IOCS TERM

PAPER

COMPETITIVE ADVANTAGE

ANALYSIS

SUBMITTED BY:

Amar Kumar (G12007)

Prathanna Goswami (G12036)

Zulekha (G12059)

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Table of Contents 1. EXECUTIVE SUMMARY .................................................................................................................... 2

2. INDUSTRY ANALYSIS ........................................................................................................................ 2

2.1. Indian Print Media Overview ..................................................................................................... 2

2.2. Print Media Industry Analysis ..................................................................................................... 3

2.2.1. Macro Environment analysis using PEST framework .......................................................... 3

2.2.2. Michael Porter’s Five Force Analysis ................................................................................... 3

3. FIRM ANALYSIS ................................................................................................................................ 6

3.1. Company Overview: Bennett Coleman & Company Ltd. ............................................................ 6

3.1.1. Subsidiaries of BCCL ................................................................................................................ 6

3.1.2. Key Businesses ........................................................................................................................ 8

3.2. Company Analysis ..................................................................................................................... 10

3.2.1. BCCL’s SWOT Analysis ........................................................................................................... 10

3.2.2. Establishing the Competitive Advantage .............................................................................. 10

3.2.3. Threat to sustainability ......................................................................................................... 15

3.2.4. Sustainable competitive advantage ...................................................................................... 16

3.2.4.1. The Resource-Based Theory.............................................................................................. 16

3.2.4.2. Isolating Mechanisms........................................................................................................ 17

4. BUSINESS UNIT ANALYSIS ............................................................................................................. 20

4.1. Times of India Overview ........................................................................................................... 20

4.2. Performance Statistics of Times of India .................................................................................. 20

4.3. Strategic Positioning of Times of India ..................................................................................... 21

4.4. Cost Leadership Strategies followed by Times of India ............................................................ 23

4.4.1. Customer Contact Centre Implementation .......................................................................... 23

4.4.2. Strategic Co-operation by forming Strategic and Competitive Group .................................. 24

4.4.3. Pricing Strategy ..................................................................................................................... 24

4.4.4. Cost drivers of Times of India ............................................................................................... 26

5. CONCLUSION ................................................................................................................................. 26

6. REFERENCES .................................................................................................................................. 27

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COMPETITIVE ADVANTAGE ANALYSIS

1. EXECUTIVE SUMMARY This paper aims to analyze the competitive advantages of a company that is outperforming

its competitors in the print media. The outperformer is Bennett Coleman and Company

Limited (BCCL). Since BCCL has various products from print media to television channels,

which can be classifed into several industties, the analysis is needs to be performed on a

certain set of products in the same industry. Hence our analysis is performed on various

levels.

Industry level analysis of the print media industry – This is to analyse the

micro and macroenvironment in which the firm exists

Firm level analysis – The paper analyzes the sources of competitive

advantage and the if these advantages are sustainable and identifies some

isolating mechanisms.

Product or business unit level analysis – In this section, the paper identifies

the outperforming product of BCCL and analyzes the competive advantages

on the product or business unit level. We have identified this product of

BCCL as Times of India(TOI).

2. INDUSTRY ANALYSIS

2.1. Indian Print Media Overview Indian print media is one of the largest print media in the world. There is no dearth of news

in India. A growing economy, mushrooming advertising budgets, rising disposable income

and, above all, increasing literacy rates have fuelled a newspaper renaissance, with new

titles and fatter editions appearing by the month. Since 2005 the number of paid-for daily

newspaper titles in India has grown by 44 per cent to 2,700, according to the “World Press

Trends 2010” survey published by the World Association of Newspapers (WAN-IFRA). That

makes it the world leader ahead of the United States with 1,397 titles and China with 1,000.

India also has the world`s highest paid-for daily circulation, having surpassed China for the

first time in 2008. Indian newspapers are also incredibly cheap, with revenue driven by

advertising rather than sales. The market liberalization of the early 1990s triggered the rapid

expansion of an Indian middle class that was hungry for information and represented a

boom in potential consumers as well as newspaper readers. India boasts the world`s largest

English-language newspaper in the Times of India, with a circulation of around four million

and a well-educated, affluent readership that allows it to charge ad rates more than 10

times those of Hindi and other language publications. The clearest sign of this broadening

appeal is the ascendance of the non-English press. Circulation of Hindi newspapers, for

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example, has risen from less than eight million in the early 1990s to more than 25 million in

2009. And circulation figures only tell half the story, as many more people read newspapers

than actually buy them. Moreover, there are still 800 million to 900 million people waiting

to start engaging with newspapers

2.2. Print Media Industry Analysis

2.2.1. Macro Environment analysis using PEST framework

Political

India’s democracy allows a free and fair newspaper industry which provides an ideal

environment for growth.

In spite of perceived political influencing, Indian newspaper industry has been able to

maintain an impartial image.

Economic

As India’s growth story percolates into the rural and Tier I/II tows of India, the attractive

of these consumers from a corporation point of view will grow which will attract better

advertisement rates.

The un-catered segment in the rural and Tier I/II towns will make sure that the industry

is growing and the competitive forces will reduce.

Social

Increased literacy is one reason for the rise in newspaper readership

Human development index among top states in India.

Extensive road network, providing links between urban centres, agricultural market-

places and rural areas.

Technology

Growth of internet will be a cause of worry.

Due to emphasis on the sustainable practices, the industry will face problems and have

to find sustainable ways to find the inputs.

2.2.2. Michael Porter’s Five Force Analysis

To analyse the industry systematically, we will apply Porter’s five forces framework to

understand the Media industry (Print in particular).

