Abstract This case is about the marketing strategy undertaken by Tata Motors Limited, (the market leader in commercial

vehicles in India, and one of the major players in the passenger vehicles segment), in 2006 to sustain and enhance its market share in the burgeoning passenger car market. In January 2006 the company launched the Indica V2 Xeta Petrol (Xeta) car as a refurbished version of its existing petrol car Indica V2 Petrol MPFI. According to the company, Xeta was to benefit the customer by better meeting their needs compared to existing options in the market - specifically by rendering better fuel efficiency at a competitive price. Indica was an umbrella brand Though the diesel driven Indica was performing well, its petrol counterpart - Indica V2 Petrol MPFI, had not reaped the intended results. Through Xeta, the company intended to create a unique brand identity in the customer's mind for the petrol variant of Indica. Immediately after the launch of Xeta in January 2006, the passenger car business unit of Tata Motors reported a growth of 15 percent over January 2005 by selling the highest number of passenger cars till then. The Indica brand grew by 18.7 percent which was attributed mainly to the launch of Xeta. This success also coincided with the growing attractiveness of India as a global hub for small cars. The entry of Tata Motors' immediate rivals like Maruti Udyog Limited and Hyundai Motor India Limited into the diesel segment of the small car market was also expected to pose a strong challenge for the company. This case discusses the rationale behind the development and launch of the Xeta. It also examines the product, pricing, distribution, and promotional strategies undertaken in this regard and the challenges faced by the company in sustaining its market share in the Indian passenger car market. Introduction In January 2007, it was reported that Tata Motors Limited (Tata Motors) beat close rival Hyundai Motor India Limited (HMIL)4 to capture the second position in the fast-growing passenger car market in India, behind market leader Maruti Udyog Limited (MUL). In December 2006, Tata Motors' car sales stood at 12,665 units against HMIL's 11,049 units.

The growth for Tata Motors came in the compact car segment, primarily driven by the growing passenger car market in India, behind market leader Maruti Udyog Limited (MUL). In December 2006, Tata Motors' car sales stood at 12,665 units against HMIL's 11,049 units. The growth for Tata Motors came in the compact car segment, primarily driven by the strong performance of the Tata Indica (Indica) range. In January 2007, the Indica

reported its highest ever monthly sales since launch, at 14,466 units, a growth of 14% over January 2006. Industry analysts said that this growth was mainly due to the launch of the Indica V2 Xeta (Xeta) in January 2006, and subsequently its revamped version in November 2006. The Xeta was developed by Tata Motors as a pre-emptive move to fight competition, mainly from MUL and HMIL in the passenger car segment. The Xeta's "eXtra Efficiency Torque Advantage" according to the company, was proffered as an answer to the market demand for fuel-efficiency at a competitive price. Xeta was a refurbished version of the company's Indica V2 Petrol car. Analysts said that through Xeta, Tata Motors intended to create a unique brand identity in the mind of the customer for the petrol variant of Indica. The company intended to make a major impact in the petrol driven compact car segment with the Xeta. Analysts also felt that the Xeta had the potential to change Indica's image as a diesel car brand. Xeta's success coincided with the growing attractiveness of India as a global hub for small cars. This led to the entry of a number of domestic and foreign players into this segment, which resulted in intense competition in the growing Indian automobile market. (For an overview on the Indian automobile industry refer to Exhibit I). Some of the companies which planned to launch small cars in India in and after 2007 were General Motors India (GM) Fiat, Toyota Motors, Honda Motor Co., Skoda India, and Renault. The entry of MUL and HMIL in the diesel segment of the small car market was expected to pose a strong challenge to Tata Motors which had the leadership position in this segment Background note On June 1, 1945, Tata Sons Limited (Tata Sons) bought the Tatanagar Shops (also called the Singbhum shops of the East Indian Railway) from the Government of India to manufacture steam locomotive boilers. It intended to extend its operations later to building complete locomotives and other engineering machinery. This project was set up as a new company by Tata Sons and was called the Tata Locomotive and Engineering Company Ltd. which was commonly known as Telco. Today, its manufacturing base is spread across India - in Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), and Pantnagar (Uttarakhand)... Indica : More car per car In December 1998, Tata Motors launched the first indigenously developed compact car, the Indica. The model was displayed at the Auto Expo'98 . To underline the "Made in

India" image, the Tata Motors stall at the exposition had models and organizers dressed in Indian attire. At the inauguration function, which was attended by the then Union Industry Minister Murasoli Maran , hundreds of children waved the Indian flag. The Indica project was named Project Mint (short for Mini Telco), when it was commissioned. This car was partly designed and developed by Tata Motors, the original design being that of the French car manufacturer Peugeot. Enter the Xeta For the Indica, although the diesel-engined version continued to ring the cash registers, the sales of the petrol variant failed to gather momentum in spite of the engine having seen refinements since it was commissioned. This, analysts said, could possibly be attributed to two factors: Tata Motors' lack of experience with petrol cars compared to other small-car manufacturers with established credentials in this segment, and the fact that the 'big and powerful' tag is not necessarily a positive attribute for a petrol car in the extremely fuel-efficiency conscious small-car segment... Product and Pricing - Extra Efficiency Advantage Tata Motors strove to improve and refine its product continuously but customer feedback was not always positive in all respects. The Indica V2 Petrol's 1.4 litre engine had become a handicap as it was the biggest in the small car segment. Also, it shared the same block as its diesel counterpart, making it inherently heavy. Promotional Strategies Xeta was promoted through various media: television, print, and the Internet. The television campaign 'You Gotta Be Dumb' was conceptualized by FCB Ulka. M G Parameswaran, Executive Director, FCB Ulka, said, "The creative team looking after Indica had a leap idea, that not looking at Xeta is like refusing to have a good time with four lovely women. When you see an advertisement like the Indica Xeta, you instantly remember the scene from Dumb and Dumber and it's this that the advertisers are aiming for. Now every time you think of Dumb and Dumber, you'll be thinking of the Indica Xeta as well.

Subsequent Modifications In November 2006, Tata Motors launched a new 1.2-litre engine option for the Xeta range at an introductory limited period discount of Rs 25,000. (See Exhibit XI for print

ad). The new variant followed the reduction in excise duty (16 per cent excise duty vis-vis 24 per cent for the petrol model with a 1.2-litre engine,) in the Union Government's Budget 2006-07 Retail Network Support Tata Motors' sales and distribution network in India consisted of 720 dealer outlets which were supported by eight regional offices, 28 regional sales offices and 38 sub-regional offices. Most of the dealers were exclusive dealers. The company had a presence at over 2,000 locations in India, including after-sales and vehicle servicing outlets... Outlook The Indian automotive industry has been growing substantially over the years, and is poised for major change. (For sales trend in the domestic automobile market since 200102 see Exhibit XIII). New challenges are likely to come both from the opening of the domestic market to imports and the entry of international automotive manufacturers. To meet the needs of changing times, domestic automotive manufacturers are being forced to reduce costs, improve productivity, enhance quality, reliability and durability, increase market orientation and create a high level of customer loyalty... Issues Understand the strategy adopted by Tata Motors to sustain the Indica brand in the highly competitive small car market in India Understand the rationale behind the launch of Indica V2 Xeta as an extension of the Indica umbrella brand Analyze the various marketing aspects that Tata Motors had to focus on in order to establish the Xeta in the Indian small car market