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2010
[ASSIGNMENT 2 : LAUNCHING TATA “SWACH” IN SRI LANKA] Assignment 2 is a group assignment, wherein we are asked to choose a product that needs to be marketed to a specific country. We have chosen Tata Swach , as this product is most essential to developing countries like India and Sri Lanka.
Submitted to:
Mrs. Rekha H
By:
Anupam Singh -10171707
Donald Leslie - 10171804
Hitesh Goyal - 10171808
Rajeev Pariyarath - 10171383
Assignment 2 : Launching Tata “Swach” in Sri Lanka 2010
MKT5708: International Marketing Page 2 of 45
Contents Executive Summary ................................................................................................................................................................ 4
Overview ................................................................................................................................................................................ 5
SRILANKA .............................................................................................................................................................................. 7
History ................................................................................................................................................................................ 8
KEY FACTS Of Sri Lanka .............................................................................................................................................. 8
POLITICAL ENVIRONMENT ..................................................................................................................................... 10
ECONOMIC ENVIRONMENT .................................................................................................................................... 11
Economic Performance ............................................................................................................................................. 11
Trade ................................................................................................................................................................................. 12
Prospects .......................................................................................................................................................................... 13
SOCIAL ENVIRONMENT ............................................................................................................................................ 14
TECHNOLOGICAL ENVIRONMENT ....................................................................................................................... 15
Market Audit And Competitive Market Analysis ................................................................................................. 16
Introduction ........................................................................................................................................................................ 16
Product ............................................................................................................................................................................. 16
PROFIT Analysis ........................................................................................................................................................... 18
Organizational Resources: ............................................................................................................................................ 18
Financial Resources: ........................................................................................................................................................ 18
Intellectual Resources Analysis: ................................................................................................................................. 19
Strength And Weakness ............................................................................................................................................ 19
Strength ............................................................................................................................................................................ 19
Weakness ........................................................................................................................................................................ 20
Industry Analysis ......................................................................................................................................................... 20
BCG Matrix Of Tata Swach With Respect To Eureka Forbes And Industry Growth Rate ............... 21
Marketing Mix .................................................................................................................................................................... 22
Segmentation ................................................................................................................................................................. 22
Evaluate The Product In Intended Market ............................................................................................................. 23
Competitor’s Analysis ..................................................................................................................................................... 25
Government Participation In The Marketplace .................................................................................................... 27
Marketing Plan ................................................................................................................................................................... 28
Executive Summary .................................................................................................................................................... 28
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Marketing Objective .................................................................................................................................................... 29
Promotion Mix............................................................................................................................................................... 30
Sale Promotion .............................................................................................................................................................. 31
Personal Selling ............................................................................................................................................................ 31
Retailers ........................................................................................................................................................................... 31
Methods Of Operation For Each Type (Cash/Credit) .................................................................................... 32
Scale Of Operation For Each Type (Small/Large) .......................................................................................... 32
Wholesale Market ........................................................................................................................................................ 32
Markup For Class Of Products By Each Type ................................................................................................... 33
Methods Of Operation For Each Type (Cash/Credit) .................................................................................... 33
Scale Of Operation (Small/Large) ......................................................................................................................... 33
Import/Export Agents ............................................................................................................................................... 33
Warehousing – Type And Location ....................................................................................................................... 34
Price Determination.................................................................................................................................................... 34
Terms Of Sale ................................................................................................................................................................. 35
Budget ................................................................................................................................................................................... 35
Selling Expenses ........................................................................................................................................................... 35
Advertising And Promotion Expenses ................................................................................................................ 35
Distribution Expenses ................................................................................................................................................ 36
Product Expenses......................................................................................................................................................... 36
Annual Profit And Loss Statement For Year 1st Year ........................................................................................ 36
Resource Requirements ................................................................................................................................................. 38
Finances: .......................................................................................................................................................................... 38
Personnel......................................................................................................................................................................... 39
Production Capacity .................................................................................................................................................... 39
References ........................................................................................................................................................................... 40
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Executive Summary
After analyzing the market we have found out that there is huge market opportunity in Sri Lanka
to sell water purifier. Due to low price there are more chances that Tata Swach can become the
market leader successfully after some time because of many reasons such as low cost, already
operation exist in Sri Lanka and due to climate condition. The water purifier market is growing
by 25-28% annual. If we talk about local competition, it is very less. The local players get the
help by the government also where the government has distributed free water purifier to
households and started a project to provide water supply to those households. There is huge
competition from outside because many multinational firms entered in this field to capture the
market share in which Eureka Forbes is on the top. It is considered as market leader in many
countries but still it has to earn market share in Sri Lanka. Some other firms are Philips, Kent,
Godrej and Usha Ltd.
In marketing mix if we talk about segmentation, we can segment our market base on income,
geographic and physiographic bases. We can position ourselves in the market as new technology,
low price and good quality. We can target the government where the government buy our
product and distributed to households and we can also target by income level.
Overall we want to say that before making a marketing plan a company should do marketing
auditing which includes socio-cultural analysis of that country, industry analysis and competitor
analysis which will help to make effective marketing plan.
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Overview At the outset, we want to present some startling facts that led
us to choose a product which is the very need of the hour for
many developing countries and the third world countries.
(WWAP)
United Nations indicates that each person needs about twenty
to fifty liters of fresh water a day to meet their basic needs like drinking, washing and cooking. A
joint monitoring program by World Health Organization and UNICEF on water supply and
Sanitation reveals that one is six people worldwide, which is 894 million - don‟t have access to
safe fresh water. In the world today, diarrhea is one the serious cause of illness and death, about
88 per cent of diarrheal deaths are due to lack of access to proper sanitation and inadequate
availability of safe drinking water. (UN-Water)
The cost of water in many under developed countries are higher compared to the price paid for
water in the developed countries.
