Tata Motors Limited is one of the India largest automobile corporation with having 81,090 employees worldwide (Mitra, 2011). As per the company last fiscal year of the company, there estimated revenue was about 45.2 billion U.S. dollars (Statista, 2018). In 2015, the name of the most valuable corporate brand in Asia was Tata Motors. The company headquarter is situated in Mumbai. The major products manufactured by Tata motors include passengers’ cars, vans, trucks, sports cars and military vehicles. In addition, as per the annual report of Tata motors, there net profit was 1.4 billion U.S. dollars in the fiscal year of 2018 (Statista, 2018). Guenter Butschek is the current CEO of Tata motors groups and he is also responsible for all domestic and overseas subsidies in association with Tata motors (Sudhakar, 2018).
Presently, Tata Motors group is serving 175 countries with a global network covering over 6,600 touch points. In 1954, the company comes in the commercial vehicle sector with a joint venture with Daimler-Benz of Germany. For many ages, Tata dominates the commercial vehicle market and then they entered in the passenger vehicle market in 1991 with launching of Tata Sierra (Becker-Ritterspach & Bruche, 2012). In 1998, Tata introduced Indica, which is the first fully indigenous Indian passenger car. Tata Motors also make them registered in NSE in the year 2004. With the time, the group acquire many stakes and also make joint ventures to diversify themselves into every vehicle segment like aerospace and also to enhance their styling and designing capabilities.
This analysis helps in bringing various external aspects relating to the company i.e. Tata Motors. The different external forces that are having a significant impact on the business enterprise are political forces, economic forces, sociocultural forces, technological forces and Legal forces (Helms & Nixon, 2010).
In India, one of the biggest competitors of Tata Motors is Maruti Suzuki (Panizzolo, Garengo, Sharma & Gore, 2012). It was established in 1981 and they are committed to producing best vehicles for the Indian roads. This company is also having the biggest share in the market with various vehciles focused on fuel efficiency like Alto, Maruti Swift, etc. Due to the market share, it is considered one of the top competitor against Tata motors. Other competitors of Tata motors in India include Hyundai, Toyota, Mahindra, Honda, Ford and Renault.
Automobile industry in itself is a differentiated oligopoly market, which tries to distinguish their products from those of rivals (Esteban & Shum, 2007). These Oligopolies have a few key players in the market and in automotive company; costs are large barriers to enter into the industry.
However, one of the cars produced by Tata Motors i.e. Tata Nano is dissimilar in terms of its price as it enjoys monopoly in the global market due to the price which starts from Rs 1,34,000 (Indian Currency) in respect with base model (Sharma & Iyer, 2012). It replaces the existing competitor car i.e. Maruti 800 which is around for many years at a base price of Rs 1, 84,600.
Customer of the Tata Motors is the group of individual who are looking for an affordable 4-wheeler for their family. These customers are needs of innovative and trendy vehicles with world-class safety features. The company mainly aims at Aspires and Seekers. In addition, the customers also purchase their cars for personal purposes through the loan. They preferences are now shifted to superior quality of the car, which includes airbags, touch infotainment system, and many more.
Moreover, In India, People are seeking for quality Tata cars as due to their previous use of one of the Tata Motor vehicles Indica, many people are not able to trust completely on their own country brand (Yadav, Khan, Pal & Sharma, 2015).
|
Strengths |
Weakness |
|
· Leader in the commercial portfolio and the country top three-car manufacturer. · Diversified product portfolio. · Research and development activities, which improves competitive strengths. · The division relating to Jaguar Land Rover is doing very well. |
· Their major plans and procedures are restricted towards India only. · Nano perception in a low cost segment car keeping the customer away and this leads to decline in sales (Borgave & Chaudhari, 2010). · Employee productivity – The weak revenue per employee cause the company a weaker productivity and this leading to operational inefficiency. |
|
Opportunities |
Threats |
|
· With the help of organic and inorganic routes, the country has an opportunity to expand in other countries with exporting. · Electric cars can have huge market potential in future. · Extended E-Commerce market and digital medium (Chandra Shukla, Deshmukh & Kanda, 2009). |
· Increase in the competition from the other global markets incudes the home country competitors i.e. Maruti Suzuki which is known for its excellent customer service and experiences. · Various environment policies in different countries to curb the pollution. |
The company does not follow particular marketing approach but it considers that all the members of the society should be served. Their mission statement states that – “We innovate with passion, mobility solutions to improve the quality of life”.
