Assignment Taken

A market entry, distribution strategy and brand building plan

Case Understanding

India has an increasing energy demand to fulfil the economic development plans that are being implemented. The provision of increasing quanta of energy is a vital pre-requisite for the economic growth of a country According to the World Resource Institute Report 2017, India is responsible for nearly 6.65% of total global carbon emissions, ranked fourth next to China (26.83%), the USA (14.36%), and the EU (9.66%). Climate change might also change the ecological balance in the world. This way, the country will have a rapid and global transition to renewable energy technologies to achieve sustainable growth and avoid catastrophic climate change. Renewable energy sources play a vital role in securing sustainable energy with lower emissions The increase in India's energy consumption will push the country's share of global energy demand to 11% by 2040 from 5% in 2016. Emerging economies such as China, India, or Brazil have experienced a process of rapid industrialisation, have increased their share in the global economy, and are exporting enormous volumes of manufactured products to developed countries. This shift of economic activities among nations has also had consequences concerning the country's energy use In 2020, India was the fifth-largest auto market, with ~3.49 million units sold in passenger and commercial vehicles. It was the seventh-largest manufacturer of commercial vehicles in 2019. Renewable energy has great scope in India. The automobile industry is one of them, the Automobile sector has taken several giant steps recently, but the Indian market is still an infant. As compared to other countries, the market share of electric vehicles is meagre in India. It is already accepted that renewable energy technologies might significantly cover the electricity demand and reduce emissions. In recent years, the country has developed a sustainable path for its energy supply. Awareness of saving energy has been promoted among citizens to increase the use of solar, wind, biomass, waste, and hydropower energies. It is evident that clean energy is less harmful and often cheaper. India is also a prominent auto exporter and has strong export growth expectations for the near future. In addition, several initiatives by the Government of India and significant automobile players in the Indian market are expected to make India a leader in the two-wheeler and four-wheeler markets globally by 2020. According to some estimates, the total number of registered vehicles in India is 230 million, and the market is growing continuously. This also leads to India's dependence on fossil fuels. Taking a reformist measure, India's Government aims to promote electrical vehicle usage in the country.

BCS Solution Summary

The idea of our start-up is to manufacture a solar panel that can be fitted over any car roof as an external enhancement. The purpose of this solar panel would be to act as an alternative charging for electric vehicles. This panel would enable to charge the batteries for four-wheelers used for short commutes within a city independently, whereas, for long-distance commutes, this would act as an alternative medium for charging the battery in addition to the conventional charging stations. This feature would be highly beneficial to the users travelling to places with inadequate charging stations. As a company, we target these two specific groups of customers: users going for long trips in remote areas or users who only use their vehicles for short commutes like travelling from workplaces to homes, going to markets, etc. The product of the company has been generated following the 6-step procedure, i.e., the ideation phase, research phase, planning phase, prototyping phase, sourcing phase and costing stage. The ideation of this product has come keeping in mind the major pain point of electric vehicles in our country, i.e., the inadequate charging infrastructure and lack of option of fast charging. Our product would be a solution to this major challenge for users of personal electric vehicles. In addition, our product being in the cost range of INR 45,000 – 1,25,000 would also be cost-effective and can be afforded by the domestic electric vehicle owners. The company's operations would initially start in Bangalore and gradually expand across the other parts of the country. The organisation's financial projections and human resource planning have been executed, keeping this agenda of operation and future expansions. The distribution of our product is conducted in two models: B2B (Business to Business) and B2C (Business 2 Customers). For the B2B model, we are focusing on selling our product to India's top manufacturers of electric vehicles to incorporate our solar panels in their design. The major companies that have been considered for this purpose are TATA, Hyundai, Maruti Suzuki and MG, among several others. The branding of our product has been done with the use of printed media, social media, and digital marketing. In addition, various community marketing strategies have also been proposed like printing merchandise for employees and users, customizing the logo according to the company objectives and in line with sustainability. The company also focus on building relations with the clients by providing premium pre-sales and post-sales service.

