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MARKETING STRATEGY FOR

TATA BOLT

EXECUTIVE SUMMARY

Tata Motors Ltd. is a subsidiary of Tata Group, a major multinational motor vehicle manufacturing
company, with headquarters in Mumbai, Maharashtra. It is Indias largest automobile company and
in terms of volume, worlds seventeenth largest motor vehicle manufacturing company. With over 50
thousand employees and a revenue of Rs. 2328.34 billion (FY 2013-2014), the company has secured
its presence 26 countries across 4 continents and has established itself as a household name in the
Indian subcontinent. The company launched the countrys first Light Commercial Vehicle (Tata 407,
1986), first SUV (Tata Safari, 1991) and first fully indigenous passenger car (Tata Indica, 1998).
With a decline in Indian automotive industry, Tata Motors have seen sharper plunge in sales than the
industry average in recent years. Compared to a dip of 6% in Indian automobile market last year,
Tata Motors has witnessed 24% drop in sales and 48% in passenger vehicles. Dearth of new models
and brand image dilution after failure of its Nano car has been attributed to this situation.
Tata has announced the launch of Tata Bolt, a diesel engine powered hatchback, with Automatic
Manual Transmission in the month of Jan, 2015. With a starting price of Rs. 6.6 Lacs, the car is
projected as the lowest priced diesel engine hatchback in India with automatic transmission. Along
with the new product launch, the marketing strategy followed by the company will be the key to push
its brand and improve the dipping sales.

SITUATION ANALYSIS

The passenger vehicle segment is expected to grow 5-7 % in FY 2014-2015, owing to a reviving
economy, after two years of negative growth (Source: SIAM, Crisil Research). The current
penetration of semiautomatic and automatic vehicles is 5% of total passenger cars in India, a figure
slated to touch 20-30% in next five years. Diesel cars will occupy close to 45% market share as per
Crisil research. The soon-to-be launched Tata Bolt can bolster the sales figures of Tata passenger
cars. The figures show a division of the target market for Tata Bolt and anticipated sales figures.

Target Markets: Tata Bolt, being a premium hatchback with semiautomatic transmission and diesel engine,
is targeted at the following markets:

Customers in cities with high traffic congestion. Semiautomatic feature provides ease of
driving, eliminating frequent pressing of clutch pedal. Diesel cars provide upto 20% better
fuel efficiency, which can prove more economical for regular travellers.

Customers who plan to switch from manual transmission cars to semiautomatic cars. As the
sale of automatic cars is expected to rise to 20% of market share in next few years, it can be
anticipated that many people will switch from manual cars to automatic manual transmission
modes.

Buyers who are buying their first cars, looking for maximum ease of driving and maintenance
hassles. Clutchless gear shifting can provide easier driving experience and diesel engines
require much lesser maintenance than petrol engines, thus making Tata Bolt an ideal car for
such customers.

Customers who change cars frequently and look for better resale value of old cars. Diesel
engines have lower depreciation than petrol engines and a diesel car can suit the requirement
of such customers.

Customers who travel more than 50 km in a day will better leverage the fuel efficiency of
diesel engines. Cities like Mumbai, Delhi and Bangalore have maximum number of
customers who regularly travel more than such distan advantage of both the fuel ces by their
own cars (Source: Business Standard). Such customers can get the efficiency of Tata Bolts
diesel engine and also the ease of driving of an Automatic Manual Transmission car in a city
with high traffic.

Market Needs: The following are the major needs that Tata Bolt is trying to address:

Low priced Automatic Manual Transmission cars that are unavailable in Indian market.
Automatic and Semiautomatic cars have low penetration rate in India, close to 5%, high price
being a major deterrent of adoption. Tata Bolt, priced at Rs. 6.60 Lacs is anticipated to
capture the growth of the semiautomatic car market in India, which is expected to reach 20%
of total car sales by 2017.

Lack of diesel engine cars with Automatic Manual Transmission engines at an affordable
price range. Currently, Hyundai Verna diesel automatic is the only option available with
automatic transmission and is priced at Rs. 11 Lacs.

