THE TELESHOPPING BUSINESS IN INDIA
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TELESHOPPING TRAUMAS
Though teleshopping market was showing positive growth trend, its growth rate
was much below the expectations of the players involved. According to a
report[1], most of the teleshopping networks in the country were not making any
profits. In fact, TSN had closed its teleshopping activities in 2002 and was
concentrating only on online retailing (www.tsnshop.com). According to market
sources, Telebrands was the only network that was able to sustain itself and
make profits - though it was attributed by many to the strong support it
received from its parent company, Telebrands Inc.
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The reasons for the slow growth of the teleshopping market in India were many, the most important being the
abundant supply of imitation product. Local entrepreneurs copied the
products advertised on TV and very soon the markets were flooded with
imitated versions of these products. These products were not only cheaper
compared to organized sector products, but also offered consumers the
facility to personally touch and appraise them. Mahesh Panna of Telebrands
said, "What happens is that we come out with a product and it is promptly
copied by a local player. He obviously sells it at a lesser price. This
way the whole market goes out of our hands."
To address this problem, networks such as Telebrands and ASK opened
special retail outlets in all major metros and semi-metros to enable
customers to personally appraise the products offered, before making a
purchase decision. Apart from the new products, the companies also
retailed those products, which had been taken off air (to make place for
new products) but still had potential for sale. However, the local retailers still enjoyed a
substantial price advantage over the teleshopping networks due to local
manufacturing, low transportation costs and elimination of
distribution/delivery costs. |
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Though the teleshopping networks claimed that their pricing strategies were in
tune with the target customer's profile, the reality was very different. The
higher prices were proving to be a major hindrance for the growth of
teleshopping networks. Most of the products were priced between Rs 1,000-5,000.
Customers were found to be unwilling to pay this amount for lifestyle products
that ranked rather low in their household purchasing priority list.
The differences in the culture and language also posed problems and hampered
the prospects of teleshopping market in India. As teleshopping networks needed
to telecast their programs in different regions, they dubbed most of their
infomercials into the regional languages. However, they failed to have any
impact in prospective customers as they did reflect the native culture of the
region.
Another major problem for the teleshopping networks was the growing criticism
for some of its products. There were a host of products that claimed to do
'seemingly impossible' tasks for consumers. For instance, products promising to
reduce weight, remove unwanted hair, improve posture, improve hearing and cure
chronic diseases were eyed with suspicion by a majority of Indians. Also, the
'over-enthusiastic' and 'chirpy' foreign models that appeared in the dubbed
infomercials were criticized on the grounds of being rather awkward mouthing
dialogs in Hindi and other regional languages.
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QUESTIONS FOR DISCUSSION
[1] Times of India, September 7, 2002.
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