Summer training project report

On

DEVELOPING MARKETING STRATEGY FOR FOUR TONNER LCV IN DELHI

Submitted for the partial fulfillment of Award

Of

Master of Business Administration

DEGREE
(Session :2010-12)

SUBMITTED BY
Geetika Madhur 1003270015

UNDER THE GUIDANCE OF

Mr. Vaibhav Malhotra (External Guide) & MS. Anshika Sangal (Internal Guide) Department of Management ABES ENGINEERING COLLEGE GHAZIABAD

AFFILIATED TO

MAHAMAYA TECHNICAL UNIVERSITY, NOIDA

Candidates Declaration/certificate I hereby declare that the work which is being presented in this report entitled Developing Marketing for Four Tonner LCV in Delhi is an authentic record of my own work carried out under the supervision of Mr. Vaibhav Malhotra

The matter embodied in this report has not been submitted by me for the award of any other degree.

Dated:

Geetika Madhur MBA

This is to certify that the above statements made by candidate (s) are correct to the best of my knowledge.

Prof. Rakesh Passi (Head Of Department) Date:

Anshika sangal (Name Of Supervisor) Asst Prof. MBA Date:

ACKNOWLEDGEMENT I would like to express my gratitude to my project guide Mr. Vaibhav Malhotra and my internal guide Ms. Anshika Sangal for continuously encouraging me with their support and helping me with any problems, I faced. I would also like to thank the TSS Delhi head Mr. Sehgal for his guidance. I would also like to appreciate the efforts of all the Sales managers and Sales Executives of TSS Delhi for helping me in bringing this project to a conclusion. This project would not have been possible without the help of any one of them. I appreciate the systems in place at Tata Motors which made my experience a rich one and also providing me the opportunity to learn various aspects of marketing. At the last I would to thanks all those customers who gave time to me and shared the information regarding the trucks. Without their help this work would not have been possible.

DATE

Geetika Madhur

PLACE

Table of Contents

Table of Contents .......................................................................................................................... 9 List of Figures .............................................................................................................................. 11 List of Tables ............................................................................................................................... 12 Chapter 1: INTRODUCTION ................................................................................................... 13 TATA MOTORS: ............................................................................................................... 13 The Company: ....................................................................................................................... 13 Scope of study ...................................................................................................................... 13 Objective of study.................................................................................................................. 13 BUSINESS UNITS: .............................................................................................................. 14 THE ORGANIZATION STRUCTURE:............................................................................... 49 TSS Delhi: ............................................................................................................................. 16 Product: .................................................................................................................................. 18 Comparison between variants: ............................................................................................ 19 Comparison with competitors

products:19 Sales process flow chart: ..................................................................................................... 23 Literature Survey: ................................................................................................................ 24 Chapter 2: Research Problem................................................................................................... 28

Problem Definition: ............................................................................................................. 28 Problem Formulation: ......................................................................................................... 28 Structure of Project: ............................................................................................................ 28 Scope of Project: ................................................................................................................. 29 Chapter 3: The Research Design ............................................................................................... 30 Methodology: ...................................................................................................................... 30 Sample: ................................................................................................................................ 30 Data Collection procedure:.................................................................................................. 30 Data analysis: ...................................................................................................................... 30 Expected output:.................................................................................................................. 30 Time frame : ....................................................................................................................... 31 Chapter 4: Data Collection and Observation .......................................................................... 32 Customer Survey ................................................................................................................. 32 Market Share ......................................................................................................... 32 Sales segments ...................................................................................................... 33 Resale value .......................................................................................................... 33 Product rating ........................................................................................................ 34 Rankings ............................................................................................................... 35 Satisfaction Index.................................................................................................. 36 Financers share...................................................................................................... 38

Financers Survey ................................................................................................................. 39 Grievances............................................................................................................. 42 Finding (Summary) ............................................................................................................. 44 SWOT.................................................................................................................................. 45 Environment analysis .......................................................................................................... 46 Chapter 5: RECOMMENDATIONS ........................................................................................ 47 Marketing Strategy .............................................................................................................. 47 Recommendations ............................................................................................................... 49 Appendix ...................................................................................................................................... 51

Figures

Figures Heading No. 1 2 3 4 5 6 7 8 9 10 11 12 13 Organizing Structure Sales Process through dealership Sales Process through TSS SFC 407 Ex Turbo SFC 407 Turbo LPT 407 Turbo Structure of project Market share Sale segments Resale value Product rating Ranking Satisfaction Index

Page No.

15 16 16 18 19 19 27 32 33 33 34 35 36

14 15 16 17

Loan vs Cash Financers share Financers Share SWOT analysis

37 38 41 45

List of Tables

Table Number Heading 1 2 3 4 5 6 7 Comparison of TML 4 ton products Comparison with other products in 4 ton category Sales Process flow chart Structure of project Time Frame Survey in NCR Survey in East Delhi

Page Number 20 20 23 28 31 31 31

List of Abbreviation Abbreviation Full form TML EM SM TSS TMF NCR ICICI HDFC FSE TA TATA Motors Ltd. Eicher Motors Swaraj Mazda Tata Sales and Service Tata Motor Finance Ltd National Capital Region Industrial Credit and Investment Corporation of India Housing Development Finance Corporation Limited Field Sales Executives Trade Advance

Chapter- 1
INTRODUCTION

Tata Group
Tata Group is an Indian multinational conglomerate company headquartered in the Bombay House in Mumbai, India. Tata Group is one of the largest companies in India by market capitalization and revenue. It has interests in communications and information technology, engineering, materials, services, energy, consumer products and chemicals. The Tata Group has operations in more than 80 countries across six continents and its companies export products and services to 80 nations. The Tata Group comprises 114 companies and subsidiaries in eight business sectors, 27 of which are publicly listed. 65.8% of the ownership of Tata Group is held in charitable trusts. Companies which form a major part of the group include Tata Steel (including Tata Steel Europe), Tata Motors (including Jaguar and Land Rover), Tata Consultancy Services, Tata Technologies, Tata Tea (including Tetley), Tata Chemicals, Titan Industries, Tata Power, Tata Communications, Tata Sons, Tata Teleservices and the Taj Hotels. The group takes the name of its founder, Jamsedji Tata, a member of whose family has almost invariably been the chairman of the group. The current chairman of the Tata group is Ratan Tata, who took over from J. R. D. Tata in 1991 and is one of the major international business figures in the age of globalist. The company is currently in its fifth generation of family stewardship. Tata Group's 114 companies are held by its main company Tata Sons and the main owner of Tata Sons are various charitable organizations developed and run by Tata Group. Out of which JRD Tata Trust & Sir Ratan Tata Trust are the main holders. About 65% ownership of Tata Sons which is the key holding company of the other 114 Tata Group Company is held by various charitable organizations. The 2009, annual survey by the Reputation Institute ranked Tata Group as the 11th most reputable company in the world. The survey included 600 global companies. The Tata Group has

helped establish and finance numerous quality research, educational and cultural institutes in India. The group was awarded the Carnegie Medal of Philanthropy in 2007 in recognition of its long history of philanthropic activities. Tata gets more than 2/3 of its revenue from outside India. In June 2011, based on market value Tata Group has become India's wealthiest group with $98.7 billion.

History of Tata Group

The beginning of the Tata Group can be traced back to 1868, when Jamsetji Nusserwanji Tata established a trading company dealing in cotton in Bombay (now Mumbai), British India. This was followed by the installation of 'Empress Mills' in Nagpur in 1877. Taj mahal Hotel in Bombay (now Mumbai) was opened for business in 1903. Sir Dorab Tata, the eldest son of Jamsetji Tata became the chairman of the group after his father's death in 1904. Under him, the group ventured into steel production (1905) and hydroelectric power generation (1910). After the death of Dorab Tata in 1934, Nowroji Saklatwala headed the group till 1938. He was succeeded by Jehangir Ratanji Dadabhoy Tata. The group expanded significantly under him with the establishment of Tata Chemicals (1939), Tata Consultancy Motors, Tata Industries (both and Titan

1945), Voltas (1954), Tata

Tea (1962), Tata

Services (1968)

Industries (1984). Ratan Tata, the incumbent chairman of the group succeeded JRD Tata in 1991.

TATA deals in many fields

Chemicals

Tata Chemicals Rallis India Tata Pigments Limited General Chemical Industrial Products

Consumer Products

Tata Salt I-shakti Casa Dcor Tata Swach Tata Global Beverages Tata Tea Limited is the world's second largest manufacturer of packaged tea and tea products.

