The Marketing Plan For Reva Electric Car

Published Date: 23 Mar 2015 Last Modified: 27 Apr 2017

The automobile industry has been one of the key industries world-wide. With advancing technology, easy and swift transportation has helped the consumers move from one place to another with comfort and pace. As seen in the figure on the left, the developing countries like India, China, Brazil and Korea are way off the trend and hence there is a huge potential for the growth of this automobile market. India, in particular, is on the lowest on the vehicles per thousand people amongst all the developing nations. With increasing revenues and higher GDP growth expected in the coming years, Indian consumers are set to have higher disposable incomes with high spends on wants than on needs.

History of Electric Vehicles

The history of electric cars is a very interesting one. The first electric vehicle was invented by a Hungarian called Anyos Jedlik, who built a tiny car powered by a simple electric motor. Further improvements in battery technology led to electric cars becoming very popular in US/Europe in the late 19th century. But after major advances in internal combustion engine technology, mass production of vehicles by the likes of Ford and GM sent the electric car into temporary hibernation. The energy crises of the 70s again led to a surge in interest for electric cars, but again they failed when it came to mass marketing. But in the last 6-7 years, thanks to some pioneering advances in battery technology and efficient power management techniques, the electric car market has emerged from oblivion and today most major car manufacturers in the world have a product in the electric car segment.

Some companies have also started up exclusively to design and manufacture electric cars - Coda Automotive in the USA, Buddy Electric in Norway, our very own Reva Electric Company. Tesla motor company in the US manufactures flamboyant electric sports cars dispelling the general notion that electric cars are slow, odd-looking cars only meant for pollution conscious consumers.

Some in the industry have ambitious predictions. Diarmuid O'Connell, of Tesla Motors, estimates 3 in 10 cars will be battery electric or plug-in hybrid [1]. Carlso Ghosn of Nissan has similarly predicted that 1 in 10 cars will run on battery alone by 2020. An independent study by Deloitte suggested electric and other 'green' cars will represent a 3rd of all car sales worldwide by 2020.[2]

Indian Markets - Need for electric automobiles:

The Indian Markets saw the surge in electric segment a little late than European Markets. The credit to the innovation goes to Chetan Maini who founded Reva Electric Car Company in 1994.[3] But the real interest towards the electric segment went up in the market after Mahindra & Mahindra bought 55.2% stake in 2010. The rising price level of petrol and the growing concern towards environment in metro cities have attracted a lot of customers lately and the number of potential customers has been growing. We interviewed Mr. A.K.Ambasht (Member Secy of Delhi Pollution Control Committee) to take his perspective on Reva. They distributed REVA among the employees to promote the car on road in Delhi. The basic reasons for the promotion have been discussed below:

1. The pollutants like sulphur and nitrogen compounds (SO2 and NO2) emitted from the petrol and diesel vehicles was increasing at an uncontrollable pace.

a. Delhi alone accounted for total volume of cars in all other metros, leading to extremely large amount of emissions.

b. These pollutants mixed with the air particles to form extremely dangerous compounds, thus resulting in a myriad of diseases.

2. We were increasingly becoming dependent on the fossil fuels (fast depleting). It is known that these sources are not going to last long. Thus there was a need to look for alternate sources of fuel, before the fossil fuels get exhausted.

Battery operated cars do not depend on fossil fuels and also do not cause any emissions, thus serving as a twofold solution to the air pollution as well as the depleting sources problem.

If looked from the Product Life Cycle concept, Indian Market is still predominantly occupied by innovators but the rising fuel prices and Go-Green initiatives by different corporates have boosted the idea of Electric cars. If the growth meets the expected levels Indian Market will easily be under Early Adopters in 3-4 years and the shift to Early Majority will be very quick.

As the final report project the team has decided to interview a few employees of SAP India who encourages their employees to use REVA by giving them incentives in their travel reimbursements.

Reva to Mahindra Reva:

Reva is an electric car which was introduced in the Indian market by Mr. Chetan Maini in 1994, under the aegis of Reva Electric Car Company (RECC). The market for the electric cars in India was not yet ready to accept the same as a mainstream product and the company faced a hard time to manufacture and sell the product. To meet the high technology requirements of the electric car, Reva tied up with reputed vendors to provide a competent and technically sound car to the Indian consumers and launched the first version of the car in year 2001. [3]

Initial marketing plans of the company were focused on explaining the benefits of the electric car vis-à-vis the conventional cars present in the market. Cost of education in addition to the cost of manufacturing was prohibitive in the Indian market. Forecasts of selling 1500 cars a year turned out to be a far-reaching one and the company was able to sell only 300 cars in the first year [4]. This compelled the company to take the car out of the market in first three years of the launch. The focus of the promoter was always on enhancing the product and the marketing was carried out educating the enhancements and the features of the car. Being a heavy capital-intensive industry and low returns, the growth of the company was limited.

Source: Electric Vehicle India, Rekha Salvi, O&N India, Sreehari B. Nambiar, O&N India; FinPro

In 2004, RECC tied up with a UK based firm to market its car into the European markets. The European markets were highly encouraging as the non-conventional fuel cars and especially the electric cars were given special incentives and impetus by the respective governments. The reviews for the car in these markets are found to be satisfactory and competent to the competitors.

