Marketing Audit

Presented byAnkit, Pooja, Tajan, Neha, Shreya, Ei MonIshita and Shadul

9th Auto Expo, in January 2008

Commercial launch in March of 2009

Price around USD 2000 , became World Cheapest Car

Expecting to penetrate into the global auto mobile market

TATA NANO

Strength• Cheap Price• High Fuel efficiency• Environment friendly• Innovativeness

Weakness• A very low power engine and a maximum

speed capacity of only 60MPH - not suitable for American freeways

• Less features and specifications ( no AC, power steering , Use of fibres and plastics instead of full metal in body ,small tyres, etc)

Opportunity

• Demand for less expensive cars due to the recession

• Growing immigration population which falls in the low to medium income group

Threat• Strict safety and emission control standards in

USA which is not consistent in all US states• Growing competitors ( Honda Siel, Chery )• Emergence of complete green cars which do

not consume fuel and work on alternate sources of energy

Helpful HarmfulIn

tern

al O

rigin

Exte

rnal

Orig

in

Vision - “To evolve into a world class Indian brand” , “To be the best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics“

A Move Towards US

• Market generated total revenues of $210.9 billion in 2008

• Annual growth rate of 0.4% for the period of 2004-2008

• Value of $222.7 billion by the end of 2013

• Market is forecasted to accelerate with a CAGR of 1.1% for the period 2008-2013

Pric

eM

ileag

eBr

and

Weak Strong

USD 6000-7500USD 9900USD 9900

Versa QQ3 Nano

USD 19250

Prius

USD 10000

Smart

50 MPGNano, Prius, QQ3

42 MPGSmart

28 MPGVersa

COMPETITIVE ANALYSIS

Var. Major Event Specific Impact of the event on the Business

Effect of the event on business

Prob.

P1 Change in Trade policies Stiffening of trade policies will impact imports

-1 50

P2 Change in Tax policies In order to discourage foreign players, the government could impose heavy taxes leading to decreased profitability

-2 80

E1 Change in monetary policy Increased interest rates in medium term can impact demand

-1 50

E2 US Trade policy will move towards protectionism

Stiffer and punitive tariffs and trade barriers

-2 80

T1 Strict Safety Regulations including Crash Avoidance and Worthiness

Increased investment in implementation of safety features including ABS

-1 100

T2 Issues about the performance Poor cooling, poor traction control, small tyres, not fit for hilly areas and hence will require major product modifications.

-2 70

ENVIRONMENTAL ANALYSIS

Var. Major Event Specific Impact of the event on the Business Effect of the event on business

Prob.

Eco1 People preference towards environment friendly vehicles.

Fuel Efficient car, with good mileage and hence Low environmental impact. Almost nil ecological impact if E-Nano is introduced

+2 80

Eco2 Issues in compliance with US emission standards

Air emission standards comply with Euro IV, Complying with US standards with assistance from Chrysler and Fiat will increase price

+1 70

S1 Change in consumer perception in terms of considering a car just a mode of convenience and not a “something special - more than just a way to get around”

Increase in demand for low fuel consuming cars which are convenient.

+2 70

S2 Growing Hispanic immigrant population in USA which fall in the medium to lower income bracket5.

High demand of low cost cars in this section of population.

+1 40

ENVIRONMENTAL ANALYSIS

Utopia Catastrophe

Neutral

Disappointment To be watched

Excellent Indifferent Disastrous

100%

66 2/3%

33 1/3%

0

+3 +2 +1 0 -1 -2 -3

P1

P2

E1

E2S1

S2

T2

T1

Eco1

Eco2

ENVIRONMENTAL SCAN

Segmentation• Segmenting the market based on income• Secondary Psychographic segmentation

Targeting•Low Income group, less than $25,000 p.a , 25,000 - $50,000 p.a•Youths , the college goers, low income singles and a second car for middle class families.• For the people who like to stand apart- self expression