UNICEF has also worked with local
partners on larger ventures, such as a
water supply project for hundreds of
homes in a re-settlement area in
Thirukkovil called the Mandanai
Tsunami Resettlement Scheme.
Recently completed on a nearby hillside, the Thirukkovil Water Supply Project will make a huge
difference in the lives of ordinary people.
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Shopkeeper Thawarasa showed us the tap that will soon be flowing with water when the system
is connected. Currently, he has to collect water from,a well located in the middle of the
settlement, a job that is made harder during the dry
season.
“When the water is harder to pump, I have to get
up at 2 in the morning and go to the well,”
Thawarasa said. “It normally takes me three hours
to get enough water."
Five years on, life is certainly better for many thousands of families impacted by the tsunami.
But this anniversary will still be a hard one for many. For Jayawathi it will be a reminder of her
personal tragedy.
“I can't forget the tsunami, because of the loss of my son,” she said. “The birth of my daughter
since then has helped a little, but there will always be the pain." (UNICEF, 2009)
We see a need in Sri Lanka as this place is widely affected with bacterial diarrhea and hepatitis
A, dengue and chikungunya, and water contact disease known as leptospirosis. (CIA, 2009) To
throw more light into the political, economic, trade related information that are prerequisites of
marketing Tata “Swach” to Sri Lanka.
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SRILANKA
Before start any business in foreign country, it is important to understand external as well
as internal factor, which affect the business. We have done PESTEL analysis of the Sri
Lanka, which will throw more light on the business environment of Sri Lanka.
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History
Sri Lanka's history has reflected its close links with the subcontinent and with South East
Asia. The colonial European powers arrived in 1505. The Portuguese, the Dutch and then
the British ruled Sri Lanka. Sri Lanka (or Ceylon, as it was then known) gained
independence from Britain in February 1948.
KEY FACTS of Sri Lanka
Full name
Democratic Socialist Republic of Sri Lanka
Capital City
Colombo
Government Type
Democratic republic
State Chief
President Mahinda Rajapaksa
Government Chief
President Mahinda Rajapaksa
Population
20.2 million
Total area
65,610 sq km
Linguistics
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The officially spoken language is Sinhala which comprises of 74%, Tamil is considered as a
national language which comprises of 18%, English is usually spoken in governmental and
commercial institutions and there are other languages spoken which comprises of 8%.
Ethnic Composition
Sinhalese (73.8%), Sri Lankan Moors (7.2%), Indian Tamil (4.6%), Sri Lankan Tamil (3.9%),
other (0.5%), unspecified (10%)
Major Religions
Buddhist (69.1%), Muslim (7.6%), Hindu (7.1%), Christian (6.2%), unspecified (10%)
Life expectancy
73.4 years (total population), 70.8 years (men), 76.1 years (women)
Currency
Sri Lankan rupee
Main exports
Textiles and apparel, tea and spices, diamonds, emeralds, rubies, coconut products, rubber
manufactures, fish
GDP per capita
$1050
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Internet domain
.lk
Geographical location
Southern Asia, island in the Indian Ocean, south of India
POLITICAL ENVIRONMENT
Socialistic predilection in Sri Lanka was unswerving, but as time passed by it gave room for
investment overseas in 1978. Board of Investment operates as a sovereign legal bureau with
investment in foreign countries as a focus. BOI is authorized to yield grants to organizations that
meet the basic eligibility standards on minimal investment, employment and exports. When the
organization fails to meet the standards then its projects have to be sanctioned by the respective
departments of the government. BOI also deals with the 10 zones of free trade, which is known
as the export-processing zones. BOI possess the authorization to relieve any confinements on the
FDI.
Eleven huge privatizations were accounted for 34% of the FDI. Nevertheless due to the instable
political conditions and conflicting ethnicity the advancement on this issue is been decelerate for
years. The president sketched out regarding anti-privatization economical scheme in his electoral
pronunciamento known as „Mahinda Chintana‟. Various enterprises of the state which designing
itself to be privatized were not approved, this includes the airports and banks. Privatized
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organization was planned to be regulated by the government which will turn the loss into a
profit-making organization. The Labor Unions opposed the idea of Privatization.
ECONOMIC ENVIRONMENT
Sound rates of growth has been steady in Sri Lanka despite if its intense violence on ethnicity.
Rich private demand of requirements, core industrialization, primarily the intensive labor textile
industry and the advancement of domestic tea manufacturing hiked the growth rate of the
economy. The well-disposed FDI policy of the government ensued the zooming inflows of
capital. The deceleration in the global issues activated an acute condensation in the activities of
the economy in the year 2001. Subsequently there was a recuperation in the sectors of the
industries that is impelled by a firm external demand and an increased growth rates in the sectors
relating to service resulted in a sizeable enlargement of economical activities though the tsunami
that hit the sectors of agriculture was critically damaged. Deficits in the fiscal aspects are an
important issue to the government, which has been diminishing in the years past. The current
fiscal obligates to cut back deficits. There are many industries that imparts in great value to the
GDP that engages greater population of the manpower, this comprises of the industry in tourism,
and the service industries. When taking industries into consideration, it is the textile industry that
yields greater sum of revenues in export. Nevertheless constraining laws of labour and
privatization forbiddance has hampered the investments of foreign countries.
