Tag: University of Mumbai BMS Notes

Players of commodities market have been classified into three broad categories. They are Hedgers, Speculators and Arbitrageurs.

Hedgers: Hedging is an investment strategy used for minimising a risk and hedgers are the practitioners of this strategy. Generally, hedgers are producers or consumers who want to transfer the price-risk on to the market. Commodities derivatives market provide them an effective hedging mechanism against adverse price movements. They protect themselves from risk associated with the price of commodity by using derivatives.

For example, an airline company faces the risk is price rise of fuel. So they will go for a long position (buy an oil futures contract) to hedge, just to cover the amount of fuel they expect to buy.

Similarly, gold is the best hedge against inflation.

Speculators: Speculators are sophisticated leading players in commodities futures market. They are basically risk takers and are never associated with any commodity. They generally bet against the price movement in the hope of making gains.

They undertake speculative position with respect to anticipating future price movements with a small margin and square-off anytime during trading hours. They do either by going long or going short positions.

Buying a futures contract in anticipation of price increase is known as ‘going long”. Selling a futures contract in anticipation of a price decrease is known as ‘going short”.

Arbitrageurs: Arbitrageurs are investors who earn from discrepancy in prices between the two exchanges or between different maturities of the same commodity.

A simple example of arbitraging is simultaneously buying a gold at lower price from one exchange and selling it on another exchange for higher price. So they make profit from price difference.

Margin Traders: In the finance industry, the margin is the collateral deposited by an investor investing in a financial instrument to the counterparty to cover the credit risk associated with the investment.

The commodities market exists in two distinct forms:

• Over-the-counter (OTC) market
• Exchange based market

Similar to equities, there exists the spot and the derivatives segments. Spot markets are essentially OTC markets and participation is restricted to people who are involved with that commodity, such as the farmer, processor, wholesaler, etc.

A majority of the derivatives trading takes place through the exchange-based markets with standardized contracts, settlements, etc. The exchange-based markets are essentially derivative markets and are similar to equity derivatives in their working, that is, everything is standardized and a person can purchase a contract by paying only a percentage of the contract value.

A person can also go short on these exchanges. Moreover, even though there is a provision for delivery, most contracts are squared-off before expiry and are settled in cash. As a result, one can see an active participation by people who are not associated with the commodity. The typical structure of commodity futures markets in India is as follows.

Structure of commodity market in india

Ministry of Consumer Affairs, Food and Public Distribution

The Department pertaining to consumer affairs is responsible for the formulation of policies for:

• Monitoring Prices
• Consumer Movement in the country
• Controlling of statutory bodies (Bureau of Indian Standards (BIS) and Weights and Measures)
• Internal Trade
• Inter-State Trade- The Spirituous Preparations (Inter-State Trade and Commerce) Control Act, 1955 (39 of 1955).
• Control of Futures Trading- the Forward Contracts (Regulations) Act, 1952 (74 of 1952)

The Department for food and public distribution is responsible for the formulation of policies for:

• Ensuring food security for the country through timely and efficient procurement and distribution of food grains.
• Building up and maintenance of food stocks, their storage, movement and delivery to the distributing agencies and monitoring of production, stock and price levels of food grains.
• Incentivizing farmers through fair value of their produce by way of Minimum Support Price mechanism, distribution of food grains to Below Poverty Line (BPL) families.
• Covering poor households at the risk of hunger under Antyodaya Anna Yojna (AAY).
• Establishing grain banks in food scarce areas and involvement of Panchayati Raj Institutions in Public Distribution System (PDS).
• Concerns for the sugar sector such as fixing of Fair and Remunerative Price (FRP) of sugarcane payable by Sugar factories, development and  regulation of sugar industry (including training in sugar technology), fixation of levy price of sugar and its supply for PDS and regulation of supply of free sale sugar.
• Export and import of food grains, sugar and edible oils.

Forward Market Commission

The Commission functions under the control of the Ministry of Consumer Affairs, Food & Public Distribution, Department of Consumer Affairs, Government of India. The functions of the Forward Markets Commission are:

• To advise the Central Government in respect of the recognition or the withdrawal of recognition from any association or in respect of any other matter arising out of the administration of the Forward Contracts (Regulation) Act 1952.
• To keep forward markets under observation and to take such action in relation to them, as it may consider necessary, in exercise of the powers assigned to it by or under the Act.
• To collect and whenever the Commission thinks it necessary, to publish information regarding the trading conditions in respect of goods to which any of the provisions of the Act is made applicable, including information regarding supply, demand and prices, and to submit to the Central Government, periodical reports on the working of forward markets relating to such goods.
• To make recommendations generally with a view to improving the organization and working of forward markets.
• To undertake the inspection of the accounts and other documents of any recognized association or registered association or any member of such association whenever it considers it necessary.