The main product features differentiating Reva from the competitors were:

Unique Drive System

Power Pack

Energy Management System

Portable Electronic Tool

Climate Control Seats

HVAC system

Chassis and suspension

Use of indigenous items [7]

Since 2001 to 2010, Reva sold 3500 units, out of which 50% of the sales were in the domestic market, while the rest was from the overseas market.

During the early days of car marketing, the marketing research found that the company was not successful in conveying the message clearly to the potential customers. The following factors were attributed to the failure of the product:

Product was targeted to small families, old couples and female drivers with the idea of promoting small size, easy to drive and slow speed. Though Reva had a beneficial cost proposition of only Rs. 0.40 per km, it was not a cheap car. Other competitors had a strong presence and influence on the targeted audience.[4]

The product was not appealing to the youth of the country and they found the car to be slow in speed, frequent charging requirements and inconvenience for long drives. These people thought the car to be way below their league.

The car was not able to create buzz and excitement in the market despite being the first Indian car to enter in the segment.

There were not enough variants available for the customers to choose from.

In 2010, a large Indian conglomerate, Mahindra & Mahindra acquired a large stake in the company and aggressively took steps to promote the Reva-electric car. Backed by the strong sales channel and a focussed marketing group experienced in the automobile industry, the company is geared up to launch three new variants with a target of selling 30,000 units in next three years.

The new management portrays the willingness to learn from the past mistakes and has brought out globally competent designs and technology with focused investments.

Objective:

To use marketing management concepts learnt in the course to design an integrated marketing plan to improve the market penetration of REVA - Electric car in the Indian Market

CONSUMER BEHAVIOR

Research Methodology:

Design: -

DEMOGRAPHIC SEGMENTATION

To understand consumer behaviour with respect to attitude towards purchasing electric cars in general and then proceeded to evaluate, we created survey and interview templates targeting the following sets of people

Potential Customers : Diverse age groups, occupations, marital status, income

Design Type : Survey & Interview (Similar questions but interview goes into details)

Understand needs of customers who are purchasing a car

Understand attitudes towards non-conventional cars (petrol/diesel versus LPG/CNG/Electric)

Understand consumers' perception and knowledge of electric cars in general and Reva in particular

Understand what sources they are likely to depend on, criteria considered and weights of each criteria considered while making a decision

Current Owners

Design Type : Qualitative Interview

Understand what made them choose Reva

Understand their experience so far with the car

Understand expectations met, exceeded and gaps

Understand post purchase service quality, wear and tear, availability of spare parts

Understand perception amongst friends and colleagues

Dealers

Design Type : Qualitative Interview

Understand the general profiles of people who visit the store

Understand what unique features attract customers to buy electric cars

Understand major concerns of customers

What deals and promotions has the company recently pursued

Understand company future strategy from an insider's perspective

Approach & Execution: -

For potential customers, we did surveys as well as focused interviews. The template for the same is available in the index

Survey: The google form based surveys were floated to groups from two different backgrounds - IT professionals & MBA Students. This helped us capture consumer perception in different occupations. The sample size was around 25 for each group

Interview: We interviewed people of various demographics, marital status, earning levels, gender to get more details of their perception. One of the advantages of using the interview method was that it compensated for some of the limitations of the online survey where it was difficult to get a decent sized sample of married people, 30+ age group.

Some of the interviews were face-to-face and some were conducted over the phone.

The transcribed interviews are available in the Appendix

For the dealer, we conducted face-to-face interview in the Bannerghatta Mahindra showroom. There were some focused pre-planned questions which were answered by the dealer and other details were added as we went on. The interview template is available in the Appendix. We felt that dealer interviews were very helpful not just in terms of understanding competition, market size but it also helped us gain useful insights about customer perception.

For the owner, we tried to understand what their expectations were prior to purchase and how well their expectations were met. We also tried to understand some of the softer issues like service which would be good-to-haves.

Results & Observations:-

Based on the surveys and interviews conducted for the above sets of people, we found the core needs of the product as follows:

Stated Needs: Travel from one place to another.

Real Needs: Easy to drive, comfort and mileage

Unstated Needs: Safety and low-maintenance

Delight Needs: Speed and style

Apart from these there is immense potential for the electric car segment itself to become a premium product in the upcoming years, a potential need.

We were able to analyse and find patterns in the consumer behaviour in decision making for a new car purchase.

Most consumers do not have adequate knowledge of electric cars, don't consider them part of the mainstream car market and do not evaluate it as an alternative when buying a car.

The environmental friendly aspect does not seem to be a major factor for potential vehicle customers and was not the deciding factor even for REVA owners at the time of purchase

Most consumers feel that the REVA is overpriced and not value for money.

Most consumers rated REVA very high on agility and city driving comfort

The REVA is most popular among working women in the 25-35 age range

The REVA is also popular to an extent among college goers in the 18-25 age range, but in this case the buying decision is made by the parent

There are no direct competitors to the REVA as there is no other electric car in the Indian market. It can be considered an isolated product as people who are inclined to buy the REVA

There is a mixed opinion about the aesthetics of the car. Some have compared it to US / European micro-car models like Smart and felt there is a scope for improvement in looks

Tech-savvy people seem to be more inclined to consider buying the REVA

Married people seemed to be relatively more interested in purchasing the car.

