My commentary examines the recent acquisition of Tata Motors of two iconic brands- Jaguar and Land Rover from Ford Motors at a staggering amount of $2.3 billion. Despite being well known brands, they are suffering losses. After Tata Motors’ take over, they were strategizing to launch these products in the Indian market which has huge growth prospects. The real challenge was in these brands attracting customers away from rivals in the Indian market. Simultaneously Tata Motors has launched Tata Nano to capture the Indian market for small cars. This will be reinforced by launching light- weighted aluminium and hybrid cars from Land Rover.
With help of SWOT, Ansoff Matrix and Asset led Marketing my commentary will examine how successful will be the launch of Jaguar and Land Rover cars in India.
SWOT analysis is a useful decision-making tool that is used to assess the current and future situation of a product, brand, company, proposal or decision. It considers both internal and external factors that are relevant to the issue under investigation.
The acquisition of the two global brands- Jaguar and Land Rover acts in a crucial way to increase and develop the brand reputation and the quality of products for Tata Motors. It provides plenty of opportunity to the Indian consumer and the developing Indian automobile market can also help the launch of brands in the long-term. It can reap economies of scale through component sourcing and low cost engineering.
With different product portfolios for both brands it will be a challenging task ahead to market the same in the price sensitive Indian market. But this could be overcome through proper market research. Another concern is the diminishing image due to the continued losses and a de motivated work force due to the change in management. With right training and incentives and proper marketing strategies the company can convert these negatives to strengths.
This launch is a great opportunity for the Indian customer and target the growing Indian market. Automobile market is developing in India and placed with launch of Nano, Tata Motors will be in a good position capture a larger share of the market.
Increasing fuel prices combined with global meltdown will be a challenge for the company to stay afloat and over come the losses. In addition the strong competition can threaten the expected sales of the company. However the inherent financial and managerial strength of the conglomerate should be able to let the company withstand the challenges and move ahead. A danger that remains is that with the new ownership international brand loyalties may change and customers may move towards other models in the market.
The Ansoff Matrix is an analytical tool that helps managers to devise their product and market growth strategies. It consists of four growth strategies namely- Market penetration, Market Development under new and existing and markets AND Product development, Diversification under new and existing products.
It refers to the high risk growth strategy that involves a business marketing new products in new markets. Parent companies can benefit from having a presence in a range of products and markets in different regions of the world.
Tata could continue with the same strategy that it had adopted for the UK for the rest of world. The estate, coupe and open saloon models of Jaguar and the Freelander and Range Rover sport of Land Rover selling in the existing markets UK can help them to gain profits and increase in sales in other markets due to the reputation of the brands.
For the new models that are planned to launch, promoting and advertising can be a good choice for the firms to maintain their position in the market and to attract more consumers and build customer loyalty. Tata Indica and other commercial vehicles like Tata Ace are examples of Tata’s market penetration strategy that exist in the existing markets and are still earning them great profits.
Tata Motors are launching the smallest car the famed Tata Nano in the Indian markets which is a new product by the firm and launched in existing markets of India and other countries where Tata Motors operate. This car can be useful for the firm as they can easily generate profits through this product as well as their brand name. Also, the firm can compete with other businesses in the same market with the help of these products. Tata Starbus and Tata Xover are other new products that have been launched by Tata Motors in India and other existing markets of Tata Motors.
The new products planned by Tata Motors through the Jaguar and Land Rover brands can be categorized in diversification. The company plans of manufacturing hybrid, electric and bio-fuels based and environmental friendly cars with the help of latest technology through both of these brands which can be useful in boosting the brand image of the firm. Also, there may be an increase in the profits of the firm as the hybrid cars are said to be the future of automobiles in order to save the earth from pollution. These new products launched in the new markets of India and others can be termed as diversified strategy of the firm. Tata Nano can also be included in this strategy as it is also a new product and is planned to be launched into new markets of African and Asian countries.
Asset led marketing is a strategy that is adopted by the business for the sales of their products or services. Here, the firm uses its intangible assets for introducing a new product in the market. Tata Motors is a well-established and well-known firm and a part of the parent company Tata and Sons. Thus, in order to launch its products or services in the market and start off with immediate sales and profits, Tatas can use this which may even be applicable for launching the two automobile brands. Tata Motors have been in the news for past several months due to the launch of the world’s cheapest car in India- Tata Nano manufactured by their own company. Simultaneously launching two brands can help Tatas in gaining a lot of customer attention and thus a larger customer base. The well established and elegant brands with the giant prestige of Tata Motors can help the firms in garnering huge amounts of profits and gaining control over their competitors.
The biggest advantage of this acquisition is that the firm might see an increase in sales of the cars due to both firms’ worldwide luxury brand reputation and also due to the services and quality provided by the cars.
But at the same time, the number of competitors in the booming automobile market of India has increased and finding their way out to satisfy the customers with different marketing strategies can be very costly for the firm.
Tata Motors can implement various strategies such as advertising and also, various schemes can be used which guarantee consumer satisfaction and can also prove to be a part of customer attraction. These strategies can prove to be useful in boosting the brand image and the sales of the company as well.
Short- term problems faced by the firm may be the recovering of the costs that has been put into the acquisition and the launch of Jaguar and Land Rover cars. The high manufacturing costs of Tata Motors, Jaguar and Land Rover might prove to be another reason for the losses in the accounts of the Tata Motors. The long-term problems can be an increase in competition as the Indian automobile market is developing at a rapid rate. If the company suffers losses, then there might be the need for job redundancies, thus leading to worker de-motivation.
To conclude, the acquisition of Jaguar and Land Rover brands may be risky due to the global slowdown but Tata Motors with its brand name and established presence in India can succeed in the long run.
Tata Group, a huge multinational giant worldwide can capitalize through cross-subsidization. I think that by promoting the products and launching it along with Tata Nano will be useful as each can be a backup for the other in the future. The workforce can be motivated through good learning experience as they may have access to the technology used in manufacturing these premium cars but at the same time, if the products fail to create a mark on customers, the workers may feel insecure as job redundancies may be adopted by Tata Motors to struggle with their own financial portfolio.
· Jaguar and Land Rover have a respected brand image in the global markets for their luxurious cars.
· A good move for Tata Motors to enter the luxury market.
· A global visibility for the owner of the company as a sprawling conglomerate.
· Benefits from component sourcing, design services and low cost engineering.
· A good learning experience for the workers.
· Both brands have a vast and a different product portfolio.
· Unavailability of premium auto parts at the Indian auto parts suppliers and thus, the need to import.
· Diminished corporate image of the brands due to massive losses in the past few years.
· De-motivation of workers due to redundancies and job cuts
· Opportunity for the Indian customers to have near access for driving premium cars.
· India is a developing automobile market and thus, a useful step for the long term.
· Simultaneous launch of the Tata Nano and other models can generate higher profits and develop their control on both the upper and the lower and middle class market.
· Range of products with different prices helps them to diversify.
· Reinforcement of globalization.
· Negative impact on the car sales of the brands due to economic meltdown and global recession.
· Lead to value-destruction due to lack of synergies and high-cost operations.
· Prohibition of establishing a stronger market base and increasing sales due to the number of rivals such as Audi, Mercedes, Porsche, BMW, Lamborghini.
· Increase in fuel prices.
· Shifting brand loyalty due to change in ownership