Tetley Tata Coffee Tata Industries Titan Industries Trent (Westside) Tata Sky

Energy

Tata Power is one of the largest private sector power companies. Tata BP Solar, a joint venture between Tata Power and BP Solar Jamshedpur Utilities and Services Company North Delhi Power Power links Transmission Tata Power Trading

Engineering

TAL Manufacturing Solutions Tata Auto Comp Systems Limited (TACO) Tata Motors, manufacturer of commercial vehicles (largest in India) and passenger cars Jaguar and Land Rover Tata Daewoo Commercial Vehicle Tata Consulting Engineers Limited Voltas, consumer electronics company Voltas Global Engineering Centre

Information systems and Communications

Computational Research Laboratories Tata Business Support Services Tata Consultancy Services Ltd. (TCS) is Asia's largest software company. Tata Elxsi Tata Interactive Systems

Tata Technologies Limited Tata Teleservices Virgin Mobile India Tata Communications VSNL International Canada Tata Teleservices

Services

Ginger Hotels Tata Sons Landmark Tata Housing Development Company Ltd. (THDC) Tata Limited Tata AIG General Insurance Tata AIG Life Insurance Tata AG

TATA MOTORS:
The Company: Tata Motors Limited is India's largest automobile company, with revenues of Rs. 35918.96 crores (USD 8.5 billion) in 2006-07. And in 2010-2011 it increased to 1,23,133 crores(USD 27 billion) It is the leader by far in commercial vehicles in each segment, and the second largest in the passenger vehicles market with winning products in the compact, midsize car and utility vehicle segments. The company is the World's Fifth largest medium and heavy commercial vehicle manufacturer. The company's 25,000 employees are guided by the vision to be best in the manner in which we operate, best in the products we deliver and best in our value system and ethics. Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. Close to 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company's manufacturing base is spread across Jamshedpur, Pune, Luckhnow, Singur, Pantnagar and Dharward supported by a nation-wide dealership, sales & services and spare parts network comprising over 2,000 touch points.

Important landmarks - Acquisitions and Joint Ventures: Tata Motors, the first company from India's engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as a global automotive company. In 2004, it acquired the Daewoo Commercial Vehicles Company, Korea's second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has already begun to launch new products. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, with an option to acquire the remaining stake as well. Hispano's presence is being expanded in other markets. In 2006, it has formed a joint venture with the Brazil-based Marco polo, a global leader in bodybuilding for buses and coaches, to manufacture and assemble fully-built buses and coaches. Tata Motors and the Fiat Group have recently signed a memorandum of understanding to establish an industrial joint venture in India to manufacture passenger vehicles, engines and transmissions for the Indian and overseas markets; Tata Motors already distributes and markets Fiat branded cars in India. In March 2008, Tata Motors finalized a deal with Ford Motor Company to acquire, Jaguar Cars and Land Rover, with which comes along Rover, Daimler and Lanchester. The deal would be complete, in all respects, by the second quarter of 2008. This deal has certainly made Tata Motors a global company and given it a presence in the much profitable luxury car segment.

1.1 Transportation in India.

Transport in the Republic of India is an important part of the nation's economy. Since the economic liberalization of the 1990s, development of infrastructure within the country has progressed at a rapid pace, and today there is a wide variety of modes of transport by land, water and air. However, India's relatively low GDP has meant that access to these modes of transport has not been uniform.

Motor vehicle penetration is low by international standards, with only 13 million cars on the nation's roads In addition, only around 10% of Indian households own a motorcycle. At the same time, the automobile industry in India is rapidly growing with an annual production of over 2.6 million vehicles, and vehicle volume is expected to rise greatly in the future.

Road Main article: Indian Road Network The Network of National Highways in india

India has a network of National Highways connecting all the major cities and state capitals, forming the economic backbone of the country. As of 2005, India has a total of 66,590 km (41,377 mi) of National Highways, of which 200 km (124 mi) are classified as expressways. Under National Highways Development Project (NHDP), work is under progress to equip some of the important national highways with four lanes; also there is a plan to convert some stretches of these roads to six lanes. However congestion and bureaucratic delays enroute ensure that trucking goods from Gurgaon to the port in Mumbai can take up to 10 days

As per the National Highways Authority of India, about 65% of freight and 80% passenger traffic is carried by the roads. The National Highways carry about 40% of total road traffic, though only about 2% of the road network is covered by these roads. Average growth of the number of vehicles has been around 10.16% per annum over recent years. Highways have facilitated development along the route and many towns have sprung up along major highways. Road transport Benchmark Freight Index (BFI) initiative taken in India.

All national highways are metallic, but very few are constructed of concrete, the most notable being the Mumbai-Pune Expressway. In recent years construction has commenced on a nationwide system of multi-lane highways, including the Golden Quadrilateral and North-South and East-West Corridors which link the largest cities in India. In 2000, around 40% of villages in India lacked access to all-weather roads and remained isolated during the monsoon season.

To improve rural connectivity, Pradhan Mantri Gram Sadak Yojana (Prime Minister's Rural Road Program), a project funded by the Central Government with the help of World Bank, was

launched in 2000 to build all-weather roads to connect all habitations with a population of 500 or above (250 or above for hilly areas).

As per 2009 estimates, the total road length in India is 3,320,410 km (2,063,210 mi) making the Indian road network the third largest road network in the world. At 0.66 km of highway per square kilometer of land the density of Indias highway network is higher than that of the United States (0.65) and far higher than that of China's (0.16) or Brazil's (0.20).

Type of Road Expressways National Highways State Highways Major District Roads Rural and Other Roads

Length 650 km (400 mi) as of 2006 66,590 km (41,380 mi) 131,899 km (81,958 mi) 467,763 km (290,654 mi) 2,650,000 km (1,650,000 mi)

Total Length

3,300,000 km (2,100,000 mi) (Approx)

1.2

Need of the Study

Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives. Plans and objectives are generally tested for measurable results. Commonly, marketing strategies are developed as multi-year plans, with a tactical plan detailing specific actions to be accomplished in the current year. Time horizons covered by the marketing plan vary by company, by industry, and by nation, however, time horizons are becoming shorter as the speed of change in the environment increases. Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned. Marketing strategy involves careful scanning of the internal and external environments. Internal environmental factors include the marketing mix, plus performance analysis and strategic constraints. External environmental factors include customer analysis, competitor analysis, target market analysis, as well as evaluation of any elements of the technological, economic, cultural or political/legal environment likely to impact success. A key component of marketing strategy is often to keep marketing in line with a company's over arching mission statement. Besides SWOT analysis, portfolio analyses such as the GE/McKinsey matrix or COPE analysis can be performed to determine the strategic focus. Once a thorough environmental scan is complete, a strategic plan can be constructed to identify business alternatives, establish challenging goals, determine the optimal marketing mix to attain these goals, and detail implementation. A final step in developing a marketing strategy is to create a plan to monitor progress and a set of contingencies if problems arise in the implementation of the plan.

1.3 Scope of study

Scope of Project: The scope of the study is that where we use this research process in the organization like Marketing, Finance, and Human Resources. Organization develop the product concept and marketing strategy, it can evaluate the Proposals business attractiveness management needs to prepare sales, cost and profit projection to determine whether they satisfy the customer requirements. In the upcoming transportation industry the need for usage of diesel LCV needs to be thought more seriously, as swift transportation of FMCGs to short distances is becoming the trend of the day. This study is based on the market requirements which at the same time add to the promotional sales of LCV TATA 407.As new information comes in the business analysis will undergo revision and expansion, because small loads customer products reach the end customer at the desired point of time. Thus an effective product strategy links product decisions with cash flow, market dynamics and product life-cycle and organization capabilities. A company must have cash for product development and to go in for the necessary Research work to understand the customer needs and analyze and understand the changes taking place in the market and have the necessary talent and resource for product development. Hence this study is being conducted so that the company adjusts its production and designing to enhance its market share in LCV sales.

TSS Delhi:

Tata motors have two channels for distribution to reach its customers. 1. Through showrooms that are franchise of the company and are owned by some private individual or some private firm. In such cases the flow is as follows:

TATA motors

Dealer

Customer

Figure 1- Sales process through dealership

Advantages The advantage of this route is that it helps increase penetration and is the common channel employed. Dealer has generally a better understanding of the territory Disadvantages The main disadvantage is that the company becomes detached from its customers Another disadvantage is that the dealers can misrepresent the facts to both company and the customers

2. The other route that the company (TML) is following is that it is reaching its customers directly. For that it has opened up TATA sales and service centers (TSS). There are only two such offices, one in Delhi and one in Bhubaneswar. The flow to reach the customer is shown below:

TSS

Customer

Figure 2- Sales process through dealership

In this route, the company is directly reaching its customers. TSS is a sales and service office owned by TATA motors and run its TATA motors employees. It is basically a model dealership which has been set up by the company so that other dealers can follow the practices at TSS. It acts as a nodal point and has also been setup to control the commercial vehicle market in north India.