Economic Performance
Though Sri Lanka has been facing ethnical dispute steadily, it has gained commendable growth
economically of 5.2% yearly all through the 90s. The curriculum of Liberalization of the Sri
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Lankan government which bestowed importance to investments of foreign countries and
liberalization in trade aided in the increase of the net FDI influxes from $48m in the 1991 to
$430m in the year 1997. The demand in the private consumption increased to an average yearly
rate which accounted to 13.6% in 1992-2000 which calculated for 3 quarters of the GDP. The
textile manufacture increased by a yearly rate of 23% which accounted for 50% of the aggregate
exports. They were various other industries that contributed to the GDP rate, they are beverage
industry, tobacco and leather ware. There was retardation in the economic activities due to the
deceleration in the global economy.
Trade
The import tariffs are comparatively less in Sri Lanka that acts as an elementary trade policy
tool. The moderate enforced non-agricultural duty is at the rate of 8.3% and the enforced
agricultural duty was greatly increased to 22.5%. Medical instruments are allowed for a free
import without any charges but the staples are taxed at 2.5%. Duties on cigars and tobacco are
greater starting from 75% - 250%. Companies dealing in exports that are authorized by the BOI
are usually exempted of tax and also freed on the defrayment of VAT.
Sri Lanka has consented to a bilateral investment with many countries, nearly 24. The country
has also consented to an isobilateral investment accords with Pakistan and India. Sri Lanka has
signed the South Asia Free Trade Agreement. The continual declension of the Sri Lankan
currency versus the dollar in US and the fringy appreciation in 2005 has assisted in sustaining the
competition in exports in the years past.
In 2005, $6.3m was the aggregate measure of the exports. The textile and the tea industries
constituted 58.4% of exports. The quality of imports soared which was actuated with the aid of
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goods like conveyance instruments, machines and crude oil. The aggregate value of importations
in the year 2005 was $8.9b. Sri Lanka‟s most substantial export commercial is the United States
which is computed at 31.1%. India and UK are also plays a part in this aspect which accounts for
12.2%. When imports are taken into consideration, 20.7% accounts for India.
Prospects
As far as Sri Lanka is concerned, it has come out of chaos and confusion that it had been
confronted with for a very long time. Now the panorama needs to be viewed differently for the
development of the country in all its spheres. Since LTTE is not in power, the country is
expected to experience a commendable improvement. The government has enforced favourable
FDI policies, and it has increasingly subjugated taxing rules and decrees that has facilitated to
promote commendable rates in terms of growth. Though LTTE has ceased in its existence, there
is continual fear of militants in the country. The need of the hour is to reconstruct the remains of
the tsunami attacks.
Diversification of the exportation needs to be paid attention by the government of Sri Lanka to
avert depending on the exports. Textile industry was confronted with competitions from various
other low-priced manufacturers since the limit of production was put to an end in the year 2005.
Tea industry has been confronted with competition from foreign countries and therefore it
necessitates the government‟s initiative to facilitate increased productivity that is bound to add
value to the product. Cutting back on financial deficit and the public liabilities and sourcing of
sufficient resources that are necessary without taking into account the foreign lending‟s and
concessions. Fiscal management Act is the most apt stride that will be received for the
advancement of the nation. Persistent unpredictability in the prices of petroleum and the
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increasing deficits in trade are the vital considerations of the government for the betterment of
the economy. The pension schemes might obtrude a definite onerous position for the government
which calls for prompt reforms. Educational system needs to be reformed to unfold sufficient
facilitates to the areas where the revolt broke up in the country in the past years due to the LTTE.
SOCIAL ENVIRONMENT
Sri Lanka holds a populace of 20,238,000, of which Sinhalese constitutes about 74%, Sri Lankan
Moors constitutes about 7.2%, Sri Lankan Tamils constitutes about 3.9% and the Indian Tamils
constitutes about 4.6%. When religions are taken into consideration the Buddhists comprise a
major share of 69.1%. Sri Lanka is prominently a rustic area that holds 79% of the population.
The populace medial age is 30 and 7.8% constitute for an age group of 65 and over. The health
index of Sri Lanka is fairly good when compared to other countries in Asia. The government has
an expenditure of 46.3% from the 4% of the aggregate GDP for medical expenses of the country.
The expected life span is 73.4yrs of the aggregate populace.
Meliorating the health service was the major aspect that the government undertook for the
betterment of the country. The vital aim was to meliorate 1 hospital in every district so as to cut
back the unfairness meted out when the services are rendered. Special attention should be given
to people who are impaired and aged. In order to ensure these services community meetings were
conducted to ensure the involvement of the people in those areas.
The literacy value in Sri Lanka is commendably in a good state and is at 92.3%. The rate of
dropouts in Sri Lanka is less than 1%. The parliament enforced compulsory education for the
children belonging to the age of 5 to 14 years, which was also set up free of cost for a student to
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get educated. The government catered to the basic needs of a student such as free school texts,
availing scholarship facilities and providing uniforms. Teachers were given free predilection
programmes before handling any class for the year. These schools had donors like the Asian
Development bank and the World Bank who were interested in the betterment of the education
system. Nevertheless the regions in the North and the East still require attention as things have
been worse when the revolt of the LTTE broke out.
