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The Marketing Plan For Reva Electric Car

5304 words (21 pages) Essay in Marketing

27/04/17 Marketing Reference this

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The automobile industry has been one of the key industries world-wide. With advancing technology, easy and swift transportation has helped the consumers move from one place to another with comfort and pace. As seen in the figure on the left, the developing countries like India, China, Brazil and Korea are way off the trend and hence there is a huge potential for the growth of this automobile market. India, in particular, is on the lowest on the vehicles per thousand people amongst all the developing nations. With increasing revenues and higher GDP growth expected in the coming years, Indian consumers are set to have higher disposable incomes with high spends on wants than on needs.

History of Electric Vehicles

The history of electric cars is a very interesting one. The first electric vehicle was invented by a Hungarian called Anyos Jedlik, who built a tiny car powered by a simple electric motor. Further improvements in battery technology led to electric cars becoming very popular in US/Europe in the late 19th century. But after major advances in internal combustion engine technology, mass production of vehicles by the likes of Ford and GM sent the electric car into temporary hibernation. The energy crises of the 70s again led to a surge in interest for electric cars, but again they failed when it came to mass marketing. But in the last 6-7 years, thanks to some pioneering advances in battery technology and efficient power management techniques, the electric car market has emerged from oblivion and today most major car manufacturers in the world have a product in the electric car segment.

Some companies have also started up exclusively to design and manufacture electric cars – Coda Automotive in the USA, Buddy Electric in Norway, our very own Reva Electric Company. Tesla motor company in the US manufactures flamboyant electric sports cars dispelling the general notion that electric cars are slow, odd-looking cars only meant for pollution conscious consumers.

Some in the industry have ambitious predictions. Diarmuid O’Connell, of Tesla Motors, estimates 3 in 10 cars will be battery electric or plug-in hybrid [1]. Carlso Ghosn of Nissan has similarly predicted that 1 in 10 cars will run on battery alone by 2020. An independent study by Deloitte suggested electric and other ‘green’ cars will represent a 3rd of all car sales worldwide by 2020.[2]

Indian Markets – Need for electric automobiles:

The Indian Markets saw the surge in electric segment a little late than European Markets. The credit to the innovation goes to Chetan Maini who founded Reva Electric Car Company in 1994.[3] But the real interest towards the electric segment went up in the market after Mahindra & Mahindra bought 55.2% stake in 2010. The rising price level of petrol and the growing concern towards environment in metro cities have attracted a lot of customers lately and the number of potential customers has been growing. We interviewed Mr. A.K.Ambasht (Member Secy of Delhi Pollution Control Committee) to take his perspective on Reva. They distributed REVA among the employees to promote the car on road in Delhi. The basic reasons for the promotion have been discussed below:

1. The pollutants like sulphur and nitrogen compounds (SO2 and NO2) emitted from the petrol and diesel vehicles was increasing at an uncontrollable pace.

a. Delhi alone accounted for total volume of cars in all other metros, leading to extremely large amount of emissions.

b. These pollutants mixed with the air particles to form extremely dangerous compounds, thus resulting in a myriad of diseases.

2. We were increasingly becoming dependent on the fossil fuels (fast depleting). It is known that these sources are not going to last long. Thus there was a need to look for alternate sources of fuel, before the fossil fuels get exhausted.

Battery operated cars do not depend on fossil fuels and also do not cause any emissions, thus serving as a twofold solution to the air pollution as well as the depleting sources problem.

If looked from the Product Life Cycle concept, Indian Market is still predominantly occupied by innovators but the rising fuel prices and Go-Green initiatives by different corporates have boosted the idea of Electric cars. If the growth meets the expected levels Indian Market will easily be under Early Adopters in 3-4 years and the shift to Early Majority will be very quick.

As the final report project the team has decided to interview a few employees of SAP India who encourages their employees to use REVA by giving them incentives in their travel reimbursements.