It works as a point for 3S i.e. Sales Service Spares

TSS provides its customers sales of commercial vehicles, sale of spare parts and service center for vehicles. It has a very big facility in Ghazipur and acts as a center for all kind of activities for TATA motors. Recently when the AUTOEXPO2007 was held at New Delhi, TATA motors participate in it and all the TATA motors cars were stored at TSS. All kinds of commercial vehicles are available at TSS like LCVs ICVs M&HCVs CNG fitted DTC buses in collaboration with Marco polo

Advantages: Company can connect with customers better Can act as a control and distribution centre

Sales process at TSS

At TSS Delhi sales takes place in the following ways: 1. First are the walk-in customers. 1.1. These customers approach the TSS dealership to purchase a vehicle by themselves. 1.2. Sales team is not involved in this. 1.3. Primary means of attracting these customers is through advertising and partnerships with financers etc. 2. Secondly, sales team at TSS goes to the field regularly to visit the existing and potential customers and try to sell them vehicles. Delhi and NCR has been divided into various regions and each region has a separate team. 2.1. Sales team is divided by regions for better penetration 2.2. Actual sales pitch done by FSEs 3. Thirdly, TSS gets leads from financers. 3.1. Financers have their own sales teams and their working has been explained in the later chapters. 3.2. Financers also collaborate with company sales executives to approach potential customers

For the managers to keep a track of the sales and potential customers, TSS has quantified it as follows: C0 - Under C0 is the whole universe, anybody and everybody to whom the commercial vehicle can be sold comer under C0. C1 Under this category, those customers fall who are interested to purchase vehicles from TSS. C2 The customers who fall under this category are those who have submitted a certain amount of money as deposit with TSS in advance. C3 Under this category those customers who have cleared the final bills and have received the delivery of their vehicle. Sales executives at TSS also involve in other activities to market their product and promote the sales of their products. They give demos of the vehicles to interested customers They social gatherings and meets for customers They throw launch parties for example when Magic and Winger were launched, a huge party was thrown for the customers and dealers They give advertisements in the leading hindi newspapers like Danik Jagran etc in Delhi and NCR region. They have collaboration with TATA finance to further promote their sales.

Products:
TML has basically three products in the 4 ton category

SFC 407 Ex Turbo

Model- 1

SFC 407 Turbo

Model- 2

SFC 407 CNG

Model- 3 Specially made for the Delhi market after the Supreme Court ruling.

Objective Of study

Objective of the research define the direction in which we have to proceeds, what was purpose of the study, why are we going for the research or what we want to achieve through research. In the present research there were two objectives on which the focused has been made they are as following:-

To have detailed knowledge about the LCV 407 truck in the market. To analyze the customer needs and expectation about the LCV 407 truck . To determine the awareness levels of customers regarding the brand TATA MOTRS and its products LCV 407 truck.

To give suggestions that the company could follow for marketing the product.

Production Growth in consumer-spending habits has reshaped the industry which has spurred an enormous cost advantage in manufacturing, research and development (R&D), skilled labour, software, and design, encouraging leading automakers to perceive India as a global player in this sector. Marked by consistent growth at a frantic pace, the automobile industry recorded production of a wide variety of vehicles including over 1.76 million passenger vehicles, 0.54 million of commercial vehicles, and over 8.52 million twoand-three wheelers (scooters, motor-cycles, mopeds, and three wheelers) - in 200708. Spurred on the continuous increase in the consumer demand for automobiles, production has continued to grow in the current fiscal year (200809). Vehicle production grew by 8.78 per cent during AprilMay 2008, over the corresponding period last year. Sales Spurred by a huge demand due to increasing purchasing power, new product launches, coupled with attractive finance schemes and booming exports, automobile sales has been growing at a frenetic pace. According to SIAM, the Commercial Vehicles segment grew by 4.07 per cent over the same period in 200607. Light Commercial Vehicles recorded a growth of 12.29 per cent. The exports in this category increased by 19.10 per cent in 200708.

Chapter- 2
RESEARCH METHODOLOGY

2.1- Research Methodology

What is research? Research can be defined as the search for knowledge, or as any systematic investigation, to establish novel facts, solve new or existing problems, prove new ideas, or develop new theories, usually using a scientific method. The primary purpose for basic research (as opposed to applied research) is discovering, interpreting, and the development of methods and systems for the advancement of human knowledge on a wide variety of scientific matters of our world and the universe. Scientific research relies on the application of the scientific method, a harnessing of curiosity. This research provides scientific information and theories for the explanation of the nature and the properties of the world around us. It makes practical applications possible. Scientific research is funded by public authorities, by charitable organizations and by private groups, including many companies. Scientific research can be subdivided into different classifications according to their academic and application disciplines. Artistic research, also seen as 'practice-based research', can take form when creative works are considered both the research and the object of research itself. It is the debatable body of thought which offers an alternative to purely scientific methods in research in its search for knowledge and truth. Historical research is embodied in the historical method. Historians use primary sources and other evidence to systematically investigate a topic, and then to write histories in the form of accounts of the past.

The phrase my research is also used loosely to describe a person's entire collection of information about a particular subject. How Research Works? Like every system of this world, research also follow certain rules and take the help of certain organized procedures in order to get the intended result. In a word, a research works on its methods to serve its true purpose in any area of the knowledge domains. So, for working of a research project, you need to approach your study area in a systematic way, which is also recognized and familiar with the rest of the world-what I mean by this is that your research method must be recognized by all over the world or at least by the majority of the scientific community. What is the value of Research? 1. Every research works either identify new opportunities for us or give us novel ideas. 2. Research helps us to diagnosing any known problems or opportunities; 3. Help us to establish a standard of taking action on any chosen area of the knowledge domain. 4. Evaluate and develop the current technologies and systems.

Types and Methods of Research Every Research needs lots of dedication from the researchers part-the amount of dedication mainly depends on the subject matter of the research. Before undertaking any research in any subject areas one must be sure about the intended purpose of the research-this purpose determines what type of research one is going to undertake. Any scientific research may fall into the following three broadly categories: Exploratory research-This type of research may generate any novel idea in the domain of knowledge. It is primarily done for the purpose of finding anything new in any subject arena and always tries to shed some light in the unknown domain of knowledge. This kind of research also Help us to generate new discipline in sciences and help us to identify problems of those particular research areas. Constructive research- This is mainly done by many technological corporate in order to find new/alternative solutions to any particular crisis or problems. For example-renewable energy research or development of the capacity of optical fiber may fall into this category of research. Empirical research-This is very impressive observational type of research, where one observes or test on real-life data or analysis the pattern of some specific events in order to identify the nature or the class of trend that specific phenomenon maintains. Based on the test result, researchers try to draw lines in order to predict the result of that type of incidents with certain level of confidence

Methodology:

1. The methodology adopted for the research study is to gather primary data from the customer and analyze that to get valuable insights about market perceptions, customer buying preferences and comparison between various products available in this category. 2. An interview was conducted with the financers to gather their view on the market.

Sample:

1. For customer survey the sample size was 200 and was distributed over NCR and East Delhi region. 2. Executives of top three financers were interview, namely Tata Motor Finance, ICICI Bank and HDFC Bank.

Data collection procedure: 1. The procedure adopted for gathering primary data from the customers is by using a questionnaire which will ask close ended with multiple choices. Some questions were also on rating scale. As the sampled audience was mostly illiterate we decided to stick with easy to understand multiple choice questions. The questionnaire designed included in the Appendix. 2. Financer interview had all open ended questions because the objective was to gauge their opinions and get insights into their operations. The questions were also designed to

discover problem areas and possible future course to action. The interview questionnaire is included in Appendix Data analysis: The data gathered from the questionnaire of 200 respondents is quantitatively analyzed using Microsoft Excel. The open ended questions give customers insights which are analyzed to give suggestions to increase the products market share.

Expected output: The expected output is in the form of quantitative and qualitative information about customers buying preferences, our product and its competitors to suggest recommendations.

Research instrument:-

The present study was conducted using a questionnaire designed for the study. The questionnaire employed was structured and undisguised and almost all the questions were closed ended. The purpose of adopting structured and undisguised questionnaire was that such a questionnaire is easy to administer, tabulate and analyze. Even during the pilot study it was observed that respondents felt no difficult in answering to the questions given in the questionnaire. Question were asked in simple language use of jargons was avoided to the maximum extent so that inaccuracy and errors could be kept at the barest minimum level.

Time Frame:

Title Orientation, Understanding the project and Research Design

Wk1 Wk2 Wk3 Wk4 Wk5 Wk6 Wk7 Wk8

Survey of NCR region

Reassessment of project

Survey of East Delhi region

Interviewing financers

Preparation of final report

Time Frame

Survey of NCR region: Area Noida Faridabad Gurgaon Ghaziabad Number of days 3 2 2 3

Time Frame

Survey of East Delhi region: Area Geeta Colony Shahadra UP Border Seemapuri Number of days 2 3 4 1

Time Frame

2.2- Problem Definition:

DEVELOPING MARKETING STRATEGY FOR 4 TONNER IN DELHI

Tata 407 is an old product of TML which is showing negative growth in sales for past few years

Identify customer needs Identify how product can be marketed better

Problem Formulation:

Tata Motors 407 is the market leader in its segment in Delhi region. It has existed in the market for more than 20 yrs and has been the prime product for the company during this time. This product has benefited immensely from the special laws governing vehicular movement in Delhi.

