Project Report On

Submitted To
Prof. Vibhava Srivastava
Management Development Institute
Submitted by: Group 5, This Report is for partial fulfillment of PGDM
(NMP), B2B marketing course)

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 ACKNOWLEDGEMENT

Gratitude is a feeling which is more eloquent than words, more

tranquil than silence.
We, as a group 5, would collectively like to thank Prof. Vibhava Srivastava, Management

Development Institute, who gave us the opportunity to commence this project and encouraged

us throughout our project with his knowledge, experience, and valuable guidance.

We would also like to thank Management Development Institute for including this project in our

B2B curriculum, as it added vastly to our knowledge and experience.

This acknowledgement would not be complete without thanking each and every member of the

group for the immense effort and time spend on the completion of this project.

NMP 29
ASHUTOSH K.SINGH (29NMP18)
GAURAV SHARMA (29NMP30)
KISHORE SRIRAM (29NMP38)
PRITAM KUMARI (29NMP42)
MOHNISH SINGH (29NMP46)
NEERJA MALIK (29NMP47)

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Table of Contents
Introduction............................................................................................................1
1. Firm: Situation Analysis (5CS Analysis)..............................................................2
About Company...................................................................................................2
Reverse Innovation in Harman...........................................................................4
Collaborator........................................................................................................4
Climate/Context...................................................................................................5
IN-CAR INFOTAINMENT MARKET SEGMENTATION.......................................8
By Installation type............................................................................................ 8
By Components................................................................................................... 8
By Geography..................................................................................................... 9
Competition.........................................................................................................9
Customer............................................................................................................11
2. Problem Symptom.............................................................................................11
3. Problem Statement............................................................................................12
Scope..................................................................................................................12
4. Data Set (Primary and Secondary)....................................................................12
5. Financial Analysis..............................................................................................12
6. Value Chain of in-car infotainment...................................................................14
7. Alternatives: Pros and cons...............................................................................14
8. Recommendations and course of action to implement the same.......................15
9. References.........................................................................................................17

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Introduction
Harman International Indias latest in-car infotainment system can be seen in the
recently launched Tata Tiago, a crucial model that involves high stakes for the company.
The infotainment system is one of the many features on Tata Tiago that are being
appreciated by experts.
The systems that Harman have developed for Tata Motors are infotainment systems
predominantly catering to two segments entry small car (Bolt and Tiago) and entry
mid-sized sedan category (Zest). Products developed by them are in two variants entry
radio and display audio. While the entry radio (AM/FM, Bluetooth, USB and AUX
support) and display audio are internally classified terms, according to the senior
company official, the entry radio solution is a segment-first in terms of giving a better
user experience via bigger display and flow of functionalities. Segment-first because a
typical entry radio found in the market only offers a single-line segmented display with
not much of additional features. So this was something where Harman and Tata Motors
collaborated to deliver segment-first infotainment system for the end consumers,
Prathab Deivanayagham, head of connected car India, Harman International explains.
Harman drive the technologies from their global platforms yet remain innovative in
terms of tailor-made functionalities suitable for the Indian market. Thats how they were
able to pitch into Tata Motors and deliver such systems. Harmans plant in Chakan,
which now has two functional assembly lines, currently produces around 10,000-15,000
units per month. They have a scalable capacity that can go up to half a million units per
annum. Having an acoustics engineering center in Pune and a production plant in
Chakan is a key advantage for Harman.
The senior official estimates that if the Indian passenger car industry grows, as per the
projections, to 5-6 million units annually by 2020/21, the in-car infotainment segment
could translate into a US$ 200-250 million opportunity.
However, currently, OEM-fitted infotainment systems come in less than one million
cars. Almost 60-70 percent of total car produced come with entry radio because they sell
in the cost sensitive segments. Entry-navigation units are the biggest bet with bigger
display touchscreens. According to a recently published report by Allied Market
Research titled, World In-Car Infotainment Market Opportunities and Forecasts, 2015-

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2022, the world in-car infotainment market is expected to reach US$ 33.8 billion by
2022, registering a CAGR of 13.3 percent in 2016-2022. The report says that while
Europe is the most promising region with surging demand,
Asia-Pacific would be the fastest growing region over the forecast period.