Reva to Mahindra Reva:

Reva is an electric car which was introduced in the Indian market by Mr. Chetan Maini in 1994, under the aegis of Reva Electric Car Company (RECC). The market for the electric cars in India was not yet ready to accept the same as a mainstream product and the company faced a hard time to manufacture and sell the product. To meet the high technology requirements of the electric car, Reva tied up with reputed vendors to provide a competent and technically sound car to the Indian consumers and launched the first version of the car in year 2001. [3]

Initial marketing plans of the company were focused on explaining the benefits of the electric car vis-à-vis the conventional cars present in the market. Cost of education in addition to the cost of manufacturing was prohibitive in the Indian market. Forecasts of selling 1500 cars a year turned out to be a far-reaching one and the company was able to sell only 300 cars in the first year [4]. This compelled the company to take the car out of the market in first three years of the launch. The focus of the promoter was always on enhancing the product and the marketing was carried out educating the enhancements and the features of the car. Being a heavy capital-intensive industry and low returns, the growth of the company was limited.

Source: Electric Vehicle India, Rekha Salvi, O&N India, Sreehari B. Nambiar, O&N India; FinPro

In 2004, RECC tied up with a UK based firm to market its car into the European markets. The European markets were highly encouraging as the non-conventional fuel cars and especially the electric cars were given special incentives and impetus by the respective governments. The reviews for the car in these markets are found to be satisfactory and competent to the competitors.

The main product features differentiating Reva from the competitors were:

Unique Drive System

Power Pack

Energy Management System

Portable Electronic Tool

Climate Control Seats

HVAC system

Chassis and suspension

Use of indigenous items [7]

Since 2001 to 2010, Reva sold 3500 units, out of which 50% of the sales were in the domestic market, while the rest was from the overseas market.

During the early days of car marketing, the marketing research found that the company was not successful in conveying the message clearly to the potential customers. The following factors were attributed to the failure of the product:

Product was targeted to small families, old couples and female drivers with the idea of promoting small size, easy to drive and slow speed. Though Reva had a beneficial cost proposition of only Rs. 0.40 per km, it was not a cheap car. Other competitors had a strong presence and influence on the targeted audience.[4]

The product was not appealing to the youth of the country and they found the car to be slow in speed, frequent charging requirements and inconvenience for long drives. These people thought the car to be way below their league.

The car was not able to create buzz and excitement in the market despite being the first Indian car to enter in the segment.

There were not enough variants available for the customers to choose from.

In 2010, a large Indian conglomerate, Mahindra & Mahindra acquired a large stake in the company and aggressively took steps to promote the Reva-electric car. Backed by the strong sales channel and a focussed marketing group experienced in the automobile industry, the company is geared up to launch three new variants with a target of selling 30,000 units in next three years.

The new management portrays the willingness to learn from the past mistakes and has brought out globally competent designs and technology with focused investments.


To use marketing management concepts learnt in the course to design an integrated marketing plan to improve the market penetration of REVA – Electric car in the Indian Market


Research Methodology:

Design: –


To understand consumer behaviour with respect to attitude towards purchasing electric cars in general and then proceeded to evaluate, we created survey and interview templates targeting the following sets of people

Potential Customers : Diverse age groups, occupations, marital status, income

Design Type : Survey & Interview (Similar questions but interview goes into details)

Understand needs of customers who are purchasing a car

Understand attitudes towards non-conventional cars (petrol/diesel versus LPG/CNG/Electric)

Understand consumers’ perception and knowledge of electric cars in general and Reva in particular

Understand what sources they are likely to depend on, criteria considered and weights of each criteria considered while making a decision

Current Owners

Design Type : Qualitative Interview

Understand what made them choose Reva

Understand their experience so far with the car

Understand expectations met, exceeded and gaps

Understand post purchase service quality, wear and tear, availability of spare parts

Understand perception amongst friends and colleagues


Design Type : Qualitative Interview

Understand the general profiles of people who visit the store

Understand what unique features attract customers to buy electric cars

Understand major concerns of customers

What deals and promotions has the company recently pursued

Understand company future strategy from an insider’s perspective

Approach & Execution: –

For potential customers, we did surveys as well as focused interviews. The template for the same is available in the index

Survey: The google form based surveys were floated to groups from two different backgrounds – IT professionals & MBA Students. This helped us capture consumer perception in different occupations. The sample size was around 25 for each group

Interview: We interviewed people of various demographics, marital status, earning levels, gender to get more details of their perception. One of the advantages of using the interview method was that it compensated for some of the limitations of the online survey where it was difficult to get a decent sized sample of married people, 30+ age group.

