1. Strategic Management

1.1 What is strategy?

The word “strategy” is derived from the Greek word “stratçgos”; stratus (meaning army) and “ago” (meaning leading/moving).

Strategy is an action that managers take to attain one or more of the organization’s goals. Strategy can also be defined as “A general direction set for the company and its various components to achieve a desired state in the future. Strategy results from the detailed strategic planning process”.

A strategy is all about integrating organizational activities and utilizing and allocating the scarce resources within the organizational environment so as to meet the present objectives.

While planning a strategy, it is essential to consider that decisions are not taken in a vacuum and that any act taken by a firm is likely to be met by a reaction from those affected, competitors, customers, employees or suppliers.

Features of Strategy

1. Strategy is Significant because it is not possible to foresee the future. Without a perfect foresight, the firms must be ready to deal with the uncertain events which constitute the business environment.

2. Strategy deals with long term developments rather than routine operations, i.e. it deals with probability of innovations or new products, new methods of productions, or new markets to be developed in future.

3. Strategy is created to take into account the probable behaviour of customers and competitors. Strategies dealing with employees will predict the employee behaviour.

Strategy is a well-defined roadmap of an organization.

It defines the overall mission, vision and direction of an organization. The objective of a strategy is to maximize an organization’s strengths and to minimize the strengths of the competitors.

Strategy, in short, bridges the gap between “where we are” and “where we want to be”.

1.2 Strategic Management Meaning

Strategic Management is all about identification and description of the strategies that managers can carry so as to achieve better performance and a competitive advantage for their organization. An organization is said to have competitive advantage if its profitability is higher than the average profitability for all companies in its industry.

Strategic management can also be defined as a bundle of decisions and acts which a manager undertakes and which decides the result of the firm’s performance.

The manager must have a thorough knowledge and analysis of the general and competitive organizational environment so as to take right decisions. They should conduct a SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they should make best possible utilization of strengths, minimize the organizational weaknesses, make use of arising opportunities from the business environment and shouldn’t ignore the threats.

The following are the features of Strategic Management-

Planning for contingenciesStrategic management is nothing but planning for both predictable as well as unfeasible contingencies. It is applicable to both small as well as large organizations as even the smallest organization face competition and, by formulating and implementing appropriate strategies, they can attain sustainable competitive advantage

Defining future directionStrategic Management is a way in which strategists set the objectives and proceed about attaining them. It deals with making and implementing decisions about future direction of an organization. It helps us to identify the direction in which an organization is moving.

A continuous processStrategic management is a continuous process that evaluates and controls the business and the industries in which an organization is involved; evaluates its competitors and sets goals and strategies to meet all existing and potential competitors; and then reevaluates strategies on a regular basis to determine how it has been implemented and whether it was successful or does it needs replacement.

Gives broader perspective to employeesStrategic Management gives a broader perspective to the employees of an organization and they can better understand how their job fits into the entire organizational plan and how it is co-related to other organizational members. It is nothing but the art of managing employees in a manner which maximizes the ability of achieving business objectives. The employees become more trustworthy, more committed and more satisfied as they can co-relate themselves very well with each organizational task. They can understand the reaction of environmental changes on the organization and the probable response of the organization with the help of strategic management. Thus the employees can judge the impact of such changes on their own job and can effectively face the changes. The managers and employees must do appropriate things in appropriate manner. They need to be both effective as well as efficient.

Incorporating functional areasOne of the major role of strategic management is to incorporate various functional areas of the organization completely, as well as, to ensure these functional areas harmonize and get together well. Another role of strategic management is to keep a continuous eye on the goals and objectives of the organization.

1.3 Components of Strategic Management Process

The strategic management process means defining the organization’s strategy. It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance. Strategic management is a continuous process that appraises the business and industries in which the organization is involved; appraises its competitors; and fixes goals to meet all the present and future competitor’s and then reassesses each strategy.

Strategic management process has following four steps:

1. Environmental Scanning - Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it.

2. Strategy Formulation - Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting environment scanning, managers formulate corporate, business and functional strategies.

3. Strategy Implementation - Strategy implementation implies making the strategy work as intended or putting the organization’s chosen strategy into action. Strategy implementation includes designing the organization’s structure, distributing resources, developing decision making process, and managing human resources.

4. Strategy Evaluation - Strategy evaluation is the final step of strategy management process. The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as well as its implementation meets the organizational objectives.

These components are steps that are carried, in chronological order, when creating a new strategic management plan. Present businesses that have already created a strategic management plan will revert to these steps as per the situation’s requirement, so as to make essential changes.

1.4 The strategy heirarchy

Most corporations have multiple levels of management.

Strategic management can occur at corporate, business, functional and operational levels.

o Corporate strategy answers the questions, "which businesses should we be in?" and "how does being in these businesses create synergy and/or add to the competitive advantage of the corporation as a whole?"

o Business strategy to the corporate strategy of single firm or a strategic business unit (SBU) in a diversified corporation.

o Functional strategies are specific to a functional area, such as marketing, product development, human resources, finance, legal, supply-chain and information technology. The emphasis is on short and medium term plans. Functional strategies are derived from and must comply with broader corporate strategies.

o Defining an operational strategy was encouraged by Peter Drucker. It deals with operational activities such as scheduling criteria.

1.5 Functional strategy

Functional strategy is an organizational plan for human resources, marketing, research and development and other functional areas. The functional strategy of a company is customized to a specific industry and is used to back up other corporate and business strategies.

Functional strategy means selection of decision rules in each functional area. Thus, functional strategies in any organization, some (e.g., marketing strategy, financial strategy, etc.). It is desirable that they have been fixed in writing.

While a business strategy's scope is the business as a whole, a functional strategy’s scope is each of the functional units of the business: IT, finance, marketing, engineering, manufacturing, etc. A functional strategy describes how that business function will deliver on its responsibilities within the business strategy.

Included in a functional strategy are “what must the function be able to do? How will it do that, especially in light of what the other functions of the business ore doing? Or of what the same functions in competitive businesses are doing?”

Functional strategy: Diagrammatic representation

Functional strategy is the approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity

It is concerned with developing a distinctive competence to provide a company or business unit with a competitive advantage.Eg: A multi-dimensional company has several business units. Each unit has its own business strategy. Each unit has its own set of departments. The orientation of functional strategy is dictated by its Parent business unit’s strategy. Eg: A manufacturing functional strategy that emphasizes on an ‘expensive,quality assurance’ process over ‘cheaper,high volume’ production or an H.R functional strategy which stresses on hiring and training high skilled but costly workforce.

Objectives of functional strategy:

o Profitability

o Market share

o Human talent

o Financial health

o Cost efficiency

o Product quality

o Innovation

o Social responsibility

Types of functional strategies:

o Marketing Strategy

o R&D Strategy

o HRM Strategy

o Financial Strategy

o Information Management Strategy

1.6 Marketing strategy

Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage.

Marketing strategies includes all basic and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contribute to the goals of the company and its marketing objectives.

It is a strategy that integrates an organization's marketing goals into a cohesive whole. Ideally drawn from market research, it focuses on the ideal product mix to achieve maximum profit potential. The marketing strategy is set out in a marketing plan.

