International Marketing Plan for Tata Swach Water Purifier

2010

[ASSIGNMENT 2 : LAUNCHING TATA “SWACH” IN SRI LANKA] Assignment 2 is a group assignment, wherein we are asked to choose a product that needs to be marketed to a specific country. We have chosen Tata Swach , as this product is most essential to developing countries like India and Sri Lanka.

Submitted to:

Mrs. Rekha H

By:

Anupam Singh -10171707

Donald Leslie - 10171804

Hitesh Goyal - 10171808

Rajeev Pariyarath - 10171383

Assignment 2 : Launching Tata “Swach” in Sri Lanka 2010

MKT5708: International Marketing of 45

Contents Executive Summary ................................................................................................................................................................ 4

Overview ................................................................................................................................................................................ 5

SRILANKA .............................................................................................................................................................................. 7

History ................................................................................................................................................................................ 8

KEY FACTS Of Sri Lanka .............................................................................................................................................. 8

POLITICAL ENVIRONMENT ..................................................................................................................................... 10

ECONOMIC ENVIRONMENT .................................................................................................................................... 11

Economic Performance ............................................................................................................................................. 11

Trade ................................................................................................................................................................................. 12

Prospects .......................................................................................................................................................................... 13

SOCIAL ENVIRONMENT ............................................................................................................................................ 14

TECHNOLOGICAL ENVIRONMENT ....................................................................................................................... 15

Market Audit And Competitive Market Analysis ................................................................................................. 16

Introduction ........................................................................................................................................................................ 16

Product ............................................................................................................................................................................. 16

PROFIT Analysis ........................................................................................................................................................... 18

Organizational Resources: ............................................................................................................................................ 18

Financial Resources: ........................................................................................................................................................ 18

Intellectual Resources Analysis: ................................................................................................................................. 19

Strength And Weakness ............................................................................................................................................ 19

Strength ............................................................................................................................................................................ 19

Weakness ........................................................................................................................................................................ 20

Industry Analysis ......................................................................................................................................................... 20

BCG Matrix Of Tata Swach With Respect To Eureka Forbes And Industry Growth Rate ............... 21

Marketing Mix .................................................................................................................................................................... 22

Segmentation ................................................................................................................................................................. 22

Evaluate The Product In Intended Market ............................................................................................................. 23

Competitor’s Analysis ..................................................................................................................................................... 25

Government Participation In The Marketplace .................................................................................................... 27

Marketing Plan ................................................................................................................................................................... 28

Executive Summary .................................................................................................................................................... 28



Marketing Objective .................................................................................................................................................... 29

Promotion Mix............................................................................................................................................................... 30

Sale Promotion .............................................................................................................................................................. 31

Personal Selling ............................................................................................................................................................ 31

Retailers ........................................................................................................................................................................... 31

Methods Of Operation For Each Type (Cash/Credit) .................................................................................... 32

Scale Of Operation For Each Type (Small/Large) .......................................................................................... 32

Wholesale Market ........................................................................................................................................................ 32

Markup For Class Of Products By Each Type ................................................................................................... 33

Methods Of Operation For Each Type (Cash/Credit) .................................................................................... 33

Scale Of Operation (Small/Large) ......................................................................................................................... 33

Import/Export Agents ............................................................................................................................................... 33

Warehousing – Type And Location ....................................................................................................................... 34

Price Determination.................................................................................................................................................... 34

Terms Of Sale ................................................................................................................................................................. 35

Budget ................................................................................................................................................................................... 35

Selling Expenses ........................................................................................................................................................... 35

Advertising And Promotion Expenses ................................................................................................................ 35

Distribution Expenses ................................................................................................................................................ 36

Product Expenses......................................................................................................................................................... 36

Annual Profit And Loss Statement For Year 1st Year ........................................................................................ 36

Resource Requirements ................................................................................................................................................. 38

Finances: .......................................................................................................................................................................... 38

Personnel......................................................................................................................................................................... 39

Production Capacity .................................................................................................................................................... 39

References ........................................................................................................................................................................... 40



Executive Summary

After analyzing the market we have found out that there is huge market opportunity in Sri Lanka

to sell water purifier. Due to low price there are more chances that Tata Swach can become the

market leader successfully after some time because of many reasons such as low cost, already

operation exist in Sri Lanka and due to climate condition. The water purifier market is growing

by 25-28% annual. If we talk about local competition, it is very less. The local players get the

help by the government also where the government has distributed free water purifier to

households and started a project to provide water supply to those households. There is huge

competition from outside because many multinational firms entered in this field to capture the

market share in which Eureka Forbes is on the top. It is considered as market leader in many

countries but still it has to earn market share in Sri Lanka. Some other firms are Philips, Kent,

Godrej and Usha Ltd.

In marketing mix if we talk about segmentation, we can segment our market base on income,

geographic and physiographic bases. We can position ourselves in the market as new technology,

low price and good quality. We can target the government where the government buy our

product and distributed to households and we can also target by income level.

Overall we want to say that before making a marketing plan a company should do marketing

auditing which includes socio-cultural analysis of that country, industry analysis and competitor

analysis which will help to make effective marketing plan.



Overview At the outset, we want to present some startling facts that led

us to choose a product which is the very need of the hour for

many developing countries and the third world countries.

(WWAP)

United Nations indicates that each person needs about twenty

to fifty liters of fresh water a day to meet their basic needs like drinking, washing and cooking. A

joint monitoring program by World Health Organization and UNICEF on water supply and

Sanitation reveals that one is six people worldwide, which is 894 million - don‟t have access to

safe fresh water. In the world today, diarrhea is one the serious cause of illness and death, about

88 per cent of diarrheal deaths are due to lack of access to proper sanitation and inadequate

availability of safe drinking water. (UN-Water)

The cost of water in many under developed countries are higher compared to the price paid for

water in the developed countries.