Positioning•Fuel efficient / Environment friendly• Economy Car• Unique combination of style and convenience

SCENARIO A - UTOPIA

PlaceDistribute through

Dealerships

Price Prices for the three

versions :1. Basic -->

2. Medium-->3. High end-->

SCENARIO A - UTOPIA

2009 2010 2011 2012 2013 2014 Growth Rate 0.10 0.10 0.10 0.10 0.10Light Vehicle Market 7,000,000 7700000 8470000 9317000 10248700 11273570% Share of Small Car 0.005 0.0075 0.01 0.015 0.02 0.025

Unit Share of Small Car 35000 57750 84700 139755 204974 281839% Share of Nano 0.1 0.15 0.18 0.20.225Share of Nano 5775 12705 25156 40995 63414 Selling Price $7,500 +taxes Cost Price $5,750 $4500 production charges + $500 shipping and Handling + $750 (15% margin) Total Revenue $43,312,500 $95,287,500 $188,669,250 $307,461,000 $475,603,734

COGS $33,206,250 $73,053,750 $144,646,425 $235,720,100 $364,629,530

Marketing Expenditure (% of Rev) 20% 20% 17% 15% 12% $8,662,500 $19,057,500 $32,073,773 $46,119,150 $57,072,448 Cinema $265,179 $583,393 $981,850 $1,411,811 $1,747,116 Direct Mail $441,964 $972,321 $1,636,417 $2,353,018 $2,911,860 Internet $1,299,375 $2,858,625 $4,811,066 $6,917,873 $8,560,867 Outdoor $530,357 $1,166,786 $1,963,700 $2,823,621 $3,494,232 Press $2,165,625 $4,764,375 $8,018,443 $11,529,788 $14,268,112 Radio $519,750 $1,143,450 $1,924,426 $2,767,149 $3,424,347 TV $3,465,000 $7,623,000 $12,829,509 $18,447,660 $22,828,979

SCENARIO A – UTOPIA (FINANCIALS)

DASHBOARD ( UTOPIA )

% Contribution of mode of marketing spend

CinemaDirect MailInternetOutdoorPressRadioTV

Brand Awareness

H

M

L

Click Trough Rate

2009 2010 2011 2012 2013 20140

10000

20000

30000

40000

50000

60000

70000

Sales Forecast (Volume)

Share of Nano

2009 2010 2011 2012 2013 20140.00

0.05

0.10

0.15

0.20

0.25

Growth of Market Share of Nano

% Share of Nano

Segmentation• Based on income

Targeting• The college goers, low income singles and middle class families• Low Income group, less than $25,000 p.a , 25,000 - $50,000 p.a

Positioning• As world's cheapest car yet not compromise the quality, safety and

environment• To be achieved through leveraging Tata's experience in vehicles

industries and knowledge of the US car market and good supplier manufacturer relationship

SCENARIO B - NEUTRAL

• Three versions however simple feature based versions

Product

• Launched across US through multiple retailers and distributors . Easily accessible by the common masses

Price

• At between for the target segment

Place

• Conventional as well as online advertising revolving around the affordability and value for money proposition

Promotion

SCENARIO B - NEUTRAL

SCENARIO B – NEUTRAL (FINANCIALS) 2009 2010 2011 2012 2013 2014 Growth Rate 0.08 0.08 0.08 0.08 0.08Light Vehicle Market 7,000,000 7560000 8164800 8817984 9523423 10285297% Share of Small Car 0.005 0.0075 0.009 0.012 0.015 0.02

Unit Share of Small Car 35000 56700 73483.2 105816 142851 205706% Share of Nano 0.10 0.12 0.15 0.180.20Share of Nano 5670 8818 15872 24999 41141 Selling Price $7,000 +taxes Cost Price $5,750 $4500 production charges

+ $500 shipping and Handling + $750 (15% margin)

