SALES AND DISTRIBUTION MANAGEMENT

FINAL REPORT
The Sales and Distribution Function of
Tata Motors Ltd.

GROUP 7 | Section A

Submitted By:
Avnie Saxena 16P015
Deepanjali Khurana 16P019
Shashank Mittal 16P050
Anirban Maiti 16P069
Mahim Dwivedi 16P090
Rahul Dwivedi 16P101

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Contents
1. Objective, Scope and Methodology of the Project .......................................................................... 3
1.1. Objective.................................................................................................................................. 3
1.2. Scope ....................................................................................................................................... 3
1.3. Methodology ........................................................................................................................... 3
2. About the Company ........................................................................................................................ 4
2.1. Tata Motors ............................................................................................................................. 4
2.2. Brief History ............................................................................................................................. 4
2.3. Business Model ........................................................................................................................ 4
2.4. Organizational Structure .......................................................................................................... 5
3. Competitors .................................................................................................................................... 6
3.1. Competitors ............................................................................................................................. 6
4. SALES and DISTRIBUTION NETWORK of TATA MOTORS .................................................................. 7
5. SALES STRUCTURE at TATA MOTORS .............................................................................................. 8
4.1. Cars and Utility Vehicles Sales Channel ..................................................................................... 8
4.2. Spare Parts Sales Channel ...................................................................................................... 10
6. PROBLEM ANALYSIS ...................................................................................................................... 13
5.1. Issues Identified ..................................................................................................................... 13
5.2. PROBLEM STATEMENT ........................................................................................................... 14
7. RECOMMENDATIONS .................................................................................................................... 15
6.1. Implementation Challenges .................................................................................................... 16
8. REFERENCES .................................................................................................................................. 17

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1. Objective, Scope and Methodology of the Project

1.1. Objective
To study the structure of sales and distribution for TATA Motors Ltd., identify potential problems with
the same and provide recommendations

1.2. Scope
The project report aims at analyzing the channel design and the sales force structure of TATA Motors
and identifying issues and strengths of the channel in general and specifically in the Delhi/ NCR region.
The focus will be on developing an understanding how Tata Motors undertakes sales with focus on
the Passenger Vehicle (Cars and Utility vehicles channel). This will include understanding the channel
design, in terms of regions, levels as well as understanding and learning about the sales force involved
in the sales process.

1.3. Methodology
Primary Research- Interaction with distributors, TATA Motors employees, area sales officer and
regional channel manager through telephone and on field meetings.

Secondary Research- Companys website and other research agencies

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2. About the Company

2.1. Tata Motors

Tata Motors Limited, a USD 42 billion organization, is a leading global automobile manufacturer with
a portfolio that covers a wide range of cars, sports vehicles, buses, trucks and defense vehicles. Its
vehicles are sold in around 175 countries around the world.
It is a multinational corporation headquartered in Mumbai, India. Part of the TATA Group, it was
formerly known as TELCO (TATA Engineering and Locomotive Company).

Since first rolled out in 1954, Tata Motors has produced and sold over 4 million vehicles in India. In
2010, Tata Motors outshined Reliance to win the coveted title of 'India's most valuable brand' in an
annual survey conducted by Brand Finance and The Economic Times.

Tata Motors has auto manufacturing and assembly plants in Jamshedpur, Pantnagar, Lucknow,
Ahmedabad, Sanand and Pune in India, as well as in Argentina, South Africa and Thailand.

Tata Motors is listed on the (BSE) Bombay Stock Exchange, where it is a constituent of the BSE SENSEX
index, the National Stock Exchange of India, and the New York Stock Exchange. The company is ranked
226th on the Fortune Global 500 list of the world's biggest corporations as of 2016.

2.2. Brief History

Tata entered the commercial vehicle sector in 1954 after forming a joint venture with Daimler-Benz
of Germany. After years of dominating the commercial vehicle market in India, Tata Motors entered
the passenger vehicle market in 1991 by launching the Tata Sierra, a multi utility vehicle. Tata
subsequently launched the Tata Estate (1992; a station wagon design based on the earlier
'TataMobile' (1989), a light commercial vehicle), the Tata Sumo (1994; LCV) and the Tata Safari (1998;
India's first sports utility vehicle).

Tata launched the Indica in 1998, the first fully indigenous Indian passenger car. Although initially
criticized by auto analysts, its excellent fuel economy, powerful engine, and an aggressive marketing
strategy made it one of the best-selling cars in the history of the Indian automobile industry. A newer
version of the car, named Indica V2, was a major improvement over the previous version and quickly
became a mass favorite. Tata Motors also successfully exported large numbers of the car to South
Africa. The success of the Indica played a key role in the growth of Tata Motors.

