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OBJECTIVE OF THE PROJECT

Companies undertake International Marketing for a variety of
reasons. Some are pushed by poor opportunities in the home
market, and some are pulled by superior opportunities abroad.
Given the risks of International Marketing, companies need a
systematic way to make their International Marketing decisions.

This Project concentrates on major dimensions of global marketing,
the global marketing mix, and managing and leading the global
marketing effort.

A company that fails to go global is in danger of losing its domestic
business to competitors with lower costs, greater experience, better
products, and, in a nutshell, more value for the customer.
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1.1. INTRODUCTION TO GLOBAL MARKETING

We live in a global marketplace. As you read this project, you may be
sitting in a chair imported from Brazil at a desk imported from Denmark
under a lamp from Italy. On your desk you might have a PC clone from
Taiwan, software programmes from India or perhaps a Macantosh
designed in the United States and made in Ireland. Your shoes might
have come from Bulgaria, and the coffee you are sipping could be from
Latin America or from Africa, or tea made in India. In the background you
have on your favorite soft-rock radio station playing a Grateful Dead
record pressed on a Philips of the Netherlands compact disc. You are
planning to go to a Hollywood movie made in Los Angeles and then you
plan to meet friends for dinner at the new McDonald's in town. Welcome
to the new millennium. Yesterday's marketing fantasy has become
today's reality: A global marketplace has emerged.

The world has undergone a complete revolution economically from the
time only 50 years ago when students sitting at their desks would,
perhaps with the exception of the books they were reading, not have any
article in their possession that was manufactured more than 75 miles from
where they lived. This project is about global marketing, which is defined
as:

It is the process of focusing the resources (people, money and
physical assets) and objectives of an organisation on global
market opportunities and threats.

The post-World War II decades have been a period of unparalleled
expansion of enterprises into global markets. Two decades ago, the term
global marketing did not even exist. Today, global marketing is essential
not only for the realization of the full success potential of a business, but
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even more critically, for the survival of a business.

Appraising the Deciding Deciding which Deciding how
international whether to go markets to to enter the
marketing abroad enter markets
environment

Deciding on the Deciding on
marketing the marketing
organization programme

Following are the steps the company has to keep in its mind while taking
major decisions:

• Considering a particular foreign market, its economic,
political-legal and cultural characteristics.

• Whether to do business in few or many countries

• To decide in which particular market to enter

• How to enter the market that is through direct exports,
joint venture or direct investment

• The extent to which their product, price, promotion,
distribution should be adapted to individual foreign
markets.

The main aim of doing this project is to get familiar with the strategies a
company adopts to make important international business decisions.
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1.2. ORIENTATIONS OF THE MANAGEMENT IN GLOBAL
COMPANIES

Behavior is based on the thinking of the top management can be
classified in four ways i.e. whether the organization is – Ethnocentric,
Polycentric, Geocentric and Region centric.

• Ethnocentric:

These companies have strong orientation towards the home country.
They use the home base for standardized production for export in order to
gain some marginal business. Decision-making is centralized. Ex.
Siemens and GM are ethnocentric.

• Polycentric:

These companies have strong orientation towards the host country. They
consider each market to be unique and influenced by income, culture,
laws and politics. Decision-making is decentralized.

• Geocentric:

These companies consider the whole rather than any particular country as
the target market. They usually do not identify themselves with a
particular country. They combine centralization and decentralization in the
syntheses that allows some degree of flexibility. Ex. Colgate-Palmolive.

• Region centric:

These companies are powerful only in certain regions. Ex. Frooti is
present in India, Sri Lanka and Nepal.
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1.3. THE STAGES OF DEVELOPMENT OF THE
TRANSNATIONAL CORPORATION

There are five stages in the evolution of the transnational corporation.
These stages describe significant differences in the strategy, worldview,
orientation, and practice of companies operating in more than one
country. One of the key differences in companies at these different stages
is in orientation.

Stage One—Domestic

The stage-one company is domestic in its focus, vision, and operations.
Its orientation is ethnocentric. This company focuses upon domestic
markets, domestic suppliers, and domestic competitors. The
environmental scanning of the stage-one company is limited to the
domestic, familiar, home-country environment. The unconscious motto of
a stage-one company is: "If it's not happening in the home country, it's not
happening." The world's graveyard of defunct companies is littered with
stage-one companies that were sunk by the Titanic syndrome: the belief,
often unconscious but frequently a conscious conviction, that they were
unsinkable and invincible on their own home turf.

The pure stage-one company is not conscious of its domestic orientation.
The company operates domestically because it never considers the
alternative of going international. The growing stage-one company will,
when it reaches growth limits in its primary market, diversify into new
markets, products, and technologies instead of focusing on penetrating
international markets.
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Stage Two—International
The stage-two company extends marketing, manufacturing, and other
activity outside the home country. When a company decides to pursue
opportunities outside the home country, it has evolved into the stage-two
category. In spite of its pursuit of foreign business opportunities, the
stage-two company remains ethnocentric, or home country oriented, in its
basic orientation. The hallmark of the stage-two company is the belief that
the home-country ways of doing business, people, practices, values, and
products are superior to those found elsewhere in the world. The focus of
the stage-two company is on the home-country market.

Because there are few, if any, people in the stage-two company with
international experience, it typically relies on an international division
structure where people with international interest and experience can be
grouped to focus on international opportunities. The marketing strategy of
the stage-two company is extension; that is, products, advertising,
promotion, pricing, and business practices developed for the home-
country market are "extended" into markets around the world.

Almost every company begins its global development as a stage-two
international company. Stage two is a natural progression. Given limited
resources and experience, companies must focus on what they do best.
When a company decides to go international, it makes sense at the
beginning to extend as much of the business and marketing mix (product,
price, promotion, and place or channels of distribution) as possible so that
learning can focus on how to do business in foreign countries.

A fundamental strategic maxim is that it is a mistake to attempt to
simultaneously diversify into new customer and new-product/technology
markets.
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The international strategist observes this maxim by holding the marketing
mix constant while adding new geographic or country markets. The focus
of the international company is on extending the home-country marketing
mix and business model.

Stage Three—Multinational

In time, the stage-two company discovers that differences in markets
around the world demand an adaptation of its marketing mix in order to
succeed. Toyota, for example, discovered the former when it entered the
U.S. market in 1957 with its Toyopet. The Toyopet was not a big hit:
Critics said they were "overpriced, underpowered, and built like tanks."
The car was so unsuited for the U.S. market that unsold models were
shipped back to Japan. The market rejection of the Toyopet was chalked
up by Toyota as a learning experience and a source of invaluable
intelligence about market preferences. Note that Toyota did not define the
experience as a failure. There is, for the emerging global company, no
such thing as failure: only learning experiences and successes in the
constantly evolving strategy and experience of the company.

When a company decides to respond to market differences, it evolves into
a stage-three multinational that pursues a multi-domestic strategy. The
focus of the stage-three company is multinational or in strategic terms,
multi- domestic. (That is, this company formulates a unique strategy
for each country in which it conducts business.) The orientation of
this company shifts from ethnocentric to polycentric.

A polycentric orientation is the assumption that markets and ways of
doing business around the world are so unique that the only way to
succeed internationally is to adapt to the different aspects of each national
market. Like the stage-two international, the stage-three multinational,
polycentric company is also predictable. In stage-three companies, each
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foreign subsidiary is managed as if it were an independent city-state. The
subsidiaries are part of an area structure in which each country is part of a
regional organization that reports to world headquarters. The stage-three
marketing strategy is an adaptation of the domestic marketing mix to meet
foreign preferences and practices.
Philips and its Japanese competition was dramatic. Matsushita, for
example, adopted a global strategy that focused its resources on serving
a world market for home entertainment products.

Stage Four—Global

The stage-four company makes a major strategic departure from the
stage-three multinational. The global company will have either a global
marketing strategy or a global sourcing strategy, but not both. It will either
focus on global markets and source from the home or a single country to
supply these markets, or it will focus on the domestic market and source
from the world to supply its domestic channels. Examples of the stage-
four global company are Harley Davidson and the Gap. Harley is an
example of a global marketing company. Harley designs and
manufactures super heavyweight motorcycles in the United States and
targets world markets. The key engineering and manufacturing assets are
all located in the home country (the United States). The only Harley
investment outside the home country is in marketing. The Gap is an
example of a global sourcing company. The Gap sources worldwide for
product to supply its U.S. retail organization. Each of these companies is
operating globally, but neither of them is seeking to globalize all of the key
organization functions.

The stage-four global company strategy is a winning strategy if a
company can create competitive advantage by limiting its globalization of
the value chain. Harley Davidson gains competitive advantage because it
is American designed and made, just as BMW and Mercedes have traded
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on their German design and manufacture. The Gap understands the U.S.
consumer and is creating competitive advantage by focusing on market
expansion in the United States while at the same time taking advantage of
its ability to source globally for product suppliers.

Stage Five—Transnational

The stage-five company is geocentric in its orientation: It recognizes
similarities and differences and adopts a worldview. This is the
company that thinks globally and acts locally. It adopts a global
strategy allowing it to minimize adaptation in countries to that which will
actually add value to the country customer. This company does not adapt
for the sake of adaptation. It only adapts to add value to its offer.

The key assets of the transnational are dispersed, interdependent, and
specialized. Take R&D, for example. R&D in the transnational is
dispersed to more than one country. The R&D activities in each country
are specialized and integrated in a global R&D plan. The same is true of
manufacturing. Key assets are dispersed, interdependent, and
specialized. Caterpillar is a good example. Cat manufactures in many
countries and assembles in many countries. Components from
specialized production facilities in different countries are shipped to
assembly locations for assembly and then shipped to customers in world
markets.
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1.4. MARKETING STRATEGIES ADOPTED BY GLOBAL
COMPANIES

Marketing Strategies Adopted by Global Company can be broadly
classified as follows:

1. A Global Strategy

It treats the world as a single market. This strategy is warranted when
the forces for global integration are strong and the forces for national
responsiveness are weak. This is true of the consumer electronics
market, for example, where most buyers will accept a fairly
standardized pocket radio, CD player, or TV. Matsushita has
performed better than GE and Philips in the consumer electronics
market because Matsushita operates in a more globally coordinated
and standardized way.

2. A Multinational Strategy

It treats the world as a portfolio of national opportunities. This strategy
is warranted when the forces favoring national responsiveness are
strong and the forces favoring global integration are weak. This is the
situation in the branded packaged-goods business (food products,
cleaning products). Unilever can be cited as a better performer than
Procter & Gamble (P&G) because Unilever grants more decision-
making autonomy to its local branches.
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3. A "Glocal" Strategy

It standardizes certain core elements and localizes other elements.
This strategy makes sense for an industry (such as telecommunica-
tions) where each nation requires some adaptation of its equipment
but the providing company can also standardize some of the core
components. Ericsson can be cited as balancing these considerations
better than NEC (too globally oriented) and ITT (too locally oriented).

One of the most successful "Glocal" companies is ABB, formed by a
merger between the Swedish company ASEA and the Swiss company
Brown Boveri.
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1.5. MARKETING MIX UNDER GLOBAL MARKETING

A global marketing manger has to take 4 ‘Ps’ of international
marketing into consideration i.e. the ‘Product’, ‘Price’, ‘Place’ and
‘Promotion’.

1.5.1. 1ST P: THE PRODUCT

Product is probably the most crucial element of a marketing program. To
a very important degree a company's products define its business.
Pricing, communication, and distribution policies must fit the product. Its
research and development requirements will depend upon the
technologies of its products. Indeed, every aspect of the enterprise is
heavily influenced by the firm's product offering.