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We will analyze each force by asking “Is it sufficiently strong to reduce or eliminate industry

profits?”

1. Industry competitors and extent of rivalry and advantage

Rivalry among the leading players is very high. Suddenly, they have woken up from

hibernation and are fighting for the extra pie of the print media market. The high

opportunity in the industry is also tempting large media houses to follow unethical

practices to dominate the market. The firms are also fighting to increase to

circulation by lowering price to as low as Rs. 1.

Details of the players:

Category Players

Dailies Deccan Chronicle, The Times of India, The Hindu, Aaj Tak, India Abroad,

Deepika Global, Asian Age

Business dailies The Economic Times, The Financial Express, Business Line, Business

Standard

Weeklies and

Monthlies

The Week, Outlook, India Today, Asha kiran, Panchjanya weekly

Regional

Andhra Pradesh: Deccan Chronicle, Andhra Bhoomi, Hindi Milap

Delhi: Hindustan Times, Pioneer

Maharashtra: Bombay Mid-day, Lokmat Times, Sakaal , Loksatta

West Bengal: The Telegraph, The Statesman

Film related

Filmfare, Screen, Planet Bollywood, Indian Express Bollywood Scoop,

Apun Ka Choice, Indian Television, RedifIndia, Film Trip, Star Dust

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Computer

related

PC Quest, Cyber India, Data Quest, Voice & Data, Computers Today,

Express Computer, Silicon India

Others The Onion, India Today Plus, Des Pardes, India Together, Teens Today,

Andhra Jyothi in telugu, Wow Hyderabad, Zee Premiere, Showtime,

Arcade, JAM, India Talkies

2. Suppliers-

There are mainly two critical suppliers in the print media industry-

a. Paper Manufacturers- Fairly low.

b. Content providers- Newspapers get news, features, and photos of state,

national, and international interest by teletype or mail from the

inter­national and national wire services like the Samachar, now reverted

into 4 news agencies-The Press Trust of India (PTI), United News of India

(UNI), Hindustan Samachar (H.S. Hindi) and Samachar Bharati (S.B. Hindi). The

news agencies wield tremendous power in news media space. Many news

vehicles depend on them for their daily dose of national and international

news. The news agencies are the media of the mass media. A news agency is

to a mass medium, what an apex bank is to commercial banks within a

nation’s financial system. If the media are the agenda-setters, then news

agencies are super agenda setters.

3. New entrants-

The newspaper industry has relatively high entry barriers due to the strong brand

equity of existing players. The brand equity is derived from customer loyalty, which

is automatically associated with newspaper by virtue of being an experience product.

Also, existing players have strong control over the distribution network, making it

difficult for new players to enter.

4. Buyers-

Buyers enjoy very high bargaining power. Individual readers can choose to read

online content for free at most newspapers instead of paying Rs. 1 to Rs. 5 for a

newspaper. Large advertisers – another type of customers – likely have a great deal

of power to bargain.

5. Substitutes-

Extremely high. Most markets have multiple news sources. Many people are content

to seek news from TV stations or national publications. Even those who want

focused, local news from print publications have more than one option (business

journals, magazines, competing newspapers).

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3. FIRM ANALYSIS

3.1. Company Overview: Bennett Coleman & Company Ltd. Bennett Coleman and Company Limited (BCCL) is the largest publishing company in India

and South-Asia. BCCL is commonly known as Times group of India & is the largest mass

media company in India. Starting off with The Times of India – which is now the largest

English publication in the world, BCCL and its subsidiaries (called The Times of India Group),

are present in every existing media platform – Newspapers, Magazines, Books, TV, Radio,

Internet, Event Management, Outdoor Display, Music, Movies and more. With a turnover

exceeding a $1.5 billion, the group has the support of over 25,000 advertisers, 11,000

employees and an audience spanning across all continents.

3.1.1. Subsidiaries of BCCL

The Times Group subsidiary companies include:

ENIL & TIML: Times Innovative Media Limited & Entertainment Network India Limited that together

control and are as follows:

Radio Mirchi National network of Private FM stations

360 Degrees Events

Times Outdoors Outdoors

Mirchi Movies Limited Filmed Entertainment. Producers of BEING CYRUS, VELLITHIRAI, MANJADIKURU

Times Internet Limited: Times Internet Limited is one of the largest internet companies of India. It

has interests in online news, online business news, Hindi, Marathi, Kannada, and Bengali news,

mobile, e-Commerce, music, video, and communities. Some of the larger properties of TIL include:

Indiatimes shopping - one of the largest and earliest ecommerce portals in India

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Indiatimes

Times of India

Economictimes.com |Economic Times]

Navbharattimes.com Navbharat Times

Maharashtra Times

Timescity.com Times City

Gaana.com

BoxTV.com

TimesDeal

Times of Money: Times of Money operates financial remittance services for Indians abroad to send

money back to India. Their product, remit2India, is a standalone product, while also powering the

remittance services of many banks globally.

Times Global Broadcasting Limited: It is the Television division. It is also called Times Television

Network.

Times Now A general interest news Channel

Smart Hire A Consulting Division - Recruitments

ET Now A business news channel

Zoom A 24x7 Bollywood entertainment and gossip channel

Movies Now A 24x7 Hollywood Movies channel in High Definition (India's first)

Times Business Solutions: TBSL, corporate website of TBSL.

TimesJobs, a jobs portal

Techgig, a professional networking site for Technology Peoples.