A commodity is a group of assets or goods that are important in everyday life, such as food, energy or metals. A commodity is alternate and exchangeable by nature. It can be categorized as every kind of movable good that can be bought and sold, except for actionable claims and money.

Hard and soft commodities are traded on the exchanges. Metals, crude oil, etc. fall under the category of hard commodities whereas agricultural commodities like corn, wheat, cotton, soybean, and guar are soft commodities as they have a limited shelf life. Let us concentrate on the types of commodity market in India and list of commodities traded on commodity market.

Commodity trading in India started way back in time, even before it did in many other countries. But, foreign invasions and ruling, natural calamities, and many government policies and their amendments were significant reasons for the diminishing of commodity trading. Today, even though there are various other forms of stock market and share market traders, commodity trading has regained its importance.

Commodity trading is where various commodities and their derivatives products are bought and sold. A commodity is any raw material or primary agricultural product that can be bought or sold, whether wheat, gold, or crude oil, among many others. When you engage in commodity trading, such commodities can diversify your asset portfolio.

Types of Commodities Traded

Commodities that are traded are typically sorted into four categories broad categories: metal, energy, livestock and meat, and agricultural.

1. Metals

Metals commodities include gold, silver, platinum, and copper. During periods of market volatility or bear markets, some investors may decide to invest in precious metals–particularly gold–because of its status as a reliable, dependable metal with real, conveyable value. Investors may also decide to invest in precious metals as a hedge against periods of high inflation or currency devaluation.

2. Energy

Energy commodities include crude oil, heating oil, natural gas, and gasoline. Global economic developments and reduced oil outputs from established oil wells around the world have historically led to rising oil prices, as demand for energy-related products has gone up at the same time that oil supplies have dwindled.

Investors who are interested in entering the commodities market in the energy sector should also be aware of how economic downturns, any shifts in production enforced by the Organization of the Petroleum Exporting Countries (OPEC), and new technological advances in alternative energy sources (wind power, solar energy, biofuel, etc.) that aim to replace crude oil as a primary source of energy, can all have a huge impact on the market prices for commodities in the energy sector.

3. Livestock and Meat

Livestock and meat commodities include lean hogs, pork bellies, live cattle, and feeder cattle.

4. Agriculture

Agricultural commodities include corn, soybeans, wheat, rice, cocoa, coffee, cotton, and sugar. In the agricultural sector, grains can be very volatile during the summer months or during any period of weather-related transitions. For investors interested in the agricultural sector, population growth–combined with limited agricultural supply–can provide opportunities for profiting from rising agricultural commodity prices.

A firm using a global strategy sacrifices responsiveness to local requirements within each of its markets in favor of emphasizing efficiency. This strategy is the complete opposite of a multidomestic strategy. Some minor modifications to products and services may be made in various markets, but a global strategy stresses the need to gain economies of scale by offering essentially the same products or services in each market.

Microsoft, for example, offers the same software programs around the world but adjusts the programs to match local languages. Similarly, consumer goods maker Procter & Gamble attempts to gain efficiency by creating global brands whenever possible. Global strategies also can be very effective for firms whose product or service is largely hidden from the customer’s view, such as silicon chip maker Intel. For such firms, variance in local preferences is not very important.

A firm using a transnational strategy seeks a middle ground between a multidomestic strategy and a global strategy. Such a firm tries to balance the desire for efficiency with the need to adjust to local preferences within various countries. For example, large fast-food chains such as McDonald’s and KFC rely on the same brand names and the same core menu items around the world. These firms make some concessions to local tastes too. In France, for example, wine can be purchased at McDonald’s. This approach makes sense for McDonald’s because wine is a central element of French diets.

Technological change

Rapid and sustained technological change has reduced the cost of transmitting and communicating information sometimes known as “the death of distance” – a key factor behind trade in knowledge products using web technology.

Containerisation

The costs of ocean shipping have come down, due to containerization, bulk shipping, and other efficiencies. The lower unit cost of shipping products around the global economy helps to bring prices in the country of manufacture closer to those in export markets, and it makes markets more contestable globally

Differences in tax systems

The desire of businesses to benefit from lower unit Labour costs and other favorable production factors abroad has encouraged countries to adjust their tax systems to attract foreign direct investment (FDI). Many countries have become engaged in tax competition between each other in a bid to win lucrative foreign investment projects.

