Tata Motors is one of the established automobile industries in India that produces passenger, utility, and commercial vehicles. It was among the first Indian companies to featured in the New York stock exchange and has more than 24, 000 employees (Samiee & Chirapanda, 2019). This international marketing plan analysis the opportunities, threats, and strategies for exploring the United States market and other foreign countries.
USA Opportunity Analysis
Being an economic, technological, and political superpower, the United States is the main foreign market focus for Tata Motors. This opportunity analysis seeks to highlight the main economic, cultural, political, and legal issues in the United States.
United States serves as the largest economy globally with a GDP of $21,427,100 million (Morgan et al. 2018). This country has the largest development institutions such as the World Bank, the International Monetary Fund, and World Bank. It also hosts giant companies that include CocaCola, Google, Apple, and Facebook that play a critical role in shaping the socio-economic factors. Although there was a recession back in 2009 that led to a rise in unemployment cases, this situation changed in 2015, and to date, it’s citizens receive high-income levels. Projections show that the United States will be the 3rd country in terms of purchasing power parity in 2050 (Martin, 2017). Although there was great concern on the stock market over their trade war with China, Brexit, and other geopolitical uncertainties, the United States remains be economically advanced and major market for goods such as an automobile. The recent coronavirus pandemic has slowed major economic activities in major countries but the United States is keen to open their country.
Language difference is usually a major factor when it comes to branding and advertising. The United States is among the populous country with over 327.2 million people in 2018 and all speak American English (Morgan et al. 2018). It is also diverse hosting Asian, African, Native Americans, and other races. This diversity factor places this country to be potential buyers of goods from all over the world. Their social-economic mobility has been increasing for decades thus making it perfect for companies such as Tata Motors to explore. Most citizens are second class and compared to other countries, it has a big aging population. Their health and education system is the best globally and in terms of immigrants, it still has the highest number. Although the majority of the citizens are liberal, racial intolerance still dominates in this country.
The United States has been strongly built in a democratic set up and has a strict adherence to the rule of law. Despite controversies, this country is known for transparent and fair elections. It enjoys massive economic and political influence in many countries. The major issue is the trade war with China which has resulted in major restrictions and policies being put in place. For Tata Motors, the United States enjoys good diplomatic relation with India and remains to be a potential market.
All foreign companies are bound to exist laws in the host country in line with international law. Product acceptability can be greatly affected by policy and change in legislation. In the United States, each state has a legal scheme and government structure. However, federal law upholds the treatment of foreigners and nationals equally. This country also has practiced a strong legal system when it comes to protecting intellectual property rights. Tata motors will take advantage of the US legal system to explore the great market potential.
Segmentation refers to the way a company divides its large market into small segments that are sharing common characteristics and more definable. Segmentation also outlines the demographics, behavior, and psychographics of the targeted market. In Tata Motors, Nano is a small vehicle in which families who cannot afford high budget wheelers. This car is also suitable for professionals such as managers, technicians, and also students. Since most population in the United States is aging, they require cars for commuting around. Tata Nano is an efficient car that fits the lower middle citizens and students.
Tata Ace is another vehicle from the Tata motors which is primary as a light commercial vehicle. It targets the transporters and industries that want to transport their goods to the markets especially in rural places. Since the United States leads in manufacturing, this vehicle will be on a top-notch demand. Others in this segment are Tata 407 and Tata prima that are also used for commercials.
Lastly, Tata Harrier is an SUV that targets the middle class who want a classy and decent car for commuting. This vehicle carries five passengers and will be the perfect choice for most families. Tata harrier features ESP stability control, standard traction control, and three driving modes.
Tata motors provide a wide range of vehicles that target specific sections and industries. For instance, Tata Nano is target lower middle people who need a vehicle to commute to the workplace. This car is ideal for lower-income populations and students who need a vehicle for commuting. This vehicle can also be used for family trips and taxi business. Other models target commercial industries and construction companies. The United States is the primary target since it has a large population which considers owning a car as a basic necessity. With many industries being located in the US, commercial vehicles will also be on-demand to transit goods and services. Most US automobile companies focus on producing classy four-wheeler which is top and earners and forgets the middle section. One of the strategies of Tata motors is to tap this section with lower income. Since global warming is a major issue in the world, this company also aims at producing vehicles that produce less carbon dioxide emissions.
