150 seats. HomeShop18 is becoming highly popular across the country and has been growing at a pace of 30 per cent month-on-month since its launch.
To bring down the delivery time (which is seven days at present) for metros by 30 per cent
To increase consumer orientation, cash card, EMI and credit card payment options will also be introduced
Till date, when a person plans his travel, he just gets to see the tariff rates of the package, along with the name of a hotel, in print. Here, the customers will be taken for a live walk through the hotel, food and exotic travel destinations
Insurance will also be sold through the channel and experts will guide people on the different types of policies available and the benefits associated with them.
RESEARCH METHODOLOGY
For the purpose of the research primary and secondary data was used from the company officials.
For primary data
the information was collected from their customers to know who their potential customers are and what factors are considered by them while making a purchase from the company.
For secondary data
the information was collected from the company’ website as well as interviews of the CEO published on the internet.
The information was also collected from the company officials.
Objective of the Study:
Marketing research is a systematic collection, analysis, interpretation and reporting of marketing manager to solve some marketing problem.
This particular study is being designed with some objective in mind.
Primary Objective:
To study the awareness of HS18 in the areas of Delhi and NCR and to find out Economic feasibility of Tele-Shopping pattern of people.
Secondary Objectives:
- To map up the key and target areas for product branding.
- To find out how to increase the visibility of the product through different branding activities.
- To find out how to increase the market share of HS18 with the help of branding.
Problem Definition:
How to increase the market share of HS18 by increasing the brand visibility and to analyse the customers so, as to reduce the loss the organization is making on account of rejection of COD (Cash on delivery) orders.
Research Design:
Research design stands for the planning of methods to be adopted for collecting the relevant data and technique to be used in their analysis. It is a plan in advance for data collection and analysis and is needed for the research report.
The Research type followed in the study is
Descriptive Research
Descriptive research is used to obtain information concerning the current status of the market to describe "what exists" with respect to variables or conditions in a situation. The methods involved range from the survey which describes the status quo, the correlation study which investigates the relationship between variables, to developmental studies which seek to determine changes over time.
- Statement of the problem.
- Identification of information needed to solve the problem.
- Selection or development of instruments for gathering the information.
- Identification of target population and determination of sampling procedure.
- Design of procedure for information collection.
- Collection of information.
- Analysis of information.
- Generalizations and / or predictions.
Sample Design:
Type of Universe
All consumers in Delhi and NCR.
Sampling Unit
4 zones in Delhi i.e. south , east , north and west.
Sampling procedure
Since the total area of interest is a big one, we divide the area into 4 zones and then find out the key places in that area. Thus, Area sampling is the most appropriate sampling technique in this study.
Sample size of consumers = 100
Data
In dealing with any real life problem it is often found that data at hand are inadequate, and hence, it becomes necessary to collect data that are appropriate. There are several ways of collecting the appropriate data which differ considerably in context of money costs, time and other resources at the disposal of the researcher.
5.1 Data Collection
Data collection is a systematic or assembled, to form a book. It can be through an observation or a technique. By observation it means an act or the faculty of observing or taking notice: an act of seeing or fixing the mind upon something, an act of recognizing and nothing measurement of some magnitude with suitable instrument.
Data collection techniques designed to collect standard information from a large number of subjects concerning their attitudes or feelings. These typically refer to questionnaires or interview. : Accumulation of facts and information with a view to inputting it into a data base. The data collection methods are clearly explained and credible with multiple measures, are current, could include strong mixed methods research, with adequate sampling and the data collected can easily justify the conclusions drawn from the study.
The data collection methods are credible with validated surveys and others methods are clearly described such as observational strategies, case study methodologies, the data or information is current. The data collection is focused on a limited sample of the population (e.g., single project case study) – and has minimal application in terms of generalizing the findings.
There can be two types of data collection i.e.
Primary data and Secondary data
Primary data
The primary data are those which are collected afresh and for the first time, and thus happen to be original in character. It can be collected direct or indirect. It was done through well structured designed questionnaires which were prepared for consumers in Delhi and NCR region.