Having a strong marketing strategy process in place helps to ensure that your marketing activities remain aligned with your business goals, maximizing the business return from your marketing efforts.

Solid marketing strategy is the foundation of a well-written marketing plan. While a marketing plan contains a list of actions, a marketing plan without a sound strategic foundation is of little use.

Marketing strategy involves careful scanning of the internal and external environments. Internal environmental factors include the marketing mix, plus performance analysis and strategic constraints. External environmental factors include customer analysis, competitor analysis, target market analysis, as well as evaluation of any elements of the technological, economic, cultural or political/legal environment likely to impact success. A key component of marketing strategy is often to keep marketing in line with a company's overarching mission statement

Process for developing and aligning a marketing strategy:

1. Understanding the Customer Develop a clear picture of the target customer using market research and analysis. Understand their pain points and the benefits of the company’s solution.

2. Analyze the Market Some basic market research should allow the company to find market data such as total available market, market growth (historical numbers and projections), market trends, etc.

3. Analyze the CompetitionAsking oneself what other choices the target customers have to solve their pain point. Researching and assessing the strengths and weaknesses of each.

4. Research Distribution ChannelsWhat is the best way to deliver the company’s product or service to the target customers? This will impact on the company’s sales strategy and financials, as well as marketing mix.

5. Define Marketing MixDefining market mix involves decisions about Product, Price, Place and Promotion.

6. Analyze the FinancialsPutting together the marketing budget and evaluate projected marketing ROI, customer acquisition costs, etc.

7. Review and ReviseContinuously evaluate the effectiveness of the company’s marketing strategy, and revise or extend as needed.

2. Indian Automobile Industry and Tata Motors

2.1 The Indian Automobile industry

Since the first car rolled out on the streets of Mumbai (then Bombay) in 1898, the Automobile Industry of India has come a long way. During its early stages the auto industry was overlooked by the then Government and the policies were also not favorable. The liberalization policy and various tax reliefs by the Govt. of India in recent years has made remarkable impacts on Indian Automobile Industry.

Indian auto industry, which is currently growing at the pace of around 18 % per annum, has become a hot destination for global auto players like Volvo, General Motors and ford. A well-developed transportation system plays a key role in the development of an economy and India is no exception to it.

With the growth of transportation system the Automotive Industry of India is also growing at rapid speed, occupying an important place on the ‘canvas’ of the Indian economy. Today Indian automotive industry is fully capable of producing various kinds of vehicles and can be divided into 03 broad categories: Cars, two-wheelers and heavy vehicles.

Indian Automobile Industry includes the manufacturing of trucks, buses, passenger cars, defense vehicles, two-wheelers, etc. The industry can be broadly segmented into the Car manufacturing, two-wheeler manufacturing and heavy vehicle manufacturing units. The major Car manufacturer are Hindustan Motors, MarutiUdyog, Fiat India Private Ltd., Ford India Ltd ., General Motors India Pvt. Ltd., Honda SielCars India Ltd. Hyundai Motors India Ltd., Skoda India Private Ltd., Toyota Kirloskar Motor Ltd, TATA Motors. The two-wheeler manufacturing is dominated by companies like TVS, Honda Motorcycle & Scooter India (Pvt.) Ltd., Hero Honda, Yamaha, Bajaj, etc. The heavy motors like buses, trucks, defense vehicles, auto rickshaws and other multi-utility vehicles are manufactured by Tata-Telco, Ashok Leyland, Eicher Motors, Bajaj, Mahindra and Mahindra, etc. The Commercial Vehicle Segment has been contributing to the automobile market to a great extent. So also in passenger luxury cars now many foreign companies like Mercedes, Suzuki, Chevorlet, Honda,Mitsubishi, Toyota, Hyundai etc. have been investing in the Indian Automobile Market in various ways such as technology transfers, joint ventures, strategic alliances, exports, and financial collaborations. Eg: Maruti joined hands with Suzuki in passenger cars, same as Mahindra with Renault, Hero joint ventures Honda in two wheeler segment, Ashoka with Leyland in commercial vehicle segment. The auto market in India can boast of attractive finance schemes, increasing purchasing power, and launch of the latest products investments in the automobile industry by the foreign companies in India help in strengthening the India`s economy.

India`s giant automotive manufacturer company TATA MOTORS has largest share in commercial vehicle and now they have acquired the Jaguar and Range Rover globally, capturing international market too, also they are exporting their key products in the international market. Total sales of major car manufacturers in India registered a figure of

0.674 million units at the end of March, 2007. The number of car exports in India was 39,295 units. General Motors, Maruti, and Honda accounted for 60 percent of the market sales at the end of April, 2007. As the increase in per capita income is observed in India, there has been an increase in the purchase of motorcycles and cars both in the rural as well as urban areas.

The modern automobile market in India has been considering key issues in the process of growth:

Customer care and not just 'service' Domestic as well as multinational investments Searing through cut-throat competition Road safety Anti-pollution norms Coordination with the government to enable advancement Used vehicle trade

The future of Indian Automobile market is bright as it looks forward to manufacturing and implementing new innovations such as electric cars as provided by Reva, CNG technology is used in new upcoming models of Maruti and Honda has launched their new hybrid car in the Indian market.

Segmentation of Automobile Industry

Among the two-wheeler segment, motorcycles have major share in the market. Hero Honda contributes 50% motorcycles to the market. In it Honda holds 46% share in Scooter and TVS makes 82% of the mopeds in the country.

40% of the three-wheelers are used as goods transport purpose. Piaggio holds 40% of the market share.

Among passenger transport, Bajaj is the leader by making 68% of the three-wheelers. Cars dominate the passenger vehicle market by 79%. Maruti Suzuki has 52% share in

passenger cars and is a complete monopoly in multipurpose vehicles. In utility vehicles Mahindra holds up to 40% of the total share of the automobile industry. In commercial vehicle, Tata Motors dominates the market with more than 60% share.

Tata Motors is also the world's fifth largest medium & heavy commercial vehicle manufacturer.

2.2 Tata Motors: An introduction

The Tata Group

The Tata group comprises over 100 operating companies in seven business sectors:

communications and information technology, engineering, materials, services, energy,

consumer products and chemicals. The group has operations in more than 80 countries across

six continents, and its companies export products and services to 85 countries.

The total revenue of Tata companies, taken together, was $83.3 billion (around Rs3,796.75 billion) in 2010-11, with 58 per cent of this coming from business outside India. Tata companies employ over 425,000 people worldwide. The Tata name has been respected in India for more than 140 years for its adherence to strong values and business ethics.

Every Tata company or enterprise operates independently. Each of these companies has its own board of directors and shareholders, to whom it is answerable. There are 31 publicly listed Tata enterprises and they have a combined market capitalisation of about $88.21 billion (as on September 13, 2012), and a shareholder base of 3.8 million. The major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages, Tata Teleservices, Titan, Tata Communications and Indian Hotels.

