Tata Indica_case Study

COMPANY PROFILE Inception Tata Motors Limited is India's largest automobile company, with revenues of Rs. 24,000 crores (USD 5.5 billion) in 2005-06. By far it is the leader in commercial vehicles in each segment. It is also the second largest in the passenger vehicles market with winning products in the compact, midsize car and utility vehicle segments. The company is the world's fifth largest medium and heavy commercial vehicle manufacturer. Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India.. The company's manufacturing base is spread across Jamshedpur, Pune and Lucknow, supported by a nation-wide dealership, sales, services and spare parts network comprising over 2,000 touch points. Close to 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The foundation of the company's growth over the last 50 years has been a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer-desired offerings through R&D. Established in 1966, the company's Engineering Research Centre, with 1,400 engineers and scientists, has developed pioneering technologies and products. Today the company has R&D centers in Pune, Jamshedpur, Lucknow, in India. And not only this, it also has R&D centers in South Korea, Spain, and the UK. The pace of new product development in Tata Motors has quickened. In 2005, the company created a new segment by launching the Tata Ace, India's first indigenously developed mini-truck. The years to come will see the introduction of several other innovative vehicles, all rooted in emerging customer needs. Besides product development, the R&D centers of the company are also focusing on environment-friendly technologies in emissions and alternative fuels.

GLOBAL PRESENCE Today, Tata branded vehicles can be seen in several countries like Europe, Africa, the Middle East, Australia, South East Asia and South Asia. So, Tata Motors is not only at the forefront of the Indian automobile industry, it is also one of India's best known brands in international markets. Tata Motors is the first company from India's engineering sector to be listed in the New York Stock Exchange (September 2004). It has also emerged as a global automotive company. In 2004, it acquired the Daewoo Commercial Vehicles Company, Korea's second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has already begun to launch new products. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, with an option to acquire the remaining stake as well. Hispano's presence is being expanded in other markets. In 2006, the company formed a joint venture with the Brazil-based Marcopolo, a global leader in body-building for buses and coaches, to manufacture and assemble fully-built buses and coaches. Tata Motors already distributes and markets Fiat branded cars in India. To establish an industrial joint venture in India to manufacture passenger vehicles, engines and transmissions for the Indian and overseas markets; Tata Motors and the Fiat Group have recently signed a memorandum of understanding. The company's commercial and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, Australia, South East Asia and South Asia. It has assembly operations in Malaysia, Kenya, Bangladesh, Ukraine, Russia and Senegal.These acquisitions will further extend Tata Motors' global footprint, established through exports since 1961.

Product: TATA INDICA V2 The Brand value Indica, the first truly Indian car heralds India’s arrival on the global automobile arena. The company strives to make the Indica accessible to the value-seeking Indian, without compromises. It is a trustworthy, reliable car that appeals to the head as well as the heart. The brand is recognized as one of the strongest and most enduring of the past decade and has consistently figured amongst the most trusted brands in industry surveys. The Tata Indica catapulted the Indian automobile industry into the big league of the global arena. It has been created in an industry rife with global competition, requiring huge financial investment and scale as well as high technological competence. Facts about Indica •

Tata Motors is the youngest passenger car company in the world.

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The car came into being – concept freeze to launch – in just 31 months.

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The name, Indica, was derived from two words – India’s Car.

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The Indica sold its second 100,000th car in a record period of less than 18 months.

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Indica’s investment of Rs. 19.20 billion for a capacity of 150,000 cars achieved cash profits in its third year and net profits in its fourth.

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Indica catapulted Tata Motors as the second largest player in the Indian passenger vehicle market.

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In the Indian car industry, Indica Club is the largest brand loyalty program.

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Indica is instrumental in creating a Rs. 46 billion passenger car business for Tata Motors within five years of its launch.

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Indica investment became EVA positive in its fifth year – a rare distinction in the automobile world.

