TATA MOTORS

Tata Motors is an Automobile Company in India and is a very high earning company. It's
revenues reportedly in the year 2008-2009, is 14 billion. But it's achievements do not stop there.
It is among the world's top automobile companies, reportedly the 4th largest truck manufacturer.

INNOVATION STRATEGY:
With 23,000 employees what is notable in Tata Motors approach is the fact that it's
marketing approach is novel and founded on clear cut internet marketing guidelines.

Innovation is simply the proccess by which companies increase their profitability in the
marketplace by staking out a position that other companies in the market can't do.  It clears out
space in their prospect's mind as to what their company is able to offer them that no other
company can.

For Tata Motors- excellence in service and presentation- is the perception that comes to the
prospect 's mind, for others it may understanding a customer's family needs for a car.

Essentially what Tata Motors has done is they've brought a new range of value to their
market by bringing media and technology that have not been overemphasized by their
competitors so that they could carve out an unshakable space in the minds of their customers and
thus lead to increased sales. But, their success isn't complete.

India´s car manufacturer Tata Motors is about to revolutionize the global car market with its
disruptive innovation strategy. At the Delhi Motor Show, start on January 10, Tata Motors
presented its disruptive innovation named „People´s Car (Volkswagen !)“ or „One-Lakh-Car“.
As of autumn 2008 this innovation is planned to be produced in India. One Lakh is equivalent to
100.000 Indian Rupees. The „People´s Car (Volkswagen)“ therefore corresponds to a  “Two-
Thousand-Euro-Car“.

Tata´s disruptive Innovation of the People´s Car“ will turn the automobile market on its
head, and will result in a paradigm shift. As many other disruptive innovations (the term was
coined by Clayton Christensen) Tata´s innovation consciously sacrifices some performance in
order to be able to radically reduce the costs and the selling price. According to available
information, the car, on the one hand, will have four seats and four doors but, on the other
hand, it will be only propelled by a 660 ccm rear-mounted diesel engine with 30 horsepower.
The maximum speed is said to be 64 kilometers per hour.

The target group of Tata´s disruptive innovation of the “One-Lakh-Car” are not the already
existing car drivers. It  is rather the millions of Indian motor bike and motor scooter drivers, to
which, however, the drivers of three-wheeled cars can be added, that Tata´s innovation strategy
targets. While each year 6.5 million motor bikes and motor scooters are sold in India, up to now
only 1.3 million cars are purchased every year. The conversion of motor bike and motor scooter
drivers into car drivers therefore represents a huge market potential.
 It is estimated that out of India´s present population of more than 1.1 billion people more
than 400 thousand qualify for the target group of a low-price innovation strategy and as a
potential buyer of a low-price car. The determining factor for the conversion success is the price
point.

With only one Lakh Tata´s disruptive innovation will cost about double the price of an
Indian motor scooter. This should enable Tata to win over a large part of the price sensitive
motor bike and motor scooter drivers, who so far could not afford a car, for the “People´s Car”.
With its four wheels and the protecting body, this disruptive innovation will open up a totally
new world of safety and comfort for the Indians that have driven motor bikes and scooters so far.
This is how Tata´s CEO Ratan Tata explains his innovation strategy.

In the first five years Tata Motors plans to sell 2 million „People´s Cars“. Apart from selling
the car in India, an export of this innovation to emerging countries such as Thailand and
Bangladesh is envisioned.

Tata Motors as a company up to now is the no.2 in the Indian passenger car market (but it is
the no.1 in the Indian truck market). Tata´s main rival, market leader Maruti Suzuki, of which
54% is owned by the Japanese Suzuki Motor Company, is casting doubts on Tata´s innovation
strategy and about the feasibility of producing an innovative car for one Lakh only that meets the
Indian safety and emission standards. This doubt could turn out to be an error with grave
consequences.

