1. TOOL BOX SALES &MARKETING PLAN
Prepared By
Sumit D. Kumtha
Tool Box Sales & Marketing Plan Page 1
2. 1. SITUATION ANALYSIS:
1.1. Industry Analysis
1.1.1. Market Characteristics
As the digital age of visual effects got underway some countries started offering tax incentives
for the VFX & Animation industry. The digital age enabled the use of computers and software to
be setup anywhere. VFX & Animation artists can be brought in from anywhere else and setup
with little effort. VFX & Animation artists can be trained in the basics locally.
The internet allowed images to be sent anywhere quickly for work to be done and reviewed
anywhere else. The studios, always eager to save money on things that weren’t under their
umbrella, were more than happy to start sending out work.
Some companies started opening satellite companies in other countries like India that were able
to offer a better price break. There were multiple arrangements. In some cases they simply
outsourced the work they felt can be outsourced such as Roto, Rig removal and low end
compositing.
In other cases the overseas studios developed a full working relationship where the foreign
company did a fair bit of real work on the actual product.
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3. Competition has been especially fierce since many countries around the world offer attractive
tax incentives and studios have demonstrated a willingness to outsource in response to these
tax credits.
The main reason why foreign entertainment firms are flocking to India is the cost advantage the
country offers. For instance, in the US, animators can cost about $125 an hour; in India, they
cost $25 an hour.
Animation Studios in India offer animation service at 25 per cent to 40 per cent lower rates than
other Asian studios and much lower than those of American studios.
For many years, Indian VFX units catered mainly to Hollywood and ad film makers in India, with
feature film directors - barring a few exceptions - keeping their distance. Suddenly, attitudes
have changed.
The market for VFX in India stood at approximately Rs 450 crore in 2010 against Rs 320 crore in
the previous year, an increase of 41 per cent. The overall industry comprising animation, VFX
and post production grew by 17.5 per cent over 2009 to reach Rs 2,360 crore, according to a
FICCI-KPMG Media and Entertainment report. The overall growth was largely led by VFX and
post-production, the latter rising by 17 per cent. The report says that animation and VFX
together are expected to grow at a compounded annual growth rate of 18.5 per cent to reach Rs
5,590 crore by 2015.
1.1.2. Trends and Drivers
On Account of the cyclic nature of the business, VFX and Animation services business has
always been difficult to operate. The amount of work has fluctuated causing feast or
famine for those working in it. In the last decade or two the amount of work has increased
but the amount of competition has expanded even more.
Low entry barriers and High exit barriers have resulted in overcapacity in this segment in the
domestic markets.
Low search and switch over cost have also tipped the balance in favor of the buyer leading
to intense price wars and reducing margins for the Animation & VFX companies.
India is a key player in the global media process outsourcing business (MPO) but increasingly
the VFX & Animation industry in India is being challenged by VFX & Animation industries in
other countries that have built stronger reputations for quality, consistency and reliability in
some cases and low-cost in others.
Among the high-profile films of late that used VFX extensively are Chandni Chowk to China
(1,500 VFX shots), Aladin (1,600 shots), Blue (800 shots), Guzaarish (350 shots) and above
all, Enthiran (2,000 shots). Currently, industry insiders estimate around 70 per cent of Indian
films are using VFX.
Indian Films have a long way to go before they catch up with Hollywood films. For a VFX
driven film, rarely do Indian producers budget more than 10 per cent for the effects, while
their Hollywood counterparts could earmark as much as 60 to 70 per cent. Then, there is the
size of budget, itself. Hollywood studios can spend $200 to 250 million on VFX alone, while
the entire budget of Enthiran, for instance, was around Rs 160 crore or $36 million.
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4. Unlike films and TV, Indian advertising cottoned on to the benefits of VFX very early. In
advertising, VFX has already come of age with almost 80 per cent of commercials today
using VFX in varying degrees, according to those in the industry.
They estimate that a 40-second commercial, which would typically cost Rs 40 lakh to shoot,
can be made for Rs 30 lakh if VFX is used instead.
Conversion from 2D to 3D is a growing trend in the film industry. Currently in India, 2D to 3D
conversion for a full-length feature film may take 4-6 months and cost over Rs20-30 crores,
depending on the complexity of the execution.
1.1.3. Technology Factors
In the last few years hardware prices have fallen dramatically along with easy
availability of pirated software copies leading to low entry barriers and
exponential growth in number of VFX studios.
