Strategic marketing management
It is simple being caught up in the everyday development (or even endurance) of a business and put off strategic planning. With no strategic planning, nevertheless, a business will have difficulty. To remain from floundering, keep in mind the three key principles of strategic planning.
Principle 1: The clearer the value proposal, the more expected the business is to be thriving.
The value proposition should be well-encouraged by competencies or ability sets of the business. To the degree that these competencies are distinctive, or that the company is chiefly capable in those areas, they produce competitive advantage. There are classic examples of companies that have developed typical competencies and used them productively:
Principle 2: A trade business must have a well-built core merchandising capability, but can study or subcontract numerous of the other essential skills.
The strategic plan and management assurance identifying the value proposition, distinctive competencies, and other core competencies is the base of the strategic plan for a business. Setting up a vision of where the enterprise ought to be in three years, supported by the value proposition, drives growth of the strategic plan. The plan should set goals and recognize the main steps essential to get there.
Principle 3: A strategic plan is of no worth if it is not initially challenged, after that developed, and finally dedicated to by the management team. The part of the strategic planning process that makes the whole thing work is measuring growth and comparing it to the plan. This is a vital step since it does two things: It gives management feedback on how execution is going, and it provides feedback on how achievable the plan is and what refinements are needed. (Bessin, 2007)
Porter's model is based on the insight that a business strategy should meet the opportunities and intimidations in the organizations outside environment.
Particularly, competitive strategy should base on and understanding of industry structures and the way they alter. Porter has recognized five competitive forces that form every industry and every market. These forces establish the strength of competition and therefore the effectiveness and attractiveness of an industry. The aim of corporate strategy should be to alter these competitive forces in a manner that improves the situation of the organization. Porter's model supports investigation of the driving forces in an industry. Based on the data derived from the Five Forces Analysis, management can settle on how to persuade or to utilize particular characteristics of their industry. (Porter, 1980)
The business that I have chosen to analysis the Porter's Five Forces is the Tata Motors. The Specific product that I will be taking into analysis is the NANO CAR. This section has a great growth prospective in developing countries, particularly in a country like India.
Potential Entrants - Danger of new entrants
Buyers - Bargaining power of buyers
Danger of substitute products or services
Opposition among existing firms
Suppliers - Bargaining Power of Suppliers
Further Stakeholders - Relative Power of Union, Governments etc.
Concise Information about the product:
TheTata Nanois arear-engine, four-passengercity carbuilt byTata Motors, aimed chiefly at theIndian market. The car is very fuel proficient, achieving around 78mpgon the highway and around 92 in the city. It was first offered at the 9th yearlyAuto Expoon 10 January 2008, atPragati MaidaninNew Delhi,India.Nano had a commercial start on March 23, 2009 and, a booking period from April 9 to April 25, generating more than 200,000 bookings for the car. The sales of the car began in July 2009, with an initial price of Rs 115,000 (rupees), which is roughly equal toUK£1,467 orUS$2,421 as of June 2009. This is cheaper than theMaruti 800, its major competitor and subsequently cheapest Indian car priced at 184,641 Rupees.Tata had sought to manufacture the least expensiveproduction carin the world, aiming for a starting price ofRs.100,000 (just aboutUS$2,000 in June 2009).
Porter's 5 Forces Model of the NANO car
There is ongoing concern in the study of the forces that influence on an organization, mainly those that can be harnessed to offer competitive advantage. The ideas and models which emerged throughout the period from 1979 to the mid-1980s were based on the thought that competitive advantage came from the capability to receive a return on speculation that was better than the average for the industry sector. As Porter's 5 Forces analysis deals with factors outside an industry that influence the nature of competition within it, the forces within the industry (microenvironment) that influence the way in which firms compete, and so the industry's probable profitability is conducted in Porter's five forces model.
BARRIERS TO ENTRY
· Time and cost of entry - Time is most vital thing while launching a product in any market. The initiation of the NANO is fairly feasible as the demand of the small car is on the rise in the market. By the cost of the entrance we represent the initial capital necessary to set up a new firm is very high, it makes the chances of the chances of new entrants are very less.
* Knowledge and Technology - Ideas and Knowledge that provides competitive benefit over others when patented, preventing others from using it and therefore creates blockade to entrance. The TATA motors have great knowledge/ experience in the automobile industry and have well-known technological benefit since of the recent acquirement and mergers.
* Product Differentiation and Cost Advantage - The latest product has to be dissimilar and striking to be accepted by the customers. Attractiveness can be measured in the terms of the features, price etc. At this level the price of the NANO car was one thing that is attracting clients. And in particular the image, trust the name TATA carries with it.