TECHNOLOGICAL ENVIRONMENT
The telecom sphere was improved to an incredible extent in terms of liberalizing right in the
90‟s. Act of Sri Lankan Telecommunication of 1991 founded the Sri Lanka telecom also known
as the SLT, it awarded the permit to function in the global system. For the betterment of rural
telephone, the government heralded regarding the constitution of fund program named Vishwa
Grama in the year 2003. The Information and Communication Technology Agency has enforced
“e-Sri Lanka‟ proposition which advances the usage of technological elements in the
assuagement of impoverishment with the means of capital that involves humans and its sub
structural development. Usage of mobile phones was a greater achievement in the telecom
market which has increased steadily. The usage of mobile phone has increased to 18.8 in the past
years from 0.6 for every hundred populace. Even though it is still in demand the government is
offering well-disposable rates which are likely in increase in the years to come. Utilization of
mobile phones has become a necessity rather than a need. Usage of Internet services with the
help of Broadband connections has worked out to a greater extent. Utilization of internet which
is bound to be uncommon rural areas of Sri Lanka has shown steady increase. The number of
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users has increased to 43902 from 62, which shows a rapid improvement within a span of 5
years. Source: Datamonitor, 2007)
Market Audit and Competitive Market Analysis
Introduction
Over many decades, due to rapidly change in resources, logistics or transportation services and
technology, many multinational organization across the world have established closer contacts
with each other to achieve the Economic of Scales and improve the relationship among
countries. They establish their production and operation units in other countries to use their
natural resources which help to increase the productivity and profit. When an organization
directly or indirectly provides its product or service to consumers in more than one nation and to
make it successful in that particular market it does promotion activities, logistic management,
pricing and many other activities called International Marketing. (Cateora, Graham & Salwan,
2008) If an organization wants to make its product or service successful in a particular country‟s
market, it should do proper market research such as is there any demand or need of that product,
which is target market, which sources of advertising would be more effective to communicate to
customers, local competition, buying behavior and logistics management. Base on that a
company should make effective market plan then only it can sustain in market for long time.
(Kotler & Keller, 2009)
Product
To complete this project we as a group has chosen „Tata Swach‟ which is the world‟s cheapest
water purifier. Tata Chemical Ltd. which is a SBU (Strategic Business Unit) of Tata Group has
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launched it in 2009 when they found there is huge demand and growth in water purifier market.
Every day about 1.5 lakh people die in India because of drinking polluted water and water
related disease. (CIA- The World Fact Book, 2008) Therefore customers have become more
health conscious. They want to be healthy and protect their self. So it is one of the most
important factors behind of growth of this sector. The water purifier market has been growing by
35% annually and presently it is Rs. 1200 crore worth market. (Business India, 2009) Tata has
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started water purifier business in 1982 when they had tie-up with Sweden Company called
Electrolux. But after few years Tata Group sold its stake to Shapoorji Pallonji (SP) Group.
(Business India, 2009)
PROFIT Analysis
Profit Analysis helps companies to identify their availability of resources which include
Physical, Reputation, Organizational, Financial, Intellectual and Technological Resources.
Physical Resources: It helps organization to inform customers about their availability in several
places. Tata Swach has already started its operation in 90 cities in India and it is available more
than 25 Asian and African‟s countries. It has already given Franchise to about 500 dealers all
over the country and it is also available all Tata‟s retail stores. (Tata Swach, 2009)
Reputation Resources: Being a part of Indian multinational group (Tata Group) it has great
reputation among people because Tata is considered as a trust in India. In the same way, Tata
Swach is the world‟s cheapest water purifier which is targeting low and middle level income
consumers. Due to this it has made positive image between customers. (Tata Group, 2009)
Organizational Resources: Along with Tata Chemical, Tata Group is considered as one of the most
ethical companies in India and it reflects in all of its operations. The company has maintained cordial
relations with its dealers and distributors. The company holds annual award functions to reward its
suppliers, distributors and employees. It gives bonuses and dividends to its shareholders and employees
every year. (Tata Group, 2009)
Financial Resources: The current ratio and the quick ratio of Tata Chemical Ltd. (Current
Assets/Current Liabilities) is 1.38:1 and 1.3:1 which show they can convert their assets in to cash
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easily and pay their current liabilities (Capitaline, 2009). In the same way their working capital is
$1.5 billion which shows that they have huge cash for daily bases operation and financial works.
If we talk about their shareholder funds which include general reserve and equity share capital is
$ 23 billion and total long term debt is $6 billion which is less than their capital, so it helps them
to get loan easily (Tata Chemical Ltd. Revenue, 2009). Revenues for Tata Chemical‟s 13
operating service areas for Q1 at Rs. 26 million grew by 13.9% in 2009 (The Financial Express,
2009). So base on the data, we can say that company has strong financial management resources
(Capitaline, 2009).
Intellectual Resources analysis: Tata Swach has separate R&D department which helps to
increase market share. It invests a huge amount in direct and personal selling It has positioned it
selves as most innovative and the world‟s cheapest water purifier. Their advertisement punch
line “Promise of pure water and trust of Tata Group” created self image of the brand that other
players were not able create in a short span of time.
Technological Resources: Tata is always recognize as great inventor such as Tata Nano and
now this purifier which does not need electricity, running water and boiling water. They invent
the world‟s cheapest water purifier. (Tata Swach, 2010)
Strength and Weakness
Strength
Brand image: Being a part of Indian multinational group (Tata Group) it has great reputation
among people because Tata is considered as a trust in India.
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Effective pricing strategy: Tata Swach is the world‟s cheapest water purifier which is targeting
low and middle level income consumers. Due to this it has made positive image between
customers.
Strong distribution Channel: Tata Group is also one of the big players in retail sector in India.
It has many SBUs like Tata Trent, Tata Croma and West life which help them to increase the
sale and help to approach to customers easily.
Operation in many countries: Tata Group has it operation and plants in many countries. It has
plant in Sri Lanka also. Therefore there is no need to make separate warehouse for Tata Swach.
In the same way it also divided and decreases the logistics and distribution cost.
Weakness
Huge competition: Tata Swach had just launched in the water purifier market where there are
already many big players in the market such as Kent, Eureka Forbes, Usha Ltd. and many others.
Eureka Forbes is the market leader with almost 70 % market share. So it is difficult for Tata
Swach to gain market share.