The company is focused on raising their market share globally with the help of new Gen X Nano in the Canadian market. Below are some of the long-term and short-term financial objectives that are based on the expected revenue.
Short- Term –
Long- Term –
The Gen X model is designed to target individuals who also come in the Middle Class Professionals. Their income level will be range between $35000.00 to $65000.00 CAD annually. The secondary targeted individuals will be Youth and Senior citizens.
Tata Motors will try to get the market demand of the youth that believes in purchasing second hand car as their first cars after getting their G license in Toronto. The major characteristics of this brand new Gen X Nano are lies in its competitive price and superior mileage. Moreover, as the car is Compaq hatchback, Tata motors will also try to cap the senior citizens as it needs a less space to drive and various security standards were also well placed considering the adequate needs of the senior citizen.
Gen X Nano will be the product that will be in introduced in to the Canadian market. It will be a feature rich PV that equipped with the latest technology and design engineering. The product is made by considering youngsters and family in mind, and this it will include a roomy passenger compartment with generous leg space and head room. Moreover, four people can easily be seated in the car. It also set a new benchmark among small cars due to its mono-volume design (Crainer, 2010). In the engineering design, the lean design strategy also helps in minimizing weights and maximising performance in terms of energy consumer and fuel efficiency. The Nano Gen X will be available in seven colours – Royal Gold, Dazzle Blue, Damson Purple, Pearl White, Meteor Silver, Sangria Red and Persian Rose.
In respect with introducing Gen X Nano, the best pricing strategy would be market penetration pricing. In this strategy, the product initial price will be low so that it can gear up in formulating sales, market share and revenue generation (Liu, 2010).
This product will be unique ever to be seen in Canada. This makes the price to be set between $8000 CAD and $10,000 CAD dollars. Customers will also be given monthly payment option, as an instalment in they cannot able to give full payment at once.
In order to promote the product to the target market selecting most effective type of advertisement in relation with Gen X Nano in the Canadian market. The main objective of this section is to enlighten the market at the early stage of product life cycle and later in their maturity phase. The multiple channels will be –
Combination of these media will be adopted by Tata motors to meet the customer expectations conveniently.
It will be best to launch with location in the Toronto area which is a major city in Ontario Canada. This place is also classed as the biggest city area in the province with a population of 6,055.7 (thousands) people as of 2014. Over the years, there is seen as a continuous growth and this brings large opportunities for several corporate businesses. The sale needs to be maintained by the Tata Motors dealers that will be located in the heart of the place at 2300 Danforth Ave, Totonto, Ontario.
It will include highly talented staffs that have a skill set to convert potential customers into consumers. As Tata motors is launching its new car in the market, it is important to conduct rigorous training programmes so that it will refine their entrepreneurial skills and impart comprehensive product knowledge. As in future, they will the part of sales promotion activities, the structured skill set is important to make the deal crack with the customer.
In this aspect, it is important that the company make a positive impression on the clients during the first meeting of sales of GNX Tata Nano. This can be done with the help various tangible cues during the events such as the brochure given by the sales team to the client, supreme coffee making machine during the time of sale or event, etc.
