The IPL Guide to the Indian Markets

25 03 2010

 

The Indian Premier League (IPL) recently awarded franchises for two new centres, Pune and Kochi from 2011 onwards. The Pune franchise has gone to the Subrata Roy led Sahara Group. The Kochi franchise has gone to a little known group which goes by the name Rendezvous Sports. The amounts paid by the 2 team owners are staggering and is 25% higher than the amount  paid by the all the eight teams put together in the first auction.

It is interesting to see the cities chosen for the second round of auctions, Ahmedabad, Pune, Nagpur and Kochi. Bidding the same amounts for Ahmedabad, Nagpur  and Pune, the Sahara team chose Pune.

Pune is the second city in Maharashtra to have an IPL franchise. It is very close to Mumbai, which already has an IPL team. Mumbai being a commercially important city, it can as well have a second franchise. Already Mumbai is hosting IPL matches in two stadia, Brabourne and D.Y.Patil. Pune is like the second franchise for Mumbai, much like Manchester City and Manchester United in EPL. Subrata Roy has mentioned that the Amby Valley being close to Pune has made them chose Pune over the other cities.

IPL may appear to be cricket. But it is much more than that. It is the convergence of Advertising, Bollywood and Corporate Power (ABC). The cities which have the biggest markets are likely to attract most advertising. Bollywood glamour is essential to attract the non-cricketing enthusiasts like women and children to watching IPL matches, forgoing their soaps and cartoons. Corporate Power is essential to bring in the big money. Corporate groups are attracted to IPL possibly because the access it gives to fame, glamour and even access to politicians. Cricket is just incidental.

Kochi and therefore Kerala getting an IPL franchise is quite a surprise. Kerala is never known for its cricketing skills. Sreesanth is perhaps the only test level player Kerala has given to the Indian team. Kochi is the fourth team from the South to have an IPL franchisee.

It is not surprising that big states like UP and Bihar have no IPL franchise. UP is a Ranji finalist and has several players who make it to the T20 India team like Suresh Raina, Praveen Kumar, RP Singh to name a few. Sahara group head quarters is also at Lucknow and Subrata Roy is a virtual maharaja in the Sahara City. Yet, there is no IPL franchise, because it is low on ABC score.

The entire East India has just one team from Kolkata. The eight states of North East is totally unrepresented through any IPL franchise.

Many years ago, Jairam Ramesh had said, when he was not a minister, that if one takes the map of India and keeping Varanasi in UP as a reference point draw a line  one will find a huge contrast between  the entire region to the West of Varanasi to that of its East. The East lags behind and the gap is getting bigger every year.

The economic progress and the market growth made by Western and Southern India is reflected even in the choice of IPL centers.

– G. Mohan

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Differential Pricing, Yield Management and 3 Idiots

6 01 2010

The Aamir Khan starrer 3 Idiots has had a bumper opening and is now a blockbuster hit. Interestingly, on the same day three friends of mine watched the movie during the New Year weekend i.e. the second week for the movie, in three different cities. One friend watched the movie with his family in a single screen theatre in Bhilai (Chhattisgarh). Another friend watched with his family in a Multiplex -Big Cinemas in Mulund. I watched with my family, in the Cinemax multiplex at Banjara Hills, Hyderabad.

Three friends watching the same movie on a particular weekend is a coincidence, but does not deserve a post. The point to note is the ticket prices paid for the same movie in the three places. The friend in Bhilai paid Rs 25 for a ticket. I paid Rs 100 per ticket and my friend in Mumbai paid, hold your breath, Rs 600 per ticket (it was a recliner seat). Same movie, same day, only difference was the location. All the tickets were bought from the counter, hence, there was no ‘black’ component.

Subsequently, six more friends chipped in with inputs on the pricing of 3 Idiots in their respective cities/towns.

SV informed that he watched in the INOX multiplex in Kolkata and paid Rs 400 for the ticket. SG watched in Big Cinemas Vashi, Navi Mumbai and paid Rs 220 per ticket. RK saw “3 idiots’ in Satyam Multiplex -Chennai and paid Rs 120 per ticket.GD informed that Pune Multiplex ticket price was Rs. 250 in the New Year weekend. RC informed that she saw the movie in a single-screen theatre in Bhubaneswar, reluctantly sitting in the rear stall, paying Rs 50 per ticket, which included a black component of Rs 25.  VS saw it in Durg in a single-screen theatre and paid Rs 50 per ticket.

 Whereas, the range of ticket price from Rs 25 to Rs 600 establish that there are several segments within urban India.

Creating a product like a movie, which cannot be customized for local markets and yet getting the differential pricing aligned with multiple levels of price elasticity existing within urban India calls for sophisticated skills in yield management. The distribution and exhibition links of the film industry’s value chain have to grapple with complexities of high order. In the case of 3 Idiots,clearly, credit is due not only to the content and promotion aspects of the film.

– G. Mohan





Novel Modes of Music Merchandizing

23 10 2009

Here is a short quiz. Which is the largest selling brand of FM Radio in India? Which is the largest selling brand of music players in the country? The answers for both the question are the same.

Nokia.

 The cell phones of today are multipurpose devices, voice services being just one of the many features. The market leader in cell phone becomes the leader in other segments too.

In cities it is a common sight to see security guards and waiting drivers, playing music on their cell phone to battle their boredom. 

Seeing the opportunity of selling legally copyrighted music to these new customers of music T-Series has launched music in Micro SD cards and USB pen-drives with   the Bollywood movie Blue. The Micro SD card is priced at Rs 475 and the USB pen drive  2GB is priced at Rs 525.

Nokia already has set up an online music store with a huge library of over 30,00,000 songs. Several models of Nokia come with preloaded songs.

The Apple iPods and other MP3 players had already taken the market in the western countries. In India, because of their high price they did not make much of a mark. Micro SD cards played on cell phones has a great future in India. Nearly 400 Million Indians have a cell phone, so if the pricing is right, the market can become significant.

Music loaded in pen drives also has a good prospect. Besides, the desktop and laptop computers, increasingly the set-top boxes provided by DTH operators have a USB port. The only hitch here is that given the easy availability of freely downloadable music on the Internet, customers are unlikely to pay Rs 525 for pen drives many times.

The Micro SD cards and USB drives do offer other opportunities for entrepreneurs. Will the semi-literate cell phone user use his cell phone for education? How about an English speaking course on these cards ? Can audio books on self-improvement and management subjects be published on USB drives for the laptop users ? 

What the CD-ROMs could not do can the Micro SD cards and USB drives do ?

–       G. Mohan








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