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2 Reva – The Car of the Future
TABLE OF CONTENTS
CURRENT STATUS________________________________________________________________ 5
AGE GROUP____________________________________________________________ 7
GENDER_______________________________________________________________ 7
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PREFERENCE OF REVA GIVEN THAT IT HAS 10 TIME THE FUEL EFFICIENCY __________ 11
5CS ________________________________________________________________________ 12
COMPANY _____________________________________________________________ 12
PRODUCT ______________________________________________________________ 12
CUSTOMER ____________________________________________________________ 13
COLLABORATOR _________________________________________________________ 13
COMPETITION___________________________________________________________ 13
CONTEXT ______________________________________________________________ 14
STRENGTHS ____________________________________________________________ 16
WEAKNESSES ___________________________________________________________ 16
OPPORTUNITIES _________________________________________________________ 17
THREATS ______________________________________________________________ 17
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POSITIONING __________________________________________________________________ 20
PRODUCT ____________________________________________________________________ 21
PRICE _______________________________________________________________________ 21
PLACE_______________________________________________________________________ 22
PROMOTION __________________________________________________________________ 22
PR __________________________________________________________________ 22
ADVERTISING ___________________________________________________________ 22
IMPLEMENTATION __________________________________________________________________ 23
BUDGET _____________________________________________________________________ 23
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EXECUTIVE SUMMARY
BRIEF HISTORY
REVA Electric Car Company Private Ltd. (RECC), based in Bangalore, India, was established in 1994 as a
joint venture between the Maini Group India and AEV LLC, California USA, to manufacture environment-
friendly and cost-effective electric vehicles (EVs). Seven years of R&D earned the RECC recognition in the
form of 10 patents and a globally accepted product. REVA, India's first zero polluting Electric Vehicle for
city mobility, was commercialized in June 2001.
CURRENT STATUS
REVA is currently being sold primarily in Bangalore, the city where it is manufactured. It has sales points
in other major cities like Bombay, Ahmedabad, Hyderabad, Delhi, Pune, Kolkata, Goa and Agra. It is also
sold in 9 other countries which include United Kingdom, Italy, Malta, Cyprus, Norway, Spain Ireland,
Japan, Srilanka, and being test marketed in Australia, Switzerland, Germany, and Austria, Nepal The
company currently uses direct word of mouth publicity to gain customer base. It doesn’t advertise on TV
or other media. The sources of information for the customer Most of the sales come from referrals
from previous customers. For most of the customers this is the second car and 50 per cent of the
customers are women. The car is being predominantly sold in Bangalore.
PLAN OF ACTION
We intend to create a complete and comprehensive marketing strategy for the product REVA. We
understand that different customers have different perceptions about the product because of lack of
product positioning done by the company. We want to market a new concept like REVA in the Indian
market by first identifying target markets not only in one or two cities like in the current case but across
the whole of India and then positioning the product accordingly to maximize sales in all cities. In this
marketing strategy, we shall also take into account the customer inertia that the car will face, not only
because it is the first of its kind but also because it would be difficult to get people to change their style
of driving from petrol cars to electric cars.
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MARKETING SURVEY
We conducted a market survey among urban people who are a part of the current target clientele. The
questions asked and the resulting answers are given below graphically.
AGE GROUP
GENDER
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IMPORTANCE OF PRICE
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SITUATION ANALYSIS
For situation analysis, we decided to do with 5Cs, SWOT and Porter’s 5 forces analyses to provide a
holistic view of the entire situation and encompass internal and external forces at work.
5CS
COMPANY
Some basic facts about the company include:
RECC is a joint venture between Maini Group, Bangalore, India and AEV LLC, California, USA
Based on the principle of energy conservation and environment friendliness, the company was
built to produce India’s first zero pollutant car that ran on electricity for urban transportation
The company has a policy of launching a new model every year with technological
advancements and allocates about 30-50% of its funds for the same
PRODUCT
Maximum speed of 80 kmph with a battery life of 80 km.
Additional safety and strength features incorporated following past complaints. Dent proof body
material used to prevent damage during accidents.
