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8/20/2010
Group B-11
Amagi Media Labs 201
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Table of Contents
Introduction................................................................................................................3
Industry Background..................................................................................................3
Concept Definition and Clarity....................................................................................4
What is the product?...............................................................................................4
Who buys and who uses?........................................................................................5
What customers buy and how they use it...............................................................6
How does the customer collect information?..........................................................6
Why customers prefer the product?........................................................................6
Benefits................................................................................................................6
Costs....................................................................................................................6
Value....................................................................................................................7
Stakeholders...............................................................................................................8
Group B-11
Amit Krishnan Subramanian
Competitor Analysis...................................................................................................9
-2008118 Bharath
5 C Analysis - Amagi.................................................................................................13
Raghunathan - 2008125
Segmentation...........................................................................................................14
Balaji V - 2008124
Pradeep Sundaram -
Low Involvement Customers.................................................................................14
2008136
Medium Involvement Customers...........................................................................14
High Involvement Customers................................................................................14
Marketing Mix - Amagi..............................................................................................15
Product Diffusion......................................................................................................16
Creating a Sales force..............................................................................................17
Recommendations....................................................................................................18
Appendix A...............................................................................................................19
Appendix A
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Introduction
Amagi Media Labs, a startup based out of Bangalore was started in 2007 by three
engineer Mr.Srinivasan, Mr.Bhaskar and Ms.Srividhya. The company works on the
concept of narrow casting which is basically a method to transmit information to a
particular subset of people. In partnership with other stake holders in the country,
Amagi intends to expand the TV advertising pie in India by enabling many small
local businesses to advertise on national TV but to a local audience using new
technology created by the technical team at Amagi. The company was adjudged as
one of the best start ups in India in 2010 by the publication ‘Business Today’.
Industry Background
Amagi Media Labs tries to bring together a new ecosystem consisting of national
level television channels (content providers), cable TV multi system operators
( MSOs ), advertising agencies and small businesses together and garner value for
all the stakeholders. This section consists of a brief introduction on each of these
players. See Appendix A for a detailed description.
Cable TV Industry
The cable TV industry in India is highly fragmented with around 20000 MSOs. Most
of these MSOs have a very local foothold and there is a tendency for them to be
geographical monopolies. MSOs serve close to 60 million households in India are the
primary mode of Pay TV content delivery mechanism in India. In recent times they
have been facing competition from the Direct-to-Home (DTH) providers.
India has a robust advertising industry of size Rs.12000 crore. It is made of many
major players like Mudra, Ogilvy and Mathew (O&M), McCann Ericsonn, Rediffussion,
Leo Burnett etc. Most of these advertisers are high end advertisers who run a
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national or at least a state level campaign. Most of the local campaigning is left to
small fragmented players in the advertising market.
Narrowcasting
Thus each customer who needs to run a local ad campaign would only need to pay
a much smaller amount for the advertisement as the reach is now limited to a small
geographical. This leads to a much more efficient utilization of resources by
reducing the burden for each advertiser. This also increases the advertising revenue
manifold as the sum of the parts is much greater than the whole.
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Amagi is a one stop shop for any small business’s local advertisement needs. It
works with the local business owner providing consultation on the elements of the
marketing mix and helps the customer understand how, when and where to market
his product. It can also work with the business owner to develop the advert. Thus
Amagi is not just a technology company that gets revenue from local advertising
but it also plays in all the links in the Advertising industry value change.
The way Mr. Srinivasan, one of the co-founders of the company, eloquently explains
it, Amagi does not look at changing percentages in a pie which is basically a zero-
sum game, Amagi is looking at creating a brand new pie and hence bringing more
money into the system.
Medium Local business – These are businesses which are local to a single city or
area. They generally have products that require a distribution network. Hence such
businesses tend to a single office or in the city with a procurement manager who
deals with vendor payments. For marketing, such businesses use radio and
newspaper to reach the local audience. In such organizations the decision process
involves a person who would be the influencer ( procurement manager ) but the
final decision for making the purchase ( decider role ) would still reside with the
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owner of the business. An example of such a business would be a local chain of
hotels.