Tata Steel is among the top ten steelmakers, and Tata Motors is among the top five commercial vehicle manufacturers, in the world. TCS is a leading global software company, with delivery centres in the US, UK, Hungary, Brazil, Uruguay and China, besides India. Tata Global Beverages is the second-largest player in tea in the world. Tata Chemicals is the world’s second-largest manufacturer of soda ash and Tata Communications is one of the world’s largest wholesale voice carriers.

In tandem with the increasing international footprint of Tata companies, the Tata brand is also gaining international recognition. Brand Finance, a UK-based consultancy firm, valued the Tata brand at $15.75 billion in 2011 and ranked it 41st among the world's 100 most valuable brands. BusinessWeek magazine ranked Tata 17th among the '50 Most Innovative Companies' list and the Reputation Institute, USA, in 2009 rated it 11th on its list of the world's most reputable companies.

Founded by Jamsetji Tata in 1868, Tata’s early years were inspired by the spirit of nationalism. It pioneered several industries of national importance in India: steel, power, hospitality and airlines. In more recent times, its pioneering spirit has been showcased by companies such as TCS, India’s first software company, and Tata Motors, which made India’s first indigenously developed car, the Indica, in 1998 and recently unveiled the world’s lowest-cost car, the Tata Nano.

Going forward, Tata is focusing on new technologies and innovation to drive its business in India and internationally. The Nano car is one example, as is the Eka supercomputer (developed by another Tata company), which in 2008 was ranked the world’s fourth fastest. Anchored in India and wedded to traditional values and strong ethics, Tata companies are building multinational businesses that will achieve growth through excellence.

Tata Motors:Tata Motors is India's largest automobile company, with consolidated revenues of Rs1,65,654 crore (USD32.5 billion) in 2011-12. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand, Spain and South Africa. Among them is Jaguar Land Rover, the business comprising the two iconic British brands. Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon to produce both Fiat and Tata cars and Fiat powertrains.

Tata Motors is the country's market leader in commercial vehicles and among the top three in passenger vehicles. It is also the world's fourth-largest truck and bus manufacturer. Tata Motors commercial and passenger vehicles are being marketed in several countries in Europe, Africa, the Middle East, South Asia, South East Asia and South America. It has franchisee / joint venture assembly operations in Bangladesh, Ukraine and Senegal.

The company, formerly known as Tata Engineering and Locomotive Company, began manufacturing commercial vehicles in 1954 with a 15-year collaboration agreement with Daimler Benz of Germany. It has, since, developed Tata Ace, India's first indigenous light commercial vehicle; the Prima range of trucks; the Ultra range of international standard light commercial vehicles; Tata Safari, India's first sports utility vehicle; Tata Indica, India's first indigenously manufactured passenger car; and the Nano, the world's most affordable car.

Tata Motors has over 4,500 engineers, technicians and scientists at R&D centres in India, South Korea, Spain and the UK.

Areas of business Tata Motors makes passenger cars, multi-utility vehicles and light, medium and heavy commercial vehicles.

Passenger cars: The company launched the compact Tata Indica in 1998, the sedan Indigo in 2002 and the station wagon Indigo Marina in 2004.

Utility vehicles: The Tata Sumo was launched in 1994 and the Tata Safari in 1998.

Commercial vehicles: The commercial vehicle range extends from the light two-tonne truck to heavy dumpers and multi-axled vehicles in the above 40-tonne segment.

Passenger buses: The Company also manufactures and sells passenger buses, 12-seaters to 60-seaters, in the light, medium and heavy segments.

Joint ventures, subsidiaries, associates Tata Motors has a joint venture (JV) with Marcopolo, the Brazil-based maker of bus and coach bodies. Tata Motors (SA) (Proprietary) is Tata Motors' JV with Tata Africa Holding (Pty); the JV assembly plant at Rosslyn, Pretoria, assembles light, medium and heavy commercial vehicles ranging from 4-50 tonnes from semi knocked down kits.

Other associates include:

Tata Daewoo Commercial Vehicle Company, a 100-percent subsidiary of Tata Motors in the business of heavy commercial vehicles (www.daewootruck.co.kr/).

Tata Motors European Technical Centre is a UK-based, 100-percent subsidiary engaged in design engineering and development of products.

Telco Construction Equipment Company makes construction equipment and provides allied services. Tata Motors has a 60 percent holding; the rest is held by Hitachi Construction Machinery Company, Japan (www.telcon.co.in/).

Tata Technologies provides specialised engineering and design services, product lifecycle management and product-centric information technology services (www.tatatechnologies.com/).

Tata Motors (Thailand) is a joint venture between Tata Motors (70 percent) and Thonburi Automotive Assembly Plant Co (30 percent) to manufacture and market the company’s pickup vehicles in Thailand (www.tatamotors.co.th/).

Tata Cummins manufactures high horsepower engines used in the company’s range of commercial vehicles (www.tatacummins.com/).

HV Transmissions and HV Axles are 100-percent subsidiaries that make gearboxes and axles for heavy and medium commercial vehicles.

TAL Manufacturing Solutions is a 100-percent subsidiary that provides factory automation solutions and designs and manufactures a wide range of machine tools (www.tal.co.in/).

Hispano Carrocera is a Spanish bus manufacturing company in which Tata Motors acquired a 100 percent stake in 2009 (www.hispano-net.com/).

Concorde Motors is a 100 percent subsidiary retailing Tata Motors’ range of passenger vehicles (www.concordemotors.com/).

Tata Motors Finance is a 100 percent subsidiary in the business of financing customers and channel partners of Tata Motors (www.tatamotorfinance.com/).

LocationTata Motors' plants are located at Jamshedpur (eastern India), Pune and Sanand (west), Dharwad (south west) and Lucknow and Pantnagar (north). Tata Motors and Fiat have set up a common manufacturing facility at Ranjangaon, near Pune.

2.3 Brief Timeline and history

It has been a long and accelerated journey for Tata Motors, India's leading automobile manufacturer. Some significant milestones in the company's journey towards excellence and leadership are as under:

1945: Tata Engineering and Locomotive Co. Ltd. was established to manufacture Locomotives and other engineering products.

1948: Steam road roller introduced in collaboration with Marshall Sons(UK).

1954: Collaboration with Daimler Benz AG, West Germany, for manufacture of medium commercial vehicles. The first vehicle rolled out within 6 months of the contract.

1959: Research and Development Centre set up at Jamshedpur

1985: First hydraulic excavator produced with Hitachi collaboration

1993: Joint venture agreement signed with Cummins Engine Co. Inc. for the manufacture of high horsepower and emission friendly diesel engines.

1994:.Launch of Tata Sumo - the multi utility vehicle2. Joint venture agreement signed with M/s Daimler - Benz / Mercedes -Benz for manufacture of Mercedes Benz passenger cars in India. Joint venture agreement signed with Tata Holset Ltd., UK for manufacturing Turbochargers to be used on Cummins engines.

2001: a) Indica V2 launched - 2nd generation Indica. b) Launch of the Tata Safari EX c) Indica V2 becomes India's number one car in its segment.