Some of the interviews were face-to-face and some were conducted over the phone.

The transcribed interviews are available in the Appendix

For the dealer, we conducted face-to-face interview in the Bannerghatta Mahindra showroom. There were some focused pre-planned questions which were answered by the dealer and other details were added as we went on. The interview template is available in the Appendix. We felt that dealer interviews were very helpful not just in terms of understanding competition, market size but it also helped us gain useful insights about customer perception.

For the owner, we tried to understand what their expectations were prior to purchase and how well their expectations were met. We also tried to understand some of the softer issues like service which would be good-to-haves.

Results & Observations:-

Based on the surveys and interviews conducted for the above sets of people, we found the core needs of the product as follows:

Stated Needs: Travel from one place to another.

Real Needs: Easy to drive, comfort and mileage

Unstated Needs: Safety and low-maintenance

Delight Needs: Speed and style

Apart from these there is immense potential for the electric car segment itself to become a premium product in the upcoming years, a potential need.

We were able to analyse and find patterns in the consumer behaviour in decision making for a new car purchase.

Most consumers do not have adequate knowledge of electric cars, don’t consider them part of the mainstream car market and do not evaluate it as an alternative when buying a car.

The environmental friendly aspect does not seem to be a major factor for potential vehicle customers and was not the deciding factor even for REVA owners at the time of purchase

Most consumers feel that the REVA is overpriced and not value for money.

Most consumers rated REVA very high on agility and city driving comfort

The REVA is most popular among working women in the 25-35 age range

The REVA is also popular to an extent among college goers in the 18-25 age range, but in this case the buying decision is made by the parent

There are no direct competitors to the REVA as there is no other electric car in the Indian market. It can be considered an isolated product as people who are inclined to buy the REVA

There is a mixed opinion about the aesthetics of the car. Some have compared it to US / European micro-car models like Smart and felt there is a scope for improvement in looks

Tech-savvy people seem to be more inclined to consider buying the REVA

Married people seemed to be relatively more interested in purchasing the car.


Market Segments:-

Assumptions: In our objective, we have stated that we are focusing on urban middle/upper middle classes for our product. Our consumer behaviour study has focused on this set of people only and the segments that we have considered are subsets of this set

Based on our analysis of the results obtained in the demographic survey and interviews, we have identified the following market segments and a brief description of their profiles:

Initial Demographic Segmentation

The main elements of differentiation among these groups are occupation, gender and age group

Students (Male & Female) in the 18-25 age range

These are mostly under-graduate and post graduate students in urban settings. They use the car to commute to and from college.

Male working professionals in the 25-30 age range

These are mostly urban IT professionals with a earning potential of 6-12 lakhs. They have disposable income for buying a car

Working women & housewives in the 25-35 age groups

These are mostly urban women working and earning around 6-12 lakhs per annum. They are identified to have an inclination for buying electric cars for short commutes to and from office

Note: All within the urban upper middle/middle class superset

Profiling of the Potential Customers:

On analysing the different interviews from multiple clusters, we have profiled 3 segments which we find should be the intial targets for the Reva’s new variants

Profile 1: Chintan Buch

# Male, 32 years, IT Professional, Bangalore, 18lacs CTC, Married

Chintan Buch is an IT Professional working in Bangalore and living in small family with his wife and mother. Chintan owns a car and a two-wheeler. He has to travel around 18-20 kms everyday back and forth from office. The recent hike in petrol prices and the Bangalore traffic has pushed Chintan to car-pool for his transportation to his office. He earns around 18 lacs per year and planning to buy a car for his wife for daily household requirements. His wife is not very familiar with driving and hence looking for a car that is easy to drive. Mileage and aesthetics are the two parameters which Chintan is looking for in a small car. When asked about Reva he showed his willingness as he is very concerned about the increasing pollution in Bangalore. Although he feels that that the looks of Reva is very catchy and the car is value for money but he feels that the car should focus for pick-up and performance. On the whole he is convinced with the feature and planning to buy Reva for his wife in near future.