Economies of scale

Many economists believe that there has been an increase in the minimum efficient scale (MES) associated with some industries. If the MES is rising, a domestic market may be regarded as too small to satisfy the selling needs of these industries. Many emerging countries have their own transnational corporations

Growth Strategies of Transnational and Multinational Companies

In their pursuit of revenue and profit growth, increasingly global businesses and brands have invested significantly in expanding internationally. This is particularly the case for businesses owning brands that have proved they have the potential to be successfully globally, particularly in faster-growing economies fuelled by growing numbers of middle class consumers.

Less protectionism

Old forms of non-tariff protection such as import licensing and foreign exchange controls have gradually been dismantled. Borders have opened and average import tariff levels have fallen.

That said, it is worth knowing that, in the last few years, there has been a rise in non-tariff barriers such as import quotas as countries have struggled to achieve real economic growth and as a response to persistent trade and current account deficits.

Global marketing is defined as the process of adjusting the marketing strategies of your company to adapt to the conditions of other countries. Of course, global marketing is more than selling your product or service globally. It is the full process of planning, creating, positioning, and promoting your products in a global market.

Big businesses usually have offices abroad for countries they market to. Currently, with the proliferation of the internet, even small businesses can reach consumers anywhere in the world. If a business chooses not to extend internationally, it can face domestic competition from international companies that are extending their international presence. The presence of this competition almost makes it a requirement for many businesses to have an international presence.

There are many benfits of global marketing, when it is done right.

• First, it can improve the effectiveness of your product or service. This is because the more you grow, the more you learn, and the faster you learn, you become more effective at producing new product or service offerings.
• Second, you are able to have a strong competitive advantage. It is easy enough for companies to be competing in the local market. But there are very few companies who can do so on the worldwide arena. Hence, if you can compete in the worldwide market and your competitors cannot, you have become a strong force in your industry!
• Third, you increase consumer awareness of your brand and product or service. Through the internet, consumers can keep track of your progress in the world.
• Finally, global marketing can reduce your costs and increase your savings. In focusing on other markets, you can attain economies of scale and range by standardizing your processes not to mention the savings that you get when you leverage the internet.
• Companies evolving towards global marketing are actually quite gradual. The first stage has the company concentrating on the domestic side, with its activities focused on their home market. Stage two has the company still focusing domestically but has exports. By stage three, the company has realized that they need to adapt their marketing geared towards overseas. The concentration moves from multinational. Thus, adaption has become crucial. The fourth and last stage has the company creating value when it extends its programs and products to serve worldwide markets. Definitely, there are no definite time periods to this evolution process.

A global marketing strategy almost always consists of several things:

(1) Uniform brand names

(2) Identical packaging

(3) Similar products

(4) Standardized advertising messages

(5) synchronized pricing

(6) Coordinated product launches

(7) Harmonious sales campaigns.

• As a whole, these two are the most well-known global marketing strategies used by companies expanding internationally:
• Create a consistent and strong brand culture. Creating a strong and consistent brand that always seems familiar to customers is a priority for companies growing internationally. With the ever-more rising and expanding internet, brand structure has become more of a brand culture. To be more specific, it has become more prevalent nowadays that the brand you support reflects your culture. It can be damaging if you compromise your brand culture. For example, Google found out the hard way when it launched a self-censored search engine in China, even though China subjects its new media to government blocks. Google’s brand has been known to make the world access information at anytime. How can Google set up something in China against its own culture? As a result, customer backlash versus Google was substantial.
• Market as if there were no borders. Due to the proliferation of digital platforms, brands cannot always adopt different strategies per country. In a way, due to the internet, companies have to adopt a marketing approach that is more or less unified.

Global marketing issues and mistakes

Companies, especially their marketing teams, often face the following issues and mistakes when expanding worldwide. These can become hurdles in achieving international success.

Non-Specification of Countries

Many businesspersons usually think of foreign markets vaguely, like they want to shift to Asia or they want to increase their growth by offering their products to Europe. It is problematic to take things too simply. Europe can mean the European Union, Western Europe, Eastern Europe, and so on and so forth. Consumers always identify themselves at the local level and marketing teams have to remember that each country has its own norms, laws, payment types, and particular business practices.