SimplyMarry, a matrimonial portal

Magic Bricks, a real estate portal

Yolist, free classifieds portal

Ads2Book, online classifieds booking system for print publications

PeerPower, a Senior-Level professional networking portal

World Wide Media: World Wide Media - started off as a 50:50 magazine joint venture between

BCCL and BBC magazines. In August 2011, it was announce that Bennett, Coleman & Co. bought out

the remaining 50 per cent shares of Worldwide Media from BBC Worldwide thereby making World

Wide Media a fully owned subsidiary of BCCL.

Filmfare

Filmfare Awards

Femina

Femina Miss India A Beauty Pageant

Top Gear Magazine India

BBC Good Homes

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Femina Hindi

Grazia

What to Wear

TIML Radio Limited: On 30 May 2008, SMG sold The British Virgin Radio to TIML Radio Limited for

£53.2 million with £15 million set aside for rebranding. On 28 September 2008, The British Virgin

Radio Station rebranded as Absolute Radio, including the sister radio stations Absolute

Xtreme and Absolute Classic Rock.

Stations

Absolute Radio

Absolute Radio 60s

Absolute Radio 70s

Absolute 80s

Absolute Radio 90s

Absolute Radio 00s

Absolute Classic Rock

Absolute Radio Extra

This company is a direct subsidiary of BCCL (not through TIML or ENIL).

Times Syndication Service: The syndication division of The Times of India Group, grants

reprint rights for text, and other media from the group's publications.

Brand Capital: Brand Capital provides funding to growth oriented enterprises for their long

term brand building needs.

3.1.2. Key Businesses The various businesses of BCCL can be further classified as follows:

Publishing: Largest publishing co in India: 13 newspapers, 18 magazines, 11 publishing

centers, 26 printing centers

o Largest English newspaper in India by circulation (and the world) o Largest Business newspaper in India by circulation (2nd largest English

Business daily in the world, behind WSJ) o Largest Non‐English newspapers in Mumbai, Delhi, Bangalore by circulation

(India’s three largest cities)

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Television

o Largest English News TV Channel, No. 2 English Business News TV Channel o Largest Bollywood News and Lifestyle TV Channel, No. 2 English Movies TV

Channel

o Digital

o Largest Indian network based on traffic and revenue (behind Google, Facebook, Yahoo)

o Operates 30+ digital businesses, most of which are Top 3 in their competitive segment

o Most popular B2C mobile shortcode in India, across SMS, voice, WAP, and USSD Radio

o Largest radio network in India by revenue and listenership, with 32 stations o Operates the largest rock radio station in the UK

Out-of-home

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o Largest Out‐of‐home advertising business in India with presence in all major metros

o Owns advertising contracts in most major airports in India. Other Activities

o Music o Movies o Syndication o Education o Financial Services o Event Management o Specialised publications - including books and multimedia

3.2. Company Analysis

3.2.1. BCCL’s SWOT Analysis

Strength

- Largest readership with very high

readership

- Favourable financial figures

- Varied product offerings

- Image of unbiased, credible and non-

aligned.

- Easy Brand Recall

Weakness

Non-standardized product leading to high

operating cost.

Tough competition

Opportunity

Huge opportunity in Regional Languages

space

Increase in readership will enable

commanding premium rates.

Threats

Dependence on Ad Revenue

Competition from Internet News Sources

3.2.2. Establishing the Competitive Advantage

Customer’s Perceived Value of a product is the difference between the prospectives

customer’s evaluation of all the bedefits and all the cost of an offering.

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Value = Benefits – Cost.

So either BCCL can increase the benefits offered to the customer or reduce the cost of the

offering to increase the value to the customers. These strategies not only create value to the

customer but also creates value that are not delivered by other competitors.

BCCL has been outshining in establishing its competitive advantage in providing value to the

customer. They have been adopting numerous strategies for the same. Following are there

strategies followed in print media.

Benefit Increasing Strategy

Efficient Product line management: At present, in Indian media scenario there is a battle

between the print media and electronic media. Present age is the age of technology and it

would be best to compare the print media with the electronic media or e-media. Nobody

would oppose the existence and reach of media but this is a fact that prints media too is of

much importance. Print media has better reach than electronic media and still there are

more number of newspaper readers in the country having so many different languages and

all of them have strong circulation. Contrary to expectations, the popularity of internet and

television has not maligned the importance of print media in India. It is still one of the most

trusted and respected source of information for the public and continue to play a vital role

in generating and shaping public opinion in the country. And BCCL has completely exploited

this advantage and has never compromised with its resource allocations to print division.

From print media, following parameters are important to be taken care of and are usually

consciously or unconsciously determine the reader’s choice. These parameters also form the

basis of differentiation and provide the competitive advantage:

Idea: Significance (Was it worth reporter and reader spending time on?) Newsworthiness Timeliness Originality and creativity Humorous Initiative

Reporting: Depth and breadth Context and background Accuracy Fairness and balance Comprehensive, relevant sources (officials and real people) Detail that engages reader Answers readers’ questions Enterprise and effort

Writing: Language (precision of usage, elegance)

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Style, tone, mood (appropriate to content) Credibility/authority Compelling lead/opening Clarity Strong focus/theme – what is this story about? Structure and organization Effective anecdotes quotes and examples Narrative and description Accuracy and fairness Creativity/Risk-taking Reader interest

Other Differentiating Strategies:

BCCL has tried to differentiate itself from competitors and also tries to make these

differentiations as a benefit to the customer.

BCCL is creative and innovative and open to changes. When TOI went live, the

newspaper changed the width of its paper. Moreover, the Group changed its entire

pricing policy, which had not changed in about 10 years.