*Refer Appendix A-Interview # 8 for the complete conversation.

Profile 2: Manan Nagori

#Male, 26 years,Self-Employed,Ahmedabad,6 lacs CTC, Single.

Manan Nagori is a self-employed, unmarried individual from Ahmedabad who lives with parents and one sibling. They have one car and 3 two-wheelers. He uses all his vehicles for his daily travelling and seldom uses car for out station travels. He is planning to buy a car to replace one of his two-wheelers. He is currently using a car loaded with LPG Cylinders and not happy with the performance of the car. He is very concerned about the pollution and safety is one of the concerns for Manan. Asked about Reva he looked happy about the features and given a lowered price he is ready to buy it in near future.

*Refer Appendix A-Interview # 10 for the complete conversation.

Profile 3: A.Sarojini

#Female, 58 years, Manager- Entyce Corporation, Bangalore, 12 lacs CTC, Married.

A.Sarojini is a married and working professional living and has a car for her family use. She has no concern for the performance but keeps a care about the aesthetics and mileage of the car. She is not very tech savvy and depends on the salesperson for the specifications of the car. She has a high inclination towards electric cars as she feels that the car should be value for money. Asked about Reva she showed her willingness towards buying the car.

*Refer Appendix A-Interview # 16 for the complete conversation.

Further segmentation based on psychographic research:

After further researching the above 3 demographic segments, we narrowed down our target group to the following

Working Women aged 25-30, independent lifestyle, believes in living life on her own terms. She is modern, yet at the same time she is rooted in conservative culture. She does not believe in being dependent on men and is progressive and has concern for the environment

Housewives in the 25-35 age range, the family may already own a car and the car is being bought for the wife. This type of woman has a major say in the buying decisions of the household which is brought out by our interviews

The women in these target groups felt that REVA gives them the freedom of easily navigating through city traffic and very useful for commuting to work or short distances for shopping. She sees it as a tool to come out of the confines of her household and be more confident.


After the demographic segmentation, we proceeded to do a psychographic segmentation to understand the psychographic profiles of the people within the demographic target groups, i.e. what is the lifestyle and general attitudes of the people who would prefer this car.

The demographic and psychographic segmentations were superimposed to get a final picture of our target segments

We proceeded by creating 2 particular profiles for the people within the demographic groups that were identified to have a potential for buying this car

Profile 1: Urvashi Jajoria

#Female, 26 years, Business Consultant, New Delhi, 8 lacs CTC, Single

Urvashi is a business consultant working in New Delhi. She lives with her family members. She is independent, creative and believes in her own decisions. She is traditional as well as fashionable, keeps herself a bit informed and loves to party with her friends in clubs and loves shopping in big malls. She travels around 30-35 kms daily for her office for which she uses a car pool. She is thinking of buying a new car. She looks interested in buying REVA if she finds the new model attractive and it fits for her requirements.

*** Based on her responses she fits Strivers/Seekers in VALS Framework of psychographic segmentation.

Profile 2: Rajani Ch.

#Female, 26 years, worked in DLS, Gurgaon, 20 lacs CTC, Married

Rajani worked in DLS Gurgaon. She lives with her husband. She is independent, influences decisions, takes initiatives and looks for value for money. She is traditional as well as fashionable. She travels around 20kms daily. Her husband owns a four wheeler and they are looking for a second car in the family. She looks interested in buying REVA if it fits her comfort and safety requirements.