With increased competition the sales of this product has been steadily decreasing over the past few year. This study was undertaken with the aim to develop strategies to increase the sales and also to understand the factors behind recent slump and to devise ways to have continuous growth of this product over sustained periods.

Structure of Project:

Study product and its main features Study competitor product

Customer Survey analysis

Financer interview analysis

Findings and recommendations

Structure of project

Limitations

Questionnaire used for data collection are subject to errors. Sample taken was small. We cannot generalize the findings for the whole company or the industry.

Unwillingness to respond by top management officials owing to their busy schedule. Inability of some of the customers to answer as they could not understand the questions asked.

I could not get the opportunity to go for each & every detail on my own as I was not the part of the organization.

Chapter -3
DESCRIPTIVE WORK ON SUBTOPIC OF STUDY

What is marketing strategy?

Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives. Plans and objectives are generally tested for measurable results. Commonly, marketing strategies are developed as multi-year plans, with a tactical plan detailing specific actions to be accomplished in the current year. Time horizons covered by the marketing plan vary by company, by industry, and by nation, however, time horizons are becoming shorter as the speed of change in the environment increases. Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned. Marketing strategy involves careful scanning of the internal and external environments. Internal environmental factors include the marketing mix, plus performance analysis and strategic constraints. External environmental factors include customer analysis, competitor analysis, target market analysis, as well as evaluation of any elements of the technological, economic, cultural or political/legal environment likely to impact success. A key component of marketing strategy is often to keep marketing in line with a company's overarching mission statement. Besides SWOT analysis, portfolio analyses such as the GE/McKinsey matrix or COPE analysis can be performed to determine the strategic focus. Once a thorough environmental scan is complete, a strategic plan can be constructed to identify business alternatives, establish challenging goals, determine the optimal marketing mix to attain these goals, and detail implementation. A final step in developing a marketing strategy is to

create a plan to monitor progress and a set of contingencies if problems arise in the implementation of the plan.

Marketing strategies may differ depending on the unique situation of the individual business. However there are a number of ways of categorizing some generic strategies. A brief description of the most common categorizing schemes is presented below:

Strategies based on market dominance - In this scheme, firms are classified based on their market share or dominance of an industry. Typically there are four types of market dominance strategies:

Leader Challenger Follower Eicher

Porter generic strategies - strategy on the dimensions of strategic scope and strategic strength. Strategic scope refers to the market penetration while strategic strength refers to the firms sustainable competitive advantage. The generic strategy framework (porter 1984) comprises two alternatives each with two alternative scopes. These are Differentiation and low-cost leadership each with a dimension of Focus-broad or narrow.

Product differentiation (broad) Cost leadership (broad) Market segmentation (narrow)

Innovation strategies This deals with the firm's rate of the new product development and business model innovation. It asks whether the company is on the cutting edge of technology and business innovation. There are three types:

Pioneers Close followers Late followers

Growth strategies In this scheme we ask the question, How should the firm grow?. There are a number of different ways of answering that question, but the most common gives four answers:

Horizontal integration Vertical integration Diversification Intensification

A more detailed scheme uses the categories:

Prospector Analyzer Defender Reactor Marketing warfare strategies - This scheme draws parallels between marketing strategies and military strategies.

Strategic model
Marketing participants often employ strategic models and tools to analyze marketing decisions. When beginning a strategic analysis, the 3Cs can be employed to get a broad understanding of the strategic environment. An Answer off Matrix is also often used to convey an organization's strategic positioning of their marketing mix. The 4Ps can then be utilized to form a marketing plan to pursue a defined strategy. There are many companies especially those in the Consumer Package Goods (CPG) market that adopt the theory of running their business centered around Consumer, Shopper & Retailer needs. Their Marketing departments spend quality time looking for "Growth Opportunities" in their categories by identifying relevant insights (both mindsets and behaviors) on their target Consumers, Shoppers and retail partners. These Growth Opportunities emerge from changes in market trends, segment dynamics changing and also internal brand or operational business challenges. The Marketing team can then prioritize these Growth Opportunities and begin to develop strategies to exploit the opportunities that could include new or adapted products, services as well as changes to the 7Ps.

Real-life marketing
Real-life marketing primarily revolves around the application of a great deal of common-sense; dealing with a limited number of factors, in an environment of imperfect information and limited resources complicated by uncertainty and tight timescales. Use of classical marketing techniques, in these circumstances, is inevitably partial and uneven. Thus, for example, many new products will emerge from irrational processes and the rational development process may be used (if at all) to screen out the worst non-runners. The design of the advertising, and the packaging, will be the output of the creative minds employed; which management will then screen, often by 'gut-reaction', to ensure that it is reasonable. For most of their time, marketing managers use intuition and experience to analyze and handle the complex, and unique, situations being faced; without easy reference to theory. This will often be 'flying by the seat of the pants', or 'gut-reaction'; where the overall strategy, coupled with the knowledge of the customer which has been absorbed almost by a process of osmosis, will determine the quality of the marketing employed. This, almost instinctive management, is what is sometimes called 'coarse marketing'; to distinguish it from the refined, aesthetically pleasing, form favored by the theorists.

THE ORGANIZATION STRUCTURE:

Organization Structure of Tata Motors

The company generally follows a matrix structure where the organization is managed product wise as well as region wise. Here the MD of the company takes care of all the plant and a separate department of sales and marketing. Now the sales and marketing department is structured on the basis of products as well as on the basis of region. There are 4 regional managers who have some business managers under them. Now these business managers have Product Area Managers or PAM which take care of individual segments of vehicles.

Sales Process Flow-Chart:

Field Sales Executive

Call / Walk in

Financer

Financer and Sales executive officer visit the customer

Check and procedure the requisite documents.

Place the order

Money released by the Financer on completion of formalities

Sales process flow chart

Mergers and Acquisition (M&A), Joint Venture (JV)

An upbeat Indian economy, corporate cash and friendly government policies have contributed to the new M&A trend. Indian companies are now aggressively looking at North American, European markets and Asia to spread their wings and become global players in this sector. Indian automotive industry now has the dynamics of an open market. Many JVs have been set up in India with foreign collaboration, both technical and financial with leading global manufacturers. This has led to the recent spurt in the demand for new automobile models in India where over 20 models have been launched in only passenger vehicle segment over the past 12 months.

Tata Motors has acquired Jaguar and Land Rover of US-based Ford Motors. DaimlerChrysler AG of Germany has taken a call option to buy 26 per cent in Jalandharbased bus body builder Sutlej Motors.

German auto major Daimler will hold 60 per cent stake in its commercial vehicle joint venture in India with the Hero group holding the remaining 40 per cent, with a total investment of about US$ 870.5 million.

Tata Motors, have ventured into Saudi Arabia's passenger car market with the launch of its three car models-- Tata Indica, Tata Indigo and Tata Marina.

Tata Motors acquired a Nissan facility in Pretoria, S. Africa which would allow it to roll out Tata vehicle for both South African and European market.

The Indian commercial vehicle segment has been witnessing a spurt in joint venture activity between domestic and foreign players. Significant manufacturing pacts in this segment include Hero Groups joint venture with Daimler AG, Ashok Leylands tie-up with Nissan, and Eicher Motors partnership with Volvo. Government Policies Budget Measures

Secondary and higher education cess @ 1% of the aggregate of duties of excise has been imposed on excisable goods including automobiles. This would be in addition to existing education cess of 2% imposed in budget 2004

A weighted deduction of 150% for expenditure relating to in-house research and development to be extended to five more years

Hike in the dividend distribution tax from the current 12.5% to 15% Farm credit outlay to be increased by Rs 500 bn and 50 lakh new farmers to be added to the banking system

Budget Impact

The extension of concession for weighted deduction of 150% for expenditure relating to in-house research and development will encourage companies to invest in meeting new safety and emission standards and it will also enable them to compete globally.

Increase in education cess and dividend distribution tax rates will have a small impact on the profits of corporate and might even lead to lesser dividends in the hands of shareholders.

With 50 lakh more farmers to be brought under the banking system, demand for tractors and associated commercial vehicles might receive a further boost.