SEGMENTATION, TARGETING & POSITIONING

Market Segments:-

Assumptions: In our objective, we have stated that we are focusing on urban middle/upper middle classes for our product. Our consumer behaviour study has focused on this set of people only and the segments that we have considered are subsets of this set

Based on our analysis of the results obtained in the demographic survey and interviews, we have identified the following market segments and a brief description of their profiles:

Initial Demographic Segmentation

The main elements of differentiation among these groups are occupation, gender and age group

Students (Male & Female) in the 18-25 age range

These are mostly under-graduate and post graduate students in urban settings. They use the car to commute to and from college.

Male working professionals in the 25-30 age range

These are mostly urban IT professionals with a earning potential of 6-12 lakhs. They have disposable income for buying a car

Working women & housewives in the 25-35 age groups

These are mostly urban women working and earning around 6-12 lakhs per annum. They are identified to have an inclination for buying electric cars for short commutes to and from office

Note: All within the urban upper middle/middle class superset

Profiling of the Potential Customers:

On analysing the different interviews from multiple clusters, we have profiled 3 segments which we find should be the intial targets for the Reva's new variants

Profile 1: Chintan Buch

# Male, 32 years, IT Professional, Bangalore, 18lacs CTC, Married

Chintan Buch is an IT Professional working in Bangalore and living in small family with his wife and mother. Chintan owns a car and a two-wheeler. He has to travel around 18-20 kms everyday back and forth from office. The recent hike in petrol prices and the Bangalore traffic has pushed Chintan to car-pool for his transportation to his office. He earns around 18 lacs per year and planning to buy a car for his wife for daily household requirements. His wife is not very familiar with driving and hence looking for a car that is easy to drive. Mileage and aesthetics are the two parameters which Chintan is looking for in a small car. When asked about Reva he showed his willingness as he is very concerned about the increasing pollution in Bangalore. Although he feels that that the looks of Reva is very catchy and the car is value for money but he feels that the car should focus for pick-up and performance. On the whole he is convinced with the feature and planning to buy Reva for his wife in near future.

*Refer Appendix A-Interview # 8 for the complete conversation.

Profile 2: Manan Nagori

#Male, 26 years,Self-Employed,Ahmedabad,6 lacs CTC, Single.

Manan Nagori is a self-employed, unmarried individual from Ahmedabad who lives with parents and one sibling. They have one car and 3 two-wheelers. He uses all his vehicles for his daily travelling and seldom uses car for out station travels. He is planning to buy a car to replace one of his two-wheelers. He is currently using a car loaded with LPG Cylinders and not happy with the performance of the car. He is very concerned about the pollution and safety is one of the concerns for Manan. Asked about Reva he looked happy about the features and given a lowered price he is ready to buy it in near future.

*Refer Appendix A-Interview # 10 for the complete conversation.

Profile 3: A.Sarojini

#Female, 58 years, Manager- Entyce Corporation, Bangalore, 12 lacs CTC, Married.

A.Sarojini is a married and working professional living and has a car for her family use. She has no concern for the performance but keeps a care about the aesthetics and mileage of the car. She is not very tech savvy and depends on the salesperson for the specifications of the car. She has a high inclination towards electric cars as she feels that the car should be value for money. Asked about Reva she showed her willingness towards buying the car.

*Refer Appendix A-Interview # 16 for the complete conversation.

Further segmentation based on psychographic research:

After further researching the above 3 demographic segments, we narrowed down our target group to the following

Working Women aged 25-30, independent lifestyle, believes in living life on her own terms. She is modern, yet at the same time she is rooted in conservative culture. She does not believe in being dependent on men and is progressive and has concern for the environment

Housewives in the 25-35 age range, the family may already own a car and the car is being bought for the wife. This type of woman has a major say in the buying decisions of the household which is brought out by our interviews

The women in these target groups felt that REVA gives them the freedom of easily navigating through city traffic and very useful for commuting to work or short distances for shopping. She sees it as a tool to come out of the confines of her household and be more confident.

PSYCHOGRAPHIC SEGMENTATION

After the demographic segmentation, we proceeded to do a psychographic segmentation to understand the psychographic profiles of the people within the demographic target groups, i.e. what is the lifestyle and general attitudes of the people who would prefer this car.

The demographic and psychographic segmentations were superimposed to get a final picture of our target segments

We proceeded by creating 2 particular profiles for the people within the demographic groups that were identified to have a potential for buying this car

Profile 1: Urvashi Jajoria

#Female, 26 years, Business Consultant, New Delhi, 8 lacs CTC, Single

Urvashi is a business consultant working in New Delhi. She lives with her family members. She is independent, creative and believes in her own decisions. She is traditional as well as fashionable, keeps herself a bit informed and loves to party with her friends in clubs and loves shopping in big malls. She travels around 30-35 kms daily for her office for which she uses a car pool. She is thinking of buying a new car. She looks interested in buying REVA if she finds the new model attractive and it fits for her requirements.

*** Based on her responses she fits Strivers/Seekers in VALS Framework of psychographic segmentation.

Profile 2: Rajani Ch.

#Female, 26 years, worked in DLS, Gurgaon, 20 lacs CTC, Married

Rajani worked in DLS Gurgaon. She lives with her husband. She is independent, influences decisions, takes initiatives and looks for value for money. She is traditional as well as fashionable. She travels around 20kms daily. Her husband owns a four wheeler and they are looking for a second car in the family. She looks interested in buying REVA if it fits her comfort and safety requirements.