Large Local Business – These tend to be businesses where the product might
have a larger sales/distribution network spanning more than one city in a single
state. These businesses have a need for managing multiple offices across the cities.
Also there is generally a sales department which acts as a feedback channel from
the market and hence has a strong influence on the organization. So in such cases,
the decision making becomes a bit more complex. We have the sales managers
acting as influencers with the decision made by the owner. If there is any marketing
department, they may act as initiators for the product. An example of such a
business would be FMCG products that are local in nature like say local pickles and
jams or local soaps.
For the large local businesses, we would have the following decision role/benefit
matrix
Buying Roles
Needs/Benefits Decider/Purc
sought Initiator Influencer
haser User
(Marketing) ( Sales )
(Owner)
Low Cost NA
Targeted
NA
Reach
Effectiveness
of Television
Association
with national
television
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What customers buy and how they use it
Once the customer buys the service/product, there are multiple features of the
product that provide benefits to the customer. They are as follows,
Feature Benefit
Benefits
Most of the benefits have already been discussed in the previous sections. So we
can skip this section.
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Costs
On the basis of cost, the value innovation can be done in two ways
More for same – In this pricing mechanism, Amagi can price their product to be
quite competitive with those of print and TV ads. Currently, it costs Rs. 5 lakh and
Rs. 45 lakh for one full-page advertisement in a newspaper, whereas Rs. 240 & Rs.
1200 for a 50 sec ad in radio. Based on the number of impressions required the
effective cost of these two mediums needs to be calculated. Amagi needs to price
itself competitively to this product.
More for more – In this pricing mechanism, the positioning of Amagi needs to be
based on the superior value derived out of the TV medium. This can then be
leveraged for better pricing based on the reduced number of impressions required
in TV vis-à-vis the other mediums.
Value
While the monetary value derived out of the product/service can be calculated, the
following strategic imperatives also need to be considered in understanding the
value derived by the customer from Amagi’s product.
Most brands are increasingly using all types of media in order to create brand
awareness and capture market share. These large national/international brands
with their large marketing budgets can spend on a national advertising campaign.
In such situations, smaller brands and traders need to come up with a local
marketing campaign or risk losing market share to the national brands. Currently,
Amagi is the only provider in India who can provide the required services.
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“Our brand awareness has shot up and the number of customer enquiries have
seen a huge increase” - Beam Telecom, Hyderabad
Amagi scores low on this aspect of brand benefits as it is yet to build its brand
equity.
Stakeholders
Stakeholder Value Provided Benefits Received Power
– Upgrade marketing
campaign from less
effective medium to
more effective ones.
Customers NA – Cost savings as Low-Medium
opposed to budgets
required for
traditional TV ad
campaigns
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the ecosystem.
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Competitor Analysis
The general mediums of advertising in India are listed below:
1. Television
Driven by increase in subscription revenues (due to growth in DTH subscribers)
and proliferation of televisions across households, the year 2009 was a good
innings for the Indian television industry. Currently estimated at Rs. 265.5 billion
in 2009 as compared to Rs. 245 billion in 2008, the industry reported a growth of
8.5%. Revenues from television distribution segment contributed 62% towards
the television industry’s overall returns in 2009 up from 61% in 2008, outdoing
other segments in this industry. The segment stood at an estimated Rs. 165
billion up from Rs. 150 billion in 2008.
The television advertising industry, that has shown a growth of 11.5% over the
last four years, slowed down in the last year (2009) to a meager 6% as financial
crisis that resulted in lesser spending by the corporate houses. In 2009,
television advertising industry contributed 34% to the overall television
industry’s revenues as compared to 37% in 2004. It stood at an estimated Rs.89
billion in 2009, up from Rs. 84 billion in 2008.