Times of India made its appearance a hit, by the launch of Zoom TV, an

entertainment channel, viewing Page 3 gossip and Indian and Western cinema.

MOVIES NOW, This too was a worked strategic, as Indians are curious about the

happenings in cinema and the world around it, the channel making its hit.

TIMES NOW is a Leading 24-hour English News channel.

ET Now, the latest addition to business news channels.

The advertisements have highlighted the ‘Indian-ness’ in all the campaigns and

reflected how TOI is a part of this great journey of Indian-ness.

In their campaigns – rather than talk about the newspaper, they try and are the

platform or the presenter of ideas that come from the readers’ own lives, reflect their

hopes, aspirations.

BCCL also launched an all-color newspaper of color in Indian life as seen on our

streets and our cinema and linked it back to the product subtly, rather than a narrow

campaign focusing on the product itself.

BCCL also places equal focus and importance to every department and function -

which has made it a professional entity and ensured its place as the most profitable

newspaper in the country. The present management of BCCL has been instrumental

in changing the outlook of Indian journalism.

The Editor of a newspaper has traditionally been considered as the most notable

position in a newspaper set up. The Times of India, however, changed this in the early

1990s, in keeping with the management policy of treating the newspaper as just

another brand in the market

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In order to build brand image, BCCL adopted a social marketing strategy and

projected itself as an agent of social change by launching a series of social campaigns

highlighting social issues. According to BCCL, the 'Teach India' campaign created a lot

of buzz and within three weeks of the program being launched in July 2008, a total of

88,710 people had responded. Of these, 55,035 applied for the program.

In a bid to improve its circulation, BCCL has been concentrating on efforts like

introducing colored pages, celebrity articles, and film-related articles.

The newness of the masthead on occasions like Diwali, Holi, Christmas, New Year,

Budget Day, etc., acts as a refreshing innovation and helps forge an emotive link with

the reader segment.

Cost Reduction Strategy

Cost Leadership: In print media, BCCL has been a cost leader and catering to masses. There

Times of India has contents and design understandable by large population thereby

emphasising less on intellectual contents. At the same time there Economic Times serves

the readers with flair for business updates. This is also voluminous compared to its

competitors adding to its salvage selling. The technology used is world class technology in

printing and the paper quality giving customers high value perception. BCCL believes in

Implantation of technology to achieve responsive and flexible value chain. The Times group

has implement SAP Business Communications Management it integrate all processes in the

value chain.

Economies of scale and scope: TOI itself has 7.653 Million of circulation (substantiated in

later section) giving BCCL economies of scope. BCCL has reporters that get news for

different newspapers. This helps them with the advantage of economies of scope. BCCL has

customized their additions with supplements for different cities. This also gives the readers

personalized feel of info for their local areas. The various city specific supplements are Delhi

Times, Calcutta Times, Bombay Times, Hyderabad Times, Indore Times, Kanpur Times,

Lucknow Times, Nagpur Times, Bangalore Times, Pune Times, Ahmedabad Times and

Chennai Times, The Times of South Mumbai, The Times of Doon, Meerut Plus, Haridwar

Plus, Bhopal Plus.

Strategic alliances: BCCL is open to strategic alliances that will not only bring value in terms

of money but will enable us to emerge as a global media company. It has partnered with

BBC and Wall Street Journal. BCCL has a joint operating agreement with Dow Jones & Co. to

publish the Wall Street Journal for India. The Journal publishes 5 days a week, with Dow

Jones owning 26% – the maximum allowed by foreign ownership laws – and the Times of

India, owning 74% of the new venture. The content focuses on Indian readers and taps into

the global resources of the Wall Street Journal.

Forging brotherhood with competition: BCCL has been rewriting the rules of the game. It

has collaborated with its competitors to best serve the new aspirations and mindsets of

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readers and provide the best possible value to advertisers. There are following instances

reinforcing the same:

A 50:50 joint venture with archrivals Hindustan Times to launch a ‘compact’

in Delhi.

A business cooperation agreement with Mid-Day, whereby BCCL picked up

6.65 per cent stake in Mid-Day Multimedia for Rs 211.1 million

Aggressive promotions and price war: Media penetration varies across socio-economic

classes. Though media penetration is poor in lower socio-economic classes, the absolute

numbers are much higher for these classes. Hence, efforts to increase the penetration even

slightly in these lower socio-economic classes are likely to deliver much higher results,

simply due to the higher base.

Source: IRS 2005, Round 2 as quoted in Jagran Prakashan Prospectus filed with SEBI

dated February 3rd, 2006

By cutting the cost they have been able to penetrate the market.

Other Cost effective strategies:

PPI Media integrated with the SAP software, provided TOI with significant

competitive advantage in terms of speed, efficiency and turnaround time.

Over the years since the implementation, BCCL have had a whole lot of changes with

respect to business policies and configuration trying to reduce cost.

The BCCL constantly keeps things exciting – not just through their contents, but also

through their designs and innovations. Everything that they do is also always greatly

marketed and backed up by perhaps one of India’s best sales teams, which is always

equipped with the best tools and researches. With these efficient tools , BCCL has

been successful in keeping costs at bay.

They don’t have their PR agency. So they communicate through their own media

channels ensuring higher dedication and belongingness.

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The BCCL are active on all fronts. They have proven themselves strong legally and to

curb competitors in future, they not only challenged, but also sought damages worth

Rs 100 crore (about US $ 22 million) from Indian Express Newspapers (Bombay)

Limited for making false readership claims.

3.2.3. Threat to sustainability Like any other media company, The Times Group is facing following challenges, which can

threaten its existence.