1.2. Competitive Analysis
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5. 1.2.1. Porter’s 5-forces analysis
Applying Michael Porter’s 5-forces Model to the VFX services Markets in India, we can analyse the
following points;
SUPPLIER BARGAINING POWER
a) Supplier concentration: Low
b) Importance of volume to supplier: High
c) Differentiation of inputs: Low
d) Impact of inputs on cost or differentiation: Low
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6. e) Switching costs of firms in the industry: Low
f) Presence of substitute inputs: High
g) Threat of forward integration: Low
BUYER BARGAINING POWER
a) Bargaining leverage: High
b) Buyer volume: Low
c) Buyer information: High
d) Brand identity: Low
e) Price sensitivity: High
f) Threat of backward integration: Low
g) Product differentiation: Low
h) Buyer concentration vs. Industry: Low
i) Substitutes available: High
THREAT OF NEW ENTRANTS
a) Proprietary learning curve: Low
b) Access to inputs: Low
c) Economies of scale: Low
d) Capital requirements: Medium-High
e) Brand identity: Low
f) Switching costs: Low
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7. g) Expected retaliation: High
h) Proprietary products: Low
THREAT OF PRODUCT SUBSTITUTES
a) Switching costs: Low
b) Buyer inclination to substitute: High
Summarizing Michael Porter’s 5-Forces model of pure
competition in seeking to develop an edge over rival firms by
understanding the industry context in which the firm operates
we observe that:
a. Supplier Bargaining power is low on account of low concentration ratio of suppliers due
to overcapacity in this segment.
b. Buyer Bargaining power is high.
c. Threat of New Entrant is high as setting up an animation and VFX studio involves
moderate fixed investments.
d. Threat of Product Substitutes is high as VFX shots can be sometimes substitutable with
conventional live action footage which is a low cost affair. Also there is low service
differentiation within VFX service category.
e. The Degree of Rivalry in the VFX service Market is high as the market concentration is
low owing to large number of players in the market. Low entry barriers, low technological
complexity and high bargaining power of the buyer have contributed to the high market
dynamics.
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8. 1.2.2. Competitive Landscape
Considering tool box current capabilities and positioning we are focusing only on the VFX segment
and competitors from the Indian market.
VFX Competitive Landscape
Organised Sector
Unorganised Sector
Competitive rivalry among various companies large and small operating in this space is very
intense, most of the times the competition is in the form of price.
VFX and Animation services sector is a highly unorganized sector the majority of VFX companies
are not efficiently run.
For the most part, the people running these companies don't have business backgrounds.
Smaller companies are almost always artist-driven (meaning a talented artist or group of artists
driven
get together and start their own business).
These companies are notorious for being mismanaged and the result is that they end up
underbidding competitors to generate cash flow. This puts downward pressure on the industry
puts
pricing in general.
Price cuts by one competitor are quickly and easily matched by rivals and once matched they
lower revenues for all firms.
Most domestic and international clients view animation& VFX service as a commodity and
choice by the buyer is largely based on price and credit periods.
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9. 1.2.3. Key Players
Apart from these there are numerous other small and medium sized companies operating
out of various cities and towns across India.
Cities like Mumbai, Hyderabad and Chennai have pockets within these cities which house
large clusters of companies offering various postproduction services mainly to television
channels, smaller advertising agencies, regional films etc.
Out of the key players based on current strategy,capabilities,competitors response profile
and there known future goals we can conclude Prime focus,Pixion,Reliance MediaWorks ,
Tata Elxsi and FutreWorks are the companies which are the most aggressive to grab a
larger market share.
1.2.4. TOOL BOX Competitors
Note: Companies have been segmented into various categories based on their business policies,
current strategy, infrastructure and market share of the VFX business for both feature films and ad
films.
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12. 1.2.9. Competitors Vs TOOLBOX
Aggressiveness Threat level
Direct Service Service Marketing
Strengths Weakness
Competitors Description Features Strategy
(High,Low,Medium) (High,Low,Medium)
Unorganized All major VFX Customized Low Aggressive
service
Lack of QC High High
sector SERVICES Overheads Pricing
Small All major VFX Customized Low Aggressive
SERVICES service
Lack of QC Pricing High High
Companies Overheads
Indirect Competitors
Aggressive
Pricing,
end-to-end
All major POST Effective
Large Post Economics of High
PRODUCTION Branding, Medium Low
Companies Production Scale Overheads
SERVICES
solutions
Better
customer
reach
Aggressive
Pricing,
end-to-end Effective
All major POST
Mid-Size Post Economics of High Branding,
PRODUCTION Medium Low
Companies Production Scale Overheads
SERVICES
solutions
Better
customer
reach
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13. 1.2.10. Potential Competitors
Considering potential strategic changes in context to introduction of new services and considering the
probability of new entrants along with the possibility of entering new markets and geographies we can
assume completion from the following quarters.
