this is the second assignment of MKX 9550
TATA Motors Limited is India's largest automobile company, the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer, with consolidated revenues of USD 14 billion in 2008-09 （TATAmotors, 2010）. The previous analysis indicates that TATA has some strengths and weaknesses, and its main problem is the brand awareness in worldwide. But this can not stop the steps of TATA's globalisation. From the previous analysis, it also indicates that Australian vehicles market is a very attractive market, there are some opportunities contained in this market. So this report will state in details about how TATA enters into Australian market. It first states how to segment the market and define the target market. Then marketing objectives and marketing strategies will be stated. At the end of the report, it will describe how to implement the strategies and measure the success of them.
Australia car market should be segment by income. As statistic on November 2009, average income of Australian employees is 956 dollars per week (Australian Bureau of Statistics, 2009). According to this, market could be segment to three segmentations by different income level. The lower level contains people with less than 600 dollars income per week. These people may be reluctant to support a car, because they don't only have to afford the initial cost for cars, but also day to day petrol consumption and maintenance cost. The medium level presents person with 600 to 1300 dollars income per week. Person in medium level have the abilities to support a medium price car. And the top level refers to person with more than 1300 dollars income per week, who obviously could have top brand cars.
TATA's target segment is families and individual in the medium income level. Several groups of people may fall in the segment:
First, couples with one or more dependent children. Couples need more money to take care of their children. Some parents even would like to send their children to private schools, which could provide better education and certainly have relative high education fees. Of course they could not support luxury cars. These couples have strong desire to buy a higher quality new car with a lower price.
Second, some university students (include overseas students) and new graduates. This group can be treated as main group of buying new lower price cars. Most students are interest in having their own car. Their income is from doing part time job or from their parents. Many financial instruments also provide student car loan with a lower interest rate than that from car dealers (Youth Central, 2010). It is encouraging students to purchase a lower price new car. TATA's low price and good quality could easily satisfy their wish. In the overseas student part, Indian students should be considered specially. Unlike other potential customers, Indian students already know TATA or even familiar with this brand, because this brand is from their home country. So, Indian students maybe TATA's first customers.
To sum up, TATA's target market is families and individuals in the medium income level (earn $600-1,300 per week), especially some of university students (including overseas students), and new graduates. In the short run, TATA can market its products to Indian students, then other parts in the target market. And in the long run, TATA can spread its target market to high income group, sell this groups luxury cars to achieve high profit.
Market Objectives
² Market share: it is estimated 5 million potential users within the segment we target on and set a target of attracting 0.1% of the market, that is, 5000 users.
² Percentage of the market that should be reached by advertising: it is estimated to reach 80% (4,000,000 prospects) with the advertising message.
² Percentage of aware prospects that should be persuaded to purchase the brand: TATA should be pleased if 0.5% of aware prospects (4,000,000), which is 20,000, can have a test drive. It is estimated that 25% of the test drivers, or 5000 people, would purchase TATA cars.
Financial objectives
² Sales volume: for the first introductory half year, it is expected to have only 500 sales. For the first 3 years, it is expected to achieve 5,000 sales in total.
² Sales revenue: since the average price of TATA cars is $20,000 and volume is 5000 for the first 3 years, it is expected to have $100 million sales by 2013.
TATA should use indirect exporting, because:
² There is less investment: the company doesn't have to develop an export department, an overseas sales force or a set of international contacts
² There is less risk: because international marketing intermediaries bring know-how and services to the relationship, the seller will make fewer mistakes (Kotler et al, 2009, P658).
² The labour cost is lower in India than Australia. So direct investment (such as Toyota set up manufacturing factories in Australia) is not smart choice for TATA.
² In Australia, the present tariff rate for vehicles is 10 per cent and is scheduled to be reduced to 5 per cent in 2010 (Wilson, 2008). It indicates that export cars to Australia will face lower tax cost.
But in the long run, after TATA solving its problems (low brand awareness and weak distribution network), TATA can consider to use direct exporting. The investment and risk are somewhat greater, but so is the potential return.
This is the service or benefit the customer really buying (Kotler et al, 2009, p342). For TATA, its core benefit is providing transportation from one place to another.
TATA makes reasonable low price but have high quality motor vehicles for its customers.
TATA should make reliable car which is safe, low fuel consumption, easy to control, good design and so on.
Part of the augmented product would be the warranty, the customer service support offered by the car's manufacture, and any after-sales service
Some accessories with car, such as Parking Distance Control, Bluetooth Car Kit and car perfume.
As one important feature of TATA is low price with high quality, and its target market is people in medium income level. Its prices of the products should also be low in Australia market.
Their pricing strategy should let TATA survive and take some market share in Australia market. At least, its price should cover its cost. Compared with India market, some additional cost occurred when TATA sells its products in Australia. First is the tariff, but the tariff rate is 5% now, so this may not the main extra cost for TATA. Second is advertisement cost. Australian market is a totally new market for TATA, and as mentioned above, TATA is not aware by the people outside India. TATA needs invest a lot of money on advertising, so that let more Australian know this brand.
To sum up, its products should be sold at around $15,000-$25,000, which is lower than most new cars in Australia, but still higher than the price in India to cover the extra cost. And in the long run, after TATA is accepted by Australian market, it can bring some luxury cars into Australian market to achieve high profit.
Because the point of a marketing channel is to make a product available to customers, what Australian customers actually want is important for TATA to make channel design decision.
² Customer prefers faster and faster delivery channels
² Customer needs convenient purchasing store. (E.g. Toyota offers greater spatial convenience in Australia, which helps customers to save on transportation and search cost in buying and servicing a car) (Toyota, 2010)
² Because rising fuel prices and environmental requirements, smaller vehicles increasing market share.
