Marketing Research According to Green and Tool

Marketing Research

According to Green and Tool (1993) "Marketing research is the systematic and objective search for, and analysis of, information relevant to the identification and solution of any problem in the field of marketing." The main aim of marketing research is to enable the beneficiary to take some steps, some that may be risky, though with confidence hence the need for observing absolute objectivity. It is due to this need that marketing research does adopt a scientific method and approach that will help turn the personal opinions, prejudices and notions into hypotheses and consequently test them in an empirical manner. The alternative views are also given due considerations independently as long as they can be of interest to the researcher.

Significance of marketing research

In the field of marketing, research is not just for the aim of learning but is a very central component in the good decision making process. This is achieved by market research since it gives the marketer a clear picture of the occurring or the likely to occur market situation and even goes further to give the alternative choices that can be made, this makes the decision making process less risky since the management will have alternatives from which they can pick from (Know This LLC, 2011). Research has been proven to be the basic foundation of marketing without which, the marketing process can be in vain and the results futile to the organization.

Marketing research can also be a very significant tool for the organization to survive the competition. It is through research that one organization will understand and ascertain the information about the competitor that are pertinent in their quest to keep in pace with them as noted by Parul Solanki (2010).

These may include their identity, their scale of operation as well as customer focus, their marketing network and so on. These are pieces of information that can enable an organization survive the competition and even at times leave them behind. It can also help the organization know well and understand the underserved customers and their needs that have not been satisfactorily met.

Marketing research will as well give relevant information on the customer demographics such as the age, location, purchasing behavior and even gender. This helps the marketers to zero in on the target markets.

The other advantage of having a comprehensive market research is that it helps in the maximization of profits for the organization. It helps in finding out ways through which an organization can not just make sales but increase the profitability of the organization, a measure that will make the organization to survive in the long run.

Increase in the sales can also be achieved through a comprehensive research. It is only through research that the organization will understand the needs of the customers and hence make or supply the products that match with the needs of the customers as well as undertake steps that can convert the non-customers into customers.

1.3 Research purpose

With the increasing globalization and the advancement in technology and connectivity, there is an increasing pressure on all the leading global companies and organizations to make their presence in every part of this globe. The Multi-National Corporations are all moving a step further to ensure that all the developing economies are covered under their expansion process.

The purpose of this research is to access the market conditions of Hong Kong and look into the suitability of the market for the TATA Company to invest in it. The research will first look at the TATA Company structure and their corporate strategy as well as the strengths and the weaknesses of the company.

Then, the research will carefully examine the Hong Kong car market, the legal aspects and the clientele base and their purchasing trends over the years with an aim to relate it to the corporate strategy of TATA and make an informed decision on whether to invest in the market as an expansion strategy or not.

2.0 Organization background

2.1 TATA Motors Limited

Tata Motors Limited is categorized as Indians largest automobile company with its consolidated revenue running to USD 27 billion by 2010. It deals in a wide range of vehicles from the commercial vehicles to the passenger vehicles, compact and mid size cars and even the utility vehicles. It is categorized as the world's fourth largest manufacturer of trucks and the third in the world on bus manufacture.

TATA has an employee base of well over 25,000 who help the company perpetuate the vision, "best in the manner in which we operate, best in the products we deliver and best in our value system and ethics." It was founded in 1945 in India and had been manufacturing on its own till 2005 when they partnered with Fiat Group Automobiles to produce TATA cars and Fiat power trains as well as Tata selling Fiat branded vehicles in India.

Tata Motors was the first from the engineering sector of India to be listed in the New York Stock Exchange which was done in 2004. Tata Motors has subsidiaries and associate companies in UK, South Korea, Spain and Thailand through which it carries out its operation in these regions. Among these subsidiaries are Jaguar Land Rover and Daewoo. Currently two-thirds of the exported heavy commercial vehicles out of South Korea are produced from Tata Daewoo.

It is also noteworthy that Tata Motors acquired a significant 21% of the top Spanish coach and bus manufacturer called Hispano Carrocera. Further, in 2006 Tata Motors forged a joint venture with Morcopolo which is a Brazil-based world leader in building of bodies for coaches and buses so that they can manufacture fully built buses. Another feat is the joint venture with Thonburi Automotive Assembly Plant Company that is based in Thailand so that they can produce and market the Tata pickups in Thailand.

The company also has a significant market share in Africa, the Middle East, Europe, South Asia, South East Asia and South America (Tata Motors, 2011). Currently the company boasts of the world's cheapest new car the Tata Nano which goes for approximately $2,200 and the demand for the car has been on the rise each day.

Tata Motors also engages in automotive solutions, engineering solutions, construction equipments, automotive vehicle components manufacturing and their supplies, factory automation solutions, machine tools, plastic and electronic components for computer applications, high precision tooling and automotive retailing services.