Sector Outlook With no significant proposals being made, the long-term fundamentals of the auto industry will witness no change. Higher GDP growth rates being targeted for the 11th plan and increased emphasis on infrastructure, the prospects for this sector are bright. For the sector in the near future: Key Market Drivers Growth in Economic Activity Road Network Development Wide variety and easy availability of financing options. High sensitivity to Fuel prices Government Policies

Key Trends
Migration from erstwhile Basic MCV Workhorse to Hub & Spoke Model Increasing Power to weight ratio Increasing customer emphasis on aesthetics and comfort. Arrival of Global Players Divergence in Truck and Bus Technology Focus on Fully Built Transport Solution

Research and Development:

The secret of companys 50 years sustained growth lies in the strong emphasis on its R&D facility, which is highly customer centric. With 1,400 engineers and scientists, the company's Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The company today has R&D centers in Pune, Jamshedpur & Lucknow, in India and internationally in South Korea, Spain, and the UK. The pace of new product development has quickened. Tata Motors developed and produced Indias first indigenous passenger vehicle in form of Indica, which has gone on to sell more than one million units. January 2008 also witnessed a great technological and manufacturing breakthrough, when Tata Nano the 1 lac car was launched by Mr. Ratan Tata. In commercial vehicles, Tata Motors created a new segment by launching the Tata Ace, India's first indigenously developed mini-truck. One of major fall outs of Daewoo acquisition has been the access to high technology in higher end commercial vehicle engines. All acquisitions are bringing new technologies to the Tata stable. The years to come will see the introduction of several other innovative vehicles, all rooted in emerging customer needs and market dynamics. Besides product development, R&D is also focusing on technologies in alternative fuels. With the drop in world oil reserves and subsequent rise in oil prices, alternate fuel technology is becoming crucially important. It might emerge as the differentiating factors in the survival rate of automobile industry. India is committed to improvement in the emission norms for all vehicles; Tata being industry leader is pioneering in environment friendly technology. An Through its subsidiaries, the company is engaged in

engineering and automotive solutions, construction equipment manufacturing, auto finance, automotive vehicle components manufacturing and supply chain activities, machine tools and factory automation solutions, high-precision tooling and plastic and electronic components for automotive and computer applications, and automotive retailing and service operations. BUSINESS UNITS: Tata Motors Ltd. works as two separate business units:a) Commercial Vehicle Business Unit- Tata Motors is a leader in this segment which caters to the needs of commercial applications with vehicles such as trucks, tippers, trailers, buses, defense vehicles etc. These vehicles have customers which are transporters, businessmen, constructors, defense organizations etc and they are people who are concerned about the performance of the vehicle more than how the vehicle looks. These people are concerned about the payload, mileage, and finance options available before going for the vehicle. Tata Motors boasts of vehicles in the sub-1 tonne to 40 tonne GVW category. The commercial vehicle unit also boasts of 375 dealerships, more than 1000 sales and service centers. Tata Motors has come up with new initiatives in the recent past which include Reconditioning service, AMC and 24 hour customer assistance centre. b) Passenger Vehicle Business Unit- Tata Motors forayed into this segment a few years back and since then have taken major strides in the segment. The company is coming up with new vehicles and is gaining the market share at a fast pace. So and so that it has become a threat to the already established players within some years of its arrival.

Tata Motors had 18% of sale growth in June as compared with other automobiles industry

GLOBALIZATION OF TATA MOTORS: STRATEGIC PLAN FOR THE FUTURE

Tata Motors produces vehicles both in the Light Commercial Vehicles (LCV) and the Medium and Heavy Commercial Vehicles (M and HCV) segments. It faces higher competition in the LCV segment, where its Tata ACE has been a huge success. Internationalization forms a key component of Tata Motor's strategy and it has successfully entered countries having a demand similar to India like South Africa, Thailand and Argentina, mainly through acquisitions and joint ventures. It needs to improve its product reliability, service network and channel reach in order to maintain and replicate this success in other markets. Some of the recommendations for Tata Motors are exploring mass customization options in the Small Commercial Vehicle (SCV) segment, improving brand reputation and technology appropriation to bring out a world class ultra-HCV segment. Tata Motors is currently India's largest automobile company with revenues of $7.2 billion in 2006-07. It is by far the leader in commercial vehicles and the second largest player in the passenger vehicles market with winning products in the compact, midsize car and utility vehicle segments. Employing around 23000 people and headquartered in Mumbai, Tata Motors became the first company from India's engineering sector to be listed in the NYSE in September 20041. While currently about 18% of its revenues come from international business, the company's objective is to expand its international business, both through organic and inorganic growth routes. A brief examination of the truck industry in India using Porter's analysis helps us understand the threats that Tata Motors faces.

Overview of the Truck Industry in India The truck market in India comprises the light trucks (LCV) and the medium and heavy trucks segments (M and HCV), of which the M and HCV segment constitutes nearly 78% of the total Indian truck market. a) Light Commercial Vehicles (LCV) 2 The market for light trucks is composed of pickups, vans and coaches weighting up to 3.5 tonnes. This segment has exhibited a consistent growth rate of over 20% in the past 5 years. This growth is expected to continue with the launch of Tata Ace by Tata Motors and similar plans by other players like Mahindra & Mahindra, Eicher, etc. b) Medium and Heavy Commercial Vehicles (M and HCV) 3 The medium and heavy trucks include commercial vehicles, heavy buses and coaches weighing 3.51-16 tonnes. This segment has stabilized and is expected to grow at 10% over the next 5 years. The major players in this segment include Tata Motors and Ashok Leyland which account for more than 85% of the market. Competitive Threats in the Industry The Porter's analysis for the LCV and the M and HCV segments show strikingly similar results except for the threat of new entrants. In the LCV market there exist a small number of large companies between whom there is a high degree of competition. To gain market share companies are focused on innovation and strong marketing strategies. The companies are usually not diversified beyond automotive manufacture. As a result, if the automotive sector is in a downturn, it could raise exit barriers. Hence the overall rivalry is strong in this market. In the face of such rivalry, let us consider the financial performance of Tata Motors.

Financial Performance of Tata Motors Over the years the conpany has performed exceptionally well financially inspite of the cyclical nature of the industry. A critical analysis of the financial statements provides us with the following insights.

1. The issue of Cyclicality is plaguing the automotive sector and the future outlook in India is not great considering the robust performance of the past 3 years. Tata Motors has countered this by increasing the share of exports in the sources of revenue. 2. Excess debt has led to a high Debt to Equity ratio and this is not good news as the company plans to go for further capital expansion. Also the percentage of cash flow used for CAPEX is increasing as shown in Exhibit 1.

Exhibit 1 Percentage of cash inflow used for CAPEX

3. Rising interest rates in the economy is a cause of concern as it dampens both capital investments and softens the domestic demand. 4. Positives: The cash flow from operations has grown 11 times compared to last year despite a huge CAPEX. Tata Ace single handedly raised the market share of Tata Motors in LCV segment by 5%. The operating leverage for Tata Motors is higher due to the high fixed costs of CAPEX. But still the overall financial leverage of Tata Motors is well under control when compared to Ashok Leyland.

5.

Internationalization

Tata motors has decided to focus on a narrow base of 14-15 countries where market conditions are similar to that of India

As a part of the company's new internationalization strategy, the company has decided to focus on a narrow base of 14-15 countries where market conditions are similar to that of India. In these countries, Tata Motors now has dedicated manufacturing facilities, marketing teams and sales teams. The idea is to have self sustained operations in this narrow band of countries. The company evaluates locations on the basis of market opportunities and labour skills. In the framework pertaining to international expansion strategies, Tata Motors can be identified as an Extender, and is focusing on expanding into markets similar to those of the home base, using competencies developed at home (see Exhibit 2).

Exhibit 2 Where is Tata Motors now and How to Globalize?

Korean Operations Tata Motors entered the advanced Korean Market by acquiring Daewoo, with which it has tremendous synergies in terms of product strategy and R & D. Tata Motors has planned to use this merger and leverage the technology for developing a World Truck for India and international markets. South African Operations In the export market, Tata Motors moved from a fragmented approach to specific markets, chosen in terms of consumer behavior, distribution networks, supply chain, etc. and identified South Africa as one of the best markets. The sales in this region are about 15,000 units4. This is a significant improvement over what Tata Motors was cumulatively exporting (8000 units) before adopting its new internationalization strategy. Thailand Operations Tata Motors formed a joint venture with Thonburi Automotive Plant to enter Thailand. Thailand is the second most competitive market for pickups, and the new pickup trucks developed here will be sold in both domestic and export markets. Latin American Operations Tata Motors has taken its alliance with Fiat to produce a new one-tonne pick-up truck, for Latin American markets from Fiat's facility in Argentina. This arrangement will also see Tata Motors forming a joint venture with a subsidiary of Iveco, the commercial vehicle division on Fiat, to set up a distribution network. Now that Tata Motors has established a sustainable model in some countries, its main challenge is to replicate this model in other countries as well.

How to replicate this strategy for other markets? Sustainable competitive advantage lies not in one, but a combination of multiple resources, each of which individually need not necessarily be the best, but in overall weighted average terms, presents the best solution. For Tata Motors, the combination of resources providing it competitive superiority on a weighted average basis includes (see Exhibit 3):

1. Product Reliability 2. Service Network 3. Channel Reach

Exhibit 3 Three-way Resource Based View In terms of product reliability, Tata Motors offers products of reasonably high standards. However, foreign players like Volvo and even local competitors like Ashok Leyland arguably offer products that are far more refined. But this is more than compensated by a dependable service network and extensive channel reach. Tata's service and distributor network is by far the most extensive of any player in the trucks industry. Hence in overall weighted average terms, Tata Motors still has a winning proposition.

In the next section, we provide recommendations that can take this winning proposition even further.