Tata Motors is giving reassurances that its “People´s Car” will comply with the Indian safety
and emission standards that understandably at this moment are not yet as stringent as the German
ones. Tata is the only Indian car producer with a certified crash-test facility. In order to reduce
the cost of this innovation, the “One-Lakh-Car” will use more plastic parts, which are glued
together rather than welded, than is usual in the car industry. The first factory for the “One-Lakh-
Car” has already been built in Singapur in West Bengal. The innovative car will be assembled in
further three satellite plants which will also sell and service the cars, if needed, in order to save
the trade margin of the intermediaries.

In its innovation strategy, Tata Motors makes use of a network of European partners such as
BASF, which supplies plastic components, or Fiat, which helps Tata with its design. Concerning
design:  this in the past was often a weakness of products from emerging countries. In its design,
Tata relies on the help of such renowned Italian design firms as I.D.E.A. and Stile Bertone,
respectively. Tata has already sufficiently proven in the past that it knows how to design likeable
cars.

Maruti Suzuki´s doubts may actually be rather tactically motivated. Also at the Delhi
Motor Show, Suzuki will present an innovation of its own of a low-cost car with the code
name „A-Star“. In Suzuki´s global innovation management plan, India in the future is planned to
play the role of an innovation centre for low-cost vehicles.

Renault and Nissan as well intend to make India their innovation centre for low-cost cars.
Other industries and companies such as the innovation machine GE or SAP or, respectively, the
innovation machine Cisco have already made the experience that India is an interesting location
for an innovation centre for disruptive innovations.

India more and more becomes the leading choice for placing an innovation centre that shall be
globally responsible for low-cost cars. It can be safely assumed that the Indian employees who
are heavily influenced by daily experiences of scarcity and penury will bring along a big amount
of creativity and innovation that will benefit the development of disruptive low-cost cars.

In the meantime, Tata Motors is very active at the other end of the car price scale. It is being
viewed as the leading candidate for acquiring the Jaguar and Land Rover businesses that Ford
wants to divest itself of. The target market is nicely pointed out Dr Wentz! In fact, the key to
producing a $2500 car has been Tata Motors ‘innovation around cost’ model. For the markets
that the Nano is vying for, this model has helped keep the car’s price within the target buyer’s
reach.

INTERNATIONAL STRATEGIES BASED ON THE COMPETITIVE ADVANTAGE:

• New product (Eg.Tata Nano, the world’s cheapest car).

• Acquisitions (Land rover and Jaguar brands from ford motors).
• Partnership with established companies (Alliance with Fiat since 2006) to enhance the
product portfolio and knowledge exchange.

FACILITIES FOR LEARNING FROM OTHER COMPANIES

Developing programs for intensive management development

CONSOLIDATE POSITION IN INDIA BY EXPLOITING OPPORTUNITIES:

• New mobility of young Indians

• Government’s substantial road building program
• GDP growth

MARKETING STRATEGIES OF TATA MOTORS:

Marketing strategies of TATA motors is one of the most successful marketing strategies in
automobile industry. By analyzing the SWOT analysis of Tata Motors, it is understand that why
Tata Motors Company is able to produce more than 4 million different types of vehicles such as
cars, trucks, commercial vehicles, 4*4….etc since the company began in 1945. Meanwhile, Tata
Motors Limited has also become the largest automobile producer in India market.

1. PRODUCT, BRANDING AND ADVERTISING:

 Every business started from 0, from no one knows it until everyone know it. Advertising
is one of the most common ways to make car buyer or car enthusiast aware of the new car with
special promotion price. Another more important way of advertising is to create an image or
brand image. Take BMW Z3 for example, it was introduced in 1996 and shortly the car has been
used in the famous James Bond Movie. This is similar to Nissan 350 Fair lady Z in the recent
2007 Fast and the Furious 3 – Tokyo Drift. Over the years Tata Motors have been successful in
creating their brand image especially they use some famous stars as their spokesman.