*** Based on her responses she fits Achievers/Globals in VALS Framework of psychographic segmentation.

We interview people belonging to the above profiles and in this we particularly focused on understanding their lifestyle, views on woman's independence, how they make choices and we then proceeded to understand their attitudes towards electric cars in general and REVA in particular

*Detailed interviews of these people are attached in Appendix B

From the psychographic and the demographic primary research, we feel Reva should target the Achievers/Globals and the Strivers, found to be independent, confident and earning well to be the initial customers for its different variants of the new Mahindra Reva NXR an NXG cars.

Spending estimates of the target segments

Source: The 'Bird of Gold' : The Rise of India's Consumer Market, May 2007, Mckinsey Global Institute

In the coming years from 2015-2025, India is going to witness interesting times when the deprivers, aspirers and seekers would move one step ahead and the disposable incomes of these segments are estimated to be the highest. With increasing disposable incomes, Reva should start early and Catch Them Young.

Positioning Strategy:

The target segment identified is "Working women in the 25-35 age category".

Our positioning line could be

"REVA -Redefining value, just like you "

Although the consumer in this segment is inclined to buy an electric car, we have identified a few perceptual biases against the REVA which need to be addressed

Safety: Most consumers in this category have indicated that they consider REVA to be unsafe. They have a feeling that the car cannot take impacts. Some have also mentioned the fact that the car is tall and narrow and is prone to toppling on minor impacts or even due to road bumps.

But a closer look at the features reveals a different story. Among the smaller cars in the Indian market including the Alto, Nano, REVA has the most solid frame and is more impact-resistant but the company has not been able to communicate this to its audience

Value for Money: Most consumers that we interviewed felt that, at 4.5 lakhs, REVA is probably very costly and they made frequent comparisons to NANO. But our interaction with dealers and owners reveal that if we analyse overall cost over a period of 5 years, taking into consideration fuel costs ( Rs 0.5 per km) and maintenance costs (Rs 600/year), we would realize that the REVA is more value for the price paid. So this particular aspect also needs to be communicated to our target audience.

These perceptions are severely affecting REVA's reputation and our positioning should address these two core issues in addition to having a special appeal to working women. The positioning line should most importantly drive home the fact that it is cheap. Further customer communication should basically enable the customer to understand the arguments behind the whole value.

We have attempted to answer these problems in the detailed marketing plan that follows.

Structural Analysis - 5Cs for MAHINDRA REVA

Company

Product Line

The following are the REVA products that are currently available:

REVAi: It was launched in January 2008 and this was a revamped version of the original REVA. Till March 2011, 4000 units of car have been sold in India.

Some of its features are:

Four-seater - 2 adults and 2 children

Top speed - 80 kmph

Maximum range for full charge - 80km

Time taken for full charge - 8hrs

Consumes 16 units for 8hrs charging (approx. cost for charging once is Rs. 32)

It has safety features such as front disc brakes, a collapsible steering column, reinforced chassis, etc.

REVA NXR: It was branded as REVA NXR City and was launched in late 2012.This car has major improvements over the older models.

Some of the improved features are:

Maximum range for full charge - 160 km

Four-seater - Can comfortably seat 4 adults

Regenerative breaking capability i.e. recharges the battery upon breaking

REVA NXR L-ion: It was branded as REVA NXR Intercity; this was launched in Jan 2009 and it uses lithium-ion batteries instead of the traditional lead-acid batteries.

Some of its features are:

Four-seater - 2 adults and 2 children

Top Speed - 80 kmph

Maximum range for full charge - 120 km

Time taken for full charge - 6hrs

Image in Market

The first criterion that a prospective buyer of car looks at is the price of the car. Since the initial price of REVA is quite high compared to other small cars, there is a general perception among the buyers that it is expensive. Prospective buyers also believe that the looks of the car are really bad. They believe that REVA can be used only for travel within city limits and can't be used for long distance drive unless charging points are made available on the highway.

The users of the car worry that they have to replace their batteries every few years. They think that REVA possesses high safety risk due to the presence of battery inside the car and the possibility of toppling over in case of an accident. For these reasons, most people do not see a positive Return on Investment on this car. However, some users believe that REVA is easy to drive, especially in crowded area and the service offered by the company is excellent. Also, they believe that the body of this car does not get dented very easily which is a strong selling point in the Indian market because of high traffic and ruthless driving.

Technology & Experience

REVA has an in-house electronic system that manages energy usage better. The company has been bringing in better and cost-efficient chargers and batteries that take 6 to 8 hours to fully charge. It has advanced telematics systems and superior systems to determine battery conditions.

The users of REVA are highly satisfied with the technology embedded in the car. High charging time is the only perceived disadvantage.

Goals

The goal of the company is to produce economical and convenient electric cars at a time when there is a worry about climate change, energy security and high oil prices. Mahindra wants to advance the design and production of REVA worldwide.

Collaborators

Distributors

After being acquired by Mahindra, REVA's distribution network has received a sudden boost as it is now being distributed through Mahindra outlets which have a wider reach into metros (more showrooms in a given metro) and Tier II cities.

Suppliers

To support its huge plant in Bangalore, REVA has built up an extensive chain of suppliers and component manufacturers. Recently, it was announced that REVA had agreed on a deal with Continental India to provide components for its basic functions controller (BFC), immobilizer and remote keyless entry system.

