Marketing Management - 1 Assignment
Marketing Management - 1 Assignment
Marketing Management - 1 Assignment
Introduction
India became the fifth largest auto market in 2019 with sales reaching to 3.81 million units.
It was the seventh largest manufacturer of commercial vehicles in 2019.The two wheelers
segment dominate the market in terms of volume owing to a growing middle class and a
young population. Moreover, the growing interest of the companies in exploring the rural
markets further aided the growth of the sector.
India is also a prominent auto exporter and has strong export growth expectations for the
near future. In addition, several initiatives by the Government of India and major
automobile players in the Indian market is expected to make India a leader in the two-
wheeler and four-wheeler market in the world by 2020.
Market Size
Domestic automobiles production increased at 2.36 per cent CAGR between FY16-20 with
26.36 million vehicles being manufactured in the country in FY20. Overall, domestic
automobiles sales increased at 1.29 per cent CAGR between FY16-FY20 with 21.55 million
vehicles being sold in FY20.Two wheelers and passenger vehicles dominate the domestic
Indian auto market. Passenger car sales are dominated by small and mid-sized cars. Two
wheelers and passenger cars accounted for 80.8 per cent and 12.9 per cent market share,
respectively, accounting for a combined sale of over 20.1 million vehicles in FY20.Overall,
automobile export reached 4.77 million vehicles in FY20, growing at a CAGR of 6.94 per cent
during FY16-FY20. Two wheelers made up 73.9 per cent of the vehicles exported, followed
by passenger vehicles at 14.2 per cent, three wheelers at 10.5 per cent and commercial
vehicles at 1.3 per cent. EV sales, excluding E-rickshaws, in India witnessed a growth of 20
per cent and reached 1.56 lakh units in FY20 driven by two wheelers. Premium motorbike
sales in India recorded seven-fold jump in domestic sales, reaching 13,982 units during April-
September 2019. The sale of luxury cars stood between 15,000 to 17,000 in the first six
months of 2019.
Government Initiatives
The Government of India encourages foreign investment in the automobile sector and has allowed 100 per
cent foreign direct investment (FDI) under the automatic route.
Under Union Budget 2019-20, the Government announced to provide additional income tax deduction
of Rs 1.5 lakh (US$ 2,146) on the interest paid on the loans taken to purchase EVs.
The Government aims to develop India as a global manufacturing centre and a Research and
Development (R&D) hub.
Under NATRiP, the Government of India is planning to set up R&D centres at a total cost of US$
388.5 million to enable the industry to be on par with global standards
The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in the country for
introduction of EVs in their public transport systems under the FAME (Faster Adoption and
Manufacturing of (Hybrid) and Electric Vehicles in India) scheme. The Government will also set up
incubation centre for start-ups working in the EVs space.
In February 2019, the Government of India approved FAME-II scheme with a fund
requirement of Rs 10,000 crore (US$ 1.39 billion) for FY20-22.
Road Ahead
The automobile industry is supported by various factors such as availability of skilled labour at low cost,
robust R&D centres, and low-cost steel production. The industry also provides great opportunities for
investment and direct and indirect employment to skilled and unskilled labour.
Indian automotive industry (including component manufacturing) is expected to reach Rs 16.16-18.18 trillion
(US$ 251.4-282.8 billion) by 2026.
INDUSTRY ANALYSIS
Tata Motors Limited, formerly Tata Engineering and Locomotive Company (TELCO), is an
Indian multinational automotive manufacturing company headquartered in Mumbai,
Maharashtra, India. It is a part of Tata Group, an Indian conglomerate.
Its products include passenger cars, trucks, vans, coaches, buses, sports cars, construction
equipment and military vehicles.
Tata Motors has auto manufacturing and assembly plants in Jamshedpur, Pantnagar,
Lucknow, Dharwad, and Pune in India, as well as in Argentina, South Africa, Great Britain,
and Thailand. It has research and development centres in Pune, Jamshedpur, Lucknow, and
Dharwad, India and South Korea, Great Britain and Spain.