When producing a product, it should have a distinct, desirable, and clear place regarding targeted consumers and competing products. Tata motors have a detailed marketing strategy and have positioned itself well in the competitive industry. Most competitors for Tata Nano car is the Hyundai Santro and Maruti Suzuki which are also focusing on the production of vehicles that target low budget.
The microenvironment is another element that ensures the company can meet market needs, supply chain, channel firms, and stands in a chance to compete with related companies. Although Tata motors had initially faced political challenges, they have put the required strategies that ensure they have a running production plant that meets all the legal and environmental issues. Tata motors had to move to Gujrat from Bengal and are now enjoying benefits such as tax, government land, and other related concessions.
The newly released Nano car faces stiff competition from other small car producers like Maruti 800 and twice the cost. This vehicle has been on the market for long and features less fuel consumption engines. In this case, it has to gain a monopoly by being the cheapest in comparison with other companies such as Mahindra and Honda.
International competitive analysis
Despite Tata motors is dominating the market industry in India, it faces major challenges when trying to secure a place in the international market due to the nature of the dynamic and competitive automobile industry.
Strengths of competitors
When it comes to cars and small SUVs, Tata motors mainly depend on old models such as Nano. However, due to the dynamic nature of the international market, it requires new designs and models to be produced every year. Unlike Tata motors, most automobile industries release new designs yearly which feature the latest components. Most of them come with a variety of models with different prices placing them at high chances of dominating the market.
Tata Motors is also not experienced in the production of luxury cars, the major strategy is to target low to middle-class citizens and forgets about the luxury car market which can be tapped. Although they have recently incorporated land rover and jaguar vehicles, it still has no experience in producing luxury vehicles. There is also safety concern over Tata motors, despite producing the cheapest cars in the market as it does not meet the required standards and legal requirements. Tata Motors has been in the market for over 10 years but still produces the cheapest models, this can be seen as a weakness in customer perspectives. This company should have secured the market demand and venture in the production of luxury vehicles that meet safety standards featuring modern technologies. The most common competitors include Maruti, Hyundai, Toyota, Honda, Ford, and Mahindra.
Weakness of competitors
Tata motors have diversified portfolios and produce vehicles in all categories ranging from SUVs to commercial vehicles. Tata vehicles have been well-rooted in the utility industry and commercial sector thus achieving stability in profit and sales. Unlike other automobile industries that have mainly dwell in either small cars and luxury vehicles, Tata motors till focus on low-income citizens as well as being deeply in commercial business.
Tata motors have a large domestic market which guarantees them stabilized profit. Unlike the competitors who only depend on the international markets, its dominance in the local market serves them a major boost. Tata has also partnered with international companies such as Ford to produce luxury vehicles which includes Jaguar and Land Rovers. This allows the company to acquire more knowledge and technology of producing luxury vehicles in the future. This acquisition also enables them to dive into foreign markets such as the United States and China. With sophisticated manufacturing techniques, they will get from these other companies, Tata will be able to grow and flourish in a developed market targeting the top earners.
Tata motors have been on the automobile industry for long and have penetrated to over 85 countries. With major investments in transportation and commercial vehicles, this company is still able to explore more potential markets. By partnering with other related industries, Tata Motors Company will achieve great market expansion in the United States and Europe.
International market strategy
Tata Motors company takes advantage of porter’s competitive strategy which focuses on differentiation, cost leadership, and cost focus. This enables the company to stand up in the competitive automobile industry and attain average profits (Johnson et al. 2017).