* Government Policy and Expected Retaliation - Even though government's job is to safeguard free competitive market, it restricts competition throughout regulations and restrictions. The government tried to encourage the TATA Motors to begin a plant by providing land and tax rebates. But the unanticipated retribution by the local people surface in the setting up of the plant which charged the company plenty.
* Access to Distribution Channels - Once a latest product a launched a fine developed distribution is must for its achievement. The TATA motors had an benefit of well recognized distribution channel throughout the world.
· Switching Costs - If switching to another product is plain and cheap the customers does not believe much prior to doing it. In case of NANO car the switching cost from bike to car is too high. Therefore growing the demand of the car many fold.
· Number of customers/ Volume of sales - If there are few buyers then they are capable to dictate the terms. They flatten the cost by Bargaining. The bargaining power of buyer is high as there are lots of choices offered to the buyer and the service does not differ from one manufacturer to the other. They force the manufactures to progress the quality. All this can be obviously seen in the case of NANO car the price tag at which it has been presented or the superiority of the NANO car no compromise has been done at any front.
* Brand Image - The brand image of the TATA and the section in which the NANO has been the most attractive thing in the whole package.
* Number and Size of Suppliers - A company to produce its products requires unprocessed material, labor etc. If there are few suppliers providing substance necessary to make a product then they can set the price high to confine more profit.Influential suppliers can compress industry profitability to immense extend. In case of NANO the supplier are inadequate and the size of the suppliers are large enough to bring about the controlling power in the price of the car. The NANO car has more than 128 suppliers in all and the main segment of the building cost of the car is the parts supplied by the suppliers.
* Unique Service / Product - Suppliers' products have not many substitutes. Supplier business is subjugated by a few firms. The various parts of the NANO car are acquire from the supplier who them are big enough and limited substitutes are existing against them. So the whole production line depends upon them simply.
* Capability to substitute - Suppliers' products have high switching costs. In numerous case even when alternate are obtainable it's not that easy to opt for alternate as the next product in the assemblage line depends upon it. If the change in the any part is brought about the long list of depended parts also have to be distorted, which in most cases is not reasonable to do.
· Number and Diversity of Competitor - This describes the competition among the existing firms in an industry. The present situation, the small car market in India is very competitive with players like Maruti Suzuki, Tata Motors, Hyundai etc. which was practically dominated by Maruti. But with launch of Nano the 1 lakh car the entire force of the market has shifted. Now to be competitive in market other companies have to either cut rates of their existing model or have to go back to the drawing board and assemble again.
· Price Competition - Promotion battles may boost whole industry demand, but may be expensive to smaller competitors. Products with comparable purpose limit the prices firms can charge. Price competition frequently leaves the whole industry worse off. NANO is the only player so it has the price freedom but as the Maruti and Honda are also planning to launch the car in the same division the price competition will begin.
· Exit Barriers - Even though the product fails in the market it's not that simple for the company to exit the market just like that as of the heavy investment it has made in the initial stage. If the NANO fails or falls flat the TATA motors will not be in a situation to slow done the product even when NANO production line can be used by the other products after few modification as for NANO only the new product line were setup and enormous cost were incurred.
· Product Quality - Increasing consumer warranties or service is extremely widespread these days. To retain low cost, companies constantly has to make manufacturing improvements to keep the business competitive. This requires extra capital expenditure which tends to eat up company's earning. On the other hand if no one else can offer products/ services the way you do you have a monopoly. NANO enjoys the monopoly are there are no competitors in this section.
TATA MOTORS STRENGTHS
* The internationalisation strategy up to now has been to carry on local managers in new acquisitions, and to only transplant a couple of elder managers from India into the new market. The advantage is that Tata has been able to exchange expertise. For instance after the Daewoo acquisition the Indian company leaned work discipline and how to get the final product 'right first time.'
* Tata Motors Limited acquired Daewoo Motor's Commercial vehicle business in 2004 for around USD $16 million.
* In the summer of 2008 Tata Motor's effectively purchased the Land Rover and Jaguar brands from Ford Motors for UK £2.3 million. Two of the World's luxury car variety have been added to its portfolio of brands, and has certainly off the company the chance to market vehicles in the luxury segments.
* NANO is the cheapest car in the World.
* The choice of Super Milo fuel efficient buses are powered by super-efficient, eco-friendly engines.
TATA MOTORS WEAKNESS
* The company's passenger car products are based upon 3rd and 4th generation platforms, which put Tata Motors Limited at a drawback with challenging car manufacturers.
* Even with buying the Jaguar and Land Rover brands Tata has not got a grip in the luxury car segment in its domestic, Indian market. The brand linked with commercial vehicles and inexpensive passenger cars to the degree that it has remote itself from rewarding segments in a more aspiring India.