TATA MOTORS
CVBU PCBU
MISSION – “We innovate mobility solutions with passion to enhance the quality of
life”
VISION - By FY 2024, we will become the most aspirational Indian auto brand, consistently
winning , by
Integrity
Teamwork
Accountability
Customer focus
Excellence
Speed
MARKETING STRUCTURE
4 P’s OF MARKETING
Marketing Mix of Tata Motors analyses the brand/company which covers 4Ps (Product,
Price, Place, Promotion) and explains the Tata Motors marketing strategy. As of 2020, there
are several marketing strategies like product/service innovation, marketing investment,
customer experience etc. which have helped the brand grow.
PRICING STRATEGY - Tata Motors has a diverse portfolio, which means a diverse pricing
strategy. In 2008, Tata Motors launched Tata Nano the cheapest passenger car in the
world. It followed penetration-pricing strategy and vehicles manufactured by Tata Motors
are
comparatively cheaper than its competitors are. Due to its low price, it attracted media
attention and the vehicle reported an increase in sales figure within short time during the
initial days of the launch. The lower pricing of Tata Nano also resulted in consumers
perceiving it as a cheap product. The penetration pricing strategy can act as entry barrier
for new players in the segment targeting lower income group. The pricing strategy in the
marketing mix of Tata Motors caters to the lower class as well as the affluent upper class.
Tata Motors’ international acquisition Jaguar Land Rover targets niche customers providing
high quality features.
PLACE AND DISTRIBUTION STRATEGY - Tata Motors has the third largest service and
sales network in India. To distribute its vehicles, it has partnered with various distributors
across India and the service centres are well equipped with the spare parts and accessories.
Tata Motors has extensive distribution network set up across India, also major launches are
displayed in showrooms to experience the product. To purchase defence vehicles, Tata
Motors has set up regional offices in the states of West Bengal, Maharashtra, Delhi and
Karnataka. It is also involved in the sales of Pre – Owned Cars and provides features such as
extended warranty.
PROMOTION AND ADVERTISING STRATEGY - Tata Motors has been known to having
an aggressive marketing strategy. To endorse its passenger vehicles globally, Tata Motors
declared Lionel Messi as their brand Ambassador. It also signed film celebrities like
Akshay Kumar as brand ambassador for its commercial vehicle business. Tata Motors is
the prime sponsor of many events and it helped in creating awareness about its new
product Tata Tiago in the minds of the consumers. The company offers discount to its
customers as part of festival offers in India hence developing interest among consumers. The
promotional strategy in the marketing mix of Tata Motors is carried out in the form of TV,
Newspapers, and electronic media. Tata Motors leverages upon Social media marketing
to target customers based on the search results. The Tata brand is considered a trusted brand
hence it uses the same to tap on the customers.
SWOT ANALYSIS –
SWOT analysis of Tata Motors analyses the brand/company with its strengths, weaknesses,
opportunities & threats. In Tata Motors SWOT Analysis, the strengths and weaknesses are
the internal factors whereas opportunities and threats are the external factors.
STRENGTHS –
Tata Motors is one of the most established company in automobile sector in India
Tata Motors has a wide & extensive distribution and service network
Good market penetration in the taxi & rental segment
Expert service professionals available
Many associations like Jaguar Land Rover, Hispanso, Macropolo etc increases
Tata Motors' international presence
Dedicated engineering and R&D department
More than 70,000 employees are present with Tata Motors
Highly diversified product portfolio
Strong brand legacy owing to parent brand
Tata WEAKNESSES –
OPPORTUNITIES –
THREATS –
Increasing fuel costs
Competitive products offering same level features at a lesser price
Product innovations and frugal engineering by competitors
Competition from other big automobile giants means reduced market share for Tata Motors
SEGMENTATION, TARGETING AND POSITIONING IN
THE MARKETING STRATEGY OF TATA MOTORS –
Tata Motors does not follow a single marketing approach or formula but it believes that all
members of the community should be served. Brand targets crowd from the rural part to
the metros with its offerings varying from NANO to Jaguar Land Rover segment.
Tata Motors offers products such as Tata ACE a mini truck mainly used for agriculture
transport purpose, Tata NANO for the middle class, Tata Indica and Indigo for commercial
purposes and Jaguar in the high-class segment thus creating the image that there’s something
for everyone in its huge line of offerings.
