MBA 630 N3

Megha Patel Tapan Patel Benazeer Pathan Jainik Shah Ben Ruetz

Royal Tranz
Marketing Plan

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

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

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

tubeless tires  Seating for 5. multiple color schemes  MP3 player  Business    Safety Desirable Rental Car Fuel Efficient Airbags. sunroof. sunroof  High kpl. CNG options  .Royal Market Summary (continued) Table 1 Targeted Segment Middle Class w/Children Customer Need   Corresponding Feature/Benefit Airbags. large trunk space  Safety Space Young Middle Class   To be in style Network with tech toys Spoiler. tubeless tires  Spoiler. LPG.

Options such as a sunroof. 3. We also intend to offer free first time tune-ups and complimentary car washes at every tunetunetune-up. Innovative design We employ cutting edge designers and engineers who know how to design and build an attractive lowlowcost car. This will allow us to offer better and more consistent service than the competition who often leave training to be handled independently by each dealership. 2. Multiple options We will offer various options on the Tranz that are typically not available on our competitors cars. Our contemporary designs will make the Tranz attractive to a wide variety of consumers. Extensive customer support We have an excellent training program for mechanics employed by our various dealerships.Strengths 1.Royal SWOT Analysis . MP3 player and an LPG or CNG kit will make the Tranz attractive to potential buyers. .

whereas our competition has extremely good brand awareness.Weaknesses 1. Lack of brand awareness We have no brand awareness. 2. .Royal SWOT Analysis . word-ofHigher price Because of the better styling and options that we offer. we are not able to beat the competition on price. We will work to improve our brand awareness by using everything from public events to word-of-mouth campaigns. Therefore we must be able to differentiate our product from our competitor s product and make it attractive to potential customers.

Right now is an excellent time to this wave of increasing demand and eventually push into other vehicle segments of the market. the world economy is starting to slow down and the price of oil is still somewhat high. Increasing demand for low-cost cars The middle class of India lowis growing rapidly which is rapidly increasing demand for lowlowcost cars. We foresee the demand for these types of vehicles continuing to rise as consumers look for cheap cars that sip fuel.Royal SWOT Analysis . . Economy and the price of oil Currently. 2.Opportunities 1.

the competition will continue to get more difficult. Uncertainty of the Nano s affect It is not completely clear yet. what affect the release of Tata s Nano will have on the market. . we foresee twice as many lowlow-cost car offerings in the market. We must focus on making a better. more attractive car and differentiate it from the competition. A year from now. 2.Threats 1. Increased competition The Maruti 800 and Hyundai Santro are well established low-cost cars and with the Tata Nano and lowothers about to hit the market.Royal SWOT Analysis . Many speculate that it will cause other companies to lower their prices in order to compete with Tata. we may be hard pressed to keep up in a price war. If this is the case.

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

Hyundai Motor Company has grown into the Hyundai-Kia Automotive Group which was ranked as the world s Hyundaififthfifth-largest automaker in 2007 and includes over two dozen autoautorelated subsidiaries and affiliates.000 dealerships and showrooms.9 billion in 2007 on a consolidatedconsolidated-basis and $32. . Employing over 75. nonHyundai vehicles are sold in 193 countries through some 6.8 billion on a non-consolidated basis.Royal Competition (continued) Hyundai: Established in 1967. Hyundai Motor posted sales of $74.000 people worldwide.

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

It is the leader in 2007commercial vehicles in each segment. The company is the world s fourth largest truck manufacturer and the world s second largest bus manufacturer.Royal Competition (continued) Tata: Tata Motors Limited is India s largest automobile company. with revenues of $8. Tata Motors is the only Indian Automobile Company to have been recognized as Notable COP for the second consecutive year by the Global Compact Society in 2006. and among the top three in passenger vehicles with leading products in the compact. midsize car and utility vehicle segments.8 billion in 2007-08. .

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

63hp  Tires 155/70R13  A/C  Price $7706 Maruti M800 A/C LPG 12.6/16 kpl (gas)  5 person seating capacity  35 liter fuel tank  4 cylinder 1086cc engine. 19. 37 hp  Tires 145/70R12  A/C  $5006 Tata Nano 20 kpl (gas)  4 person seating capacity  15 liter fuel tank  2 cylinder 623cc engine. 10. 33hp power  12 Tubeless Tires  A/C  $2500 .1 (LPG)  4 person seating capacity  28 liter fuel tank (gas).2/17.2 liter fuel tank (LPG)  3 cylinder 796cc engine.5 kpl (gas).2/15.Royal Competition (continued) Table 2 Competitor Hyundai Model Santro Euro III GL Solid LPG Features 11.

Royal Product Offerings Royal offers the following standard features on every Tranz: Child safety rear door lock system  Power locks  Overhead lamp  Front and rear speakers  Ashtray  A/C  Heater  Power steering  Power windows  Remote fuel door opener  Remote trunk opener  Rear double folding seat  Front air bags  Choice of standard paint schemes  Cell phone charger  Tubeless tires  Seating for 5 people  Large trunk space  Options include: Sun roof  Sport paint scheme  MP3 player  Satellite Radio  Spoiler  Premium wheel Premium speakers  LPG/CNG kits  .

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

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

offer a variety of options that some customers may want. We want to provide a Car 4 All .Royal Objectives (continued) Our main marketing objective is to focus on the customers' wants and needs and. at the same time. precarious rickshaws. It virtually frees them from a world of overcrowded trains. emission norms and fuel efficiency standards. The reason we decided to launch a low-cost car is the fact that entire lowfamilies. This will allow us to effectively influence and persuade the customer to purchase from us. . would ride on a bike together. sometimes four people. which is affordable. The Indian market is rapidly changing to where people can afford a car and spend time together. Every person who has a desire for a vehicle will look to Royal to fulfill this need. yet built to meet safety requirements. taxis they can t afford and packed buses.

Our differentiation strategy will play a large role here.Royal Target Markets The low-cost car is clearly intended for the masses. Primary Consumer Market: Our primary target market is the 44person family who cannot afford a car today.e. The Tranz will semiprovide a connection and that s social entrepreneurship in the Indian context. . for the lowfirstfirst-time car buyer in India a huge market despite the increasing number of cars in the urban and semi-urban areas. a whole new market will be opened and a productivity and lifestyle improvement will be created that will benefit the Indian economy and ultimately the global economy. Secondary Consumer Market: Our secondary target market is consumer who may have already purchased their first car and is looking for a similar low-cost car that they can add options to in loworder to make it their car. We foresee a large rural demand for this car i.

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

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

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

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

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

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

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

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

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

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

000 per car with a sales volume of 100.000 units $7.= 150.000 .000 cars resulting in first year revenues of $700 million.000 and we are anticipating a first year loss of less than $150 million. our analysis indicates that we will break even midway through our second year of production when we achieve 150.000 in sales volume.000.000 ------------------. $300.$5. Projected variable cost per unit is $5.Royal Financials We are projecting an average price of $7. With $300 million in first year fixed costs.000 .

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

Royal Controls Marketing Organization Jainik Shah is Royal s chief marketing officer and is responsible for all marketing related activities. of Customer Service Ben Ruetz . of Sales Tapan Patel Dir. See the organizational chart below for the corporate marketing structure. of Marketing Strategy Benazeer Pathan Dir. CMO Jainik Shah Dir. We have outsourced much of our frontline marketing operations to MarketStar in order to achieve better results and cost savings. of Marketing Communications Megha Patel Dir.

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