GLOBAL MARKETING STRATEGIES As compared to others who manufacture lower B segment cars; Tata Motors (Telco) has drawn up a clear cut strategy that highlights the fact that their only competitor is Palio in the B segment. This is their USP in a market dominated by luxury and super premium cars. They expect demand from Spain, Malta, Italy and Portugal and are striving for markets in UK, Iran and China. Their Goal is the international market in the long term. They aim for 20 per cent of business from the international market. Realizing the potential of Indica, Telco modified the model and launched Indiva – a MPV concept – at the Geneva Auto Fair in Switzerland. The Tata Indica v2 sedan is likely to be launched in the second half of the next fiscal year. The Sedan has been styled by IDEA – the Italian design house that penned Indica. The result is a well-proportioned but conservative-looking midsize car. The invitation to the motoring media to “Go on, try them yourself” at the WesBank raceway in December 2005 contributed to the high level of media attention. This open and honest approach to communicating the value of their products served well for the ongoing building of the Tata brand in South Africa. Given the progress the Tata Group has made in the past 10 years and the scope for involvement and growth in numerous sectors in South Africa and rest of Africa, Tata can be expected to shift gears upwards soon. Ratan Tata has emphasized his group’s commitment to the South African market, commenting that “the arrival of our cars in South Africa is the fulfillment of a desire I have held since I first came here… our countries can do much together

and we are focusing seriously on our presence here – we will not take away but will add to South Africa.” Product Though a late entrant, the Indica quickly established itself as the benchmark for the segment. By offering exciting features, the car changed the rules of the category in Space, Power, Style, Safety and Economy for international market. The Indica ensured a pleasant ride and handling experience as it had features like wide large tyres, generous leg room and independent front and rear suspension. It developed a new segment of diesel small cars along with its petrol offering. The luggage space was also the best in its class. The rigid 980 kgs steel body of the car was rigorously tested at India's first and only crash test facility. A collapsible steering wheel, impact absorbing bumpers, anti-submarine seats, crumple zones and side impact beams are just a few of the features that make the Indica one of the safest cars on the roads today. Savings are ensured with the fuel-efficient 1.4L diesel engine, while the 1.4L petrol engine is optimized for performance. The foray into the export markets with the Indica would commence only after meeting the initial requirements of the domestic market. However, the company will commence development of the export model, work on homologation and ensure that the car meets all the norms of the markets abroad. Indica features for international market: •

Collapsible steering column

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Side-impact beam

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Energy-absorbing crumple zones in the front

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Anti-submarine seats

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Child-safety locks on rear doors

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Laminated front and rear windshield glass

Promotion ‘More car per car’ is the famous tagline of this product. The Indica’s positioning has remained consistent with the brand's offering in an increasingly competitive market. The Indica is now synonymous with the word ‘More, by encapsulating the inherent product strengths and marrying them with the customer trait of desiring ‘More’. A promotion strategy for Indica v2 in international market is more or less same as that of the Indian market. Media innovations have been a key to the success of the Indica. The positioning was strengthened with the successful launch of the Indica V2, which assumed the leadership position in the year of its launch. The Indica v2 was launched in the international market only through the press medium, with three diesel versions and a petrol version, and this campaign shattered many automobile advertising myths. The car was launched without any television advertising, but through high-impact newspaper ads, dominating the medium and delivering the desired impact. The campaign redefined the competition by keeping away from the ‘small car’ nomenclature. Headlines such as ‘You’ll never have to suffer a small car again’ assisted customers in distinguishing between their old choices and the Indica. This, in effect, placed the Indica on the pedestal of leadership, set to change the rules of the game. A recent campaign for the Indica V2 has helped in building the product on the rational platform and adds an emotional layer. Anchored on the insight ‘It’s only human to want more’, the campaign revolves around interesting candid moments in the daily lives of normal everyday people who desire more; be it a boy wanting the other boy’s bigger lollipop, or a baby crying when her parents stop driving her around in the Indica V2. The latest campaign moves to the ‘Even more car per car’ positioning.

Place Tata automobile group have a very large distribution network all over the world. Tata Indica v2 is exported and assembled in many countries. South Africa has an assembling unit for consumer vehicles. Other places where the company’s products (Tata Indica) are exported and in some assembled also are mentioned below: •

Africa :- Algeria , Angola , Ethiopia , Ghana , Kenya , Mauritius , Sudan , Uganda , South Africa , Senegal etc.

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Europe: - Greece, Hungary, Italy, Malta, Portugal, Spain, Switzerland, UK and Ireland.

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CIS: - Belarus, Russia, Ukraine.

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Asia: - Bangladesh, Malaysia, Sri-Lanka, Nepal, Bhutan.