2002: a) Unveiling of the Tata Sedan at Auto Expo 2002. b) Launch of the Tata Indigo. c) Tata Engineering signed a product agreement with MG Rover of the UK

2003: a) Launch of the Tata Safari Limited Edition. b) The Tata Indigo Station Wagon unveiled at the Geneva Motor Show. c) On 29th July, J. R. D. Tata's birth anniversary, Tata Engineering becomes Tata Motors Limited.

2004: a).Tata Motors unveils new product range at Auto Expo '04. b) Tata Motors and Daewoo Commercial Vehicle Co. Ltd. sign investment agreement. c) Indigo Advent unveiled at Geneva Motor Show. d) Tata Motors completes acquisition of Daewoo Commercial Vehicle Company. e) Tata Motors lists on the NYSE

2005: a) Tata Motors acquired 21% of Aragonese Hispano Carrocera sensing an opportunity in fully built bus segment. Tata Ace, India's first indigenously developed sub-oneton mini truck, was launched in May 2005

2006: Tata Motors has formed Joint Ventures with Marco polo in Brazil and introduce low floor busses in Indian market.

2008: Tata Motors reached an agreement with Ford to purchase their Jaguar and Land Rover operation for US$ 21 billion. Completed on 2nd June Tata Motors Launches the least expensive production car in the world TATA NANO at Rs 1,00,000. The super mini was unveiled during the Auto Expo 2008 exhibition in Pragati Maidan, New Delhi

2009: Tata Motors is India's largest automobile company, with standalone revenues of US$5.5 billion in 2008-09. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, the business comprising the two iconic British brands. It also has an industrial joint venture with Fiat in India. With over 4 million Tata vehicles plying in India, Tata Motors is the country’s market leader in commercial vehicles and among the top three in passenger vehicles. It is also the world's fourth largest truck manufacturer and the second largest bus manufacturer. Tata cars, buses and trucks are being marketed in several countries in Europe, Africa, the Middle East, South Asia, South East Asia and South America.

2.4 Various products of Tata Motors

Passenger cars

Indica V2 Indica Vista Indica V2 Xeta Indigo Manza Indigo CS Indigo Marina Indigo XL NANO – The People’s Car

Utility Vehicles

Safari Safari Dicor Sumo Grande Sumo Victa Xenon

Commercial Passenger Vehicles

Buses Winger Magic Trucks

Marketing strategies of Tata Motors

3.1 Product, Price, Promotion, Place

Marketing is the process by which a product or service originates and is then priced,

promoted, and distributed to consumers. The principal marketing functions involve market

research and product development, design, and testing. It is the business activity of presenting

products or services in such a way as to make them desirable. One has to consider promotion

that is balanced with a suitable product available at a reasonable price, provided at all places

to maximize the sale of one’s product.

1. PRODUCT (Brand, Packaging, Innovations, Quality):

The product strategy in Tata Motors has been driven by two primary objectives – Identifying the market need and creating new market segments. The success stories in the past two decades such as Tata Sumo, Tata Ace, Tata Indica etc have been able to fulfill these overall objectives.

A) Brand: o 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.

o 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.

o Consumers frequently buy the product not only for its functional characteristics but also because they want to be identified with the image associated with the brand. Tata Motors have been successful in creating and maintaining a professional brand image.

o Tata Motors follows ao o sub brand strategyo o . Although there is no separate Brand for TATA motors as such but the TATA brand

is used as a mother brand. All products benefit from the association with the Tata brand which, in turn, stands for trust and reliability.

B) Packaging:

o A vehicle cannot have a material packaging. Here, packaging refers to an effective

assembly of features. Tata Motors provide many innovative features to suit the target customers and the product. E.g. Tata Safari Dicor has ‘Reverse Guide System’ which includes a weather-proof camera to help the driver while reversing the vehicle.

C) Innovations: o The various motives behind buying an automobile are Need, Prestige, Comfort,

Fashion, Jealousy and Novelty. The R & D Department continuously strives to bring new innovations in their product.

o Tatas have an industrial experience of over 100 years and they are well known with

the psychology of Indian customers, who desire more at less price. This experience has helped them to develop products which fulfill the expectations of Indian consumers.

D) Quality Control: Tata Motors have their Quality Control standards and the Quality Control department ensures that the customer does not face any inconveniences of a defective product.

2. PRICE (Pricing Strategy, Alterations, Discounts)

A) Pricing Strategy: The prices are fixed keeping in mind a number of factors. The prices have to be at par with the prices of the competitors. Tata Motors give a relative price advantage as compared to its competitors. The various determinants of price are

a. Market Conditionb. Costs incurredc. Profit percentage desired by the Cod. Dealer Profit

TATA motors have a pricing advantage due to its low cost leans manufacturing abilities. The in-house steel company acts as a shock absorber against steel price fluctuations. The pricing methodology adopted is that of a perceived value pricing. It was demonstrated by the Rs 1 Lakh price of TATA Nano, where the cost of producing the car left a very small margin for TATA.

B) Alterations: The Company does not allow any alterations to any of the features of the product. If there is an alteration which affects the performance of the engine, then the warranty becomes void. However, there may be alterations in the accessories, if desired by the customer.

C) Discounts: Discounts are decided by the company every month. Any further discounts may be given from the dealer’s margin. However, the company may compensate the dealer for the discounts allowed to a certain extent.

3. PROMOTION (Personal Selling, Advertising, Sales Promotion, Public Relations) :

A) Personal Selling: There is minimal personal selling involved. The Sales Officers at the dealerships collect prospective customer databases and undertake cold calling to attract customers.

B) Advertising: Advertising is a form of commercial mass communication designed to promote the sale of a product or service. Tata Motors is responsible for the advertising of its products. The dealer does play any role in the advertising. The various media used for advertising are T.V., Newspapers, Magazines, Hoardings, and Internet etc. The dealer conducts point-of-purchase displays to advertise the products.

C) Sales Promotion: The purpose of sales promotion is to supplement and coordinate advertising and personal selling; Sales promotions are designed to persuade consumers to purchase immediately by providing special incentives such as cash rebates, prizes, extra product, or gifts. The Company conducts intensive sales promotion during festivals such as festive discounts during Diwali.

TATA Motors uses extensive promotion for its passenger car segment. The Utility vehicle and commercial passenger carrier follow this segment based on Share of Voice.

D) Public Relations: Public Relations is a management function that creates, develops, and carries out policies and programs to influence public opinion or public reaction about an idea, a product, or an organization. The Company takes serious measures to maintain good public relations. The Company follows business ethics to ensure that the customer is satisfied and receives good service whenever and wherever he desires.

4. PLACE (Channels of Distribution, Physical Distribution)

A) Channels of Distribution:

o In case of vehicles, dealership method of distribution and sales is generally

adopted. Tata Motors have also adopted dealership method of distribution of its products. The dealers purchase products from the Company at a negotiated price. The MRP is fixed by the Company and the dealer gets a profit within these prices.

o As the Company deals in commercial and passenger vehicles, there may be a

single or distinct dealerships to market its commercial and passenger vehicles in a town. However, if there is a single dealership appointed, then the commercial and passenger vehicles are managed under Commercial Vehicles Dept. and Passenger Vehicles Dept. respectively.

o The dealers and suppliers are bound by a Supplier Relationship Management

Program and Dealer Management System. These programs are reviewed from time to time. The efficiency of transactions within the organization and also supplier coverage are given importance. Supplier’s day, Vendors meets, Channel partner meets are organised wherein the Board members can interact with suppliers to share ideas and thoughts.

o Tata Motors have contracts with the Government of India and it supplies buses

and passenger vehicles, in some cases, to the Govt. Sometimes, bulk quantities of vehicles are ordered by a Govt. Dept. or a private company. The sales, distribution and billing of these are looked after by the Company itself.

