Marketing Management - I Assignment

Automobile Sector

TVS MOTORS

Ishit Dewangan
20PGP052 ‘A’
Automobile Industry in India:

Introduction
India became the fifth largest auto market in 2019 with sales reaching to 3.81 million
units. The Two-Wheeler Industry is the largest in the world as far as the volume of
production and sales are concerned. The two wheelers segment dominate the market
in terms of volume owing to a growing middle class and a young population.
Moreover, the growing interest of the companies in exploring the rural markets
further aided the growth of the sector. In addition, several initiatives by the
Government of India and major automobile players in the Indian market is expected
to make India a leader in the two-wheeler and four-wheeler market.
Market Size
Domestic automobiles production increased at 2.36 per cent CAGR between FY16-20
with 26.36 million vehicles being manufactured in the country in FY20. Overall,
domestic automobiles sales increased at 1.29 per cent CAGR between FY16-FY20
with
21.55 million vehicles being sold in FY20.
Two-Wheeler Industry
Two wheelers accounted for 80.8% accounting for a sale of over 17.33 million
vehicles in FY20. The two-wheeler industry declined by 18% compared to the
previous year to due to the changes in the emission norms, from BSIV to BSVI
models and due to COVID -19 pandemic across the country.
Broadly two wheelers are defined into the below three categories:
 Motorcycles segment - (executive segment – less than 125cc, entry premium
segment – 125cc to 150cc, Premium segment 150cc to 300cc, Super premium
segment – 300cc & above) The motorcycles segment, which make up 64% of
the industry, declined by 17% to 11.23 million.

 Scooters Segment – (gearless vehicle) Scooters contribute 32% of the

industry and the segment declined due to increase in the overall cost of
ownership and higher penetration levels. The 100-110cc segment declined by
21% in FY20, while for 125cc scooters, sales plateaued within the segment.
The scooter industry volume stood at 5.57 million.

 Mopeds – This category is basically used for transporting goods. It makes up

4% of the two-wheeler industry. Moped industry volume was 0.64 million,
registering a significant decline of 28% over the previous year.
 Sales
Moped

Scooter

Motorcycle

MotorcycleScooterMoped

Market share in terms of two wheelers:

Hero Motocorp leads the market in terms of manufacturing and sales followed by
Honda > TVS > Bajaj and others. Hero being deriving itself as a national brand by
using taglines line like “Desh ki Dadhkan” and promoting its brand like Splendor “a
perfect motorcycle for a family or a field” which made the people connected with the
product.
As per demographics a major proportion of population lived in rural India which
made Hero’s Splendor a value for money product and was the top selling bikes for a
decade. However, in last couple of years due to the increase in demand for gearless
vehicles, Honda Activa has become the top selling vehicle.
When it comes to Moped segment, TVS dominantly leads the markets.
 TVS MOTORS

PROFILE:
TVS Motor Company Limited (T.V.S) is an Indian multinational motorcycle
company headquartered at Chennai, India. It is the third largest 2-wheeler company in
India with a revenue of over ₹18,217 crore (over US$2.9 billion). It has an annual
sale of more than 3 million units and an annual capacity of over 4.95 million vehicles.
TVS Motor is also the 2nd largest exporter in India with exports to over 60 Countries.
The company has four manufacturing plants, three located in India (Hosur in Tamil
Nadu, Mysore in Karnataka and Nalagarh in Himachal Pradesh) and one in Indonesia
at Karawang.
VISION:
“We are committed to being a highly profitable, socially responsible, and leading
manufacturer of high value for money, environmentally friendly, lifetime personal
transportation products under the TVS brand, for customers predominantly in Asian
markets and to provide fulfilment and prosperity for employees, dealers, and
suppliers.”

 A Vehicle for Everyone - TVS Motor manufactures the largest range of 2-

wheelers, starting from mopeds, to scooters, commuter motorcycles, to racing
inspired bikes like the Apache series and the RR310.

 Innovation at the Helm - TVS Motor’s strength lies in its extensive research
and development, resulting in products that are industry leading in terms of
innovation. We at TVS deliver total customer satisfaction by anticipating
customer need and presenting quality vehicles at the right time and at the right
price.