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The reach of television has increased rapidly over the past 5 years and we see that
it covers 91% of the Indian households. The breakup of urban versus rural divide for
the TV households has been provided in the side.
Different genres of channels have a
different viewership ratings and
patterns. This would determine which
products are advertised on the
channel and at what time. It also
determines what the advertisement
spot rates of such channels can be.
The different rates for various
channels in different genres are also
shown at the top.
This shows that there is a very wide variance in the range of advertisement slots
based on genre of the channel, channel viewership & demographics that it
caters to and the time slots that the advertisements would appear in.
2. Radio
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platforms which provided high and measurable returns on investment. In 2009,
due to recessionary pressure, advertisement rates were slashed by 20-25% by
most radio stations.
Radio slots are typically 30 seconds long and depending on the number of
listeners (it being a primetime or otherwise) the charges for the slot could vary
from `1000 to `5000.
Typically, the times 7AM to 8AM is considered as primetime, AM to 11 AM and
6PM to 8 PM is considered to be super prime time. This is the times when the
price of a slot of advertisement is the maximum.
Since the radio caters to audience in one region or one city, it is an excellent
mechanism by which the vernacular content and regional and targeted
advertisement can be created and deployed. The explosion in radio stations is
expected to give a further boost to this market.
3. Newspapers
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internet, people in India prefer to read the news in hard copy format and
digitization has not had any major impact on newspaper circulation. Though
Indian newspapers have a good online presence, no major shift has been noted
in readership to these online portals.
The Indian print media industry has grown at a healthy rate of 10.2% over the
last five years. In 2009, however, the delving economic conditions resulted in the
Indian print media industry remaining steady at the same size as previous year.
Summary
If we apply the measures of regionalization, reach, price and format, we get the
following scores
Regional National
Newspaper Radio Amagi
channels channels
Regionalizatio
High High High Low High
n
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Low to Low to
Reach Med to High Low to Med High
Med Med
Low to
Price Med Low Low High
Med
Ease of recall
for end Med Low High High High
customer
So based on the above analysis we can say that compared to its competition of Print
and Radio, Amagi produces a much more balanced score card for its customers.
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5 C Analysis - Amagi
Company
Climate
Customers
Collaborators
Competitors
Target
Makes
The
End
Ad
Primary
agencies
industry
Customers
TV
competitors
adssell
inaffordable
are
India
local
subscribers
are
has
ad Radio,
slots.
been
Sells
growing
of
ContentMarket
Regional
theLocal
MSO
partners
for
& Advertisement
National
in
alltie
its up
sell
constituents
Television
with Amagi
Slotsat
and
Narrowcasting
a
Advertisement
advertisement
minimum
Newspapers.
CAGR
technology
slots.
agencies
of 8%. buy – ad
First mover
Expected
slots
MSOs
Internet
for
delivering
their
&GDP
Mobile
clients.
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ads
based
toofthe
India
endin
Still next
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inBusinesses
Early
decade
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mayat
directly
abe
mode
rate
a threat.
buy
of 8-
9%.slots.
ad
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Segmentation
Segmentation of products can be done on the basis of the value derived from the
product to the consumer. The following segments can be created based on this.
Given the above segmentation, we believe that Amagi can target all the above
segments with their product offering.
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Product Diffusion
Product Price
The first
ave any variations. step in product
The pricing will be in between the prices of Radio &various
diffusion would be to analyze the product on Regional/ National TV.
of the product is in its ability to offer image of advertising in national channelsbelow.
product characteristics that
Revenue will influence
share method diffusion
of as shown
interaction within the
MSOs table at lower price.
Additional revenue
known technology but first implementation will be generated by Amagi Acting as an advertising agency
in India.
Innovation
Comment Rating
Aspect
However despite the various aspects of the innovation that support diffusion,
communication of these aspects is key to diffusion of the product. Hence a strong
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sales force which can span the country and pull in the various stake holders and
hence roll out the service in other cities is an important requirement for product
diffusion. This is dealt in the next section that talks about the building of a sales
force to achieve this.
