A market entry, distribution strategy and brand building plan and an annual operating plan for Financial year 2021-22.

Assignment Taken

Prepare A market entry, distribution strategy and brand building plan. Prepare an annual operating plan for Financial year 2021-22.

Case Understanding

Climate change is universally acknowledged as a severe and growing threat to humanity. Automobile vehicle emissions are a key factor to climate change. While the automobile industry throughout the world is working hard to address this, India has made little progress in this area. Considering India’s high dependence on fossil fuels and large market available for the automobile sector, Government of India is taking major steps to promote Electric vehicle usage in India. Government of India has set a target of 30% adoption of electric vehicles by 2030 in primarily two-wheeler, three-wheeler, and commercial vehicles segments. Identifying this as a need of an hour, a group of entrepreneurs are looking forward to this opportunity to foray into the business related to “Electrical vehicles”. They have a team of 8 members and a limited financial capital of 46 L as corpus funds and 60L available as a loan amount. Considering all the constraints what market it should enter, where they should invest and what should be their distribution strategy. The case also asks about the brand building plan and how to take the idea of start-up forward. Now company want to set up Operational Plant for the financial year 2021-22.

BCS Solution Summary

After Market and Company assessment, it can be inferred that there are equal challenges as well as rewards that a company might face as it enters the industry. Company was assessed on the product types and customer segmentation. The target customer was people from middle and upper class who are trying to look at best possible alternative in terms of design and at most affordable price for them, market for electric vehicle was assessed and possible challenges were identified. Major Players were identified and Porters five forces were analysed. Distribution strategy involved initiating at tier 1 cities and then gradually expanding into larger distribution markets. Providing direct sales, thereby reducing the cost components involved in middle chain. Brand positioning will be done by keeping in mind the targeted segment and through messaging and content marketing. Efforts will be taken to make sure that Company focuses on flexible operations plan initially and make room for Just in time inventory. Relationships will be established with the multiple suppliers who can take the timely offers for business and distribution strategy and distribution channels will be expanded gradually. There will be more focus on machine and methodology to eliminate the deviations in process and make process as optimised as it could be

Solution

Market Entry:

To answer the question of market entry, two assessments must be conducted: a market evaluation and a company assessment. The internal motives for entering into the business will be revealed by a company evaluation, whilst the external motivations for expansion will be revealed by a market assessment. We will also perform Porter’s five forces analysis to figure out factors that shape every industry and identify its strength and weaknesses.

Company Assessment:

It is a new Start-up. It consists of team of 8 members coming together to set up a business related to Electric vehicles. Some of them have previously designed and created prototype of electric vehicles as a college project during their engineering courses and some of them have experience of an industry as marketers.

• Product Portfolio:

To start with, company will design and manufacture two models of Electric Two wheeler.

1. Two wheeler at very affordable price to gain market share and
2. Two wheeler at competitive market price with some added features

Company will also cover passenger cars with major focus on Safety.

• Customer segmentation:

Company will try to attract customers who are willing to buy electric commercial vehicles with affordable rates and some added features. Initial target will involve customers from Tier 1 and Tier 2 Cities and will be more focused on sell on order.

 

Market Evaluation:

            The Indian Electric Vehicle Market was worth USD 5 billion in 2020, and it is predicted to grow to USD 47 billion by 2026, with a CAGR of more than 44% over the forecast period. In India, the electric vehicle (EV) market is still in its infancy. Due to several government programmes and policies, it is predicted to expand at a considerably quicker rate during the forecast period. The Indian EV market is consolidated with the presence of major players in the market, owing to cheap and readily available manpower. However, established players in the market are introducing new models to gain a competitive edge over other players.

