Professional Documents
Culture Documents
N. Ananthi1
Abstract:
FM radio has gained popularity in India, especially with the entry of private players. Radio
stations generated revenue of INR 8 bn in 2008; expected to reach INR 18 bn by 2012. Share of
Radio advertising was 3.3 % in 2008; expected to reach 4 % in 2012. Privatization of Radio
discusses phase I and phase II rounds of FM licensing in India. The study was intended to access
the current preference and suggestions about the respondent’s favorite FM, as it plays a very
important role in developing a strong market base, as Fm is such a service where Brand is not
what is given preference, its only the content that matters. The study is aimed to assess the
standing of Radio Market as a whole in Chennai.
INTRODUCTION
India has an estimated 180 million radio sets, reaching over 99 percent of its one billion
inhabitants - a clear indication of the vast commercial potential in India for this medium.
Today FM radio market has emerged and has made enormous growth. The commercial aspect of
radio is enormous as is the number of people it reaches to. Right from the roadside petty shop to
corporate banker – all are hooked to the radio. The radio industry revenues for fiscal year 2005
were at Rs 3.22 billion, and there was a growth of 14.3 per cent in 2006 and it is expected to be a
Rs 1000 crore industry by 2010.
Chennai Market
While measuring the growth of the Radio market, two aspects are considered – one is the growth
from the listenership point of view, and the other is from revenue point of view. As far as
listenership is considered, Chennai is the fastest growing market among the metros. Today in
Chennai, radio penetration has reached a level of 75 per cent and growing. From the advertisers‟
side, the way the clients were looking at radio last year, compared to how they are using the
medium now has completely changed. Last year the clients had to be educated to what radio is
all about. Advertisers have already tasted success of their radio campaigns and are slowly
increasing their spends on radio.
1
Asst.Prof, Department of Business Administration, Dr.Ambedkar Government Arts College
Chennai, India. Email: ananthi.ethirajcollege@gmail.com
1
Chennai where there exist exit 9 stations, it becomes very necessary to find out the
preferences of people regarding the fm stations. Radio mirchi being one of the most preferred
FM stations among people, has strong competitors like Big FM, Suryan FM, Radio city,
Rainbow etc. Hence this project throws light on the FM radio market in Chennai, with regard to
the FM listening habits of the people.
Radio listening on medium wave was confined to urban limits of cities. As against a
mere 2,75,000 receiving sets at the time of Independence, now there are about 111 million
estimated radio sets in about 105 million household in the country. Presently the broadcast
scenario has drastically changed with 198 broadcasting centers, including 74 local Radio
Stations, covering nearly cent-per-cent country's population . It reaches 97.1 per cent of the
population, which includes substantial population in rural area, and covers 89.7 percent of the
geographical area of the country.
History
In India radio broadcasting began in 1935 by AIR. In 1999, the privatization of FM through the
Phase I policy was undertaken. However, the phase I policy failed due to a high license fee
structure. Of the 108 licenses issued, only 22 operated and one was closed down.
Phase II policy
The Phase II Policy enabled the industry to enter a high growth trajectory. Before the Phase II
policy, there were 22 stations and by the end of 2007, 266 stations are expected to go on air. This
was possible due to a more favorable fee structure. In the phase II policy, annual license fees are
4% of gross revenues or 10% of reserve OTEF (One time Entry Fee) whichever is higher.
Key players
The key players operating the FM radio stations in India are Adlabs, South Asia, ENIL, Radio
city and Dainik Bhaskar.
2
The share of radio in the overall advertising pie at approximately 3% is much lower than various
developed and developing countries worldwide. Globally, the share of radio in the advertising
pie is around 5% in countries where the medium is still in a growth phase and around 10-12% of
the advertising pie when the medium reaches a mature phase.
Radio does not require any commissioned original content unlike other media such as print and
television. Royalty fees have to be paid for the music content to Phonographic Performance
Limited (PPL) and Indian Performing Rights Society (IPRS) and certain music companies.
The prime time for radio listenership differs from prime time television viewing. Radio
listenership peaks in the morning, afternoon and late nighttime slots, while for television the
prime time is the night slot.
3
Listenership of radio as indicated by the Indian Listenership Track (ILT) survey is the highest
among the younger audiences (15-29) and the SEC A audiences. The research indicates that
almost 70% of SEC A (higher socio economic class) audiences listens to radio everyday. This is
the audience most sought by advertisers.
Audio medium
Radio is not a visual medium like television and thus people prefer television to radio. Besides
this, the only source of revenue for the FM radio operators is advertisement revenues and they do
not receive any subscription revenues from the listeners.