1. Firm: Situation Analysis (5CS Analysis)

About Company
Harman International Industries, Incorporated, incorporated on January 31, 1980, is
engaged in the designing and engineering of connected products and solutions for
automakers, consumers and enterprises, including connected car systems, audio and
visual products, enterprise automation solutions and connected services. The
Company's segments include Connected Car, Lifestyle Audio, Professional Solutions,
Connected Services and Other. The Company's brands include AKG, AMX, Crown,
Harman/Kardon, Infinity, JBL, JBL Professional, Lexicon, Mark Levinson, Martin,
Revel, Sound craft and Studer. The Company's software solutions power mobile devices
and systems that are designed to be connected, integrated, personalized and adaptive
across all platforms, from work and home, to car and mobile. The Connected Car
segment designs, manufactures and markets connected car systems for vehicle
applications to be installed primarily as original equipment by automotive
manufacturers. Its connected car platforms deliver enhanced and connected capabilities
to the car, including intelligent high-performance navigation with embedded solutions
for multimedia, premium entertainment tuners, and on-board and off-board
connectivity that addresses a range of vehicle categories. It offers an integrated suite of
technologies that extends beyond infotainment to encompass telematics, connected
safety, and over-the-air update capabilities. It also offers a suite of automotive cyber
security solutions through a multi-layer architecture.
In the span of just a few years, Harman International overcame its institutionalized
thinking, developed innovative products for emerging markets, and imported the
knowledge it gained in those markets to its existing business. Below is the timeline of
events which indicate the successful implementation of reverse innovation in Harman

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 West.
centers in the
development
product-
Harmans
systems. in the West. begin to move to
infotainment market segment new methods
automotive- in orders. the middle products. The very small cars.
market for luxury target: $5 billion markets and in for the teams motorbikes and
dominant in the The fve-year emerging its frst customer products for
comfortably audio systems. succeed in Toyota becomes working on
Harman is displays and Harman to change, and Harman is
customization, information ABB. He wants commitment to new business.
sale low-cost Switzerlands maintains its $10.9 billion in
extensive after- China to build after 22 years at Harman of the divisions
technology and team in India and Harmans CEO downturn, account for 40%
proprietary an innovation becomes economic innovations
Relying on Harman sets up Dinesh C. Paliwal Despite the The product
Early 2000 2007 2008 2009 2012

Reverse Innovation in Harman

For decades glocalization, whereby innovations flow from rich to poor markets, has
been a key part of multinationals strategy. Having developed great offerings for home
markets, Western companies modify them, often by stripping off many of their features,
and then distribute them around the world at lower price points.
Glocalization has proved effective in reaching the top segments of the market in
developing nationsbuyers with needs and resources similar to those in the developed
world. However, most growth opportunities in emerging markets are not at the top but
in the middle market and below, where the gaps between customers needs and those of
their developed-world counterparts are enormous. Gradually a new approach is
emerging, one that starts with the recognition that if you want to succeed in emerging
markets, and you must innovate for them. But that isnt the end of the story. Because
the global economy is richly interconnected, innovations developed for emerging
economies can be extended to other markets, including those in the developed world. To