Total Revenue $39,690,000 $61,725,888 $111,106,598 $174,992,892 $287,988,303

COGS $32,602,500 $50,703,408 $91,266,134 $143,744,162 $236,561,820

Marketing Expenditure (% of Rev) 20% 20% 17% 15% 12%

$7,938,000 $12,345,178 $18,888,122 $26,248,934 $34,558,596 Cinema $243,000 $377,914 $578,208 $803,539 $1,057,916 Direct Mail $238,140 $370,355 $566,644 $787,468 $1,036,758 Internet $1,428,840 $2,222,132 $3,399,862 $4,724,808 $6,220,547 Outdoor $486,000 $755,827 $1,156,416 $1,607,078 $2,115,832 Press $2,143,260 $3,333,198 $5,099,793 $7,087,212 $9,330,821 Radio $648,000 $1,007,770 $1,541,887 $2,142,770 $2,821,110 TV $2,778,300 $4,320,812 $6,610,843 $9,187,127 $12,095,509

DASHBOARD ( NEUTRAL )

% Contribution of mode of marketing spend

CinemaDirect MailInternetOutdoorPressRadioTV

Brand Awareness

H

M

L

Click Trough Rate

2009 2010 2011 2012 2013 20140

5000

10000

15000

20000

25000

30000

35000

40000

45000

Sales Forecast (Volume)

Share of Nano

2009 2010 2011 2012 2013 20140.00

0.05

0.10

0.15

0.20

0.25

Growth of Market Share of Nano

% Share of Nano

Segmentation• Geographic: Sub urban Areas• Demographic : Car for low earning individuals

Targeting• Students in Universities age above 16• Second hand car users

Positioning• Students car- intra-state cars• Easy to own, ride and maintain

SCENARIO C - CATASTROPHE

Price7.500 USD + Taxes as

applicable

ProductOnly 1 variant having

the most basic features

SCENARIO C - CATASTROPHE

SCENARIO C – CATASTROPHE (FINANCIALS) 2009 2010 2011 2012 2013 2014 Growth Rate 0.06 0.06 0.06 0.06 0.06Light Vehicle Market 7,000,000 7420000 7865200 8337112 8837339 9367579% Share of Small Car 0.005 0.006 0.0075 0.009 0.012 0.015

Unit Share of Small Car 35000 44520 58989 75034 106048 140514% Share of Nano 0.10 0.11 0.12 0.130.14Share of Nano 4452 6489 9004 13786 19672 Selling Price $6,000 +taxes Cost Price $5,750 $4500 production charges + $500 shipping and Handling + $750 (15% margin) Total Revenue $26,712,000 $38,932,740 $54,024,486 $82,717,490 $118,031,496

COGS $25,599,000 $37,310,543 $51,773,466 $79,270,928 $113,113,517

Marketing Expenditure (% of Rev) 20% 20% 17% 15% 12% $5,342,400 $7,786,548 $9,184,163 $12,407,624 $14,163,780 Cinema $160,272 $233,596 $275,525 $372,229 $424,913 Direct Mail $0 $0 $0 $0 $0 Internet $1,442,448 $2,102,368 $2,479,724 $3,350,058 $3,824,220 Outdoor $267,120 $389,327 $459,208 $620,381 $708,189 Press $1,335,600 $1,946,637 $2,296,041 $3,101,906 $3,540,945 Radio $534,240 $778,655 $918,416 $1,240,762 $1,416,378 TV $1,602,720 $2,335,964 $2,755,249 $3,722,287 $4,249,134

DASHBOARD (CATASTROPHE)

% Contribution of mode of marketing spend

CinemaDirect MailInternetOutdoorPressRadioTV

Click Trough RateBrand Awareness

H

M

L2009 2010 2011 2012 2013 2014

0.000.020.040.060.080.100.120.140.16

Growth of market share of Nano

% Share of Nano

20092010

20112012

20132014

0

10000

20000

Sales Forecast (Volume)

Share of Nano

THANK YOU !!