Customers

Market Size & Growth

India, a growing economy, has tremendous potential for the growth in the automobile industry. With the passenger vehicle density in India being only 13 per 1000 persons, as compared to the other developing and the developed countries, there is a huge scope for the different varieties and brands of automobiles in India. The following report from ICRA gives a holistic view of the growth potential of this segment.

Source: CRISIL Research, SIAM

Source: Indian Passenger Vehicle Industry: Growth Momentum to continue, ICRA

Source: Maruti Suzuki, India Passenger Vehicle Market, Vivek Kumar, Corporate Planning, April 2011

The above market study made by Maruti-Suzuki demarcates that the income levels of the consumers is increasing. To have a long-lasting effect, Reva should target the top brackets early and 'Catch them Young'.

After our segmentation and targeting exercise, we have narrowed down our target market to urban middle income families.

From census data, we obtained the statistics on A1, A2 group for 6 Tier 1 cities. From this, we estimated the number of these families in the Tier 1 cities.

Assumptions:

The market consists of A1, A2 populations from the Tier 1 cities i.e. Delhi, Mumbai, Kolkata, Bangalore, Chennai and Hyderabad.

4 people per family

10% of the urban population belongs to A1, A2

40% of the families in Tier 1 cities in A1, A2 category fall under our target segment

The total number of families in Tier 1 cities in A1, A2 category is 12 lakhs (47,889,988 X 0.1 / 4). Hence, the potential size of the market is 12 lakhs. The size of the target market is 4.8 lakhs (40% of 12 lakhs).

This category will grow in size with rapidly increasing urbanization and movement of jobs to urban areas. The Urban population growth (annual %) in India was last reported at 2.32% in 2010, according to a World Bank report published in 2012. The potential size of the market will grow to 15 lakhs and that of target market will grow to 6 lakhs (40% of 15 lakhs) in 10 years.

Market Segments

The major segments identified after the STP exercise (Psychographic and demographic segmentation) are:

Housewives aged between 25-35 belonging to urban middle class families -

These women belong to the group of innovators, who are sophisticated, well-informed, seek novelty and worry about environmental pollution. Here, the person who initiates, influences and decides the purchase of a car is the husband and the user of the product is the housewife.

Independent working women in the 25-35 age range -

This group also falls under innovators who are successful, have unique tastes and are concerned about environment. In this case, the working women are the ones who initiate, decide, buy and use the car. She may be influenced by friends, review of cars available online or sales person from showrooms.

Channel

The customers can access REVA car from Mahindra showrooms present in tier - I and majority of tier II cities.

Consumer Information Sources

Since most of the customers are innovators, they mainly rely on the information available on the internet and online car review websites. Here, the existing users of the car also share their experience with the car and provide review on the car. Information about REVA is also shared through friends and family who have used or heard about the REVA. Some customers, who are inclined to buy a small car, directly contact the sales person in showrooms and understand about the various options available to them.

Trends

The electric car market is slowly growing with some state governments giving subsidies, refunding Value Added Taxes (VAT) and offering lower road tax subsidies. With the advent of technology, the cost of certain important parts of REVA like battery, charger, etc. will eventually come down, thereby, reducing the initial cost of REVA car. The company is also trying to address most of the current issues seen in REVA like improving its looks, making it safer, etc. It is also believed that in the future, people will become more concerned about the environment and eventually move to cleaner sources of energy (even through government regulations). Hence, the market size for REVA car appears to show a growing trend.

Competitors

From our interviews with dealers and our study of the electric car market scenario in India, we infer that there are no direct competitors to REVA. But there is a potential competitor in the form of Nissan Leaf which plans to enter the Indian market if the proposed subsidies for electric vehicles happen as expected. The company has already sold over 20,000 vehicles in Japan, Europe and the US and would want to enter the Indian market. However, the Nissan Leaf is priced very high at Rs. 12,00,000 and may not be in direct competition to REVA which is priced much lower and further.

Tata motors currently produces an electric version of Indica Vista which has already been launched in the European Market. In a few years, this car would be launched in the Indian market at a price of Rs. 6,00,000. This car has a higher pick up speed, charging capacity and mileage. Tata motors is also planning to introduce an electric version of Tata Nano which could be the world's cheapest electric car. We can clearly see that REVA has an imminent threat from Tata motors which is planning to capture both higher-end and lower-end electric vehicle consumers. Hence, REVA should come up with the most relevant value proposition quickly in order to remain in the business.

Another kind of competitor is the conventional cars like Maruti Alto, Skoda Fabia, Maruti Swift, Hyundai i20 which are favourably priced compared to the REVA and many consumers may see it as a safe alternative to REVA especially since it comes from a very established brand houses.

Context

Political & Regulatory Environment

This August, the heavy industries ministry announced the launch of a National Mission for Electric & Hybrid Mobility in which the Govt. plans to spend around Rs 23,000 crore to "make passenger electric cars more affordable" to the Indian consumer.

The same ministry estimates that there are around 6-7 million electric vehicles on Indian roads, but they are mostly made up of buses and some two-wheelers and very small representation from 4-wheelers which is estimated to reach to 6-7 lakh units by the end of the 8 year period of this Mission. Even in this case, there is a significant market that could be tapped by electric car makers.

