mindscape 2010 01 final rev0

8/8/2019 Mindscape 2010 01 Final Rev0

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MINDSCAPE 2010 CASE

STUDY

In the Wonder Land of Two

Wheeler Automobiles

Case Submitted By:-

ANOOP B IYER KASHISH GARG

Asst. Manger Tech Services PCBU Asst. Manger Tech Services PCBU

TATA MOTORS LTD.


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CONTENTS :-

Introduction

Objective of Case Study Why M&Ms entry in two wheeler market makes

business sense?

Response from Market Leaders

Can M&M acquire 10-15% in the next 2-3 years

Suggestion

Conclusion

Bibliography


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Introduction :- India is being recognized as potential emerging auto market.

Foreign players are adding to their investments in Indian auto industry.

7.4 million two wheelers were sold in India in 2008-2009.

80% of two wheelers sold in India are Motorcycle.

Mahindra With its 62 years of automotive manufacturing experience, strongbrand equity and recent acquisition of Kinetic motors Ltd. has entered in this

market which has been growing consistently over past few year.

Competing with the likes of Hero Honda, Bajaj and TVS with their expertise in

two wheeler manufacturing and having large products portfolio, it would be

difficult to clinch decent market share.

Mahindra & Mahindra has launched its scooters, a portfolio of three (Duro,

Rodeo and Flyte) as a foothold to gain entry into two wheeler market also,acquisition of kinetic motors added Nova, Kine and 4S to its portfolio.

In Jan 2010 it has managed to sell 10,000 vehicles.


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Objectives

Why M&Ms entry in twowheeler market makesbusiness sense?

What would be the reactionof existing market leaders?

Strategic plan of M&M andhow it can be improved

The case study In the Wonder Land of TwoWheeler Automobiles is undertaken toanalyze :-


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Problem 1: Why M&Ms entry in two

wheeler market makes business sense?

India is the second largest two-wheeler market in the

world & 80% of vehicles sold in India are two wheelers.

Low vehicle penetration in our country for 1000 peoplethere are 37 two wheelers.

MARKET ANALYSIS


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Age demographic shift towards range of 18-35 years, whoare working professionals and are the major customers oftwo wheelers.

Rise of Indias Rural Economy and Growth in MiddleIncome Households so greater affordability.

Rapid Product Introduction and Shorter Product LifeCycle.

Inadequate Public Transport Systems in most UrbanAreas.

Higher access to relatively inexpensive financing which

vital for country like us where per capita income is less. Fuel-efficient and low-maintenance models are current

demand from customer.

Scope of lot of new introduction of new technologies liketwo wheelers with CNG, Diesel and hybrid technology.

Problem 1: Why M&Ms entry in two

wheeler market makes business sense?


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Government Reduction in excise

duty

100% FDI

Liberalized policies

Factor Conditions Comparatively cheaper

workforce

Low cost productionbase

Low vehicle penetration(37 per 1000)

Largest two wheelermarket

Demand Condition Demanding consumer

Rapid Urbanization

Increase in disposableincome

Age demographic shift

Easy availability of finance

Scope of newtechnologies

Shorter Product life cycle

Supporting Industry Well established component

industry that supports OEMs

Competition Presence of large number

of foreign and domestic

players

CompanyStratergy


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SWOT Analysis Mahindra & Mahindra

STRENGTHS:-

Past records of successful

transition from Tractors to

Commercial vehicles to cars. Market leader in rural and

Semi-urban areas.

Acquisition of Kinetic Motors

Ltd.

Strong distribution networkand customer touch points.

Financing through its financial

arm, Kotak Mahindra.


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WEAKNESS :-

New entrant in two wheeler

market.

No prior experience of motorcycle making which

constitute 80% market

share

Lack of In-house R&D

facility which isprerequisite to understand

domestic customer

perception.



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OPPORTUNITIES:- Scope of growth in rural market.

New technologies like CNG, powered electric bike which is

on par with conventional bikes. Niche markets like high end bikes.

Consistent growing two wheeler market of which 40% wouldbe in rural market in which Mahindra has strong brandimage which Mahindra can leverage it.

Age demographic shift toward 18-30 years, who are the

major customers of two wheelers. Export market

Two-wheelers will act as an additional touch-point forconsumers to interact and bond with Mahindra Product.


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THREATS:-

Intense competitive two wheeler market.

Since M&M is likely to target rural

market, the purchasing capacity of

people depends on unreliable monsoon.

Capitalization of the time gap by other

Market Leaders which is created by M&M

Introduction of secondhand car market

by the reputed car manufacturers.

Easy loan availability for new as well as

used cars.

Introduction of new small cars like Tata

Nano.



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Conclusion for problem no 1


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Problem 2: Response from Market

Leaders

First of all they would adoptwait and watch policy andgauge the market reaction.

Price of vehicles will belowered to retain the customerbase.

Existing major player couldcapitalize the time gap created

between M&Ms product launchand meeting the marketdemand and could utilize theirexisting research anddevelopment to modify their existing products as per theproduct features offered by

M&M.

