2Who Are We?Kent Van HornKent is a junior economics student at the KrannertSchool of Management. He is also majoring inManagement.Dan SchwartzDan has completed his first year of the MBA programat the Krannert School of Management. HisConcentration is in operations. Previously, he workedas a project manager at General Electric and as aconsultant at Total Quality Logistics, a 3rd party logisticsprovider.
3Lets Look at the Agenda… Industry AnalysisTraffic vs Retail SalesHead EffectivenessProblemIndoreRecommendation
4What is the Problem? StaR Sales Decline Average of 500 less sales per month for the last 3 yearsUnclear Effect of PromotionMany different promotion methods usedResults of promotions unclear
9Market Segmentation Economy Segment <40,000 Rs ex showroom 15-49 years old2 million bikes per yearDecreased in due to economyIncreasing again in 2010Buy DecisionPriceFuel efficiencyHigh durabilitySpecs not important
10Who is Our Target Group?TVS StaR CityMale, 25-35MarriedSelf employedSEC BCDTVS SportMale, 20-30UnmarriedSalaried/Self employed(2nd Generation)Key Takeaway: TVS Sport targets a younger, wealthier market
11Situation/Opportunity Analysis StrengthsBrand awarenessReliabilityTVS brand nameWeaknessesPrice pointFuel economyLimiting designPrice conscious consumersOpportunitiesSell on reliabilityDifferentiate from competitorsThreatsQuality not perceived by customers
12Macro-Environment Environment Economic Tightening Lending Policies ThreatOpportunityEconomicTightening Lending PoliciesGrowing Middle ClassDemographicSocioeconomic ShiftUniquenessTargetPolitical / LegalEnvironmental RegulationGovernment IncentivesTechnologicalObsolescence, Alternative PowerIncremental Product ModificationSocioculturalDemand for CarsDissatisfaction with Public TransitGlobalJoint Venture or ImportExport trade with Pakistan
13Market Analysis Key Takeaway: Concentrated market with few players Hero HondaSplendorReliabilityUndifferentiatedCD DeluxeValueBajajPlatinaFuel EfficiencyTVSStar CityToughnessLasts a whileSportSportyKey Takeaway: Concentrated market with few players
14Market AnalysisCD DeluxeSplendorStar CityPlantiaSportKey Takeaway: TVS products are differentiated in this segment
15Agenda Industry Analysis Traffic vs Retail Sales Problem Indore Head EffectivenessProblemIndoreRecommendation
16Look at the Distribution Channel TVSDealerCustomer(Urban)30%Sub-dealerCustomer(Rural)70%Margin split 50/50 between dealer and sub-dealer
17Comparing Retail Sales Vs. Traffic Key Takeaway: Retail Traffic and Sales are closely related.
18Agenda Industry Analysis Traffic vs Retail Sales Problem Indore Head EffectivenessProblemIndoreRecommendation
19Head EffectivenessRegional spend compared to sales: Correlation = R2 Highly correlated spends have highest effect Y=m x+b Positive m values indicate sales increase Negative m values indicate sales decrease Both advertising and promotion
22Weighted Sales Method to compare sales: Weighted Sales = 0.5 x Month n Sales + Month (n+1) Sales x Month (n+2) Sales x Month (n+3) Sales
23West Bengal Regression Analysis Key Takeaway: Print, advertisements, demos and hoardings appear to increase sales. There is a strong correlation between all India sales and West Bengal. Too many variables makes a difficult to use model.
24What About Tamil Nadu?SUMMARY OUTPUTRegression StatisticsMultiple RR SquareAdjusted R SquareStandard ErrorObservations8ANOVAdfSSMSFSignificance FRegression2Residual5Total7Coefficientst StatP-valueLower 95%Upper 95%Lower 95.0%Upper 95.0%InterceptE-05Weighted TVE-05E-05PressE-05Sales = x Weighted TV Spend x PressKey Takeaway: For every 1500 Rs. Spent on press, TVS can expect one additional sale. Combining variables leads to a cleaner model.
25Purdue Item Indian Foreigner Dan Taj 20 750 N/A Rickshaw 30 90 150 SpiceFlamingMildKetchupFoodNaanRiceMcDonald'sTravelBusHonda CivicDrinkTeaCoffeeBeer
26Opportunity Breakdown Key Takeaway: TVS Star City and Sport are Economically Inferior goods that decrease in sales in wealthier areas. There are some areas where there is opportunity for more sales.
27Opportunity Breakdown DelhiKey Takeaway: 73.2% of the sales in TVS City can be explained by its linear relationship with total market segment sales during that month. For every 9 products the market increases, 1 TVS City sale is expected.
28Opportunity Breakdown Key Takeaway: Uttar Pradesh, West Bengal and Andhra Pradesh all have very high potential for future sales.
34Indore Consumer Feedback House 1House 2House 3Which bike do you own?SplendorStarCityWhy this bike?Mileage, road presenceMileage, max loadMileage, bad TVS experienceWhat adds have you seen for Star City?TV: Cricket Star, MS Dhoni Print: Paper and MagazinesTV: Cricket Star, MS Dhoni heavily influenced Print: Paper and MagazinesPrint: Paper and MagazinesWhat do you think of the promotional gifts?Good, but not enough to influence decisionLiked them, but not ecstatic about themNot impressedKey Takeaway: Customer perceived mileage is key.
35Diwali>Wedding Season Sub-DealerStore Traffic?6-7/dayAverage Sales?52/month, 62 YTDPay Cash First Visit?25%What Impacts Sales?Diwali>Wedding SeasonIs Price a Factor?TVS Fixes PricesStar City Sales?75-80%Stockout Loss?2-4/month
36TVS Primary Dealership Customer ServiceGreeted within 1 minuteFollow up callsGreen/Pink cardsRepairs300 Rs. Profit per bike repairrepairs per day10-20 service bays
37Misaligned Priorities? Top 3 Features that Affect Purchase IntentPartyPrimarySecondaryTertiaryConsumer 1MileageRoad PresencePowerConsumer 2MaintenanceMax LoadConsumer 3Sub-DealerStrong SturdyTVS Primary DealerLooks/ImageBrandKey Takeaway: Customer perceived mileage is key although dealers focus on other selling points.
38Summarizing Our Findings Sales based on perceptionWedding season increases salesSub-dealer closer to customerCustomer needs misunderstood
39Agenda Industry Analysis Traffic vs Retail Sales Problem Indore Head EffectivenessProblemIndoreRecommendation
40Recommendations Untapped Markets (West Bengal) Increase Spend Sponsor DealershipsToo Many Advertising Heads UsedReduce NumberIncrease DemosConsumer PerceptionEducate ConsumerBelow the Line