In the past, managers have been prone to committing (often
simultaneously) two types of errors regarding product decisions in global
marketing. One error has been to fall victim to the "Not Invented
Here" (NIH) syndrome, ignoring product decisions made by subsidiary or
affiliate managers. Managers who behave in this way are essentially
abandoning any effort to influence or control product policy outside the
home-country market. The other error has been to impose product
decisions policy upon all affiliate companies on the assumption that
what is right for customers in the home market must also be right for
customers everywhere.

The challenge facing a company with global horizons is to develop
product policies and strategies that are sensitive to market needs,
competition, and company resources on a global scale.
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PRODUCT DESIGN
Product design is a key factor determining success in global marketing.
Should a company adapt product design for various national markets or
offer a single design to the global market? In some instances, making a
design change may increase sales. However, the benefits of such
potential sales increases must be weighed against the cost of changing a
product's design and testing it in the market. Global marketers need to
consider four factors when making product design decisions: preferences,
cost, laws and regulations, and compatibility.

• Preferences

There are marked and important differences in preferences around the
world for factors such as colour and taste. Marketers who ignore
preferences do so at their own peril.

Cost

In approaching the issue of product design, company managers must
consider cost factors broadly. Of course, the actual cost of producing the
product will create a cost floor. Other design-related costs whether
incurred by the manufacturer or the end user must also be considered.

Compatibility

The last product design issue that must be addressed by company
managers is product compatibility with the environment in which it is used.
A simple thing like failing to translate the user's manual into various
languages can hurt sales of home appliances built in America. Also,
electrical systems range from 50 to 230 volts and from 50 to 60 cycles.
This means that the design of any product powered by electricity must be
compatible with the power system in the country of use.
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• Climate

Climate is another environmental characteristic that often demands
compatibility. Many products require tropicalization to withstand humidity,
whereas other products must withstand extreme cold. Many European
automobiles are not suited to the extreme cold winter conditions found in
parts of North America. This is particularly true of cars coming from Britain
and Italy, two countries that do not have extreme winters.

Measuring systems do not demand compatibility, but the absence of
compatibility in measuring systems can create product resistance. The
lack of compatibility is a particular danger for the United States, which is
the only non-metric country in the world. Products calibrated in inches and
pounds are at a competitive disadvantage in metric markets. When
companies integrate their worldwide manufacturing and design activity,
the metric-English measuring system conflict requires expensive
conversion and harmonization efforts.

Strategy 1: Product-Communications Extension (Dual Extension)

Many companies employ product-communications extension as a strategy
for pursuing opportunities outside the home market. Under the right
conditions, this is the easiest product marketing strategy and, in many
instances, the most profitable one as well. American companies pursuing
this strategy sell exactly the same product, with the same advertising and
promotional appeals used in the United States, in some or all world
market countries or segments.

Note that this strategy is utilized by companies in stages two, four, and
five. The critical difference is one of execution and mindset. In the stage-
two company, the dual extension strategy grows out of an ethnocentric
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orientation; the stage-two company is making the assumption that all
markets are alike. The company in the fourth or fifth stage does not fall
victim to such assumptions; geocentric orientation allows the company in
stage four or five to thoroughly understand its markets and consciously
take advantage of similarities in world markets.

One of the leading practitioners of this approach is PepsiCo, whose
outstanding robust global performance is a persuasive justification of this
practice. Gillette also recently used this strategy in the worldwide launch
of its Sensor razor, using the advertising theme "The best a man can get."

The product-communications extension strategy has an enormous appeal
to global companies because of the cost savings that are associated with
this approach. The two most obvious sources of savings are
manufacturing economies of scale and elimination of duplicate product
R&D costs. Less well known but still important are the substantial
economies associated with standardization of marketing communications.
For a company with worldwide operations, the cost of preparing separate
print and television ads for each market is a significant marketing
expense. Although these cost savings are important, they should not
distract executives from the more important objective of maximum profit
performance, which may require the use of an adaptation or invention
strategy. As we have seen, in spite of its immediate cost savings, product
extension may in fact result in market failure.

Strategy 2: Product Extension-Communications Adaptation

When a product fills a different need, appeals to a different segment, or
serves a different function under use conditions that are the same or
similar to those in the domestic market, the only adjustment that may be
required is in marketing communications. Bicycles and motor scooters
are examples of products that have been marketed with this approach.
They satisfy recreation needs in the United States but serve as basic
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transportation in many other countries. Similarly, outboard marine
motors are usually sold to a recreation market in the United States,
whereas the same motors in many foreign countries are often sold to
fishing and transportation fleets. As these examples show, the product
extension-communications adaptation strategy whether by design or by
accident results in product transformation. The same physical product
ends up serving a different function or use than that for which it was
originally designed or created. The appeal of the product extension-
communications adaptation strategy is it’s relatively low cost of
implementation. Since the product in this strategy is unchanged, R&D,
tooling, manufacturing setup, and inventory costs associated with
additions to the product line are avoided. The only costs of this approach
are in identifying different product functions and revising marketing
communications (including advertising, sales promotion, and point-of-sale
material) around the newly identified function.

Strategy 3: Product Adaptation-Communications Extension

A third approach to global product planning is to extend, without change,
the basic home-market communications strategy while adapting the
product to local use or preference conditions. Note that this strategy (and
the one that follows) may be utilized by companies in stages three, four,
and five. The critical difference, as noted earlier, is one of execution and
mindset. In the stage-three company, the product adaptation strategy
grows out of a polycentric orientation; the stage-three company assumes
that all markets are different. By contrast, the geocentric orientation of
managers and executives in a company in stage four or five has
sensitized them to actual rather than assumed differences between
markets.

Strategy 4: Dual Adaptation
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When comparing a new geographic market to the home marker marketers
sometimes discover that environmental conditions of use or consumer
preferences differ; the same may be true of the function a product serves
or consumer receptivity to advertising appeals. In essence, this is a
combination of the market conditions of strategies 2 and 3. In such a
situation, a company in stage four or five will utilize the strategy of product
and communications adaptation. As was true about strategy 3, stage-
three companies will also use dual adaptation regardless of whether the
strategy is warranted by market conditions, preferences, function, or
receptivity.

Unilever's experience with fabric softener in Europe exemplifies the
classic multinational road to adaptation. For years, the product was sold in
ten countries under seven different brand names with different bottles and
marketing strategies. Unilever's decentralized structure meant that
product and marketing decisions were left to country managers. They
chose names that had local-language appeal and selected package
designs to fit local tastes. Today, rival Procter & Gamble is introducing
competitive products with a pan-European strategy of standardized
products with single names, suggesting the European market is more
similar than Unilever assumed. In response, Unilever's European brand
managers are attempting to move gradually toward standardization.

Strategy 5: Product Invention

Adaptation and adjustment strategies are effective approaches to
international (stage-two) and multinational (stage-three) marketing, but
they may not respond to global market opportunities. Nor do they respond
to the situation in markets where customers do not have the purchasing
power to buy either the existing or adapted product. This latter situation
applies to the less developed part of the world, which includes roughly
three-quarters of the world's population.
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Rather than extend or adapt an existing product, it is often necessary to
plan and design for the global market. An example is the rechargeable
battery market, whose voltage and cycles vary around the world.
Anton/Bauer, a small Connecticut company, offers a portable power
system (batteries and chargers) that will operate anywhere in the world
without adjustments by the user. The charger "knows" or reads the type of
power that it is plugged into and adjusts accordingly. The products
portability creates added value for customers. The Anton/Bauer approach
is to design for the global market: The company manufactures one
product instead of many and thereby keeps costs down. This design
feature enables Anton/Bauer to manufacture one chassis instead of
several, which in turn enables the company to achieve greater economies
of scale and greater experience. Scale and experience mean lower costs,
and lower costs and higher quality are essential in serving global markets
in the 1990s. The winners in global competition are the companies
that can develop product designs offering the most benefits, which
in turn create the greatest value for buyers. The product invention
strategy frequently means higher levels of product performance and lower
prices, which translate into greater customer value.

In some instances, value is not defined in terms of performance, but
rather in terms of customer perception. Customer perception is as
important for an expensive perfume or champagne as it is for an
inexpensive soft drink. Product quality is essential—indeed, it is frequently
a given—but it is also necessary to support the product quality with
imaginative, value-creating advertising and marketing communications.
This can be done with a global advertising campaign. Most industry
experts believe that a global appeal and a global campaign are more
effective in creating the perception of value than is a series of separate
national campaigns.
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When potential customers cannot afford a product, the strategy Indicated
is invention. In other words, a company may need to develop an entirely
new product designed to satisfy the need or want at a price that is within

the reach of the potential customer. This is demanding, but if product
development costs are not excessive, it is potentially a rewarding product
strategy for the mass markets in the less developed countries of the
world.

Although there are ample opportunities for the application of the invention
strategy in global marketing, it is a strategy that is unfortunately under
appreciated and under utilized. For example, an estimated 600 million
women in the world still scrub their clothes by hand. Soap and detergent
companies have served these women for decades, yet until recently not
one of these companies had attempted to develop an inexpensive
manual-washing device.
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1.5.2. 2nd P: PRICE

In any country, three basic factors determine the boundaries within which
market prices should be set. The first is product cost, which establishes a
price floor, or minimum price. While it is certainly possible to price a
product below the cost boundary, few firms can afford to do this for
extended periods of time. Second, competitive prices for comparable
products create a price ceiling or upper boundary. International
competition almost always puts pressure on the prices of domestic
companies. A widespread effect of international trade is to lower prices.
Indeed, one of the major arguments favoring international business is the
favorable impact of international competition upon national price levels
and, in turn, upon a country's rate of inflation. Between the lower and
upper boundaries for every product there is an optimum price, which is a
function of the demand for the product as determined by the willingness
and ability of customers to buy. The interplay of these factors is reflected
in the pricing policies adopted by many Global companies in the mid-
1990s.

A global manager must develop pricing systems and pricing policies that
address these fundamental factors in each of the national markets in
which his or her company operates. The following is a list of eight basic
pricing considerations for marketing outside the home country.

• Does the price reflect the product's quality?

• Is the price competitive?

• Should the firm pursue market penetration, market skimming, or
some other pricing objective?
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• What type of discount (trade, cash, quantity) and allowance
(advertising, trade-off) should the firm offer its international
customers?

• Should prices differ with market segment?

• What pricing options are available if the firm's costs increase or
decrease? Is demand in the international market elastic or
inelastic?

• Are the firm's prices likely to be viewed by the host-country
government as reasonable or exploitative?

Do the foreign country's dumping laws pose a problem?

A firm's pricing system and policies must also be consistent with other
uniquely global constraints. Those responsible for global pricing decisions
must take into account international transportation costs, middlemen in
elongated international channels of distribution, and the demands of
global accounts for equal price treatment regardless of location. In
addition to the diversity of national markets in all three basic dimensions
of cost, competition, and demand, the international executive is also
confronted by conflicting governmental tax policies and claims as well as
various types of price controls. These include dumping legislation, resale
price maintenance legislation, price ceilings, and general reviews of price
levels.
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GLOBAL PRICING STRATEGIES

An effective pricing strategy for international markets is one in which
competition and costs have influenced the pricing decision. Only
examining the price levels of competitive and substitute products in target
markets can determine competitive prices. An excellent way to get this
information is to visit the market personally. Once these price levels have
been established, the base price can be determined. The four steps
involved in determining a base price are:

1. Determine the price elasticity of demand. Inflexible demand will
allow for a higher price.

2. Estimate fixed and variable manufacturing costs on projected sales
volumes. Product adaptation costs must be calculated.