Solution

Market Entry:

A. Evaluating potential market -

The world is now being driven by innovation and technology. At the same time business, technology all is focusing to come up with environment-friendly solution. India is already 5th largest automotive industry in the world and targeting to become 3rd largest by 2030. To achieve that automobile industry can not be completely dependent on fuel resources as it is somewhat limited. It has become necessary to use alternative resources now. Here the business of electric vehicle is grabbing the opportunity to grow potentially in the market. But there are certain challenges which may hinder the business to expand more. Reliance on import of battery and other components is contributing to increase the cost of the vehicle. There are not enough charging stations specially in Tier II and Tier III cities and rural area which is impacting purchasing decision of consumers. When customers are driving cars from metro city to reach some underdeveloped part of the country, they are facing major issues due to lack of charging stations as the EV manufacturers are hesitant to operate in such areas as the operating cost can not be recovered from such areas. Hence, the EV market is losing lots of potential customers. If solar plates are integrated with vehicle, then the vehicle can automatically get recharged as per need when there are no charging stations nearby.  Solar vehicle is an electric vehicle integrated with solar plates at roof of the vehicle. Solar vehicle market is forecasted to reach at 107380 units by 2030 from projected 8955 units by 2022. As the demand for solar vehicle grows, the demand for solar plates will also grow. The market of solar plates for electric vehicle has its unique features. So, integration of solar plate at roof of the vehicle makes the usage more convenient for customers and pull them to purchase the product. In a high solar resource country like India, it is very good strategy to use the same in transportation as the cost of building more frequent charging stations can be avoided. How does our company choose to consider external factors to understand potential markets to enter?

B. PESTEL Analysis –

Political – As India is aiming to universalize the membership of International Solar Alliance , located in India, it will help our country to move forward with the business of solar energy. Indian Government is collaborating in national and international level to boost the growth of solar energy as most of the country are now targeting to reduce carbon-footprint to make an environment-friendly world. In Paris Climate Agreement, India is making agreement with other countries to reduce the amount of green house gas produced by different economic activities. There India pledged to increase the share of non-fossil fuel sources in its energy generation capacity to at least 60 per cent, with the possibility of raising it to 65 per cent, by 2030. All of these can work as driving forces for other countries to import solar plates from India to manufacture the vehicles as EV is the recent trend across the globe.

Economical - Macroeconomic outlook is very positive. Investors want to invest on such innovation which have some certain possibility in near future. The government is providing tax concessions, subsidy, low-cost power, cheap credit, and land lease at discounted rates to automobile companies to set up their plants locally and to use solar panels which are manufactured within country to cut down dependency on import. Our company is going to build solar plates only for car manufacturers which is a very cost-effective innovation for these manufacturers as they don’t need to think of building expensive charging infrastructure in rural area where the return on investment is very low.

Social – As the usage of solar vehicle will boom gradually, this will also create jobs for Indian people. To plan, implement, develop, and customize the solar plates as per car models, numerous talented pool of workers will be attracted. Post-purchase service can be improved to ensure sustainably and popularity among the mass population to boost the purchase of solar vehicles.

Technological – The industry of solar energy involves cleaner technology, scope of innovation and attract investors to invest in research and development to make solar plates with higher efficiency. Currently, the transportation sector is a leading contributor to greenhouse gas emissions. As the fuel prices has been increasing significantly, the integration of solar panels on cars is becoming more feasible and in demand due to new advancements in PV technology and limited access to charging infrastructure in areas other than metro cities.

Environmental - The customer base of EV is expanding in many countries. But, in country like India users still have limited access to the charging stations while travelling outside metro cities. In this case, solar powered vehicle will provide an opportunity to shift customers into solar vehicle as they don’t need to worry about the charging stations or petrol pump while travelling. At the same time, by reducing the carbon footprint the functions of such EV are aligned with the goals of sustainability and climate change.

Legal – More initiatives on legal side are needed to reduce the environmental impact done by vehicles. In India, changes in environmental laws will boost the sales of solar plates integrated vehicle.

C. Targeting potential prospects –

There are regular users of personal cars who have to go for a long road journey outside metro cities. They often feel lack of charging infrastructure in small town rural areas. That’s why they refrain themselves from purchasing EV as it requires recharging of cars frequently. So, our aim is to enhance the user experience of using EV and make the charging of cars convenient while customers are on the go. Even there are some customers who use their cars just to travel from home to office. If they use solar vehicle, they don’t even require recharging their cars for this short travel route as their cars will be recharged everyday on the go. So, the middle-class office goers will be our potential target customers along with those who travel long outside the city for professional and personal purposes.

D. Marketing mix strategy –

To identify the customer needs, delivering and communicating the customer value, we have to think like marketers by improving our product offerings.