Core Business: Water purifier is not a core business of Tata Group where as it is a core business
of Eureka Forbes. They entered in market by water purifier‟s products and it has almost 28
patents to protect its technology.
Industry Analysis
By the help of BCG Matrix we can analyze the industry such as what is growth rate where Tata
Swach comes in and market leader.
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BCG Matrix of Tata Swach with respect to Eureka Forbes and industry growth rate
Tata Swach
In BCG matrix Tata Swach comes under question mark because by the help of Product Life
Cycle it shows that it is just passing the introduction stage where Eureka Forbes is already in
Maturity stage. Question mark is defined as when there is growth in market but your product do
not have sufficient market share. Eureka Forbes has about 65-70% market share where Tata
Swach is just started rapidly earning market share.
Tata Swach
Mar
ket
Gro
wth
Rat
e (
in %
)
0
LOW
1
7
HIG
H
35
HIG
H
70x 50x 35x 20x 0.1X
Relative Market Share
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Marketing Mix
Segmentation
Geographic Segmentation: In India Tata Chemical launched Tata Swach firstly in Mumbai then
they launched it in Bangalore, Kolkata, Delhi and Chennai. When they launched successfully in
this metropolitan cities, then they launched it in tire-2 cities. We are going to launch it in Sri
Lanka because it is near to India and due to Free trade Agreement and less trade barrier. We will
launch it in tire-1 cities such as Colombo, Kandy and Mannar. Secondly Sri Lanka is a place
where Monsoon takes place heavily and it is also surrounded by ocean. So there are more
chances of water diseases and pollute water.
Income: We segment the market according to income level also because Tata Group is the
world‟s cheapest water purifier and its 25% population is under poverty line.
Physiographic: We will also segment the market according to physiographic where as we will
target those people who are more emphasize about their health.
Positioning: We will position ourselves as best technology and innovative products and
available at low price by using differentiation strategy and low pricing strategy.
Targeting: Firstly, we will target the government where as we will persuade them to buy our
products by telling them the advantages that how can it is helpful to stop water disease and it is
also cheaper than other companies‟ products. Secondly we will target middle and low income
level customers.
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Evaluate the product in intended market
Relative advantage and compatibility: There are many advantages by using Tata Swach over
competitors and local players such as saving of electricity bills, pure water available at low price;
everybody can afford it and less water diseases.
Complexity: People should have knowledge about product before using it then only they can use
the product in proper manner. There is one complexity which can be faced by us is educate
people about how to use our products, when to change the filter net and plate and other
technological products.
Trail ability and observe ability: Our product can be purchased and used at minimal social and
economical risk because it will be wildly available in the market and we will sell it by direct
marketing and personal selling where we will send our employees to set up the purifier. There
will be only one risk and that would be use of the product. We have to educate people to
minimize this risk and train them to use successfully.
The market size: In Sri Lanka there is huge potential market because of climate and
geographical condition. Due to monsoon and ocean, water is not pure and it results to spread
numerous diseases in Sri Lanka. One death out of six deaths is caused of polluted water. (UNO,
2008) But there is no local player in water purifier industry due to lack of technology and
money. Most of the companies which have strong presence in the other Asian countries‟ water
purifier market; they are also run operation in Sri Lankan market such as; Eureka Forbes‟
Aquaguard (Kaushik, 2003), Unilever‟s Pureit, Kent, Philips, Godrej, Usha Brita etc. The market
is growing by 25% per annual. Last year 12 million water purifiers were sold. (Brandix and
Deutsche Bank water filter project, 2009)
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Geographic region: Tata Group has already operations and manufacturing plant in Sri Lanka
such as it has two hotels such as Taj Airport Garden and Taj Bentota which is established in
1984, Tata Motors has started its manufacturing plant in 1961 therefore today Sri Lanka is the
biggest market for them in South Asia Region, Tata Steel has its plant in Mannar and Watawala
which has already earned 555 market share in steel industry. It shows the strong presence of Tata
Group in Sri Lanka. We have chosen Mannar, Watawala and Colombo to start our operation
because these cities have already Tata‟s plant and tea warehouses so it will reduce the operation
cost and these cities are nearby India so transportation cost also will be less.
Consumer buying behavior: In Sri Lanka Consumer buying behavior is almost as same as
India. People are more concern about saving money rather than spending. Customers do not
prefer impulsive buying. Therefore customers buy local products because of low price. They
also drink supplied water which cost very low rather than to buy Rs. 2000-3000 water purifier. It
is an advantage for Tata Swach because of its cheaper price.
Retailing and wholesaling: Basically there are two types of organized retail formats in Sri
Lanka: Supermarket and hypermarket which is follow discount and low price strategy. But the
major part is handled by unorganized retail sector. Most of the companies are using dealership or
franchise to sell their water purifiers. They tie up with local retailers to sale their products.
Advertising and sales promotion activities: The literacy rate is 92% in Sri Lanka which is
considered as a good rate. (CIA-The World Fact Book, 2008) News paper is the cheapest and
effective mean to reach out to majority of customers. But to sell the water purifier every
company more emphasizes on direct marketing such as event or trade show and personal selling.
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Competitor’s analysis
Importance of understanding competition: When a company launches its product in the
market, it tries to position its brand uniquely among other brands present in the market.
Therefore it is critical to understand the strengths, weaknesses, opportunities and threats of each
of those competitors along with the industry structure itself. This knowledge is important
because it‟s the competition that helps us to own the unique benefit in our customer‟s mind that
our competitors‟ have not addressed and cannot easily address in the future.