3. Identify all costs associated with the marketing program.

4. Select the price that offers the highest contribution margin.

The final determination of a base price can be made only after the other
elements of the marketing mix have been established. These include the
distribution strategy and communication strategy. The nature and length
of channels utilized in the marketing program will affect margins, as will
the cost of advertising and communications. Clearly, the marketing
program has a dramatic effect on the final price of the product.
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GLOBAL PRICING: THREE POLICY ALTERNATIVES

What pricing policy should a global company pursue? Viewed broadly,
there are three alternative positions a company can take toward
worldwide pricing.

Extension/Ethnocentric

The first can be called an extension/ethnocentric pricing policy. This policy
requires that the price of an item be the same around the world and that
the importer absorbs freight and import duties. This approach has the
advantage of extreme simplicity because no information on competitive or
market conditions is required for implementation. The disadvantage of this
approach is directly tied to its simplicity. Extension pricing does not
respond to the competitive and market conditions of each national market
and, therefore, does not maximize the company's profits in each national
market.

Adaptation/Polycentric

The second pricing policy can be termed adaptation/polycentric. This
policy permits subsidiary or affiliate managers to establish whatever price
they feel is most desirable in their circumstances. Under such an
approach, there is no control or fixed requirement that prices be
coordinated from one country to the next. The only constraint on this
approach is in setting transfer prices within the corporate system. Such an
approach is sensitive to local conditions, but it does present problems of
product arbitrage opportunities in cases where disparities in local market
prices exceed the transportation and duty cost separating markets. When
such a condition exists, there is an opportunity for the enterprising
business manager to take advantage of these price disparities by buying
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in the lower-price market and selling in the more expensive market. There
is also the problem that under such a policy, valuable knowledge and
experience within the corporate system concerning effective pricing
strategies is not applied to each local pricing problem. The strategies are
not applied because the local managers are free to price in the way they
feel is most desirable, and they may not be fully informed about company
experience when they make their decision.

Invention/Geocentric

The third approach to international pricing can be termed
invention/geocentric, Using this approach, a company neither fixes a
single price worldwide nor remains aloof from subsidiary pricing decisions,
but instead strikes an intermediate position. A company pursuing this
approach works on the assumption that there are unique local market
factors that should be recognized in arriving at a pricing decision. These
factors include local costs, income levels, competition, and the local
marketing strategy. Local costs plus a return on invested capital and
personnel fix the price floor for the long term. However, for the short term,
a company might decide to pursue a market penetration objective and
price at less than the cost-plus return figure using export sourcing to
establish a market. Another short-term objective might be to estimate the
size of a market at a price that would be profitable given local sourcing
and a certain scale of output. Instead of building facilities, the target
market might first be supplied from existing higher-cost external supply
sources. If the market accepts the price and product, the company can
then build a local manufacturing facility to further develop the identified
market opportunity in a profitable way. If the market opportunity does not
materialize, the company can experiment with the product at other prices
because it is not committed by existing local manufacturing facilities to a
fixed sales volume.
GLOBAL VENTURING – A CASE STUDY OF TATA - 25 -

For consumer products, local income levels are critical in the pricing
decision. If the product is normally priced well above full manufacturing
costs, the international marketer has the latitude to price below prevailing
levels in higher-income markets and, as a result, reduces the gross
margin on the product. While no business manager enjoys reducing
margins, margins should be regarded as a guide to the ultimate objective,
which is profitability. In some markets, income conditions may dictate that
the maximum profitability will be obtained by sacrificing "normal" margins.

The important point here is that in global marketing there is no such
thing as a “normal margin”

The final factor bearing on the price decision is the local marketing
strategy and mix. Price must fit the other elements of the marketing
program. For example, when it is decided to pursue a "pull" strategy that
uses mass-media advertising and intensive distribution, the price selected
must be consistent not only with income levels and competition but also
with the costs and extensive advertising programs.

In addition to these local factors, the geocentric approach recognizes that
headquarters price coordination is necessary in dealing with international
accounts and product arbitrage. Finally, the geocentric approach
consciously and systematically seeks to ensure that accumulated national
pricing experience is leveraged and applied wherever relevant.

Of the three methods, only the geocentric approach lends itself to global
competitive strategy. A global competitor will take into account global
markets and global competitors in establishing prices. Prices will support
global strategy objectives rather than the objective of maximizing
performance in a single country.
GLOBAL VENTURING – A CASE STUDY OF TATA - 26 -

1.5.3. 3rd P: PLACE

The American Marketing Association defines channel of distribution as

"An organized network of agencies and institutions, which in
combination, perform all the activities required to link producers
with users to accomplish the marketing task."

Distribution is the physical flow of goods through channels; as suggested
by the definition, channels are comprised of a coordinated group of
individuals or firms that performs functions adding utility to a product or
service. The major types of channel utility are:

• Place (the availability of a product or service in a location that is
convenient to a potential customer);

• Time (the availability of a product or service when desired by a
customer);

• Form (the product is processed, prepared and ready to use, and in
proper condition); and

Information (answers to questions and general communication
about useful product features and benefits are available).

Since these utilities can be a basic source of competitive advantage and
product value, choosing a channel strategy is one of the key policy
decisions, marketing management must make.

Distribution channels in markets around the world are among the most
highly differentiated aspects of national marketing systems.
GLOBAL VENTURING – A CASE STUDY OF TATA - 27 -

For this reason, channel strategy is one of the most challenging and
difficult components of an international marketing program. Smaller
companies are often blocked by their inability to establish effective
channel arrangements. In larger multinational companies operating via
country subsidiaries, channel strategy is the element of the marketing mix
that headquarters understands the least. To a large extent channels are
an aspect of the marketing program that is locally led through the
discretion of the in-country marketing management group. Nevertheless, it
is important for managers responsible for world marketing programs to
understand the nature of international distribution channels. Distribution is
an integral part of the total marketing program and must be appropriate to
the product design, price, and communications aspects of the total
marketing program. Another important reason for placing channel
decisions on the agenda of international marketing managers is the
number and nature of relationships that must be managed. Channel
decisions typically involve long-term legal commitments and obligations to
other firms and individuals. Such commitments are often extremely
expensive to terminate or change. Even in cases where there is no legal
obligation, commitments may be backed by good faith and feelings of
obligation, which are equally difficult to manage and painful to adjust.
GLOBAL VENTURING – A CASE STUDY OF TATA - 28 -

TARGET MARKETS

The starting point in selecting the most effective channel arrangement is a
clear determination of the target market for the company's marketing
effort and a determination of the needs and preferences of the target
market.

Where are the potential customers located?
What are their information requirements?
What are their preferences for service?
How sensitive are they to price?

These are some of the questions that the channel manager should
answer. Customer preference must be carefully determined because
there is as much danger to the success of a marketing program in
creating too much utility as there is in creating too little. Moreover, each
market must be analysed to determine the cost of providing channel
services. What is appropriate in one country may not be effective in
another.

Channel strategy in a global marketing program must fit the company's
competitive position and overall marketing objectives in each national
market. If a company wants to enter a competitive market, it has two basic
choices.

• One option is providing incentives to independent channel agents
that will induce them to promote the company's product.

Alternatively, the company must establish company-owned or
franchised outlets.
GLOBAL VENTURING – A CASE STUDY OF TATA - 29 -

The process of shaping international channels to fit overall company
objectives are constrained by four factors: customers, products,
intermediaries, and the environment. Important characteristics of each of
these factors are discussed briefly.

Customer Characteristics

The characteristics of customers are an important influence on channel
design. Their number, geographical distribution, income, shopping
habits, and reaction to different selling methods all vary from
country to country and therefore require different channel approaches.
Remember, channels create utility for customers.

In general, regardless of the stage of market development, the need for
multiple channel intermediaries increases as the number of customers’
increases. The converse is also true: The need for channel intermediaries
decreases as the number of customers’ decreases. For example, if there
are only ten customers for an industrial product in each national market,
these ten customers must be directly contacted by either the
manufacturer or an agent. For mass-market products bought by millions
of customers, retail distribution outlets or mail-order distribution is
required. In a country with a large number of low-volume retailers, it is
usually cheaper to reach them via wholesalers. Direct selling that
bypasses wholesale intermediaries may be the most cost-effective means
of serving large-volume retailers. While these generalizations apply to all
countries, regardless of stage of development, individual country customs
will vary.
GLOBAL VENTURING – A CASE STUDY OF TATA - 30 -

Product Characteristics

Certain product attributes such as degree of standardization,
perishability, bulk, service requirements, and unit price have an
important influence on channel design and strategy. Products with
high unit price, for example, are often sold through a direct company sales
force because the selling cost of this "expensive" distribution method is a
small part of the total sale price. Moreover, the high cost of such products
is usually associated with complexity or with product features that must be
explained in some detail, and a controlled sales force can do this most
effectively. For example, computers are expensive, complicated products
that require both explanation and applications analysis focused on the
customer's needs. A company-trained salesperson or "sales engineer" is
well suited for the task of creating information utility for computer buyers.

Computers, photocopiers, and other industrial products may require
margins to cover the costs of expensive sales engineering. Other
products require margins to provide a large monetary incentive to a direct
sales force. In many parts of the world, cosmetics are sold door to door;
company representatives call on potential customers. The representatives
must create in the customer an awareness of the value of cosmetics and
evoke a feeling of need for this value that leads to a sale. The sales
activity must be paid for. Companies using direct distribution for consumer
products rely upon wide gross selling margins to generate the revenue
necessary to compensate salespeople. Amway and Avon are two
companies that have succeeded in extending their direct-sales systems
outside the United States.

Perishable products impose special form utility demands on channel
members. Such products usually need relatively direct channels to ensure
satisfactory condition at the time of customer purchase. In less developed
GLOBAL VENTURING – A CASE STUDY OF TATA - 31 -

countries, producers of vegetables, bread, and other food products
typically sell their goods in public marketplaces. In developed countries,
controlled sales forces distribute perishable food products, and stock is
checked by these sales distributor organizations to ensure that it is fresh
and ready for purchase.

Bulky products usually require channel arrangements that minimize the
shipping distances and the number of times products change hands
between channel intermediaries before they reach the ultimate customer.
Soft drinks and beer are examples of bulky products whose widespread
availability is an important aspect of an effective marketing strategy.

Selection and Care of Distributors and Agents

The selection of distributors and agents in a target market is a
critically important task. A good commission agent or stocking
distributor can make the difference between realizing zero performance
and performance that exceeds 200% of what is expected. At any point in
time, some of any company's agents and distributors will be excellent,
others will be satisfactory, and still others will be unsatisfactory and in
need of replacement.

To find a good distributor, a firm can begin with a list provided by the
Department of Commerce or its equivalent in different countries. The local
chamber of commerce in a country can also provide lists, as can local
trade associations. It is a waste of time to try to screen the list by mail. Go
to the country and talk to end users of the products you are selling and
find out which distributors they prefer and why they prefer them. If the
product is a consumer product, go to the retail outlets and find out where
consumers are buying products similar to your own and why. Two or three
names will keep coming up. Go to these two or three and see which of
them would be available to sign. Before signing, make sure there is
GLOBAL VENTURING – A CASE STUDY OF TATA - 32 -

someone in the organization who will be the key person for your product
who will make it a personal objective to achieve success with your
product.