Market Trends: After two consecutive years of reporting negative growth in passenger vehicles
segment, the Indian car market is set for a revival, owing to positive changes in economy. The
projected sales of passenger vehicles and small cars in particular are both expected to grow at 5-7%
in FY 2014-2015. Tata, which reported a 24% plunge in total car sales and 48% in small car
segment, anticipates to ride the wave and report a better figure.

Trend in diesel car segment: Diesel cars have seen steady rise in sales from FY 2010-2011
onwards, to a peak of 58% of total car sales in 2013. However, recent decision by the government to
deregulate diesel prices has resulted in a spike in diesel prices. The decision has affected sale of
diesel cars, as for the first time since 2011, diesel cars have seen decline in sales in 2014. Although
they still occupy 53% market share in domestic car sales, the projected figure is slated to go down to
45% in 2015.
A comparison between historical prices of diesel vis--vis petrol and car sales by engine reveals that
fuel prices are a key driver in sale of cars by fuel type of engine.

Trend in sales in different car segments: Hatchbacks occupy close to 50% in market share of all
passenger vehicle sales in India, a figure expected to remain almost the same in the coming years.

The share of Tata Motors in hatchbacks, however, has dipped from 15% in 2011-2012 to a current
figure of 8%. Projections predict market share of next year at 11%

Market predictions for Tata:


Based on the available data and market predictions, we can make an estimate about the prospective
sale of Tata Bolt:
Expected total passenger car sales expected in 2015 = 26.75 Lac units
Expected total sale of hatchbacks in 2015

= 13.4 Lac units

Expected sale of Tata hatchbacks in 2015

= 1.47 Lac units

Market Growth: The domestic passenger car segment is slated to rise by 5-7% next year. Close to
50% of all passenger vehicles sold are projected to be hatchbacks and 45% of the sold cars will be
diesel cars in 2015.
The graph below depicting CRISIL research reports explain that by 2016-2017, 50% of households
will be able to afford buying a car, and actual penetration of car sales will be 20% in those
households. The market presents immense potential to be tapped in near future.

Product Offering: Tata Bolt offers an 1.3 L diesel Quadrajet engine and an Automatic Manual
Transmission mode. The specifications of the car are:
Body Type

Hatchback

Engine Displacement

1248 cc

Engine Description
Maximum Power
Maximum Torque
Transmission
Fuel Type
Fuel Tank Capacity
Seating Capacity

1248cc, Quadrajet
74 Bhp @ 4000 rpm
190 NM @ 1750 rpm
5 Speed Automatic Manual Transmission
Diesel
44.00 litres
5

SWOT Analysis:
Strength:

With a price tag below Rs. 6.60 Lacs, the car is the lowest priced diesel engine hatchback
with Automatic Manual Transmission mode.

Ease of driving and convenience is a major factor in acceptance of automatics and semiautomatics, especially in congested urban areas.

Diesel engines provide 20% more fuel efficiency and lower cost of maintenance. Regular
drivers can benefit from this advantage.

With three different modes of driving: Eco, Sport and City, the car can cater to the need of
different types of drivers who wants to choose between a mix of performance and fuel
efficiency.

Compared to a torque of 140 Nm in its petrol variant, diesel engine gives a higher torque of
190 Nm. Higher torque results in better manoeuvrability of car.

Weakness:

Perception of Tata cars as manufacturers of trucks and taxis.

Perception of diesel engines as inferior to petrol variants.

With price advantage slowly eroding away, diesel engine car sales is projected to further go
down.

Opportunities:

Only 5% of total cars in India comprise of automatic and semi-automatic transmission mod, a
figure expected to rise to 20% to 30% of the market in next 5 years, as per expert forecast
(Source: Economic Times). With price factor being addressed in the newly launched car, Tata
Motors expect to ride the automatic wave at the earliest.