High broadband penetration

Household internet and mobile internet penetration is increasing day by day. This is

redefining the delivery and content of media products. As the internet penetration

will further grow at very high rate, information will be available on a click. The

younger generation finds it convenient and exciting. Hence, print media companies

will keep facing the sustainability challenges from internet based media companies.

Competition from non-conventional players

Most of the companies are gaining internet presence by advertising in popular free

websites with large customer base. In the process, conventional players such as The

Times Group are losing share of total advertisements spent.

Content innovation and multi-platform delivery

Digitisation will provide an opportunity for multiple channels to enter the market,

adding to the overall content clutter. But this will also enable players to experiment

with new business models relying primarily on subscription revenue, as compared to

the traditional dependency on advertising. In the medium term, increasing online

and mobile connectivity and usage will also drive multiplatform delivery of content.

However, there is uncertainty regarding user preferences of the product design and

mode of delivery.

Price war among the rivals

Frequently, Benneton Colman is waging price wars with national and regional players

such Anand Bazar Patrika and The Hindu etc. Though the advertisements are main

source of revenue, price war cannot be sustained in long run. Ultimately the market

will be dictated by Bertand price competition and the company will have worse pay

off than what it could have without price war.

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3.2.4. Sustainable competitive advantage Despite the above mentioned threats, BCCL is thriving year by year. It is diversifying in all

possible industries. It is a massive financial Investment Company .Its share holdings in

subsidiary companies (around 59 in number) and investment holdings (it is the second

major shareholder in HDFC Bank) are unparalleled in the Indian Corporate sector. Benentt

is, also, a Venture Capital Investment giant ( e.g. investments in HCC promoted Lavasa). It

also owns 250 shares of the Press Trust of India and 548 shares of United News of India,

both wire agencies. The company has also demerged some of its non-print ventures,

possibly with an eye on partners or capital. These include Zoom Television Channel, website

magicbricks.com and timesjobs.com. There are some interesting, big names among the 13

directors on Bennett, Coleman’s board. AreclorMittal CFO Aditya Mittal and Kalpana

Morparia of ICICI Group are the prominent outside directors on the board. The

unprecedented growth story is not without any reason.

3.2.4.1. The Resource-Based Theory To be sustainable a competitive advantage must be underpinned by resources and

capabilities that are scarce and imperfectly mobile. BCCL’s ability to create superior value

depends on the following resources:

A. Brand name and reputation

a. Bennett is over a century old, but the brand remains fresh, vibrant and

matches today's consumers need. The secret of its success is simply the

brand's willingness to continuously innovate and constantly re-invent itself.

While retaining its core values of fairness and objectivity, it has developed

several new products to cater to the varying interests of its burgeoning base

of consumers. This has resulted in the creation of sections like Times City,

Times Nation and Times International in TOI, and the recent launch of new

editions of the Times of India in Mangalore, Mysore and Kanpur. It was the

same philosophy that led to the introduction of Mumbai Mirror.

b. Bennett measures its achievements in terms of whether its brands have

helped their respective audiences succeed in life, while enriching the

business of relevant advertisers. That's a stringent benchmark, but Bennett's

brands are renowned for their success in measuring up to the challenge.

c. Apart from commercial success, they've also been rewarded with accolades

globally. For instance, The Times of India has been ranked among the world’s

six best newspapers by BBC. Perhaps the most visible sign of Bennett’s

success at the international level is the string of triumphs notched up in

recent years by Femina Miss India winners at beauty pageants such as Miss

Universe and Miss World. Its film magazine, Filmfare, has become a

blockbuster in itself, with the Filmfare Awards being regarded as the Indian

version of the Oscars.

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B. High quality as a core competency-

From print to the internet BCCL spans multiple mediums and technologies. But a

common thread runs through these disparate businesses: high quality of content. In

conjunction with the group's relentless pursuit of innovation, this has catapulted it

to the position of India’s largest media conglomerate. Building on its traditional

strength in print media, namely newspapers and magazines, BCCL has diversified

into new, emerging areas and rapidly emerged as a market leader in each case.

3.2.4.2. Isolating Mechanisms Scarcity and immobility of critical resources and capabilities are necessary for competitive

advantage to be sustainable, but they are not sufficient. There are economic forces

(isolating mechanisms) that limit the extent to which a competitive advantage can be

duplicated or neutralized through resource-creation activities of other firms.

BCCL is sustaining competitive advantage through the following isolating mechnisms:

A. Early mover advantages

a. Learning curve- Rich, varied and evolving content

i. Bennett, Coleman & Co offers its audiences a wide buffet of options

that are both informative and entertaining. Over the years, it has

demonstrated its understanding of the evolving and growing

aspirations of the consumer by diversifying from The Times of India to

The Economic Times (Business and Economy news), Navbharat Times

(Hindi news), Maharashtra Times (Marathi daily) and now Mumbai

Mirror (India’s first true quality morning compact launched in

Mumbai). Taking note of changing trends in the consumer’s media

habits, it has also launched Femina, Filmfare, Indiatimes.com, Radio

Mirchi and Zoom TV and a host of other products – each of which

seeks to make the consumer feel empowered. It also carries daily city-

specific and subject-based supplements such as Delhi Times,

Education Times (education), Ascent (careers) and Times Property

(real estate). With twelve editions, it has achieved a truly national

presence.