Recommendation Matrix
Based on a close scrutiny of the resource based view of Tata Motors and the challenges it faces, we propose a recommendation matrix arranged along three broad dimensions - Tangible, Intangible and Capabilities (see Exhibit 4).

Exhibit 4 Three Dimensional Recommendation Matrix

Tangible
The strategies in this domain are primarily directed at sustaining Tata Motors' first mover advantage with respect to its offering in the Small Commercial Vehicle segment ACE .
Strategy Sustaining the First Mover's Advantage of ACE Tata Motors has an unparalleled network of dealers and service stations across the country for Medium and Heavy Commercial Vehicles (M and HCV). However most of National Footprint these service stations are along inter-city routes. It would need to replicate this network at intra-city level for its hugely successful SCV - the Tata ACE. For this Tata Motors can liaise with small garages, train them and certify them as 'Tata Authorized Service Station'. Tata Motors has positioned ACE as a multipurpose vehicle (MPV). This is where Tata Motors can learn from the Maruti small car strategy that posits that 'there is no such thing as a small car buyer'. Hence Tata Motors should Product endeavor to move form a multi-purpose positioning to a Portfolio mass customization positioning for ACE, wherein multiple variants are offered on the ACE platform, each uniquely suited for a specific application - such as tippers, long base trawlers, milk carriers.

Intangible
In intangible terms, Tata Motors needs to bolster its brand loyalty, by providing a unique customer experience.
Strategy Intangible Assets

In commercial vehicles industry, the uniqueness of customer experience is largely driven by the efficacy of the 'Support' framework. If your car breaks down, you can take a taxi to office. But that's not so for a transport operator. For him, his vehicle is at the heart of his business and hence responsive after-sales Unique Customer Experience support is critical. Minimizing downtime calls for a service network that is highly responsive and easily accessible. Besides, Tata Motors should also

1. Consider introducing mobile service units for Tata ACE that can respond to customer calls anywhere within a given city. 2. Start treating "Services" as a dedicated profit center. Towards this end, the company should "productize" annual maintenance contracts.

Brand Reputation

Building a reputation will help sustain sales, without having to engage in discount sales.

Capabilities There are two broad capabilities that Tata Motors should seek to acquire. Strategy Capability Acquisition Technology Appropriation is the key to Tata Motor's ambitions to offer products with engines larger than 210 HP. As the share of ultra heavy commercial vehicles grows, the company will Technology Appropriation need to face up to technologically superior players like Volvo. Here, Tata will have to carefully spearhead its 'World Truck' program by carefully coordinating technology appropriation from its numerous international technology partners, notably Daewoo, Fiat and Hispano. Tata Motors has made significant investments in IT systems to network its countrywide service network. This helps them maintain very high spares parts availability at their service stations Robust Supply and minimize downtime. In the years to come, it Chain would need to include their SCV service station within this framework. This will however be a big challenge, since these service stations would largely be managed by illiterate and not-so-tech

Contingency Plans

1. Mass customization has its own shortcomings. Firstly, it puts a disproportionate amount of strain on the company's supply chain. And this is a wasted effort in case the demand patterns aren't properly understood. Hence we propose that the sales of the customized vehicles be closely tracked and in case sales achieved within a reasonable timeframe do not merit the additional resource outlay, then the company should revert to the original multipurpose positioning. 2. In the background of rupee appreciation, exports will become costly. Hence it is prudent to open integrated production plants in other countries rather than just concentrating on exports. A few pointers on what Tata Motors ought not to do are captured below:

1. Compete on price because proportion of individual players is low. Instead differentiate through service. 2. Engage in rapid capital expansion given the high debt to equity ratio. Use ring fencing judiciously. 3. Focus on rapid acquisitions and instead focus on consolidation in the foreign market. 4. Lose focus on the 'Value for Money' positioning, especially in the soon to be launched offering in the Ultra Heavy Commercial Vehicle segment

Conclusion Tata Motors has never had it so good. Today the company is the undisputed market leader in the commercial vehicles industry in India and is gradually emerging as one of the key players internationally too. It has been forging ahead on a number of fronts in an attempt to further entrench its position as a market leader. In the SCV segment, the company has witnessed unprecedented success with the launch of the pioneering Tata ACE. In the M and HCV segment, the company has been taking determined steps to further consolidate its position. The company enjoys a number of key strengths that enable it to present a unique value proposition to its customers. However this success is far from being a given. The company must focus on combining its unique strengths, as it endeavors to replicate its recent successes in new segments and across new geographies. Apart from product reliability, the most important determinant of future success would the company's ability to bolster its support framework. If the company gets it right, the spoils could indeed be breathtaking. Not only will that catapult the company to the forefront of creating a unique customer experience, but also help spawn altogether new revenue streams. The future presents challenges and opportunities for the company in equal measure both domestically and internationally. While pitfalls are many, Tata Motors looks well positioned indeed to capitalize on these opportunities and take on the world.

SWOT Analysis:

Trusted product and high brand value Low cost advantage Easy availability of spare parts

TATA 407

Low mileage Poor pickup

Tie ups with financers Emerging hubspoke model

New emerging players in sub 4 ton category Cannibalization by TATA ACE Aggressive promotion by EM Local industry migration

SWOT analysis

Environment analysis

On environmental front we found that: Change in regulations like introduction of Bharat Stage III reforms from April 2010 will alter the market dynamics drastically Stringent emission regulations leading to shifting of local small scale industry to areas outside NCR, this is adversely affecting the transporters and hence the demand for trucks.

Chapter- 4 DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS ANND INTERPRETATION

Customer Survey

In this stage of study fleet owners, truck drivers and employees employed at transport companies who owned/operated at least one 4 tonner truck were interviewed. The survey sample was taken from NCR and East Delhi. Based on this survey of 200 respondents we were able to gather the following data.

1. Market Share

Trucks

Tata Motors Eicher Swaraj Mazda Others

Market share

As can be seen from the pie chart (above) TML has nearly 71% market share. This confirms TMLs market leader position in LCV and specially the 4 tonner category. EM has nearly 25% market share, this establishes EM as the market challenger. EM has rapidly increased its market share owning to its strong presence in the strategically important Faridabad region and Noida region. TML on the other hand is very strong in the East Delhi and UP border region. Other companies like Swaraj Mazda, DCM have a very marginal presence is this area.

2. Sale segments 3. Among Tata truck owners about 25% have bought used trucks. This is a very large segment of buyers which company is losing out on.

8% 25% 67%

TATA MOTORS TRUCKS NEW USED BOTH

Sale segments

4. Resale value

100 80 60 40 20 0 0-20 21-40 41-60 61-80 81-100 TM Eicher SM

Resale Value

Compared to EMs truck TML has much higher resale value. This is a very important factor and even an important decision criterion while making a truck purchase. This is indicative of not only better quality but also the wide spread service network and easy availability of spare parts.

5. Product ratings

PICKUP 5 SERVICE 4 3 2 1 COMFORTS 0 COST of MAINTAINANCE TML EM SM MILEAGE

HANDLING

SPARE PARTS AVAILABILITY SAFETY

Product ratings During the survey we also tried to get ratings from truck owners and users to get a better idea of the market perception of our product and the competitors products. Since TML, EM and SM are the three largest selling brands in Delhi region we limited ourselves to only these brands. EM scores over TML in both pick up and mileage. This is turning out to be a very major drawback of Tata 407. As the competition in market between transporters is getting fiercer such cost cutting measures will become more important for our customer. Drivers are now days are playing a much more vital role in decision making. So comfort becomes an important parameter to compare products in this segment. A more comfortable

driver can also run more number of trips, so the owners are getting more conscious about getting comfortable vehicles. Thou figures show only a small difference between TML and EM trucks, the sentiment in market is much more biased towards EM. Even on driving comfort parameter EM does better than TML. Most of the truck drivers interviewed on being asked about handling responded by saying Eicher Toh Maruti Jaise Hai, Tata Majboot Hai Par Ambassador Jaisi Chalne Kohai. Safety, cost of maintenance and spare parts availability are very important criterion and in any other region would make a big difference but not so in Delhi. Since such small tonnage vehicles primarily run within city limits and adjoining areas the need for a wide network does not arise. So on these core competencies of TML ,in spite of getting high ratings, the company is not reaping the potential advantage it could.

6. Ranking of parameters considered while purchasing a truck

This survey also aimed to determine the important decision making criterions for a potential customer. The listed parameters managed the following rankings.

0 1

Rank

2 3 4 5 6 7

Ranking As can been seen from the graph above the three most important criterions while purchasing a truck are all related to operating and purchasing costs. This reiterates the fact that in spite of many changes in the profile of Indian customer, cost is still the most important factor while making a purchasing decision.

On further analysis it was found that FTUs rank price as the most important criterion. This is understandable as this segment while making a purchase is most concerned with initial upfront costs. Lower cost also translates into lower loan amount and thus smaller EMIs.

Established fleet owners on the other hand are more concerned with the operating costs. With increasing diesel prices, mileage becomes a very important parameter.