UNICEF has also worked with local

partners on larger ventures, such as a

water supply project for hundreds of

homes in a re-settlement area in

Thirukkovil called the Mandanai

Tsunami Resettlement Scheme.

Recently completed on a nearby hillside, the Thirukkovil Water Supply Project will make a huge

difference in the lives of ordinary people.



Shopkeeper Thawarasa showed us the tap that will soon be flowing with water when the system

is connected. Currently, he has to collect water from,a well located in the middle of the

settlement, a job that is made harder during the dry

season.

“When the water is harder to pump, I have to get

up at 2 in the morning and go to the well,”

Thawarasa said. “It normally takes me three hours

to get enough water."

Five years on, life is certainly better for many thousands of families impacted by the tsunami.

But this anniversary will still be a hard one for many. For Jayawathi it will be a reminder of her

personal tragedy.

“I can't forget the tsunami, because of the loss of my son,” she said. “The birth of my daughter

since then has helped a little, but there will always be the pain." (UNICEF, 2009)

We see a need in Sri Lanka as this place is widely affected with bacterial diarrhea and hepatitis

A, dengue and chikungunya, and water contact disease known as leptospirosis. (CIA, 2009) To

throw more light into the political, economic, trade related information that are prerequisites of

marketing Tata “Swach” to Sri Lanka.



SRILANKA

Before start any business in foreign country, it is important to understand external as well

as internal factor, which affect the business. We have done PESTEL analysis of the Sri

Lanka, which will throw more light on the business environment of Sri Lanka.



History

Sri Lanka's history has reflected its close links with the subcontinent and with South East

Asia. The colonial European powers arrived in 1505. The Portuguese, the Dutch and then

the British ruled Sri Lanka. Sri Lanka (or Ceylon, as it was then known) gained

independence from Britain in February 1948.

KEY FACTS of Sri Lanka

Full name

Democratic Socialist Republic of Sri Lanka

Capital City

Colombo

Government Type

Democratic republic

State Chief

President Mahinda Rajapaksa

Government Chief

President Mahinda Rajapaksa

Population

20.2 million

Total area

65,610 sq km

Linguistics



The officially spoken language is Sinhala which comprises of 74%, Tamil is considered as a

national language which comprises of 18%, English is usually spoken in governmental and

commercial institutions and there are other languages spoken which comprises of 8%.

Ethnic Composition

Sinhalese (73.8%), Sri Lankan Moors (7.2%), Indian Tamil (4.6%), Sri Lankan Tamil (3.9%),

other (0.5%), unspecified (10%)

Major Religions

Buddhist (69.1%), Muslim (7.6%), Hindu (7.1%), Christian (6.2%), unspecified (10%)

Life expectancy

73.4 years (total population), 70.8 years (men), 76.1 years (women)

Currency

Sri Lankan rupee

Main exports

Textiles and apparel, tea and spices, diamonds, emeralds, rubies, coconut products, rubber

manufactures, fish

GDP per capita

$1050



Internet domain

.lk

Geographical location

Southern Asia, island in the Indian Ocean, south of India

POLITICAL ENVIRONMENT

Socialistic predilection in Sri Lanka was unswerving, but as time passed by it gave room for

investment overseas in 1978. Board of Investment operates as a sovereign legal bureau with

investment in foreign countries as a focus. BOI is authorized to yield grants to organizations that

meet the basic eligibility standards on minimal investment, employment and exports. When the

organization fails to meet the standards then its projects have to be sanctioned by the respective

departments of the government. BOI also deals with the 10 zones of free trade, which is known

as the export-processing zones. BOI possess the authorization to relieve any confinements on the

FDI.

Eleven huge privatizations were accounted for 34% of the FDI. Nevertheless due to the instable

political conditions and conflicting ethnicity the advancement on this issue is been decelerate for

years. The president sketched out regarding anti-privatization economical scheme in his electoral

pronunciamento known as „Mahinda Chintana‟. Various enterprises of the state which designing

itself to be privatized were not approved, this includes the airports and banks. Privatized



organization was planned to be regulated by the government which will turn the loss into a

profit-making organization. The Labor Unions opposed the idea of Privatization.

ECONOMIC ENVIRONMENT

Sound rates of growth has been steady in Sri Lanka despite if its intense violence on ethnicity.

Rich private demand of requirements, core industrialization, primarily the intensive labor textile

industry and the advancement of domestic tea manufacturing hiked the growth rate of the

economy. The well-disposed FDI policy of the government ensued the zooming inflows of

capital. The deceleration in the global issues activated an acute condensation in the activities of

the economy in the year 2001. Subsequently there was a recuperation in the sectors of the

industries that is impelled by a firm external demand and an increased growth rates in the sectors

relating to service resulted in a sizeable enlargement of economical activities though the tsunami

that hit the sectors of agriculture was critically damaged. Deficits in the fiscal aspects are an

important issue to the government, which has been diminishing in the years past. The current

fiscal obligates to cut back deficits. There are many industries that imparts in great value to the

GDP that engages greater population of the manpower, this comprises of the industry in tourism,

and the service industries. When taking industries into consideration, it is the textile industry that

yields greater sum of revenues in export. Nevertheless constraining laws of labour and

privatization forbiddance has hampered the investments of foreign countries.

