Ethar El-Katatney

Call Now While Supplies Last

Posted in Business Today by Ethar El-Katatney on September 3, 2007

Call Now While Supplies Last

Business Today
News Focus
September 2007

Available at: http://www.businesstodayegypt.com/article.aspx?ArticleID=7633
Photo Courtesy of Tamima
Defying conventional logic, the teleshopping industry is still posting impressive growth. It’s enough to make you wonder: As satellite TV channels pop up everywhere, is the infomercial the new face of retail?
By Ethar El-Katatney
Call us now at 0800-900-700 and for a very limited time you can get this set of 100 magical knives for LE 299, which cut through wood, iron and vegetables! And if you call today, we’ll throw in an extra 20 magical spoons for free.”
Who hasn’t, at one time or another, watched one of these ads or even bought one of the products? Infomercials, a cross between ‘information’ and ‘commercial,’ first appeared in the mid-1980s in the United States to pitch products from cooking utensils and home appliances to exercise equipment and cosmetics. In its short form, an infomercial run two minutes, about two to four times longer than a regular TV commercial. The long version runs about 28 minutes and typically involves a demonstration of the merchandise, usually a more complex product retailing for more than LE 500. As the demonstrator explains how the product will change your life, she urges you to run to the phone: It’s only offered for a limited time, of course, so hurry while supplies last, and the sooner you call, the more gifts you’ll get.
In Egypt, the infomercial began to increase in popularity in the mid-1990s, and the number of teleshops (combination of tele(vision), tele(phone) and shop) began to increase. But with stores aplenty selling the same products, where you can actually pick up, turn over, and hold the item you like, why would anyone resort to buying a product off the television?
Dr. Ibrahim Hegazy, the chairman of the American University in Cairo’s department of management and the founder of Dr. Ibrahim Hegazy & Co. Marketing and Communications Consultants, is critical of the infomercial marketing technique in Egypt in general.
“Sometimes [in Egypt] we try and duplicate things without realizing how these things are successful and why they are successful,” says Hegazy, who is also an associate professor of marketing. He lists three things that make infomercials successful in the US: a diverse population, higher discretionary income (the money left over after you’ve paid for essentials like food and shelter) and an increasing retiree population with more free time to sit at home watching TV.
Egypt fails on all three criteria: It has a homogenous population, discretionary income is being eroded by inflation and the senior population is not increasing — yet teleshops comprise a LE 100 million market with about a dozen companies contesting the field. Tell them it’s not viable.
Not Available in Stores Near You