ii. In keeping with its policy of evolving with the times, Bennett launched

Indiatimes.com during the IT boom of the 1990s. In recent years,

Bennett has launched Radio Mirchi, India’s leading private radio

network; Zoom TV, the fashion and lifestyle channel and most

recently, Mumbai Mirror, a compact reflecting the spirit of the

always-on the- move Mumbai. Besides these products, Bennett also

runs Times Retail – which operates the music retail chain Planet M,

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now present in more than ten cities; Times Multimedia – which is fast

carving out a niche for itself in the world of digitised entertainment

with tie-ups with Walt Disney, IBM and the like; and Times Card – an

entertainment-focused and internationally usable credit card that is

co-branded with Citibank and Mastercard.

iii. As per Samir Jain’s ideology, a newspaper should be sold like a bar of

soap". His invitation price of Rs 1.50 daily (most papers sold at twice

that), which punched rivals where it hurt in 1992, can be traced back

in BCCL history books. In 1907, just after the newspaper decided to

extend news deadlines to midnight from 5 pm earlier, the

management cut the newspaper's price to one anna from four annas

(16 annas made a rupee). Circulation rose five times. Samir's decision

in 1992 resulted in home subscriptions jumping five-fold, too. BCCL’s

top executive claims that the company is not in the newspaper

business, but in the advertising business. The argument of BCCL is that

with newspapers sold so cheaply and generating little circulation

revenue, newspapers depend more on ad revenue (90% of total

revenue). A spectacular surge in circulation ensued, leaving

competitors no option but to follow suit, and justified Bennett's

contention that it is a market-driving, not a market-driven

organisation. Another major initiative came in the form of 'combo'

offers on newspapers. The first step was taken in June 2003 when The

Times of India and the Navbharat Times were made available together

to consumers at a special price. A similar offer was introduced for a

TOI-ET combo as well. Once again, the result was a massive leap in

circulation of all the brands involved in the exercise.

iv. Its ability to set prices for advertisers comes from its dominance in

virtually every product it runs. The Economic Times newspaper, for

instance, brings in revenues of over Rs 500 crore for BCCL. In

comparison, Mint - ranked No. 2 by audited readership among

financial dailies and part of rival HT Media, the publisher of Hindustan

Times - makes under Rs 80 crore.

v. BCCL, as a group, has been an early mover online and in radio too. A

late entry in television has seen it miss out on opportunities that

others have captured in general entertainment, but it has clawed its

way into electronic media with its channels Times NOW and, more

recently, ET NOW and Movies NOW.

b. Reputation and Buyer Uncertainty

This concept will be useful to elaborate the competitive advantage of

advertisement business of BCCL. Quality or effectiveness of advertisements

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cannot be estimated before they are purchased and used because advertisement

is an experience product. BCCL has made itself virtually invincible by following

innovative strategies:

i. Medianet, a vehicle that offered advertising-like rate cards for

editorial content in lifestyle supplements of TOI, and Private Treaties

that bartered advertising space in return for equity in client

companies (typically, start-ups or mid-cap firms) came in for a good

deal of flak.

ii. Other tactics, which rivals sourly call guerilla ambushes, were discount

coupons for classifieds, realigning space selling departments to

sharply focus on advertiser interests, "combo offers" both for

advertisers and newspaper buyers, and product sampling. In

expanding its reach, BCCL has been panned by the intelligentsia on

two decisions: "dumbing down" the content of its flagship

newspapers to reach to a wider audience and violating Chinese walls

between advertising and editorial.

c. Network effect

Consumers often place higher value on a product if other consumers also use

it. This is called network effect and arises from use of complementary goods.

BCCL has complementary goods such as hardcopy newspaper, e-paper,

indiatimes.com, Timesnow TV etc. BCCL has tactfully integrated the content

delivery of these media. It had the early mover advantage and has created a

huge network of online and offline users. Now the new users will observe the

size of the network and gravitate toward BCCL.

B. Impediment to Imitation

These isolating mechanisms impede the existing firms and potential entrants from

duplicating the resources and capabilities that form the firm’s advantage. BCCL has

following impediments to imitation:

a. Superior access to customers

BCCL has huge consumer base. It can develop a new product and promote

the same through various media in no time.

b. Market size and scale economies

The Indian entertainment is one of the fastest growing sectors in India. We

have a huge opportunity in media penetration and advertisement spends.

The size of E&M in India is currently estimated at INR 353 billion and is

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expected to grow at a compounded annual growth rate of 19 % over the next

five years.

However, not all will have equal opportunity to grab the market share. The

larger customer a media company has the more growth it can achieve. The

economies of scope increases with increase in number of advertisers where

they get high return and in turn help in reduction in cost of the newspaper as

the processes utilize the same resources.

4. BUSINESS UNIT ANALYSIS

4.1. Times of India Overview Times of India(TOI) is one of the widely read and most popular English newspapers in India.

It is also the leading product of BCCL. Its readership has reached 7.653 million as of

September 2012. It is circulated in pan India. It has ten different editions that are printed in

32 different cities. From the statistics, it is clear that Times of India outperforms its rival in

the industry. Hence TOI is chosen for further detailed analysis.

4.2. Performance Statistics of Times of India Times of India is clearly an outperformer. This can be seen from various

following statistics.

List by Indian Readership Survey as on September 30, 2012

News paper Language City

Readership(in

millions)

Times of India English Various cities and states 7.653

Hindustan Times English Various cities and states 3.786

The Hindu English Various cities and states 2.258

The Telegraph English Various cities and states 1.254

Deccan Chronicle English Various cities and states 1.051

DNA English Various cities and states 0.962

Mumbai Mirror English Various cities and states 0.807

Economic Times English Various cities and states 0.753

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The New Indian

Express English Various cities and states 0.664

The Tribune English Various cities and states 0.653

In terms of page views, The Times of India Online has emerged as the world's No.1 English

newspaper website in the year 2009. According to the latest, timesofindia.com had 159

million page views in May 2009. This was way ahead of the New York Times, Sun,

Washington Post, Daily Mail and USA Today websites. These figures are from internet

marketing research company ComScore which is considered the trusted source of

information on website performance.