This is the critical difference between the successful distributor and the
worthless distributor. There must be a personal, individual commitment to
the product. The second and related requirement for successful
distributors or agents is that they must be successful with the product.
Success means that they can sell the product and make money on it. In
any case, the product must be designed and priced to be competitive in
the target market. The distributor can assist in this process by providing
information about customer wants and the competition and by promoting
the product he or she represents.

The only way to keep a good distributor is to work closely with him or her
to ensure that he or she is making money on the product. Any distributor
who does not make money on a line will drop it. It is really quite simple. In
general if a distributor is not working out, it is wise to terminate the
agreement and find another one. Few companies are large enough to
convert a mediocre distributor or agent into an effective business
representative. Therefore, the most important clause in the distributor
contract is the cancellation clause. Make sure it is written in a way that will
make it easy to terminate the agreement. There is a myth that it is
expensive or even impossible to terminate distributor and agent
agreements. Some of the most successful global marketers have
terminated hundreds of agreements and know success is based on their
willingness to terminate if a distributor or agent does not perform.
GLOBAL VENTURING – A CASE STUDY OF TATA - 33 -

The key factor is performance: If a distributor does not perform, he
or she must either shape up or be replaced.

Environmental Characteristics
The general characteristics of the total environment are a major
consideration in channel design. Because of the enormous variety of
economic, social, and political environments internationally, there is a
need to delegate a large degree of independence to local operating
managements or agents.
GLOBAL VENTURING – A CASE STUDY OF TATA - 34 -

1.5.4. 4th P: PROMOTION

Marketing communications—the promotion "P" of the marketing mix—
refers to all forms of communications that organizations use to establish
meaning and influence buying behavior among existing and potential
customers. Marketing communications should be designed to tell
customers about the benefits and values that a product or service offers.
The principal forms of marketing communications that is/ the elements of
the promotion mix, are

Advertising,
Personal selling,
Publicity and
• Sales Promotion.

All of these elements can be utilized in global marketing; however, the
environment in which marketing communications programs are
implemented can vary from country to country.

Advertising may be defined as any sponsored, paid communication
placed in a mass-medium vehicle.

Advertising plays a more important communication role in the marketing
of consumer products than industrial products. Frequently purchased,
low-cost products generally require heavy advertising support. Not
surprisingly, consumer products companies top the list of big advertising
spenders.
GLOBAL VENTURING – A CASE STUDY OF TATA - 35 -

GLOBAL PROMOTION STRATEGIES

Companies can run the same advertising and promotion campaigns used
in the home market or change them for each local market, a process
called communication adaptation. If it adapts both the product and the
communication, the company engages in dual adaptation. There are 3
approaches that a global company can use in advertisements:

First Approach

The first approach is to consider the message. The company can
change its message at four different levels. The company can use one
message everywhere, varying only the language, name, and colors.
Exxon used “Put a tiger in your tank” with minor variations and gained
international recognition. Colours might be changed to avoid taboos in
some countries. Purple is associated with death in Burma and some Latin
American nations; white is a mourning color in India; and green is
associated with disease in Malaysia. Even names and headlines may
have to be modified. When Clairol introduced the “Mist Stick,” a curling
iron, into Germany, it found that mist is slang for manure. Few Germans
wanted to purchase a “manure stick.” The Dairy Association brought its
“got Milk?” advertising campaign to Mexico only to find that the Spanish
translation read, “Are you lactating?” When Coors put its slogan “turn it
loose,” into Spanish, it was read by some as ‘suffer from diarrhoea.” In
Spain, Chevrolet's Nova translated, as “it doesn't go." A laundry soap ad
claiming to wash “really dirty parts” was translated in French-speaking
Quebec to read “a soap for washing private parts.”
GLOBAL VENTURING – A CASE STUDY OF TATA - 36 -

Second Approach

The second Approach is to use the same theme globally but adapt the
copy to each local market. For example, Camay soap commercial showed
a beautiful woman bathing. In Venezuela, a man was seen in the
bathroom; in Italy and France, only a man's hand was seen; and in Japan,
the man waited outside. Danish beer company, Carlsberg, goes so far as
to adapt copy not to countries but to individual cities and even neighbour
hoods within those cities. The 151-year-old Danish beer is available in
more than 140 countries around the world, but because of the
competitiveness and maturity of the U.S. market, it has to take a local tack
in its approach to win new customers who aren't familiar with the brand.
All advertisements feature the same single image of the Carlsberg bottle,
along with a humorous message about the specific city.

Third Approach

The third approach consists of developing a global pool of ads, from
which each country selects the most appropriate one. Coca-Cola and
Goodyear use this approach. Finally, some companies allow their country
managers to create country-specific ads— within guidelines, of course.
Kraft uses different ads for Cheez Whiz in different countries, given that
household penetration is 95 percent in Puerto Rico, where the cheese is
put on everything; 65 percent in Canada, where it is spread on morning
breakfast toast; and 35 percent in the United States, where it is
considered a junk food.

The use of media also requires international adaptation because media
availability varies from country to country. Norway, Belgium, and France
do not allow cigarettes and alcohol to be advertised on TV. Austria and
Italy regulate TV advertising to children. Saudi Arabia does not want
GLOBAL VENTURING – A CASE STUDY OF TATA - 37 -

advertisers to use women in ads. India taxes advertising. Magazines vary
in availability and effectiveness; they play a major role in Italy and a minor
one in Austria. Newspapers have a national reach in the United Kingdom,
but the advertiser can buy only local newspaper coverage in Spain.

Marketers must also adapt sales-promotion techniques to different
markets. Greece prohibits coupons, and France prohibits games of
chance and limits premiums and gifts to 5 percent of product value.
People in Europe and Japan tend to make inquiries via mail rather than
phone—which may have ramifications for direct mail and other sales-
promotion campaigns. The result of these varying preferences and
restrictions is that global companies generally assign sales promotion as
a responsibility of local management.
GLOBAL VENTURING – A CASE STUDY OF TATA - 38 -

2.1. COMPANY PROFILE - TATA

o India’s first and largest integrated steel plant

o India’s first and largest private sector power utility

o India’s first fully indigenous passenger car

o India’s first international airline

o India’s first and largest luxury hotel chain

o India’s first software venture

o Asia’s largest integrated inorganic chemical plant

o Asia’s largest software exporter

o The world’s largest integrated tea company

o India’s largest exporter of leather and leather products

THIS IS WHAT TATA HAS ACHIEVED

They believe that the world is as big as the vision
GLOBAL VENTURING – A CASE STUDY OF TATA - 39 -

TATA GROUP

For over 130 years Tata name had been synonymous with leadership in
industry, ethical business practices and an ongoing commitment to
quality. The Tata Group had fueled the nation’s growth and prosperity by
contributing significantly to India’s core sectors and has emerged as a
leading force in the new economy.

2.2. VISION OF TATA INTERNATIONAL

As the international business gateway of the Tata Group, we are the
driving force behind the emergence of the Tata name as a global brand.
Augmenting the existing product portfolio of the group, we leverage our
reach to offer quality products and services around the globe, sourced
from the most competitive regions worldwide.

It is our commitment to our vision of creating and exciting, empowered
and know ledged Rich Corporation, which propels our continuous
exploration of new horizons.

2.3. ACHIEVEMENTS IN THE LAST 5 YRS
1995-96

1996 • First engine produced by Tata Cummins in January 1996.
• LPT 2516 vehicle fitted with Tata Cummins engine launched on
March 4, 1996.
• Tata Sumo Deluxe launched.
• Tata Holset's turbo charger plant inaugurated on November 25,
1996.
688 acres of land at Dharwad (Karnataka) were allotted for Auto and
CEBU Units, in Dec 1996.
• Concorde Motors Ltd., a Joint Venture was established between
GLOBAL VENTURING – A CASE STUDY OF TATA - 40 -

Tata Engineering and Jardine International Motors (Mauritius) Ltd.

1997-98

1997 • Industrial Entrepreneurs Memorandum was filed for taking up
manufacture of special purpose vehicles and construction equipment at
Dharwad in Jan 1997.
• Management Services Division of the Company was transferred to
the wholly owned subsidiary of Tata Engineering - Tata Technologies (I)
Ltd, in Apr 1997.
• Tata Sierra Turbo launched.
100,000th Tata Sumo rolled out.
• The commercial vehicle, LPT 909 introduced.

1998 • Tata Safari - India's first Sports Utility vehicle launched in Jan 1998.
Concorde Motors Ltd., a Joint Venture between Tata Engineering and
Jardine International Motors (Mauritius) Ltd. was appointed as dealer
for the Company's passenger cars in several cities across the country,
in Feb 1998.
• Two millionth vehicle rolled out.
• Collaboration with Hitachi, Japan, for manufacture of Series V
excavators to replace Series I & III machines, in Mar 1998.
• Indica, India's first fully indigenous car, launched in Dec 1998.
• Telco Construction Equipment Company Ltd. (TELCON) came into
being as a subsidiary of Tata Engineering, in Dec 1998.

1999

1999 • An overwhelming 115,000 bookings for Indica were made against
full payment within a week, in Jan 1999.
• New TATA Logo unveiled. The company would hereafter be called "
Tata Engineering".
GLOBAL VENTURING – A CASE STUDY OF TATA - 41 -

• Commercial production of Indica begins and first car is sold.
• Construction Equipment Business Unit is transferred to TELCON.
• In Oct 1999, the Company won the National award for R&D Efforts
in Development of Indigenous Technology in the Mechanical
Engineering Industries Sector instituted by Department of Scientific and
Industrial Research, Ministry of Science and Technology for the year
1999.

2000
2000 • Order for 500 Nos. of Tata Indica received for Malta. First batch of
160 Nos. exported in Jan 2000.
• Indica with Bharat Stage II (Euro II) compliant diesel engine
launched in Feb 2000.
• Machine Tools and Growth Divisions, Axle Division and
Transmission Division of Tata Engineering transferred to newly formed
subsidiaries Telco Automation Ltd., HV Axles Ltd. and HV Transmission
Ltd. respectively on March 31 2000.
• The Automobile Business Unit was restructured into Commercial
Vehicles Business Unit and Passenger Car Business Unit, in Mar 2000.
• Tata Engineering bagged the National Award for successful
commercialization of indigenous technology by an industrial concern for
the year 2000, for the indigenous development and commercialization of
Tata Indica, in Mar 2000.
• Utility vehicles with Bharat Stage II (Euro II) compliant engine
launched, in Mar 2000.
• Indica 2000, Bharat Stage II (Euro II) compliant with Multi Point Fuel
Injection petrol engine launched, in Apr 2000.
• Tata Engineering selected for the "Good Corporate Citizen Award"
by Bombay Chamber of Commerce and Industry for the year 1999-
2000.
• The award was received later in April 2001.
• Tata Engineering received the "All India Trophy for Highest Exports"
GLOBAL VENTURING – A CASE STUDY OF TATA - 42 -

for the year 1998-99 in the Capital Goods Exports- Non- SSI category,
from Engineering Export Promotion Council (EEPC) on May 31, 2000.
• Tata Engineering was awarded the EEPC Regional Top Exporter's
Trophy in the category of 'Units registered with DGTD/ SIA/ Textile
Commissioner etc.' for engineering exports in the year 1998-99 on
November 10, 2000.
• Second prize- "Central Pollution Control Board Award for
Environment Protection" was bagged by Tata Engineering at ENVIRO
INTERNATIONAL, 2000 which was jointly organized by TAFCON
Projects (India) Ltd. and Royal Dutch Jaarbeurs, Netherlands, in Pragati
Maidan, Delhi from September 27 to 29, 2000.
• Launch of CNG Buses in December, 2000.
• Launch of 1109 vehicle(11 Ton GVW).
• Hitachi inducted as an equity partner for TELCON under
shareholder's agreement with Tata Engineering.