Economic Performance

Though Sri Lanka has been facing ethnical dispute steadily, it has gained commendable growth

economically of 5.2% yearly all through the 90s. The curriculum of Liberalization of the Sri



Lankan government which bestowed importance to investments of foreign countries and

liberalization in trade aided in the increase of the net FDI influxes from $48m in the 1991 to

$430m in the year 1997. The demand in the private consumption increased to an average yearly

rate which accounted to 13.6% in 1992-2000 which calculated for 3 quarters of the GDP. The

textile manufacture increased by a yearly rate of 23% which accounted for 50% of the aggregate

exports. They were various other industries that contributed to the GDP rate, they are beverage

industry, tobacco and leather ware. There was retardation in the economic activities due to the

deceleration in the global economy.

Trade

The import tariffs are comparatively less in Sri Lanka that acts as an elementary trade policy

tool. The moderate enforced non-agricultural duty is at the rate of 8.3% and the enforced

agricultural duty was greatly increased to 22.5%. Medical instruments are allowed for a free

import without any charges but the staples are taxed at 2.5%. Duties on cigars and tobacco are

greater starting from 75% - 250%. Companies dealing in exports that are authorized by the BOI

are usually exempted of tax and also freed on the defrayment of VAT.

Sri Lanka has consented to a bilateral investment with many countries, nearly 24. The country

has also consented to an isobilateral investment accords with Pakistan and India. Sri Lanka has

signed the South Asia Free Trade Agreement. The continual declension of the Sri Lankan

currency versus the dollar in US and the fringy appreciation in 2005 has assisted in sustaining the

competition in exports in the years past.

In 2005, $6.3m was the aggregate measure of the exports. The textile and the tea industries

constituted 58.4% of exports. The quality of imports soared which was actuated with the aid of



goods like conveyance instruments, machines and crude oil. The aggregate value of importations

in the year 2005 was $8.9b. Sri Lanka‟s most substantial export commercial is the United States

which is computed at 31.1%. India and UK are also plays a part in this aspect which accounts for

12.2%. When imports are taken into consideration, 20.7% accounts for India.

Prospects

As far as Sri Lanka is concerned, it has come out of chaos and confusion that it had been

confronted with for a very long time. Now the panorama needs to be viewed differently for the

development of the country in all its spheres. Since LTTE is not in power, the country is

expected to experience a commendable improvement. The government has enforced favourable

FDI policies, and it has increasingly subjugated taxing rules and decrees that has facilitated to

promote commendable rates in terms of growth. Though LTTE has ceased in its existence, there

is continual fear of militants in the country. The need of the hour is to reconstruct the remains of

the tsunami attacks.

Diversification of the exportation needs to be paid attention by the government of Sri Lanka to

avert depending on the exports. Textile industry was confronted with competitions from various

other low-priced manufacturers since the limit of production was put to an end in the year 2005.

Tea industry has been confronted with competition from foreign countries and therefore it

necessitates the government‟s initiative to facilitate increased productivity that is bound to add

value to the product. Cutting back on financial deficit and the public liabilities and sourcing of

sufficient resources that are necessary without taking into account the foreign lending‟s and

concessions. Fiscal management Act is the most apt stride that will be received for the

advancement of the nation. Persistent unpredictability in the prices of petroleum and the



increasing deficits in trade are the vital considerations of the government for the betterment of

the economy. The pension schemes might obtrude a definite onerous position for the government

which calls for prompt reforms. Educational system needs to be reformed to unfold sufficient

facilitates to the areas where the revolt broke up in the country in the past years due to the LTTE.

SOCIAL ENVIRONMENT

Sri Lanka holds a populace of 20,238,000, of which Sinhalese constitutes about 74%, Sri Lankan

Moors constitutes about 7.2%, Sri Lankan Tamils constitutes about 3.9% and the Indian Tamils

constitutes about 4.6%. When religions are taken into consideration the Buddhists comprise a

major share of 69.1%. Sri Lanka is prominently a rustic area that holds 79% of the population.

The populace medial age is 30 and 7.8% constitute for an age group of 65 and over. The health

index of Sri Lanka is fairly good when compared to other countries in Asia. The government has

an expenditure of 46.3% from the 4% of the aggregate GDP for medical expenses of the country.

The expected life span is 73.4yrs of the aggregate populace.

Meliorating the health service was the major aspect that the government undertook for the

betterment of the country. The vital aim was to meliorate 1 hospital in every district so as to cut

back the unfairness meted out when the services are rendered. Special attention should be given

to people who are impaired and aged. In order to ensure these services community meetings were

conducted to ensure the involvement of the people in those areas.

The literacy value in Sri Lanka is commendably in a good state and is at 92.3%. The rate of

dropouts in Sri Lanka is less than 1%. The parliament enforced compulsory education for the

children belonging to the age of 5 to 14 years, which was also set up free of cost for a student to



get educated. The government catered to the basic needs of a student such as free school texts,

availing scholarship facilities and providing uniforms. Teachers were given free predilection

programmes before handling any class for the year. These schools had donors like the Asian

Development bank and the World Bank who were interested in the betterment of the education

system. Nevertheless the regions in the North and the East still require attention as things have

been worse when the revolt of the LTTE broke out.