This strategy seeks to enable Tata motors to be unique in producing vehicles in foreign markets that are distinct and attractive compared to the competitors. Since the production of cheap effective vehicles remains untapped in foreign countries such as the United States, Tata motors seek to produce cars that are cheap and cost-effective. This will enable lower-income citizens to acquire these cars for commutation. Nano car for instance is cheap and consumes less fuel compared to existing vehicles. This will make them distinct in foreign markets as countries such as the United States primarily focuses on the production of luxury vehicles. Another strategy is diversification of production of vehicles. Tata Motors can produce large commercial vehicles and Lorries for the construction industry. This enables them to tap all the possible markets thus reducing the risks.
Cost leadership strategy
Labor and costs of production translate to the final price of the product. This strategy seeks to produce goods at cheaper production costs while maintaining the average prices. Tata motors produce the cheapest cars in the world by changing the production site and redesigning processes. This is also achieved by adopting the best technology practices, efficient logistics, and choosing production sites with low cost on labor, facilities, and facilities. Tata motors seek to enter a foreign market offering cheap automobiles and value for money.
This strategy aims at analyzing specific markets and understanding the market’s needs before producing a product. Tata motors seek to take advantage of the lower middle customers that remain untapped in foreign countries such as the United States. It also takes consideration of the social-economic status and the high number of the aging population in the United States. By focusing on the market needs, Tata motors will be able to customize their production chain to produce goods that are on the demand and meet the international market. Depending on the marketing strategy a company adopts, the addition of extra features on the existing models enables them to be distinct and serves as the driving force for the customers when choosing a product over the other.
International Marketing Tools
For a company to dominate the international dynamic industry, it has to adhere to four elements of global marketing which are product, promotion, price, and place.
Before taking a product to the market, it has to be unique and meets customer needs. In this case, there should be demand for the product and it should be acceptable in the foreign markets. Tata Motors produces a Nano car that targets low-income citizens and comes with distinct features. Since foreign markets such as the United States have been dominated with luxury vehicles mainly meant for the top earner and middle class, Tata motors seek to take advantage of the untapped market to produces cars for lower-middle-income citizens. Since the United States host most global companies, there is a high demand for commercial vehicles to transport goods, Tata motors also produce commercial and transit vehicles.
When entering a foreign market, a company is expected to conduct promotion and campaign for the respective product. For the case of Tata Motors, it advertises their products through print media and televisions giving insight on what their cars entail and the target audience. In the United States, Nano from Tata Motors will target their promotion to the lower-income citizens and industries for the commercials ones. Also, promotions require a company to utilize well the power of social media to target specific groups. For instance, a company can come up with an online contest where winners receive the product as the award.
When targeting foreign markets, the place is an important factor. Existing demographic facts and factors such as economic, political, and social issues play a critical role. For the Tata motors, the United States stands as the preferred destination for selling their products due to the high population and demand for vehicles being produced. There is also political instability in this country and likely not to go into recession. It also hosts many top companies and industries thus making it a high potential for commercial vehicles.
The price of your product is a critical element when choosing the international market (Rothaermel et al. 2016). You’ve had to study your possible competitors and determine a price that is will make customers buy the product while still being able to get profits for your company. For Tata Motors, the production of cheap cars such as Nano is the top priority to tap the lower-income customers in the United States. The cheap price of Nano cars is a result of the company using adhesives and plastics instead of welding, the company receiving tax relief the government and use of low-end features.
An international marketing plan enables any industry to analyze the potential market in a foreign country and utilize the best strategy in meeting customers and the company’s expectations. The United States remains to be an economic superpower country hosting major global companies that require commercial vehicles. It also has a high population with less focus on the lower-middle-class citizens. Tata Motors seeks to explore this untapped potential and expand its foreign markets.
Samiee, S., & Chirapanda, S. (2019). International marketing strategy in emerging-market exporting firms. Journal of International Marketing, 27(1), 20-37.
Morgan, N. A., Feng, H., & Whitler, K. A. (2018). Marketing capabilities in international marketing. Journal of International Marketing, 26(1), 61-95.
Johnson, G., Whittington, R., Scholes, K., Angwin, D. N., & Regnér, P. (2017). Exploring strategy (No. 11th e). Pearson.
Rothaermel, F. T. (2016). Strategic management: concepts (Vol. 2). McGraw-Hill Education.