Tamima is a direct marketing and consumer finance company operating six different sub-companies including Tamima TV — the only teleshop company with its own channel. In 1994, Tamima started out creating infomercials for imported products, selling the products directly to the end consumers and delivering them to their homes. Next, it started to source its own products, continuing to build its own product portfolio through the end of the 1990s. Today, Tamima is synonymous with teleshopping in Egypt.
“Home shopping started to get bigger,” explains Tamima Chairman Hany Fathy. “In home shopping you have a whole channel, and it is a low-budget production because you do a [live] demonstration rather than a commercial that is expensive to make and is aired several times.”
With its own studio, production equipment and a broadcasting suite, Tamima has control over what it airs. The satellite-channel viewer base in 2000, however, wasn’t enough to justify the investment and operating expenses of being live 24-hours a day, and so many programs were repeated.
In addition to being the only teleshop offering a channel, Tamima is the only company to offer payment options other than just cash on delivery (COD). In 2003, it produced a co-branded credit card with Ahli Bank, marking the first time in the market Ahli Bank had agreed to have an agent.
“And then in 2006,” continues Fathy, “the situation evolved. Instead of doing the revolving credit card, i.e. you buy and pay, then buy and pay [] we started personal loans for buying goods. The personal loan is different, because the [customer] has become tied to buying from you [unlike the credit card].”
But even with a variety of payment options, is the channel successful?
“The teleshopping was 100% of the company’s revenue until 2002. Now it’s around 15%, [mainly] because we began to focus on consumer finance sales,” Fathy explains. “But another reason is that a big change happened in the Egyptian market; there was a high viewership rating so the infomercials had a high response. But then satellite channels began to [grow]. So now to get the same response you used to get for one channel you pay five times as much, and you have to work with higher markups.” According to Fathy, Tamima gets 400 orders per day.
Now How Much Would You Pay?
Saeed Hassan, general manager of Oscar Teleshop and Fajr Teleshop, founded both companies five years ago. Like many local teleshop companies, Oscar and Fajr air two-minute ads between five and 10 times daily on several TV channels, including El-Mehwar, Melody, Hekma and El-Nas. Hassan gets approximately 50-100 orders a day and delivers the goods COD to people in their homes.
Both teleshops also sell their products — which include mini bars, water filters, blood-sugar-level testers for diabetics and all kinds of kitchen equipment — through traditional retail stores. They buy the majority of their products from Turkey, Korea, and China.
Hassan says that his teleshops are doing better as time goes by: “I choose products based on customer demand,” he explains. “I sell cheaper than [in stores], and I change products often. The viewership rating is high and [even though] the infomercials cost me LE 25,000-30,000 per ad, which is 40% of my total costs, [it’s better business] than having a channel.” He claims that after a while people get bored with a dedicated home-shopping channel, which shows the same infomercials over and over and rarely has new products; eventually they stop turning to it. “But I diversify in different channels, and each channel with different products. There’s [more chance] of people seeing the ads.”
So who do these teleshop companies target? Hassan: “All TV watchers.” Fathy: “B and C socioeconomic classes.” Hegazy: “The parallel economy,” (referring to self-employed people like electricians and carpenters, who make a decent amount of money but are not necessarily registered as part of the labor force). With infomercials embedded everywhere from music to religious channels, it’s clear that no one single market segment is being targeted. There are different products for different people, but all basically target TV viewers with money to spend.
Even though ads enjoy great exposure, teleshops tend to have a bad reputation. “It’s because anyone who had LE 5,000-LE 10,000, opened up a teleshop,” Hassan notes. “Teleshops have to be big companies who won’t trick people and rip them off, because some companies get any old products and sell them.” He adds that his companies have a return policy and a guarantee of three to five years depending on the product. “I also try and get [as much] Egyptian products as I can,” he adds, “because it is easier to get replacement parts.”
Many other teleshops don’t offer guarantees or returns, leaving the customer with no recourse if they are dissatisfied with the quality of the products.Time is Running Out
For companies with a broad target market, infomercials do have a number of advantages. For one, they reach a large audience through mass media, and they communicate products directly to the end consumer without any intermediaries, therefore cutting costs. Long-form infomercials are worth it for expensive, complicated products that a customer normally wouldn’t buy without a thorough orientation.
But then again, with increasingly shorter attention spans and people having gotten used to snazzy 30-second ad spots, it’s unlikely someone would watch a 28-minute program on a product unless he were really interested in it; and even then, he probably would have found a live vendor to buy it from. In addition, despite more than a decade in the market, most of the long infomercials are not produced in Arabic and are dubbed by out-of-sync voices in fake, perky classical Arabic.
Culturally speaking, Egyptians have not embraced buying via satellite channels and the internet. Not because they have to give credit card details over the phone — in fact almost all teleshops are cash on delivery — but as Hegazy puts it: “They still want to inspect the product. They still want to tangibly see it.”
This is partly why companies that also offer retail distribution for their products do especially well: Customers can learn about the product from the infomercial, then go to the store to inspect and buy it.
It doesn’t help that infomercials are also associated with low-quality products. Hegazy calls this the ‘overpromise,’ where the ad promises what the product cannot deliver. “This is a sort of deception [and] there are no rules or regulations governing this,” he says. “So [there are a] lot of products [out there] which may not be tested or approved.” Returning a defective product is next to impossible, and seldom do guarantees work out.
Despite the preponderance of infomercials, there is actually a limited selection of products, leaving viewers bored with infomercials about the same type of products. How many times can you really watch someone strengthen their abs, regardless of what they’re using to do it? The problem stems from the difficulty of licensing in Egypt, especially for food supplements and cosmetics, two of the top-selling products in the US.
Are infomercials a good marketing tool and will they flourish in the years to come? There was a time when it seemed every grandmother in the country had bought at least one blender from a TV infomercial and got a cutlery set thrown in free. The market right now is unstable, but it does have potential. If the companies can make sure to deliver what they promise, spice up the infomercials a bit, lengthen their product lines and establish a return policy, then who knows? You may be picking up the phone soon to order a brand new Thighmaster yourself. bt

2 Responses

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  1. a7asessha3er said, on September 27, 2007 at 10:05 pm

    يا سيدي كلمني عربي

  2. corbMync said, on July 31, 2011 at 6:30 am

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