By being specific in the start, companies can prioritize the markets they want to get into, generate a staffing plan, and allocate the budget. These are all important for a business to attain its global objectives.

No Focus on Internal Information

You have to conduct specialized and complicated market research when you are going to create a global market entry strategy. You would need to consider the potential opportunity in the market, how easy or hard it would be for your business to work in that market, and how successful you already are in the market.

There are a lot of companies that concentrated on outside data to help their decision-making, as described above. Nonetheless, you can simply use your own internal information to get the data, on whether there is a strong fit between your product or service and the market. Remember that data from third parties do not understand your company or even know your consumer. Only you have the best input on this.

Lack of Adaptation of Sales and Marketing Channels

Most Western companies think that they can go into new markets by doing the same things that brought them success domestically.

As previously mentioned, it is important to have brand consistency, but differing markets would like particular marketing approaches. Moreover, marketers have to consider at which channels it would be best to market, based on market behavior.

Case in point, for Brazil, marketing campaigns are more successful through Facebook because of its popularity there. However, in Latin America, you can draw in a bigger audience through Twitter. Hence, you may need to check which channels give you the best results through market research.

No Adaptation of Product Offerings

Business can only attain a fit between their product and the market one at a time. However, more often than not, businesses attempt to launch the same products in varying markets. In essence, they are ignoring that they are interacting with a different set of consumers.

Case in point, if a tech company sells a similar product abroad that it sells domestically and if the new customers do not know the advanced features of the product, the company could be in trouble. Alternatively, the company should begin with the basic version.

On the same note, a market that is more advanced might need additional features than what the product already has.

Non-Usage of Local Team Leads

Perhaps one of the usual mistakes companies make in global marketing is failing to consider the input of strong and competent employees in their foreign markets, especially when establishing strategic decisions.

These individuals are significant because they know their country and your company. Since one of the biggest issues businesses face when including local input is communication, the marketing team must have a system that guarantees that local perspectives are gathered and distributed often.

Lack of Knowledge on Global Logistics

Marketers often make use of software that allows them to publish website content, send email, publish updates on social media, and accomplish other marketing-related activities. However, these tools do not always support each market. For example, you have payment solutions only for a couple of countries, but your customer relationship management system has many contacts coming from a hundred countries.

Marketers have to guarantee that they could market to customers in the countries they are entering. They should consider how to display the local currency, how to email consumers in particular time zones, and how to support the languages of the consumers.

Unethical issues in sales

Without sales, businesses die. This unvarnished truth drives businesses and salespeople to work hard at securing sales. Unfortunately, the drive to sell or pressure from management to increase sales volume often leads salespeople to use unethical sales techniques to bolster short-term numbers. Ethical sales techniques produce enduring and profitable relationships with customers, while unethical sales techniques damage those relationships and long-term profits.

Unethical Technique: Excessive Fine Print

Some businesses bury warranty limitations, performance guarantees and other information that might undermine customer confidence in the fine print. Customers only discover this information when something goes wrong and they want a refund, repair or alteration to the product. The company informs the customers that their requests are not covered, not possible, or require an excessive fee to accommodate. This deliberate obfuscation may lead to short-term sales that a more honest approach would miss, but at a significant loss to the company’s reputation over time.

Unethical Technique: Bait and Switch

A classic unethical technique, the bait and switch promises customers one thing and offers them something different at the store or on delivery. For example, a grocery store promises to sell porterhouse steaks at half the regular price. Customers arrive only to discover the store is “sold out,” except the store never stocked porterhouses from the advertised brand at all, or only has a few available that are gone quickly. Instead, it carries a more expensive brand it hopes the customer will purchase instead.

Unethical Technique: Misrepresentation

Misrepresentation takes many forms. Salespeople may misrepresent the capabilities of a product to secure the sale. The salesperson might misrepresent the actual costs of a product or offer a promotional price as though it were the recurring cost. Misrepresentation also takes the form of pretending the customer can expect product upgrades sooner than the company can possibly institute the upgrades.

Unethical issues in marketing

Ethical marketing involves making honest claims and helping to satisfy the needs of customers. Besides being the right thing to do, ethical marketing can have significant benefits for your business. For example, if customers believe you’ll live up to your word, brand loyalty will develop, customer retention will increase and your customers will tell others of their good experiences, according to the book “Marketing,” by James L. Burrow. Unethical marketing activities, in contrast, can destroy your business’s reputation and possibly lead to legal troubles.