² Customer needs great service bake-up such as repair and credit service. (E.g. whether it's a scheduled service or an unexpected repair, every Toyota Service Centre in Australia is authorized to service for the customers) (Toyota, 2010)
As mentioned above, when TATA enter the Australia market it might be required the following channels:
² Sales Channel
-Indirectly through intermediaries such as retailers or dealers
² Service channel
-Local repair stores which provide Safety Check and free repair during the warranty period
-Online parts sales
-Answer customer's question though internet
-Call centre
In managing its intermediaries, it is important to decide the distribution strategy.
TATA can employ both the push strategy and pull strategy
² Pull strategy
TATA can use advertising promotion and other form of communication to persuade consumers to demand the product from intermediaries. That is, without customer interest it can be very difficult for TATA to gain much channel support
² Push strategy
Customer can make brand choice in the store and better understand the product of TATA.
As TATA now is unaware by Australian, so its promotion strategy should focus on how to increase the brand awareness.
Advertisements on public transports system, such as bus stop, train station and tram stop. Before people buying their first cars, they use public transportation system. So, if TATA put the advertisements in these places, more people will know it. On the advertisements, they should highlight the key characteristics of TATA- Cheap and high quality. So when the people in these places take a lot of time to wait for the bus or train, then they see these advertisements. Potentially, it will push people to consider buying a car.
Advertisements on TV and some websites. TATA can put its advertisements on some popular TV channel such as 7, SBS. For the on-line part, according to Alexa (2010), the most three popular website are Google, Facebook and Yahoo. So TATA can create a Google Adwords and Facebook accounts, through these two platform to let more people know TATA. Besides that it can direct put its advertisement in Yahoo 7. Also there is a very famous website about selling cars in Australia- CarSales. TATA can put advertisements there too, and this website is most close to its potential customers.
Promotions. As the students are potentially the main group of TATA's customers. TATA can make some promotions direct to this group, such as when students buy TATA cars, TATA can make $500-$1,000 price reduction on the car, or give the buyers some special gifts.
First, representative offices should be set up in Australia. Although TATA can use indirect export to enter Australia, it needs not develop its own export department. But representative offices are necessary. Its responsibilities are:
² Oversight the sales in Australia.
² Get the feedback from Australian customers.
² Conduct Survey in Australian, and find out a better way to promote.
² Provide after-sale services.
² Connect between Australian sales and Indian headquarter.
The details of the implantation plan (first six months) are shown on the table below:
| When | From 1st June 2010 to 31st Dec 2010 |
| Why (Objective) | Achieve new sales of 500 cars |
| What (strategy) | Advertise on TV and Websites |
| Where - location | SBS, 7 6pm, 3days per weeks for 6 months Google Adwords, Facebook, Yahoo 7, CarSales |
| Who – is going to do the work | Marketing Manger |
| Revenue Budget | 500 cars X $ 20,000 (average price)= $ 10,000,000 |
| Cost Budget | $3,000 each night X 25 weeks X 3= $225, 000 $150,000 on Google Adwords $ 1,000,000 on CarSales $ 180,000 on Yahoo 7 $ 100,000 on Facebook |
Other objects such as market share can be measured by the number of sales. And the main weakness of TATA-brand awareness can also be measured by the sales, when the sales increasing, it indicates that the brand awareness is increased.
At the end of 2010, the offices in Australia should collect the sales information from each sales to check whether the sales goals has been achieved. Then it could make the whole budget for the 2011 based the information collected.
Also the offices should take the survey from the customers to find out how the customers know the TATA car. And then an adjustment should be made on the advertising budget, increasing budget on the most effective way, and decreasing the worst effective way.
The details of implementation plan (three years) are shown below:
| When | From 1st Jan 2011 to 31st Dec 2013 |
| Why (Objective) | Achieve new sales of 5000 cars |
| What (strategy) | Advertise on TV and Websites |
| Where - location | SBS, 7, Google Adwords, Facebook, Yahoo 7, CarSales |
| Who – is going to do the work | Marketing Manger |
| Revenue Budget | 5000 cars X $ 20,000 (average price)= $ 100,000,000 |
| Cost Budget | $10,000,000 on TV $500,000 on Google Adwords $ 20,000,000 on CarSales $ 400,000 on Yahoo 7 $ 200,000 on Facebook |
References
Australian Bureau of Statistics, 2009, 6302.0 - Average Weekly Earnings, Australia, Nov 2009, Retrieved from http://www.abs.gov.au/ausstats/abs@.nsf/mf/6302.0
Kotler, Philip, Kevin L. Keller, and Buron, S (2009) Marketing Management (1st edition), Frenchs Forest, NSW: Pearson Education Australia.
TATA Motors (2010) Profile, Retrieved from http://www.TATAmotors.com/our_world/profile.php
Toyota, 2010, The Service Department, Retrieved from http://www.toyota.com.au/about/toyota-dealerships/service
Wilson, T (2008) Tariff cuts do more, The Australia, Retrieved from http://www.theaustralian.com.au/news/opinion/tariff-cuts-do-more/story-e6frg6zo-1111116595314
Youth Central, 2010, Car loans, Retrieved from http://www.youthcentral.vic.gov.au/Managing+Money/Financial+assistance/Car+loans/
Key problems:
1. Positive Image- so far, TATA motors' products mainly sell in India, but in the worldwide, its sales is few. Few people familiar TATA motors outside the India market.
2. Strong distributing network- TATA motors' distributing network is mainly in India.
Key opportunities
1. Good Research and Development management- TATA motors has world-class research center. And it is the first company which produce air-power car.
2. Follow consumers' demand- nowadays, people care about the environment more, and TATA Motors has began produced environment- friendly cars.
3. Compliance with various local regulations- TATA Motors has follows the emissions standards
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