Tata Motors Market Strategy Analysis Marketing Essay

Tata motors is an Indians largest multi-holding company. It was established in 1945. This company caters to three market segment internationally. The passenger cars, Utility vehicles and commercial vehicles. The company produced the first mini-truck, first light and heavy vehicles and many more firsts in India, being an inventor in their industry. Tata motors has entered into strategic acquisition and joint ventures in its mid stage and launched new products at a rapid pace in various markets. Now a days, Tata motors enjoys the position of being Indian’s leading auto-mobile manufacturer with increasing presence in Europe, South East Asia, Africa, Australia, and the middle East with a total more of US $ 4 billion. The company focuses on providing customers the best value for their money meets European standards and environmental regulations through their advance technologies. A newer version of the car, named Indica V2, was a major improvement over the previous version and quickly became mass favourite. In United Kingdom a badge engineered version of this car was sold (Rover City Rover), which was big failure and declared the worst car ever driven on BBC Top Gear show. Tata motors also successfully exported large quantities of the cars in South Africa. The success of Indica in many ways marked the rise of Tata Motors.

The proposal will include the current position of Tata motors, International expansion, what are the things they have done to be successful. What are their weaknesses? How can they improve. Marketing factors effecting Tata motors. The company’s Swot analysis, its Boston matrix, Its market planning and strategy will all be included in the proposal.

(Yadong Lou 1999) suggests International Expansion is a process by which regional economies, societies, and cultures have become integrated through a global-spanning network of communication and trade. This report would not only define how Tata motors and tea expanded internationally but also what are the reasons of organisations to globalise, how complex this expansion is actually as it may seems to be mouth watering because of high profits and economies of scale but in practise it is not that easy. It is important to understand why Tata Motors did expand, though companies in the international arenas have experienced many benefits, however the complexity of the international business also brings a lot of risk with it. For Tata motors to justify international business activities, therefore, relied on the below reasons.

Generally international expansion is not easy as it may sound since many factors have to be taken in to account. For example Tata motors started from India with an international view but faced problems like political new country’s legislation and laws. For example Nano’s launch in October maybe delayed due to political issues related to plant land. Reference Free research report for 1Q 09 results. It should be taken in to account that Plant of Tata motors in India would be much more cost beneficial rather than a plant in Europe as there would be a difference in minimum wage laws. So to decide where a plant should be build lot of thinking is required. Economic factors were also taken in to account, since different countries would have different per annum income of the people hence to produce cars that would be affordable. Recession has not hit the third world countries as such but has hit European countries to much more effect so different international strategy is required. One of the reasons of Tata motors success is that they faced such challenges successfully.

Market targeting is a process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. Segmentation is dividing into distinct groups of buyers who have distinct needs, characteristics, or behaviour and who might require separate products or marketing programmes. As the Tata Group is a worldwide concern operating in more than 100 countries with thousands of products, there is almost no industry which seems to be untouched by the group. The focus of Tata’s market entry will be UK. There were several reasons for selecting UK as the target market. These favourable factors were the status of India as the favourable economic agent, UK Car market dynamics and potential, language similarity. The other countries which were considered as potentially attractive were: the USA – the largest market size in the world, Russia – emerging market with significant sales potential. The option of the USA as target market was declined due to extremely high quality requirements and other non-tariff barriers which make it hard for a new entrant to enter this market  

(Roger A. Kerin 1994)

Through strategic planning, the company decides what it wants to do with each business unit. Market planning involves deciding on market strategies that will help the company attain its overall strategic objectives. A detailed marketing plan is essential for each business, product or brand. The plan begins with an executive summary, which quickly overviews major assessments, goals and recommendations. Tata Nano is the cheapest car in the world. It is sold in home country India around Rs 1-lakh i.e. approximately USD 2000. Tata Nano was first launched in India on 1st April 2009 and expected to be in Indian market by July 2009. Since launching, it has created a huge buzz all over India. Within the first two days of lunching, it has received 5500 booking. The figures keep increasing every day since the launching. What makes Tata Nano so cheap? Basically, by making things smaller, lighter, do away with superficial parts and change the materials wherever possible without compromising the safety and environmental compliance. It is said that Tata Nano has better mileage than Toyota Prius and same gas emission as a scooter. The planning of this car is that it will be imported to Malaysia in parts by Tata motors and is assembled in its two assembly plants. There are forty sale offices in Peninsular Malaysia nationwide. All Tata Nano cars will be distributed through these sale offices only. Order can be made vide these distribution centres or its web site.

(Robert.E)

Market strategy:

Market strategy outlines the broad marketing logic by which the business hopes to achieve its marketing objectives and the specifics of targets markets, positioning, and marketing expenditure levels. How will the company the company create value for customers in order to capture value from customers in return? This section also outlines specific strategies for each marketing mix element and explains how each responds to the threats, opportunities and critical issues spelled out earlier in the plan.

Product:

Over the years Tata Motors have been successful in creating their brand image especially they use some famous stars as their spokesman. Other important marketing strategies are such as the packaging, innovations, and quality control. Tata Motors provide many innovative features to attract car lover. One of these innovations is the Tata Safari 4X4 Decor that has “Reverse Guide System”. A weather-proof camera is fixed to the rear car to help the driver while reversing the car.

Pricing strategy:

There are number of factors to determine the price of the car. Factors include like market condition for example it cannot be too low or too high with the prices of same vehicles of the competitors. Giving discount every month and special promotion for certain type of vehicle also one of the strong strategy use by Tata Motors. Discount can be made from Company’s profit or from dealer’s profit at certain range.

