Marketing strategy analysis

Group
Arya Dipta Dash (9)
Manish Bhasin (23)
Sunpreet Singh (50)
Vineet Kr Maheshwari (60)
Guided by
Prof. Jaydeep Mukherjee
Agenda
Environment Scan
Market Size, Product Segmentation
Targeting, Positioning, Price
Marketing Recommendation

0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
0
500000
1000000
1500000
2000000
2500000
3000000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Passenger Car sales
Number Growth
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
500000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Car Exports
Exports
Environment Scan
Key Domestic Players Chosen
Maruti Suzuki
Tata Motors
Mahindra and Mahindra

2011 Recessionary period for
auto industry

Increasing per Capita income
Yr 2011 USD 3608
Yr 2015 (Est.) USD 4965

Easier Finance options
Maruti Sales Numbers for Nov 2011
Source: Maruti press release of Dec-2011
Key developments
Sub-800 cc optimism
Nov-2011: Maruti decides to enter with 660cc
car
Nov-2011: Nano-2012 announced
Sep-2011: EON launched by Hyundai
Market shares for big existing players going
south
Fuel economy and costs have got highest
priority in minds of majority buyers
Diesel cars sales rose to 30% from 20% last
year
Hybrid cars
MPV like Vans Launches due in Diesel engines
(M&M Maxximo, Maruti Ertiga)
2 wheelers sales/revenues continues to grow
Bajaj Autos: 25% YoY growth in Nov 2011, 331k bikes sold (129k exports)
Increased focus on alternate fuels/hybrid technology
M&M recently bought Reva to aquire electric automotive technology
Demand Passenger Cars in
India
2010
2568
3859
0
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1500
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2500
3000
3500
4000
4500
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Demand Curve
Demand (in th)
Source: http://www.indiastat.com
Market size: Appprox 4 million passenger cars /yr
Potential buyers: 10 million (Income 5k to 7k USD /yr)
Selected Company
Tata Motors

Product:
NANO
Priced at Rs 1.53lac
624cc engine

Predicted sales of 250k cars/ yr
It is 8 percent smaller bumper to bumper and has 21
percent larger seating capacity than Maruti 800 Mr. Tata
Segmentation
Segmentation basis
Demographic Income level
Roughly 300-400 million emerging
middle class population in India
Roughly 80 million are categorized
as lower middle class with income
<5 lacs
Psychographic Lifestyle/Attitude
Travel Habits
Mileage preference
Over Rs 1.0
mn
1%
Rs 501,000
to Rs 1.0
mn
3%
Rs 301,000
to Rs
500,000
49%
Under Rs
300,000
47%
Price range based
Segments (%)
NANO Targeting
Target Segment (Micro-segments)
Low income group, family income < 5 lacs per
annum
Nuclear Families
Existing users of 2 wheelers
User preference for running costs versus style
and comfort
NANO Positioning
Common mans car
Got labeled as a Cheap car

Promise: Travel together at low costs
Fulfills the familys dream of travelling together in the
comforts and safety of a car





S
t
y
l
e

Verna, City
EON
NANO
NANO-2012
Swift, Desire
Honda City
Indigo
Bike/Scooter
Alto
Price
Created New Category
Competition
Maruti Pallete,
MR Wagon
Hyundai Eon
and more


Competitive
Forces
Industry Rivalry
Little (Big market)
Bargaining power of Suppliers
With rising volumes, Becoming
significant
Bargaining power of Buyers
Very low price, Lesser
options
Threat of New Entrants
MNCs with advanced technologies
and appetite to compete on prices
Threat of Substitutes
Compared with bikes, targeted
population of migration from bikes
TCO Comparison
Lowest cost of ownership across
Source: http://cars.zimbly.com/2009/03/running-costs-nano-vs-competition/
TCO Comparison for NANO
Assumptions
Average drive of 35 kms a day, 22x12 days/yr
Mileage of bike is 35km/l and petrol @ Rs 40/l
Need to get this data from friends????
Difference between M-800 and NANO is significant leading to higher
consumer surplus for relatively same feature set.
There is a room to create another variant with slightly higher price tag
and address different segment
In Rs Lac
NANO Promotions and Channels
Existing dealers of TM
Financing - Rs 15,000 is all that one needs to
get it
Issues
Existing Tata dealership difficult to scale for mass
distribution
Confuses customers with NANO selling alongside
Tata Aria/Indigo Manza
Communication
Advertisements targeting nuclear family
Low Cost



Marketing Strategy Recommendations
Targeting and Positioning
Include Middle class into the target consumer segment
Youth (18-25 years)
East India - Low-cost models, low per capita income
Replacement to bike

Product and Pricing
Change the image of a Poor Mans car by improving interiors and
providing add-on features
Increase price by Rs40-50k (possibly for Diesel variant i.e. Rs 2.15
lacs)
Promotion
Down payment - sub 10k level
College students Competition, Test Drive


Communication
Mass media Regional TV channels, newspapers
Message: More Convenience, Safe, Lower Cost/km and easier
to maintain, compare it with two wheelers, For someone you
care for
Ease of maintenance
Post purchase behavior is key to success

Marketing Strategy Recommendations
Marketing Strategy Recommendations
Distribution
Create NANO exclusive showrooms to facilitate
Next to shops where bikes are sold/serviced
Direct to home delivery model may be used
Easy to assemble kits nearby garage
Franchising for repair
Like Eureka Forbes

NANO Evolution
NANO Evolution Contd
Thanks
Concept car Showcased at Auto expo in Geneva 2011
Sales and EBIDTA for 3 Cos.

GDP

Market Share in Passenger
Cars

India Demographics


Source: http://populationcommission.nic.in/facts1.htm
Source: http://populationcommission.nic.in/facts1.htm
R&D Expenditure

Cost of ownership - breakup
Fuel Maintenance Repairs Insurance
Up to 6
months
74.2% 1.7% 0.7% 23.4%
36 months 69.9% 6.2% 4.9% 19%
Bibliography
1 http://www.tatamotors.com/investors/pdf/2011/businessReviewQ2FY12.pdf
2 http://www.capitaline.com
3 http://www.siamindia.com/
4 http://www.business-standard.com/india/news/crisil-cuts-india-gdp-forecast-for-fy12-to-76/148625/on
5 http://www.hyundai.com/in/en/wcm/groups/webcontent/@in/documents/webvehiclecontent/290683.pd
f
6 http://www.mahindra.com/mahindra/resource.page
7 http://knowledgenetwork.thunderbird.edu/research/2010/08/24/vw-bric/
8 http://www.team-bhp.com/web/plugins/p2_news/printarticle.php?p2_articleid=11
9 http://www.indiacar.com/infobank/nfo_autocar/nfoautocar.htm
10 http://www.thehindubusinessline.in/2003/05/23/stories/2003052301990200.htm
11 http://cars.zimbly.com/2009/03/running-costs-nano-vs-competition/
12 http://www.thehindu.com/business/Economy/article1498167.ece
13 http://www.thehindu.com/business/companies/article438770.ece
14 http://www.siamindia.com/upload/AMP.pdf
15 http://www.businessweek.com/innovate/NussbaumOnDesign/archives/2008/01/new_distribution_syste
m_for_indias_nano_car_from_tata.html
16 http://blogs.hbr.org/cs/2011/01/learning_from_tatas_nano_mista.html