Harman speakers on Tata

Tiago and its future

marketing strategy
Submitted by Group -5
ASHUTOSH K.SINGH (29NMP18)
GAURAV SHARMA (29NMP30)
KISHORE SRIRAM (29NMP38)
PRITAM KUMARI (29NMP42)
MOHNISH SINGH (29NMP46)
NEERJA MALIK (29NMP47)
Background

Harman International Indias latest in-car infotainment system can be seen

in the recently launched Tata Tiago.
The infotainment system is one of the many features on Tata Tiago that
are being appreciated by experts.
infotainment systems predominantly catering to two segments entry
small car (Bolt and Tiago) and entry mid-sized sedan category (Zest).
As per one senior official of Harman, if Indian passenger car industry
grows to 5-6 million units annually by 2020/21, the in-car infotainment
segment could translate into a US$ 200-250 million opportunity.
According to a recently published report by Allied Market Research by
2022, the world in-car infotainment market is expected to reach US$ 33.8
billion
 5C ANALYSIS-Company

Harman International Industries, Incorporated, on January 31, 1980.

engaged in the designing and engineering of connected products and solutions
for automakers, consumers and enterprises.
The Company's brands include AKG, AMX, Crown, Harman/Kardon, Infinity, JBL,
JBL Professional, Lexicon, Mark Levinson, Martin, Revel, Sound craft and Studer.
Reverse innovation in Harman: Glocalization helped in reaching top segment of
the market.
Companies need to develop a reverse-innovation mind-set that means valuing
the products that come out of emerging markets and being willing to rethink the
underlying assumptions in its developed-world businesses.
 Company Strategy Reverse
Innovation

Relying on Dinesh C. Paliwal Harman sets up an Despite the The product

proprietary becomes innovation team in economic innovations
technology and Harmans CEO India and China to downturn, Harman account for 40% of
extensive after- after 22 years at build low-cost maintains its the divisions
sale Switzerlands ABB. information commitment to $10.9 billion in
Early 2000

2007

2008

2009

2012
customization, He wants Harman displays and audio change, and new business.
Harman is to succeed in systems. The five- Toyota becomes Harman is working
comfortably emerging markets year target: $5 its first customer on products for
dominant in the and in the middle billion in orders. for the teams motorbikes and
market for luxury market segment in products. The new very small cars.
automotive- the West. methods begin to
infotainment move to Harmans
systems. product-
development
centers in the
West.
Collaborator

Harman is shifting some plants to BRIC nations to lower its costs and
increase margins.
Harman does engineering work for audio systems of BMW and audi
Acquired by Samsung electronics Samsung break into the high barrier
automotive industry
Harman earns around two-thirds of its revenue from its automotive-
related business
Climate/context

World in-car infotainment market is segmented

Contd..

Market is driven by growth strategies such as product launch,

acquisition, and partnership

Demand for advanced in-car infotainment system with mobile

integration technology is rapidly growing and causing the boom in the
smartphone industry.

Smartphone integration with in-car infotainment system have reduced

product cost by leveraging existing connectivity and processing power of
mobiles
Contd..
 Competition
The division had a 70% share of the market and accounted for two-
thirds of the companys $3 billion in revenues
Continental- Also specializes in tachographs, brake systems, tires, automotive safety, powertrain
components, chassis components, and other parts used for the automotive and transportation
industries
Denso Corp- . Its infotainment solutions manage music, directions, emails, internet radio, and other
infotainment features through advanced voice commands
Bose Corp -experts in how the acoustic space influences what we hearand in psychoacoustics, the
science of how humans perceive sound
Delphi Automotive plc - Delphi Venture Capital identifies, evaluates, and invests in innovative
companies with next generation automotive technology
Problem Statement

Poor/Unsatisfactory performance of Harman Speakers in Tata Tiago car. High repair time
of speakers in case of failure.
Brand Harman is at stake and the company may fail to expand to 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 it should take the relationships with Tata further and also fix the problems
that are occurring
Data set

Data Set (Primary and Secondary)

Primary data - Questionnaire

Secondary data (qualitative) - User reviews taken from various

sources.
Analysis of Market Survey

46% of the consumers most likely use Infotainment system while

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

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.

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.
 Financial analysis
No of Tata Tiago sold in an Galvanized steel

year 60000 FPD_Link II Deserializer-24-
Harman Revenue from Tiago 1.84
Bit,5- 43 MHz,DC Balanced,
sales
10373880 100 Automotive
Component Description Cost in $
Display Module-7" Diagonal,
Regulator DC Converter,
1.76
LTPS TFT,640x480 Pixels,14
64 Switching, Step Down,
Blacklight LEDS
Adjustable,2A,55
Touchscreen Overlay-7"
Enclosure, Main,

Diagonal, 4-wire Resistive,ITO
14.4 Bottom-
Film Over Glass/integral flex 1.61
Stamped/Formed
PCB
Electro- Galvanized Steel
MCU-32-BIT, V850ES CPU
Enclosure, Main, Top-
Core, 32 Mhz,1024KB
Stamped/Formed Electro-
Flash,60KB 6.06 1.44
RAM,16-channel 10-Bit Galvanized Steel
ADC,128 Power management IC 1.34
Other Components 10.77
I/Os, Automotive Labor Cost 10
4 layer-FR4, Lead Free 3.72 Total cost of manufacturing
119.24
one unit
Cost of goods sold 7154400 69%
Display mounting
2.3 Gross margin 3219480
bracket- Expense 2074776
Stamped/Formed Profit 1144704
Taxes 400646.4
Electro
Net Income 744057.6 7%
Value Chain of car Infotainment
Alternatives Collaborate only with
Maruti Suzuki
Maruti plans to incorporate Harman speakers in SUVs in the end of 2017
Since Maruti doesnt have plans to implement Harman systems for its
budget cars, Harman cant meet with its goal of more volume sales in
the emerging market India
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 had collaborated 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
Contd

Revenue expected from Maruti SUV ~ 7 Million USD

N0. of units expected to sale per year for Maruti 40000

Ignis
Price(Rs) of Harman system 119.45
Harman Revenue from Ignis sales 6915920

*Lead time of repair of infotainment system for Maruti SUV will be less .1737
service centers for Maruti against 715 of Tata cars in India.
 Recommendations
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 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.
References

HBR Article - https://hbr.org/2012/04/a-reverse-innovation-playbook

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
Thank You!