• Various big, small and medium services for hire animation companies like Cornershop, Accel
Animation, DQ, Prana, Crest, BIG Animation etc.
• Services for hire VFX companies like Anibrains.
• Various big, small and medium services for hire game art companies like Laksya Digital.
• Various big, small and medium services for hire product animation companies like HMX Media.
• Apart from these companies possible threat would also arise from large number of unorganized
and organized companies offering services like architectural walkthroughs, medical animation
etc.
• Threat would also be posed from companies operating out of
S.EAsia,Russia,Bangaladesh,Nepal,Eastern Europe,Middle East and South America
1.2.11. TOOL BOX Competitive Advantage
• Lean Business Model: resulting in lower overheads and lower operating cost this would
ensure long term sustainability for the business.
• Cost Advantage: resulting in competitive pricing of services.
• Accessibility: TOOLBOX is strategically located in the western suburb of Mumbai in Bandra
close to various production houses, add agencies and television companies.
• Ability to scale up: TOOLBOX has the technical and financial capability to scale up on a
very short notice.
• Training: TOOLBOX has the ability to periodically enhance the knowledge and skill sets of
its team on account of SEAMLESS EDUCATION ACADEMY PVT LTD which is a sister concern
of TOOLBOX and a leading Media School.
• Human Resource: Due to its association with SEAMLESS EDUCATION ACADEMY PVT LTD
TOOLBOX has an access to a large set of skilled manpower.
• R&D: TOOLBOX has technical capabilities of developing in house proprietary tools through
its sister concern DUX Soft. DUX Soft is a pioneering company that focuses on providing
domain-specific value-added IT services primarily to the Animation, VFX and Gaming
industry in India and abroad.
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14. 1.3. Costumer Analysis
1.3.1. Segmentation Dimensions
• Geographic Regions: Apart from India which is growing media market, globally there are
other regions which are lucrative from services view point these can be classified as
primary markets like USA, Canada, UK and Certain Western European countries and
secondary markets like certain South American countries and Middle East. S.E.Asian
Market is difficult to access and owing to its cultural proximity to these countries is largely
dominated by China. The domestic market is again broadly classified into two regional and
mainstream. Overseas clients have a work flow which is more streamlined.
• Purchase Habits: The Buying Cycle for feature films and Corporate AV, TVC is different,
Vendor selection for Corporate AV and TVC is shorter as the projects involve quicker
turnaround time and net worth is less than a feature film project.
• Resistance to Change: Resistance to change is very high in the A+ segment as compared
to other segments in both tvc and feature films where the client has very strong
relationships with the vendor.
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15. 1.3.2. Target Markets
• TOOLBOX would target the following geographies in the coming fiscal year
India,USA,UK,France,Canada,Italy,Germany,Dubai,Argentina,Brazil.
• Within India we would be targeting both mainstream ie Hindi and regional markets like
Marathi, Bhojpuri, Punjabi and Bengali.
• In terms of industry segments we would try to reach out to segments like game art
companies, architectural walkthroughs, medical animation, product animation, animation
companies,vfx companies,filmand tvc companies in all above mentioned geographies
1.3.3. Forecasted Changes
• Films made in Marathi, Bhojpuri, Punjabi and Bengali languages are increasingly wooing
mainstream audiences, aided by funding from studios rushing to cash in on untapped
markets due to this the VFX budget of these regional films would also gradually increase.
• Viral advertising though still at a nascent stage in India, but are slowly becoming quite
popular among consumers. More and more brands are looking at this form of marketing to
create brand awareness this would be an attractive market in terms of 2d flash animation
services.
• With Social networking sites have given a boost to online gaming and with the increase in
mobile gaming market services to these sectors would see an exponential growth.
• In view of global economic slowdown would result cost saving measures due to which
international outsourcing work in animation, gaming and VFX will increase.
• Low budget Hindi film market would gradually grow thereby creating opportunities for
midsized companies like toolbox.
• Increase in add spend would result in more use of VFX and animation in adds.
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16. 1.4. SWOT Analysis
STRENGTHS WEAKNESS
• Low Cost Business Model. • Poor Sales Management
• R&D Capabilities. • Poor Brand Awareness
• Training Division. • Lack of Global Presence
• Financial Strength of the Group. • Ambiguity in Positioning
OPPORTUNITES THREATS
• Growing media services • Over dependence on TVC segment.
outsourcing market.