*** Based on her responses she fits Achievers/Globals in VALS Framework of psychographic segmentation.

We interview people belonging to the above profiles and in this we particularly focused on understanding their lifestyle, views on woman’s independence, how they make choices and we then proceeded to understand their attitudes towards electric cars in general and REVA in particular

*Detailed interviews of these people are attached in Appendix B

From the psychographic and the demographic primary research, we feel Reva should target the Achievers/Globals and the Strivers, found to be independent, confident and earning well to be the initial customers for its different variants of the new Mahindra Reva NXR an NXG cars.

Spending estimates of the target segments

Source: The ‘Bird of Gold’ : The Rise of India’s Consumer Market, May 2007, Mckinsey Global Institute

In the coming years from 2015-2025, India is going to witness interesting times when the deprivers, aspirers and seekers would move one step ahead and the disposable incomes of these segments are estimated to be the highest. With increasing disposable incomes, Reva should start early and Catch Them Young.

Positioning Strategy:

The target segment identified is “Working women in the 25-35 age category”.

Our positioning line could be

“REVA -Redefining value, just like you “

Although the consumer in this segment is inclined to buy an electric car, we have identified a few perceptual biases against the REVA which need to be addressed

Safety: Most consumers in this category have indicated that they consider REVA to be unsafe. They have a feeling that the car cannot take impacts. Some have also mentioned the fact that the car is tall and narrow and is prone to toppling on minor impacts or even due to road bumps.

But a closer look at the features reveals a different story. Among the smaller cars in the Indian market including the Alto, Nano, REVA has the most solid frame and is more impact-resistant but the company has not been able to communicate this to its audience

Value for Money: Most consumers that we interviewed felt that, at 4.5 lakhs, REVA is probably very costly and they made frequent comparisons to NANO. But our interaction with dealers and owners reveal that if we analyse overall cost over a period of 5 years, taking into consideration fuel costs ( Rs 0.5 per km) and maintenance costs (Rs 600/year), we would realize that the REVA is more value for the price paid. So this particular aspect also needs to be communicated to our target audience.

These perceptions are severely affecting REVA’s reputation and our positioning should address these two core issues in addition to having a special appeal to working women. The positioning line should most importantly drive home the fact that it is cheap. Further customer communication should basically enable the customer to understand the arguments behind the whole value.

We have attempted to answer these problems in the detailed marketing plan that follows.

Structural Analysis – 5Cs for MAHINDRA REVA


Product Line

The following are the REVA products that are currently available:

REVAi: It was launched in January 2008 and this was a revamped version of the original REVA. Till March 2011, 4000 units of car have been sold in India.

Some of its features are:

Four-seater – 2 adults and 2 children

Top speed – 80 kmph

Maximum range for full charge – 80km

Time taken for full charge – 8hrs

Consumes 16 units for 8hrs charging (approx. cost for charging once is Rs. 32)

It has safety features such as front disc brakes, a collapsible steering column, reinforced chassis, etc.

REVA NXR: It was branded as REVA NXR City and was launched in late 2012.This car has major improvements over the older models.

Some of the improved features are:

Maximum range for full charge – 160 km

Four-seater – Can comfortably seat 4 adults

Regenerative breaking capability i.e. recharges the battery upon breaking

REVA NXR L-ion: It was branded as REVA NXR Intercity; this was launched in Jan 2009 and it uses lithium-ion batteries instead of the traditional lead-acid batteries.

Some of its features are:

Four-seater – 2 adults and 2 children

Top Speed – 80 kmph

Maximum range for full charge – 120 km

Time taken for full charge – 6hrs

Image in Market

The first criterion that a prospective buyer of car looks at is the price of the car. Since the initial price of REVA is quite high compared to other small cars, there is a general perception among the buyers that it is expensive. Prospective buyers also believe that the looks of the car are really bad. They believe that REVA can be used only for travel within city limits and can’t be used for long distance drive unless charging points are made available on the highway.

