MBA 630 N3

Megha Patel Tapan Patel Benazeer Pathan Jainik Shah Ben Ruetz

Royal Tranz
Marketing Plan

Royal

Executive Summary
Royal is launching a new low-cost car, the Tranz, in Indian markets. We will compete with existing companies by offering a vehicle with better amenities while keeping the price affordable. We are targeting the rapidly growing middle class customers who desire a slightly better low-cost car as well as businesses who desire to add low-cost cars to their current fleets. Our main objective is to capture between 6-7% of the Indian market share with first year sales of 100,000 cars. Our financial objective is to achieve $700 million in revenue the first year and to keep losses at less than $150 million. We foresee breaking even midway through our second year of production.

Royal

Situation Analysis
Royal was founded 1 year ago by five business partners with automotive industry experience. They are about to enter the exciting low-cost car market in India, where competition is starting to heat up. The size and buying power of the Indian middle class is rapidly increasing, but price still remains the main driver when purchasing a vehicle. Approximately 1.5 million new small cars are sold in India each year and Tata, Indias leading vehicle maker, is looking to capture a sizable chunk of that market with their recent introduction of the Tata Nano . . . a sub-compact car costing only $2,500. To position ourselves successfully in this market, Royal is targeting customers who may want a low-cost car that is a notch above the Tata Nano. We also plan to offer optional features that are highly valued by potential customers.

Royal

Market Summary
Royals market consists of customers who are looking for a low-cost car but want something a little better than what the price leader offers. It also consists of customers looking for options that allow them to customize their vehicle to some degree. In addition, we will be marketing to businesses looking to add low-cost cars to their fleets and concentrating on filling all orders in a timely manner. See Table 1 for specific target segments. Low-cost car customers currently have very little to choose from as far as options go. We will offer our customers the standard options for low-cost cars (color, A/C, etc.), but intend to differentiate ourselves by offering options above and beyond the norm . . . options such as sunroofs, air bags and MP3 players.

Royal
Table 1

Market Summary (continued)

Corresponding Feature/Benefit Airbags, tubeless tires Seating for 5, large trunk space

Targeted Segment Middle Class w/Children

Customer Need

Safety Space To be in style Network with tech toys Safety Desirable Rental Car Fuel Efficient

Young Middle Class

Spoiler, sunroof, multiple color schemes MP3 player

Business

Airbags, tubeless tires Spoiler, sunroof High kpl, LPG, CNG options

Royal
1.

SWOT Analysis - Strengths

Multiple options We will offer various options on the Tranz that are typically not available on our competitors cars. Options such as a sunroof, MP3 player and an LPG or CNG kit will make the Tranz attractive to potential buyers. Innovative design We employ cutting edge designers and engineers who know how to design and build an attractive lowcost car. Our contemporary designs will make the Tranz attractive to a wide variety of consumers. Extensive customer support We have an excellent training program for mechanics employed by our various dealerships. This will allow us to offer better and more consistent service than the competition who often leave training to be handled independently by each dealership. We also intend to offer free first time tune-ups and complimentary car washes at every tune-up.

2.

3.

Royal
1.

SWOT Analysis - Weaknesses

Lack of brand awareness We have no brand awareness, whereas our competition has extremely good brand awareness. We will work to improve our brand awareness by using everything from public events to word-of-mouth campaigns. Higher price Because of the better styling and options that we offer, we are not able to beat the competition on price. Therefore we must be able to differentiate our product from our competitors product and make it attractive to potential customers.

2.

Royal
1.

SWOT Analysis - Opportunities

Increasing demand for low-cost cars The middle class of India is growing rapidly which is rapidly increasing demand for lowcost cars. Right now is an excellent time to this wave of increasing demand and eventually push into other vehicle segments of the market. Economy and the price of oil Currently, the world economy is starting to slow down and the price of oil is still somewhat high. We foresee the demand for these types of vehicles continuing to rise as consumers look for cheap cars that sip fuel.