Some of the Indian state governments have provided subsidies, reduced VAT and road-taxes in order to promote eco-friendly electric cars. Soon, certain international environment treaty might come in place which would promote the use of clean energy. We can infer that the political and regulatory frameworks that will be implemented in the years to come are going to be favourable to the electric cars.

Economic Environment - business cycles, inflation rate

The economic environment could not be more favourable. The Indian middle class is growing at an appreciable rate and the disposable income available with them is also increasing. The income, affordability and awareness levels in Tier I cities has also gone up considerably. The fact that the Mahindra plant is setup in Bangalore to churn out 30,000 units per year is a clear indication of the Mahindra's confidence in the economic scenario and the purchasing power of the Indian middle class in the future.

The growing petrol/diesel rates are also pushing more consumers to think about non-conventional cars like electric/hybrid cars. The dealer, we spoke to at the Mahindra showroom at Bannerghatta road, shared this view and told that sales have picked up around July/August this year. He attributes some part of it to growing fuel costs and expects this trend to continue.

Technological Environment -

The technology in the electric car market is growing very fast with a lot of innovations. The advancement in Lithium-ion battery technology has led to vast improvements in mileage, charging time and lowered weight. In future, the company is expected to develop technologies that will make the car more safe and convenient. Technological development in electronics and Information Technology (IT) will directly help in improving the intelligence and control of the car.

THE MARKETING PLAN - 4p analysis

PROMOTION:

Source: http://kcmgmarketing.com/the-3-marketing-pillars/convert/marketing-funnels/

To have an integrated Promotion plan, we have devised a structure to be followed for converting the potential target consumers into getting aware of the product and helping them use the same.

Inspired from: Marketing Management; Kotler, Keller, Koshy, Jha

To have better visibility of the brand, an integrated promotion plan should be implemented. The main aim of the integrated promotion is to effectively convey the swiftness and trendy side of REVA.

Mega Re-Launch for better Public Relaions

The re-launch should span world-wide, creating a buzz about REVA. This launch should cover the front page and headlines for a while. The launch strategy should first create the anticipation, this can be done by creating an advertisement with a car which is hidden under a gift wrap , there should be a virtual countdown in TV for the launch. The launch ambassador could be a stylish sports person or a youth icon rather than the normal cine celebrity. After the formal launch, the ambassador will lead a rally of REVA where the old customers and the future probable customers will participate.

Media Promotion:

TV Advertising

The advertisement in the media should now focus on the agility and ease of use of the car for women & housewives in the 25-35 age groups. The independence of travel that the women can attain using REVA is the highlight; here REVA will be pitched as a reflection of their confidence. The ad should portray a person who reflects the attitude, progressiveness.

Use of Saina Nehwal as a Brand ambassador:

Using Saina Nehwal in the ads might be a good idea. Saina Nehwal has achieved the pinnacle of success in Badminton on the world stage through her hard work and talent and reflects the success story of the modern Indian woman. This coupled with her middle class roots and dressing sense will appeal to the women in our target group and they would immediately be able to relate to her. Currently, she endorses Herbalife, Top Ramen noodles and Fortune cooking oil which are mostly in the health and wellness category and she could be a good fit as she would be very well known to urban audiences

TV Program Sponsorship:

REVA can be a sponsor/co-sponsor for Roadies & Splitsvilla. These reality shows have good viewership among yound woman audineces and REVA's presence willwhere REVA can be promoted. These

CINEMA :

REVA can tie up with film makers to feature the REVA car as being driven by the female protagonist especially in movies where the focus is on the woman. This was a strategy used by Beetle (Beetle used it with Deepika Padukone in the movie 'Break ke Baad') and REVA can gain benefits using the same.

SOCIAL MEDIA:

Facebook, twitter, blogs, Picasa are the mediums. This campaign will be two-way, thus will have more credibility.

PRINT MEDIA:

Reva should target magazines like Vogue, which carry direct content for the women across the globe, including India. With the increasing awareness of the Reva variants, it is gradually enjoying high coverage and could aspire to be in the range of Top 5 Car Models considered by Women. Currently, the title holders include VW Beetle, Nissan Micra, BMW and other. With a strong marketing plan in place, Reva could become one of the coveted assets of women in India.

REVA -Redefining value - just like you.

ONLINE EXPERIENCE: REVA can set up a exclusive web page with a panoramic inner and outer view of REVA. This can also include a 3D image of the same.

ONLINE CONTESTS: Competitions of photography, short ad film contest and tag line contest, web auto re-modelling competition, gaming console creation, gaming contest and website creation of REVA at national level will create buzz about REVA. Blogs and tweets with expert advices on the Auto market.

DIRECT PROMOTION:

Own REVA for One day

This will be a promotion competition mainly for IT professionals in all the Tier 1 metros. A treasure hunt game can be conducted in which some clues will be given and the competitors will drive around the city in the REVA to crack the treasure hunt. This will give them a feel of how agile the car is and how suitable it is for the metro traffic. The competing candidates can be interviewed at the end of the day to find out how they felt and some selected videos can be placed within advertisements to create that personal association with similar women. This could also be a source of word-of-mouth publicity

ROAD SHOWS:

Road shows in colleges, educational institutions and corporate offices with specific offers will enhance the direct connect and increase the positive perception of REVA.