Based on market research, Tata Motors has segmented potential customers into first-time
buyers, those looking for a replacement or an additional car and others who want more
features and performance. Near-term plans include a variant with automated transmission to
strengthen the smart city car positioning. With all the significant product changes, they have a
really easy- to drive car, great to manoeuvre, with a distinct individuality and colour and
offering what no car can in this price range — a great style, entertainment and music,
industry-leading power steering and more. The repositioning will make the product cater to a
larger number of customer segments. If the value proposition is right, it should lift volumes.
CORONA VIRUS IMPACT -
Amid the ongoing pandemic, Tata Motors had asked about 3000 of its employees with office-
based roles to work from home but insisted its manufacturing operations will continue to
function as before . As per reports from the company has developed a three-tier response
plan.
As part of the measures taken, international travel has been suspended and domestic travel
that involves public travel that is subject to the approval of respective executive committee
member. A communication campaign on awareness, preventive steps are being shared
through emails, poster, health contact meetings across work staff.
Biometric attendance has been replaced with the card swiping. There is an adequate supply of
hand sanitizers liquid soap and surgical masks arranged across sites. Training and meetings
beyond 20 people have been suspended. The visitors at Tata Motor sites have been restricted
The employees of office-based roles including company HQ, sales and marketing HQ and
enabling functions in regional office and purchase team based in Pune will work from home
effective 16th March 2020.
The employees of manufacturing, supply chain, quality, engineering and research centre and
warehouses across the country will continue to operate with strict adherence to measures
mentioned. The employees in sales, service, supplier quality, product line should connect
with outside virtually. The employees of these functions may not be needed to come to the
office daily, said the statement.
Tata Motors reported 81.78 per cent dip in its total sales at 25,047 units in the first quarter
ended June 30, 2020.The company had sold 1,37,545 units in the April-June quarter of 2019-
20. Domestic sales of the company stood at 23,845 units in the first quarter of the current
fiscal, down 82 per cent from 1,31,879 units in same period of 2019-20, Tata Motors said in a
statement.
As per the statement, amidst subdued demand environment, first quarter was marked by
successful transition to BS-VI across the range of commercial vehicles. There are early
recovery signs in a few sectors, and the company looks forward to a gradual pickup in
demand on the back of overall economic recovery while continuing to address the challenges
of intermittent demand and supply disruptions from Covid-19.
The company's commercial vehicle sales during the quarter declined by 90 per cent to 10,476
units as compared with 1,00,357 units in same period of 2019-20.Passenger vehicle sales
during the period under review declined by 61 per cent to 14,571 units as against 36,945 units
in the corresponding period last year. The Covid-19 lockdown deeply impacted PV industry
sales in the first quarter of 2021 fiscal.
After partial sales recovery in May pent up demand supported a steeper recovery of retail in
June. Retail sales were stronger than wholesales by 27 per cent, driven by the company's
focus on the former while ensuring optimum inventory levels in the network.
As of June 30, 2020, the auto major had cash and cash equivalents of more than Rs 5,000
crore and undrawn committed facilities of Rs 1,500 crore. Tata Motors has decided to provide
only quarterly sales data from April this year. Retail sales were stronger than wholesales by
27 per cent, driven by the company's focus on the former while ensuring optimum inventory
levels in the network.
PESTEL ANALYSIS –
Political environment –
The Goods and Service Tax (GST) which was introduced in July 2017 is a growth
opportunity for the automobile industry (Tata Motors 2017). Whereas the old tax system was
levied on the manufacture and on exported vehicle leaving the consumer to bear the burden in
buying, in the new system the tax is charged at the point of supply. With the government
taxing the automobile 28% and a sizable reduction in small cars and SUVs, this will
positively impact on the buyer as the taxation impact will be passed on to the consumer in
form of cheaper cars which will in turn boost manufacturing growth.