High visibility from within the car due to small bonnet and high seat
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Better suited for city driving with ease of maneuvering and parking and small size
CUSTOMER
Customer is well informed. As there are no advertisements in TV or other mass media, the
information is spread through word of mouth or news in the media
Adopted by elderly due to ease of driving due to lack of clutch and gears.
COLLABORATOR
Suppliers are ready for small batch production schedules
COMPETITION
The REVA was priced at a moderate Rs 2,49,000 earlier and now Rs 3,30,000
The company faces no direct competition in this segment apart from the probable entry in the
segment by big companies like TATA, Renault-Nissan, GM and even BMW within a period of 10
years.
Faces competition from Maruti 800 because it is priced in the same range and has been
attributed as common people’s car for quite a long time. Similarly, other cars like Hyndai Santro
and Tata Indica are also priced in the same range.
New competition from TATA NANO which is the cheapest car till date priced at a mere Rs
1,00,000. NANO provides space for 4 adults even up to 5 while REVA provides space for 2 adults
and 2 children at such a low price.
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CONTEXT
REVA was launched in the year 2001, the petrol prices in that year and in present year 2009
alongwith the cost per kilometer is as follows:
Considering the above data, the cost per kilometer of the car is increasing by 13.6% per year
which is very high
Also savings due to Reva are significant given that people can recover the entire cost of the car
within a period of 5 years as shown below.
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*Assuming that a person travels 1500 kms a month, the average fuel economy achieved in city driving
condition 14km/lts
*Average maintenance
The depreciation costs same in both types of cars and hence we shall not factor them in.
This shows that this car will actually recover 2,04,215/3,31,000 = 62% of its costs in 5 years of operation
in comparison to a similar petrol driven car.
For long distance travellers, taking the average no of kilometres per day to 50 km, we get the following
results,
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This shows that this car will actually recover 3,40,360/3,31,000 > 100% of its costs in 5 years of
operation for a long distance traveller.
In any case this car offers a great value proposition for the customers in terms of economy. Note that we
haven’t yet quantified the environmental benefits that this car has over other petrol/diesel driven cars.
SWOT ANALYSIS
STRENGTHS
No Competition in the Electronic Vehicle Segment.
WEAKNESSES
Competition from gasoline vehicles
Small size
High Price
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OPPORTUNITIES
Huge untapped EV market
THREATS
Government incentives to gasoline vehicles
Entry of competitors
PORTER’S 5 FORCES
THREAT OF NEW ENTRANTS - LOW
Suzuki Global Car
As there are many alternatives to the car like 2 wheelers and other petrol driven cars, the
buyers has to make more than one choices while buying the Reva. Hence, the buyers need to
decide if the price is appropriate for the value provided.
Reva is also into Automotive Components Manufacturing for many years and manufactures
many components for itself thus giving less bargaining power to its suppliers
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Also, 2 wheelers provide indirect competition to Reva as a substitute with nearly similar
purchasing and operating costs.
Future Substitutes- Tata Nano, Bajaj-Renault-Nissan Small Electric Car, field Marshall Group
Small Car, Ajanta Group Small Electric Car (Proposed Price Rs. 85,000) also pose a challenge to
REVA
MARKETING OBJECTIVES
The main marketing objectives for REVA are:
1. Increase Sales
2. Create brand awareness
INCREASING SALES
The current sales of REVA are not sufficient to achieve break even. As a result, RECC is having problems
in deciding the long term strategies for the company. Though people like the concept of car on
electricity, still many people are apprehensive when it comes to buying the car. This is because of the
unavailability of recharge points on existing roads and the present scenario of power deficiency in India.
MARKETING STRATEGIES
SEGMENTATION SCHEME
The current segmentation scheme for Reva is based on utility, gender and income preference. The
target segment includes working women, college going students, small families with one or no children
and for families that are looking to substitute a 2-wheeler with a car for the purpose of a second vehicle.
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Highly environment friendly people also prefer Reva for city use. The geographic distribution is
restricted to 6 states and overseas operations in 10 countries.