2

2

Honda TVS Hero Honda Suzuki Mahindra & Mahindra

Market Share of Companies inScooter Market


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Increase in advertisements toeclipse the hype created byM&M two wheelers.

Loyalty bonus schemes.

Negative marketing.

Increasing its presence in rural

market Adopting new technologies

and creating new segments.

New Motto to attract customerbase created by Mahindra

Problem 2: Response from Market

Leaders

Increase in tie up with financial institutions for retailfinancing of their two wheelers to counter the advantage ofMahindras own financial subsidiary (Kotak MahindraFinance Ltd.)


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COMPETITOR RESPONSE

PROFILE

OBJECTIVES

ASSUMPTIONS

RESOURCES &

CAPABILITES

STRATERGY

WHAT DRIVES COMPETITORWHAT THE COMPETITOR IS DOING

OR IS CAPABLE OF DOING

Response from Market Leaders


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Problem 3:- Can M&M acquire 10-15% in

the next 2-3 years

No. With the current scenario, the scooter comprise of 12% of total two wheeler market of 8 million. Also, Mahindrais new entrant in Scooter market so we can assume itcould achieve maximum of 20 % market share in scootermarket in two to three years.

So effectively it is:-

20% of 12% of 8million which comesout to be 2.5 %.


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Also the current capacity of manufacturing is 4.5 lakhs oftwo wheelers which is 5.5 % of 8 million. So Withoutexpanding its current plant capacity it cannot achieve therequired target.

In the last four to five years, the two-wheeler market haswitnessed a marked shift towards motorcycles at theexpense of scooters. In the rural areas, consumers havecome to prefer sturdier bikes to withstand the bad road

conditions. So, M&Ms strategy not to enter motorcyclemarket immediately could not help them to acquire thetargeted 10 -15 % of total two wheeler market of 8 million.


the next 2-3 years


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South West North-Central East & North-East

All India

2835 4327 2624 883 10669

(12.90) (16.80) (12.50) (11.10) (14.00)

203 219 602 99 1124

(2.60) (3.50) (2.80) (2.00) (2.08)Scooter

Table 1: Demand Forecast for M otorcycles and Scooters for 2011-12

Note: Compound Annual Rate of Growth during 2002-03 and 2011-12 is presented in parenthesis

Source: Indian Automobile Industry: Optimism in the Air, Industry Insight,

NCAER

2-Wheeler

Segment

Regions (in thousands)

Motorcycle


the next 2-3 years


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Sales of two wheelers in India Source SIAM

Scooter

Motorcycle


the next 2-3 years


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Problem 4:- Suggestion

They should enter into twowheeler motorcycle market assoon as possible.

They should start developingin-house R&D (to understanddomestic customer perceptionand requirements) or jointventures with globalmotorcycle bike companieswhich are looking to enter into

two wheeler market in India toenhance its own R&D capabilitywith knowledge sharing.

SUGGESTION


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By developing 4Ps of marketing Strategy for M&M.

PRODUCT :-

Launching a new product like apple iPod, Sony Walkman,the class of product which are recognized by the brandname itself.

Product differentiation for different markets or MarketSegmentation like rural, semi-urban and urban markets asan urban customer is not likely to digest the product meantfor rural people.

Constantly innovating like modifying configuration; faceliftlaunches etc. to get a new product feeling in short durationof time.

Launch a product with time gap at least four months, sothat it doesnt cannibalize its own products: - which bike tobuy.



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PROMOTION :-

Strong advertisement and brand ambassador to connectwith masses.

Online customization of two wheelers, like Dell,

Participate in motorcycle rallies which require both powerand ruggedness

PRICE :-Pricing according to the cost of production.

Keeping an eye on the price of the competitors.Providing more free services to its customers incomparison to its competitors.

Good services facilities to its customers through dealersservice station.

Dealers encouragement by giving discount, providing 0%

interest loan schemes, prices, coupons etc.



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PLACE :-They should keep their dominance in rural market as it didin its previous products.

Develop many regional offices located in major citiesthrough out the country.The variety products should be easily available inshowrooms

Today the market is customer centric, so theessential part of survival not vehicle manufacturing butproviding strong after sales support. So, M&M shoulddevelop strong after sales support with the help of their existing four wheelers customer support centers.



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Forget product.. Study consumerCHOICE and needs

Forget Price Understand the consumerCOST tosatisfy that choice and needs

Forget place Think of the consumerCONVENIENCEto buy

Forget promotion the word is COMMUNICATION


NEW MANTRA - Forget 4Ps, Think 4Cs


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Conclusion

Today the customer needs :-

Auto Start

Cheap

Powerful

Stylish

Fuel Efficiency

Low Maintenance

M&M which is known for its rugged, powerful and muscularvehicles is the only one who can integrate all these features intoone to satisfy the ever growing demand customer


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Bibliography

AUTO MAGAZINE.

BUSINESS INDIA

FINANCIAL EXPRESS

BUSINESS LINE

OVER DRIVE MAGAZINE

www.google.com

www.siam.com


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Thank You for your Attention

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