• Potential loss of financial backing
• Emerging markets like game art, from parent company.
architectural walkthroughs,
medical animation, product • Price war from small and
animation, animation for television unorganized sector.
and films.
• Regional films market and TVC
market.
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17. 2. Objectives:
2.1. Marketing Objectives
2.1.1. Short Term ( Upcoming Year)
• Improve customer loyalty and ensure more repeat business from existing customers.
• Reposition toolbox from a vfx studio to a total media solution company.
• Ensure proper risk mitigation of the business by diversifying into other media services.
• Tapping new geographies.
• Increase Brand awareness in all chosen market segments and geographies.
chosen
• Extend reach of communication to 90% of target customers.
• Increase market share in TVC and film segment (Regional and C grade Hindi
Hindi).
• Secure partnerships with other studios by building strategic alliance with them there by
increasing operational capacity.
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18. 2.1.2. Long Term (3 to 5 Years)
• Become the number one brand for vfx services in regional film market.
• Acquire 20% market share of the TVC business of mid size competitor.
• Reduce marketing cost and cost per acquisition of acc
account.
• Increase revenue share of global clients to 50% in the total revenue of the company.
3. Marketing Strategy:
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19. 3.1. Market Segmentation Strategy
Market segmentation strategy to be based on two parameters
1. Geographic Segmentation: The intention would be to target companies in the
following geographies.
a. India
b. USA
c. UK
d. France
e. Canada
f. Italy
g. Germany
h. Dubai
i. Argentina
j. Brazil.
2. Service User Segmentation: The focus would be to target the following segments.
a) game art companies
b) architectural walkthroughs
c) medical animation
d) product animation
e) 2D&3D animation companies
f) vfx companies
g) film production companies
h) tvc production companies
i) advertising agencies
j) digital agencies
k) VAS companies
l) Viral animation
m) Animation for films
n) Animation for television
3.2. Potential Strategies:
3.2.1. Strategic Formulation: In order to achieve the marketing objectives of the company I purpose
a twofold strategy one for the domestic market and the other for the international market.
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20. 1. Cost leadership Strategy-(Global Markets):
Considering the global economic situation which has made it mandatory for various global studios to cut
cost thereby making India a suitable destination for outsourcing on account of wage-arbitrage I purpose
we develop a strategy based on the principle of cost leadership.The core principles of our strategy would
be to build efficient-scale facilities through tie ups with other studios, tight cost and over head control
followed by aggressive marketing and sales activities. This would enable us to capture a larger market
share across various services globally.
2. Cost Focus Strategy(Domestic Markets): Extending the strategic outlook of global markets to
domestic markets we would like to focus on a strategy whose central theme would be low cost
relative to leading market competitors but we would seek a lower-cost advantage by primarly
focusing on TVC,Regoinal Films and c and d grade Hindi films.
3.2.2. Positioning Strategy
Keeping in mind the global aspirations of the company we would have to device a positioning strategy
that would reposition toolbox from being merely a vfx studio to complete media Solution Company. This
positioning philosophy would remain constant irrespective of the market and would serve as a
differentiating factor for the company.
3.2.3. Branding
In tune with the positioning philosophy the company would have develop all marketing collateral that
would address the issue of positioning toolbox as a media Solution Company. Web site needs to be
gradually changed to incorporate more services and highlight our strengths like our financial capabilities,
in context to our relation with the parent company, our IT strength etc. The website also needs to shed
some light on our training capabilities and our technology pipeline. If possible we should also design a
brand mascot for better brand recall. Inclusion of sections like downloads on the website where
potential prospects can download e-brochures of the company services, can read about client
testimonies etc.
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21. 4. Marketing Programs
4.1. Marketing Mix:
4.1.1. Product (Services)
Apart from the current set of services and above mentioned service segment we should new
services like
• Character Licensing.
• Toon Branding (In conjunction with advertising sister concern).
4.1.2. Pricing:
In order to achieve a larger market share and to develop a substantial body of work the company would
need to resort to aggressive pricing. Most VFX and Animation companies operate under a fixed bid
business model. In order to maintain a healthy cash flow we need to follow the principle of 50% advance
and 50% on delivery.
4.1.3. Place:
Focus should be to keep pipelines busy at both locations Mumbai and Pune and whenever possible try
arrange for a client visit to the Pune facility.