B) Physical Distribution: o The commercial vehicles are manufactured at Jamshedpur, Lucknow and

Pantnagar whereas the passenger vehicles are manufactured at Pune plant.

o From the plant, the finished product is transported to the dealerships. The nation-

wide dealership, sales, services and spare parts network comprises over 2,000 touch points. The dealerships are strategically located in the target and potential markets to ensure efficient and timely availability of its products in the market.

o TATA Motors has a large network of dealers and Stockyards, all across the globe

and uses the DMS technology for efficient cooperation between these dealers. Its distribution network includes operations in India, Nepal, Bhutan, Ghana, Italy, Poland, South Africa, Spain, Sri Lanka and Turkey. The company's dealership, sales, services and spare parts network comprises over 3500 touch points.

o Apart from the wide distribution network Tata Motors also has Distributed

manufacturing – it has Assembly units at South Africa, Thailand, Bangladesh,

Brazil apart from India. The company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh),Pantnagar (Uttarakhand) and Dharwad (Karnataka).

o To augment the scarce resources, it has a joint venture with Fiat wherein Fiat sells

its vehicles through Tata dealerships and in return Tata Motors has accessto Fiat’s technology and unutilized capacity

o Over the years, one of the major success factors of Tata Motors is their supply

chain excellence. To keep their distribution costs to the minimum they have outsourced the logistics and distribution part of their business to Tata Motors Ltd. Distribution Company (TDCL), a wholly owned subsidiary of Tata Motors Ltd.

o Through this arrangement, Tata Motors is able to reduce its logistical costs by at

least 1% and to focus more on the core business. This in turn has provided flexibility to Tata Motors in terms of delivering the right product at the right time at the right place. Therefore, today, Tata Motors is a fully integrated automobile manufacturer with a portfolio which covers trucks, buses, utility vehicles &passenger vehicles/cars.

3.2 Joint ventures

Tata Motors has formed joint venture for building bus bodies with Marco Polo of Brazil. This joint venture is to manufacture and assemble fully-built buses and coaches targeted at developing mass rapid transportation systems. The joint venture will absorb technology and expertise in chassis and aggregates from Tata Motors, and Marco Polo will provide know-how in processes and systems for bodybuilding and bus body design. Tata and Marco Polo have launched a low-floor city bus which is widely used by Delhi, Mumbai and Bangalore Transport Corporations.

Tata Motors also formed a joint venture with Fiat and gained access to Fiat’s diesel engine technology. Tata Motors sells Fiat cars in India and is looking to extend its relationship with Fiat. Fiat's first body-on frame pickup will have the same styling as Tata Xenon and is to be named Fiat Terra.

Tata Daewoo Commercial Vehicle (One of the Successful Joint Ventures)

With the success of Tata Indica, Tata Motors aimed to increase its presence worldwide. In2004, it acquired the Daewoo Commercial Vehicle Company of South Korea. The reasons behind the acquisition were:

o Company's global plans to reduce domestic exposure.

o The domestic commercial vehicle market is highly cyclical in nature and

prone to fluctuations in the domestic economy. o The company plans to diversify into various markets across the world in both

MHCV as well as LCV segments.

To expand the product portfolio Tata Motors recently introduced the 25MT GVW Tata Novus from Daewoo’s (South Korea) (TDCV) platform. Tata plans to leverage on the strong presence of TDCV in the heavy-tonnage range and introduce products in India at an appropriate time. This was mainly to cater to the international market and also to cater to the domestic market where a major improvement in the Road infrastructure was done through the National Highway Development Project.

Tata remains India's largest heavy commercial vehicle manufacturer and Tata Daewoo is the2nd largest heavy commercial vehicle manufacturer in South Korea. Tata Motors has jointly worked with Tata Daewoo to develop trucks such as Novus and World Truck and buses namely, GloBus and StarBus.

3.3 Customer Perception: Why Tata Motors

In today’s scenario customer are brand loyal and they prefer the buying Tata products for the following reasons:

100% reliability Geared for future Research & Development Edge Technology – driven Backed by TATA name

3.4 SWOT analysis

By looking at the Marketing strategies of TATA motors, the SWOT analysis (the Strengths, Weakness, Opportunities and Threats) can clearly tell us why Tata Motors marketing strategies is one of the successful stories in automobile industry nowadays.

Strengths o The internationalization 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 learned work discipline and how to get the final product ‘right first time.’

o 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 for intensive management development in place in order to establish its leaders for tomorrow.

o 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 in2007, and the companies have an agreement to build a pick-up targeted at Central and South America.

Weaknesses o 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.

o 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?

o One weakness which is often not recognized is that in English the word ‘tat’ means

rubbish. Would the brand sensitive British consumer ever buy into such a brand? Maybe not, but they would buy into Fiat, Jaguar and Land Rover (see opportunities and strengths).

Opportunities o In the summer of 2008 Tata Motor’s announced that it had successfully purchased

Land Rover and Jaguar brands from Ford Motors for UK £2.3 million. Two of the World’s luxury car brands have been added to its portfolio of brands, and will undoubtedly help the company the chance to market vehicles in the luxury segments.

o Tata Motors Limited acquired Daewoo Motor’s Commercial vehicle business in 2004

for around USD $16 million.

o 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!

o 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. These are the opportunities.

o However the company has put in place a very proactive Corporate Social

Responsibility (CSR) committee to address potential strategies that will make its operations more sustainable.

o 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 o Other competing car manufacturers have been in the passenger car business for 40,

50or more years. Therefore Tata Motors Limited has to catch up in terms of quality and lean production.

o Sustainability and environmentalism could mean extra costs for this low-cost

producer. This could impact its underpinning competitive advantage. Obviously, as Tata globalizes and buys into other brands this problem could be alleviated.

o 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 anew 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.

o 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.

3.5 Porters Five Force Analysis for TATA Motors:

1. Marketing Channel:

TATA Motors being a big company the process of appointment adealership at the remote places is a very difficult process, as investment on thedealership is very high. As in case of Mahindra & Force Motors investment cost is less &they have dealerships in every district place, which help then to get the rural marketcoverage. M&M has got a market share of 31% in 4 ton Bus market.

2. Large Product Range: TATA Motors is having a large product range of vehicles, due to the same supply chain of the products become tedious & time consuming. Products are made on order with the delivery commitment of at least 3 months. Whether in case of Swaraj Mazda, they can do customization within 10 days as the range of products is very less. Most of the mobile homes are set up in Swaraj mazda Buses only

3. Price Competition: TATA Motors have to face a price competition with products of other companies which have low qualities. First time user / captive customer who are unknown to the products & industry will get into the trap of these low cost options.