Product - For marketing purposes, we are evaluating our products in customers’ point of views. We will sell solar charging plates to car manufacturers to install the same at the roof of the car. As many car manufactures worry about their dependence on the import of high-quality costly solar plates or they have to build more frequent charging infrastructures which is any day costlier than purchasing and integration of solar plate. So, our product offering will relief the automobile manufacturers and boost their sales as well. Not only this, but consumers can also directly buy the solar attachments separately for their vehicle from our store.

Price – Solar plate is very cost-effective choice for consumers and manufacturers. The unit pricing of each kit will vary from 45k to 125k depending on customers’ vehicle models and size. We will use the market-oriented pricing strategy for its solar panels. The pricing strategy will help us to maintain competitiveness in a rapidly changing environment of customer demand and manages to boost the retention of customer base.

Place – We will sell and supply the solar plates to multiple automobile manufacturer companies, so that they can install the same while manufacturing cars. We will also sell our products to car repairing centres as customers who want to integrate the solar plate in their already existing cars, they can easily get that done from servicing centres. Solar charging plates will be also available on e-commerce site where users can purchase as per their choice.

Promotion – Promotion of solar plates specifically for vehicle should be our primary focus as we aim to increase the visibility of solar installations. Using printed media, communications, and promotional strategies to favourably present solar in the marketplace and ensuring that the right messages are presented to the public will help build a stronger market for solar technologies. Printed media and digital advertising will help us to promote our environment-friendly product by increasing the product awareness in potential customers.

 

Distribution Strategy:

When a manufacturing company produces goods, it needs to have a distribution channel in place to ensure the movement of goods from manufacturing to end consumer. Therefore, most companies use various types of distribution channels to distribute their products.

Macro Level Distribution channels -

a) B2B channels – B2B Channels involve the movement of goods from a business company to a business company.

b) B2C channels – B2C channels as the name suggests are distribution channels which involve the distribution of goods from the manufacturing company to the end customer.

Direct Distribution channel -

Using Ecommerce Websites and brick & motor stores -

Levels of Distribution channels:

There are basically Four levels of distribution. To understand them, read this article on industrial and customer channels. I have given a summary below.

1. Zero level channel – Where the distribution happens from company to end customer.
2. One level channel – Distribution happens with a single agent in between. Example – From manufacturer to E-commerce companies. And from E-commerce to customer.
3. Two Level channel – Distribution happens with 2 business entities in between. Example – Goods flowing from manufacturer to Distributor >> Distributor to Retailer >> And Retailer to customer.
4. Three level channel – Distribution happening with 3 business entities in between. Example – Goods flowing from Manufacturer to C&F >> C&F to Distributor >> Distributor to Retailer >> And Retailer to customer.

Refer to the attched chart to understand better.

Brand Building Plan:

Branding is the most important to promote our product to increase the loyal customer base. For this following is to be done by Energiana-

1. Printing of the brand logo on solar plate being delivered by Energiana to customers.
2. For all types of products, we can use the brand logo which symbolizes the environment-friendly attitude of the brand and it would help us to build the trust of the customers in our brand and increase loyal customer base.
3. Employees of Energiana will use get T-shirts attached with brand logo and tagline “Let’s go solar” from the company.
4. Energiana will be advertising in newspapers across the city in which it operates along with hoarding and billboards across the city, specifically in industrial area of the city to grab the attention of the car manufacturer.
5. Social media is one of the integral part of our daily life. Our product launch and promotion of services will be done through social media. We will make videos of satisfied customers giving their feedbacks on our service and post it in social media pages to increase brand penetration. Advertisement and webinars on social site will highlight our environment-friendly attitude by the campaign #Let’sGoSolar thus boosting loyal customer base. 

Conclusion

Team ' Energiana' achieved its objective of providing a renewable energy source to drive electric vehicles. The electric vehicle is an essential element in the plan to reduce the carbon footprint, but the addition of solar energy to drive the vehicle will further lower the carbon footprint. The product is unique in terms of its application and offers a long-term prospect, with most customers shifting towards electric vehicles. The uniqueness and the value contribution of the product enabled Team Energiana to list it at a higher gross margin of 30 percent. Using the SCAMPER model to develop a new model helped reduce the time associated with product ideas as it is one of the most time-consuming steps in the entire product development stage. Altering the application of an existing product like a solar panel to drive the electric vehicle enhanced the feasibility of the product. The high interest shown by the investors during the fundraising simulation was one of the critical aspects in the product validation stage. The industry outlook looks positive with increased awareness among the customers to purchase products that promote the environmental cause. The expected increase in trend will further bolster the business prospect for the company.

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