1. Misleading Advertising

Outright false advertising is illegal. For example, reporting that your product is safe for people to use when it isn’t can land you in serious trouble. Misleading advertising might not rise to the level of false advertising, but it’s unethical and can hurt your reputation with the public. For example, if you claim your product is much better than it actually is, your company will appear untrustworthy. While it’s important to put your best foot forward in marketing, avoid crossing the line by making dishonest or exaggerated claims.

2. Exploitation

Manipulating people by exploiting their fears is unethical. For example, exaggerating the risks people face so you can sell them insurance is a form of manipulation, as is tricking your customers into buying overpriced or useless extended warranties. This approach is called the “fear-sell” tactic and is especially nefarious when it targets people who are disadvantaged in some way. For example, the fear-sell tactic is often used by insurance salesmen to trick low-income earners into buying unnecessary insurance, according to the book “Critical Marketing,” by Mike Saren and colleagues.

3. Spam

Delivering a sales message to potential customers is part of a marketer’s job, but it’s unethical to flood consumers with an onslaught of advertisements especially when they have not given you express permission to contact them. For example, email spam and robo-calling using automatic dialers to contact many people without permission, typically are unethical marketing activities. Further, these practices might anger customers rather than attract them to your business.

4. Pushy Sales Tactics

It’s a salesperson’s job to convince customers to buy a product, but being overly aggressive is unethical. For example, suppose a customer seems interested in a purchase but asks for more time to consider the deal. An unethical salesperson might bully the customer into making a quick decision, perhaps by lying about how the deal will expire soon or how another customer is interested in the same item. The line between being persuasive and being a bully isn’t always clear, so it’s more ethical to focus on helping customers make informed decisions rather than focusing on making the sale at any cost.

Unethical issues in advertising

In modern times, advertising has been playing a significant role in our socio-economic life. It is considered an effective and cost efficient tool for communication. Though advertising is used for non-economic purposes, it is highly used to attain business objectives. In this era of globalization and deregulation, advertising has acquired a new status. Technological advances have added new feathers to the entire gamut of advertising, and hectic competition has made advertising more powerful in the process of attracting and holding customers. As a result, advertising has been the victim of criticisms and abuses. Different social thinkers and other organisations throughout the world express their serious concerns on the role advertising plays. It is normally believed that most of the advertisements today are the embodiment of unethical practices. Most of the advertisements are viewed as offensive, indecent, vulgar, repulsive, and against public decency. More particularly, it affects children negatively. The present paper makes an attempt to examine the attitudes of consumers regarding advertisements. The paper is based on an empirical study with a sample size of 100 respondents consisting of university teachers, students, and the common consumers. Appropriate statistical tools have been used for analysis and interpretation.

Advertising is considered unethical when

• It gives false information.
• It degrades the rival’s product or substitute product.
• It makes exaggerated or tall claims.
• It is against the national and public interest.
• It gives misguiding information,
• It conceals information that vitally affects human life.
• It is obscene or immoral.

Forms of Unethical Advertising

1. Alcohol Advertising

Alcohol advertising is banned on broadcast and print media in India. But we can find manufacturers of alcohol advertising for Soda, in an effort to keep the brand name afresh in the minds of the consumers.

2. Tobacco Advertising

Tobacco advertising is considered an unethical advertising practice. All cigarette advertisements should carry a Statutory warning that Smoking is injurious to health in order to highlight the risks involved. But in reality, the advertisers release very colorful and catchy advertisements of cigarettes that give an impression, especially to the youth that smoking cigarettes is indeed graceful.

3. False Claims

(a) If an air-conditioning company advertises that it uses imported compressors in their machines for ensuring better performance while actually using an indigenously manufactured one, then it is a case of false claim.

(b) Advertisements offering mixtures and substances that claim to possess the ability to prevent people from ageing are categorized as unethical.

4. Exaggerated Claims

Such claims include those that make an assurance which may not be true. For example, if a shampoo manufacturer claims that their product will remove dandruff in hair forever even when used only once, is a case of an exaggerated claim.

5. Unverified claims

The language used in such advertisements will be quite ambiguous. For example, if a company advertises that its product offers instant hi-energy drink for children. But the question arises what do we mean by instant hi-energy drink and what are its parameters? And also if there is no scientific verification of the energy it possesses, such advertisements are included under unverified claims.

Ethics

• It is the art and science of determining good and bad or right or wrong moral behavior.
• It is a science of moral duty or the science of ideal human character.
• Right things are called as ethics.