2.2 Tata Motors Corporate strategy

The strategy that Tata Motors is using at the moment is aimed at producing disruptive innovation in the industry. Tata Motors has offered lower priced products yet quality products like the Tata Nano taking the world with surprise.

After the company was faced with a heavy loss in 1999, it realigned its strategies and became more sensitive to the needs of the client. The revival strategy was divided into three phases; Cost reduction initiatives, domestic and international expansion by improved sales and service and new products, long time focus on new market segments as well as introducing the low commercial vehicles into their traditional heavy commercial vehicles focus. These strategies have greatly improved the performance of Tata Motors (Andrea Rodrigues, 2011).

The Tata Motors has its philosophy deeply rooted in the core philosophy of the Tata group. It emphasizes on the transparency in their governance, high standards of professionalism, integrity, honesty as well as ethical behavior.

The company prioritizes the value creation and sustainability of stakeholders. It has also successfully implemented the excellence model as part of their code of conduct that must be followed and perpetuated in all their subsidiaries since it also operates with a very firmly built social conscious and believe in benefiting the lives of people (Tata Motors Ltd. 2008).

It id also important to note that one of the strategies that Tata Motors adheres to strictly is the whistle blower policy, which requires every employer to notify the management promptly on any possibility or actual violation of the Code or any occurrence that may put the reputation of the company into jeopardy. In deed, Tata Motors has an Ethics and Compliance Committee that monitors on a monthly basis the adherence to the 'Tata Code of Conduct for Prevention of Insider Trading'. It is also charged with deciding penalties on the cases of flaunting of these codes of ethics, this is in a bid to hold steadfast to the notion that their brand has created of Tata being synonymous to Trust (Tata Communications Ltd. 2008 ).

The CSR engagements of the company also major on energy and water conservation, education, environment and livelihood. There is also a Tata Business Excellence Model (TBEM) in place to ensure the driving force to excellence and success of the company is well stipulated. There is also a balanced score card methodology that is used in the accurately track the long-term strategic goals. This way, the company goes beyond just the financial reflection of performance into incorporating the societal and the environmental considerations as well.

2.3 Scope of management team

Tata Motors has a special type of management system that is not commonly found in many companies. To have a clear focus on the issues at hand and consequently find solutions to diverse challenges, the Board of Directors has constituted a set of committees each with their terms of reference and the their scope specifically cut out. These committees will set targets in agreement with the management which are periodically reviewed and corrections made mid-course.

The decisions by the Board of Directors and the committees are also made in a consultative manner referred to as circular resolutions which are taken note of in the succeeding meetings. The minutes of the meetings held are placed before the Board of Directors for noting and discussion if need be (Tata Motors, 2011).

Generally the structure of the management of Tata Motors is as follows in a hierarchical manner; Shareholders, Board of Directors (forms Audit, Executive, remuneration, nominations, investor's grievance, ethics and compliance and the special needs-based Committees), Managing director & Group CEO, Managing Director (India Operations who forms management and operations committees), Heads of products sectors then the Heads of departments.

2.4 Strengths and weakness

Strengths

The process of going international for Tata Motors has been a followed by retention of the local managers in the newly acquired joint ventures only to get a few managers from India into the new locations. This has facilitated exchange of expertise to the new acquisitions hence boosting the strength of the company as a whole.

The company also focuses on new products as well as the intensive management system being put in place so as to build a base of the next generation leaders that will guide Tata Motors to new heights.

The other strength of the company is the new alliances that it forges with external companies, which are all successful and helps in the strengthening of the brand name outside India and the traditional market. One such example is the alliance with Fiat which gave it an upper hand in terms of production and knowledge. This led to the idea of building pickups targeting Central and South America.

The other strengths that Tata Motors enjoy are the virtue of being a strong domestic player, their steady revenue growth, good brand image as well as the research and development activities (Marketing Teacher Ltd., 2011).

Weaknesses

Their cars that are focused on passenger are based on the 3rd and 4th generation policy which puts the company at a disadvantage against the competitors.

Despite Tata Motors having bought Jaguar and Land Rover brand, it has not established itself in the luxury cars section in the domestic market of India, despite there being a more aspiring Indian market for such luxury cars.

3.0 Marketing context

3.1 Opportunity and Threats in Hong Kong market

3.1.1 Opportunity

One of the reasons why Hong Kong can be a viable ground for the motor industry is the huge number of motor vehicles that are bought from imports and showrooms each year. For instance between 2006 and 2008 there were on average 55,000 public service vehicles in Hong Kong (The World Bank Group, 2011), and on the other hand, there were on average 360,000 private cars in the same period within a population of 7 million people, this is quite high. This indicates a big market for the Tata Motors.

Hong Kong has been proven to be the best base for regional operations according to UK Trade and Investment (2011). There is a way higher and better political environment and a stable social environment. These two are prerequisites to the success of a business in any country. This is due to the fact that the government has eased the policies for external investors giving them a chance to invest without fear of bureaucratic impediments.