 Inspiring Millions of Smiles - TVS has always stood for innovative, easy-to-
handle, and environment-friendly products, backed by reliable customer
service. More than 44 million + customers have bought a TVS product to date.
.
 Driven by the customer - TVS Motor will be responsive to customer
requirements consonant with its core competence and profitability. TVS Motor
will provide total customer satisfaction by giving the customer the right
product, at the right price, at the right time.

 The Industry Leader - TVS Motor will be one among the top two two-wheeler
manufacturers in India and one among the top five two-wheeler manufacturers
in Asia.

 Global Overview - TVS Motor will have profitable operations overseas

especially in Asian markets, capitalizing on the expertise developed in the
areas of manufacturing, technology and marketing. The thrust will be to
achieve a significant share for international business in the total turnover.

 At The Cutting Edge - TVS Motor will hone and sustain its cutting edge of
technology by constant benchmarking against international leaders.

 Committed to Total Quality - TVS Motor is committed to achieving a self-

reviewing organization in perpetuity by adopting TQM as a way of life. TVS
Motor believes in the importance of the process. People and projects will be
evaluated both by their end results and the process adopted.

 The Human Factor - TVS Motor believes that people make an organization
and that its well-being is dependent on the commitment and growth of its
people. There will be a sustained effort through systematic training and
planning career growth to develop employees' talents and enhance job
satisfaction. TVS Motor will create an enabling ambience where the maximum
self-actualisation of every employee is achieved. TVS Motor will support and
encourage the process of self-renewal in all its employees and nurture their
sense of self-worth.

 Responsible Corporate Citizen - TVS Motor firmly believes in the integration

of Safety, Health and Environmental aspects with all business activities and
ensures the protection of employees and environment including development
of surrounding communities. TVS Motor strives for long-term relationships of
mutual trust and interdependence with its customers, employees, dealers, and
suppliers.
 Marketing Mix (4P) Strategy:
As of 2020, there are several marketing strategies like product/service innovation,
marketing investment, customer experience etc. which have helped the brand grow.
Marketing strategy helps companies achieve business goals & objectives, and
marketing mix (4Ps) is the widely used framework to define the strategies.

Product Strategy:
“A Vehicle for Everyone” this line is used by TVS Motor which simply explains itself
as it manufactures the largest range of 2-wheelers, starting from mopeds (XL, Super
XL, Super Heavy Duty, XL 100, XL 100 Comfort), to scooters (Scooty pep, Scooty
Zest 110, Jupiter, Ntorq), commuter motorcycles (Sport, Start city +110, Radeon), to
racing inspired bikes (Apache series and the RR310).
TVS has earnt a reputation of producing very innovative solutions for its product
lineup. It has innovated such products as TVS 50, India’s first two seater moped,
Scooty, India’s first scooterette, TVS Champ, India’s first Digital Ignition, Apache,
India’s first bike to feature Anti Lock Braking System, Jive, first bike in India without
a clutch, Wego, first scooter featuring Body balance technology, Victor, first
indigenously developed Indian bike. So catering to mass markets as well as young
working professionals, smart independent women and sports oriented youngsters,
TVS has a wide range of products. Hence their product category meets the needs from
rural to urban life style.

Moped bikes to carry luggage:

Pricing Strategy:
Keeping in mind the sentiments and value of Indians, TVS prices its products
competitively, undercutting the competition in case of Scooters, and executive
motorcycles. Traditionally TVS has been known for its value pricing for its spare
parts too, many of which are used in its own products. Since buyers of these segments
have constantly changing needs, TVS uses survival strategy to remain competitive.
Thus, mostly the pricing strategy in the marketing mix of TVS Motors is based on
competition. The hotly contested Rs50000 to Rs80000 segment sees a lot of entrants
each year but TVS continues to be profitable and drives home good sales because of
its pricing strategies. Through new tie ups with financial institutions and launch of
updated variants, TVS is able to attract customers without raising its product prices.