SEGMENTATION PROFILES
We recommend a widening of the customer base on various grounds. Firstly, the sales should be
expanded to all of the country as compared to just 6 states. Tier I and Tier II cities can be targeted for
sales. In Tier I cities, the congestion in traffic, lack of parking space and long queues at the petrol pump
can be avoided if Reva is used by a high percentage of the population. Also, in these cities pollution is a
major cause of concern that can be addressed by Reva. Some states like Rajasthan, Uttarakhand, Andhra
Pradesh, etc, have given subsidy in road taxes or other taxes for public and corporate using environment
friendly vehicles like Reva. In Tier II cities, the economy of the car can be emphasized to the middle
income bracket that forms a majority of the working population. As the car is preferred by women for its
ease of driving, the following data presents the potential for use in case expansion to all the states
across the country. The current coverage is only 40% of the entire female working population in urban
centers.
The age distribution given below, shows that the majority of the population in the country is within the
age segment of 20-60. This is the age when driving is most required for working people. Hence, age
wise, this age segment is most appropriate for Reva.
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Secondly, using the findings of the market survey mentioned earlier, we see that for most people, fuel
efficiency is the most important factor considered while buying a car followed by
TARGET SEGMENT
The target segment that we propose is middle and upper income groups across geographic locations
throughout the country. As explained earlier, Tier I and Tier II cities, both should be targeted. Increasing
the coverage to across the country will involve a few initial costs, as the showrooms and outlets are
managed by the company itself, but a 150% increase in target audience occurs validating the initial
expenses. Women, college goers and also people looking for a bike can be given the Reva as a car made
to save them money and meet all their requirements of driving in the city where the average speed is 20
kmph. An EMI Calculator is shown for people who would like to buy the Reva instead of a 2-wheeler.
POSITIONING
The Reva is positioned as the following based on the statistics and survey results presented earlier.
Easy to drive
Easy to maneuver
Small size
City car
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Ideal second vehicle for performing daily routine tasks like going to the market, picking up
children from school, etc.
PRODUCT
Battery electric vehicle designed for low speed, congested, urban conditions
Low operating cost 40 paise /Km compared to 4 Rs/km for petrol cars
Easy serviceability
REVA has the best-in-class safety features like dent-proof ABS body panels, side-impact beams, a
steel space frame and dual-braking system.
REVA is one of the most feature rich vehicles available in the market. Features like the Climate
Control Seat (CCS™) and Remote Controlled A/C have been especially incorporated to improve
passenger comfort at an affordable price.
The design methods and manufacturing philosophy used in REVA allow it to be manufactured
cost effectively even at low volumes.
PRICE
Actual Price - 3.3 lakhs
Competitive pricing strategy based on the cost of the production and return on investment
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Government subsidizes 33 % of EV costs for purchases involving PSUs, govt departments, private
institutions when ordered in bulk
PLACE
Exclusive showrooms and sales outlets in major Tier I and Tier II cities
Collaboration with Reliance Digital to leverage its well established distribution network
PROMOTION
Currently Reva doesn’t have any promotion strategy. Its site acts as a point of contact between people
and the company. Currently the public is aware about its being a zero-emission vehicle, but other
benefits of the car are unknown. Also some misconceptions exist regarding its safety, power and drive.
Building impact through various media public relations, mass media, advertising and events can be done
to increase public awareness about the other aspects of Reva and clear up misconceptions.
PR
Pre launch excitement and buzz created before the release of the new model every year,
because of being the first of its kind in Indian market
MASS MEDIA
Creating awareness among the target segment about electric vehicles emphasizing the key
features like low maintenance costs and easy to drive etc
Appealing to the target segment by emphasizing the importance of being eco friendly
ADVERTISING
Displaying in college festivals and major events like trade fairs, Auto shows in major cities.
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Advertising through radio and Television using film stars or cricketers as Brand ambassadors
Booklets and Pamphlets can be distributed at car showrooms and retail battery outlets
The sales executive of the company needs to make sales presentation to corporate buyers
DIRECT MARKETING
In the case of Direct Marketing the Company Officials directly contact the Prospective buyers with the
information available through various sources. For example in case of Road Shows, Trade Fairs, Auto
shows etc. Sometimes the existing customers also provide references of prospective buyers such as their
friends or relatives.
