DTDIY SPECIAL THE 'HOW TO' ISSUE 2012
HOW TO 'TAP AN UNTAPPED MARKET'
WHEN EXISTING MARKETS SATURATE, IT'S ALWAYS WISE TO EXPLORE NEWER ONES. IN THIS INTERACTION, SUMANT BHARGAVA, MD, STARGAZE ENTERTAINMENT TELLS DTDIY HOW HE DID IT WITH THE FILM EXHIBITION BUSINESS BY NOT MAKING THE MISTAKE OF ASSUMING THAT A FRESH MARKET MEANS NO COMPETITION.
Angshuman Paul | Issue Date - 03/02/2012
Q. Do you think your decision of starting Stargaze Entertainment has paid off?
A. I think yes. We've ended up as a a leading movie exhibition company with a dominant market share in tier 2 and 3 cities. We offer 5,200 seats per show and reach close to 2.5 million captive customers.
Q. You originally started operations from Delhi. Why is it that you suddenly started concentrating on tier 2 and 3 cities?
A. Based on our analysis of tier 2 and 3 cities in tandem with the movie exhibition business, we found a huge demand supply gap for quality theatres. It also revealed increased awareness levels among the populace, rising disposable income and an incessant demand for better cinema services. That's when we decided to bring a world class cinema experience to these emerging markets.
Q. How did you avoid blunders which a lot of entrepreneurs make when foraying into such markets?
A. You need to be very sure that there’s a demand and resort to research before taking any initiative. Like we knew, that there are 300 million movie-viewing Indians in these cities who were looking for an option beyond the old existing cinemas that were ill-equipped, badly maintained and not the preferred family destination. So knowing the demand and the market helps you clearly focus.
Q. What is the most apt approach to tap an utapped market in India?
A. As I said earlier, you need to know the demand and see whether it fits with your supply capacity. Whatever the industry, when you are foraying into a new market, don’t think there’s no competition. Stargaze has a clear strategic intent to build and operate multiplexes in cities and towns in emerging India which do not offer an international cinema viewing experience. But we knew there would be competition from local players. Therefore, we decided to offer what no was offering. For instance, we offer three differentiated products – Glitz Lounge, Glitz Max and Glitz 3D. As such, we get to have a lead.
Q. Do you think the idea of identifying a new market came across as a risky proposition?
A. That depends on the company's strategy to identify a profitable market. Of course there is always an element of insecurity and risk involved. And if you are not a MNC, then these risks can prove to be very costly if they backfire. During the first two years, we invested about Rs.45 crores for setting up 19 screens and the turnover for FY2010-11 was Rs.13.25 crores. Therefore, you need to be prepared financially when you take such a risk.
Q. How does a company sustain its position when competition sets foot?
A. It's very simple. Never take your competitors for granted. No matter how vulnerable they appear. Establish a USP till a competitor comes along and then work on improving your services without compromising on what made you successful in the first place.