The Aspects of International Marketing Affected TATA Motors Cars in the United States Market - Research Paper Example

International Marketing Table of Contents Introduction 4 a.Market Analysis 5 (i)General Information about The United s: 5 (ii) Cultural and Social Analysis: 6 (iii) Economic Analysis: 6 (iv) Political and Legal Situation: 8 b.Market Entry Strategy 9 (i)Introduction 9 (ii)Situation Analysis: 10 (iii)Target Market and Positioning: 11 (iv) Marketing Mix 11 Promotional Budget For First Two Years Of Product Launch 14 c.Conclusion 15 Works Cited 16 Introduction The concept of international marketing involves the trade activities conducted within overseas countries. The marketing process in this present business scenario has engaged to be more competitive throughout due to the emergence of inter-dependent global economy. Due to globalization, global economy can be characterized by means of incessant financial flow, faster communication as well as transportation facilities which signify efficient opportunities along with challenges in terms of dealing with products or services of any organization. The process of international marketing possesses the extension part of trading procedures that has been implemented in the domestic market place. The process of international marketing engages targeting of the consumers for a particular product in the international market, approaches to enter in the particular country, marketing mix strategies along with strategic business plans to compete in the international market (Onkvisit & Shaw, “International Marketing: Analysis and Strategy”). From the perspective of American Marketing Association (AMA), international marketing is the global practice of planning and manipulating the inherent strategies of an organization along with the pricing strategies, strategies of promotion and allocation of products, services or ideas that satisfy the consumers along with the organization goals (Onkvisit & Shaw, “International Marketing: Analysis and Strategy”). The paper intends to study about the various aspects of international marketing which will affect TATA Motors’ cars in the United States market. The study of market analysis with various aspects, such as general information of the US market, social and cultural analysis of the US consumers, economic analysis of the US market as well as political and legal situation of the US has been focused upon through this paper. Market entry strategy of TATA Motors including situational analysis, target market and product positioning along with different features of marketing mix have also been highlighted through this paper. a. Market Analysis (i) General Information about The United States: In the present globalised market scenario within the automobile sector, the US car market is one of the most sought after places for the international car manufacturing companies. However, the car market segment of the country has faced deficits in terms of selling units. The sales of personal cars or light weight vehicles were previously 11% in the year 2010 and increased by 10% in the year of 2011. The fluctuating scenario of the US car market signifies the increasing level of crisis along with accumulation of demand in the personal vehicle segment (Heymann, “US Car Market: Returning To Its Previous Size”). With regard to the geographical existence of the United States, it can be seen that it is one of primary business destinations in North America. It is surrounded by Canada and Mexico. It possesses quite a convenient reach-ability through seas, which facilitates in suitable transportation options for business organizations. The geographic location of the US enables it to act as a connecting destination for various trade activities. The climatic condition in the US, however, is quite fluctuating as especially in the winter season the temperature drops significantly in many regions. Nevertheless, in many regions the climate remains quite pleasant which enables to conduct daily activities conveniently. Thus, for an organization such as Tata Motors the geographic existence of the US can provide certain positive outcomes (Koontz, “US Public Library Geographic Database”). (ii) Cultural and Social Analysis: United States entails a multi-ethnic culture that is spread throughout the whole country. The western culture has been widely spread in the nation and is influenced by European cultures. Christianity is the primarily religion which is practiced in the nation. However, there are many people who belong to other religions as well such as Hinduism and Muslim. In this present day context, the US is one of the ethnically and culturally diverse countries in which immigration of people from various nations is observed. Buying behavior of the consumers in the US towards the car segment can be recognized to be quite varied. The high end consumers generally prefer to purchase light weight vehicles due to convenience and comfort. Perception of consumers towards the foreign products can be said to be quite enthusiastic as cars of various multinational corporations such as Toyota, Honda and Mercedes-Benz among others are successfully operating in the nation (Leung, “Culture And International Business: Recent Advances and Their Implications for Future Research”). (iii) Economic Analysis: From the economic point of view, the US is one of the leading economically developed countries