IMPLEMENTATION
BUDGET
The expenses of the company for marketing include mainly that of an advertising budget. We would like
to use the percentage of sales method. The desired sales for Reva are around 7,000 cars to break even
when the current sales are of around 3,000 cars per annum. Hence, the desired revenue amount is
7,000 * 3,30,000 = Rs 2,31,00,00,000. Hence if we consider 20% of these costs as this will be the first
advertising campaign for the product, the total budget for advertising is Rs 46,20,00,000. The costs for
Research and development are fixed at $ 20 million which has been funded by private equity.
ACTIVITY SCHEDULE
The activity schedule around the advertising campaign will revolve around the product launch that
happens every year.
3 months prior to the product launch, the advertisements in the media, print, television and radio,
should start that create curiosity regarding the product.
During the product launch, along with the advertisements, the messages regarding loans should be sent
across to the public to facilitate conversion of 2 wheeler buyers into Reva’s customers.
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For the remaining period, testimonials from satisfied customers can be sent across to concretize the
message for buyers to be pulled towards Reva.
FINANCIAL PROJECTIONS
Fresh investments that Reva got = $ 20 million (from Private Equity)
Rate of growth expected for the next 3 years: 7000 = 3000 (1 + r/100)3
R = 32.6%
The company needs 3 times the growth of 32.63% for the next 3 years to just achieve break-
even sales, which in itself is an uphill task
Since the company is relying primarily on funding and Private equity investments, it has
probably got the last big boost of equity from a partner and hence this is the company’s last
chance to improve sales and turn profitable
The horizon for improvement of 3 years seems unreasonable given the past growth
So if the sales still grow at twice the rate, it shall take about 5 years to just break-even. Hence the
company’s decision to increase capacity to 30,000 cars seems a step in preparation for the future and is
the last effort to save it from bankruptcy.
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REFERENCES
i. www.revaindia.com
ii. www.dnaindia.com
iii. www.business.outlookindia.com
iv. www.auto.indiamart.com
v. http://www.businessworld.in/index.php/Can-Reva-Go-the-Extra-Mile.html
vi. http://www.businessworld.in/index.php/Automobiles/Reva-Takes-Charge/Page-2.html
vii. http://www.indiastat.com
TABLE OF AUTHORITIES
Table 1: Cost of petrol per liter in conventional cars __________________________________________________ 14
Table 2: Savings per month due to reva usage for corporates __________________________________________ 14
Table 3: number of working women in india and a few states __________________________________________ 19
Table 4: age wise population distribution in urban centers in india ______________________________________ 19
Table 5: EMI calculator _________________________________________________________________________ 20
TABLE OF FIGURES
Figure 1: Age group of survey respondents __________________________________________________________ 7
Figure 2: Gender distribution of SURVEY RESPONDENTS ________________________________________________ 7
Figure 3: Previously owned cars ___________________________________________________________________ 7
Figure 4: importance of power drive _______________________________________________________________ 8
Figure 5: Importance of Fuel Efficiency______________________________________________________________ 8
Figure 6: Importance of Maintenance Costs _________________________________________________________ 8
Figure 7: Importance of reputation of brand _________________________________________________________ 8
Figure 8: Importance of Price _____________________________________________________________________ 9
Figure 9: Importance of size of car _________________________________________________________________ 9
Figure 10: importance of looks and comfort _________________________________________________________ 9
Figure 11: importance of ease of service ____________________________________________________________ 9
Figure 12: importance of additional services ________________________________________________________ 10
Figure 13: importance of environment friendliness ___________________________________________________ 10
Figure 14: time period for buying a new car ________________________________________________________ 10
Figure 15: Price range of car desired ______________________________________________________________ 10
Figure 16: requirement of a car as a second vehicle __________________________________________________ 11
Figure 17: general awareness About reva __________________________________________________________ 11
Figure 18: sources of information of reva __________________________________________________________ 11
Figure 19: preference of reva given that it has 10 times efficiency _______________________________________ 11
Figure 20: Cost savings due to reva for personal users ________________________________________________ 16
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