Post on 02-May-2017
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INDUSTRY - AUTOMOBILE FOCUS - TATA MOTORS
(NANO)
Marketing strategy analysis
GroupArya Dipta Dash (9)Manish Bhasin (23)Sunpreet Singh (50)Vineet Kr Maheshwari (60)
Guided byProf. Jaydeep Mukherjee
Agenda Environment Scan Market Size, Product Segmentation Targeting, Positioning, Price Marketing Recommendation
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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Passenger Car salesNumber Growth
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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Car Exports
Exports
Environment Scan Key Domestic Players Chosen
Maruti SuzukiTata MotorsMahindra and Mahindra
2011 – Recessionary period for auto industry
Increasing per Capita incomeYr 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
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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 mn1%
Rs 501,000 to Rs 1.0 mn3%
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 FamiliesExisting users of 2 wheelersUser preference for running costs versus style
and comfort
NANO Positioning Common man’s car
Got labeled as a Cheap car
Promise: Travel together at low costs Fulfills the family’s dream of travelling together in the
comforts and safety of a car
Sty
le
Verna, CityEON
NANO
NANO-2012Swift, Desire
Honda City
Indigo
Bike/Scooter
Alto
Price
Created New Category
Competition
Maruti – Pallete, MR Wagon
Hyundai – Eonand 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 acrossSource: 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
• 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 Man’s 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
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%
Bibliography1 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.pdf6 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_system_for_indias_nano_car_from_tata.html16 http://blogs.hbr.org/cs/2011/01/learning_from_tatas_nano_mista.html