Canadian markets are a hub of different car companies (Sturgeon & Van Biesebroeck, 2011). For making effective advertisement of GENX Tata Nano in the market, it is important to consider various costs like location, sale representative salaries, advertising channel costs, etc. Below is the estimation cost for the respective expenses –
|
2016 |
2017 |
2018 |
|
|
Variable cost: |
|||
|
Cost of Goods Sold |
$90,000,000 |
$135,000,000 |
$90,000,000 |
|
Advertisement cost: |
|||
|
Radio |
$3,000,000 |
$2,500,000 |
$2,000,000 |
|
Television |
$7,000,000 |
$6,000,000 |
$5,000,000 |
|
Newspaper |
$2,000,000 |
$1,500,000 |
$1,250,000 |
|
Digital |
$5,000,000 |
$4,000,000 |
$3,500,000 |
|
Salary for sale representative: |
|||
|
Salary |
$10,500,000 |
$15,000,000 |
$16,000,000 |
|
Distribution cost |
$10,000,000 |
$15,000,000 |
$10,000,000 |
|
Administrative cost |
$8,000,000 |
$12,000,000 |
$10,000,000 |
|
Fixed cost : |
|||
|
Property, Plant and Equipment |
$50,000,000 |
$10,000,000 |
$7,000,000 |
|
Total |
$185,500,000 |
$201,000,000 |
$144,750,000 |
|
Contribution margin* |
45.80% |
45.43% |
44.90% |
Sales Forecast
|
Revenue |
2016 |
2017 |
2018 |
|
Units 24,000 @ $10,000 |
$240 million |
||
|
Units 35,000 @ $10,000 |
$350 million |
||
|
Units 25,000 @ $10,000 |
$250 million |
||
|
expenses |
$185,500,000 |
$201,000,000 |
$144,750,000 |
|
Profit(revenue-expenses) |
$54,500,000 |
$149,000,000 |
$105,250,000 |
|
2016 |
2017 |
2018 |
|
|
Total Sales ( in mn $) |
4.76 |
14.86 |
23.03 |
Breakeven analysis is a point where organization needs to cover its costs and also there is no profit/loss situation
Breakeven point – Planning of selling 2000 cars initially.
Genx Tata Nano manufacturing costs come to $8,000/per car and to retailer, it will be sold them at $10,000.
So, mark-Up costs will be $2,000.
Consequently Mark-up (%) = 2000/8000 = 25%
Margin (%) = 2000/10000 = 20 %
|
2016 |
2017 |
2018 |
|
|
Forecasted market revenue |
$200 million |
$350 million |
$250 million |
|
Market share% |
18.5% |
22.5% |
19% |
Conclusion and Recommendations
For the successful of any business organization, it is important to understand the customer perception to as to increase the area of effectiveness. Tata Motors is one of the pioneer company of India having operations in many nations across the globe.
Launching of Genx Tata Nano in the Canadian market needs of proper marketing strategy and in-depth analysis of their market. This includes focussing on the four aspects of marketing mix i.e. – Product, price, place and promotion.
This marketing plan needs to be addressed from all perspectives of the business environment in order to exploit the market growth and opportunities. In addition, Sales promotion will be an effective tool considering the initial phase of the product.
References
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Becker-Ritterspach, F., & Bruche, G. (2012). Capability creation and internationalization with business group embeddedness–the case of Tata Motors in passenger cars. European Management Journal, 30(3), 232-247.
Borgave, S., & Chaudhari, J. S. (2010). Indian auto component industry: challenges ahead. International Journal of Economics and Business Modeling, 1(2), 1.
Chandra Shukla, A., Deshmukh, S. G., & Kanda, A. (2009). Environmentally responsive supply chains: learnings from the Indian auto sector. Journal of Advances in Management Research, 6(2), 154-171.
Crainer, S. (2010). The Tata way. Business Strategy Review, 21(2), 14-19.
Esteban, S., & Shum, M. (2007). Durable?goods oligopoly with secondary markets: the case of automobiles. The RAND Journal of Economics, 38(2), 332-354.
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Lee, I., Choi, B., Kim, J., & Hong, S. J. (2007). Culture-technology fit: Effects of cultural characteristics on the post-adoption beliefs of mobile Internet users. International Journal of Electronic Commerce, 11(4), 11-51.
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Panizzolo, R., Garengo, P., Sharma, M. K., & Gore, A. (2012). Lean manufacturing in developing countries: evidence from Indian SMEs. Production Planning & Control, 23(10-11), 769-788.
Shafiulla, B. (2014). Tata Nano to tata no-no. IUP Journal of Marketing Management, 13(1), 78.
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Singh, S., & Srivastava, P. (2012). The turnaround of Tata Nano: reinventing the wheel. Vision, 16(1), 45-52.
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