TECHNOLOGICAL ENVIRONMENT

The telecom sphere was improved to an incredible extent in terms of liberalizing right in the

90‟s. Act of Sri Lankan Telecommunication of 1991 founded the Sri Lanka telecom also known

as the SLT, it awarded the permit to function in the global system. For the betterment of rural

telephone, the government heralded regarding the constitution of fund program named Vishwa

Grama in the year 2003. The Information and Communication Technology Agency has enforced

“e-Sri Lanka‟ proposition which advances the usage of technological elements in the

assuagement of impoverishment with the means of capital that involves humans and its sub

structural development. Usage of mobile phones was a greater achievement in the telecom

market which has increased steadily. The usage of mobile phone has increased to 18.8 in the past

years from 0.6 for every hundred populace. Even though it is still in demand the government is

offering well-disposable rates which are likely in increase in the years to come. Utilization of

mobile phones has become a necessity rather than a need. Usage of Internet services with the

help of Broadband connections has worked out to a greater extent. Utilization of internet which

is bound to be uncommon rural areas of Sri Lanka has shown steady increase. The number of



users has increased to 43902 from 62, which shows a rapid improvement within a span of 5

years. Source: Datamonitor, 2007)

Market Audit and Competitive Market Analysis

Introduction

Over many decades, due to rapidly change in resources, logistics or transportation services and

technology, many multinational organization across the world have established closer contacts

with each other to achieve the Economic of Scales and improve the relationship among

countries. They establish their production and operation units in other countries to use their

natural resources which help to increase the productivity and profit. When an organization

directly or indirectly provides its product or service to consumers in more than one nation and to

make it successful in that particular market it does promotion activities, logistic management,

pricing and many other activities called International Marketing. (Cateora, Graham & Salwan,

2008) If an organization wants to make its product or service successful in a particular country‟s

market, it should do proper market research such as is there any demand or need of that product,

which is target market, which sources of advertising would be more effective to communicate to

customers, local competition, buying behavior and logistics management. Base on that a

company should make effective market plan then only it can sustain in market for long time.

(Kotler & Keller, 2009)

Product

To complete this project we as a group has chosen „Tata Swach‟ which is the world‟s cheapest

water purifier. Tata Chemical Ltd. which is a SBU (Strategic Business Unit) of Tata Group has



launched it in 2009 when they found there is huge demand and growth in water purifier market.

Every day about 1.5 lakh people die in India because of drinking polluted water and water

related disease. (CIA- The World Fact Book, 2008) Therefore customers have become more

health conscious. They want to be healthy and protect their self. So it is one of the most

important factors behind of growth of this sector. The water purifier market has been growing by

35% annually and presently it is Rs. 1200 crore worth market. (Business India, 2009) Tata has



started water purifier business in 1982 when they had tie-up with Sweden Company called

Electrolux. But after few years Tata Group sold its stake to Shapoorji Pallonji (SP) Group.

(Business India, 2009)

PROFIT Analysis

Profit Analysis helps companies to identify their availability of resources which include

Physical, Reputation, Organizational, Financial, Intellectual and Technological Resources.

Physical Resources: It helps organization to inform customers about their availability in several

places. Tata Swach has already started its operation in 90 cities in India and it is available more

than 25 Asian and African‟s countries. It has already given Franchise to about 500 dealers all

over the country and it is also available all Tata‟s retail stores. (Tata Swach, 2009)

Reputation Resources: Being a part of Indian multinational group (Tata Group) it has great

reputation among people because Tata is considered as a trust in India. In the same way, Tata

Swach is the world‟s cheapest water purifier which is targeting low and middle level income

consumers. Due to this it has made positive image between customers. (Tata Group, 2009)

Organizational Resources: Along with Tata Chemical, Tata Group is considered as one of the most

ethical companies in India and it reflects in all of its operations. The company has maintained cordial

relations with its dealers and distributors. The company holds annual award functions to reward its

suppliers, distributors and employees. It gives bonuses and dividends to its shareholders and employees

every year. (Tata Group, 2009)

Financial Resources: The current ratio and the quick ratio of Tata Chemical Ltd. (Current

Assets/Current Liabilities) is 1.38:1 and 1.3:1 which show they can convert their assets in to cash



easily and pay their current liabilities (Capitaline, 2009). In the same way their working capital is

$1.5 billion which shows that they have huge cash for daily bases operation and financial works.

If we talk about their shareholder funds which include general reserve and equity share capital is

$ 23 billion and total long term debt is $6 billion which is less than their capital, so it helps them

to get loan easily (Tata Chemical Ltd. Revenue, 2009). Revenues for Tata Chemical‟s 13

operating service areas for Q1 at Rs. 26 million grew by 13.9% in 2009 (The Financial Express,

2009). So base on the data, we can say that company has strong financial management resources

(Capitaline, 2009).

Intellectual Resources analysis: Tata Swach has separate R&D department which helps to

increase market share. It invests a huge amount in direct and personal selling It has positioned it

selves as most innovative and the world‟s cheapest water purifier. Their advertisement punch

line “Promise of pure water and trust of Tata Group” created self image of the brand that other

players were not able create in a short span of time.

Technological Resources: Tata is always recognize as great inventor such as Tata Nano and

now this purifier which does not need electricity, running water and boiling water. They invent

the world‟s cheapest water purifier. (Tata Swach, 2010)

Strength and Weakness

Strength

Brand image: Being a part of Indian multinational group (Tata Group) it has great reputation

among people because Tata is considered as a trust in India.



Effective pricing strategy: Tata Swach is the world‟s cheapest water purifier which is targeting

low and middle level income consumers. Due to this it has made positive image between

customers.

Strong distribution Channel: Tata Group is also one of the big players in retail sector in India.

It has many SBUs like Tata Trent, Tata Croma and West life which help them to increase the

sale and help to approach to customers easily.

Operation in many countries: Tata Group has it operation and plants in many countries. It has

plant in Sri Lanka also. Therefore there is no need to make separate warehouse for Tata Swach.

In the same way it also divided and decreases the logistics and distribution cost.

Weakness

Huge competition: Tata Swach had just launched in the water purifier market where there are

already many big players in the market such as Kent, Eureka Forbes, Usha Ltd. and many others.

Eureka Forbes is the market leader with almost 70 % market share. So it is difficult for Tata

Swach to gain market share.