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do this a company must adopt a reverse-innovation mind-set, which means valuing the
products that come out of emerging markets and being willing to rethink the underlying
assumptions in its developed-world businesses. For most multinationals, glocalization
will continue to deliver the bulk of profits for a long time to come. Ideally, it will be
intertwined with and supportive of reverse innovation, leading companies into new ways
of doing business and new areas of growth.
Collaborator
Harman, which recently started operations at its manufacturing facility in China, is
shifting some plants to so-called BRIC nations - Brazil, Russia, India, and China - to
lower its costs and increase margins. Harman does engineering work for audio systems
for BMW and Audi from a research and development center in Bangalore. The company
has been acquired by Samsung electronics in November 2016. The transaction
highlights Samsung's efforts to break into the high-barrier automotive industry where it
has little track record and also marks a strategic shift for the electronics company, which
has previously shunned big acquisitions. The transaction highlights Samsung's efforts to
break into the high-barrier automotive industry where it has little track record and also
marks a strategic shift for the electronics company, which has previously shunned big
acquisitions. Harman earns around two-thirds of its revenue from its automotive-
related business, and its automotive order backlog as of end-June stood at $24 billion,
more than three times annual sales of $6.9 billion in fiscal 2016.
Climate/Context
The world In-car infotainment market is segmented on the basis of installation type,
components, end user, and geography. Based on installation type, world in-car
infotainment systems market is segmented into OEM and aftermarket. The segment
OEM installation dominates the global market in terms of revenue and is expected to
maintain this trend throughout the forecast period, owing to technological
advancements in the automotive electronics industry. Market is categorized as hardware
and software based on components. Hardware is one of the major components of in-car
infotainment system and software is expected to dominate the market owing to faster
performance, interactive voice recognition, intuitive touch screen, and swift graphical
interface. Hardware market is further sub segmented into four different types namely,
audio unit, display unit, connectivity and others. The other segment includes climate
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control, Bluetooth and interactive voice recognition (IVR). The world in-car
infotainment market is segmented on the basis of geographical regions, encompassing
North America, Europe, Asia-Pacific and LAMEA. Europe accounted for the largest
share of the global market, owing to higher per-capita spending on luxury cars.
However, Asia-Pacific would be the fastest growing region due to increased demand for
advanced cars.

Presently, the in-car infotainment market is largely driven by growth strategies such as
product launch, acquisition and partnership. Companies such as Audi AG, Visteon
Corporation, Fujitsu, and Visteon Corporation have launched new innovative car to
attract more number of customers and increase their market share.
Smartphone adoption has been the most prominent factor in proliferation of the in-car
infotainment market. Currently, the demand for advanced in-car infotainment system
with mobile integration technology is rapidly growing. This is one of the key reasons for
the boom in the smartphone industry, which is supporting the market growth.
Smartphones act as a bridge between end user and infotainment. Smartphone
integration with in-car infotainment system have reduced product cost by leveraging
existing connectivity and processing power of mobiles. In addition to this, it also

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delivers easy access to the downloaded applications. Therefore, it helps the consumers
in keeping pace with the consumer daily changing lifecycle.

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With the rapid technological advancements, companies have enabled advanced features
in latest in-car infotainment systems. The amplified consumption and digital content
creation within the vehicle is driving the need for more sophisticated and connected in-
car infotainment systems. However, lack of seamless and uninterrupted connectivity is
restraining the market growth, as there are still some areas, which do not have proper
connectivity. Hence, manufacturers are trying to present advanced mode of connectivity
in in-car infotainment systems. As a result, lack of seamless connectivity is expected to
reduce its impact in near future. In-car infotainment is an advanced facility in vehicles.
Companies are currently introducing customized solutions for cars that satisfy
customer-specific requirement. Today, end users demand personalized in-car
infotainment systems such as customized music, advanced suite of technology,
entertainment services, text messaging, smartphone integration facility and live audio
streaming. Moreover, personalization facility has become one of the important criteria
for consumers while buying a car. Therefore, personalization positively influences the
market growth.

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IN-CAR INFOTAINMENT MARKET SEGMENTATION

By Installation type

OEM

Aftermarket

By Components

Hardware

o Audio

o Display

o Connectivity

o Others

Software

By Geography

North America

Europe

Asia-Pacific

LAMEA

Competition
When Paliwal became the CEO of Harman, in 2007, its infotainment division, which
makes factory-installed systems that integrate GPS navigation, music, video, cell
phone, and internet, led in the luxury-car segment. The division had a 70% share of
the market and accounted for two-thirds of the companys $3 billion in revenues.
(Harman also has a consumer audio business and a division that makes sound
systems for stadiums and auditoriums.) But because the high end had little room for
growth or margin improvement, Paliwal sought new opportunities in emerging
markets, where Indias Maruti Suzuki and other manufacturers had achieved price
points that would have been unimaginable in the developed world. Harman had

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 previously tried to move into these markets through glocalization, adapting its
premium products for lower-priced segments

Continental

Continental is one of the world's largest automotive manufacturing companies

that manufactures, develops, and sells passenger cars, light trucks, industrial
tires, and other related products. The company also specializes in tachygraphy,
brake systems, tires, automotive safety, powertrain components, chassis
components, and other parts used for the automotive and transportation
industries. The company primarily is involved in the production of soft rubber
products, rubberized fabrics, and solid tires for carriages and bicycles.