In 1998, Tata launched the first fully indigenous Indian passenger car, the Indica, and in 2008 launched
the Tata Nano, the world's cheapest car. Tata Motors acquired the South Korean truck manufacturer
Daewoo Commercial Vehicles Company in 2004 and purchased Jaguar Land Rover from Ford in 2008.

2.3. Business Model

Product: Tata has a wide range of products it has passenger cars, utility vehicles, Trucks, Commercial
passenger Carriers and Defense Vehicles.

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Price: The prices of Tata motors are generally affordable acceptable by the broad public at large. Tata
always have something for the lower class people with Nano being their trump card. Giving discount
every month and special promotion for certain type of vehicle also was one of the strong strategies
used by Tata Motors. Discount can be made from Company's profit or from dealer's profit at certain
range.

Place: Tata Motors has an extensive dealer network covering Indian and Global markets. Wherever
you are, there is a Tata Motors Sales and Service dealership close to you. The channel of distribution,
physical location, and dealership method of distribution and sales is generally adopted. The
distribution of vehicle must be in an organized way, from the plant to dealership and to end user.
This is not only in India itself but also to the world-wide dealership.

Promotion: Tata motors promote their products via Advertising and after sales services. They also
offer different promotional offer according to the situation and the place. Discount of festive season,
cash back offers, free RC and insurance etc. are often provided by Tata Motors. It also invests heavily
on advertisement both nationally and locally. Advertisements are mostly done with television
commercials, print media, billboards etc.

2.4. Organizational Structure

The structure of an organization has to do with the organizational climate along with knowledge
management. In the case of Tata Motors, the organization has understood the importance of
interactions between employers and workers. The process could be both formal and informal and
the objective is to make employees feel more bound to the organization. Gathering and sharing
knowledge is another way. Tata Motors has a relatively flat structure, thus it facilitates easy
interaction between the different levels in the organization. The organization structure of TATA
MOTORS in every city is very simple. The organization structure consists of two parts- one under the
company head and the other under the dealers head. Though the personnel hired by the dealers are
not included in the company's payroll but it's well defined by the company. Each of them are trained
and supervised by the company's personnel appointed at each city.

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3. Competitors

In this section we shall look at the major competitors and customers for Tata Motors Ltd.

3.1. Competitors
Tata Motors is the market leader in terms of volumes in the Commercial Vehicle segment (including,
Light Commercial Vehicles (LCV) + Medium & Heavy Commercial Vehicles (M&HCV) segments) and
enjoys market share of roughly 12% in passenger car segment

Figure 1: Market Share: Passenger Vehicle Segment

In the Light Commercial Vehicle Segment, Tata Motors is the market leader and enjoys a healthy market
share of around 50% followed by Force Motors (28%) and Ashok Leyland (6%) with other players making
up the rest 16%. The major products in this category are Tata Prima, Ace, Ultra and other light trucks.

Similarly in the Medium and Heavy Commercial vehicle segment, Tata Motors has a market share of
around 53% followed by Ashok Leyland at 26% and Eicher Motors at 13%. The major products in this
category for Tata Motors are M&HCV Construck and M&HCV Cargo Trucks.

Below table shows the volume sales of Tata Motors in the passenger vehicle segment for April-june
quarter:

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4. SALES and DISTRIBUTION NETWORK of TATA MOTORS

The sales and distribution network in India as of March 31, 2014, comprised 2,420 sales contact points
for the Passenger and Commercial Vehicle businesses. The Company has deployed a Customer
Relations Management (CRM) system at all its dealerships and offices across the country, largest such
deployment in the automotive market. The combined online CRM / DMS system supports users both
within the Company and among the distributors in India and abroad.

The Company's 100% subsidiary, TML Distribution Company Ltd (TDCL), acts as a dedicated
distribution and logistics management company to support the sales and distribution operations of
vehicles in India. TMLD will take over and/or set up stocking points for both commercial vehicles and
passenger vehicles, in the places of manufacture and also at different places throughout India. TMLD
will help improve planning, inventory management, transport management and on-time delivery. As
a focused entity, we believe it will make delivery and inventory management more efficient.

Additionally, Tata Motors is in advanced stages of deploying a Siebel customer relations management
system at all dealerships and offices across the country, which they believe is one of the largest
deployments of that system in the Indian automotive sector. Being implemented in phases since
2003, the combined online customer relations management system initiative supports users both
within the Company and among our distributors in India and abroad.

Through their vehicle financing division and wholly owned subsidiary, Tata Motors Finance Limited,
or TMFL they also provide financing services to purchasers of their vehicles through our independent
dealers, who act as our agents, and through our branch network. TDCL provides distribution and
logistics support for vehicles manufactured at the Company's facilities. TDCL helps them improve
planning, inventory management, transport management and timely delivery.