Despite higher affordability, India continued to be an under-penetrated market in 2013-14,


with about 17 passenger vehicles per thousand people. This is significantly lower when
compared to developed nations as well as other BRIC countries. By 2018-2019, passenger
vehicle penetration is expected to increase to about 25 cars per thousand people. With highly
untapped domestic market there is huge opportunity for market penetration.
The graph shows the gap between households that can afford a car and passenger vehicle
population. The untapped market presents opportunity of growth

Threats:

With government deregulation of diesel price and closing gap between petrol and diesel
prices, sale of diesel cars has been on decline.

Maruti has launched Celerio with Automatic Manual Transmission with a price tag of Rs. 4.5
Lacs. Maruti is rumoured to release a diesel version of Celerio in mid 2015. With Maruti
having highest share of domestic car market, a competing product from its stable can
seriously threaten Bolts market share.

Porters five force analysis:

Rivalry among existing competitors:

Tata slipped to fourth spot in 2013-2014 as manufacturer of passenger vehicles. Maruti, the
market leader, Hyundai at number two and Mahindra at third spot, as well as other
manufacturers have competing cars in the segment like Swift, Hyundai i20, Honda Brio,
Volkswagen Polo.

Threat of substitute product:

As the sale of diesel variant of the cars is on continuous decline due to narrowing gap
between petrol and diesel prices, any substitute car in the same segment with petrol variant
can pose a serious threat to Tata Bolt. Cars like Maruti Celerio that offers automatic
transmission mode at a price tag of Rs. 4.5 Lacs can seriously threaten Bolts sales.

Threat of new entrants:

Maruti Celerio is planning to launch a diesel variant at a similar price range.With Celerio
offering same Automatic Manual Transmission as Bolt, it can hurt Bolts prospects in market.

Other players in the market coming out with diesel engine, semiautomatic cars can put Bolt
into competition in its segment.

Key Success Factors: The success of Tata Bolt will depend primarily on two major factors:

The brand image of Tata has been dealt with severe blow after the Tata Nano fiasco. Tata is
being identified as manufacturer of cheap vehicles, taxis and trucks. Tata needs to improve its
brand image among customers through Above the line marketing campaigns and positioning
itself as a maker of durable, efficient cars.

With the cost advantage of diesel eroding away, Tata needs to position Bolt not as a cost
efficient diesel engine car, but as an affordable premium hatchback with high fuel efficiency,
less maintenance hassles and high torque that provides better manoeuvrability.

Observations from Primary Research:

Our consumer survey data shows that 75% of the respondents prefer petrol over diesel engine. This
is due to the fact that diesel engines are relatively costlier and due to governments deregulation
policy of diesel oil the gap between diesel and petrol prices is constantly narrowing.
Also, when it comes to different transmission modes semi-automatic and automatic with 80%
preference clearly leads over manual mode of transmission. This is mainly due to the ease and
comfort of driving provided by semi and fully automatic cars.

When it comes to brand preference Tata comes at the third place after Mahindra and Maruti, among
Indian automakers. Tata does not have a robust brand image when it comes to passenger cars. Also
the frequency at which Tata launches new model is quite low. So, it has to go for a complete image
makeover, which it is trying through the launch of Zest and Bolt.
In different car segments, significant number of our respondents favoured hatchback cars. There is a
potential for Tata to tap the hatchback market with Bolt.

MARKETING STRATEGY

Marketing Objectives: The marketing objectives for Tata Bolt are:

To be identified as a premium hatchback with Automatic Manual Transmission that offers


high fuel efficiency and minimum maintenance hassles.

Capture the market share of growing number of semiautomatic transmission cars in the price
segment below Rs. 10 Lacs.

To grow its share in market of hatchback cars, from present 8% to at least 15% which was its
market share in 2012-2013.

Positioning: Tata Bolt will position itself as an affordable car at a price of Rs. 6.6 Lacs, that offers
semiautomatic transmission, high fuel efficiency, minimal hassles of maintenance and high
manoeuvrability. It would like to be identified as:
1. First preference of city drivers who commute regularly in their own cars for a distance more
than 50 kms. Tata Bolt will offer them ease of driving in city traffic and better fuel economy.
2. The car of choice for first time car buyers, who need both comfortable driving and low
maintenance cars.
3. Customers looking to choose between performance and fuel efficiency on the go. With three
different modes of driving: Eco, Sport and City, Bolt offers a choice among high
performance, fuel economy and a mix between the two, at the press of a button.