Service Marketing ethics

• Service Marketing ethics means a standard by which a marketing action may be judged “RIGHT” or “WRONG”.
• It the area of applied ethics which deals with the moral principles behind the operation and regulation of service marketing.
• Ethics in service marketing applies to different spheres such as in product, pricing, Placing (Distribution), promotion & advertising etc…

Ethical Marketing

Ethical marketing is less of a marketing strategy and more of a philosophy that informs all marketing efforts. It seeks to promote honesty, fairness, and responsibility in all advertising. Ethics is a notoriously difficult subject because everyone has subjective judgments about what is “right” and what is “wrong.” For this reason, ethical marketing is not a hard and fast list of rules, but a general set of guidelines to assist companies as they evaluate new marketing strategies.

Why we need ethics in marketing?

• To develop more positive attitudes
• To develop Values or trust with key stakeholders
• To build good image.
• To helps to remain long time in a business

Many people buy diet pills even though they are rarely, if ever, effective. This is because some diet pill companies use exaggerated and manipulative claims to essentially trick customers into buying these products. If that same company committed to using ethical advertising they would probably go out of business. However sneaky their business model may be, it is not illegal and it is keeping their doors open.

For companies looking to improve the image of a brand and develop long-term relationships with customers, this kind of unethical behavior can quickly lead to failure. Customers do not want to feel manipulated by the brands they like. Companies can use ethical marketing as a way to develop a sense of trust among their customers. If a product lives up to the claims made in its advertising, it reflects positively on the entire company. It can make the consumer feel like the company is invested in the quality of the products and the value they provide customers.

It is impossible to claim that any company is completely ethical or unethical. Ethics resides in a gray area with many fine lines and shifting boundaries. Many companies behave ethically in one aspect of their advertising and unethically in another.

Dove soap, for instance, ran a widely seen ad campaign featuring “real” models. The ad was meant to promote realistic body images and encourage girls to love the way they looked even if they were not supermodels. However, other Dove ads both during and since featured stereotypically beautiful models whose images have been altered to hide imperfections. Dove marketed ethically in one campaign and unethically in another. This illustrates how difficult it is to do the right thing in all circumstances. What is most important for any company that claims to practice ethical advertising is to make it a fundamental feature of their marketing process. With every decision they must ask themselves “will this sell” and “is this the ethical way to sell it?”

Who Employs Ethical Marketing?

Every company has the opportunity to engage in ethical marketing. Any business, from the smallest mom and pop store to the biggest multinational corporation can choose to be open, honest, and fair when they advertise to their customers. When done in a thoughtful way, ethical marketing can be an economical and effective form of advertising. Similarly, unethical advertising doesn’t guarantee higher sales or lower advertising costs.

Some companies operate according to lofty personal principles. For these companies, advertising in an ethical way is a natural and necessary extension of their corporate character. Corporate responsibility can be a major selling point to consumers who are interested in more than just price and quality. Companies that are known for treating workers fairly, sourcing sustainable materials, environmental stewardship, and charitable donation have to reflect these principles in their marketing efforts. .

For other companies, ethical marketing will be little more than an opportunity to boost their credibility. Domino’s pizza, for example, carried out a well known advertising campaign in which they showed consumers pictures of real Domino’s pizzas without the studio photography that makes them look so perfect. This was a refreshing look behind the artifice of much advertising, but this did not signal a more open and honest relationship between Domino’s and the pizza buying public. The campaign was considered an attention seeking stunt at best.

The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making significant strides. Proving its resilience to the world, Indian M&E industry is on the cusp of a strong phase of growth, backed by rising consumer demand and improving advertising revenue. The industry has largely been driven by increasing digitisation and higher internet usage over the last decade. Internet has almost become a mainstream media for entertainment for most of the people.

Media is consumed by audience across demographics and various avenues such as television, films, out-of-home (OOH), radio, animation, and visual effect (VFX), music, gaming, digital advertising, and print.

The Indian advertising industry is projected to be the second fastest growing advertising market in Asia after China. At present, advertising revenue accounts for around 0.38 per cent of India’s gross domestic product. By 2021, Indian media and entertainment industry will reach Rs 2.35 trillion.

India ranks 15 in the world in the music industry and is expected to enter the top 10 music markets by 2022.

Market Dynamics

The M&E industry will grow at a CAGR of 13.5 per cent during FY19-FY24. It is expected to reach around Rs 3.1 lakh crore (US$ 43.93 million) by 2024.