The high barriers of trade by the Indian government which include the new tariffs aimed at
helping flagship make-in-India drive are both an opportunity and a threat to the automobile
industry. These tariffs are however an opportunity for Indian companies like Tata Motors as
it favors them over foreign companies like Ford. One of the major trends affecting the Indian
car market is the demonetization policy. In November 2016, India introduced a law that bans
all high value notes that accounted for 86% of the currency in circulation in a bid to root out
counterfeit currency, fix tax evasion, carb inflation, eliminate black money and promote a
cashless economy. This has largely affected the economic growth and cash intensive
industries like manufacturing due to less cash availability.
Tata Motor’s UK operations have been negatively impacted by the Brexit. The Move by UK
to leave the EU has resulted into both economic and political uncertainties which have
resulted into a price hike and less demand for cars (Conn 2017). This partly resulted into a
decline of Tata Motors sales in UK in 2017 with Jaguar Land Rover selling 7,097 units in
October 21.5% lower than a year ago.
Economic environment
India’s growing economy is a major trend that will impact positively on automobile
manufacturers like Tata Motors. After months of suffering from the Demonetization effects,
India’s GDP grew by 7.2% in the third quarter of 2017 beating the fastest growing economy
of China at 6.8% (The Economic Times 2018). India’s GDP is forecast to grow 7-7.5% in
2018-2019 with the end of the negative effects of Demonetization (Business Today 2018).
This high GDP is a great opportunity for automobile industries like Tata Motors as it is
consistent with robust growth in the consumer spending power.
Intensive competition in the global automobile industry is a major trend that is impacting
negatively on companies like Tata Motors. Brand positioning is becoming more challenging
due to the competitive pressure from existing manufactures like Hyundai and new disruptive
entrants like Volvo due to globalization.
As a multinational company operating in the UK, Tata Motors has been negatively impacted
by the UK slow economic growth post Brexit. As the result of the devalued pound, inflation
has risen from deep to high inflation causing economic volatility which has placed pressure
on customers and a squeeze on household income .This has resulted into a decline in Tata
Motors sales in UK with Jaguar Land Rover selling 7,097 units in October 2017 which was
21.5% lower than sales a year ago .
Social Environment
The changing life style of the millennials will impact the automobile industry negatively.
Unlike those days when cars were seen as a status symbol by the millennials, these days the
buying trend is shifting from ownership to access and buying a car is becoming less on the
millennials list. With car services like Uber and Ola offering almost the convenience of a
personal car, most millennials find buying a car unnecessary (Jain 2017; Saint 2018). With
India expected to become the youngest country with a median age of 29, car manufacturers
like Tata Motors should look out for this trend as it will affect the car demand in India.
Technological environment
Internet of things. The development of Intelligent connected cars will be a major global
trend. The global connected car market is expected to be $72.89 billion in 2017 and expected
to reach $219.21 billion by 2025(Global News Wire 2018). These intelligent cars will be able
to react to dynamic changing situations such as a vehicle automatically collecting
information on its sensors, processing it and issuing instructions for action depending on the
situation.
These cars are also able to connect with each other with a system to help cars understand
traffic and help control it .Tata Motors in collaboration with Microsoft India is among the
companies in India who have taken the initiative to join the trend of intelligent connected
cars.
The Legal environment
The Goods and Services Tax is a great opportunity growth for companies like Tata. with the
government taxing the automobile 28% and a sizable reduction in small cars and SUVs, this
will positively impact on the buyer as the taxation impact will be passed on to the consumer
in form of cheaper cars which will in turn boost manufacturing growth.
Environmental Factors
The Indian government has toughened its emission norms on automobile manufacturers
where by all manufacturers have to give a declaration about the emission levels of cars they
manufacture starting from April 2020(Dashi 2018). The road transport ministry has amended
the form 22 under the motor vehicles act where by all cars have to comply with the pollution
standards, components quality, safety standards and road worthiness certificates for all
vehicles(Dashi 2018). In response, Tata motors has planned on adopting EGR (Exhaust Gas
Recirculation) and SCR(Silicon Controlled Rectifier) in order to be at the forefront to meet
emission regulations before 2020(The Hindu 2017). The company has also created a climate
change agenda where by it has adopted energy efficient systems like variable frequency
drives for motors, 20% power use by the company is from renewable resources as well as the
greening of its Tata building in a bid to cab emissions(Tata sustainability group 2018).
References
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