4. Changing Scenario of Industry: From Oligopoly market CV industry in India will become a prefect competition market. As many of Indian companies are now entering into the market place with JV with foreign experts in CV. Mahindra & Mahindra is coming up with Navistar (Mahindra Navistar in India) for Heavy CV. Ashok Leylend is coming up with Nissan for Light Commercial Vehicles (LCV). Similarly other player niche players of world CV markets are coming up in Indian market like Volvo, Mercedes Benz & Scania.

5. Upgrading Products: As in the changing scenario the needs of people are changing at very fast pace. Now the time Indian market place is very demanding, there is extreme demand for AC Buses & construction equipments for building better infrastructure for India. The company which comes up with the customer satisfaction will be the market leader. For that TATA Motors need to understand the market dynamics.

3.6 Case in point: Tata Nano

Tata’s Nano is a PHENOMENON.

The Tata Nano, one of the most ambitious projects of Tata Motors, started in 2003. It was envisioned by the Tata Group chairman Ratan Tata himself. He found that Indians lagged behind in car ownership, especially compared to the European Union and the Americas.

Keeping the potential of Indian Automobile Industry in mind, a few years back, around 2006Ratan Tata conceived the idea of a tiny car with even a tinier price tag for rapidly growingmiddle class segment.Tata Nano was seen as a triumph of home grown engineering - the making of a product which encapsulates the dreams of millions of Indians with all the elements desired by a customer i.e safety, engineering, design, efficiency, style at a price tag of one lakh only.

Conceiving of the IdeaThe idea conceived about Nano was a dare dream of Tatas’ not because of its unbelievablyaffordable price but also because of the promise it held for providing safe personal mobility to a huge section of the Indian two wheeler riding population. It was an entirely new product segment with a whole different dimension of its need to contain costs within a preset target of `1 lakh. The Nano price was the only certainty at the time idea was conceived. And then starting from a clean sheet of paper, the car was designed and developed keeping manufacturing costs, material costs and production costs at lowest possible level along with maintaining its character, style, adorable looks and finished quality.

Problems in the Product Development PhaseRide for Tatas in the production of Nano had been anything but smooth. Tata built a Nano plant in West Bengal but was forced out in Oct., 2008 due to violent protest from farmers. This event resulted in the temporary delay in the production along with causing a huge loss of infrastructure costs of a plant almost ready for car production. Another plant was built at Sanand in Gujrat where the production finally started. These initial bottlenecks in the production somewhere affected the enthusiasm about the project and resulted in limited early availability which caused pre-bookings and lottery deliveries. This affected many buyers negatively and snatched away the momentum from the market. Almost from the start the project was plagued by problems and was magnified by intense media involvement.

Most Awaited launchWhen India’s Tata Motors launched Nano in 2009, the concept of the world’s cheapest car in one of the fast growing vehicles markets seems pre-destined for success. At its launch , car buying dynamics seemed to be undergoing a subtle change.

Tata dealers were flooded with queries from prospective buyers. People mainly middle class were anxiously waiting for it.

Being the world’s cheapest car, Tata Nano had an edge over its competitors in terms of itspricing , which helped Tata to register decent sales figures initially. While choosing betweenMaruti Suzuki 800 and Tata Nano, people gave letter more weightage in terms of price anddesign. Its biggest USP (unique selling preposition ) was its attractive looks at lowest price.

In March 2009, when Tata was launched it got advance bookings upto 2,00,000 cars but it went through lottery route to give the first 1,00,000 Nanos to its lucky customers. Nano became the most coveted thing for two wheeler riders and Tata was so confident about its product that it didn’t go into any marketing plan for Nano. Its intense hype was itself doing its buzz marketing i.e. word of mouth recommendations by existing users. So, Tata got busy in producing Nanos to fulfill its intense demand but at the same time being very complacent about the market and customers perceptions of the car.

The marketing strategies of Tata Nano have been as under:

A. Online Marketing:

a. Website: TataNano.comA website dedicated to Tata Nano was up and running and the website saw huge spurts in traffic when it was released and when the car was launched.

The folks at Tata have a done a good job at building a beautiful website which experience wise is also good

The major sections of the site area) Galary (both pictures and videos)b) Game(rather Link to a nice virtual driving game by Zapak)c) Communityd) Why Nano?e) Booking Details

The website is quite informative and easy to navigate while the chat feature is either programmed or buggy. The site also has a forum which is slightly active and has no signs of involvement by officials from Tata.

b. Social Media:There are definitely some efforts to use social media to market the car.

i. Blog: It’s a step in the right direction but clearly it’s a half-hearted effort with just two posts on the blog (managing 71 and 20 comments respectively) and no official replies to the conversation.

ii. Orkut: Orkut is one of the most popular social networking platforms in India and thus an obvious choice to pitch. There’s a user profile for Nano which has a few pictures and videos and has around 350 friends. Also, there’s a group dedicated to the car which has around 11,000 members. The group was started back in May, 08.

iii. Facebook: Facebook is also a top networking site amongst Indians and there are some attempts to market Nano here too. There’s a fan page for the car with about 6000 fans, a few videos and picture albums. Here again the interaction levels from company representatives are quite low.

iv. YouTube: There’s also a YouTube channel for Tata Nano which has some 78 subscribers and has managed to generate more than 10,000 views on videos of the car.

c. Online Booking:There was also a lot of buzz surrounding online bookings for the car, it did definitely generate a lot of excitement on the web in general.

d. Nano Game: Software developer Zapak was entrusted with developing a Nano game which was a great move to spread word about the car and it seems to have really worked well in doing its job. There are a lot of claims that the game has been played millions of times since its launch. It’s a simple and easily accessible game, which anyone with a browser and internet connection can play. The blogosphere and Indian media sites were inundated with ads for Tata Nano. The ads came in all shapes and sizes and were definitely noticed. Though not directly a part of marketing, it’s an important aspect of Nano’s promotional campaign.

B. Offline Marketing

a. Collaborations: As a part of their strategy to avoid premium for booking Nano, Tata partnered with a few banks for releasing application forms. Though the reason behind the move was different, it did help a lot in marketing Nano as the banks used their resources to market their collaboration with Tata to attract more and more applicants. ICICI bank for example initiated a whole campaign to get noticed and spread the word. Icicibank.com had a banner ad on their home page for booking Nano, and also ran links inside the site for the same. Not only this, the banks hired extra part time staff to book the Car. Roping banks like ICICI and SBI helped in also offering loans for total payment of.

b. Mall Promotions:As is the case with most automobile companies, Tata too ran a series of promotional activities in Shopping Malls to get Nano in front of perspective buyers.

c. Leveraging Existing Infrastructure:Tata, a giant brand that it is has also leveraged it’s umbrella groups to market Nano.

Sudden drop in sales of Tata Nano:

Dent in customers’ perception about the car’s safety:When the new emerged middle segment of car owners were enjoying their ride in their sparkling stylish Nanos , first case of Nano catching fire was reported in March, 2010 while its trip from showroom to customer’s house. Another incident quoted the car went on flames soon after the driver reported a spark from the rear side of the car. The assurance of Tata’s cheapest car being safest proved ironical and the media which was giving intense scrutiny to the project did its job well during the bad times also.