Denso Corp.

Denso is another major vendor in the market with its infotainment solutions
being adopted worldwide. The company's voice-activated infotainment is being
used in Ford automobiles. Its infotainment solutions manage music, directions,
emails, internet radio, and other infotainment features through advanced voice
commands. Denso's solutions also customize the touch-screen layout and
download applications such as Facebook, Pandora internet radio, and Flickr.

Bose Corp.
The singular mission at the heart of Bose is to reproduce music as true to the
original performance as possible. That involves research, technology and a strong
commitment to excellence. The research to better understand what makes live
music so magical began in world-class concert halls over 45 years ago. They are
experts in how the acoustic space influences what we hearand in
psychoacoustics, the science of how humans perceive sound. This is especially
important in an automobile.

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 Delphi Automotive plc.

Delphi Venture Capital identifies, evaluates, and invests in innovative companies

with next generation automotive technology and those companies with non-
automotive technologies that can be brought into the vehicle to enhance Delphis
existing offering of world class products and technologies.

Customer
Harman had an impression that the emerging markets could not afford for their
products. It was the CEO, Dinesh C. Paliwals decision to venture into these markets as
they are brand conscious. Initially, they started with Kingdom of dreams, Gurgaon,
Commonwealth games, ITC Chola, PVR and Inox cinemas in India. Harman is as eager
to move further toward the low end as it is to maintain its hold on the high end. The
Saras team, now grown to 50 people, is working on a design for the Tata Nano, the
worlds most affordable car. Its goal is to dramatically lower the Nano systems costto
between a quarter and a fifth of the high-end systemswhile sustaining three-quarters
of the performance. Because most drivers use only their systems core features, the
infotainment experience in a Nano wont be all that different from what it is in a
Mercedes.

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2. Problem Symptom
Poor/Unsatisfactory performance of Harman Speakers in Tata Tiago car. High repair
time of speakers in case of failure.

3. Problem Statement
Brand Harman is at stake and the company may fail to target the fastest growing Asia
Pacific market.
Scope
In this project we will try to discover the reason Harman entered into low car
segment infotainment. We will also bring out the failure of the Harman speakers in
Tata Tiago car and the impact of the failure on brand Harman. We will try to use
available secondary data to show the failure of Harman speakers on Tata Tiago. We
will give recommendations that what Harman should do to fix the problem in Tata
Tiago and how to prevent brand Harman to target fast growing Asia Pacific
Market.

4. Data Set (Primary and Secondary)

Primary data -Questionnaire- Attached annexure 1 at the end of the report
Secondary data- User reviews taken from various sources.

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5.

Market Survey Results Attached Annexure 2 at the end of the report

Analysis of Market Survey:

o 46% of the consumers most likely use Infotainment system while driving. It
means a good Infotainment system will really benefit the driving experience.
o 17% of the consumer gave importance to Infotainment system over other
factors while buying a car.
o Brand awareness of Sony and Bose is very high as compared to Harmon
Kardon.

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 o Customers prefer to go to Authorized Car Service center in case of faults in
Infotainment system as compared to system OEM. Customers also expect a
very less repair lead time (say 12 hours to 1 day).
Poor performance of the Infotainment system adversely affects
the system OEM brand more compared to car manufacturer
brand.

Analysis of Secondary Data

o Harmon speakers fitted on Tata Tiago are suffering from software issues and
compatibility issues. The authorized service centers dont have the capability
to repair the Infotainment system. The lead time for repair of Infotainment
system in high.
o Harmon has very few service centers in India. For example : 4 service centers
in south zone, 3 service centers in north zone, 4 service centers in west and 1
in east. Due to this repair cycle time is very high.
5. Financial Analysis
No of Tata Tiago sold in an
year 60000
Harman Revenue from Tiago
sales 10373880 100
Component Description Cost in $
Display Module-7" Diagonal, LTPS
TFT,640x480 Pixels,14 Blacklight 64
LEDS
Touchscreen Overlay-7" Diagonal,
4-wire Resistive,ITO Film Over 14.4
Glass/integral flex PCB
MCU-32-BIT, V850ES CPU Core,
32 Mhz,1024KB Flash,60KB
6.06
RAM,16-channel 10-Bit ADC,128
I/Os, Automotive
4 layer-FR4, Lead Free 3.72
Display mounting bracket-
Stamped/Formed Electro 2.3
Galvanized steel
FPD_Link II Deserializer-24-Bit,5-
1.84
43 MHz,DC Balanced, Automotive