2.

Royal
1.

SWOT Analysis - Threats

Increased competition The Maruti 800 and Hyundai Santro are well established low-cost cars and with the Tata Nano and others about to hit the market, the competition will continue to get more difficult. A year from now, we foresee twice as many low-cost car offerings in the market. Uncertainty of the Nanos affect It is not completely clear yet, what affect the release of Tatas Nano will have on the market. Many speculate that it will cause other companies to lower their prices in order to compete with Tata. If this is the case, we may be hard pressed to keep up in a price war. We must focus on making a better, more attractive car and differentiate it from the competition.

2.

Royal

Competition
Even though gas prices have dropped lately, the fact is the world is looking for alternative fuels and the market is wanting to find more efficient ways to travel. Getting a smaller car is one option, because smaller cars are more efficient than big ones. In fact, the future of the automobile may be the small car.

Royal

Competition (continued)
Hyundai: Established in 1967, Hyundai Motor Company has grown into the Hyundai-Kia Automotive Group which was ranked as the worlds fifth-largest automaker in 2007 and includes over two dozen autorelated subsidiaries and affiliates. Employing over 75,000 people worldwide, Hyundai Motor posted sales of $74.9 billion in 2007 on a consolidated-basis and $32.8 billion on a non-consolidated basis. Hyundai vehicles are sold in 193 countries through some 6,000 dealerships and showrooms.

Royal
Maruti:

Competition (continued)
Maruti Suzuki India Limited (MSIL, formerly Maruti Udyog Limited), a subsidiary of Suzuki Motor Corporation of Japan, is Indias largest passenger car company, accounting for over 50% of the domestic car market. Maruti has always embodied trust be it with the products themselves or with their service standards. They have built trust by aligning themselves with the needs of customers. They have a service footprint in over 1200 towns across the country. With 43 driving schools across the country using advanced training methods like simulators. Maruti Driving Schools tackle road safety at the grassroots.

Royal
Tata:

Competition (continued)
Tata Motors Limited is Indias largest automobile company, with revenues of $8.8 billion in 2007-08. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with leading products in the compact, midsize car and utility vehicle segments. The company is the worlds fourth largest truck manufacturer and the worlds second largest bus manufacturer. Tata Motors is the only Indian Automobile Company to have been recognized as Notable COP for the second consecutive year by the Global Compact Society in 2006.

Royal

Competition (continued)
Tata (continued): Tata Motors, the first company from Indias engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as an international automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Tata Motors is also expanding its international footprint, established through exports since 1961. The companys commercial and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, South East Asia, South Asia and South America. It has franchisee/joint venture assembly operations in Malaysia, Kenya, Bangladesh, Ukraine, Russia and Senegal. With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.

Royal
Table 2
Competitor Hyundai

Competition (continued)
Model Santro Euro III GL Solid LPG Features

Price $7706

11.6/16 kpl (gas) 5 person seating capacity 35 liter fuel tank 4 cylinder 1086cc engine, 63hp Tires 155/70R13 A/C 12.2/17.5 kpl (gas), 10.2/15.1 (LPG) 4 person seating capacity 28 liter fuel tank (gas), 19.2 liter fuel tank (LPG) 3 cylinder 796cc engine, 37 hp Tires 145/70R12 A/C 20 kpl (gas) 4 person seating capacity 15 liter fuel tank 2 cylinder 623cc engine, 33hp power 12 Tubeless Tires A/C

Maruti

M800 A/C LPG

$5006

Tata

Nano

$2500

Royal

Product Offerings
Royal offers the following standard features on every Tranz:
Child safety rear door lock system Power locks Overhead lamp Front and rear speakers Ashtray A/C Heater Power steering Power windows

Remote fuel door opener Remote trunk opener Rear double folding seat Front air bags Choice of standard paint schemes Cell phone charger Tubeless tires Seating for 5 people Large trunk space

Options include:

Sun roof Sport paint scheme MP3 player Satellite Radio

Spoiler Premium wheel Premium speakers LPG/CNG kits

Royal

Distribution
We will distribute the Tranz by developing private dealerships all over the country. We will appoint distribution committees in each state which will approve dealership ownership via financial background checks and other verification methods. Our goal is to provide at least one dealership in each district area. We will also use these dealerships to provide maintenance services and auto parts. We will offer a 4 to 5% commission to dealers on the selling of cars, parts and services.