The security failure of the car completely broke the trust of the customers in Nano. A drasticdecrease in sales was noticed in November 2010 when company called its existing customers to install the safety devices in the car.

In July 2010, Tata Motors sold 9,000 units of the Nano. This fell to 8,103 units in August, 5,520 units in September, and to 3,065 units in October. In November 2010, a festival month during which it is considered auspicious to buy new and big ticket items, the sale of Nano came down to just 509 units (85% drop from November 2009). This was despite the fact that the overall sales for the Indian auto sector rose by 45% in October 2010

So within a year the brainchild of Tatas started seeming like a failure as its sales went nearly half within a year. Sales were far off the target of 25000 cars a month and the Nano plant with an annual capacity of 250000 cars kept producing only 8000 units a month till March 2011.

Industrial Scanning and analysis showed that the passenger vehicles production in the country was growing tremendously but Nano sales showed a mixed trend till the mid of 2011. The company took to replace the starter motors in the older models and launched a new model in 2012 but replacing of the parts could also affect the further sales of new model as it’s often said, ‘Indian customers do not forgive easily’. So, there was a great challenge for Tata to retain its brand image.

The reasons for the fall in sales were as under:

Inappropriate Market Positioning: Cheaper vs Affordable

After the several months of disappointing sales of Nano, it became clear by the end of 2011 that its cheapest tag has actually shunned its sales. The status conscious customer didn’t want to get associated with its ‘cheap’ tag and rather opted for slightly pricier rivals. Nobody wanted to be caught with a tag of ‘poor man’s car. So rather being a functional step above a motorcycle it became known as a cut-price car.

Crucially car has struggled to find a core market. The overwhelming interest in the car brought all the mixed segments of the customers in the market. So, a distinctive strategy was missing to give a correct positioning and segmentation to the extremely distinctive product.

Communication complacency

Tatas relied heavily on the publicity rather than a definitely designed communication strategy. There was huge involvement from media, industry and public at large. Rather than leveraging this publicity Tata became complacent about the communication. It became the first car to be launched at zero cost of advertising with a huge success.

The publicity generated was far greater than what could be generated through any conventional campaign. Tatas plea was that problem was not of the complacency. Because the Nano plant had to move from West Bengal to Gujarat, production timelines were difficult to maintain. With not enough cars being made, the company felt it didn't have to advertise or even set up efficient distribution channels. But the hype about the car died down, and the stories about the fires gained prominence.

On the hindsight, apart from being delayed, the first ads were not the most appropriate. They showcased couples ensconced in Nanos, while those on two wheelers stared at them balefully. It seemed to be just for people who have to stretch themselves to buy a car; rather it could have been for housewife or a youngster who had just turned 18. But the advertising focused at parity level. Tata seemed to ratify the media story about it being a Garibrath rather than a cool car.

Another ad in the early 2011 also projected the same image featuring a girl in a decidedly rustic setting awaiting the family Nano.

Such mistakes by Tatas actually fuelled the perception of a poor man’s car. The car is too much of an emotional purchase. It’s the second biggest achievement after a house and the cheapest tag proved disastrous for Nano.

Consumer behaviour assessment failure

In Sri Lanka, the TATA Nano is being used extensively as a Taxi. The average Sri Lankan felt that the Nano though a good car did not carry enough prestige to be a passenger car. And this they felt was a result of the positioning taken by the marketing managers of the brand.

The brand managers positioned the car as the next upgrade for a family of four with a two wheeler. But every such household had an aspiration to move to something better and not necessarily cheaper. Even if the consumer was in that income bracket, he aspired for something cooler. This point was not taken into consideration while the brand managers were coming up with the positioning.

The next campaign focused on the tier 2 cities with bad roads and little or no inclination to move things along. This further hit the car sales.

TATA Nano was a classic case of a product manager who chooses not to respect the aspirations of his prospective consumers. In such a case the positioning was totally wrong.

Ever increasing price: But one major discussion point, which this case brings forth, was the ever increasing price of Tata Nano. This car was initially targeted at the middle class segment which rode on bikes and could not afford a car. But because of its increasing price, it was slowly slipping out of the reach of this segment.

Through its unique combination of lower cost and innovative features had given it the title of 'wonder car' for the people, its rising prices had been slowly pushing it out of the reach of its real target customers. Experts noted that the Nano had been launched initially for middle class families riding unsafely on two-wheelers on Indian roads, but a continuous price rise was making it difficult for these families to migrate from bikes to the Nano.

As quoted by Ratan Tata on the eve of Auto expo 2012 , ‘Nano is not a flop. We have lost an early opportunity due to mistakes in positioning and marketing the product.’

So what could have been done to position the car better?

1.) A dual positioning strategy one for the smaller cities and the other form the urban areas could have worked.

2.) Focusing on some of the features like maneuverability- the Maruti Suzuki Alto was positioned this way, Mileage- Maruti Zen and Performance – Hyundai Verna

3.) Positioning the brand and not the Car - There could be an initial positioning of the TATA brand rather than the car, till the marketers understood the features sought by the consumers.

4.) Focusing on special segments like Women drivers or college students as the first car- this would have helped the TATA’s create a generation of customers and keep these students in the same family as they grow up.

At the end of the day, it is what the car means to you rather than what it is

The Revival of Tata Nano

The Nano's sales figure touched the bottom in November 2010 but after implementation of certain strategies, the Nano crossed the 10,000 mark in April 2011. Since the beginning, this car of Tata Motors had caught the attention of the world, but sales failed to live up to expectations. There were many reasons for this which compelled Tata Motors to sit back and prepare a revival plan. Implementation of the revival plans helped the Nano to be ranked sixth among the passenger cars in India.

Automobile experts felt that attractive and effective television advertisements, providing of additional protection in the exhaust system of the car to avoid fire incidents, extended free of cost warranty schemes, incremental rise in sales points in smaller towns, and introduction of

the 90% financing plan through its in-house vehicle financing unit Tata Motor Finance, had made this possible.

"If it was out-of-the-box thinking that led to the birth of the Nano in 2003, it is a similar stream of innovative marketing ideas that is now helping resuscitate the Rs1-lakh car after sales crashed to a mere 509 units last November."

-The Economic Times, May 10, 2011

"When we started, around 80 per cent of Nano customers were buying it as a second car and 20 per cent were first-time buyers. Now the ratio is about 50:50 and ultimately, we are looking at 80 per cent first time buyers purchasing the car, which is what we had aimed when we started off."

-R. Ramakrishnan, Vice-President (commercial-passenger cars) of Tata Motors Ltd., in 2011

Its sales figure of 10,012 fetched it the sixth rank among passenger cars in India for the month as well as for the year till then. Analysts felt that this was a remarkable revival for the Nano as its sales figure had touched an all-time low just six months earlier - in November 2010.