Cost of maintenance is the most important parameter. In the ratings graph (figure -11) TML trucks fare better then EM trucks on this parameter primarily on back of easy availability of repairman, good network and cheap locally made spares. But many respondents have complained that TML trucks have a higher servicing/km cost.

7. Satisfaction Index
Based on the rankings and the ratings calculated earlier, we are able to calculate satisfaction graph for all the parameters. This graph was calculated by giving higher weight age to more important decision criterion and then taking the product of this weightage and rating for this parameter on the five point scale to arrive at the satisfaction graph.

35

30

25

20 TML EM 15 SM

10

0 Spare parts availability Power Brand Name Resale value Mileage Price Cost of maintainace

Satisfaction index

6. During the course of survey we were able to establish the importance of financers in the final decision making. To gauge this we can see the following graph showing the percentage of customers who took loan while purchasing the truck.

3%

Cash Loan
97%

Loan vs Cash As can be seen from the graph a staggering 97.45% of respondents financed their purchases through various financers. This along with growth in financers agents network and penetration has lead to change in the market dynamics. Now the Financer and the agents plays a more vital role in the decision making process.

8. In our survey we have tried to determine the share of each of the financers.
1. Tata Motor Finance only finances vehicles of Tata Motors. 2. There is allegation of preferential treatment by most of financers towards EM. Details have been discussed ahead.

FINANCERS 9% 13% 41% TATA MOTORS FINANCE LTD HDFC BANK ICICI BANK 24% 13% PRIVATE FINANCERS OTHERS

Financers market share The graph establishes the high market share of TMF in the Delhi market even against established players like ICICI even with its handicaps. The reasons have been discussed next section.

Financers Survey
More than 97.4 % of respondents get their purchases financed by financers. This shows the relevance of financers to customers in making the critical purchasing decision. In Delhi region, the major finance players are as follows: TATA Motor finance ICICI bank HDFC bank Chola Mandalam Sundaram finance GE Money Private Financers

The contact between customer and financer is developed through:

Customer having a financer preference approaching the said financer. Financers agent establishing the contact. Leads are provided by companies or dealers to financers to contact prospective clients.

This customer gets divided into one of the following categories by the financial institutions depending upon the kind of fleet of commercial vehicles, they have: First time users (FTU)

These are the people who are buying a commercial vehicle for the first time and have not taken a loan for any type of commercial vehicle in the past.

Banks and financial institutions are reluctant to give loans to such clients because they dont have a record with the company

These clients also lack the documentation necessary for the loans. They usually dont have any property for collateral or any guarantor to pledge for them.

Its difficult to make sure that they will pay all their installments on time. As an example HDFC bank according to its policy does not provide loans to FTUs.

An exception to this is those people who purchase trucks for their own needs. An example of this would be and scrap dealer who needs this truck to transport the scrap.

Maximum in number and reason for most of banks non-performing assets. Dealt through agents.

Small road transport owners (SRTO)

They are the owners of small transport companies that have a fleet of commercial vehicles in the range of 1 to 9.

These are better off then FTU in the fact that they already have experience in this market

They have substantial asset base to act as collateral for the loan.

Documentation for such clients is much easier

Medium fleet owners (MFO)

They are the owners of small transport companies that have a fleet of commercial vehicles in the range of 10 to 49.

They are treated as strategically important customers Negligible threat of default Generally handled at relationship manager level

Large fleet owners (LFO)

They are the owners of small transport companies that have a fleet of commercial vehicles more than 50 and could easily go upto 500-1000.

They are the premium segment No hassles in getting a loan. Most of the banks and financial institutions have appointed separate Relationship managers (RM) to handle such clients.

Generally this segment constitutes large industries or logistics companies. For example LG India Ltd., Vishal Mega Mart etc.

The basic structure of employee teams that handle commercial vehicle loans is as follows: RM DST DSA

Every RM has a few DSTs under him who in turn has a few DSAs under him. DSAs are the sales executives that go the transport companies on a regular basis and persuade the customers to take a loan from their company for the commercial vehicle. RMs are segmented along regions as well as sectors as per the company policies, but segmentation along regions is more common. DSAs are the people who visit clients and interact with them.

FINANCERS 9% 13% 41% TATA MOTORS FINANCE LTD HDFC BANK ICICI BANK 13% PRIVATE FINANCERS

24%

Financer share Tata Motor Finance

As we can see from the chart above that 41% of the customers take loans from TMF which is a major chunk. This is particularly impressive considering the fact that TMF only issues loans to TML vehicles.

It is believed that having Tatas own dedicated finance company will help them get more customers and enrich the customer experience.

TML sends most of its leads to TMF, so in effect TMF is riding on the sales team of TML.

TMF has a relatively small sales team of its own as compared to other financers. In effect this translates into the fact that they are not able to bring in many sales leads on their own

TMF has TA at the TSS Delhi office; this helps TMF customers to clear their loans much faster. This is a big advantage for TMF.

ICICI Bank

ICICI has 6 RMs, under each RM there are 4 DSTs and each DST has 4-5 DSAs on an average. This makes for a large sales force of nearly 120 sales executives.

Area wise Delhi is divided into 5 regions so each region on an average gets 20-25 sales executives with some overlapping areas.

East Delhi has a dedicated force of 25-30 executives from ICICI Bank.

HDFC

HDFC has 3 RMs, under each RM there are 2 DSTs and each DST has 4 DSAs on an average. This gives HDFC a sales force of 24-25 people.

HDFC relies more on walk in customers and leads through company/dealerships HDFC has a sales force of around 10-15 people covering the East Delhi area.

Private Financers These are private money lenders, mostly unregistered person/persons/institution They are the main source of loan for the FTUs Provide loan without documentation As many of the FTU fail to pay back loan, private financers seize their truck and resell them in the market. One of the major sellers of used trucks

Other Financers These include other financing bodies like smaller banks and NBFCs like Sundaram Finance, Cholamandalam, GE Money etc.

Grievances of Non-TMF financers A .The RMs at HDFC and ICICI have a perception that if a customer comes to a TSS office to buy a commercial vehicle; then TSS executives try to push the customer towards TMF even if the customer comes asking for other options or already has an arrangement with some other financer. On the other hand Eicher, which does not have any sister finance company, pushes its customers towards ICICI and HDFC. As a consequence ICICI bank and HDFC bank agents try to pitch in for EM. It has been established through the customer survey that the customer cant differentiate between company/dealership agents and the bank agents. So this acts as a multiplying effect for the sales force of EM. Also as the financers importance in decision making process has increased substantially over the past few years, TML is suffering the fallout of this unofficial alliance. B. In commercial vehicle business after a customers loan is approved he is issued a check

from the financing company. He then submits this cheque at the dealership/company. Further the dealership/company submit this cheque into their account. On completion of this process, once the money is deposited into TMLs bank account the customer is given his vehicle.

For TMF this process takes 2 days as TMF has a TA account within the TSS premises. For other financers this process on an average takes 7-8 days. Further delay of 2-3 days is usual, making the total process take more than 10 days. This translates into a loss for both the company and financer of 5-6 days per application.

Faster clearing makes TML agents prefer TMF but this creates resentment amongst other financers. The time loss also hurts them as this value turns significant at larger number of transactions. For example ICICI on an average clears about 400 loan applications for TML per year. This would mean an annual loss of nearly 2400 days worth of interest. C. All financial institutions calculate their earning from each venture on the basis of

IRR(internal rate of return). Major considerations which would affect the IRR for a company are:

Credit period Distribution of installments Number of installments Upfront Discount Margin money

EM shows a great deal of flexibility on these parameters which enables the financial institutions to register much higher IRR. Thus for any agent an EM deal is much more preferable. D. ICICI Bank had a TA account at TSS Delhi. This was a very beneficial arrangement for

both the entities involved. Since the closure of this account the number of deals flowing between both entities has gone down. Arrangements such as these could be a major differentiating factor for TML to recapture its lost market share.

CHAPTER-5
CONCLUSION AND SUGGESTION

CONCLUSION

Customer Survey a) Product lacks in the mileage and pickup parameters which are very important b) Drivers are unsatisfied with the driving comfort level. c) Improve the level of services provided at TSS. Large number of customers leading to fall in quality of service. d) Lack of adequate sales infrastructure in important areas like Faridabad, Noida e) Large market of used truck in which TML has no presence f) TML trucks have very high resale value. Indication of high level of product acceptance. g) Price an important criterion in buying trucks for FTUs h) Larger fleet owners more concerned with lower maintenance costs and high mileage i) Rise in prominence of financers in decision making process as depicted by the large percentage of loans taken. j) Customers cant differentiate between the sales force of a company or dealership or financer. k) New threat to this segment from sub- 4 ton vehicles such as Mahindras Champion, Tata ACE etc.