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Assuming that the business team will be in-charge of the relationships with the
Content Providers and the MSOs, The Sales team will be required to market the
advertisement slots to Small & Medium businesses and advertisement agencies
with local advertisement needs.
Possible Cost
Online shop
Viral selling
Relationship selling
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The other decision that needs to be taken by Amagi is that whether they want to
expand to all other cities of India under their own capital or they want to collect
some royalty by expanding through the medium of franchise. While expanding on
their own will give Amagi much more control over the revenues and a better profits
(as a percentage), the franchisee route will ensure explosive growth and faster
break even.
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Recommendations
1. Amagi can aim to improve diffusion by allowing initial customers to pay
based on the promise of a trial and measurement of the ad effectiveness. For
this initially Amagi may need to provide some services that relate to ad
effectiveness measurement also. For e.g. it may need to provide a common
phone number that will be monitored by both Amagi and the customer for
calls that make enquires about the end product for which the ad campaign
was launched. This is a good method of offsetting both the trialability and
observability dimensions of innovation.
2. Amagi can look at viral marketing and viral selling where it offers
benefits/discounts to current customers for referring their peer business
contacts to Amagi. This will decrease the cost/sale for Amagi.
3. External Advertising agencies typically have a lot of bargaining power which
will have an adverse impact on Amagi’s margins. Selling of advertising slots
via advertising agencies should be the last priority.
4. For fast growth of the company across the 20000+ MSOs that are present
across the country, it might make more sense for Amagi to go the franchisee
route as it will reduce capital requirements and increase sales force in an
exponential manner.
5. To enhance knowledge about Amagi, It should utilize some of the advertising
slots that it has to sensitize businesses about the possibility of local
advertising on television.
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Appendix A
Indian Television broadcasting industry
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The Indian advertising today handles both national and international projects. This
is primarily because of the reason that the industry offers a host of functions to its
clients that include everything from start to finish that include client servicing,
media planning, media buying, creative conceptualization, pre and post campaign
analysis, market research, marketing, branding, and public relation services.
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Firms in the advertising and public relations services industry prepare
advertisements for other companies and organizations and design campaigns to
promote the interests and image of their clients. This industry also includes media
representatives-firms that sell advertising space for publications, radio, television,
and the Internet; display advertisers-businesses engaged in creating and designing
public display ads for use in shopping malls, on billboards, or in similar media; and
direct mail advertisers. A firm that purchases advertising time (or space) from
media outlets, thereafter reselling it to advertising agencies or individual companies
directly, is considered a media buying agency.
The structure of the advertising industry in India has been affected by globalization
and international alignments creating a smaller number of very large agencies and
the growth of independent major media buying houses. Very sophisticated software
optimization and planning systems are now integral to the industry, enabling
agencies to offer a unique positioning in the marketplace to attract new business.
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has been a whopping 40%. The local firms are using all the available advertising
tools from electronic to print, outdoor advertising and even models. The advertising
and promotional spending by local brands is substantial during the festival season
and almost 70% of the spending is done between September to January. The
advertising industry in India is growing at an average rate of 10-12% per annum.
Over 80% of the business is from Mumbai and Delhi followed by Bangalore and
Chennai.
• India has a rich pool of strategic planning, creative and media services
personnel: Indeed, Indian advertising industry has been exporting senior-level
talent to many countries, particularly to the Gulf, South-East Asia, China, the
UK and the US. Indian talent is recognized and respected in global agency
networks.
• Indians are multicultural: we learn at least two languages and that gives us a
head start in understanding cultural diversity.
• Most of the top 20 agencies in India have a global partner or owner, which
should provide an immediate link to global markets.
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The Indian advertising industry is a very upcoming and promising sector. However
there is severe competition and survival is for the fittest and the best. In this sector
what matters the most is knowledge and experience of the work and the industry
and its functioning. The more the knowledge you can provide the better the
productivity you give.
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