INDIRECT PROMOTION: Tertiary long term promotion:

LITERARY PROMOTION:

REVA can also advertisement through stories, books and novels where the car used by the eco sensitive, independent and imaginative person will be REVA. This should be mentioned in the story in a very subtle and blending manner.

CONSUMER PROMOTION

As per the report published by Deloitte in August 2007, 59% of consumers in India were the potential first movers while 34% have been willing to consider an electric car instead of the normal petrol/diesel cars.

It is important that the consumers in the category of 'Might be willing to consider' should be converted into the 'potential movers'. The major barrier is the price comparison with the existing cars. We propose to have consumer promotion which would convert the segment of aware to the users, convert the ones under consideration to conversion, which would realise the effect of excellent value proposition and would ultimately lead to Word of mouth marketing of the cars.

CUTTING THROUGH THE METNAL PRICE BARRIER - THE GREEN CARD

One of the main concerns identified about REVA in our interviews is that it is perceived to be very costly. However, the running costs are very low and the overall lifetime cost of the car tends to be very low. We should somehow convey this message to the end user in a way that she/he understands.

End users are somehow not impressed when you educate them about running costs and they would tend to see the fixed cost of the car as the value of the car. One way of cutting through this mental barrier is the introduction of a loyalty card - free 10,000kms of charging!! . This can be used as a complement to the quick charging point tie-ups with petrol bunks. Customers can use this electronic loyalty card and redeem it for charging at petrol bunks.

GREEN CARD

Lasts as long as your car

10,000 km

10,000 kms of charging will be equivalent to worth only Rs 4000 of electricity charging(40p/km). Now this is a very small amount that can stimulate a lot of buying. Customers will immediately start comparing this with how much they would have to spend for a conventional car for the same 10000 kms and the humongous difference will immediately evident to them. However, this is contingent on Mahindra's success in establishing a strong chain of quick-charging points.

PLACE

Channels and Locations:

Reva follows the 1-level consumer marketing channels where Mahindra Reva sells through authorized dealers and showrooms located over 39 Reva dealers cross 29 cities in India. They cover all the Tier 1 cities including Delhi, Mumbai, Bangalore, Chennai, Kolkata and Pune and some Tier-2 cities like Calicut, Coimbatore, Jodhpur, Kota and Raipur. They should plan to open some new showrooms in growing cities like Patna, Ranchi, and Kanpur etc. and offer Dealer promotions in such cities.

From the Mckinsey report of population and household disposable incomes, we can see that the Tier-1 and Tier-2 cities form a major chunk of the target segment. Interesting insight from the same is that some niche cities like Chandigarh, Jaladhar, Goa, Coimbatore and others have huge household disposable incomes densed in smaller cities. These cities could play a major role in the coming years and hence specific marketing plans must be adopted to make Reva popular amongst this high income population.

Product

Points of Parity and Points of Differentiation:

Mahindra Reva has been designed with the following points of parity and points of differentiation to gain an advantage and give options to consumers over other small cars in 4-5 lakss:

Points of Differentiation:

Use of non-conventional fuel: The recent surge in the rising fuel prices has forced the Indian consumers for an alternative to conventional fuel cars. Mahindra Reva gives an option to the consumers to buy an electric car and look for long term savings in fuel expenses.

Low maintenance and servicing charges: After doing an interview with the dealer we realised that maintenance cost is around INR 300 and that too once in every six months. This servicing cost is very low in comparison with petrol/diesel small cars which cost an average INR 5000-8000 for every four months. Also due to use of electricity the life of motors and other components are longer as compared to combustion engines in conventional fuel cars.

High fuel economy: The mileage of REVA comes around 40p per km which is very high in comparison with the mileage of conventional fuel cars which is an average of Rs 5 per km. Hence such an excellent mileage attracts middle class family and especially young independent women for their daily travel.

There are some special features in the new REVA NXR over its predecessor Reva-i which is as follows:

***"Mobile app control: A unique app which help you to check on the car's charging status on your phone, switch on the AC remotely before you reach the car to cool it, or even unlock some reserve power using your phone

Easy to drive: For those who have been hankering after an automatic, the Reva NXR is a step better. Electric cars have excellent torque, which means pick up will be much faster than your average petrol hatchback in city traffic. Its compact size, AC and light weight will make it comfortable and easy to handle for daily use."

***Reference: http://www.cartoq.com/what%E2%80%99s-new-and-exciting-about-the-top-5-upcoming-launches/

Points of Parity:

After Sales Service: The association with Mahindra has given an edge for REVA which is now spread across 29 cities with its dealership and after sales services. Since the car is generally bought for in-city travel, the presence of 4-5 service centres in a city on an average will solve the purpose for Reva

Space: The new Reva NXR is designed perfectly for a family of four members and gives enough leg and head space for both the front and back seats.

Style and Looks: The new and improved sleek design attracts the consumers and it proves to be very swift in heavy traffic conditions.

Value for Money: The consumers find the car a perfect fit for value for money in hatchback segment due to efficient fuel economy and low maintenance cost despite high initial costs.

Service - Quick2Charge points at petrol stations

One of the major concerns about day-to-day usage of electric car is charging. The car needs to be charged overnight at home for the requisite period of 6-8 hrs for it to be fully charged so that it can be used over the whole range the next day. Sometimes, due to time constraints or lack or convenience, the user may need charging while she is on the go. To solve this problem, Mahindra REVA introduced the Quick2Charge feature in which the car can be quickly charged in 15 mins at a high voltage to give it a range of 25 kms.