A team led by R Ramakrishnan, VP (commercial-passenger cars), and Girish Wagh (Wagh), vice-president & head (small car project) was credited with orchestrating the revival of the Tata Nano. The team was keeping a close watch on the Nano's progress and was working to ensure that there was a constant focus on the target customer segment. However, analysts said they had a long and arduous road ahead in maintaining and building upon the sales momentum. In the future, other car manufacturing companies were also planning to launch their low cost variants in India. The challenge before the Nano's marketing team was how to counter those competitors and simultaneously attract the low-income customers.

The following were some of the measures adopted to revive sales:

Addressing Safety Issues As the major threat to the car's image was the fire incidents, engineers at Tata Motors made some changes in the Nanos existing design.

Financing Tata Motors Finance (TMF), the Tata Motors vehicle Finance Branch, announced a special finance scheme for the Tata Nano, in which a buyer could get an easy loan with selected documents in just 48 hours.

Distribution Reforms It was then the turn of distribution reforms. Beginning July 2009 when dispatches to those who had booked the car started, the company had delivered over 71,000 Tata Nanos by November, 2010...

Marketing Communication Last, Tata Motors' initiatives to spruce up the Nano's sales volumes were not just limited to the finance fronts, distribution, and providing additional protection in exhaust and electrical systems in view of some fire incidents...

Finally now the Nano has been positioned as a cool car to have fun with. Also the colors and the powerful AC are being positioned as the differentiators along with the classic adage of better fuel efficiency that has helped its sales.

A Spectacular Comeback

Tata Motors' efforts bore fruit with the sales figure showing signs of a revival after reaching its lowest level in November 2010. Backed by the television advertisements, provision of additional protection in the exhaust system, extended warranty schemes, incremental rise in sales point in smaller towns, and the introduction of the 90% financing plan through its in-house vehicle financing unit, TMF, this became possible. Sales of the Tata Nano went up dramatically to 5,784 in December compared to 509 units in November 2010...

o The existing capacity of 10,000 units each month in the Sanand plant was planned to be increased to its full capacity of 275,000 cars per year.

o Many bikers were also warming up to the prospect of owning a new Tata Nano for the price of an expensive bike.

o Since August 2010, Tata Motors had started the open sale (without any pre-registration) of the Tata Nano and by December 2010, it was being sold in 12 states.

o The sale of the Tata Nano had since then picked up in five states and the company was also trying hard to reach out to its target customers in other states through its outlets and other access points.

o Tata Motors was planning on coming out with Big Bazaar like Special Nano Access points so that potential customers could test-drive the Tata Nano. Tata Motors was planning to capture each and every nook and corner of the Indian auto market with open sales by the first quarter of 2011...

o The new marketing campaign by Tata is all set to change the perception from a Garib rath to a cool car as it allows young to be so whimsical with the cool car that they can drive the several kilometers for a cup of perfect tea!

o Tata is going to launch Tata Nano CNG by the end of 2012. The company has given the car a new makeover by additional features like new interiors, a powerful gasoline engine, better fuel efficiency and attractive colors like champagne gold and papaya orange.

o Another initiative is offering Tata Nano happiness guarantee which more than doubles the car’s warranty from 18 months to four years insisting on its reliability.

o Offering fast track financing for buyers with loan approvals in 48 hours and reducing down payments to just `15000 is another measure. Tata is planning to enter new global market such as Thailand, Myanmar, Indonesia and Bangladesh with Nano.

The lovely Nano is a big beneficial car in small package and its value is being recognized gradually by the customers. Hence, with the conviction in mind that the potential of Nano market remains as vast as it was originally predicted; Tata is moving with some strong steps

in the market as it is also planning to launch a diesel variant of Nano in near future which will prove a value preposition for its customers.

4. Conclusion

Commercial Vehicle Business Unit (CVBU) is Cash Cow for TATA Motors Ltd. TATA Motors is the only company in the Indian Commercial Vehicle (CV) Industry which has the products presence in each segment from Small Commercial Vehicles to Medium & Heavy Commercial vehicle which includes (SCV, LCV, ICV, MCV, and HCV). Competitors are having products only in specific segments like Mahindra & Mahindra in Indian CV Industry is known for School Buses &Ashok Leyland is having expertise in Medium & Heavy commercial Trucks & Buses

Luxury segment Tata motors in India are mainly famous for their carriers and this tag gets attached even with small luxury cars which affect their sales. The Tatas need to show their luxury segment through rigorous marketing and by launching a couple of high class luxury vehicles comparable to Audi and Mercedes (though the stock and distribution should be limited).This will create a special class for its small cars.

Heavy vehicles In heavy vehicles section, though Tatas enjoy most of its market share with its trucks and buses, but the launches of its new variants are only known when they hit the roads. e.g. Tata‟s 6-wheeler Trucks were replaced by 6 wheeler LP trucks gradually and then later on with 10-wheeler LP trucks. Now a days they are being replaced by Tata‟s Haiver but the change is very slow. In case any competitor launches its variant of same type it can affect Tata‟s sales.

They need to focus now on the marketing strategy in heavy duty vehicle section also as they did in case of Tata Ace.

Tata Nano o Tata Nano has to go a long way in realizing its dream of 20,000 plus units per

month that would get its plant in the western state of Gujarat running full throttle which is presently moving at the level of around 10.000 units per month.

o Hailed as a showpiece of innovation spawned from and targeted at the emerging

upper middle class, Nano is working hard to undo its mistakes in the past.o As small car segment is having very strong potential, there is a flood of small car

brands in the Indian market. It has to face strong competition from its near rivals such as Bajaj’s RE 60 Maruti Suzuki Cervo ( approx. ` 1.5 lakh) , Maruti Alto and slightly pricier options Hyundai Santro, newly launched Hyundai Eon etc.

o Nano faces rising competition from used car segment also.

o Apart from the strong competitors, high inflation and slow economic growth also

put another challenges for Tata Nano.o Tata is doing hard to resurrect the product segment by intensive reliability

engineering, advertising innovations for repositioning and strong distribution and service facilities to recollect the trust of its customers. Let’s see how Nano makes its makers proud amidst conflicting perceptions of customers, the immense competition and rising inflation by maintaining expected performance at its tiniest tag!!!

5. References

“Strategic Management”, Wikipedia, http://en.wikipedia.org/wiki/Strategic_management, Sep 17, 2012

Teece, David J.; Pisano, Gary; Shuen, Amy (August 1997). "Dynamic Capabilities and Strategic Management

“Marketing strategy”, Wikipedia, http://en.wikipedia.org/wiki/Marketing_strategy, Sep 22, 2012

“Marketing strategy process”, Easy marketing strategies, http://www.easy-marketing-strategies.com/marketing-strategy-process.html, Sep 18, 2012

“Group profile”, Tata Motors, http://www.tata.com/aboutus/sub_index.aspx?sectid=8hOk5Qq3EfQ, Sep 21, 2012

“How Tata Nano hit a big bump in India”, The Economic Times, Lijee Philip, ET Bureau, Dec 3, 2010

“Did not get Nano marketing strategy right”, NDTV profit, http://profit.ndtv.com/news/corporates/article-did-not-get-nano-marketing-strategy-right-ratan-tata-295402, Jan 5, 2012

“Business and Functional Strategy”, EOS consulting, http://www.eos-consultingllc.com/business_strategy.htm, Sep 22, 2012