English Newspaper websites Webpage views

timesofindia.com 159 million

the sun.co.uk 142 million

nytimes.com 124 million

dailymail.co.uk 73 million

washingtonpost.com 61 million

The Audit Bureau of Circulation (ABC) certifies circulation of the newspapers. The ABC

according to the circulation of the dailies compiles the list of the Top 10 Newspapers in

India. They are as follows.

1. The Times of India – English 2. Dainik Bhaskar – Hindi 3. Dainik Jagran – Hindi 4. Malayala Manorama – Malayalam 5. The Hindu–English 6. Eenadu–Telugu 7. Deccan Chronicle – English 8. Ananda Bazar Patrika – Bengali 9. Amar Ujala – Hindi 10. Hindustan Times – English

4.3. Strategic Positioning of Times of India If the print media industry is studied, we can say that the characteristics of print media

industry are as follows.

– Price competition is vigorous in Newspaper industry – Newspaper is standardized or readily available from many suppliers – There are few ways to achieve differentiation that have value – Most buyers use product in same ways – Newspaper Buyers incur low switching costs – Newspaper Buyers are large and have significant bargaining power

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These are characteristics that can be addressed by a providing a low cost product and Times

of India has done just that. Cost leadership is undercutting prices compared to competitors

and selling more when there is a price elastic demand or match price and attain higher

margins when the market is price inelastic. We can say that the newspaper industry is has

medium to high price elastic demand. The evidences of cost leadership strategies followed

by TOI are outlined below.

Distribution of Times of India

Now that we know that Times of India is adopting low cost as its competitive advantage, we

need to understand the market scope of Times of India. To understand this we need to look

at the market penetration of TOI in terms of its distribution.

From the Edition and circulation figures, we can see that Times of India is distributed across

India in all geographies – North, West, South, East. Also in each region it has considerable

circulation reaching tier II and III cities as well.

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With these in Mind we can say that Times of India has a Market Scope that “Broad”.

By applying Porter’s generic competitive strategy framework, we can say confidently that

Time of India is positioned in the first quadrant. It is following cost leadership strategy with

Broad market scope. This translates to

Every strategic decision is aimed at keeping cost as low as possible

Efficiency is sought in all areas of operation

All functional strategies & capabilities are directed at efficiency

Market products aimed at “average” customer

Little or no product frills or differences

4.4. Cost Leadership Strategies followed by Times of India

4.4.1. Customer Contact Centre Implementation TOI has implemented Customer Contact centre in order to

To improve the distribution and increase sales

Acquire more customers

Predict the demand better

Optimize Sales Customer contact center has been implemented using SAP BCM and CRM system. This is has

helped TOI to

Transition from Distribution to a Sales to a Relationship Organization.

Knowing the customers better By implementing such as system, TOI has ensured to keep the costs of acquiring a new

customer and costs of retaining an existing customer to a minimum. This is a clear

competitive advantage in terms of cost compared to other firms that don't have such

systems implemented.

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4.4.2. Strategic Co-operation by forming Strategic and

Competitive Group Bennett, Coleman and Co Ltd (BCCL), the parent company of Times of India has setup

a joint venture with competitors Hindustan Times to launch ‘compact’ in Delhi. This is a

competitive group formed by TOI as both the companies are competing on the demand

side. This will increase the readership base for both the firms. If the readership increases,

there will be more advertisers interested in advertising in TOI which will in turn increase

revenue.

BCCL also signed a Business Cooperation and Arrangement Agreement (BCAA) with

Sandesh Ltd, publisher of Gujarati daily, Sandesh. In this agreement, both competitors have

agreed to co-operate on certain areas of business such as ad sales, distribution and printing.

It also signed a business cooperation agreement with Mid-Day. The companies’ alliance was

to work for printing, circulation and advertising sales of both the organization. This is a clear

Strategic Group as they have agreed to strategically co-operate on the supply side. These

strategic co-operative interactions is going to give a competitive advantage to these firms

in the alliance in terms of economies of scale which is not available to companies outside

the group. TOI is open to more of such alliances and is interested in alliances with global

newspaper. This translates to a clear cost advantage for Times of India.

4.4.3. Pricing Strategy Times of India costs Rs. 4.50 to consumers in New Delhi. The newspaper price is

kept low on purpose. TOI has expanded into new reader segments by pushing into new

towns and increasing its circulation. By gaining market share comparatively higher than the

competitors, TOI has become the No.1 choice for advertisers to display their ads. Also the

low price of the paper forces TOI management to extract high ad tariffs from the

advertisers.

To enter new markets TOI uses the concept of promotional price. Its main aim is to

increase the market share by making people use their product for certain time period using

promotions. Then make the customers brand loyal and stick with Times of India. In this

process , TOI also undergoes some losses till the time they establish a firm position in the

market. It has to pay for for the employees, the intermediaries in the process, for the paper,

machines etc. This exhibits dumping and also predatory pricing behavior. This can be seen

in the case TOI trying to enter Chennai area .i.e. the south region where The Hindu , its

strong competitor has a strong hold.

Initially when TOI launched in Chennai, their price was Rs1 for weekdays and Rs 2 for

Sundays. They came up with 2 different subscription packages. Due to this, the incumbent

newspaper in that area, The Hindu, slashed its price from Rs 4.50 to Rs 3.50 and further

down to Rs 2.50 on weekdays.