of the world. The current position in terms of the economic status of the country is significantly elevated which encompasses the increasing rate of Gross Domestic Product (GDP) by 2.2 percent in the first quarter of 2012. Moreover, the country has recorded as 3.0 percent growth in real GDP rate in the year 2011. The emerging economic growth of the country is primarily obtained due to various economic sources such as manufacturing durable-goods, professional sectors, technical and information services along with the scientific resources that are the key factors of generating the growth in the US economy. International trade of goods and services is one of the crucial parts in the emerging growth of the US economy. According to the present export scenario, the country’s deficit level has decreased from USD52.5billion in January to USD46.0 billion in the month of February 2012 (US Department of Commerce, “Bureau of Economic Analysis”). GDP per capita income with respect to purchasing power parity is also significantly increased from the year 2000 to 2011. The per capita income of the country is USD 47198.50 according to the statistics in December 2010 (US Department of Commerce, “Bureau of Economic Analysis”). The demographic situation of the country can be taken into consideration from the viewpoint of the current income level groups along with the unemployment level among the total population of the United States. The total amount of personal household income level was USD 49777 with the consideration of the total number of household 117538000 according to the 2009 report (United Census Bureau, “Statistical Abstract of the United States”). Unemployment rate observed in the US in 2012 is estimated to be around 8.1%, which is quite high. The unemployment rate of the country increased to 8.1% of the total population according to the statistics of April 2012. However, the long-term unemployment has been evident from fact that more 4 million people is rendered unemployed among the total population (Bureau of Labour Statistics, “The Employment Situation —April”). The current population growth rate is estimated to be at 0.8% in between the years of 2007 to 2011 (The World Bank Group, “Population growth (annual %)”). (iv) Political and Legal Situation: The marketing decisions of any foreign company are highly affected by the political and legal environment of the country. The political and legal system of a country encompasses certain pertinent laws and regulations that are required to be strictly followed by an international expansion desiring business organization such as Tata Motors, which can provide it with certain benefits while conducting the business activities (Kotler & Keller, “Framework for Marketing Management”). Government of the United States has incorporated certain important policies regarding trade activities by involving both federal and state governments as well that operate in parallel and independent way. The political system of the country depicts various sub-national entities. The country provides unlimited opportunity for invention along with the trade inside the country. However, part of the regulations emphasizes on the foreign companies within the mentioned norms by the trade regulatory authorities of the United States (Heymann, “US Car Market: Returning to Its Previous Size”). The National Highway Traffic Safety Administration has authorization for issuing Federal Motor Vehicle Safety Standards (FMVSS) with the regulations for obeying the rules of certification of the motor vehicles and accessories manufacturer from the year 1967. However, the US Department of Transportation has included various issues that are important for vehicle manufactured from the first phase of 1968. The Federal Standard norms involve regulations against the sudden accidental and crashes risks regarding the design of the vehicle, engineering process along with the performance of the manufactured vehicles (US Department of Transportation, “Federal Motor Vehicle Safety Standards and Regulations”). United States in recent years has seen a rise in international trade with a number of nations which include India. The relationship between India and the US is quite cordial. There are a few companies of India operating in the US at present. Thus, this trade relation can facilitate Tata Motors’ endeavor. In the coming years, in terms of security and stability, the position of the US can be said to be quite convenient. The US has been able to maintain a stable political situation in the past decade which is expected to continue in the future as well. b. Market Entry Strategy (i) Introduction TATA Motors is one of the leading automobile manufacturing companies in the Indian market. The company is well known for being one of the foremost Indian companies that have been scheduled in the New York Stock Exchange in the year 2004. The company was founded in the year 1945 and its plants are located in different states of the country. Tata Motors commenced its spreading of business since the year 1961 with exporting of commercial and passenger vehicles to different countries of the world along with joint venture and franchisee operations in a few of the countries. According to the sales report of March 2012, Tata Motors had sold more than 100,000 units of vehicles which included exports of passenger transports, commercial vehicles along with personal