Bcg Matrix For Dth Services

BCG Matrix for DTH services and suitable strategy for the Leader What is DTH? DTH stands for Direct-To-Home television services. DTH is defined as the reception of satellite programmes with a personal dish in an individual home. DTH does away with the need for the local cable operator and puts the broadcaster directly in touch with the consumer. Only cable operators can receive satellite programmes and they then distribute them to individual homes.

BCG Matrix: - The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. It is based on the observation that a company's business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor, hence the name "growth-share". Market growth serves as a proxy for industry attractiveness, and relative market share serves as a proxy for competitive advantage. The growth-share matrix thus maps the business unit positions within these two important determinants of profitability.

The four categories are: •

Dogs - Dogs have low market share and a low growth rate and thus neither generate nor consume a large amount of cash. However, dogs are cash traps because of the money tied up in a business that has little potential. Such businesses are candidates for divestiture.

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Question marks - Question marks are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash comsumption. A question mark (also known as a "problem child") has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

•

Stars - Stars generate large amounts of cash because of their strong relative market share, but also consume large amounts of cash because of their high growth rate; therefore the cash in each direction approximately nets out. If a star

can maintain its large market share, it will become a cash cow when the market growth rate declines. The portfolio of a diversified company always should have stars that will become the next cash cows and ensure future cash generation. •

Cash cows - As leaders in a mature market, cash cows exhibit a return on assets that is greater than the market growth rate, and thus generate more cash than they consume. Such business units should be "milked", extracting the profits and investing as little cash as possible. Cash cows provide the cash required to turn question marks into market leaders, to cover the administrative costs of the company, to fund research and development, to service the corporate debt, and to pay dividends to shareholders. Because the cash cow generates a relatively stable cash flow, its value can be determined with reasonable accuracy by calculating the present value of its cash stream using a discounted cash flow analysis.

 BCG Matrix for DTH Services  Permitted in 2000, Started in 2001.  Private Players entered in 2003 (Dish TV).  Current 7 players (1 Govt. + 6 Private). Prominent players in market are: Company's Name Dish TV Tata Sky Sun Direct

Subscribers (In Million) 5.92 4.50 4.30

Market Share 31.62% 24.04% 22.97%

Relative Market Share 1.32 0.76 0.73

Airtel Digital TV

2.00

10.68%

0.34

Reliance Big TV Videocon d2h Total

2.00 NA 18.72

10.68% NA 100.00%

0.34 -

 Suitable strategies for Market Leader in DTH

Industry i.e.; Dish TV Following can be the strategies opted by Dish TV: 1. Revenue Enhancement: Creation and on-going management of multiple price points, greater emphasis on up selling and cross selling of new packages through trade incentivisation and consumer promotional schemes, revenue build up using al-a-carte packs, wider offerings on Movie on Demand increased emphasis on bandwidth revenues, adoption and usage of pay gaming and interactive services, would be some of the key revenue drivers. Tapping of high end customers for higher ARPU in the longer run, will be initiated through our tie-ups with key chain stores, direct corporate sales, better farming of MDU (multi dwelling unit) buildings etc.

2. Cost Containment: Cost Rationalization will continue to be one of the main focus areas to derive better efficiency from the available resources and optimize productivity and output to derive better value for money. Various initiatives have already resulted in huge savings on account of sales& distribution cost, collection cost, various administrative cost, marketing cost etc. An optimal utilization of below the line budgets along with efficient planning of above the line budgets, has given great returns, with dish TV enjoying the best advertising to sales ratio in the category. Employee cost is contained through better manpower planning and a robust appraisal system for reward and retention Evolution of better understanding and long term relationship with the Pay channel Broadcasters will lead to lower content cost and enrich their content offering across various schemes. 3. Brand Building: Dish TV is already considered a pioneer and leader in the DTH segment. Efforts will be on, to make the brand a force to reckon with, that carves a niche for itself in the consumers' mind-space and life. Further, it will be the task of marketing to educate consumers, about the relevance of this technology to their entertainment needs, which will drive faster adoption. Value added services, will become more aspirational and find higher usage, as the product penetration expands. These services will drive not just brand stature but add to the revenue prospects as well. 4. Corporate Governance and Value Creation: it is strongly believed that group corporate governance and management best practices are critical for longterm sustainable growth and for building resilience to competition. It will drive and ensure accountability, transparency, professionalism and risk containment. The recent restructure exercise will create more value and build a focused business approach that will go a long way in creating value for the stakeholders. 5. Subscriber and Revenue Growth: The Company has created a Zonal structure comprising of seven zones to create a wide spread distribution muscle across the length and breadth of the country. Apart from traditional retail outlets in the durable and telecom categories, the product will also find presence in multi brand national and regional modern trade chain stores. These stores that attract large volume traffic will add to more sales numbers in the year, apart from giving them a commanding brand presence in the market. Moreover, large Corporates are being approached for bulk sales for their employees, vendor gifts, trade schemes and the like. Whilst acquiring new subscribers would remain one of the primary drivers for growth, retention of existing customers.