The Major Players

1. Tata Motors
2. Mahindra and Mahindra Ltd
3. MG Motor
4. Olectra Greentech Ltd
5. JBM Auto Limited
6. Ather Energy

Porters Five forces

1. Barriers to Entry

Electric car manufacture necessitates significant expenditures in production lines, machinery, and technology. In addition, competence in the automobile industry is required in order to invest effectively. The margins on electric vehicles are shrinking as the cost of equipment remains high. Once investments have been made, these obstacles result in high fixed costs, necessitating more investment capital to obtain a market share in the beginning, especially for new competitors.

1. Bargaining Power of Buyers

Automobiles are a commodity for both private and business clients. More customers are switching from a conventional car to an electric vehicle as a result of growing environmental consciousness and the benefit of long-term fuel cost reductions. The power, however, is with the purchasers due to intense rivalry and substitution in the business. The minimal switching costs are another aspect that boosts purchasers' bargaining power. The buyer pays little or no money to switch from one model to another.

 

1. Bargaining Power of Suppliers

Suppliers wield a small amount of authority. There are numerous companies that offer both the traditional and electric car industries. Furthermore, for the majority of suppliers, the automobile sector is a crucial market. Manufacturers are more likely than providing vendors to come up with new ideas. As a result of all of these reasons, the threat of suppliers is quite modest.

1. Industry Competitors

Various automobile manufacturers compete for potential electric vehicle buyers. In the electric car business, there is a lot of competitors and a lot of buying power, thus there is a lot of competitiveness. This is bolstered by a significant growth rate and a large market forecast for the next 2-5 years. As a result, new companies (like as Tesla) are entering the industry, resulting in even more fierce rivalry.

1.  Threat of Substitute Products

Intense competition and emerging mobility concepts make the threat of substitutes very real. The e-mobility industry has a similar competition structure as the traditional automotive industry. Even though the model mix of electric vehicles is not as broad as it is for conventional cars, the threat of substitutes is still tremendous. Emerging mobility concepts as well as traditional alternatives of transportation (e.g. bus, train, plain, etc.) are a serious threat to electric vehicles.

 

Distribution Strategy:

Company initially try to rent an outlet/showroom in main city area of Mumbai from where its distribution will happen. It will take help of existing delivery players to deliver the electric vehicle in other parts of the city.

In the automobile industry, vehicle distribution and after-sales services are often given through a representative firm in each country, and payment is made between the representative company and the consumer.

Company will adopt direct sells in which Vehicle distribution and payment transaction are made between the company and customer directly, and after-sales services are provided from a company without conditions change.

Brand building plan

Brand Positioning

Brand will like to attract buyers from middle class who looks for best possible option at the most affordable price. Company will try to segment customers from tier 1 and tier 2 cities primarily and try to reach out to them through different online and offline platforms

Messaging Strategy

While the company's underlying brand positioning is the same for all audiences, different components of it will pique their attention. The most important topics will be emphasised in the communications to each audience. Each audience will have its own set of issues that must be addressed, and each will require various sorts of evidence to back up our claims. All of these requirements will be met through a messaging strategy. 

Content Marketing

In the Internet age, content marketing is ideal for professional services organisations. It performs all of the functions of traditional marketing, but it does it more effectively. It attracts, nurtures, and qualifies candidates by providing quality instructional information. The strength of a brand is determined by its reputation as well as its visibility. It's unusual that increasing awareness without also boosting your reputation is a winning strategy.

Operaring plan for 2021-22

Operational business plans should be flexible enough to accommodate unforeseen obstacles. Some adjustments must be made on a daily, if not hourly, basis. Other adjustments may be required just on occasion throughout the year. The operational plan's aim, on the other hand, is to provide direction and guidance. This manner, everyone in the company is aware of their specific responsibilities, who is in charge of specific duties, and when big events occur. The operations area of your business plan is where you detail the objectives, goals, methods, and timetable for your organisation. An operations strategy is beneficial not just to investors, but also to you and your employees because it forces you to consider tactics and deadlines.

Operational goals will differ depending on the department. However, each department's goal should contribute to the company's overall goal. Furthermore, operational objectives shift; they aren't meant to be permanent or long-term. The timeframe should be planned around your company's long-term objectives.