Rational behind identifying the competitors: Analyzing the competitors is an essential
component of corporate strategy. Knowing about the competitors and their profile will help the
concerned organization in knowing its weaknesses that it may exploit. A detailed profile of the
competitors, helps an organization in getting an in depth description of the competitor‟s
background, its unique selling proposition, financial condition, its strategies, the products and the
market share.
Competitor’s products: Most of the companies which have strong presence in the Indian water
purifier market; they are also run operation in Sri Lankan market such as; Eureka Forbes‟
Aquaguard (Kaushik, 2003), Unilever‟s Pureit, Kent, Philips, Godrej, Usha Brita etc. But the
scenario of Sri Lankan market is different in the context of social, economical and cultural to
Indian market. In spite of those companies there are many social communities, who provide safe
drinking water in Sri Lanka such as Brandix and Deutsche Bank (Sri Lanka: Deutsche and
Brandix Bank water filter project, 2008), Hitachi technologies (Latest News : Katugastota Water
Purification Plant Completed in Sri Lanka), CRRP programs under Red Cross and UNO
(Wijesinghe, 2009) and Global Medic team (Response to IDPs in Sri Lanka, 2009).
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Competitor’s prices: In order to the market segmentation, our product is design for the lower
income segment which is 79% of total population of Sri Lanka. In this segment, if we compare
our product with competitor‟s product, our product is the cheapest (Rs. 999 and Rs 749) water
purifier in the market. Our nearest competitor is Aquasure of Eureka Forbes and Pureit of HUL
and their cost is much higher than ours, which is above to Rs. 2000 (World's cheapest water
purifier from Tata, 2009). Usha Brita‟s water purifier is one of the closest competitors in this
segment in the Sri Lankan market because of two reasons; first, this group has already penetrated
in the Sri Lankan water purifier market in 2005 (Usha Brita lines up water purifier systems,
2005) and other one, it has lower range of product which cost Rs. 1.195 to Rs. 1.295 (Usha Brita
Water Purifier Price List, 2010).
Competitor’s promotion and advertising methods: In its promotional and advertising strategy
Eureka Forbes positioning its brand as an environmental friendly company and using a
combination of varieties such as direct marketing, event marketing and many CSR activities
(Eureka Forbes). Usha Shriram Brita is selling its products though door to door marketing in
India and exporting these products in Sri Lanka as well. (Usha Brita‟s niche mall gathers new
footfalls, 2004). Unilever is working its promotional activity as a CSR program with UNICEF in
Sri Lanka such as safe water program in schools and day care centre; it will work for its „Pureit‟
water purifier (Unilever).
In the context of competitors promotional and advertising strategy for their water purifier
product, they are using direct marketing tools and doing a lot of CSR activities because after
Tsunami in 2004 Sri Lanka got noticed for its unsafe drinking water (Tsunami disaster in Sri
Lanka, 2004)
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Competitor’s distribution channels: Most of the Companies using zero-level (direct)
distribution channel to selling their water purifier in Sri Lanka and exporting their product from
India because India and Sri Lanka both are neighbor country. Unilever has strong network in Sri
Lanka and selling many fast moving goods through its distribution network (Unilever, 2005).
Eureka Forbes is an innovator of door to door selling concept and it has own distribution network
which help to reach its customers directly (Eureka Forbes). Usha Shriram Brita entered in Sri
Lankan market in 2005 and exporting its products through India. Usha Shriram Brita has a
production unit in Tamil Nadu, India which enables it to export in Sri Lanka (Usha Brita lines up
water purifier systems, 2005). On the basis of above mention data we can analysis that
competition in Sri Lankan water purifier market is very high, it is not only the presence of many
competitors but also presence of many social communities. As our target in the Sri Lankan
market is lower income segment so we can say that our product has some benefits over
competitors such as trust of Tata with cheapest price.
Government Participation in the Marketplace
The government participation in water purification industry is very high. Every organization has
to get approved their products by the government before selling to customers such as in India
without ISI mark, a product cannot be sold in to market. Moreover, to provides good quality of
water to public the government is helping local players to provide good quality of water at low
price such as Ministry of Urban Development and Sacred Area Development distributed 2000
water purifier to public at free of cost. They gave permission to local water suppliers to start a
project called Brandix and Deutsche Bank water filter project where they supply filter water to
2000 households every day. (Brandix and Deutsche Bank water filter project, 2009)
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Marketing Plan
Executive Summary
In this project we as a group have made marketing plan for Tata Swach for next 5 years. To
increase our sale and profit we will spend half of our advertisement budget on personal selling
because by this only we can aware consumers about our products and persuade consumers to buy
the products. We have set the sale budget for next five year which is Rs. 149784000.
We as a group have learnt by this project that how to do marketing auditing and planning
because the whole success of an organization is depends on marketing plan. In past scenario,
most of the organizations were production and sale oriented. They believed that consumers
would prefer only those companies‟ products which are wildly available. It demonstrates that
organizations were more considered about sale and profit rather than providing good quality and
service. But in present scenario the delivery of quality in service and goods has become more
precedence. Companies are more sophisticated about selling product-support service. They
provide pre-purchase and post purchase service to their customers so customers will not switch
to other company. They spend huge money on R&D and pay millions of money to consultancy
firms for marketing research and plan.(Kotler & Keller, 2009)
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Marketing objective
Target Market: Firstly, we will target the government where as we will persuade them to buy
our products by telling them the advantages that how can it is helpful to stop water disease and it
is also cheaper than other companies‟ products. Secondly we will target middle and low income
level customers. By the help of marketing plan, we would try to achieve our targets.