India’s advertisement market is projected to grow 10.62 per cent y-o-y to Rs 85,250 crore (US$ 12.06 billion) till 2021. India’s advertisement spending touched Rs 67,603 crore (US$ 9.67 billion) in 2019, up 11 per cent y-o-y. Digital advertising has emerged as the third largest advertising medium in India. It generated revenue worth Rs 15,467 crore (US$ 2.21 billion) in 2019. Digital will contribute 29 per cent of the ad market size by 2021.

The online video market in India is estimated to reach US$ 4 billion by 2025, with subscription services contributing more than US$ 1.5 billion and advertising adding US$ 2.5 billion.

The Indian film industry reached Rs 100 billion (US$ 1.43 billion) in 2019. Increasing share of Hollywood content in Indian box office and 3D cinema is driving the growth of digital screens in the country. India’s video streaming industry is expected to grow at a CAGR of 21.82 per cent by 2023.

Recent development/Investments

Foreign Direct Investment (FDI) inflow in the Information and Broadcasting (I&B) sector (including Print Media) for the period April 2000 – March 2020 stood at US$ 9.20 billion as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT).

• In 2019, the sector witnessed a total of 21 mergers and acquisition (M&A) worth US$ 240 million.
• Shipment of TVs in India increased 15 per cent annually to reach the highest-ever level of 15 million units in 2019.
• In April 2020, Hotstar, owned by the Star network, was rebranded as Disney+Hotstar. It plans to localise Disney+ movies and shows by dubbing or adding subtitles in Indian languages, including Hindi, Tamil and Telugu.
• Bharti Airtel’s direct-to-home (DTH) arm Airtel Digital TV and Dish TV merged by end of August 2019.
• As stated in Union Budget 2019-20, Government was to launch a dedicated channel for start-ups.
• Spotify will launch lite version for low-end Android phones in India.
• As of January 2019, Zee Studios launched a digital content arm Zee Studios Originals, to globally produce premium, original content and create new (IPs) Intellectual Properties for all digital platforms.
• As on July 2019, SonyLIV, India’s first premium video on demand platform (VOD) crossed the 100 million app download on Play store.

Government Initiatives

The Telecom Regulatory Authority of India (TRAI) is set to approach the Ministry of Information and Broadcasting, Government of India, with a request to Fastrack the recommendations on broadcasting, in an attempt to boost reforms in the broadcasting sector. The Government of India has agreed to set up National Centre of Excellence for Animation, Gaming, Visual Effects and Comics industry in Mumbai. The Indian and Canadian Government have signed an audio-visual co-production deal to enable producers from both the countries exchange and explore their culture and creativity, respectively.

The Government of India has supported M&E industry’s growth by taking various initiatives such as digitising the cable distribution sector to attract greater institutional funding, increasing FDI limit from 74 per cent to 100 per cent in cable and DTH satellite platforms, and granting industry status to the film industry for easy access to institutional finance.

Road Ahead

Indian M&E industry is on an impressive growth path. The industry is expected to grow at a much faster rate than the global average rate.

Growth is expected in retail advertisement on the back of several players entering the food and beverages segment, E-commerce gaining more popularity in the country, and domestic companies testing out the waters. Rural region is also a potentially profitable target.

In any business, a solid marketing strategy is critical to building a brand, attracting new customers and maintaining loyalty. The hospitality industry is no different. Because customer loyalty is key, marketing managers and executives devote a lot of time and resources to building brand awareness and creating ongoing, interconnected campaigns. These marketing efforts usually include both print and digital collateral that target former guests while also attracting new clientele. However, this particular industry has a unique set of challenges that must be overcome. Understanding the importance of marketing in the hospitality industry can help you get ahead and stand out in the competitive job market.

The Basics

Hospitality sales are different from consumer goods sales because marketers must sell tangible as well as intangible products. In many cases this means that they are marketing services rather than goods, and success hinges on creating the right feeling in the consumer. For example, a resort will want to cultivate a relaxing, fun atmosphere that is recognizable to customers and inspires those same feelings in the consumer.

Because the hospitality industry is mostly made up of tourism and other experiential services, a consistent brand identity is also very important. Marketers want to ensure that brand recognition exists so that customers will use their services again and again. Repeat customers bring in a sizeable portion of revenue, so marketing strategy must be split between maintaining relationships with past customers while seeking out new ones.

Strategies for Success

Companies in the hospitality industry use various methods to develop and maintain an effective marketing plan. The following are some of the general strategies that marketers use for brand success.