Thus, radio has its advantages as well as disadvantages. In the next article, we shall outline the
growth drivers for the radio industry.
The radio industry recorded a growth of nearly 58% in 2006. The share of radio in the total
advertising industry increased from 2.4% to 3.1% during the same year. This is further expected
to increase to 5.5% by 2011 as per the FICCI-PwC report on the Indian entertainment and media
industry. The size of the radio industry is projected to increase at a CAGR of 28% from Rs 5 bn
in 2006 to Rs 17 bn by 2011.
The Indian economy has grown at a robust rate of 9% and 9.2% in FY06 and FY07 respectively.
The advertisement industry is a proxy to India‟s high economic growth. As per a study
conducted by Zenith Optimedia, the media planning and buying arm of advertising group Public
is, the advertising spend is expected to increase to Rs 367 bn by 2010 from Rs 227 bn in 2007.
4
Beneficiary of the Buoyant Growth of Major Advertisers
The major advertisers on radio are the entertainment channels, real estate firms and retailers. All
these industries are expected to witness robust growth in the years to come. More than 90
channels across various languages and genres are being launched this year. The real estate
industry is projected to grow at a CAGR of 25% in the next five years. Organized retail industry
is projected to grow at a CAGR of 40% in the next five years. Radio industry should be a major
beneficiary of the high growth in these sectors.
Demographics
The target listeners for the radio industry are the youth. 55% of the India population is below 25
years leading to an increase in the audience of the radio industry. The content on radio primarily
comprises of film music. The Indian film industry is getting more organized and receiving more
institutional funding. The quality of music produced is improving which augurs well for the
growth of the radio industry.
The Phase I policy for the privatization of FM radio had a very high fixed license fee structure
with an annual escalation of 15%. In the phase II policy, a revenue sharing formula was
introduced whereby radio companies had to pay a fixed annual license fee of 4% of gross
revenues or 10% of the reserve OTEF (One Time Entry Fee) whichever is higher. The reserve
OTEF was 25% of the highest valid bid for that city.
5
Availability of listenership data
Leading TV viewership research company, TAM, has recently ventured into radio audience
measurement through a study called RAM (Radio Audience Measurement). The study is
currently restricted to the cities of Delhi, Mumbai and Bangalore. Research may cover larger
number of cities in the years to come. Availability of listenership reports is bound to support and
attract larger spends from marketers. Marketers generally wait for adequate research data to
emerge before committing large spends to any medium.
Local advertising
Globally, the local retail segment constitutes a large part of radio's advertising income. As per
the CII-KPMG report, while local advertising contributes 70% of radio revenues in the United
States of America, in India, the share of local advertising is only about 8% of radio revenues.
Ideally, a localized medium like radio can be effectively used for local-level promotions apart
from being bundled as part of cross-media promotion strategies. Thus there is huge potential for
the radio industry to benefit from an expected increase in the share of local advertisements.
Theoretical Background
In 2001, the first private FM radio station went on air. Today there are more than 250 of
them beaming across almost 70 cities in India. Thanks to FM becoming mobile phone
compatible, radio has indeed become the constant companion of people 24 hours a day, seven
days a week. It‟s something that newspapers and TV will never achieve.
It is estimated that 25% of mobile subscribers in India have radio enabled mobile phones;
this simply means that more 60 million people have access to radio-on-the-move. Industry
revenues, too, are showing an upward spiral. For 2006, billings are estimated at Rs.500 crore
(US$125 million) growing at 28%cumulatively. By2011 they are projected to reach Rs. 1700
crore (US$ 425 million). (Source: The Indian Entertainment and Media Industry: A Growth
Story Unfolds, FICCI – PWC Report, March 2007.
Local Mantra
6
The sales and marketing efforts of the major FM radio stations have focused on the large
advertising clients. This may be partly attributed to the FMCG-marketing background of some of
the managers and partly due to the sales strategy of the multi-media groups that own most radio
stations. However, radio is a unique medium and the focus on large advertisers seems to be at the
cost of its largest potential benefactor - the local retailer. The retail segment globally constitutes
a large part of radio's clients and sales, but currently in India accounts for a small portion of the
radio revenue pie. For example, in USA, 70 percent of all radio revenues come from local
retailers, and only 30 percent comes from either national or international advertisers or from the
network of advertisers. In contrast, in India, retail comprises only 8 percent of radio advertising.