Royal

Objectives
Our main objective is to capture between 6 and 7% of the Indian market share with first year sales of 100,000 cars. Our financial objective is to achieve $700 million in revenue the first year and to keep losses at less than $150 million. We foresee breaking even midway through our second year of production. In our second or third year, our objective will then be to enter the European and US markets. With current safety, fuel efficiency and emissions standards, we would need to make upgrades with additional air-bags, side-impact beams, catalytic convertors and better fuel efficiency which would add $1000 to the cost of the vehicle. At $8000 the Tranz would still be far cheaper than any compact in these markets.

Royal

Objectives (continued)
Our main marketing objective is to focus on the customers' wants and needs and, at the same time, offer a variety of options that some customers may want. This will allow us to effectively influence and persuade the customer to purchase from us. The reason we decided to launch a low-cost car is the fact that entire families, sometimes four people, would ride on a bike together. The Indian market is rapidly changing to where people can afford a car and spend time together. It virtually frees them from a world of overcrowded trains, precarious rickshaws, taxis they cant afford and packed buses. We want to provide a Car 4 All, which is affordable, yet built to meet safety requirements, emission norms and fuel efficiency standards. Every person who has a desire for a vehicle will look to Royal to fulfill this need.

Royal

Target Markets
The low-cost car is clearly intended for the masses; for the first-time car buyer in India a huge market despite the increasing number of cars in the urban and semi-urban areas. The Tranz will provide a connection and thats social entrepreneurship in the Indian context. Primary Consumer Market: Our primary target market is the 4person family who cannot afford a car today. We foresee a large rural demand for this car i.e. a whole new market will be opened and a productivity and lifestyle improvement will be created that will benefit the Indian economy and ultimately the global economy. Secondary Consumer Market: Our secondary target market is consumer who may have already purchased their first car and is looking for a similar low-cost car that they can add options to in order to make it their car. Our differentiation strategy will play a large role here.

Royal

Target Markets (continued)

Primary Business Market: Our primary business market consists of the many rental car companies in India. The various standard safety options on the Tranz along with its attractive styling will make it appealing as a rental car.

Royal

Positioning
When you hear about the Tranz, the obvious temptation is to assume something like Cheap Thrill, but we would like to position it as a Car 4 All. The rationale for the pitch would essentially be that the newly emerging Indian market has a strong streak of ambition. So, this car can be the fulfillment of a dream of all great Indian classes. Though it is cheap, it is no less than a Ferrari for the people who will buy it, as it gives them membership to an exclusive club; something that they have been waiting for. The Royal Tranz lends itself to an interpretation of the brand as smart, hi-tech and intelligent. So, we will pitch it from a perspective that tackles both vivid imagery, as well as demonstrating the benefits of the car as an intelligent machine. All the advantages of being smart, and of having knowledge beforehand, which also comes from the Royal Tranz name.

Royal

Positioning (continued)
It isnt just about a car, but about a way of life, a greater friendliness with the environment around us, less emissions, more space, clean, simple design . . . even a child can sketch out its basic shape. A paradigm shift in the way we look at cars and at life.

Royal

Strategies
Product: The Royal Tranz will be sold with a 10 year/160,000 km warranty. We will introduce additional models in our third year of operation after we have raised awareness of our brand and streamlined the manufacturing process. The Tranz logo will be displayed on the vehicle as well as all packaging and advertisements specifically dealing with the Tranz. The Royal logo will be displayed on all packaging and advertisements.