To make this feature available to users easily, REVA can tie up with petrol stations in the Tier 1 cities to install the Quick2Charge facility at select petrol stations. This will address one of the key concerns of consumers which is inconvenience of charging.

This can also be used to drive one of the promotional activities described in the Promotions section.

Price

During the initial phase of Reva campaigning in the early 2000s, the price of Reva was considered to be very high compared to the features available in the car.

As per the Cost v/s perceived benefits chart plotted below (Source: Perceptual Map-MUL), it is observed that the Indian consumers perceive the low cost to be the equivalent of the lower benefits and the higher cost to consumer is considered to be providing higher benefits.

Source: Positioning-Small Cars, Perceptual Maps-MUL http://www.scribd.com/doc/19046599/Positioning-Small-Cars-India

Consumer Buying Pattern:

As per the report by Deloitte conducted on the buying pattern of the Indian consumers, it is found that around 65% of the Indian consumers prefer the cars to be less than 7 lakhs. More than 50% of this segment prefers a car priced between 4-7 lacs which is more than the cars bought priced below less than 4 lakhs. The consumers are ready to shell out more money for better benefits available in the car. However, the consumer perception of benefits is very hard to measure and hence it becomes difficult for the manufacturers to put a value to the better value proposition available in the cars.

Source: Gaining traction: Will consumers ride the electric vehicle wave? India Results by Deloitte

Reva Pricing Model:

With high competition in the segment, it is important for Reva to choose a price which would evaluate the customers' perceived value of the benefits available to them and try to match the perceived price of the customers. In absence of the government subsidies for the technological innovations, it is imperative for the firm to accurately measure and charge for the benefits provided.

Could Reva charge a premium for Green Technology?

Due to the high technology costs involved in the new electric battery technology and for setting up adequate infrastructure, the overall costs for the electric cars are going to be higher compared to its competitors. Green Technology is not perceived to be one of the premium services in India.

As per the Deloitte survey conducted on the consumer behaviour, the results show that 60% of the Indian consumers are not willing to pay any premium specifically for the green technology, and the total expected premium that Reva could charge is about INR 25,000, which is very miniscule compared to the overall costs incurred by the company for the technology. Majority of the customers do not consider green technology to provide any significant benefits and hence would not pay a premium for such differentiation.

Source: Gaining traction : Will consumers ride the electrical wave? India Results by Deloitte

Consumer Perceptions about the Electric Cars

Also, as per the survey conducted by us (for details please refer the exhibits for the survey quetionss), 59.09% feel that Reva stands for being fuel-efficient and is eco-friendly. If the advantages are combined, the eco-friendliness aspect of the car outweighs the fuel-efficiency and hence it is not efficiently conveyed to the customers. 36.36% of our survey respondents feel that electric cars are too costly and they stand for low power. Though the initial cost of the car is high compared to its competitors, the overall cost of the car is less than its competitors.

As per the historical buying patterns of the Indian consumers, it is believed that the Indian consumers believe in the following benefits before making the buying decision:

The initial cost of the car outweighs any other benefit available to the consumers. However, the price is referenced against the available potential competitors in the category or the segment. It is important that Reva portrays itself as a Premium Compact Car in competition to the likes of Skoda Fabia, Hyundai i20 and Maruti Swift to gain a competitive advantage in the initial cost by providing better features inside the car interiors and exteriors.

After the initial cost, the most important factor is the fuel efficiency of the cars. With a cost of 0.5 INR per km, Reva electric car comes out to be the cheapest option amongst all its competitors in the petrol/diesel cars. However, this needs to be properly conveyed to the customers for charging an appropriate premium in the initial price of the car.

Post-sales services like the maintenance costs and the ease of availability of the spares form the next most important criteria for developing the trust amongst the customers. With the acquisition by Mahindra, Reva would be able to utilise the wide network of dealers and expert man-power for serving the customers for their servicing requirements.

Running Costs for Consumers

Electric Cars

Petrol/Diesel Cars

1.

Yearly Running Cost

Low (INR 0.5/km)

High (INR 4/km)

2.

Yearly Maintenance

Low

High

3.

Battery Replacement

Moderate

Low

Other freebies and interiors and exteriors do form the criteria of selection, but for a small section of the Indian consumer.

Valued Features Provided by Reva - Perceived Value Pricing

Reva provides ease of handling, gearless transmission and all-informative electronic dash-board, highly regarded by the targeted segment of women. Reva could use these technological advanced features to convey to the consumers and charge a premium compared to the other competitors. Reva needs to market its superior features, not based on its technical advancement but based on the customers 'perceived benefits accrued due to those features.

With advent of the Mahindra management and their experience in dealing with the Indian consumers for a long time, the pricing model seems to be in better hands than the technocrat CEO of the earlier Reva cars, Mr. Maini. Below is one of the statements provided by Mr. Pawan Goenka of Mahindra & Mahindra, leveraging the experience in pricing of the new variants of the car.

"For the success of electric cars, affordability is the key. And we have learnt that the customer may not be able to pay more than 15-20% premium on electric cars. Our endeavour is to offer our products within that range. The extension of subsidy through new electric vehicle policy will be the key," said Pawan Goenka, president-automotive, Mahindra & Mahindra.