2001

2001 • The next generation of Indica, Indica V2 launched in January, along
with 2 new models- DLS in Diesel and LSI in the Indica 2000 range.
• 100,000th Indica rolled out in March.
• Launch of CNG Indica in June.
GLOBAL VENTURING – A CASE STUDY OF TATA - 43 -

2.4. BUSINESS SECTORS

The Tata Group operates business in seven key industry sectors. The
chart below illustrates how, in percentage terms, Tata companies in each
of these sectors contribute to the overall makeup of the group. The table
that follows shows the group's sector-wise financial performance.

[Rs. Million]

Tata Group figures

Year Total Sales Value of Gross PAT Exports
turnover turnover assets block
2000-01 4,12,906 4,00,623 4,47,341 3,52,938 10,982 65,120
1999-00 3,86,071 3,71,535 4,17,381 3,29,014 19,873 50,170
GLOBAL VENTURING – A CASE STUDY OF TATA - 44 -

Materials

Year Total Sales Value of Gross PAT Exports
turnover turnover assets block
2000-01 93,150 92,016 1,05,088 1,24,338 5,631 8,735
1999-00 83,542 8,25,79 1,04,245 1,18,275 4,213 8388

Engineering

Year Total Sales Value of Gross PAT Exports
turnover turnover assets block
2000-01 1,14,280 1,12,869 72,753 73,988 -5,236 7,879
1999-00 1,14,851 1,12,542 76,952 69,722 953 6,981

Energy

Year Total Sales Value of Gross PAT Exports
turnover turnover assets block
2000-01 38,138 35,221 64,519 50,854 3,967 914
1999-00 32,389 28,490 62,114 42,926 4,712 501

Chemicals

Year Total Sales Value of Gross PAT Exports
turnover turnover assets block
2000-01 28,627 25,774 35,668 30,757 1,409 1,477
1999-00 31,345 29,630 34,386 31,048 1,434 1197

Consumer products
GLOBAL VENTURING – A CASE STUDY OF TATA - 45 -

Year Total Sales Value of Gross PAT Exports
turnover turnover assets block
2000-01 45,437 44,020 50,153 18,593 248 4696
1999-00 50,538 48,194 34,188 18,898 2,231 4,810

Services

Year Total Sales Value of Gross PAT Exports
turnover turnover assets block
2000-01 44,988 43,552 86,382 33,818 -2,267 8,686
1999-00 38,495 36,239 79,542 31,278 2,212 7,450

It can be inferred from the above chart that the major inflow to the
company comes from the Tata Engineering sector, which is the most
important, and profit-making sector of the Tata Empire.
GLOBAL VENTURING – A CASE STUDY OF TATA - 46 -

2.5. TATA ENGINEERING

Established in 1945, Tata engineering manufactured steam locomotives
at Jamshedpur in eastern India. By 1954, the company had diversified
into manufacturing of commercial vehicles through collaboration with
Daimler Benz. By the time the collaboration ended 1969, Tata
Engineering had become an independent producer of medium
commercial vehicles (mcv) with negligible export content. It had also
developed the capability of fully designing, testing and manufacturing
such vehicles

Currently the largest automobile company in India, Tata Engineering
ranks among the top ten commercial vehicle producers in the world.

The transition of Tata Engineering from being a pre-dominantly
commercial vehicle manufacturer to a complete automobile company
began in the early 1990’s with the launch of the sports utility vehicle, Tata
Sierra and the estate car, Tata estate. The insights gained into the
customers needs in these markets led to the development of the world
class sports utility vehicle the TATA SAFARI LAUNCHED IN 1998.

Soon after they launched Tata Safari, Tata Engineering made an
aggressive foray into the main line passenger car market with its small
car, the Tata Indica. The Indica fulfils the Tata Group Chairman Ratan N
Tata’s vision of developing and manufacturing a truly Indian car that
would use modern technology and contemporary styling of the small car
genre. It went out to set a benchmark in terms of internal spaciousness
and pricing.

Automobiles accelerating globalization
GLOBAL VENTURING – A CASE STUDY OF TATA - 47 -

Globalization is a two-way process and to benefit from this Indian firms
have to exploit global opportunities. The automobile sector can make a
difference if Indian firms act with foresight. In 2000, global trade in
automobile products totaled $549 billion, 10 per cent of all the global
trade. Also the automobile industry creates enormous employment and it
has substantial spillover benefits on industrialization and regional
development.

Currently, the global automobile industry is undergoing a major
reorientation. Four clear trends, which are inter-related and intertwined,
are discernible. Global automobile firms are segmenting into two distinct
product markets low priced cars and premium segment cars with intense
competition in both segments. The strategy is to make many variants
using the same platform

A far-reaching network facilitates exports of automobiles to countries in,

• Europe
• South east Asia
• West Asia
• Australia
• Africa
• South America

Strengths of TATA Engineering

• Worldwide marketing and distribution network

• Sourcing and supplying production services

• Vendor identification, development and partnering

• Shipping, logistics and warehousing management
GLOBAL VENTURING – A CASE STUDY OF TATA - 48 -

• Expertise in trade laws and regulations of various countries

• Expertise in import and export documentation

• Risk management

• Ability to raise finance from banks and financial institutions
both in India and overseas

• Expertise in international financial transactions

• Facilitating technology transfers, joint ventures and strategic
alliances

In Tata’s ongoing quest to improve customer satisfaction and to meet
market demand they constantly seek out opportunities for growth, change
and renewal of existing businesses.

Tata launched itself into the markets with the commercial vehicles i.e.
trucks and busses in 1960 with the markets mainly; Africa, Europe,
Malaysia, Dubai etc. It re-launched itself with the passenger cars in the
year 1998, with Indica and Safari having the main markets as Europe –
Italy the diesel and the petrol versions.
GLOBAL VENTURING – A CASE STUDY OF TATA - 49 -

3.1. WHY DOES A COMPANY GO GLOBAL?

There are a number of objectives of international business but the primary
and the basic of them being;

1. Learning and Product Development:

Today every organization is a learning organization. Also it has to
continuously be in touch with the competition in the market. Hence it has
to do the up gradation of the existing products eventually whenever
required.

When one enters international markets, one comes across other
competitors from other countries. One is therefore exposed to competition
from other countries. Domestic goods have to match international
standards to remain in competition, not only with respect to product, cost
and quality but services as well. Therefore, one gets an opportunity to
learn and develop or improvise new products.

2. Brand building for other products

In international markets, if the company is competent enough to beat the
rivals in the field, it not only creates a goodwill and image of the product it
is promoting but it also opens avenue for promotion of other line of
products manufactured by the company. It not only helps in brand building
of the company but also assists in promotion of its product mix.
GLOBAL VENTURING – A CASE STUDY OF TATA - 50 -

3. Capacity utilization and providing cushion for domestic
recessions/ slow downs

International markets also help in full capacity utilization. it therefore helps
in meeting domestic recession and slow down , thus avoiding retrenchment
of staff and reduction in their salaries and wages.

4. Foreign exchange earnings

Products launched in international markets also assist in earning precious
foreign exchange for the country, thus the company can import advanced
accessories or gadgets and technology.

5. Quality improvement and cost reduction

The precious foreign exchange earned can be thus be utilized for quality
improvement of the existing products to stay in international business and
subsequently import know-how technology to develop new products.
GLOBAL VENTURING – A CASE STUDY OF TATA - 51 -

3.2. MARKET SELECTION STRATEGY

Following is the model that Tata adopts to decide upon which country has
the potential car market and the perspective customers.

MARKET ATTRACTIVENESS MATRIX

Attributes Grading Rating Scale
Product
0 1 2 3 4 5

Country stability 3 - - - - 4 - 3*4=12

Market 5 - - 2 - - - 5*2=10

Ease of entry 10 - - - 3 - - 10*3=30

Competitors 2 - - - - 4 - 2*4= 8

TOTAL 60

The above given is a hypothetical example of the selection criteria Tata
adopts in order to explore the new markets. Tata has developed its own
criterion, which is known as Market Attractiveness Matrix. This Matrix
depends on four basic factors i.e. Country stability, Market conditions,
Ease of entry, Competitors.

The above matrix is the way of deciding whether the markets are feasible
or not and whether the Company should explore the markets.
GLOBAL VENTURING – A CASE STUDY OF TATA - 52 -

There are 4 major aspects to this matrix, Country Stability, Markets, and
Ease of entry, our competitors. An already weighed scale or a standard is
given to these attributes to which the actual studied ratings are multiplied.

Example:
Consider any market not explored by the Tata’s. An already established
criterion is looked at, which has 4 constraints. Say the standard country
stability of the company as feasible to them is 3, but the Country stability
of the place that is to be analyzed is coming up to 4. So this 4 is multiplied
to the standard figure of 3 and hence 12 is what the company arrives at.
Similarly, the other constraints as, the market ease of entry and the
competitors are dealt with. This is totaled up and if the total of the
potential market lies anywhere between 50 and 81 these are considered
to be favorable and are explored. The figures of 50 and 81 are already
the set standards established by the company

The criteria taken into consideration are broadly classified as:

Country stability: Economic parameter

• GDP Growth rate

• Infrastructure

• Unemployment

• Fiscal deficit

• Current account

Market:

• Market size

• Growth Rate

• Number of players (competitors)
GLOBAL VENTURING – A CASE STUDY OF TATA - 53 -

Ease of entry: Government Regulations

• Imports

• Training requirements

• Technical requirements or competence

• Local manufacturing base/support

• Legal manufacturers.

Our competitors: Benchmarking

• Products

• Brands

After locating the market a strategy is devised to find the entry. A network
of importer distributor and dealer is selected after studying their credit
worthiness, financial capability, their experience and standing in the
industry.

The importers and distributors of the potential country, Indicating the
market size, pricing, other costs and taxes and profitability including
competition and expected market share, work out a detailed market plan.

A dealer in the Tata’s’ is chosen on the basis of the marketing plan
submitted by the dealers to the company.
GLOBAL VENTURING – A CASE STUDY OF TATA - 54 -

Following is the method by which volumes to be exported are calculated

MARKETING PLAN:

Market size

Total car market (90000 cars)

Retail price ($10,000)

Cost Insurance Freight (CIF) ($5000)

Profitability ($100)

E.g. Market share = 5% of the total market size
I.e. 5% of 90,000 = 4,500 cars.

Hence volumes mount to a sale of approximately 4,500 cars annually.

Importer distributor dealer after selection carry out necessary advertising
and sales promotion through audio, video and pint media. The distributors
also carry out the required market research by the principals as to what is
the market share, the retail pricing of a unit, competitors, trends of the
market, fashion, customer profile, product profile etc.
GLOBAL VENTURING – A CASE STUDY OF TATA - 55 -

4.1. TATA VENTURING IN ITALY

Italy (Italia) is a republic in the south of Europe,
consisting of a boot-shaped peninsula together with
two large islands in the Mediterranean Sea: Sicily and
Sardinia.

The capital is Rome, but the economic capital is Milan in the north. Other
important cities include (in decreasing order of population) Naples, Turin,
Palermo, Genoa, Bologna, Florence and Venice. The peninsula is
extended among Tyrrhenian Sea, Ionian Sea, and Adriatic Sea. Italy is
one of the countries that use the Euro currency; its national bank is Banca
d'Italia, better known as Bankitalia.