Core Business: Water purifier is not a core business of Tata Group where as it is a core business

of Eureka Forbes. They entered in market by water purifier‟s products and it has almost 28

patents to protect its technology.

Industry Analysis

By the help of BCG Matrix we can analyze the industry such as what is growth rate where Tata

Swach comes in and market leader.



BCG Matrix of Tata Swach with respect to Eureka Forbes and industry growth rate

Tata Swach

In BCG matrix Tata Swach comes under question mark because by the help of Product Life

Cycle it shows that it is just passing the introduction stage where Eureka Forbes is already in

Maturity stage. Question mark is defined as when there is growth in market but your product do

not have sufficient market share. Eureka Forbes has about 65-70% market share where Tata

Swach is just started rapidly earning market share.

Tata Swach

Mar

ket

Gro

wth

Rat

e (

in %

)

0

LOW

1

7

HIG

H

35

HIG

H

70x 50x 35x 20x 0.1X

Relative Market Share



Marketing Mix

Segmentation

Geographic Segmentation: In India Tata Chemical launched Tata Swach firstly in Mumbai then

they launched it in Bangalore, Kolkata, Delhi and Chennai. When they launched successfully in

this metropolitan cities, then they launched it in tire-2 cities. We are going to launch it in Sri

Lanka because it is near to India and due to Free trade Agreement and less trade barrier. We will

launch it in tire-1 cities such as Colombo, Kandy and Mannar. Secondly Sri Lanka is a place

where Monsoon takes place heavily and it is also surrounded by ocean. So there are more

chances of water diseases and pollute water.

Income: We segment the market according to income level also because Tata Group is the

world‟s cheapest water purifier and its 25% population is under poverty line.

Physiographic: We will also segment the market according to physiographic where as we will

target those people who are more emphasize about their health.

Positioning: We will position ourselves as best technology and innovative products and

available at low price by using differentiation strategy and low pricing strategy.

Targeting: Firstly, we will target the government where as we will persuade them to buy our

products by telling them the advantages that how can it is helpful to stop water disease and it is

also cheaper than other companies‟ products. Secondly we will target middle and low income

level customers.



Evaluate the product in intended market

Relative advantage and compatibility: There are many advantages by using Tata Swach over

competitors and local players such as saving of electricity bills, pure water available at low price;

everybody can afford it and less water diseases.

Complexity: People should have knowledge about product before using it then only they can use

the product in proper manner. There is one complexity which can be faced by us is educate

people about how to use our products, when to change the filter net and plate and other

technological products.

Trail ability and observe ability: Our product can be purchased and used at minimal social and

economical risk because it will be wildly available in the market and we will sell it by direct

marketing and personal selling where we will send our employees to set up the purifier. There

will be only one risk and that would be use of the product. We have to educate people to

minimize this risk and train them to use successfully.

The market size: In Sri Lanka there is huge potential market because of climate and

geographical condition. Due to monsoon and ocean, water is not pure and it results to spread

numerous diseases in Sri Lanka. One death out of six deaths is caused of polluted water. (UNO,

2008) But there is no local player in water purifier industry due to lack of technology and

money. Most of the companies which have strong presence in the other Asian countries‟ water

purifier market; they are also run operation in Sri Lankan market such as; Eureka Forbes‟

Aquaguard (Kaushik, 2003), Unilever‟s Pureit, Kent, Philips, Godrej, Usha Brita etc. The market

is growing by 25% per annual. Last year 12 million water purifiers were sold. (Brandix and

Deutsche Bank water filter project, 2009)



Geographic region: Tata Group has already operations and manufacturing plant in Sri Lanka

such as it has two hotels such as Taj Airport Garden and Taj Bentota which is established in

1984, Tata Motors has started its manufacturing plant in 1961 therefore today Sri Lanka is the

biggest market for them in South Asia Region, Tata Steel has its plant in Mannar and Watawala

which has already earned 555 market share in steel industry. It shows the strong presence of Tata

Group in Sri Lanka. We have chosen Mannar, Watawala and Colombo to start our operation

because these cities have already Tata‟s plant and tea warehouses so it will reduce the operation

cost and these cities are nearby India so transportation cost also will be less.

Consumer buying behavior: In Sri Lanka Consumer buying behavior is almost as same as

India. People are more concern about saving money rather than spending. Customers do not

prefer impulsive buying. Therefore customers buy local products because of low price. They

also drink supplied water which cost very low rather than to buy Rs. 2000-3000 water purifier. It

is an advantage for Tata Swach because of its cheaper price.

Retailing and wholesaling: Basically there are two types of organized retail formats in Sri

Lanka: Supermarket and hypermarket which is follow discount and low price strategy. But the

major part is handled by unorganized retail sector. Most of the companies are using dealership or

franchise to sell their water purifiers. They tie up with local retailers to sale their products.

Advertising and sales promotion activities: The literacy rate is 92% in Sri Lanka which is

considered as a good rate. (CIA-The World Fact Book, 2008) News paper is the cheapest and

effective mean to reach out to majority of customers. But to sell the water purifier every

company more emphasizes on direct marketing such as event or trade show and personal selling.



Competitor’s analysis

Importance of understanding competition: When a company launches its product in the

market, it tries to position its brand uniquely among other brands present in the market.

Therefore it is critical to understand the strengths, weaknesses, opportunities and threats of each

of those competitors along with the industry structure itself. This knowledge is important

because it‟s the competition that helps us to own the unique benefit in our customer‟s mind that

our competitors‟ have not addressed and cannot easily address in the future.