cars with the growth of 20% during the year 2011 to 2012. Moreover, the emerging growth of the company can be stated from the fact that it recorded 13% growth than the previous year according to the fiscal year ending 2011 which included export of manufactured vehicles (Tata Motors, “Press Releases”). The market entry strategy of Tata Motors in the US market would significantly be a challenging part due to higher competitive situation of the market with the presence of other foreign car manufacturers. Therefore, light weight vehicles need to be positioned appropriately to attract potential consumers. (ii) Situation Analysis: Situational analysis incorporates the study of present scenario which is there in the micro environment of a country. The micro environment involves customer, employees, stakeholders, suppliers along with the existing competitors in the market. The leading car manufacturers in the United States are General Motors, Ford, Chrysler and BMW among others. Along with it, the country is observed to witness an increasing demand in the light weight vehicles. The foreign car manufacturing companies are playing the leading role in the growing market scenario of the personal light weight vehicle segment in the United States (United Census Bureau, “Statistical Abstract of the United States”). The car market of the United States is one of the competitive segments of the country. The present car selling scenario of the country signifies that the United States is one of the highest personal car selling countries of the globe. The product mix complexity in the car markets is one of the disadvantages for the existing local car manufacturing companies of the country which creates more difficulty in their ability towards providing varied product assortments. Thus, the increasing opportunity for the personal car segment is highly influential to introduce TATA Motors’ cars in the US market. The other advantageous part of targeting US car purchasers is the price of the personal vehicle. The pricing strategy of TATA Motors’ also can inspire the consumers, due to quite high level of household income of the population of the United States. Within this context, the competition in the personal car segment is highly imperative to look after in the modern day perspective in the US market (United Census Bureau, “Statistical Abstract of the United States”). (iii) Target Market and Positioning: The targeted consumers of the US car market for TATA Motors would highly involve the middle level income groups of the country. The total household income of the country was observed to be USD 49777 in the year 2009 which signifies a good trade opportunity for one of the leading Indian car manufacturing companies Tata Motors. The personal light weight vehicles of TATA Motors are more flexible for the middle level income group of the country along with a specific age group of consumers which include 25 to 45 years (United Census Bureau, “Statistical Abstract of the United States”). (iv) Marketing Mix Marketing mix is one of the important and crucial parts in the marketing process of introducing a new product in a specific market place. The process involves four initial concepts with regard to the successful launch of the product in the target market. These steps are product specification, pricing strategy of the product, place of distribution the product as well as required promotional activities of the product. Product Decision: The product selection in the marketing process is an important part, which indicates the future aspects of sustainability along with the consumer satisfaction level in the market. In this context, the personal vehicle segment in the US market is very competitive, thus TATA Motors must be conscious about the definite product by targeting a specific segment of the consumers. The product features also does play an important phase in terms of dealing with the competitive scenario in the US personal car market segment. The beneficial part for the consumers would be about the product availability in terms of different variations, customization option along with the targeting income level groups in the US market. Pricing Strategy: Pricing decisions for the new product in a target market is one of the fundamental parts of the manufacturing organizations. The pricing strategy contains the income level group of the customers along with demographic condition within the target market. It has a substantial impact on the future financial position of the manufacturing company. According to the present competitive situation in the car market of the US, TATA Motors must focus on the middle income level groups of the country. At the very beginning step of pricing strategy, the company should be focused on the growth maximizing aspect in terms of selling units. The continuous process of consumer transactions can make the company sustain in the market for long-term. The penetration pricing strategy would be an efficient decision for TATA Motors in the US car market. The main objectives of this strategy are to enhance the market share along with gaining long run profit in the market. The penetration strategy for pricing decision would be more flexible according to the economic condition of the country, which would emphasize towards maximizing the profit collection by the manufacturing company. The high level of investment required in the