Italy is well-known for its art, culture, and several monuments, among
them the leaning tower of Pisa and the Roman Colosseum, as well as for
its food (pizza, pasta, etc.), wine, and lifestyle elegance, design and
friendliness.

Its history is perhaps the most important one for the cultural and social
development of the Mediterranean area as a whole. This country has had
an important prehistoric activity, and archeological sites can be found im
many regions: Lazio and Toscana (Etruscan people), Umbria, Basilicata.
After Magna Graecia, Etruscan civilization and Roman Empire, and the
medieval Humanism, the Renaissance indeed shaped the whole of
western art history and Rome contains some of the most important
examples of the Baroque. Today Italy is considered a leading reference
point for elegance, food, wine, culture, cinema, theatre, literature, poetry,
visual arts, music (notably Opera), holidays, and generally speaking, for
taste.
GLOBAL VENTURING – A CASE STUDY OF TATA - 56 -

Italy became a nation-state belatedly - in 1861 when the states of the
peninsula and Sicily were united under king Victor Emmanuel II of the
Savoy dynasty, hitherto ruler of Piedmont and kings of Sardinia. Rome
itself remained for a decade under the Papacy, and became part of the
Kingdom of Italy only in 1870, final date of the Italian unification. Vatican
is now an enclave, like San Marino.

The Fascist dictatorship of Benito Mussolini that took over in 1922 led to a
disastrous alliance with Nazi Germany and Japan, and Italian defeat in
World War II. In 1946 a referendum on the monarchy resulted in the
establishment of a republic.

Italy was a charter member of NATO and the European Economic
Community (EEC) and joined the growing political and economic
unification of Western Europe, including the introduction of the Euro in
1999. Persistent problems include illegal immigration, the ravages of
organized crime (mafia), corruption, high unemployment, and the low
incomes and technical standards of southern Italy compared with the
more prosperous north.

Italy has a diversified industrial economy with approximately the same
total and per capita output as France or the United Kingdom. This
capitalistic economy (still mitigated by a wide presence of state and
governmental influences) remains divided into a developed industrial
north, dominated by private companies, and a less developed agricultural
south, with substantial unemployment.

Most raw materials needed by industry and more than 75% of energy
requirements are imported. For several years Italy has adopted budgets
compliant with the requirements of the European Monetary Union (EMU);
representatives of government, labor, and employers also agreed to an
update of the 1993 "social pact," which has been widely credited with
having brought Italy's inflation into conformity with EMU requirements.
GLOBAL VENTURING – A CASE STUDY OF TATA - 57 -

Italy has been urged to work to stimulate employment, promote wage
flexibility, hold down the growth in pensions, and tackle the informal
economy. Economic growth was 1.3% in 1999 and was expected to edge
up to 2.6% in 2000, led by investment and exports.

Football is the main national sport. Italy has won the Football World Cup
three times: 1934, 1938 and 1982. Some of world's best football players
and teams come from Italy. The latter include A.C. Milan, Inter Milano FC,
A.S. Roma, S.S. Lazio (also from Rome), Juventus (from Turin), and
Fiorentina (from Florence).

GEOGRAPHY OF ITALY:
GLOBAL VENTURING – A CASE STUDY OF TATA - 58 -

Area:

• Total: 301,230 sq km

• Land: 294,020 sq km

• Water: 7,210 sq km

Languages:

• Italian (official);

• German (parts of Trentino-Alto Adige region are predominantly
German speaking; official in the province of Bolzano);

• French (small French speaking minority in Valle d'Aosta region;
standard French is official only in the Valle d'Aosta).

• Slovene (Slovene-speaking minority in the Trieste-Gorizia area).

• Sardinian (in the island of Sardinia), now partly official;

• Ladin (in the Dolomite mountains, between Trentino-Alto Adige and
Veneto), connected with Swiss Romansh; official only in the part
enclosed in the province of Bolzano, together with German;

• Friulian (in the Friuli region), presents similarities with Ladin.

Other local minorities:

• Catalan (in the town of Alghero, Sardinia).

• Albanian (villages in Calabria and Sicily);

• Greek (ancient dialects in villages of Calabria).

ECONOMY OF ITALY:
GLOBAL VENTURING – A CASE STUDY OF TATA - 59 -

The Italian economy has changed dramatically since the end of World
War II. From an agriculturally based economy, it has developed into an
industrial state ranked as the world's fifth-largest industrial economy. Italy

belongs to the Group of Eight (G-8) industrialized nations; it is a member
of the European Union and the OECD.

Italy has few natural resources. With much of the land unsuited for
farming, it is a net food importer. There are no substantial deposits of iron,
coal, or oil. Proven natural gas reserves, mainly in the Po Valley and
offshore Adriatic, have grown in recent years and constitute the country's
most important mineral resource. Most raw materials needed for
manufacturing and more than 80% of the country's energy sources are
imported. Italy's economic strength is in the processing and the
manufacturing of goods, primarily in small and medium-sized family-
owned firms. Its major industries are precision machinery, motor vehicles,
chemicals, pharmaceuticals, electric goods, and fashion and clothing.

Import growth continues to outpace export growth, resulting in a trade
surplus in 2000 of $1.3 billion, down from $14 billion in 1999 and $60
billion in 1996.

• GDP: purchasing power parity - $1.212 trillion (1999 est.)
• GDP - real growth rate: 1.3% (1999 est.)
• GDP - per capita: purchasing power parity - $21,400 (1999)
• GDP - composition by sector:
• Agriculture: 2.6%
• Industry: 31.6%
• Services: 65.8% (1998)
GLOBAL VENTURING – A CASE STUDY OF TATA - 60 -

4.2. ABOUT ITALY

• HEAD OF STATE: President Carlo Azeglio Ciampi (since 13
May 1999)

• GOVT TYPE: Republic

• CAPITAL: Rome

• POPULATION: 57,634,327 (July 2000 est.)

• CURRENCY: 1 Italian lira (Lit) = 100 centesimi

• DEFENSE: 1.7% of GDP (FY99)

• MAIN CITIES: Rome, Milan, Naples, Turin, Florence, Genoa

• KEY RESOURCES: Engineering products, textiles and clothing,
production machinery, motor vehicles, transport equipment,
chemicals; food, beverages and tobacco; minerals and nonferrous
metals

• KEY INDUSTRIES: Tourism, machinery, iron and steel,
chemicals, food processing, textiles, motor vehicles, clothing,
footwear, ceramics

• KEY PORTS: Augusta (Sicily), Bagnoli, Bari, Brindisi, Gela,
Genoa, La Spezia, Livorno, Milazzo, Naples, Porto Foxi, Porto
Torres (Sardigna), Salerno, Savona, Taranto, Trieste, Venice
GLOBAL VENTURING – A CASE STUDY OF TATA - 61 -

• MAIN TRADING PARTNERS: Germany, France, the United
States, the United Kingdom, Spain, Switzerland, The Netherlands,
and Belgium.

• GDP PER CAPITA INCOME: $21,400 (1999 estb.) GDP:
purchasing power parity - $1.212 trillion (1999 estb.)

• POLITICAL STRUCTURE AND DISTRIBUTION OF POWER
PRESIDENT: An electoral college of the Senate, the Chamber of
Deputies and representatives of regional councils, elects the
PRESIDENT for a seven-year term. The President chooses the
prime minister and nominates a number of Supreme Court judges.
The position, however, carries with it no executive powers. Carlo
Azeglio Ciampi was elected in May 1999; his term runs until May
2006

• NATIONAL GOVERNMENT: Council of Ministers headed by a
prime minister appointed by the president on the basis of ability to
form a government with parliamentary support. The present
government was formed by Silvio Berlusconi in June 2001.

• NATIONAL LEGISLATURE: Bicameral: Chamber of Deputies of
630 seats/ Senate of 315 seats

• CHAMBER OF DEPUTIES: There are two main factions or
alliances in Italian politics, the center-right "House of Freedom"
alliance, and the center-left "Olive Tree" alliance.
GLOBAL VENTURING – A CASE STUDY OF TATA - 62 -

• DISTRIBUTION OF POWER: Popular vote Seats held by party
Center-right coalition 58.4 368 Left-center coalition 38.4% 242
Other 2.2% 20 Total 100.0% Total 630
GLOBAL VENTURING – A CASE STUDY OF TATA - 63 -

5.1. INTRODUCTION

For a business that has to take important business decisions there are
some questions that revolve around the imperative premises of marketing
strategies. The marketing strategy spells out the game plan for attaining
the business’s’ objectives.

Marketing strategy is the marketing logic by which the business unit
expects to achieve its marketing objectives. Marketing strategy consists of
making decisions on the business’s marketing expenditures, marketing
mix, and marketing allocations in relation to the expected environmental
and competitive conditions.

Marketing manager must decide what level of marketing expenditure is
necessary to achieve its marketing objectives.

The company also has to decide how to allocate the total marketing
budget to the various tools in the marketing mix.

Marketing mix is one of the key concepts in modern marketing theory.
Marketing mix is the mixture of the controllable marketing variables that
the firm uses to pursue the sought level of sales in the target market.

There are literally dozens of marketing mix elements.
GLOBAL VENTURING – A CASE STUDY OF TATA - 64 -

Mc Carthy popularized a four-factor classification of these variables called
the 4 P’s:

• Product

• Price

• Promotion

• Place

The particular marketing variables under each P are shown in the figure
below:

Quality
Features
Options Marketing Channels
Style mix Coverage
Brand name Location
Packaging Inventory
Sizes Transport
Services
Warranties
Returns I Product IV Place

List price Advertising
Discounts Target market Personal selling
Allowances Sales promotion
Payment period Publicity
Credit terms
II Price III Promotion
GLOBAL VENTURING – A CASE STUDY OF TATA - 65 -

The main purpose of this exercise is to study the strategies adopted
by Tata on the concept of four P’s.

The project is undertaken to study Tata venturing in the European country
(Italy) which is the biggest potential car market in Europe in the
automobile sector with two models:

Tata Indica Euro III: Passenger Cars

The information about the marketing mix strategy adopted by both for
Tata [Tata Indicia] as also on the marketing mix strategy adopted by Fiat
[Seicento (Passenger Car)] in the European country Italy which is the
biggest export market for Tata is provided.

The information of the competitors of Tata Indica in Italy i.e. with Fiat
Seicento is given.

Some facts about Tata Indica and Tata Safari:

• Tata Engineering’s Indica has come out for the first time past its
competitors – the Hyundai Santro and the Maruti Zen. The
company has reported a 51% increase in the sales

• The Indica has already received the European standards in
January 2002.

• The company hopes to export 2000 diesel version cars of the
Tata Indica in the current year & by the beginning of the next
year.
GLOBAL VENTURING – A CASE STUDY OF TATA - 66 -

• Tata engineering is targeting a 40% export growth in the current
fiscal.

• While light and heavy commercial will contribute 1/3rd of the
company’s total exports. The rest will comprise pick up trucks
and Safari, the company’s top utility vehicles.

• The exports of commercial and utility vehicles excluding its
small car Indica, would cross Rs. 700 crores this year.

• The initial exports of Tata Indica have been 3000 cars per
annum. Telco is planning to increase this originally.