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22. 4.1.4. Advertising (Promotion)
• Advertising on portals like business of cinema.
• Advertising in film magazines like super cinema and complete cinema both Hindi and Bhojpuri
version.
• Promoting toolbox through magazines like pickle through a series of articles, paid editorials,
interviews and advertisements.
• Encouraging the in-house artist to make short films and participate in international film festivals
thereby promoting tool box.
• Social media marketing and promoting toolbox through various media sharing platforms like you
tube.
• Interacting with various industry bodies like IMPA, Producers Guild etc by conducting workshops
in association with Seamedu .
• Participation of key management officials at various domestic and international festivals like
Annecy,KidsScreen,MIPCOM,Cannes Film Festival,MAMI,KERLA Film Festival,GOA Film
Festivaletc.
• Implementation of SEO.
5. Sales Program
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23. 5.1. Current Sales Methodology:
Currently most of the sales are being carried out in an unstructured way mostly referral business
through key operational personal of the organization. There is no defined sales process .As a result
of this sales methodology the organization has failed to reach out to a large number of prospects
across various sectors resulting in poor brand visibility for the organization. The other major
drawback is there are no measures in place to check the success of sales process .The absence of
continuous process for lead generation has lead to very dismal conversion ratio as the prospect
base is static and too small.
5.2. Sales Objectives ( For this Fiscal Year):
1. Grow and Consolidate position in TVC & Corporate AV segment
• By acquiring new clients.
• By increasing the quantum of work from older clients through repeat business.
• By acquiring clients from new geographical markets.
2. Penetrate the regional film VFX market
• By aggressive personal selling.
• By extensive cold call campaigns
3. Increase Brand Visibility of Toolbox across all segments and geographies.
• By aggressive personal selling.
• By bulk mailing campaigns.
• By extensive cold call campaigns.
5.3. Sales Activities
• Building an extensive database of prospects both domestic and global for all services.
• Defining and mapping the sales process, for better sales management.
• Key Focus on relationship management for growth of business so carrying out of extensive
personal selling activities.
• Periodic bulk mailing campaigns and monthly newsletters.
• Extensive cold call campaigns.
• Constant process of lead generation through magazines like super cinema, complete
cinema and through websites like business of cinema and afaq.
• Periodic sales review and territory management.
• Strategic alliance or a MoU with film labs.
• Partner ships with Agents in USA, Canada and UK on commission basis.
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24. 5.4. Scheduling:
Activity Start Date Target End Date Assigned To
• Building an extensive database
of prospects both domestic
and global for all services.
• Defining and mapping the sales
process, for better sales
management. Start Of First End Of First
Sales team
Quarter Quarter
• Extensive telephone cold call
campaigns.
• Extensive cold call campaigns
through personal visits.
• Bulk mailing campaigns and
monthly newsletters to reach
out to other geographies and
other segments
Start Of Second End Of Second
• Extensive cold call campaigns Sales team
Quarter Quarter
and follow up through
personal visits for domestic
clients
• Extensive telephone cold call
campaigns for 2D&3D Start Of Third End Of Second
Telecaller
Animation and VFX FOR USA Quarter Quarter
,Canada and western Europe
• Extensive telephone cold call
campaigns for 2D&3D
Animation and VFX for South Start Of Fourth End Of Fourth
Telecaller
America and Dubai along with Quarter Quarter
other geographies for other
services.
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25. 5.5. Sales Analysis:
5.5.1. Reporting Schedule:
Reporting would be weekly, with a review meeting scheduled on every Monday to review the
sales performance of the past week and to brainstorm and carry out any measures that would
help accelerate the sales process. Along with weekly reviews there would also be quarterly
reviews.
Sample Daily Sales Report
Note: Kindly find attached with this mail a copy of daily sales report.
5.5.2. Benchmarking:
Sales goals and past year sales figures would be used as a benchmark for performance evaluation.
5.5.3. Client Servicing:
In order to serve our clients better I purpose we implement various client servicing measures like
the following.
• Client Feedback Form to be filled by the sales rep along with the client so as to assess the
clients level of satisfaction of our services.
• Periodic Newsletters so as to continuously engage the client.
• Cards, Sweets, Flowers and gifts on special occasions like birthdays, launch of a new film,
etc and during festivals.
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26. 5.6. Resource Requirment:
5.6.1. Marketing Collateral:
• Brochures
• E- Brochures
• Client Testimonials
• Case Studies
• Show reel
5.6.2. Manpower requirements:
• Telecaller for cold calling to various other geographies.
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