Secondary data
Secondary data are those which have been already been collected by someone else and which have already been passed through the statistical process. It may either be published data or unpublished data. Secondary data were taken from various publications, books, magazines, newspapers, reports, internet and articles.
FINDINGS AND ANALYSIS
QUESTIONNAIRE PART – I
1. Discriminant Analysis –
Discriminant analysis was carried out by conducting pilot surveys in the form of questionnaires being filled by the respondents in order to analyze the potential customers of HS18, enabling us to know what category of people purchase using teleshopping network. To analyze the type of people who are the Potential Customers.
1. Age of Customers who shop via Tele-Shopping network?
Interpretation: There is a mixed response from the respondents who are between the age group of 21-40.
2. Sex of Respondents?
Interpretation: Major chunk of people who prefer to go for Tele-Shopping are Males.
3. Annual Income of Respondents (in LAKHS)?
Interpretation: There is a mixed response of the people earning less than 5 lakhs who go for Tele-Shopping.
4. Tele-Shopping frequency (No. of times in a Month)?
Interpretation: Mostly the Tele – Shoppers have a frequency to shop 1-2 times a month.
5. Education Level:
Interpretation: There is almost equalized response among the Graduates and post graduates who prefer for Tele-shopping.
6. On-Line Shopping Frequency (No. of times in a Month):
Interpretation: Mostly the ones who shop twice a month are the ones among others who go for on line shopping
7. Shopping Frequency from Local Market (No. of times in a Month):
Interpretation:Mostly the ones who shop above 5 times a month are the ones among others who go for shopping from local market.
2.
Factor Analysis –
To analyze the factors which drive the Potential Customers towards Tele-Shopping.
PART – II Put a tick mark against the most appropriate option. (1 being the Highest and 5 being the Lowest).
Factor Analysis –
To analyze the factors which drive the Potential Customers towards Tele-Shopping
1. Convenience:
Interpretation: About 60% of the people prefer to go with Tele-Shopping in regard to considering with the convenience associated with it.
2. Affordability:
Interpretation: Most of the people do not feel shopping via a Tele – Shopping network is feasible keeping affordability in mind.
3. Safety:
Interpretation: Most of the respondents feel that shopping through Tele- shopping network is not because of any kind of safety associated with it.
4. Lack of Time:
Interpretation: A major chunk of respondents have a view that they go for Tele – Shopping mainly because of their busy schedule.
5. Lack of Outlets:
Interpretation: Respondents do not feel lack of outlets a reason to go with Tele- shopping.
6. Quality:
Interpretation:There is a mixed response of people towards quality , but on the whole it achieves a satisfactory scale.
7. Brand Name:
Interpretation: Respondents mainly consider the brand name as a prime reason to go Tele – Shopping with HS18.
8. Guarantee:
Interpretation: Respondents feel that the guarantee offered through Tele – shopping is equally good which drive them towards it.
9. After Sales Services:
Interpretation: Respondents feedback shows that they are not much satisfied with the after sales service of the products purchased through Tele – Shopping.
10. Variety:
Interpretation: Most of the respondents feel that while sitting at their homes they can have a access to a large variety of products range through Tele – shopping.
QUESTIONNAIRE – 3
This questionnaire was carried out to completely analyze the situation why the organization is facing the situation of rejection of its COD (cash on delivery) orders . For this the research was carried out completely covering all the aspects -:
1. customers point of view
2. Courier companies view
3. Analysis based on feedback received from company officials.
After analyzing all the three aspects it would be easy to seek the problem and to give recommendations to the company to minimize the loss due to rejection of orders
1. Questionnaire to analyze customers point of view
Q1 DO YOU FEEL THAT ITS LATER VERSION HAS BEEN LAUNCHED IN THE MARKET?
Q2. Has anyone told you something wrong about the product?
Q3. Have your near or dear any bad experience with HS18 before?
Q4. At the time the product was at your doorstep you were ready with your cash?
Q5.Was any other company offering the same product at a lesser price because of which you rejected the order?
Q6.The order was placed by the minor in the house?
Q7.The order was placed without the proper consultation of the family members?
Q8.You asked for open delivery of the product?
Q9.courier arrived at your doorstep?
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