Expected sale: Our main objective of this marketing plan is to increase the sale by 3 times. Last
year the quarterly sale of Tata Swach was Rs. 12.5 million all over the world so by the help of
this figure our main objective is to increase it up to Rs. 30 million by the end of this year all over
the world. Our expected sale in five year from Sri Lanka is Rs. 5 billion. This figure is base on
Eureka Forbes Sale. Last year, they sold Rs.12 billion water purifier in India and Sri Lanka but
we want to sale Rs. 5 billion only in to Sri Lanka. (Capitaline, 2009)
Expected Profit: Basically service oriented companies set the price according to their operation
structure such as how much they are spending on warranty period, production cost, distribution
cost, factory overheads and selling and advertising expanses. After analyzing all these cost they
add profit according to their strategy such as if they want to become price oriented where their
price will be less than competitor price then organization will set low profit because they want to
make profit by selling more volume of products. We are using same strategy where we will set
only 40% profit in our cost so after five years if we achieve our sale in Sri Lanka then our profit
will be Rs. 2 billion.
Product adaptation: We will also customize our product and service according to need and
demand in the market such as if any customer want more than one year warranty then we will
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provide him but we will charge him extra money. On packaging and booklet we will use Tamil,
English other than their national language because Tamil is the second most prefer language and
then English.
Promotion Mix
Today every organization spends billions of amounts on advertising, sale promotion, direct
marketing, personal selling and sponsorship. They establish a separate department which
consider only on marketing communication channel operation because in present scenario
spending on marketing communication mix is considered as a long term investment not as
expensive which helps organization to improve their turnover and goodwill. Integrated
Marketing Communication are the channels by which a firms inform, convince and sustain
consumers for a long time which help them directly and indirectly to increase their sale and
profit. They create the need and demand of new or existing product by telling the uses and the
advantages of the products through Marketing Communication. (Kotler & Keller, 2009)
Advertising Mix
Advertisement is a paid form of promotion of ideas, goods and services by an identify sponsor.
It is the cost effective way to promote the products and in the same way it is also highly
accessible means it is only the way to reach out majority of the customers. There are many
sources for advertising such as:
Print Advertisement: Newspaper advertisement is one of the easiest ways to convey the
message to majority of the customers. We will give advertisement in newspaper where most of
the consumer can see our advertisement and in the same way we will also tie-up with famous
branded and fashion magazine where we will give pastors and calendars where local celebrities
will use our products.
Broadcasting advertisement: We will also use TV advertisement because by visual ads we can
show how it is used and what the advantages are by using it.
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Sale Promotion
At last decade, organizations had been spent huge amount of their promotion budget on
advertising. But now due to increase the competition and change in technology many marketers
there are many others effective and cheaper means of promotion by which company can promote
their products more effectively. Many companies are developing fully integrated marketing
programs that include consumer and trade promotions. Sale promotion is a verity of short term
incentive to encourage customers to purchase the products.
By the help of trade show, special offering such as free home delivery, free service we will try to
increase our sale.
Personal Selling
Personal selling is one of the most important variance for water purifier industry. Most of the
organization is using it to increase the sales and aware the consumer about the product. In this
process, a salesman from company directly will come to meet consumers where he will educate
consumers, aware them about the advantage of the products and persuade them to buy the
products. Eureka Forbes is considered as Pioneer of personal or direct selling. It has more than
12000 salesmen for personal and direct selling. (Harvard Business School, 2009)
Retailers
Type of retail stores and Retail markups for products in each type of retail store
As mentioned earlier, the main type of retailers available in Sri Lanka are small conventional
stores and these stores makes shopping easier for Sri Lanka due to the large availability. As a
start up plan, a model “Swach” water purifier will be displayed in retail shops and then a toll free
number is provided for placing the order. This plan suits well with the smaller shops which
doesn‟t have enough floor space to meet our requirement. For larger departmental stores the
product will be placed on display and the benefits and the most importantly the low price and of
the product will be highlighted.
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The smaller and conventional stores can give the company a higher sale than the larger
departmental stores.The above mentioned information will help us in making a decision. This
table reconfirms that the smaller conventional stores will give more sales to the company than
the larger supermarkets.
Methods of operation for each type (cash/credit)
The main method of operation will be by providing incentives or commissions on product sold,
since “Swach” doesn‟t have a self line the product can be ordered at any point of time in the
year. Beyond that for the display of the product in conventional stores as minimum one tine
payment is made to the Shop keeper. No Credit policy is planned for the initial launch. More first
money cash is paid to retailers for shelf life and the policy of commission hold good even for big
retailers
Scale of operation for each type (small/large)
The scale of operation planned is large. The main entry into the market is via an awareness
programmed which highlights the importance of usage of unadulterated water and also how
“Swach” as a product can bring in the difference. The main USB is the price
Wholesale Market
As stated in the table Sri Lanka has a large number of wholesale r and retail distribution. The
strategy that “Swach” have is to have a one main wholesaler who has got the maximum reach in
the country and then tie up with the wholesaler for the distribution of the product.
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Markup for class of products by each type
Since there is only one model that is going to be available in the market there is no classification
of different products.
Methods of operation for each type (cash/credit)
The wholesaler‟s main objective is to deliver the product to the larger retailer within the shortest
possible time by affective supply chain management Orders from smaller shops will be diverted
to the nearest warehouse. The company pays the wholesaler for the storage and supply change
function. The plan is to agree on a yearly payment contract with the wholesaler for availing the
service.
Scale of operation (small/large)
One of the main reasons for incurring a huge cost in warehousing and supply chain is to have a
large scale of operation. As mentioned earlier in the retailer section, the objective is to connect
80% of the retailers directly or indirectly.
Import/export agents
“Swach” can be imported to Sri Lanka as part of Bilateral Free Trade Agreements (BFTA).