Financer Survey a) High relevance of financers in the decision making process b) Financers agents can act as sales force multipliers for any company if utilized properly c) Financers dont have a favorable impression of TSS d) Processing delay causing losses to both the parties e) EM being more flexible in approach is getting preference from all financers f) EM giving financing agents a cut from discounts thereby increasing its rapport with them and making use of sales multiplier effect g) Discontinuation of TA agreement hurting both TML and ICICI Bank.

SUGGESTION
From a Marketing Strategy point of view the 4Ps of marketing are the most important. Price: TML is already the leader in this category. By producing low cost product in this oligopoly market TML gains an invaluable advantage. It also insures that EM is made to price its products low as well. Product: TML trucks are time and market tested. But EM trucks incorporate many features (like more comfortable sitting, ease of driving) that make it very attractive. On many crucial parameters like mileage, pickup, better quality etc EM scores higher marks. TM product needs to work on this. Another factor to keep in mind is the environmental issues. With stricter norms continuously being introduced(BS III by April 2008) new product should also take care of this facet. Another possible area of product development is use of alternate fuels like Biodiesel. The reduction in operating cost may deal the death blow for the competitors. Promotion: Appropriate promotion channels should be used to shape and alter the customers view points. Many points which can be highlighted include TML trucks improved cabin body in terms of more comfort to the driver, new power steering etc. As awareness amongst transporters is very low about changes in product, regulations etc, TML should use these opportunities to generate goodwill for its product. Hindi newspapers, demonstration melas etc could be used. An example would be to make the transporters aware of the

impeding changes in emission regulations, so placing an information kiosk providing information about it as well as TML products in offering. Place : Need different strategies for different area. Regions within Delhi & NCR can be divided into two segments. Regions in which TML is the market leader. Regions in which TML has market share equal or less then its competitors 1) For regions in which TML is market leader a) Position defense : In effect TML should improve upon its weaknesses and should project its strengths to maintain its top position i) More advertisements to make the target customer aware of changes in the product, like introduction of power steering. ii) More frequent organization of free service camps to keep its loyal customers happy. iii) Improvement in post sales service. With impression in market being that EM provides better after sales service due their smaller client list it becomes very important for TML to improve its after sales service to attract new customers as well as retain previous customers.

2) For regions in which TML has market share equal or less then its competitors a) Counteroffensive Defense: Due to position superiority, market leader can hit back at the competitor to make it retreat. i) Aggressive sales pitch in areas where competitor is strong ii) Providing better services then the competitor like providing on the spot loans in collaboration with one of the financers iii) Make use of its larger portfolio to attract customers of competitors iv) Aggressive advertising to position our product as better than competitors. This may include conducting camps, touring TML loyal customers to interact with potential customers etc. b) Flank Strategy: i) Attack Faridabad and Noida areas to hit the home ground of competitor ii) Increase the price of vehicles in this area as competitors vehicles already cost much more; then use the extra revenue for advertising, giving higher discounts, commissions to finance agents so as to hit the support-lines of competitor. iii) Increased advertising spend through banners and demonstration melas is very important in these regions to capture the mind share of potential customers.

Recommendations:

Product development: To compete fairly with competitors TML needs to improve its product on Mileage Pickup Another potential area for development is use of alternate fuels such as biofuel. This will reduce the running cost of vehicle a major plus point from customers view point. Stronger sales teams in crucial areas of Faridabad and Noida. Counter-defense and Flank strategies should be employed as previously discussed Defensive strategies in East Delhi area like position defense need to be employed. More stress on after sales experience rather than only selling product. Advertising needs to be re-hauled to capture the mind share of potential customers. Make potential customers aware of changes in TML trucks. Comfort Driving ease Introduction of BS III from April 10. TML products in this category.

 More aggressively market SFC 407 CNG version as it meets both criterions of low operating cost and low emissions Selling refurbished trucks could be a new potential market. This could also work to improve TML trucks resale value and improve the impression of the company More aggressively re-launch and promote SFC 410 BS III. It should be positioned as the technology of the future. It can successfully compete with competitor products on pickup, comfort and driving ease. Collaborations with as many financers as possible on ways to reduce payment clearance time. This hurts both the companies financially as well as in terms of good will of customer. Re-introducing TA account of ICICI Bank would be a big step in this regard Similar arrangements should be sought out with other financers as well

Improve relations with financing companies and their agents Organizing social gathering to improve interaction and thus the collaboration between agents of company and financers Joint advertising campaigns can work to the benefit of both Commission for agents(financers) for bringing in new business/deals

Chapter- 6
BIBLIOGRAPHY

a. BOOK
1. Patley Norton. The Managers Guide to Comprehensive Marketing Strategies. Thoro good, London: 2005 2. Nash Edward. Direct Marketing strategy Planning Executation. Mc Graw Hill Companies U.S.A: 1995 3. Ranchood Ashok & Gurau Calin. Marketing Strategies. Financial times 2007 4. Malhotra K. Naresh Review Of Marketing Research. Emerald group publication ltd. Howard house U.K

b. JOURNAL ARTICLES
1. Nag Biswajit, Banerjee Saikat, Chatterjee Rittwik Changing features of the Automobile Industry in Asia Comparison of production, trade, and market structure in selected countries Asia-Pacific & training network on Trade Working Paper Series. - 37 (2007) 2. Dev Mohan Sontosh A Mission for Development of India Automotive Industry Automotive Mission Plan: 2006 SIAM REPORTS- (society for industrial and applied mathematics) 2. CMVR Central Motor Vehicles Rules 1989 3. ARAI Automotive Research Association of India.

Website
www.ibef.org www.tatamotors.com www.equitymaster.com

Chapter- 7 APPENDICES

Comparison with competitors:

Specification Comparison Eicher Parameters 10.59 E HSD Sartaj WV26-S 407 LPT SML Tata

DIMENSIONS (mm) Wheelbase Overall Length Overall Width 3350 5485 2146 3335 5454 2220 3100 5375 2140

Overall Height Cargo Body Inside Length Inside Width

2340

2070

2300

3760 2005

3740 2080

4093 2074

Inside Height (HSD) Inside Height (FSD)

585 1590

570 1090

603 1773

Loading Area (sq m)

7.54

7.78

8.48

Largest body in its category. Able to carry more load.

WEIGHTS (kg) Empty Vehicle Weight 2550 2570 2560

Maximum GVW

6250

6140

6250

Payload

3700

3570

3830

Highest payload carrying capacity. RATED PERFORMANCES Maximum (Km/Hr) Maximum speed. Minimum Radius (m) ENGINE SPECIFICATIONS TATA Model E 483 SL SP Turbo 497 Turning 6.5 6.0 6.5 Speed 102 106

No. of Cylinders Bore x Stroke (mm x

100 x 105 mm)

100x100

97 x 100

Total Displacement (cc) 3298

3455

2956

75 Max. Output 100PS @ 3200 79.1@ 3000 rpm

PS

2800 rpm rpm 22.5 Max. Torque (kgm) 29.5 @ 1400 22.0@ 1750 rpm rpm 1250-1800 rpm Table2Comparison Recirculating Recirculating Type ball & nut telescopic movement Variable Gear Ratio to 30.5 54.5 variable 26.5 Variable 32.0 to 25 to 28 g ball type ball products in 4 ton & nut with tilt & Recirculatin segment of @

STEERING SYSTEM

Comparison:

SFC Ex 407 Model Turbo Engine GVW Payload BS II 5700 KG 3626 KG 75PS@2800 Power RPM 71.3PS@3200RPM BS II 5850 KG 3250 KG SFC 407 Turbo

LPT Turbo BS II 6250 KG 3830 KG

407 SFC 407 CNG

BS III 5550 KG 3220 KG

75PS@2800 75PS@3200RPM RPM

Comparison of TML 4 ton products

Customer Questionnaire 1) Name:

2) Manufacturers name:

3) Model name and year of purchase:

4) Did you buy a new or resale vehicle:

5) If new, was the purchase from company or dealer:

6) Rate the following characteristics on a five point scale: Points/Parameters Pickup Mileage Cost of maintenance Spare parts availability Safety Handling 1 2 3 4 5

Comfort Company Service

7) Did you buy your truck on loan or cash: LOAN CASH

8) Where did you take your loan from: o o o Company finance Bank, specify Others, specify

9) Rank according to your buying preference : Parameters Power Mileage Price Cost of maintenance Rank

Spare parts availability Brand Name Resale Value

10) What problems did you face while purchasing a vehicle:

11) What problems did you face while operating the vehicle:

12) Were you approached by a financer, which company:

13) Why did you buy this truck, applications :

14) Are you planning to buy a truck in next 6 months:

15) What is the resale value of your truck after 5 years:

Financers Interview A. B. C. D. E. F. G. How do you short list prospective clients? What is the procedure involved? What is the size of your sales team/area? How have you divided the areas? On an average what are your monthly targets? How large is your market share? What are the major problems faced by a customer while securing loans? What problems, if any, do you encounter while dealing with companies? Does your institution have any tie ups with any company or dealer? Do you have any preferences while providing loans in terms of manufacturing company? Why? H. What can be done to improve TMLs relation with your company?