The users of the car worry that they have to replace their batteries every few years. They think that REVA possesses high safety risk due to the presence of battery inside the car and the possibility of toppling over in case of an accident. For these reasons, most people do not see a positive Return on Investment on this car. However, some users believe that REVA is easy to drive, especially in crowded area and the service offered by the company is excellent. Also, they believe that the body of this car does not get dented very easily which is a strong selling point in the Indian market because of high traffic and ruthless driving.

Technology & Experience

REVA has an in-house electronic system that manages energy usage better. The company has been bringing in better and cost-efficient chargers and batteries that take 6 to 8 hours to fully charge. It has advanced telematics systems and superior systems to determine battery conditions.

The users of REVA are highly satisfied with the technology embedded in the car. High charging time is the only perceived disadvantage.


The goal of the company is to produce economical and convenient electric cars at a time when there is a worry about climate change, energy security and high oil prices. Mahindra wants to advance the design and production of REVA worldwide.



After being acquired by Mahindra, REVA’s distribution network has received a sudden boost as it is now being distributed through Mahindra outlets which have a wider reach into metros (more showrooms in a given metro) and Tier II cities.


To support its huge plant in Bangalore, REVA has built up an extensive chain of suppliers and component manufacturers. Recently, it was announced that REVA had agreed on a deal with Continental India to provide components for its basic functions controller (BFC), immobilizer and remote keyless entry system.


Market Size & Growth

India, a growing economy, has tremendous potential for the growth in the automobile industry. With the passenger vehicle density in India being only 13 per 1000 persons, as compared to the other developing and the developed countries, there is a huge scope for the different varieties and brands of automobiles in India. The following report from ICRA gives a holistic view of the growth potential of this segment.

Source: CRISIL Research, SIAM

Source: Indian Passenger Vehicle Industry: Growth Momentum to continue, ICRA

Source: Maruti Suzuki, India Passenger Vehicle Market, Vivek Kumar, Corporate Planning, April 2011

The above market study made by Maruti-Suzuki demarcates that the income levels of the consumers is increasing. To have a long-lasting effect, Reva should target the top brackets early and ‘Catch them Young’.

After our segmentation and targeting exercise, we have narrowed down our target market to urban middle income families.

From census data, we obtained the statistics on A1, A2 group for 6 Tier 1 cities. From this, we estimated the number of these families in the Tier 1 cities.


The market consists of A1, A2 populations from the Tier 1 cities i.e. Delhi, Mumbai, Kolkata, Bangalore, Chennai and Hyderabad.

4 people per family

10% of the urban population belongs to A1, A2

40% of the families in Tier 1 cities in A1, A2 category fall under our target segment

The total number of families in Tier 1 cities in A1, A2 category is 12 lakhs (47,889,988 X 0.1 / 4). Hence, the potential size of the market is 12 lakhs. The size of the target market is 4.8 lakhs (40% of 12 lakhs).

This category will grow in size with rapidly increasing urbanization and movement of jobs to urban areas. The Urban population growth (annual %) in India was last reported at 2.32% in 2010, according to a World Bank report published in 2012. The potential size of the market will grow to 15 lakhs and that of target market will grow to 6 lakhs (40% of 15 lakhs) in 10 years.

Market Segments

The major segments identified after the STP exercise (Psychographic and demographic segmentation) are:

Housewives aged between 25-35 belonging to urban middle class families –

These women belong to the group of innovators, who are sophisticated, well-informed, seek novelty and worry about environmental pollution. Here, the person who initiates, influences and decides the purchase of a car is the husband and the user of the product is the housewife.

Independent working women in the 25-35 age range –

This group also falls under innovators who are successful, have unique tastes and are concerned about environment. In this case, the working women are the ones who initiate, decide, buy and use the car. She may be influenced by friends, review of cars available online or sales person from showrooms.


The customers can access REVA car from Mahindra showrooms present in tier – I and majority of tier II cities.

Consumer Information Sources

Since most of the customers are innovators, they mainly rely on the information available on the internet and online car review websites. Here, the existing users of the car also share their experience with the car and provide review on the car. Information about REVA is also shared through friends and family who have used or heard about the REVA. Some customers, who are inclined to buy a small car

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