The Agreement provides for duty free as well as duty preference access for the goods
manufactured in the two countries. “Swach “has tied up with one of the largest freight company
to carry the product from the place of manufacture that is Chennai to Sri Lanka. Opting Chennai
is also a strategic decision by keeping Sri Lanka market in mind and the product can be
transported with less cost and time. As part of the agreement the freight company will provide a
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provision for the storage of 100000 Units of Swach (dismantled) for a period of 10 days. The
duration of the shipment is agreed to be in duration of 12 days, but the cause is that the duration
can vary depending on the demand. If the duration of the shipment needs to be reduced, then
“Swach” needs to be pay additional charges to the company.
Warehousing – Type and Location
As mentioned earlier, “Swach” had a tie up with the largest wholesaler of Sri Lanka and they in
turn facilitate the warehousing facility for “Swach” and the product is moved to a ware house
which is nearest towns and cities. From an Importing point of view, it is the freight service which
is providing the facility of conditional warehousing.
Price Determination
The supply chain management cost which includes the transportation and warehousing cost will
be considered as part of marketing plan. Actual information related to the shipping chares is not
available as shipping charges vary due to the high number of variables.
Another set of expenses that are incurred are related to Loading and unloading charges, and
Wharf age fees During transportation the transported goods are insured, this is part of export
policy that “Swach” needs to adhere. There is no custom duty involved in it because of BFTA.
All the Costs that are involved will have an impact on the Retail price but due to the relaxio0n of
bilateral trade between India and Sri Lanka, the cost of the product is not so high even though it
is getting imported.
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Terms of sale
Free On Board or Freight On Board freight Policy is followed where in Swach pays for shipment
and loading costs, and insurance of the goods is paid. One of the main reasons is the safe
handling of the product. As mentioned earlier, the product is shipped from the host country and
all the expenses till it reaches the exporter market is paid by the “Swach” All the charges related
to unloading and transferring the product to warehouse is also taken care by the parent company.
The advantage is the end to end handling of product with minimum damage
Budget
Selling Expenses
Staff salaries, Sales support and distribution staff expenses are included. The total expenditure is
Rs. 3000000.00
Advertising and Promotion Expenses
Radio Rs .500000.00
Newspaper/Magazines Rs.5000000.00
Regional Television Ad Rs. 20000000.00
Sales Promotion Rs. 2750000.00 (Including Customer Awareness Program)
Customer Oriented Rs. 2000000.00
Trade Oriented Rs. 750000.00
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Support Line Rs. 3000000.00
TOTAL Rs. 33,250,000.00
Distribution Expenses
Distribution expenses include shipping and all associated charges including warehousing charges
for freight Carrier Company and expenses for storage and distribution of the product within
Srilanka. Total expenditure on Distribution costs is Rs. 25,000,000
Product Expenses
Product expenses include cost of Water Filters, Packaging, operating costs. Total expenditure is
Rs. 13,233,800
Annual Profit and Loss Statement for year 1st year The figures illustrated below are only estimations.
Revenue
INR
Sales Rs. 37446000.00
Expenses
Promotion:
Advertising Rs. 15000000.00
Sales Promotion Rs. 900000.00
Support Line Rs. 800000.00
Rs. 16700000.00
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Distribution* Rs. 4500000.00
Cost of Production
Product** Rs. 4400000.00
Salaries *** Rs. 1000000.00
Rs. 9900000.00
Total Expenses Rs. 26600000.00
TOTAL PROFIT Rs.10846000.00
Annual Profit and Loss Statement for year 5th year
Revenue
Rupees
Sales Rs. 149784000.00
Expenses
Promotion:
Advertising Rs. 45000000.00
Sales Promotion Rs. 2250000.00
Support Line Rs. 2400000.00
Rs. 49650000.00
Distribution* Rs. 18000000.00
Cost of Production
Product** Rs. 11000000.00
Salaries *** Rs. 4000000.00
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Rs. 33000000.00
Total Expenses Rs. 82650000.00
TOTAL PROFIT Rs. 67134000.00
Distribution expenses include shipping and all associated charges including warehousing
charges for freight Carrier Company and expenses for storage and distribution of the
product within Sri Lanka.
Product expenses include cost of Water Filters, Packaging, operating costs.
Salary expenses include: Administration staff, marketing/sales staff and Support staff.
Note: Promotional Expenditure has increased due to an overall increase in sales and
because of which more coverage of geographical locations required in. Cost of
production also increased due to the increase in sales that caused an increase in
production.
Resource Requirements
Finances:
“Swach” is new to the market so the finance is solely depended on the sales of the product the
expectations are very realistic, which has been concluded based on the research conducted in Sri
Lanka. Research will be undertaken to compare and contrast potential credit facilities if more
finances are needed.
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Personnel
The personnel requirements for the Water Purifier product are as follows. The company consists
of Country Head, Sales and marketing department, finance and administration, Human
Resources department and Maintenance and Customer care department
The main responsibility of Country head is to make sure company is moving towards planned
estimates of profit year on year, if required take corrective actions and handle concerns and
queries of stake holders in and outside the country. Sales and Marketing team is responsible to
achieve the sales target and marketing department objective is to make the life of sales
department easier by proper campaign and Advertising. Human Resource department will look
after the well- being of the employees and also to control employee activities. Finance
department to take care of budgets and other finance related activities. Customer care and
Maintenance department mot is to take care of customer queries and handle water filet relater
queries and maintenance activities.
Production Capacity
During the first year, product will be imported to Sri Lanka and later if the demand of the
product goes higher than a plan to have a manufacturing Unit can also be considered. This will
result in better pricing of the product will result in more sales and Profits.
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