• 10% of the production Tata Indica and Tata safari is exported

• Tata safari was launched in the European market in 1998

• Tata safari is already holding 5%-6% of the European market
share in the sports utility vehicle segment

This shows that Tata Indica and Tata safari have great potential in the
Europe Italy being its biggest export market

Source: Business Today 13 may 2002
GLOBAL VENTURING – A CASE STUDY OF TATA - 67 -

6.1. 1st P: PRODUCT

High

Brand

Low
o Tata Indica

High Low

Quality

Under this category two models are covered:

TATA:
Tata’s Indica (Passenger Car)

FIAT:
Fiat Seicento (Passenger Car)
GLOBAL VENTURING – A CASE STUDY OF TATA - 68 -

TATA INDICA

With the Indica poised to achieve Euro-III standards by January, Tata
Engineering hopes to export around 2,000 diesel cars, mainly to Europe,
in the current year.

Technology:
The Indica embodies the latest in car technology. It has a new 16 bit
microprocessor chip for the engine management system. This allows for
better responsiveness and drive ability. To top it, the Indica is Euro II
compliant.

Power:
The Indica has a Multi Point Fuel Injection system controlled 1400 cc
engine ensuring a peak power output of whopping 75 bhp, unmatched in
its category propelling from 0-60 kmph in under 6 seconds.

Safety:
The Indica is engineered for the ultimate safety. Which is why it comes
packed with safety features. Like a collapsible steering, side impact bars
an energy-absorbing crumple zone and lots more and to further enhance
safety, Tata’s have tested every feature at India's only internationally
certified crash test facility at Tata Engineering.
GLOBAL VENTURING – A CASE STUDY OF TATA - 69 -

Style:
The Indica comes with the latest styling accessories available in cars
worldwide. Like a rear roof spoiler with an integrated LED brake light a
chrome plated exhaust pipe a sporty gear knob sleek, white instrument
dials.

STANDARD SPECIFICATIONS

DIMENSIONS
Length 3660 mm
Width 1625 mm
Height 1485 mm
Wheelbase 2400 mm
Ground Clearance 170 mm

ENGINE
475 SI Water cooled Multi Point
Type
Fuel Injection System
No. of Cylinders 4 inline
Piston Displacement 1405 cc
Maximum Output 75 PS @ 5500 rpm
Maximum Torque 110 Nm @ 3000 rpm

STEERING
Type Rack and Pinion
Turning Radius 4.9 m

TRANSMISSION 5 forward, 1 reverse

SUSPENSION
Front Independent, Wishbone type
with McPherson strut, Antiroll bar
Rear Independent, Semi-trailing arm
with coil spring mounted on
hydraulic shock absorbers
GLOBAL VENTURING – A CASE STUDY OF TATA - 70 -

BRAKES
Type Dual Circuit, diagonally split,
vacuum assisted with PCR valves
Front Ventilated Disc
Rear Drum

TYRES
Type-Size Radial-165x65 R 13
FUEL TANK-Capacity 37 liters

FEATURES LEi LSi LXi
White instrument dials . . .
Collapsible steering column . . .
Door instrusion beams . . .
Internally adjustable Outer Rear View Mirror Driver's Driver's Both
(ORVM) side side sides
Remote release for fuel lid latch & tailgate - - -
latch
Remote seat back rest folding & refolding - - -
facility
Spot (reading) lamps & cabin lamp - - -
Antisubmarine type front seats - - -
Tinted windshield, door and tailgate glass - - -
Child safety locks on rear doors - - -
Digital clock - - -
Internal antennae - - -
Fabric lined seats Partial Partial Full size
Air conditioning system - - HVAC
Parcel shelf - - -
Spoiler with Brake light - - -
Chrome tipped exhaust pipe - - -
Silver-tone centre cluster and console - - -
Power steering - -
GLOBAL VENTURING – A CASE STUDY OF TATA - 71 -

Sift feel, four spoke steering wheel - -
Body colour bumpers - -
Wheel covers Full size
Power windows (Front & Rear) -
Body colour ORVM & door handles -
Heating element on tailgate glass -
Central locking -
Tachometer -
Antiglare inner rear view mirror -
Rear wiper with wash/wipe and defogger -
Light intensity adjustment for instrument -
cluster
Rear fog lamp -
Cigarette lighter -
'Key in-Belt not fastened'/'Key out-Head -
lamps on' audio warning signal
Delayed turnoff for rooflamp -
GLOBAL VENTURING – A CASE STUDY OF TATA - 72 -

FIAT SEICENTO

This car is known as the perfect city car! Compact, but boasting creature
comforts normally associated with bigger cars. The Fiat Seicento is
designed for excellent fuel returns, but is still a lively performer. Ideal in
town traffic as well as the open road, inside, the Seicento feels like a
much larger car, because of its excellent use of space and also because it
includes many features only found on larger cars.

Features:

This car has;

• More than enough room for the driver and adult passengers - and
yet so economical

• Visits to the garage are few

• Attracts admiring glances

• Slices through city traffic

• A car that has the tightest turning circle in its class

• Advanced safety features like a reinforced body shell and
passenger compartment protected by crumple zones and the FPS
fire prevention system.
GLOBAL VENTURING – A CASE STUDY OF TATA - 73 -

Version Details:

• Seicento Michael Schumacher Limited Edition:

Qualities that one will find reflected in a car that belongs in pole position.
Unique exterior features include side skirts and tailgate with
Schumacher's special logo, plus a rear tailgate spoiler and 14" alloy
wheels with low profile tyres. Inside you'll find a cockpit designed for the
uncompromising. Sill plates also bear Schumacher's logo, while the
pedals, gear lever and handbrake grip are all in sporty aluminium. The
steering wheel and gear knob are trimmed in soft black leather with red
stitching and there's a special numbered plate to remind you which one of
the few you own. Safety and handling are paramount - ABS, electronic
power steering and driver's airbag are all standard, while the driving
experience is further enhanced by the inclusion of a hi-spec Sony single
CD player/RDS stereo system. Powering the new champion you'll find the
lively, economical and environmentally friendly 1.1 MPI engine, that easily
delivers 93mph performance with 43.5mpg combined fuel economy.

• Fiat Seicento S and SX

Powered by the high performance fuel efficient 1108 Multi-Point injection
(MPI) engine, the Seicento S and SX are thoroughly versatile and
practical cars - equally at home, in city streets or country roads, and will
effortlessly cover long distances, offering high levels of comfort and
outstanding fuel economy. All models have a driver's air bag, electronic
power steering, heated rear window and rear wash wipe, state of the art
stereo in-car entertainment, and the Fiat CODE immobiliser system. The
SX further benefits from having electric windows, sunroof, split folding
rear seats, and rear head restraints.
GLOBAL VENTURING – A CASE STUDY OF TATA - 74 -

• Fiat Seicento Sporting

This high performance car could have been custom built for people who
appreciate sheer verve and love the thrill of spirited driving. The Sporting
has many features that enhance the natural good looks of the Seicento -
stylish colour-coordinated bumpers with fog lights and striking 13" alloy
wheels. The interior is equally exciting with electric front windows,
sunroof, rev counter, single CD/ RDS Radio System, sports seats, leather
steering wheel and gear lever. This is coupled with the Sporting's
outstanding performance. This high-performance 1108cc MPI engine
achieves 0-62 mph in only 13.5 second (1.0 second quicker than the S
and SX models) with an excellent fuel economy of 43.5 mpg on the
combined cycle. There are also numerous options available including
ABS, air conditioning and an Abarth Sports Kit to make this remarkable
car stand out even more.

SPECIFICATIONS
Dimensions
3319 (L) x 1521 (W) x 1445 (H)
(mm)
Fuel capacity 35 litres
Front Independent, McPherson, with lower wishbones & coil
suspension springs.
Rear Independent, with lower wishbones & coil springs,
suspension anchored to an auxiliary cross-beam by flexible bushings.
Halogen headlights, 3rd brake light, headlight adjustment,
FIAT code, athermic glass, front seat belt pre-tensioners,
Standard on
impact beams in doors, fire prevention system, heated
all models
rear window, folding rear seat, analogue clock,
radio/cassette.
GLOBAL VENTURING – A CASE STUDY OF TATA - 75 -

6.2. 2nd P: PRICE

Price is one of the most important elements in determining any company’s
market share and profitability. Price is the only element that produces
revenue, the other elements represent cost. Following is the six step
procedure for price setting.

1. Selecting the pricing objective
2. Determining the demand
3. Estimating cost
4. Analyzing competitors pricing and offers
5. Selecting a pricing method
6. Selecting the final price

The company first has to decide what it wants to accomplish with the
particular product. If the company has selected its target market and
market positioning carefully, there is marketing mix strategy, including
price, will be fairly straight forward. At the same time, the company may
cost you additional objectives. The clearer a company is about its
objective, the easier it is to set price. Each possible price will have a
different impact on such objectives as profits, sales revenue, and market
share.

We will examine four major business objectives that a company can
peruse to its pricing mainly survival, current profit maximization, market
share, leadership and product quality leadership.
GLOBAL VENTURING – A CASE STUDY OF TATA - 76 -

An effective pricing strategy for international markets is one in which
competition and costs have influenced the pricing decision. Only
examining the price levels of competitive and substitute products in
target markets can determine competitive prices. An excellent way to
get this information is to visit the market personally. Once these price
levels have been established, the base price can be determined. The
four steps involved in determining a base price are:

1. Determine the price elasticity of demand. Inflexible demand will
allow for a higher price.
2. Estimate fixed and variable manufacturing costs on projected sales
volumes. Product adaptation costs must be calculated.
3. Identify all costs associated with the marketing program.
4. Select the price that offers the highest contribution margin.
GLOBAL VENTURING – A CASE STUDY OF TATA - 77 -

The final determination of a base price can be made only after the other
elements of the marketing mix have been established. These include the
distribution strategy and communication strategy. The nature and length
of channels utilized in the marketing program will affect margins, as will
the cost of advertising and communications. Clearly, the marketing
program has a dramatic effect on the final price of the product.

Price
High Medium Low
Product
Quality
1. Premium 2. Penetration 3. Superb-
Strategy Strategy Value Strategy
High

4. Over- 5. Average 6. Good –
Strategy Value Strategy
Medium Here charging
Strategy
Here
7. Rip – off 8. Borax 9. Cheap –
Strategy Strategy Value Strategy T is
Low Tata

It can be clearly inferred from the diagram that Tata has a good value
Strategy pricing where the quality offsets the price that is prevailing in the
market.
GLOBAL VENTURING – A CASE STUDY OF TATA - 78 -

Price Level:

High

Price-Led
Promotional
Activity
o Tata Indica

Low

High Low
Price-level

TATA INDICA:

As Tata Indica is just introduced in the Market they have adopted a
Penetrating strategy & its one of its merits is that it is priced low
(that is 8% to 10% Low) than the price of the other passengers car
of its kind. Since it has not been much time after its launch, it does
not disclose the exact price that is prevailed in the markets.

FIAT SEICENTO:

Seicento Price (cc) bhp 0-62mph MPG
EL 9,535 1108 54 14.5 47.1
ELX 10,235 1108 54
Sporting 11,390 1108 54 13.5 43.5
GLOBAL VENTURING – A CASE STUDY OF TATA - 79 -

6.3. 3rd P: PROMOTION

Promotion stands for various activities the company undertakes to
communicate its product merits and to persuade its target customers to
buy them. Marketing communications—the promotion "P" of the marketing
mix—refers to all forms of communications that organizations use to
establish meaning and influence buying behaviour among existing and
potential customers. Marketing communications should be designed to tell
customers about the benefits and values that a product or service offers.
The principal forms of marketing communications i.e. the elements of the
promotion mix are;

• Advertising,

• Personal selling,

• Publicity/ and

• Sales promotion.