penetration pricing strategy would be a part of constraint for the manufacturing company. Moreover, the total revenue expected from the sales of the newly launched product would be around 2 million USD in the first year with expectation of around 2500 units of sale. In the second year, the expected sales would be around 3 million USD with 3000 units of sales expectation. Distribution Channels and Place: The distribution process of the product includes various methods of product availability in the market. The different distribution channels are such as wholesalers, retailers, local distributors along with franchisees to avail the product in the market. It can be said that it would be one of the risk factors for TATA Motors to distribute the product through their own factory retail outlets due to the existence of the dominant car manufacturers in the market. However, the distribution of the products through the franchisers in the country would be more effective for TATA Motors in the US markets. Hence, the strategy would facilitate to meet up with the demand, additional requirements in the product features, as well as would also facilitate to forecast the opportunity to launch further new products into the market. Product Promotion: Promotional activities are highly required for expanding the business along with sustaining the corporate position in the marketplace. In this context, there is a requirement of brand positioning in terms of launch of a product in the foreign market. In the present day scenario, the organizations take various steps to sustain in the market through different promotional activities. The product promotion involves two elements such as personal selling and non-personal selling, however, these elements together, are known as promotional mix of the product or the service. Personal selling is a kind of promotional presentation which involves person-to-person communication with the prospective consumer as well as non-personal selling emphasizes on customer relation, advertising of the brand and product along with sales promotional activities. In the existing situation for launching a new product in a foreign country, TATA Motors needs to follow the non-personal approach in terms of promotion of the product in the US market. Since, the customers of the foreign market should know about the brand position along with the features of the products of TATA Motors. The advertisement part is one of the crucial aspects in terms of introducing a product in the foreign country. However, in this context different media for advertising campaigns including print media, television and telecommunication along with the internet mailing advertisement would also be considered. Promotional Budget For First Two Years Of Product Launch Promotional Activities Year – 1 Year - 2 Advertising Print Media USD 5,000 USD 7500 USD 2500 USD 1500 USD 3000 USD 5000 USD 1500 USD 1000 Television/Radio Telecommunication Online Media c. Conclusion The study of starting a new business opportunity in the foreign country along with the various required steps that TATA Motors need to consider in terms of launching new personal vehicle in the US car market have been analyzed. In this context, the increasing sale of personal vehicles in the United States is one of the crucial prospects for the car manufacturer such as Tata Motors. Moreover, the emerging growth in the economic level, such as rising annual GDP of the country, higher income level groups of customer with different age groups, per capita growth along with government regulations are vital components as well as prospects in the US market. In order to succeed in the foreign destination, the company must need to identify the requirements of the customers along with providing the quality products that satisfy the prospective consumers. However, the introductory phase of providing product or service in a market is one of the crucial parts for ensuring sustainability in the competitive market. It is in this context, Tata Motors needs to leverage the certain existing benefits in the growing US car market to spread its global reach and earn more profit. Works Cited Bureau of Labour Statistics, “The Employment Situation —April”. May 11, 2012. News Release. 2012. Heymann, Eric. “US Car Market: Returning to Its Previous Size”. May 10, 2012. Verband der Automobile Industry. 2012. Koontz, Christie. “US Public Library Geographic Database”. May 12, 2012. Preliminary Training Tool, 2004. Kotler, Philip & Keller, Kevin Lane, Framework for Marketing Management Pearson Education India, 2007. Leung, Kwok. & Et. Al. “Culture and International Business: Recent Advances and Their Implications for Future Research”. May 12, 2012. Abstract, 2005. Onkvisit, Sak & Shaw, John, J. International Marketing: Analysis and Strategy Routledge, 2004. Tata Motors, “Press Releases”. May 11, 2012. Media. 2012. The World Bank Group, “Population Growth (Annual %)”. May 11, 2012. Indicator, 2012. United Census Bureau. “Statistical Abstract of the United States”. May 10, 2012. Money Income of Households—Percent Distribution by Income Level, Race, and Hispanic Origin, in Constant (2009) Dollars: 1990 to 2009, 2012. US Department of Commerce. “Bureau of Economic Analysis”. May 10, 2012. U.S. Economic Accounts, 2012. US Department of Transportation. “Federal Motor Vehicle Safety Standards and Regulations”. May 12, 2012. Rules, 1999. Read More