Research

Customers choose hotels and other hospitality services for a variety of reasons. From location to facilities and perks, companies have to be sure that they’re providing what buyers are looking for. The role of marketers is to identify what factors make customers choose a particular hospitality service, and this requires extensive research. By speaking to current and former guests, monitoring customer reviews on websites, reviewing industry data and more, marketing professionals learn what makes a hospitality service stand out, as well as how it can be improved.

Awareness

If potential customers don’t know about a service, they can’t purchase it. That’s where brand awareness comes in. Marketers make sure information on hotels, resorts and restaurants is easy to find and up-to-date. They can do this by buying ad space on relevant travel sites, creating an engaging website and collaborating with other, noncompeting hospitality services in the same market.

Promotion

Another smart strategy for attracting customers is to run promotions during certain times of the year, usually when business is slower. Introducing incentives and offering incentives are just some of the ways that marketing professionals achieve this. Have you purchased a Groupon for a spa weekend? That’s promotion at work.

Relationships

To ensure high levels of repeat business, good customer relationships are vital. Not only do repeat customers usually promote a service through word-of-mouth and social media, but they also create a stable revenue base. One way to build relationships is through customer loyalty programs, which reward customers who regularly use a particular hospitality service.

A transnational strategy is a set of planned actions defined by a company to have operations in markets abroad. This term generally applies to the methods and structures that allow a firm to initiate and maintain functions in foreign countries while preserving central coordination at one specific location.

Transnational Strategy Mean in Business

A transnational strategy is assumed to take advantage of the benefits provided by simultaneous operation in multiple countries. The objective might be to expand sales, to produce at lower cost or to achieve economies of scale. There is a central coordination or headquarter and several decentralized organizational structures located abroad.

The complexity and size of the relationships among the different sites depend on the specific business model. The degree of control maintained by the central office also varies from one company to another.

It is necessary to have uniform business policies and technologies but at the same time enough capacity to adapt to the conditions of every foreign operation. The ultimate goal is to improve the overall corporate performance through the concurrence of resources and markets available in several countries.

Example

Prisma is a large Spain-based manufacturer of mid-cost furniture. It has two production facilities located in Spain and they export to several foreign markets. After some research and analysis, the Board of Directors concluded that a production and marketing facility placed in Asia would allow the company to have lower costs and to expand sales significantly in that region.

But the Board also identified that design professionals were massively available in Latin America at low cost. The firm then designed a transnational strategy to be implemented in five years. The strategy included three new manufacturing facilities in countries abroad and only one of the original production sites in Spain. It also embraced a design and innovation division placed in Latin America and marketing and sales structures in some European, Latin American and Asian countries. The ultimate objective was to diminish the average unit cost and increase sales substantially.

Common Characteristics

Businesses focused on meeting a specific need in single-sales transactions, rather providing a range of products or services as part of a comprehensive solution, are likely to adopt a transactional strategy. A defining characteristic is that the relationship between the business and customer typically lasts only as long as it takes for the sale to be completed. For example, a mortgage title company typically fulfills a single need issuing title insurance and the often more businesslike relationship between a customer and the company typically ends at the end of the transaction. In contrast, a bank focuses on serving a customer’s short- and long-term financial needs and therefore works to establish a lasting relationship with customers.

Focus and Objective

A pure transactional strategy and corresponding marketing efforts focus first on converting potential buyers into paying customers and second on maximizing each sale. This strategy relies solely on product, pricing, placement and promotion the four Ps of marketing to deliver value and create a positive perception about the business in the minds of prospective customers. The main objective is increasing sales through product availability and value-based perceptions.

Pricing Strategy

Price is the most important of the four Ps in a transactional strategy. This can work for and against the business depending on circumstance and the ability to control inventory costs. A main issue is that transactional strategies can require the business to adopt a defensive pricing strategy. Because value perceptions are essentially based on price, customers may abandon your business if a competitor lowers prices unless you follow suit. Defensive pricing strategies taken to an extreme can, in a worst-case scenario, threaten the future of a business by eroding profit margins.

Consumer Environment

A marketing strategy that doesn’t include relationship-building activities can be less expensive for a small-business owner to implement. Customers are viewed as a means to an end, rendering such things as a customer service department and a trained sales staff essentially unnecessary. While this strategy may be successful when consumer demand is high and the economy is expanding, it may fall short if demand lags or the business can’t further reduce costs or prices.