Radio, by its very nature, is a localized medium, due to it‟s ability to transmit a particular
message over a small geographical area. The retailer, with city/ locality specific target groups,
can be a major beneficiary of radio advertising. Clearly, there is a need to unlock the advertising
potential in the retail segment. Radio stations offer high frequency „opportunity to hear‟ for the
advertiser. International research indicates that radio has 60 percent of television‟s effectiveness
at increasing campaign awareness amongst an audience of 16-44 year old radio listeners.
However, advertising on radio costs just 15 percent that of television. While the price relativity
for other audiences will vary, the achievement of 60 percent of the result at 15 percent of the cost
makes radio significantly more cost effective than television.
7
Radio is emerging as a most sought after medium today and the recent AdEx statistics
corroborate that premise. AdEx India (a division of TAM Media Research in technical
collaboration with Air Check USA) has done a comparative study of the changing spending
patterns on radio by advertisers from the first quarter of 2005 to the first quarter of 2006 across
the four metros of Delhi, Mumbai, Chennai and Kolkata.
According to the AdEx data, there has been a growth of 33 per cent in advertising spends on
radio between January and March 2006, as compared to the corresponding period in 2005. The
reason, according to leading media planners, is the gradually increasing credibility of the
medium.
“FM stations have been around for about four-five years now. Earlier, there were a lot of
misgivings about the medium and whether it would deliver. But now, it is finding its place,” says
JyotiBansal,-vice-president,MPG.
The AdEx report also brought to light the fact that the Mumbai radio stations have got the
maximum share of advertising spends – 39 per cent of the overall revenue pie. The second
largest spends have been on the radio channels in Delhi (37 per cent), followed by Kolkata (14
percent) and Chennai,(10percent).
To determine the time and place preferred by the respondents to listen to Radio FM.
8
To know if the respondents listen to advertisements on Radio.
Methodology
The scope of the project is to understand the FM listening habits of the respondents and
the study was carried out in Chennai city only. The research design adopted by the researcher is
descriptive in nature. Both primary and secondary data were collected, primary data was
collected based on the objective for analysis purpose and secondary data collected for the
theoretical review that also aided in framing a structured schedule and knowing the profile of the
customers. The sampling technique adopted was non-probability, judgment sampling. The
sample includes 250 FM radio listeners in Chennai and all class of people from various areas,
age group, income and different background.
Table No. 1
1-3 days 30 12
4-6days 95 38
9
Interpretation: Out of the total samples, 50% of the respondents listen to radio fm on all the 7
days, 38% listen 4-6 days and 12% of the respondents listen to FM only 1-3 days in a week.
Chart no. 1.
Home 104 43
Office 30 11
Friends house 21 8
Commuting 85 34
Other 10 4
10
Interpretation: 43% of the respondents listen to radio FM the most at Home, 34% listen while
commuting, 11% listen in their office and 8% listen when they are at their friend‟s place. Others
category which comprises of 4% includes public places, relative‟s house etc.
Radio mirchi 70 28
Big fm 56 23
Suryan fm 66 26
Aaha 7 3
Radio one 15 6
Rainbow 15 6
Radio city 8 3
Hello 8 3
Chennai live 5 2
Interpretation: among the 250 respondents interviewed, it is inferred that Radio mirchi is
preferred by 28 % of respondents , Suryan FM by 26% , then comes Big FM at 23% , and
Rainbow & Radio one are preferred by 6% each, whereas Aaha, Radio city & Hello fm are liked
by 3% each and Chennai live being the least preferred by on 2% of the respondents
11
Chart no. 2
Imsai arasi 37 15
Kadhala kadhala 36 14
Ragasiya snegithi 68 27
12
Dr. love 20 8
None 60 24
Others 12 5
Interpretation: Out of the total sample, it is seen that 27% of the respondents like ragasiya
snegithi the most, after which imsai arasi and kadhala kadhala were preferred with 15% & 14%
each. 8% of the respondents like Dr. Love and 7% of them like kittu mama kittu mami. Whereas
5% of the respondents liked other programs and 24% of them did not like any show/program on
the radio FM.
Request based 38 15
Informative 54 21
Theme/issue based 48 19
Road show 22 9
General Interaction 37 15
Celebrity shows 39 16
Others 12 5
Interpretation: 21% of the respondents like shows which are Informative in nature and 19%
like shows which are Theme based, Celebrity shows are liked by 16% , Request based and
13
General interaction shows are preferred by 15% each and Road shows are least preferred at 9%
only. 5% of the respondents like other kind of shows which included, contest shows, only music
shows etc.
Chart no. 3
Objective: The main aim is to find which is the most preferred FM station.
