The Teleshopping Business in India

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Background Note

Consumer marketing channels can be broadly classified based on the number of sales levels between the manufacturer and the consumer. One-two-three-four level channels are the most commonly used and involve wholesalers and retailers (also called mass marketing). Direct marketing is a zero-level channel, wherein marketers interact with the customer on a one-to-one basis (Refer Exhibit I for a comparison between mass marketing and direct marketing and various kinds of direct marketing techniques). Direct response marketing motivates customers to take prompt action.

The prerequisites for a promotion technique to be considered as direct response marketing included placing an order directly before the potential customer and prompting the customer to take immediate action (such as requesting for additional information or making a purchase decision). Teleshopping is another name for Direct Response Television (DRTV) shopping, a concept that originated in the US in the mid-1980s. It is one of the direct response marketing techniques. Other major direct response marketing techniques included catalog and direct mail retailing, and interactive/online home shopping. While in catalog/direct mail retailing, product details are communicated to the customer through a catalog or mailer (letters, brochures, pamphlets), in interactive/online shopping, product details and pictures are sent directly to the customers through an electronic medium such as the Internet. Since the 1990s, two types of infomercials have been used. Some featured people from various walks of life, using the product and benefiting from it.

These were scheduled between TV programs. At the end of the infomercial, the teleshopping networks provided their telephone numbers (usually toll-free), prompting viewers to call for further enquiries or place orders. Other infomercials were 'in-studio' productions with a live audience. The companies attempted to convince viewers that it was a regular show and not a mere commercial aimed at luring them to buy their products.

Some teleshopping networks designed 30-60 minute programs, wherein they introduced their product range and carried out in-depth product demonstrations. In countries like the US and Australia, teleshopping networks had dedicated 24-hour home-shopping channels that offered extensive information regarding their product range such as product details and price. Though the concept received a lukewarm response in its early years, in the mid-1990s, it started gaining popularity.

By 2000, the teleshopping market in the US was valued at around $2 billion. Presently, there are two major teleshopping networks in the US - the Home Shopping Network and QVC, which have their own, exclusive 24-hour teleshopping channels. These channels offer products aimed at specific customer groups at different time slots to enable viewers to plan their viewing time accordingly. In 2000, the teleshopping market in the US was valued at around $ 2 billion. However, teleshopping was not as successful in other parts of the world as it was in the US.

This was due to several problems, which included low penetration of television, lack of innovative offerings, poor promotion and advertisement techniques, and lack of awareness among the customers. But 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 billion (Refer Table I for major teleshopping networks in various countries).

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