Rational behind identifying the competitors: Analyzing the competitors is an essential

component of corporate strategy. Knowing about the competitors and their profile will help the

concerned organization in knowing its weaknesses that it may exploit. A detailed profile of the

competitors, helps an organization in getting an in depth description of the competitor‟s

background, its unique selling proposition, financial condition, its strategies, the products and the

market share.

Competitor’s products: Most of the companies which have strong presence in the Indian water

purifier market; they are also run operation in Sri Lankan market such as; Eureka Forbes‟

Aquaguard (Kaushik, 2003), Unilever‟s Pureit, Kent, Philips, Godrej, Usha Brita etc. But the

scenario of Sri Lankan market is different in the context of social, economical and cultural to

Indian market. In spite of those companies there are many social communities, who provide safe

drinking water in Sri Lanka such as Brandix and Deutsche Bank (Sri Lanka: Deutsche and

Brandix Bank water filter project, 2008), Hitachi technologies (Latest News : Katugastota Water

Purification Plant Completed in Sri Lanka), CRRP programs under Red Cross and UNO

(Wijesinghe, 2009) and Global Medic team (Response to IDPs in Sri Lanka, 2009).



Competitor’s prices: In order to the market segmentation, our product is design for the lower

income segment which is 79% of total population of Sri Lanka. In this segment, if we compare

our product with competitor‟s product, our product is the cheapest (Rs. 999 and Rs 749) water

purifier in the market. Our nearest competitor is Aquasure of Eureka Forbes and Pureit of HUL

and their cost is much higher than ours, which is above to Rs. 2000 (World's cheapest water

purifier from Tata, 2009). Usha Brita‟s water purifier is one of the closest competitors in this

segment in the Sri Lankan market because of two reasons; first, this group has already penetrated

in the Sri Lankan water purifier market in 2005 (Usha Brita lines up water purifier systems,

2005) and other one, it has lower range of product which cost Rs. 1.195 to Rs. 1.295 (Usha Brita

Water Purifier Price List, 2010).

Competitor’s promotion and advertising methods: In its promotional and advertising strategy

Eureka Forbes positioning its brand as an environmental friendly company and using a

combination of varieties such as direct marketing, event marketing and many CSR activities

(Eureka Forbes). Usha Shriram Brita is selling its products though door to door marketing in

India and exporting these products in Sri Lanka as well. (Usha Brita‟s niche mall gathers new

footfalls, 2004). Unilever is working its promotional activity as a CSR program with UNICEF in

Sri Lanka such as safe water program in schools and day care centre; it will work for its „Pureit‟

water purifier (Unilever).

In the context of competitors promotional and advertising strategy for their water purifier

product, they are using direct marketing tools and doing a lot of CSR activities because after

Tsunami in 2004 Sri Lanka got noticed for its unsafe drinking water (Tsunami disaster in Sri

Lanka, 2004)



Competitor’s distribution channels: Most of the Companies using zero-level (direct)

distribution channel to selling their water purifier in Sri Lanka and exporting their product from

India because India and Sri Lanka both are neighbor country. Unilever has strong network in Sri

Lanka and selling many fast moving goods through its distribution network (Unilever, 2005).

Eureka Forbes is an innovator of door to door selling concept and it has own distribution network

which help to reach its customers directly (Eureka Forbes). Usha Shriram Brita entered in Sri

Lankan market in 2005 and exporting its products through India. Usha Shriram Brita has a

production unit in Tamil Nadu, India which enables it to export in Sri Lanka (Usha Brita lines up

water purifier systems, 2005). On the basis of above mention data we can analysis that

competition in Sri Lankan water purifier market is very high, it is not only the presence of many

competitors but also presence of many social communities. As our target in the Sri Lankan

market is lower income segment so we can say that our product has some benefits over

competitors such as trust of Tata with cheapest price.

Government Participation in the Marketplace

The government participation in water purification industry is very high. Every organization has

to get approved their products by the government before selling to customers such as in India

without ISI mark, a product cannot be sold in to market. Moreover, to provides good quality of

water to public the government is helping local players to provide good quality of water at low

price such as Ministry of Urban Development and Sacred Area Development distributed 2000

water purifier to public at free of cost. They gave permission to local water suppliers to start a

project called Brandix and Deutsche Bank water filter project where they supply filter water to

2000 households every day. (Brandix and Deutsche Bank water filter project, 2009)



Marketing Plan

Executive Summary

In this project we as a group have made marketing plan for Tata Swach for next 5 years. To

increase our sale and profit we will spend half of our advertisement budget on personal selling

because by this only we can aware consumers about our products and persuade consumers to buy

the products. We have set the sale budget for next five year which is Rs. 149784000.

We as a group have learnt by this project that how to do marketing auditing and planning

because the whole success of an organization is depends on marketing plan. In past scenario,

most of the organizations were production and sale oriented. They believed that consumers

would prefer only those companies‟ products which are wildly available. It demonstrates that

organizations were more considered about sale and profit rather than providing good quality and

service. But in present scenario the delivery of quality in service and goods has become more

precedence. Companies are more sophisticated about selling product-support service. They

provide pre-purchase and post purchase service to their customers so customers will not switch

to other company. They spend huge money on R&D and pay millions of money to consultancy

firms for marketing research and plan.(Kotler & Keller, 2009)



Marketing objective

Target Market: Firstly, we will target the government where as we will persuade them to buy

our products by telling them the advantages that how can it is helpful to stop water disease and it

is also cheaper than other companies‟ products. Secondly we will target middle and low income

level customers. By the help of marketing plan, we would try to achieve our targets.