* Other competing car manufacturers have been in the passenger car business for 40, 50 or more years. Consequently Tata Motors Limited has to become equal in terms of quality and lean production.
The product strategy which will be modified would be the direct product addition, which is marketing the car in a further foreign market without any change. This is because there would be no supplementary product development cost, manufacturing changes, or new promotion.
The car has achieved its low price by minimizing costs on unnecessary “luxuries”, the essential Nano comes with no front and rear fog lights, with no a heater or air conditioning, with no anti-lock brakes, only one sole windscreen wiper, manually operated windows, manual steering with no air bags, tiny 12” wheels, plastic body parts joined with adhesive in its place more conventional metal and welding and a two cylinder 623 cc engine that provides a enormous highest speed of 65 mph (around 105 km/h).
Among the features of the car are:
a) Stylish and comfortable
The People's Car, considered with a family in mind, has a roomy passenger compartment with generous leg space and head room. It can contentedly sit four persons. Four doors with high seating position make entrance and way out easy.
However with a length of 3.1 meters, width of 1.5 meters and a height of 1.6 meters, with sufficient ground clearance, it can fluently maneuver on busy roads in cities as well as in rural areas. Its mono-volume plan, with wheels at the corners and the authority train at the rear, enables it to exclusively combine both space and maneuverability, which will set a benchmark amongst small cars.
b) Fuel-efficient engine
The People's Car has a rear-wheel drive, all aluminum, two-cylinder, 523 cc, 33 PS, multi point fuel injection petrol engine. This is the first time that a two-cylinder gasoline engine is being used in a car with a single balancer shaft. The tilt design strategy has helped diminish weight, which helps maximize presentation per unit of energy consumed and delivers high fuel effectiveness. Performance is prohibited by a particularly planned electronic engine management system.
c) Meets all safety requirements
The People's Car's safety performance exceeds up to date regulatory requirements. By means of an all sheet-metal body, it has a well-built passenger compartment, with safety features for instance crumple zones, intrusion-resistant doors, seats belts, strong seats and anchorages, and the rear tailgate glass bonded to the body. Tubeless tyres additional augment wellbeing.
The People's Car's tailpipe emanation presentation exceeds dogmatic requirements. In terms of generally pollutants, it has a lower pollution level than two-wheelers being manufactured in Malaysia nowadays. The high effectiveness also ensures that the car has low carbon dioxide emissions, thus providing the twin benefits of an reasonable transportation explanation with a low carbon footprint.
Brands recognize the source or maker of a product and allow consumers - either individuals or organizations to allocate dependability for its performance to a scrupulous manufacturer or distributor. Branding is endowing products and services with the authority of a brand. It's all about creating differences involving products. For branding strategies to be victorious and brand value to be shaped, consumers must be persuaded there are significant differences among brands in the product or service category. In Tata Nano's case, the branding strategy used is business name joint with individual product names. This company's name legitimizes and the individual name individualizes the new product
The Tata Nano CX, as well as all the features described in the former Product Review section, will be sold with a three-year warranty or 100,000km warranty, whichever comes first. We will bring in the Tata Nano LX throughout the following year, after we have recognized our Tata brand. The brand and logo will be displayed on the car in addition to in all marketing campaigns.
The Cost price is an anticipated USD2, 420 or equivalent to RM8, 954, which includes import tax, duties excise, sales tax, shipment costs and congregation cost. The selling price for the Malaysian market is RM13, 704.00, which is comprehensive of standard accessories, but exclude road tax (RM70.00), registration fees (RM150.00), number plate (RM50.00) and ownership support fee (RM50.00), sales tax (RM1370.40) which amounted to RM320.00. The On-The-Road price will be RM15797.40.These prices replicate a strategy of taking a split from recognized competitors, for instance Perodua' s model of Kancil and Viva.
Setting the price - selecting price objectives
Tata Nano Malaysia (TNM) has set major three objectives in its effort to position itself in the Malaysia Automotive market. The objectives are: Survival, maximum current profit and maximum market share.
Intense competition from Malaysia's second car manufacturer, Perodua for a share of the automotive market segment for the below 1,000 cc category will spur TNM to ensure that the car price covers variable costs and some fixed costs. In this case, survival is a short term objective as in the long run, TNM will add value such as added safety features to the Nano range.
b. Maximum current profit
TNM has set a price that will maximize current profits, cash flow and return on investment, after taking into consideration the demand and costs involved. As this category of small foreign cars segment has not been really tested by other manufacturers, therefore the demand is rather difficult to estimate but TNM is confident of a good response towards its entry into the Malaysian market.
c. Maximum Market Share
For the Malaysian market, TNM will realize the market-penetration pricing, which is to set a low price for a new car so as to magnetize a great number of buyers and a big market share. This will be done by achieving high sales volume, which will results in falling costs, allowing the company to cut its price even added. We are helpful sufficient that the Malaysia car market is extremely price sensitive, as a low price produces more market growth. TNM is also convinced that production and distribution costs will fall as sales volume increases and the low price of Nano cars will assist to exclude competition and uphold its low-price location. The low-price entrance will offer Malaysians consumers with a feasible alternative to Perodua -Malaysia second National car. Additional liberalization is anticipated as Malaysia implements the ASEAN Free Trade Area agreement, which commits the Malaysia Government to scrap distant car taxes.