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 Regulator DC Converter, Switching, 1.76
Step Down, Adjustable,2A,55
Enclosure, Main, Bottom-
Stamped/Formed Electro- 1.61
Galvanized Steel
Enclosure, Main, Top-
Stamped/Formed Electro- 1.44
Galvanized Steel
Power management IC 1.34
Other Components 10.77
Labor Cost 10
Total cost of manufacturing
119.24
one unit
Cost of goods sold 7154400 69%
Gross margin 3219480
Expense 2074776
Profit 1144704
Taxes 400646.4
Net Income 744057.6 7%

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6. Value Chain of in-car infotainment

7. Alternatives: Pros and cons

Harman breaks deal with Tata Tiago and collaborates with Maruti
Maruti Company plans to incorporate Harman Kardon music systems to its cars from
2017. It is highly unlikely that the small car offerings from Maruti will get fitted with
these systems as it would bump up the prices in a price-sensitive segment, the sedans
and sub-compact SUVs will get the systems on the higher variants - subject to the deal
materializing, media reports suggest. Its unclear if Maruti will strike a close partnership
with Harman Kardon similar to that of Tata Motors with the supplier. Since Maruti
doesnt have plans to implement Harman systems for its budget cars, Harman cant
meet with its goal of selling more units in the emerging markets. Cash flow would be less
when compared to what it can achieve in Tata because Tata Tiago isnt a luxury car and
is targeted to mass market. If Harman collaborates with biggest car maker of India
Maruti, then they can launch during end of 2017 only and they will lose market of
8.7Million USD from Tata Tiago.

Revenue expected from Maruti Ignis for Harman Speakers is Approx. 7

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Million USD as shown below:
N0. of units expected to sale per year for Maruti Ignis 40000
Price(Rs) of Harman system 119.45
Harman Revenue from Ignis sales 6915920
Service centres of Maruti are more in India as compared to Tata Tiago.
Lead time of repair of infotainment system for Maruti Ignis will be
less .1737 for Maruti against 715 of Tata cars in India.

8. Recommendations and course of action to implement the same

Although Harman is supplying the music system to Tata Tiago but any defect in the
Infotainment system is also tarnishing the Brand Image of Tata Group .Now, Tata
Service centers are not well equipped to directly service the music system. Customer are
ultimately blaming the Tata Motors for this .Harman on the other hand are under
pressure for the end in agreement with Tata Motors if these glitches are not taken care
off. Harman has high stake in Indian Market due to their expansion plan in the
emerging Market and cannot afford to lose the tie up. Harman plan for tie up with other
automobile companies will also not mature if the problem is not take care of in the
Indian Market. Financial Analysis suggests that Harman has a profit Margin in the
Indian Market with high expansion scope in other Automobile companies. In view of the
above the following is recommended:-
Harman should immediately call off their faulty Infotainment system and replace
back with new ones ,this will help them to build a customer and Partner
confidence
Harman should immediately look into the technical glitches of software
compatibility issues and phone pairing issue thoroughly and take corrective
actions so that it is issue is restricted.
Harman should look up for partnering with Centralized Service Centers for repair
of the speakers as they have future plans in the Indian Market.
Consumer Surveys suggests that Harman is widely known and preferred brand in
the Infotainment system this action of theirs will also protect their other Brands
in the Indian and Global Market.
This issue has a direct impact to the other collaborations that Harman is trying to
make in the emerging markets so time is key to success. They need to take actions
within the financial year on these issues.

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9. References
http://www.technavio.com/blog/top-12-automotive-infotainment-companies
http://www.livemint.com/Companies/LSNjhWjzIqFU0dLCFvjxyK/Dinesh-C-
Paliwal--We-are-in-discussions-with-Indian-auto-m.html
http://www.autocarpro.in/features/harman-india-eyes-opportunities-evolving-car-
infotainment-space-20246
https://hbr.org/2012/04/a-reverse-innovation-playbook

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