Expected sale: Our main objective of this marketing plan is to increase the sale by 3 times. Last

year the quarterly sale of Tata Swach was Rs. 12.5 million all over the world so by the help of

this figure our main objective is to increase it up to Rs. 30 million by the end of this year all over

the world. Our expected sale in five year from Sri Lanka is Rs. 5 billion. This figure is base on

Eureka Forbes Sale. Last year, they sold Rs.12 billion water purifier in India and Sri Lanka but

we want to sale Rs. 5 billion only in to Sri Lanka. (Capitaline, 2009)

Expected Profit: Basically service oriented companies set the price according to their operation

structure such as how much they are spending on warranty period, production cost, distribution

cost, factory overheads and selling and advertising expanses. After analyzing all these cost they

add profit according to their strategy such as if they want to become price oriented where their

price will be less than competitor price then organization will set low profit because they want to

make profit by selling more volume of products. We are using same strategy where we will set

only 40% profit in our cost so after five years if we achieve our sale in Sri Lanka then our profit

will be Rs. 2 billion.

Product adaptation: We will also customize our product and service according to need and

demand in the market such as if any customer want more than one year warranty then we will



provide him but we will charge him extra money. On packaging and booklet we will use Tamil,

English other than their national language because Tamil is the second most prefer language and

then English.

Promotion Mix

Today every organization spends billions of amounts on advertising, sale promotion, direct

marketing, personal selling and sponsorship. They establish a separate department which

consider only on marketing communication channel operation because in present scenario

spending on marketing communication mix is considered as a long term investment not as

expensive which helps organization to improve their turnover and goodwill. Integrated

Marketing Communication are the channels by which a firms inform, convince and sustain

consumers for a long time which help them directly and indirectly to increase their sale and

profit. They create the need and demand of new or existing product by telling the uses and the

advantages of the products through Marketing Communication. (Kotler & Keller, 2009)

Advertising Mix

Advertisement is a paid form of promotion of ideas, goods and services by an identify sponsor.

It is the cost effective way to promote the products and in the same way it is also highly

accessible means it is only the way to reach out majority of the customers. There are many

sources for advertising such as:

Print Advertisement: Newspaper advertisement is one of the easiest ways to convey the

message to majority of the customers. We will give advertisement in newspaper where most of

the consumer can see our advertisement and in the same way we will also tie-up with famous

branded and fashion magazine where we will give pastors and calendars where local celebrities

will use our products.

Broadcasting advertisement: We will also use TV advertisement because by visual ads we can

show how it is used and what the advantages are by using it.



Sale Promotion

At last decade, organizations had been spent huge amount of their promotion budget on

advertising. But now due to increase the competition and change in technology many marketers

there are many others effective and cheaper means of promotion by which company can promote

their products more effectively. Many companies are developing fully integrated marketing

programs that include consumer and trade promotions. Sale promotion is a verity of short term

incentive to encourage customers to purchase the products.

By the help of trade show, special offering such as free home delivery, free service we will try to

increase our sale.

Personal Selling

Personal selling is one of the most important variance for water purifier industry. Most of the

organization is using it to increase the sales and aware the consumer about the product. In this

process, a salesman from company directly will come to meet consumers where he will educate

consumers, aware them about the advantage of the products and persuade them to buy the

products. Eureka Forbes is considered as Pioneer of personal or direct selling. It has more than

12000 salesmen for personal and direct selling. (Harvard Business School, 2009)

Retailers

Type of retail stores and Retail markups for products in each type of retail store

As mentioned earlier, the main type of retailers available in Sri Lanka are small conventional

stores and these stores makes shopping easier for Sri Lanka due to the large availability. As a

start up plan, a model “Swach” water purifier will be displayed in retail shops and then a toll free

number is provided for placing the order. This plan suits well with the smaller shops which

doesn‟t have enough floor space to meet our requirement. For larger departmental stores the

product will be placed on display and the benefits and the most importantly the low price and of

the product will be highlighted.



The smaller and conventional stores can give the company a higher sale than the larger

departmental stores.The above mentioned information will help us in making a decision. This

table reconfirms that the smaller conventional stores will give more sales to the company than

the larger supermarkets.

Methods of operation for each type (cash/credit)

The main method of operation will be by providing incentives or commissions on product sold,

since “Swach” doesn‟t have a self line the product can be ordered at any point of time in the

year. Beyond that for the display of the product in conventional stores as minimum one tine

payment is made to the Shop keeper. No Credit policy is planned for the initial launch. More first

money cash is paid to retailers for shelf life and the policy of commission hold good even for big

retailers

Scale of operation for each type (small/large)

The scale of operation planned is large. The main entry into the market is via an awareness

programmed which highlights the importance of usage of unadulterated water and also how

“Swach” as a product can bring in the difference. The main USB is the price

Wholesale Market

As stated in the table Sri Lanka has a large number of wholesale r and retail distribution. The

strategy that “Swach” have is to have a one main wholesaler who has got the maximum reach in

the country and then tie up with the wholesaler for the distribution of the product.



Markup for class of products by each type

Since there is only one model that is going to be available in the market there is no classification

of different products.

Methods of operation for each type (cash/credit)

The wholesaler‟s main objective is to deliver the product to the larger retailer within the shortest

possible time by affective supply chain management Orders from smaller shops will be diverted

to the nearest warehouse. The company pays the wholesaler for the storage and supply change

function. The plan is to agree on a yearly payment contract with the wholesaler for availing the

service.

Scale of operation (small/large)

One of the main reasons for incurring a huge cost in warehousing and supply chain is to have a

large scale of operation. As mentioned earlier in the retailer section, the objective is to connect

80% of the retailers directly or indirectly.

Import/export agents

“Swach” can be imported to Sri Lanka as part of Bilateral Free Trade Agreements (BFTA).