All of these elements can be utilized in global marketing; however, the
environment in which marketing communications programs are
implemented can vary from country to country. Companies can run the
same advertising and promotion campaigns used in the home market or
change them for each local market, a process called communication
adaptation. If it adapts both the product and the communication, the
company engages in dual adaptation.
GLOBAL VENTURING – A CASE STUDY OF TATA - 80 -

Standardized

o Tata Indica

Branding

Non-standardized

Standardized Non-Standardized

Advertising

In our study i.e. of automobiles, it was seen that the promotional
strategies used by the companies was on the same lines as others. For
car promotions, trade fairs and motor shows are the most common
platforms.

TATA

The marketing of Tata Indica and Tata Safari is mostly done by the
dealers that are selected by the company. It is the dealer’s
responsibility to promote the vehicle and make them noticeable
before their customers. The few but important means of promotion
for these vehicles are:

Motor shows (Geneva Motor Shows held in Switzerland every year in the
month of September). This is the biggest platform for promotion of
automobile industry in the world,
GLOBAL VENTURING – A CASE STUDY OF TATA - 81 -

Trade shows

Print and broadcast adds.
Direct mailers
Catalogues
Broachers and billboards.
Audio-Visual Material (advertisements.)

A company like Tata manages a complex marketing communication
system. The company communicates with its middlemen, consumer and
various publics - its Tata dealers. Dealers communicate with their
consumers and various publics.

High

Sales Promotion

o Tata Indica

Low

High Low

Advertising
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Tata’s are in the initial talks with Rover, the German unit of BMW for a tie-
up. After this alliance, the marketing and promotion of Tata vehicles will
be done by Rover.

FIAT

For the Fiat Seicento and Dolbo; the promotion is done in the same way
as in the case of other automobiles in Italy i.e. majorly through motor
shows etc. but Fiat has an edge over the Safari as it is an Italian based
company in itself and has leverage over this aspect. Moreover Fiat Group
owns important editorial bands like

• La stampa

• Itedi

• Italiana

• Edizioni.

This helps Fiat in publishing to advertise through pint media quite often
and stay in people’s attention all the time.

Some national and local newspapers are owned or otherwise controlled
by the company. Fiat also has and an advertising center ‘Consorzio’ Fiat
Media Center which helps Fiat in its advertising and sales promotion.
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6.4. 4th P: PLACE

Marketing channel decision is one of the most critical decisions a
company has to take. The company’s chosen channels intimately
affecting all other marketing decisions. The company’s pricing depends
upon whether it uses large, high quality dealers or medium size, medium
quality dealers. The firm’s sales force and advertising decisions depend
upon how much training and motivation the dealer needs.

TATA

Tata distribution in the European country is done through dealership
networking. Tata has 70 to 75 dealers in Italy out of which 50% to 60%
are exclusively for Tata Indica and Tata safari.

Tata owns 5 showrooms in Italy in the following places

• Venice

• Milan

• Rome

• Genoa

• Nap lean
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Most of Tata distribution is done through dealership network.

Suppliers

Transporter’s
Warehouse
Manufacturer

Transporter’s
Warehouse

Dealers

Customers

Transporters

FIAT:

The distribution of Fiat is on the same lines as that of the Tata’s’
i.e. through distribution network. Fiat has got approximately 160
dealers throughout Italy. Fiat has finally bolstered its Auto Arm with a
strategic alliance with General Motors, who acquired a 20% in the groups
Fiat Auto Division in 2000. This has resulted in a stronger dealership
network of Fiat allover.

7. RECOMMENDATIONS AND SUGGESTIONS
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7.1. PRODUCT:

1. Product mix: If the price of one product is higher than that of its
competitors in that segment itself, a company should launch alternate
product to overcome this problem or sell an improved version or
quality of the product to match the competitor. This is strategic and the
strategy offers a range of product mix to the customers.

2. Comparisons: Product should be such that it can be compared to
the other products of the same category. If the company is competent
enough to beat the rivals in the field, it not only creates a goodwill and
image of the product it is promoting but it also opens avenue for
promotion of other line of products manufactured by the company. It
not only helps in brand building of the company but also assists in
promotion of its product mix.

3. Research and development: The environment is never stagnant.
It is very dynamic. And specially when there are a number of players in
the field of competition, continuous R&D efforts to upgrade the models
should be made. Or newer versions of the same model may be offered
to spare the people from the monotony. Example Ambassador Premier
Padmini (Fiat) in India.

4. After-sales Service: The Company should have an excellent after-
sales service and spare part centre/shops for the products offered by
the company so that the same can be given to them on the spot.

5. Cultural values: The product should match the customer’s
requirement keeping in mind his cultural and social background.

7.2. PRICE:
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1. Competitive: Price has to be competitive keeping in mind the cost
of production, import duties, local taxes and the consumers’ pocket. In
case the company has priced its goods higher than that of the
competitor, it should see to it that the quality is also provided in order
to offset the price difference.

2. Discounts and allowances: Proper loan schemes, discounts,
allowances, incentives, installments etc should be provided to the
consumers for facilitating easy sales of the products.

7.3. PLACE:

1. Assembly line: Looking into the future growth potential the company
should export the product in completely knock-down condition and
create an assembly line in the consumer country. This will also offer
job opportunities to the people of Italy i.e. the local population leading
to awareness and promotion of the product.

2. Ancillary industry: Since a rise in sales is expected in future, there
can be ancillary industries to support the assembly and manufacturing
of the product and spares to some extent.

7.4. PROMOTION:
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1. Blitzkrieg campaign required: A strong blitzkrieg campaign is
required to attract a considerable amount of market share.

2. Internet and Websites: The Company should look into the advertising
through internet and should have a website of its own for the Italian
markets. During the project study it was observed that little information
of the Tata Vehicles is provided online, which is not the case with its
competitors. Hence it is very important for the company to put up
information, product specification, after sales service on the internet.

3. Tie-up with well established automobile company: As Tata Safari
and Tata Indica are in their introductory stage in the Italian market,
they should go in for a strategic alliance with a local partner or with a
competitor. They should go in for a tie up with a well established
automobile industry in Italy; this will make their work easier as the
latter can then take care of the Tata vehicles distribution and
marketing. It is learnt that Tata – Rover (a unit of auto major BMW) tie-
up is in the offing in Italy. This will help to improve the image and
market share of Tata’s in the car segment. Rover is trying to promote
and sell Tata Indica and Safari in UK.

4. Target customer/specific positioning: Positioning is not what you
do to a product, but what you do to the mind of the prospective
customer. An insight into social and cultural values of the people in
Italy shows that the Italians give importance to family values. Tata
Indica can be positioned as a family car and as even Tata Indica is 8%
to 10% cheaper than the other European Passenger Cars. Hence the
concept of value for money can be highlighted effectively. The product
also should be so positioned to suit a particular segment of people e.g.
family, students, executives etc.
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5. Communication in national language: It is very important for a
company to communicate its objectives to its customers. What is
communicated, however, should not be left to chance. To
communicate effectively, Tata should hire an advertising agency to
develop effective ads, sale promotion specialists to design sales
incentive programming, public relation firms to develop corporate
image.

6. Advertisements in the papers: A proper communication establishes
a relationship with the customers. Advertising should also be done
through the print media. This can be done in the local language
papers, magazines, booklets, brochures, etc.

7. Trade Fairs and Motor Shows: The largest platform for promotion of
any automobile industry is trade fairs and motor shows especially the
Geneva motor show, which is held every year in September in
Switzerland. Tata can often participate in these trade fairs and motor
shows to gain popularity. Some of the important ones are given below:

• International Exhibition of Equipment and Products for
the Servicing of the Means of Transport (Bologna)

• International Exhibition of Equipment and Products for
the Servicing of the Means of Transport (Torino)

• International Exhibition of Equipment and Products for
the Servicing of the Means of Transport (Verona)

• Motor Show - International Car and Motorcycle Exhibition
(Bologna)
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• Transpotec / Logitec - The Road Transport Technology &
Logistics and International Services Exhibition (Verona)

Some others are:

• Belgraade fairs & exhibitions

• E.A. per le Fiere di Bologna (Bologna )

• MESSE ESSEN GmbH Essen (Germany)

• Trade Show of Automobile & Accessories (Denmark)

• E.I.C.M.A. (Milan - Italy)

8. Promoting through Italian actors and models: The Company can
make ads campaigns by inviting Italian models and actors. This gives
a glamorous touch to the company and the brand. They can even
associate themselves with an Italian celebrity the way Fiat associates
itself to Sachin Tendulkar and Shahrukh Khan in India.

9. Associating them with Italy: A company should involve themselves
with the people and customers of the country. They should merge
themselves with the social well-being of the people and adopt their
countries names like the Fiat and Suzuki had done years back and
had accepted India as their country.
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10. Italian Brand Names: A company should patronize and popularize
their brand names by selecting local word or Italian Brands, e.g.
Indica in India, and may be Italica in Italy.

11. Merging Identity: The theme of the company should be to merge its
identity with the local aspirations and getting into their hearts.

12. Door to door campaign: The Company can adopt door–to–
door campaign for promotion.
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8. CONCLUSION

With the explosion of Information Technology and improved
Communication, e-commerce and e-business have taken a centre-stage.
Lot of knowledge of international markets and marketing has become
available, and in fact the world itself has shrunk to a global market-place.

The world is undergoing economic revolution. A company that fails to go
global is in danger of losing out to a domestic player with lower cost,
richer experience, more finance, better products, offering more value for
money.

Why companies take international marketing? What are important factors
for selecting a global market? How to enter the international markets?
And such other questions or aspects are discussed in the project.

The project also covers global issues in marketing – with regard to
transnational corporations, strategies adopted, product - design and
services offered, pricing and promotional policies, target markets,
selection of distributors, agents, product mix, promotion strategies etc.
Four Ps (product, place, price, promotion) have been explained.

A case study – in particular reference to Tata’s marketing of Indica in Italy
is undertaken in the project. The case study includes company and
product profile and also information of Italian markets with its historical
and geographical background.

The present market share of Tata engineering; of Tata Safari and Tata
Indica is, only 3% to 3.5% in Italy in the previous year. But it is expected
to increase by 5%to 6% in the near future.
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It is observed that forTata, product, pricing and distribution are not lacking
but can be enhanced further. The promotional strategies if taken up
seriously and thoroughly can raise the market share. A tie-up with an
established company like Rover will help.

The project also covers other important competitors in this segment in the
market.

Various recommendations and suggestions are also given. The project
concludes with bibliography.
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9. BIBLIOGRAPHY

BOOKS AND MAGAZINES:

1. Business Basis: a study guide for degree students – Marketing,
BPP Publishing.
2. Marketing management, Philip Kotler .P.
3. Global Marketing, Keegan
4. International Marketing, Terstpra. V and Sarathy
5. International Encyclopedia of Business and Management
Encyclopedia of Marketing, Roseenblom. B.
6. Global Marketing Strategies, Jean Piere Jeannet
7. Marketing Management – analysis, planning, implementation
and control, Philip Kotler
8. Consumer Behaviour “Brand Globally but Advertise Locally. An
Imperial Investigation” International Marketing Review.
9. A & M, March 2001
10. Euro Monitor, Automobile Sector Volume Sales (2000-2001)
11. Tata International Internal News release and Journals

WEBSITES:
1. www.google.com
2. www.telcoindia.com
3. www.indiainfoline.com
4. www.automarket.com
5. www.tataengineering.com
6. www.tatainternational.com
7. www.projectshub.com
8. www.italyonline.com
9. www.governmentofitaly.org
10. www.italianauto.com