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After 1 year of establishing themselves, they came up with revised subscription plan as

shown in table below. Also they increased the price from Rs 1 to Rs 2 for weekdays and Rs 2

to Rs 3 for Sundays.

Subscription Package First 1 year after launch After 1 year of launch

1 year subscription Rs 299+free gift (Vacuum flask or travel bag)

Rs 299 without gift

6 month subscription Rs 175+ free gift (Vacuum flask)

discontinued

TOI incurred losses due to this pricing strategy as shown below, yet they concentrated on

gaining market share.

Price First year Following Year

Subscription amount per yr 299 299

Gift Worth 150 -

Vendor commission per year 360 360

Booking commission per year 80 80

Dealer commission per year 60 60

Rathi 292 292

Total Loss per subscription -643 -493

The Times group has been fighting price wars with other media giants. While doing so, it

has attracted criticism from all corners. Some of these are as given below:

They have been prompt to respond to market moves and also be a first

mover to grab the customer’s attention. In 1991, TOI had a circulation of

around 70,000 in Delhi as against 0.35 million for HT. In 1994, TOI slashed

its price from Rs.2.30 to Rs.1.50. By 1998, the difference in circulation

figures narrowed down to a few thousand copies. Since

1991, TOI's circulation has increased in percentage terms more than HT.

TOI (Ei Shomoy) versus ABP in West Bengal- At present, eight newspapers

jostle for existence in this market, with Ananda Bazaar Patrika being the

clear leader in terms of advertising and circulation. The others include

Bartaman, Pratidin, Aajkaal, Uttar Banga Sambad, Ek Din, Ganashakti and

the month-old Ebela. While an ad war with ABP is imminent, especially in

its run-up to the launch on the auspicious occasion of Mahalaya (the start

of the Durga Puja festival which invites plenty of special ads), Ei Shomoy

will take on ABP’s fairly high cover price too. At Rs 5 per copy, ABP is the

most expensive Bengali newspaper compared to its competitor papers

priced between Rs 2-3. Ei Shomoy might be priced even lower, to start

with. TOI has also managed a prize catch in the form of veteran Bengali

journalist and ex-ABP man Suman Chattopadhyay, who has been roped in

as the editor of Ei Shomoy.

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4.4.4. Cost drivers of Times of India From the strategies that TOI has employed over the years , it is evident that the cost drivers

used by the firm are as follows.

Economies of Scale – it is evident that the BCCL tries to achieve economies of scale in bringing costs down by increasing scale of operating by joint ventures with local newspapers for the purpose of printing.

Capacity Utilization – by printing, advertising and circulating the newspapers together with local newspapers through Joint ventures, TOI has tried to maximize its capacity utilization and bringing costs down.

Learning Curve – Times of India has broad coverage across India. It can leverage the learnings that it gained from location to minimize its cost in another location. Also since it has been in the business for many years, it can make use of this experience

Location – TOI gets printed in 17 different locations such as Lucknow, Mangalore, Mumbai, Mysore, Nagpur, Patna, Pune, Ranchi, Surat, Bengaluru, Chandigarh, Chennai, Delhi, Goa, Hyderabad, Jaipur, Kolkata. This reduces the cost of transportation and distribution to cities across India.

Economies of Density – India is a highly populated country. Hence customers density is more in one geographic area. This leads to cost saving due to lesser transportation cost to reach customers

Process efficiency – TOI has joint ventures with local players in order to increase its efficiency in advertising, printing and distribution. This leads to lower costs than competitors in the same region who don't have such alliances. Also it has implemented CRM systems to make its distribution more efficient.

Agency Efficiency – Implementation of CRM system is to promote agency efficiency in taking orders and completing the transaction.

5. CONCLUSION The competitive advantages built by BCCL has made it the market leader. It has

exploited strategies such as economies of scale, economies of scope, pricing, strategic

alliances and so on to create value to the customers that its competitors are struggling hard

to match. Also BCCL is quick in diversifying into new areas which sustains its already

established businesses. These different business units of BCCL complement one another in

an effort to sustain its businesses. Also the isolating mechanisms helps BCCL to remain a

market leader by sustaining its position.

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6. REFERENCES http://www.timesgroup.com/bccl/about-us.html

http://en.wikipedia.org/wiki/The_Times_Group

http://www.nna-ccj.ca/judging/judging-guidlines/

http://www.okpress.com/better-newspaper-contest-events

http://thehoot.org/web/TheTimestheJainsandBCCL/6425-1-1-4-true.html

http://articles.timesofindia.indiatimes.com/2009-07-12/india/28166748_1_comscore-

website-newspaper

http://mruc.net/images/irs2012q2-topline-findings.pdf

http://articles.economictimes.indiatimes.com/2011-10-14/news/30279399_1_online-

traffic-daily-traffic-newspaper-websites

http://www.sap.com/india/about/events/worldtour09/pdf/WT_Mumbai_Track1_04_Superi

or%20Consumer%20Experience%20at%20The%20TOI%20for%20Successful%20Competitive

%20Advantage%20_Chinmoy%20Roy,%20

http://www.televisionpoint.com/lounge/lounge.php?id=1175493810

http://www.timesgroup.com/bccl/history.html

http://www.rareindianshares.info/2010/09/bennett-coleman-and-company-limited.html

http://mediacrit.wetpaint.com/page/How+the+Times+of+India+turned+news+into+a+com

modity

http://businesstoday.intoday.in/story/bennett-coleman-and-co-among-100-year-old-indian-

companies/1/16498.html