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Australia continent

Price: Tata Motors adopted a competitive pricing strategy for Indica in the global market. Prices were fixed on the basis of the norms prevailing in the international market. Also the prices offered by their competitors like Toyota, Ford, Fiat, were kept in mind while deciding the prices. Brand Image Indica, the first truly Indian car heralds India’s arrival on the global automobile arena. It strives to make the Indica accessible to the value-seeking Indian, without compromises. A trustworthy, reliable car that appeals to the head as well as the heart. Truly ‘More car per car’ the brand has consistently figured amongst the most trusted brands in industry surveys and is recognized as one of the strongest and most enduring of the past decade. Created in an industry rife with global competition, requiring huge financial investment and scale as well as high technological competence, the Tata Indica catapulted the Indian as well as automobile industry into the big league of the global arena.

For Indica V2 brand building, Tata Engineering roll out media blitz Tata Engineering is all set to launch an aggressive multi-media ad campaign, in a bid to boost sales and build the brand image of its new launch, Tata Indica V2. While launching the Indica V2 in international market, the company had released only announcement ads to create awareness for the new launch. And now to promote Indica V2, the company plans to roll out a media blitz. The main objective of the multi-media campaign is to further build perfect global brand image for Indica V2 in highly competitive international market or global automobile market. And the new media blitz will include a print campaign, comprising a series of press advertisements, outdoor-media campaign, television commercials and ground promotions. The agency has positioned the new launch as the next stage in car revolution. Created by FCB-Ulka advertising, the creatives of the print campaign will highlight the improvements that are being carried out in the new version, especially to fit into international norms for consumer vehicles. According to the company spokesperson: "As part of the overall brand-surround experience, Indica V2 will also be promoted through 'Customer Relationship Management (CRM) programmes run by - Indica Club - our CRM initiative which was launched last year." The club now has an impressive database of Indica customers, claims the company. The company is also looking at adding more customer-friendly features to Telco's existing Website. Tata Motors – Asia-Pacific markets Tata motors is now concentrating on international market to promote Tata Indica v2 into the international market. It is also planning to increase export of Tata Indica v2 in other continents. Here are some key facts about Tata motors: Key highlights •

Tata Motors see upside to their estimates. Aggressive ramp-up in exports as company works on multiple initiatives in cars and CVs.

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With the company now entering the international arena, the R&D team is working on next generation of changes on cars.

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The cost reduction efforts have driven lowering of break-even in CVs and the company is targeting further 30% over the next few years.

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Launch of variants/facelift of the Indica will keep up the momentum, evaluating entry low-priced segment A model.

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Near-term positive news flow: bagging of South African car order, progress on due diligence of the Daewoo Commercial Vehicle factory.

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With top line momentum remaining strong, cash generation is running at record highs. Stock trades are also at an attractive price-to-cash buy position.

Aggressive export strategy •

In the CV segment, Tata Motors (Telco) revealed that it is in the final round of bidding for the South African car order.

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In the car segment, exports to Rover have commenced and will be ramped up in 2HFY06. Given the better than expected response, Tata Motors see upside to their estimates on this front.

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Telco also commences due diligence for acquiring Daewoo Commercial Vehicle (DWCV) and believes that DWCV provides a good fit to its product profile with higher-HP cars.

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Talks with industry sources have indicated that the size of the South African car order at 100,000 over 4 years, currently not factored in their estimates. The order is for the Government's bus-taxi project and would be a 17-35 sealer bus.

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Daewoo Commercial Vehicle (DWCV) is a profitable company with limited debt and a capacity of 20,000 trucks p.a. based on Isuzu technology. The plant is an integrated one and does not make its own aggregates.

Cost reduction focus •

The company elaborated on the strategy adopted for the raw material and operating cost reduction over the last four years.

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It is also working on the next generation changes.

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Telco is working to bridge the gap between its own offerings and those of international products.

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Telco's Engineering Research Centre (ERC) described its strategy at developing products to meet international requirements and changes in domestic products bought on by the improved road network.

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With the development of the improved road network, Telco believed that cars and CVs would require a new set of features like higher power-toweight ratio, enhanced safety features, higher electronics content, etc.

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Telco's City Rover already complies with UK standards (Euro-IH compliant, anti-lock braking systems, airbags, etc) and in CVs, company is working on its new platform to target global markets.

Indica variants in year 2007 •

The company will launch the station-wagon and sports version of the Indica, and it is also working towards a facelift of the Indica in FY06.

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Management is also evaluating launch of a car in the lower-priced segment A post.

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Telco's capex spend will be Rs5bn per annum over the next two-three years, primarily on product development