Place & Distribution Strategy:

Boasting of an extensive dealer network exceeding 2000 in most states of India, TVS
has presence which is bested only by competitors like Hero MotoCorp and Bajaj.
With manufacturing plants in Hosur, Nalagarh, Mysore, Karawang, Indonesia. With a
strong focus on rural markets, TVS as a brand is etched in the memories of those
living in outskirts and rural areas and not just cities and tier 1 towns. The wide
dealership network is the place strategy in the marketing mix of TVS Motors,
Licensed showrooms apart from authorized dealerships also stock and sell TVS
vehicles, sometimes paired with finance and loan schemes. Service camps are also
organized in the hinterland for even better rural penetration and reach.

Promotion & Advertising Strategy:

TVS directs its promotional activities to specific target audiences. A multi-faceted
strategy of communications with a strong online presence helps it to gain leverage as
far as back of the mind recall is concerned. Good media relations, and carefully
targeted advertising campaigns as a part of the promotional strategy in the marketing
mix of TVS, further help build the brand to grow. Comprehensive brochures, ATL
advertising,
standees, direct emailers etc all help boost TVS sales. The promotional strategies
involve placing brand ambassadors like Virat Kohli, MS Dhoni, Amitabh Bachchan,
Anushka Sharma for each product specific to geographic division (North India and
South India). The promotional activities include dirt bike rally, MRF super cross
championship rally promotional events in Malls etc. TVS motors majorly
concentrates on rural markets.

TVS Jupiter was launched with a tagline “Zyada ka Fayda”, as an Indian we want
more area in front and under the seat to carry goods e.g. carry a gas cylinder in the
front or carry our belongings with our helmet under the seat.
 Impact of COVID-19:

On business of the company

 Pursuant to outbreak of Covid-19 pandemic and consequent lockdown
announced across India effective March 25, 2020, the Company decided to
halt all manufacturing operations at its plants in India including branch offices
in compliance with the directions of the Government.

 The Company is working closely with its dealers and suppliers and extends all
support to them in the face of this unprecedented situation. Company ensured
safety and wellbeing of its employees and advocated work from home policy
wherever possible. The Company urged employees to adhere to the measures
and they were assured of complete support for transition to new workplace
arrangements in this unprecedented time.

 The ramp-up after lifting of the lock down was slow due to supply disruptions
impacting the production.

 Shutdown of dealers across India adversely impacted the domestic business.

Restarting the operations

 The Company resumed its operations in India across all its factories in Hosur,
Mysuru and Nalagarh starting from May 06, 2020 in a phased manner as per
the guidelines issued by the respective District Administration. The Company
took exhaustive safety measures to safeguard the health of the employees
across all its facilities. A comprehensive preparedness manual was designed
and employees were trained on the SOPs to ensure complete adherence as they
resumed work. The Company undertook exhaustive measures to ensure safe
workplace for employees with appropriate social distancing and highest
standards of hygiene. Similar protocol was followed for suppliers, dealers &
distributors.

 Work from Home option also continued for certain category of employees, in
adherence to respective state government guidelines.

 The Company has been seeing a progressive opening of dealerships across the
country and overseas from the second half of May 2020. The Company is also
witnessing a steady pick up in customer retail.
  18000 Dealers’ staffs were trained on sales and service excellence through
digital mode. The Company formed a Covid task force to handle the situation
and a slew of measures were taken to ensure business continuity.

Estimation of the future impact of Covid-19 on its operations

 Covid-19 pandemic has affected market sentiments, supply chain and

consumer demand.

 During these difficult times, to manage profitability the Company put in

significant actions in place towards waste elimination and cost reduction.

 The new practice of social distancing could see consumer preferences towards
personal mobility, and this could improve demand for Two-wheelers. The
Company is cognizant of this opportunity and well poised to leverage it with
its superior BS-VI offerings across the wide range of personal mobility needs.

 The Company is also ready with online booking options and door delivery
mechanisms at selected geographies, minimizing the need for customers to
physically reach out to dealerships.

 The Company aims to grow in international markets in both two-wheeler and

three-wheeler segments. However, it is difficult to assess the future impact of
COVID as normalcy is yet to return.

