Assignment 2: Tata Indica

Group 2:
Mahesh Yadav MBAEx 28/13
Neha Singh MBAEx 37/13
Vivek Rai MBAEx 64/13
Introduction...........................................................................................................................................2
Special Features of Indica..................................................................................................................2
Launch...............................................................................................................................................2
Customer Service...............................................................................................................................2
If you are the product manager of Indica: Would you continue or kill off the Indica product line?
Argue your case.....................................................................................................................................2
Threats and weaknesses to/of Indica................................................................................................3
Contribution Analysis.........................................................................................................................3
Product Mix.......................................................................................................................................3
Customer Demand.............................................................................................................................3
If you were told by your senior management to continue with the Indica line, how would you attract
the regular (non-taxi driver) consumers?..............................................................................................3
Introduction
Indica was the Tata’s entry into the passenger market and was launched as ‘more car per car’. It was
the first completed indigenously without financial or technological collaboration with a foreign
automobile manufacturer. The project incurred a massive $400 million. It was India’s car- Indica.

Special Features of Indica

 Family car with lot if inside space and easy manoeuvrability
 Steel Body
 Safety features like anti-submarine seats, ample zones, collapsible steering wheel, impact
absorbing bumpers, and side impact beams
 Fuel Efficient: Diesel version was rated to be best in the Operating Cost Category
 Affordable and had contemporary design
 Later stages; priority credit to customers by some banks
Launch
Tata Indica was heavily successful with 1,15,000 bookings within a week of launch and generating a
cash inflow of Rs. 30 Billion. It became the country’s largest selling car.

It helped the company achieve a market share of 14.1%. The product was very aptly positioned. The
success of the Tata Indica can be attributed to its customer-centric approach to offer customers a
product as per their expectations.

Customer Service
Tata’s invested heavily in customer service to enter into the passenger market. Trained staff,
appraisals connected to customer satisfaction, increasing authorized service outlet. They went to all
lengths to provide greater customer convenience.

If you are the product manager of Indica: Would you

continue or kill off the Indica product line? Argue your
case

In 2017, Indica’s share had reduced from nearly 90% to a less than 2% of the total units sold. The
company’s current product portfolio contained new products which enable it to compete in various
passenger vehicle market categories. Hence, the above question arises.
So, if we plot the units sold with year, following is the product life cycle graph for Indica:
 Numbers
160,000
140,000 142,440
138,562
120,000 116,273
106,301 110,358 104,841
100,000 98,318 99,900
94,717
80,000 77,911
76,482
60,000 59,713
53,239
50,407
40,000
38,734 36,712
34,738
20,000 23,639

0 5,753
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

The product seems to be in declining phase as per the graph. As Indica’s product manager, I would
kill the Indica product line.

Threats and weaknesses to/of Indica

 Competition from other big automobile giants e.g. Hyundai Santro, Renault Pulse, Fiat
Punto, Honda Brio, Nissan Micra
 Competitive products offering same level features at a lesser price
 Tough competition within the hatchback segment
 Difficult to detach form the Taxi segment though it is priced higher

Discontinuing a product involves various dimensions, but the following were considered in our
argument:

Contribution Analysis
Indica was very profitable initially generating record cash flows, but currently with Tata’s PV growth
at 19%, Indica accounted only about 2% of the units sold. It had fallen from 90% to 2%. So, the
contribution has fallen way below what it used to be.

Product Mix
Tata’s had a very large product mix by 2018 and had various cars in multiple passenger segments.
The company’s current product portfolio contained new products such as Tiago, Nano, Indigo, Sumo,
Sumo Grande, Safari, Safari Storme, Aria, Zest, Bolt, Tigor, Hexa and Venture, which enable it to
compete in various passenger vehicle market categories. These product lines are capable of
retaining Indica’s customers.

Customer Demand
The demand for Indica has decreased as is evident from the number of units sold. Also, for the
general perception at that time people are considering Indica to be more for taxi segment and as for
personal vehicle.

With the above factors in mind, Tata Indica should be discontinued.

If you were told by your senior management to

continue with the Indica line, how would you attract the
regular (non-taxi driver) consumers?
Tata Indica would require to hold on some loyal customers and also attract new customers to
increase sales. And for that to be from personal segment, it would need to revamp itself. There is a
lot of competition in the market and some cannibalization as well. Tata Indica needs to understand
customer behaviour, so to comprehend why other cars are being preferred over it. Probably a
customer survey would be helpful in the scenario. Indica needs to be come in the Awareness set of
the customers again.

Following are few steps that may help revive Indica product line:

 Tata can promote it using media that has not used before. We could have retailers
promoting their product, or use blogs that customers share to influence others
 Tata Indica was positioned as the complete family car; the current positioning needs to
be modified as to why Indica and not the other cars in the same segment. Indica is the
indigenously manufactured car, if we can bring the Indian(apna) element to it, it may work
 Indica also needs to build a story around the product so that we are able to attract the non-
taxi segment
 As mentioned earlier, probably by a customer survey we need to check the background of
our buyers and non-buyers to target effectively
 Product pricing needs to be worked upon to make it more competitive in the market
 We could also get some celebrity endorsement for the product, as consumer behaviour is
influenced by such scenarios
 We can offer free comprehensive vehicle health check-ups, free labor (through the warranty
system), special schemes on lubes, along with various value-added services.

Based on the above points we need to identify the customers, expand our base, engage with them
through story telling or experiences and finally use them to advocate our product. Advocacy
increases brand loyalty and it is a better form of marketing then company driven marketing.