Suryan fm 72 60 51 32 30 5 - - - 7.39 II
14
Ahaa - - 5 18 22 15 90 35 65 3.71 VII
Weight = ∑ Xi Wi
Rank = ∑ Xi Wi N= 250
N
Note:
Rank 1 2 3 4 5 6 7 8 9
Weight 9 8 7 6 5 4 3 2 1
Calculation:
250
Interpretation: Radio Mirchi is the most preferred FM station by majority of the respondents,
followed by Suryan fm, Big fm, radio one, radio city, rainbow, aaha, hello fm and the least
preferred was Chennai live.
Objective: The main aim is to find which attribute has been rated first by the overall respondents
with regard to the choice of a particular FM station.
Table no: 7
15
Information
152 50 20 18 10 250 4.18 I
given
Weight = ∑ Xi Wi
Rank = ∑ Xi Wi
Note:
Rank 1 2 3 4 5
Weight 5 4 3 2 1
Calculation:
250
Interpretation: Thus it is inferred that most of the respondents select a particular FM station
based on the information given, which is being rated first. It is followed by the selection of songs
played, the RJs, the programmes, and lastly the contests & events conducted by the FM stations.
Chi-Square
Objective: To determine the relationship between the occupation and the number of days
respondents listen to the radio FM
H0: there is no significant difference between the occupation and the no. of days respondents
listen to radio FM
H1: there is a significant difference between the occupation and the no. of days respondents
listen to radio FM
1-3 days 6 6 5 8 5 30
4-6 days 36 25 5 19 10 95
16
All 7 days 53 39 5 8 20 125
Total 95 70 15 35 35 250
Table no. 8
39 35 4 16 .46
Where,
O = observed frequency; E = expected frequency
E = RT X CT
N
Where,
RT = row total; CT = column total; N = no. of respondents
Calculated value of χ2 = 22.67
Degree of freedom = (r-1) X (c-1)
= (3-1) X (5-1)
=8
17
Level of significance = 5%
Table Value = 15.5
Interpretation: Since the calculated value of χ2 is greater than the table value, H0 is rejected at
5% level of significance and the alternative hypothesis is accepted.
Hence, There is significant difference between the occupation and the number of days
respondents listen to radio FM. i.e. it depends on the individual‟s occupational status, the no. of
days he/she listens to radio FM.
Objective: To identify whether there is any significant difference between the respondents of
different age and the time they listen to radio FM
H0: There is no significant difference between different age groups with respect to the time they
listen to radio FM
H1: There is significant difference between different age groups with respect to the time they
listen to radio FM.
Table no. .9
Early morning 10 4 10 21 45
Late morning 6 7 3 2 18
Afternoon 3 5 4 3 15
Early evening 20 8 5 0 33
Late evening 30 11 8 1 50
Night 46 30 10 3 89
18
24
CF = 62500/ 24 = 2604.17
Total SS (TSS) = ∑Xij2 – (T)2
n
= 5514– 2604.17
TSS = 2909.83
= 2188.99
F – Ratio
Sum of
Source of Degree of
Squares Mean Square (MS) MSB
Variation Freedom
(SS)
MSW
Since the table value is greater than the calculated value at 5% level of significance, the null
hypothesis is accepted.
19
Interpretation: There is no significant difference between different age group with respect to
the time when the respondents listen to radio FM
Findings
Suggestions
Since most of the respondents who listen to radio FM are the youth,
programs and content could be altered/ developed according to their
interests.
The RJ talk could be made more interesting and appealing to increase the
listener‟s involvement.
More events and contests could be sponsored and endorsed to make the
station visual to potential advertisers.
More of particular theme based programs could be aired.
20
Conclusion
As the competition is growing with more FM stations coming in, it is becoming more
important for the existing FM stations to have product differentiation and create a brand image to
sustain listenership, and attract more advertisements which is their main source of revenue.
Hence it is only through the various programs, RJ talks, events, contests, etc that the FM stations
can get familiarity and preference. The suggestions given could be considered and worked on
for further improvisation.
Bibliography
Gupta, S.P.,” Statistical Methods”, Sultan Chand & Co., Fifth Edition,pg:125-150
Bill rose &Joe Lenski,” The Infinite Dial 2008: Radio„s Digital Platforms”, Arbitron
Radio Listening Report: pg 1-25
Reports:
21
“India in Business” published by ITP Division, Ministry of External Affairs, Government
of India.
WEBSITES:
www.radiomirchi.com
www.aircheck.com
www.exchange4media.com
www.indiantelevision.com
www.radioduniya.com
www.thehindu.com
22