Other important marketing strategies are such as the packaging, innovations, and quality control.
Tata Motors provide many innovative features to attract car lover. One of these innovations is the
Tata Safari 4*4 Dicor that has “Reverse Guide System”. A weather-proof camera is fixed to the
rear car to help the driver while reversing the car.

2. PRICING STRATEGY:

There are various factors to determine a price of a car. These factors are such as market
condition (it can’t be too low or too high with the prices of same vehicle from competitors, it has
to be at par), cost incurred to build a car, profit by company, dealer profit.

Giving discount every month and special promotion for certain type of vehicle also one of the
strong strategy use by Tata Motors. Discount can be made from Company’s profit or from
dealer’s profit at certain range.

3.PLACE

Place of dealership does play an important role. The channel of distribution, physical location,
and dealership method of distribution and sales is generally adopted. The distribution of vehicle
must be in a very systematic way, from the plant to dealership and to end user. This is not only in
India itself but also to the world-wide dealership.

4. MAINTENANCE AND SUPPORT:

After sales service is also another important marketing strategy for most of the car buyer to
choose for the right car. End user will not want to spend a lot of time to travel to a far place just
to service the car such as change engine oil, oil filter and some simple checking. Parts and
accessories must also easy to access when it is needed to keep the customer satisfy from buying
Tata cars until maintaining the car or even until they sell the car and change to a newer Tata
model.

BUSINESS STRATEGY:

The implementation of the business strategy will be in three stages; product upgradation, sales
and distribution processes and penetration into new markets. The three stages could run
concurrently, depending on the market and product needs.
 Tata Motors has taken a number of initiatives to strengthen both product reliability and
durability and marketing processes. Enhancing distribution reach and a robust sales process
system have been key elements in consolidating the company’s leadership position in the
domestic market. The implementation of this strategy has begun in a few markets abroad and it
was an integrated approach where they invest in all the critical elements — product upgradation,
sales processes, distribution and above all, people."

The company’s approach has been successful in Sri Lanka and Malaysia where the installation
of a sales process system and face-to-face customer meets through road shows and service
workshops has started yielding results. Recently, a large contingent of dealers from South Africa
was invited to visit the company’s facilities in Pune and experience the new face of the
international business.

The second part of the business strategy is to make an entry in new and yet uncharted markets,
such as China and the CIS countries. Besides the assembly plants that Tata Motors has in
Bangladesh and Malaysia, the company’s recent order for 500 buses from Senegal will involve
providing technical and commercial assistance to the Senegalese government for setting up a bus
body building plant. Tata Motors has been short-listed for South Africa’s "Taxi Project" in which
the government will provide an entirely new transport system in that country.

JOINT VENTURE:

A joint venture project for bus body building in Ukraine and serious due diligence into the
opportunities available in the Chinese market are other areas where Tata Motors is looking to
create new opportunities.

GLOBALISATION:

On the road to globalisation, Dr Sumantran points out that the Rover agreement has been an
important step in helping Tata Motors to gain very quick access to a fairly large market and a
large distribution network. "Working alone in this area would have taken us much longer to
create a distribution network. The exposure that the company and the products have received
through the agreement validates the belief that we have arrived at a significant milestone in
promoting the Tata brand," elaborates Dr Sumantran. "Rover is getting a Tata product. It is a
road that many automakers have tread in the past. It will take us more than three years to arrive
at our goal. But at least we have started the journey in that direction." By remaining connected
with the international markets, one’s learning improves. One is able to draw on experiences in
different markets and create strong synergies. In doing so, the company will have created world-
class products to fight competition in the domestic market as well, with little extra investment.
This assures a greater degree of stability and, going forward, will strengthen the company’s
ability to manage risk.

Clearly, it takes the right mix of people with the right skills to make this happen. Innovation,
knowledge, commitment and pride have been Tata Motors’ greatest asset. It has amply
demonstrated that it can meet the challenge of change. "The company is now on a course that
will need a new mindset.