The Agreement provides for duty free as well as duty preference access for the goods

manufactured in the two countries. “Swach “has tied up with one of the largest freight company

to carry the product from the place of manufacture that is Chennai to Sri Lanka. Opting Chennai

is also a strategic decision by keeping Sri Lanka market in mind and the product can be

transported with less cost and time. As part of the agreement the freight company will provide a



provision for the storage of 100000 Units of Swach (dismantled) for a period of 10 days. The

duration of the shipment is agreed to be in duration of 12 days, but the cause is that the duration

can vary depending on the demand. If the duration of the shipment needs to be reduced, then

“Swach” needs to be pay additional charges to the company.

Warehousing – Type and Location

As mentioned earlier, “Swach” had a tie up with the largest wholesaler of Sri Lanka and they in

turn facilitate the warehousing facility for “Swach” and the product is moved to a ware house

which is nearest towns and cities. From an Importing point of view, it is the freight service which

is providing the facility of conditional warehousing.

Price Determination

The supply chain management cost which includes the transportation and warehousing cost will

be considered as part of marketing plan. Actual information related to the shipping chares is not

available as shipping charges vary due to the high number of variables.

Another set of expenses that are incurred are related to Loading and unloading charges, and

Wharf age fees During transportation the transported goods are insured, this is part of export

policy that “Swach” needs to adhere. There is no custom duty involved in it because of BFTA.

All the Costs that are involved will have an impact on the Retail price but due to the relaxio0n of

bilateral trade between India and Sri Lanka, the cost of the product is not so high even though it

is getting imported.



Terms of sale

Free On Board or Freight On Board freight Policy is followed where in Swach pays for shipment

and loading costs, and insurance of the goods is paid. One of the main reasons is the safe

handling of the product. As mentioned earlier, the product is shipped from the host country and

all the expenses till it reaches the exporter market is paid by the “Swach” All the charges related

to unloading and transferring the product to warehouse is also taken care by the parent company.

The advantage is the end to end handling of product with minimum damage

Budget

Selling Expenses

Staff salaries, Sales support and distribution staff expenses are included. The total expenditure is

Rs. 3000000.00

Advertising and Promotion Expenses

Radio Rs .500000.00

Newspaper/Magazines Rs.5000000.00

Regional Television Ad Rs. 20000000.00

Sales Promotion Rs. 2750000.00 (Including Customer Awareness Program)

Customer Oriented Rs. 2000000.00

Trade Oriented Rs. 750000.00



Support Line Rs. 3000000.00

TOTAL Rs. 33,250,000.00

Distribution Expenses

Distribution expenses include shipping and all associated charges including warehousing charges

for freight Carrier Company and expenses for storage and distribution of the product within

Srilanka. Total expenditure on Distribution costs is Rs. 25,000,000

Product Expenses

Product expenses include cost of Water Filters, Packaging, operating costs. Total expenditure is

Rs. 13,233,800

Annual Profit and Loss Statement for year 1st year The figures illustrated below are only estimations.

Revenue

INR

Sales Rs. 37446000.00

Expenses

Promotion:

Advertising Rs. 15000000.00

Sales Promotion Rs. 900000.00


Rs. 16700000.00



Distribution* Rs. 4500000.00

Cost of Production

Product** Rs. 4400000.00

Salaries *** Rs. 1000000.00

Rs. 9900000.00

Total Expenses Rs. 26600000.00

TOTAL PROFIT Rs.10846000.00

Annual Profit and Loss Statement for year 5th year

Revenue

Rupees

Sales Rs. 149784000.00

Expenses

Promotion:

Advertising Rs. 45000000.00

Sales Promotion Rs. 2250000.00


Rs. 49650000.00

Distribution* Rs. 18000000.00

Cost of Production

Product** Rs. 11000000.00

Salaries *** Rs. 4000000.00



Rs. 33000000.00

Total Expenses Rs. 82650000.00

TOTAL PROFIT Rs. 67134000.00

Distribution expenses include shipping and all associated charges including warehousing

charges for freight Carrier Company and expenses for storage and distribution of the

product within Sri Lanka.

Product expenses include cost of Water Filters, Packaging, operating costs.

Salary expenses include: Administration staff, marketing/sales staff and Support staff.

Note: Promotional Expenditure has increased due to an overall increase in sales and

because of which more coverage of geographical locations required in. Cost of

production also increased due to the increase in sales that caused an increase in

production.

Resource Requirements

Finances:

“Swach” is new to the market so the finance is solely depended on the sales of the product the

expectations are very realistic, which has been concluded based on the research conducted in Sri

Lanka. Research will be undertaken to compare and contrast potential credit facilities if more

finances are needed.



Personnel

The personnel requirements for the Water Purifier product are as follows. The company consists

of Country Head, Sales and marketing department, finance and administration, Human

Resources department and Maintenance and Customer care department

The main responsibility of Country head is to make sure company is moving towards planned

estimates of profit year on year, if required take corrective actions and handle concerns and

queries of stake holders in and outside the country. Sales and Marketing team is responsible to

achieve the sales target and marketing department objective is to make the life of sales

department easier by proper campaign and Advertising. Human Resource department will look

after the well- being of the employees and also to control employee activities. Finance

department to take care of budgets and other finance related activities. Customer care and

Maintenance department mot is to take care of customer queries and handle water filet relater

queries and maintenance activities.

Production Capacity

During the first year, product will be imported to Sri Lanka and later if the demand of the

product goes higher than a plan to have a manufacturing Unit can also be considered. This will

result in better pricing of the product will result in more sales and Profits.



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International Marketing Plan for Tata Swach Water Purifier

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Transcript of International Marketing Plan for Tata Swach Water Purifier