Marketing Program: The marketing program for Tata Bolt will be aimed at generating a positive
brand image for Tata Motors as a brand and communicating the unique offering of Bolts price
advantage for a car in its segment. Some strategies to be adopted are:

Narain Karthikeyan has been roped in for the launch of Tata Bolts predecessor in compact
sedan segment, Tata Zest. He is also associated with the design of Tata Bolt and Zest.
Karthikyean will launch Tata Bolt as well and advertise for the car. An Above the line
promotional campaign will be launched, which will promote the sportiness of the car coupled
with ease of driving.

Promote Tata Bolt as a car that anyone can drive, since it has done away with the hassle of a
clutch pedal. The elimination of clutch pedal makes driving easier, especially for first time
drivers. Advertisements highlighting Bolts clutchless transmission will communicate the
advantage of semiautomatic cars to buyers who are looking to switch from manual mode to
semiautomatic mode or to drivers who want to drive without the trouble of pressing clutch
pedal frequently.

The major target of Tata Bolt will be urban customers who drive their car regularly and/or
use it for commuting to and from work. Communicate the two major advantage that Bolt can
offer through advertisement; easier driving around in city traffic and for higher distance, high
fuel economy and hence, cost savings.

An advertisement campaign to be launched, with the message that from the ABC
(Accelaration, Brake, Clutch) of driving, the C has now been dropped. This is to focus on the
clutchless driving of Tata Bolt, a feature that can make driving seem feasible to those who are
deterred by complexities of a manual transmission car. Tata Bolt can essentially do to cars
what gearless scooters like Scooty did in the two wheeler market; tapped a new segment of
buyers.

To provide better customer engagement and purchase experience, Tata is recruiting 3000
staff ahead of Tata Bolts launch to join its nationwide network of dealers and service centers
in the role of Customer Advisors, Team Leaders and Sales Managers. They are not only
expected to help customers in purchases, but also create awareness about the product
offerings.

With rising number of internet users and growing popularity of social media as a
communication channel, India has close to a 100 million Facebook users and 55 million
unique users of Youtube. Since Tata Bolt is targeted primarily at young, urban drivers, social
media promotion will help reach out to a large number of potential customers.
Advertisements in Youtube and promotion through Facebook can create better brand
awareness among the youth.

Promotional campaigns through car magazines like Overdrive, Autocar India and automobile
based websites can help create positive brand image. Since, these media are accessed only by
a few with interest in automobiles, they can help reach out to a more focussed group of
audience and create awareness about the brand.

REFERENCES

The official website of Tata Motors: http://www.tatamotors.com

The official webpage of Tata Bolt: http://tatamotorsbolt.com

The website of Society Of Indian Automobile Manufacturers: http://www.siamindia.com

The website of Economic Times: http://economictimes.indiatimes.com

The website of IndiaAutoReport (IAR), an Indian automobile industry analysis platform:


http://indiaautoreport.com

http://www.crisil.com/research/customised-research-industries-auto.html

http://www.dieselserviceandsupply.com/why_use_diesel.aspx

http://firstbiz.firstpost.com/corporate/mistry-admits-fy15-will-tough-bets-zest-bolt-revivetata-motors-fortunes-92466.html

http://www.business-standard.com/article/companies/tata-motors-to-add-400-new-dealers-byyear-end-111081100203_1.html

http://profit.ndtv.com/news/industries/article-bolt-zest-could-be-turning-point-for-tatamotors-moodys-380146

http://www.mypetrolprice.com/diesel-price-chart.aspx

http://www.business-standard.com/article/pf/why-diesel-cars-still-make-sense114092100777_1.html

http://www.autocarindia.com/auto-news/tata-motors-upgrading-dealer-network-384842.aspx