Following the creation of objectives, we will strategize on how to achieve them. To accomplish so, each department (or team) must have all of the resources required for the manufacturing process.

Resources that company will require

Suppliers –  to help you produce your product, supplier of raw materials

Equipment & Technology –  to ensure each department have the necessary equipment, technology and software to meet objectives

Technology team: to promote and facilitate production

Marketing team: software licenses and Product marketing

Sales team: to take market to the product

Cost – To analyse the budget for each department

We'll need to outline our operating procedure in depth in addition to the production process. This will show investors that we know exactly how we want our company to operate on a daily basis.

Control over the Operations

One element that should be included in every operational plan is control. In an operational plan, a marketing plan, an employee development plan, or any other type of plan used in business, control refers to the measurement of outcomes and an evaluation of the activities that led to those outcomes. The control element of a business plans answers the questions

Baselining is a type of internal comparison that compares actual results to projected results. Because the corporation must do a self-evaluation of what it has done against what it can or should accomplish, baselining is critical. After undertaking a baseline study, a company can opt to change its capability. Internal comparisons, on the other hand, should be accompanied by an external analysis, known as benchmarking. We can obtain a clearer picture of how our company fits into the bigger market by comparing it to a close competitor's or the industry average.

To have productive outcomes, the firm must have important inputs: money, methods, machines, people, and leadership

Money

Some vendors will ask a deposit from the consumer before the goods is created for unique or specialty products. This deposit lowers the vendor's financial risk associated with a personalized product that may be difficult to resale if the original buyer cancels the order. It also supplies funds to the producer, who must purchase raw materials in order to complete the finished product. Paying for things in advance could put a strain on the cash flow available for our startup's ongoing operations. However, if the clients pay a deposit before the goods are manufactured, we can obtain a no-interest loan from them.

Methods

When it comes to complicated machinery and equipment, work practises are possibly most critical. A gradual transition of items from one stage to the next should save time and effort for employees, lowering prices. Raw materials should be supplied to the site where they will be used as soon as possible. It is easier and more efficient to move and store huge inventories at each point of assembly rather than storing parts elsewhere and transporting them to work stations as needed. Inventory delivery on time is also critical. The just-in-time technique refers to the delivery of materials at the precise moment they are required.

 

Machines

Purchasing machinery for our startup can be a challenging, time-consuming, and complicated undertaking. To begin, we must consider total costs of ownership (TCO), which is the complete cost of owning major capital assets, including upfront direct expenses, ongoing direct costs, and indirect costs. Maintaining and repairing operating equipment can be challenging, especially when production schedules require the machine to be up and running. Poor planning can be quite costly, especially for a young company like ours, because our ability to produce and deliver things on time reflects on our dependability to both customers and staff. The performance of machines has limits. Absolute capacity refers to the maximum number of units a machine can generate in a given amount of time. The amount of units you may reasonably expect to be produced in a given time period is known as operational capacity. The operational reserve is the distinction between the two. 

People

We hire individuals who are a good fit for us, not only in terms of talents but also in terms of personality. Every organization faces problems and obstacles in all of its stages—from conception to startup, growth, and expansion—that require a diverse set of skills and talents to overcome. Some situations necessitate a forceful, direct, or even aggressive attitude, which an extrovert may prefer. Other scenarios may necessitate a more delicate and subtle approach. In some situations, an introverted employee who is naturally slow to react may take a passive attitude that is more acceptable.

Conclusion

It can be identified from the market entry research that the company has greater potential to explore but at the same time will face challenges on many fronts which are discussed in detail. The company will initially focus on two-wheeler production segments and then eventually move to the four-wheelers market. Initially, the company will get into direct sales and will take the help of some existing delivery partners for delivery until it sets up its supply chain. Brand positioning. Marketing will be done by keeping in mind the targeted segment through online and offline modes. More focus on operation will be a key to reduce overall cost and create the most affordable Electric vehicles.

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