On financial aspects
 The Company has adequate unutilised bank limits for meeting the liquidity
challenges, if any. The Company has also raised listed unsecured
Nonconvertible Debentures for Rs. 500 Cr. The Company ensured that the
suppliers were paid and the financial obligations were duly met. Based on
assessment of the impact of Covid-19 on the operations of the Company and
on-going discussions with vendors and service providers, the Company is
confident of obtaining regular supplies and other services.
Reported volumes for April, May and June 2020 are tabulated below:
Segmentation, Targeting and Positioning of TVS
Segmentation means identifying various types of markets and arranging them in
groups depending upon characteristics like
 Demographics: age, gender, income, education, occupation
 Psychographic: values, lifestyle, interests, attitudes
 Behavioral: purchasing or spending habit, brand interaction, user status
 Geographical: locations, climate, urban or rural

Company has a separate team dedicated for collecting these data and they regularly
update the same. They also make a report of external factors that can affect the
company in material terms like sales. These data are shared to all the internal
branding team.

Targeting
Every Branding team will take this date and analyse which segment of people they
want to target and thereafter will make plans accordingly. Each brand is designed in a
such way which can fulfil the demands of a particular segment of people. A young
college going girl will like to have a light weight vehicle and also stylish, probably
easy to ride as well, so TVS Scooty Zest will be a best option for her. The company
will target the location with colleges especially where the girl’s to boy’s ratio is
higher.

Positioning
Positing is also one of the important factors that company must look upon – It refers
to the place that a brand occupies in the minds of the customers and how it is
distinguished from the products of the competitors and different from the concept of
brand awareness. TVS positions itself as a stylish and economical company:
 Positioning of TVS

Economical
TVS

Hero

Not stylish Stylish

Suzuki

Honda

Non-economical

Michael porter’s competitive force model

The strategy is developed by Michael porter which describes the external factors
affecting the organization.

Supplier Power:
Although TVS has been a prominent supplier for economic class customers in two
wheelers market, here we take the power of the suppliers for TVS to analyse. The
Supplier market for TVS is highly fragmented and the possibility for backward
integration is also high which has restrained the power of the suppliers. TVS engages
with several local suppliers for their spares and parts for their automobiles
manufacturing. The entry of many new small-scale manufacturers has also contributed
to the benefit of large automobile manufacturers like TVS to source their Spares and
parts at a very optimal price. This clearly indicates the low supplier power.
Buyer Power:
Buyers’ power in two wheelers industry is more as the product diversity and brands
available in the market are exceptionally high. Buyers today are demanding and
specific on their needs for the money they pay. They are looking for the brand that
offers better pricing and technology which has shadowed the customer loyalty for any
brand today which is the most faced threat by TVS.

Threat of Substitutes:
Threat from substitutes is quite low when compared to other forces since market
seems only to grow and mature every day. But when looked down the line we could
anticipate a threat from the escalating petrol cost growing environmental concerns
which might cause customers to switch to electronic bikes.

Intensity of Rivalry:
Two wheelers industry is most known for the competitive market and rivalry. Two-
wheeler brands like Hero, Bajaj, Honda and Yamaha have come up with various
product line and technology targeting the customer segment of age group 20 to 30
years who are more fascinated to sporty two wheelers. But TVS has very less sporty
models available for customers to choose that has restrained power of the brand over
the most targeted customer segment by its competitors. Although TVS has a better
power over the mid aged economic class customer segment, competitors now are
increasing their focus on taking over it too.

Barriers to New Entrants:

New entrants face a moderate barrier in penetrating the market since it is consolidated
by few and strong suppliers. As the market size of the two wheelers industry is big
and requires a strong footprint with high capital investment, new entrants find it
difficult to fit themselves among the market front-runners. Thus, TVS is not
susceptible to threats from the new entrants to the industry.

Interview with Mr. Pritam Mondal, Brand Manager, TVS

 How would you define TVS as a company as it is having such a huge line
of product?
TVS is a company which follows all generation and all cultures, we see what a
middle-aged person wants in south and what a millennial wants in north. This
is particularly the reason why we have such a huge line of product because we
want to cater in each and every possible segments.
 We have a strong team in consumer research – which keeps on adding data
related to the preference of consumer for a location. We have observed
different motivations related to same product, let’s say, a college going person
wants to purchase a high-end Apache to show his friends however a working
professional purchase it to feel the performance of bike. In this case we’ll
market the Apache as a high speed and stylish bike. Understanding your
customers motivation is very important as accordingly we need to market the
product. If we just market the product with high performance – maybe it will
not attract the eyes of person going to college or if it is marketed as a stylish
bike than maybe person looking for a better performance will not consider it.