The people of China and Hong Kong in general like to spend mostly on furniture, electronics and cars. It is suggested that the fast increasing retail sales has resulted into an increased income and consequently spurring the spending of this category of items hence forming a suitable market for Tata Motors (KPMG, 2007).

3.1.2 Threats

The first and very significant threat to Tata Motors that they are likely to face in Hong Kong in the bid to expand their investments there is the high rate of taxation is imposed on the imported cars. There is a 25% auto tariff that is charged, in addition a 17% VAT is added and an excise tax that was introduced in 2006 of 3% on cars with les than 1.5 liters and 20% on cars with 4 liters onwards (United States Department of Commerce, 2008). If one pays all these taxes, it amounts to high tax and for a business focused company that will eat into the profit maximization.

The other very significant threat is the ever increasing prices of raw materials that Tata would depend on if they decide to start manufacturing automotive parts. According to Emma An of China daily (Hong Kong Edition) (2011), the price of fuels and raw materials like coke coal, oil and iron ore have all gone up further freezing the profits of the steel makers. To respond and compensate for this squeeze, the still makers have been increasing the price of steel, unfortunately this is the raw material that Tata Motors will need most incase they venture into manufacturing in Hong Kong.

The other factor that compounds the challenge is the number of players in the small market that is available. The Hong Kong Industrialist (2007) pegs the number of major companies at 20 and the number of registered domestic automobile manufacturers at 1,500. It also estimates the number of enterprises that deal in car and car parts sale at 400 enterprises, 30 of these are tier-one meaning they deal with the car manufacturers directly, most are tier-two and three, meaning they retail for the big suppliers like Visteaon of for the tier-one enterprises. This poses a very big market share challenge for Tata Motors since penetrating such a market would be an uphill task.

Methodology

In order to get the relevant information, it is essential that a survey is done among the consumers themselves so that the data collected guides the decisions that are to be taken. A questionnaire of the following format was used to collect the relevant information from a number of car owners and drivers who passed by an identified gas station to refill their cars.

4.0 QUESTIONNAIRE

Name (Optional):

Address:

Country of citizenship:

Telephone:

Date of birth:

Occupation:

Sex: Female Male

(1) What is your main consideration before you buy a car?

(2) Which country's (countries') products do you prefer? Why?

(3) Who makes most of the buying decisions in your family?

(4) If you were to buy a car within the year, how much would you be willing to comfortably part with?

(5) What is your net salary range in Honh Kong Dollars (HK$).

HK$100,000 - HK$400,000

HK$400,001 - HK$700,000

HK$700,001 - HK$1,000,000

HK$1,000,001 and above

(6) In your own opinion, prioritize the following randomly listed qualities and write numbers beside them starting with the one you would consider most when buying a car as number 1 and so on.

Latest design/shape

The Brand name

The year of manufacture

Engine capacity

The stability at high speed

The comfort of the interior

Color

Size

Security features

(7) Given the resources, why would you buy a car at the moment?

(8) After how long would you like to buy another model? Will it be from the same manufacturer?

(9) Do you consider the oil prices when buying a car and determine the engine size therefore?

(10) Why would you prefer a private car to public means of transport?

The questionnaire was given to the population sample of drivers who drove by a selected gas station since this was a relevant population to rely upon in data collection as they have experience with cars. 500 questionnaires were given out to the respondents at random companies within the capital city, however on tabulation, only 467 questionnaires could be traced back for data analysis.

5.0 Research findings

Majority of the people who filled the questionnaire preferred the cars from Japan followed by Germany. Of the 467 collected questionnaires, 280 people opted for Japanese cars, 132 opted for Germany and the rest split between USA, UK, Korea, India and other countries.

One of the reasons that stood out for the pattern above was the features that the Japanese cars provided against the prices. This could be due to the fact that most of them were used cars still in good condition to perform well and even the new cars were relatively cheaper as compared to other countries due to the availability of raw materials and labor in Japan.

From the questionnaires, more that 75% indicated that the head of the family made the buying decisions for instance the father or the mother incase the father is dead. On average, 60% agreed that they look at the brand of the car when buying it and apparently most respondents valued Japanese brands, yet another 55% agreed to being conscious about the engine capacity to be one that can give them power on the road. More than 55% of the respondents were in the salary bracket of HK$400,001 - HK$700,000 indicating that they live an average lifestyle and living standards. It was amazing to see that 78% of the people never really minded the fuel price and consumption as long as the car served them well.

Given the response that the respondents, who are the potential clients gave, it would not be viable to set up a firm in Hong Kong since it will be an investment that will not rake in returns.

5.1 Discussion

Even though Tata Motors has had a long history of expansion and takeovers as well as collaborations, the statistics in Hong Kong do not support the venture that they are considering into that market. This is informed by the population that is sensitive to both the qualities of a car especially speed, security and comfort as well as the cost of the car.