Place:

It includes the company activities that make the product available to target customers. Channels of distributions, locations and sales is usually adopted. Vehicle should be distributed in a systematic way, from the plant to dealership and to end user. Tata Motors has an extensive dealer network covering Indian and International markets. Wherever you are, there is a Tata Motors Sales and Service dealership close to you

Promotion:

Personal selling: There is cold calling to customer, this is done by collection of customer data bases done by the sales officers. Hence there is minimum personal selling involved.

Advertising is any paid form of non personal presentation and promotion of ideas, goods or services by an identified sponsor. It is designed to promote the sale of a product or service. The various media that can be used for advertising are T.V, Newspaper, Magazines, Hoardings, and Internet etc. Tata Motors is responsible for the advertising of its products. The dealer conducts point-of-purchase displays to advertise the products. The advertisements done by the Co. help the dealer to capitalize on the market. Advertising is often used to make consumers aware of a product’s special low price or its benefits. But an even more important function of advertising is to create an image that consumers associate with a product, known as the brand image. The brand image goes far beyond the functional characteristics of the product. The products of Tata Motors have many special characteristics to them, but when consumers think of it, they not only think of its features, but they may also associate it with quality, performance, and class. All of these meanings have been added to the product by advertising

Sales promotion is a short term incentive to encourage the purchase or sale of a product or service. Its purpose is to supplement and coordinate advertising and personal selling. It is designed to persuade consumers to purchase immediately by providing special incentives to them for example extra product, prizes or gifts. During festivals such as diwali customers are given festive discounts.

Public relations is building good relations with the company’s various publics by obtaining favorable publicity, building a good corporate image, and handling or heading off unfavorable rumors, stories and events. The Co. takes serious measures to maintain good public relations. The Co. follows business ethics to ensure that the customer is satisfied and receives good service whenever and wherever he desires.(Edmund Jerome McCarthy).

SWOT ANALYSIS:

SWOT analysis helps a firm in strategy formulation, in responding strategically to the environment, the goal is to reduce identified threats and take advantage of the best opportunities. The following is the SWOT analysis of Tata motors

Strengths

The internationalisation strategy so far has been to keep local managers in new acquisitions, and to only transplant a couple of senior managers from India into the new market. The benefit is that Tata has been able to exchange expertise. For example after the Daewoo acquisition the Indian company leaned work discipline and how to get the final product ‘right first time.’

The company has a strategy in place for the next stage of its expansion. Not only is it focusing upon new products and acquisitions, but it also has a programme of intensive management development in place in order to establish its leaders for tomorrow.

The company has had a successful alliance with Italian mass producer Fiat since 2006. This has enhanced the product portfolio for Tata and Fiat in terms of production and knowledge exchange. For example, the Fiat Palio Style was launched by Tata in 2007, and the companies have an agreement to build a pick-up targeted at Central and South America.

Weaknesses

The company’s passenger car products are based upon 3rd and 4th generation platforms, which put Tata Motors Limited at a disadvantage with competing car manufacturers.

Despite buying the Jaguar and Land Rover brands (see opportunities below); Tata has not got a foothold in the luxury car segment in its domestic, Indian market. Is the brand associated with commercial vehicles and low-cost passenger cars to the extent that it has isolated itself from lucrative segments in a more aspiring India?

Opportunities

In the summer of 2008 Tata Motor’s announced that it had successfully purchased the Land Rover and Jaguar brands from Ford Motors for UK £2.3 million. Two of the World’s luxury car brand have been added to its portfolio of brands, and will undoubtedly off the company the chance to market vehicles in the luxury segments.

Tata Motors Limited acquired Daewoo Motor’s Commercial vehicle business in 2004 for around USD $16 million.

Nano is the cheapest car in the World – retailing at little more than a motorbike. Whilst the World is getting ready for greener alternatives to gas-guzzlers, is the Nano the answer in terms of concept or brand? Incidentally, the new Land Rover and Jaguar models will cost up to 85 times more than a standard Nano!

The new global track platform is about to be launched from its Korean (previously Daewoo) plant. Again, at a time when the World is looking for environmentally friendly transport alternatives, is now the right time to move into this segment? The answer to this question (and the one above) is that new and emerging industrial nations such as India, South Korea and China will have a thirst for low-cost passenger and commercial vehicles.

The range of Super Milo fuel efficient buses are powered by super-efficient, eco-friendly engines. The bus has optional organic clutch with booster assist and better air intakes that will reduce fuel consumption by up to 10%.

Threats

Other competing car manufacturers have been in the passenger car business for 40, 50 or more years. Therefore Tata Motors Limited has to catch up in terms of quality and lean production.

Sustainability and environmentalism could mean extra costs for this low-cost producer. This could impact its underpinning competitive advantage. Obviously, as Tata globalises and buys into other brands this problem could be alleviated.

Since the company has focused upon the commercial and small vehicle segments, it has left itself open to competition from overseas companies for the emerging Indian luxury segments. For example ICICI bank and DaimlerChrysler have invested in a new Pune-based plant which will build 5000 new Mercedes-Benz per annum. Other players developing luxury cars targeted at the Indian market include Ford, Honda and Toyota. In fact the entire Indian market has become a target for other global competitors including Maruti Udyog, General Motors, Ford and others.

Rising prices in the global economy could pose a threat to Tata Motors Limited on a couple of fronts. The price of steel and aluminium is increasing putting pressure on the costs of production. Many of Tata’s products run on Diesel fuel which is becoming expensive globally and within its traditional home market. These all factors held lot of importance for Tata motors to expand inte rationally.