 What is the process of launching a new product in TVS?

After the consumer research is done, we carefully design a product, the idea is
to always design more than is expected. The process is always to identify the
need and how can we fulfil the same. Scooty Pep was designed with vibrant
colours, low weight & low height, which basically was the need for a girl. In
last decade we saw a huge increase in sales of non-gear bikes like Activa.
While Pep was first choice for women, Activa was dominating the market for
men. According to research we came to know that a person wants more leg
space to keep more items in front of him – it can be for more groceries or a gas
cylinder. So we designed our model Jupiter keeping in mind about the more
space part and now we are still seeing the model taking up market share of
Honda Activa.

 How did the company managed the things during COVID and what
approach can we expect post COVID?
It not just only for TVS, COVID affected the whole automobile industry, our
factories were shut down – our employees showed willingness to come and
work but we had to follow the government norms. TVS announced pay-cut for
all its employees at management level. In terms of sales, this was the first in
the history that to sales were reported for a period of 50 days however we saw
a rise in sales after various unlock points – firstly, as lockdown was ended but
public transportation was still not operational so the workers were required to
have their own vehicles if they want to commute and as TVS offers a wide
economical range of two wheelers we saw a good sales figures. Secondly,
most the of consumers who had planned to purchase a two-wheeler and had to
postponed due to the lockdown were now able to purchase the same.

Coming to the post COVID world with the help of our dealers and distributors
we have already started ‘deliver to home’ facility. A person can book a vehicle
directly from our website and we will deliver the two-wheeler to her place
after sanitizing the same. The company has provided online training to all its
dealers and their workers on how to sanitise a vehicle and what protocols
needs to be maintained while delivering.
 SWOT Analysis
TVS Motors analyses the brand/company with its strengths, weaknesses,
opportunities & threats. In TVS Motors SWOT Analysis, the strengths and
weaknesses are the internal factors whereas opportunities and threats are the external
factors.
SWOT Analysis is a proven management framework which enables a brand like TVS
Motors to benchmark its business & performance as compared to the competitors and
industry. As of 2020, TVS Motors is one of the leading brands in the automobiles
sector. The table below lists the SWOT (Strengths, Weaknesses, Opportunities,
Threats), top TVS Motors competitors and includes TVS Motors target market,
segmentation, positioning & Unique Selling Proposition (USP).

STRENGTH
 Huge brand equity and one of the biggest players in the two wheelers Indian
market
 Excellent R&D, and wide variety of products in every segment
 Excellent distribution and good number of service centers
 TVS Group has over 40,000 employees and a customer reach of over 15 million
 Associating itself with celebrity brand ambassadors
 ‘Scooty’ as a brand has become a second name for the scooterrate segment

WEAKNESS
 Not much options are available in premium bike segment

OPPURTUNITY
 Two-wheeler segment is one of the most growing industries
 Export of bikes is limited i.e. untapped international markets

THREATS
 Strong competition from Indian as well as international brands
 Dependence on government policies and rising fuel prices
 Better public transport will affect two-wheeler sales
Current Product Line Explained
Scooters
 Ntorq a 125cc scooter which gives driving performance and stylish feeling for
young millennials.
Marvel edition with the help of Disney launched on 20.10.2020.
Racing edition: with designer more focused lights.
 Jupiter with features like body balancing and extra spaces a competitor for
Activa

 Zest a light weight model of especially for women with vibrant colors
Motorcycles
 Apache 310 tie-up with BMW – a very high segment racing bike

 Apache RTR series premium segment bike a perfect competitor for Pulsar

 Radeon a low-priced two-wheeler for growing India focused on performance

  Star City and Star Sports – with stylish designs

Mopeds
 XL100 – only company to produce moped segment used for carrying goods
Electric
 iQube – a fully electric bike with a range of 75 kms

Sources:
https://www.ibef.org/industry/india-automobiles/showcase
https://www.tvsmotor.com/About-Us/Overview
https://www.mbaskool.com/marketing-mix/products/16975-tvs-motors.html