Royal
Pricing:

Strategies (continued)
The Royal Tranz will be priced at an average of $7,000 per car. We intend to make the Tranz our cheapest model so that when we expand our line of cars, they will be priced higher than the Tranz. We feel that this price indicates a strategy of establishing ourselves in the upper end of the low-cost car segment.

Royal

Strategies (continued)
Distribution: We plan to set up private Royal dealerships throughout the market (at least one in each district area). These dealerships would be given a 4-5% commission on sales and be responsible for all maintenance service. We also plan to set up an extensive web site where customers can design their own Tranz and create an order sheet that they can take in to the nearest dealership.

Royal

Strategies (continued)
Marketing Communications: We will use various methods of communication to differentiate our product from our competitors. We plan to use billboards and a word-of-mouth campaign before we begin production to generate buzz. Also pre-production, we will host a contest on our website to see who can build the best Tranz. We plan on using the MarketStar advertising agency to aid us in designing television, magazine and internet ads that convey the value and uniqueness of the Tranz. The agency will also assist us in setting up booths and sponsoring contests at sporting events throughout the marketing region.

Royal

Marketing Mix
The Tranz will be launched in April of 2009. Our first six months of action programs in 2009 follows: January We will launch a billboard campaign that will signal the arrival of a new vehicle without giving any of the details away. We will also launch a word-of-mouth campaign on several highly used automotive blogs. These strategies will help create buzz before we begin production. February We will attend auto trade shows and unveil the Tranz at the largest venue possible. March We will begin our advertising campaign on television, in magazines and online. We will host a Build The Best Tranz contest on our website. We will also distribute displays and signage to our dealerships.

Royal

Marketing Mix (continued)

April We will begin rolling out the Tranz to our dealerships for retail sale. We will distribute customer satisfaction surveys after every sale. May We will set up booths and sponsor contests at sporting events all over India. We will hold dealership contests that will encourage them to compete for the most sales. June We will work with the MarketStar to develop new advertisements that will refresh our advertising campaign. We will analyze results from the customer satisfaction surveys and make any adjustments necessary.

Royal

Marketing Research
Primary data should give us the best results in our market research since the market we are entering is fairly new.
First we will conduct surveys that will aid us in recognizing the consumers desires and needs from a low-cost car. We also plan on forming focus groups that will help push our designers in a specific direction regarding options and amenities for the car. During our marketing campaign, we will conduct brand awareness surveys that will help us measure the effectiveness of our marketing mix. Lastly, we will conduct customer satisfaction surveys that will enable us to make adjustments to our product as we go.

See attachment Marketing Research.doc for secondary research data.

Royal

Financials
We are projecting an average price of $7,000 per car with a sales volume of 100,000 cars resulting in first year revenues of $700 million. Projected variable cost per unit is $5,000 and we are anticipating a first year loss of less than $150 million. With $300 million in first year fixed costs, our analysis indicates that we will break even midway through our second year of production when we achieve 150,000 in sales volume.
$300,000,000 ------------------- = 150,000 units $7,000 - $5,000

Royal

Controls - Implementation
We have developed routine audits that will monitor product quality at our production facilities as well as surveys to measure customer satisfaction. We have also put together a reporting system that will be placed at maintenance facilities that will track maintenance issues with our vehicles. In addition to these monitoring tools, we will closely track monthly sales and expenses, being mindful of any deviation from the plan and taking appropriate corrective action.

Royal

Controls Marketing Organization

Jainik Shah is Royals chief marketing officer and is responsible for all marketing related activities. See the organizational chart below for the corporate marketing structure. We have outsourced much of our frontline marketing operations to MarketStar in order to achieve better results and cost savings.
CMO Jainik Shah

Dir. of Marketing Communications Megha Patel

Dir. of Sales Tapan Patel

Dir. of Marketing Strategy Benazeer Pathan

Dir. of Customer Service Ben Ruetz