Segmentation of automotive segment is also based on the user of the products. Like the model of TATA Motors, when it observed that their merchandise ‘INDICA' is used widely by the taxi operators, it came up with a latest model of the car having Round Tail Lights to differentiate it from the car having upright tail lights used by the individual buyers.
n Individual Buyers
n Taxi operators
n Government /non-government institutions
The section that gives the maximum chance to the marketer is called target marketing.
Volvo Motors develops its cars for buyer to whom vehicle protection is a main concern. Volvo consequently positions it's as a safest a customer can buy.
Hyundai marketing strategy is differentiated marketing. Its main customer target is middle to upper earnings professionals who require true value for their money and comfy journey in city conditions. Its secondary consumer target is college students who need approach and speed. Its primary business target is midsized to large sized business that wants to assist their managers and employees by providing them a car for easiness of transportation. Its secondary business target is entrepreneurs and small business owners who want to offer discounts to managers buying a new car.
A niche is a more barely defined group seeking an individual mix of benefits. Marketers typically recognize niches by dividing a section into sub segments.
BMW is targeting high class people but it is largely targeting the young people who earn lots of money up to the age of 35-40 years and want to have a fashionable saloon
Mercedes is also targeting high class people but it is chiefly targeting the CEO's, chairmen, etc of age group of 50-60 years.
In the summer of 2008 Tata Motor's announced that it had effectively purchased the Land Rover and Jaguar brands from Ford Motors for UK £2.3 million. Two of the World's luxury car product have been added to its collection of brands, and will certainly off the company the possibility to market vehicles in the luxury segments. Tata Motors Limited acquired Daewoo Motor's Commercial vehicle business in 2004 for around USD $16 million. Nano is the cheapest car in the World - retailing at slight more than a motorbike. The 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. Nevertheless the company has put in place a practical Corporate Social Responsibility (CSR) committee to address possible strategies that will make are operations more sustainable. The variety of Super Milo fuel proficient buses are powered by super-efficient, eco-friendly engines the bus has optional organic clutch with booster help and enhanced air intakes that will lessen fuel consumption by up to 10%.
• Definition: - An economic occurrence. - A social phenomenon. - A cultural phenomenon.
• The association towards the extension of economic and social ties flanked by countries through the spread of corporate institutions and the capitalist philosophy that leads to the reduction of the world in financial terms.
Globalization could engage all these things!
• Liability of Global businesses.
• Amplified gap among rich and poor fuels possible terrorist reaction.
• Ethical accountability of business.
• Efforts to eliminate trade barriers.
There are plenty of people who consider that globalization is a off-putting development, protests at the G8 summits, pollution, poverty and unease over GM crops are just some of the issues.
Corporate Social Responsibility
• The veracity with which a company governs itself, fulfils its undertaking, lives by its values, engages with its stakeholders, measures its impact and reports on its activities.
• Includes Non- polluting situation.
• Demand from civil civilization, consumers, governments, and others for corporations to carry out sustainable business.
• Being ethical whereas running their daily operations.
As per our findings we have some recommendations, which will be functional when TATA NANO will be introduced in the market.
Advertisement and Publicity should be done very powerfully, not only by price tag but also by showing the technical requirement, this will help in,
1) NANO will be evident in the market.
2) Help in converting the latent car customers to brand customers.
3) Will give well-built position in the market to set next to the stronger competitor Maruti 800.
Tata has succeeded in value engineering of the product and its huge achievement for Tata's. It's somewhat on which India can feel proud of. Nano has been developed effectively.
Marketing is the center of all business. To do better than the competition organizations requires solid marketing awareness and accuracy in marketing decision making. Organization's positioning and the positioning of its products and services depend on the formulation and implementation of intellectual and aggressive strategic marketing plans.
An establish leadership and management consulting agency has the luxury of looking at all the criteria of developing a business strategy and strategic investigation and laying down a foundation from scratch. It may be a little harder for larger-more established companies to un-do elements of existing strategies and make the essential alignments. Internal and external analysis should efficiently discover areas of occasion and strengths to aid in the process of creating a stronger strategic business-marketing plan.