In addition to dealer service workshops, the Company uses a network of service centers on highways
and a toll-free customer assistance center to provide 24-hour on-road maintenance (including
replacement of parts) to vehicle owners. The Company believes that the reach of the sales, service
and maintenance network, provides us with a significant advantage over the competitors.

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5. SALES STRUCTURE at TATA MOTORS

Tata Motors as explained previously is a major player in the automobile sector of India. Tata Motors is
involved in the sale of Cars and Utility Vehicles as well as the sale of Commercial Vehicles. More over there
is the sale of both first hand and second hand vehicles under the pre-owned banner. Although for the
purpose of this project our focus will on the Passenger Vehicle Segment of Tata motors that is Cars and
Utility Vehicles. For the purpose of Sales, Tata Motors Views its entire sales Territory of India is divided on
a regional basis:

1. Zone (North and East): North 1, North 2, North 3, and East

2. Zone (West and South): South 1, South 2, West 1, West 2

In the above mentioned 8 territorial divisions of TATA Motors, Delhi NCR falls under the North 3 region
which also includes Rajasthan. Now in any region three parallel activities take place Sales, Service, Spare
Parts. These Three parallel running divisions, known as 3S, oversee the entire sales process at TATA
Motors a. Sales (Passenger and Utility Vehicles) b. Spare parts ( Tata Motors and Open Market) c. Service
(After Sales Service).

We have detailed out the Sales and Spares channel structure and Sale force structure in detail. But have
not gone into service as it deals more with after sales than direct sales. In Gurgaon: there are 4 Tata
Motors Sales dealerships, and in Delhi there are 9 such dealerships.

4.1. Cars and Utility Vehicles Sales Channel

Channel Structure (Passenger and Utility Vehicles)

TATA Motors follows a three-tier channel structure for the sales of its cars and utility vehicles which
is shown below:

Figure 2: Channel Structure: Cars and Utility Vehicles

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*TML TATA MOTORS DISTRIBUTION LIMITED
TIER-1:

TML Distribution Company Ltd: Single Distributor for passenger vehicles (Pan India)

In its direct sales channel Tata motors only a single distributor that is their subsidiary TML Distribution
Company Ltd.
This has been done to get some financial advantages through Cost optimization, Tax planning and
also helps Tata Motors maintain greater control over its distribution and logistics arm.

TIER-2:

This includes the dealership network of Tata Motors. There are primarily three types of dealerships:

1. 3S Dealers: These dealers offer all three services to the customer that is Sales, Service and
Spares.
2. F Class Outlets: These are also called 1s Outlet and are purely sales outlets.
3. 2S Dealers: Earlier this part of the channel was called The Nano Exclusive Dealerships. But once
the Nano Exclusive Dealerships were discontinued, the established dealerships were converted into
Sales and Spare parts dealerships.

Sales Force Structure (Passenger and Utility Vehicles)

The sales force structure for the Passenger and utility vehicles looks like following:

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 Figure 3: Sales Force Structure: Cars and Utility Vehicles
*VP Sales- Vice President Sales; *RM- Regional Manager; *State Head- Dealer Network Sales Head;
*TSM- Territory Sales Manager

4.2. Spare Parts Sales Channel

Channel Structure (Spare Parts)

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 Figure 4: Channel Structure: Spare Parts
*TML TATA MOTORS DISTRIBUTION LIMITED

Tata motors undertakes the sale of Spare parts through an independent spare part channel although
at the final level of this sales channel that is at the retailer level there may be an overlap with the
sales channel dealers.
The sale of spare parts is conducted to two types of customers:
1. The Tata Motors Customer
2. Customers using other automobile manufacturer vehicles.

Sales Force Structure (Spare Parts)

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 Figure 5: Sales Force Structure: Spare Parts
*VP Customer Support Vice President Customer Support; DGM Deputy General Manager; AGM-
Assistant General Manager; SHQ- Sales Head Quarters

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6. PROBLEM ANALYSIS

We have seen till now that in any particular of the 8 regions Tata Motors operates its sales process
primarily through an established dealer network. Based on our interaction with the dealers and
company representatives, we can high light the following issues:

5.1. Issues Identified

Multiple Point of contacts with the dealership creates problems

The TSM Sales should be the primary point of contact for the dealer and should be interacting at
the dealer GM level but in reality the dealer is dealing with TSM Sales, TSM emerging markets,
TSM Corporate sales etc. creating multiple lines of company channel partner interaction and
thus resulting in confusion about the sales strategy.

Dealer sales structure need improvement

The position of the Team Lead (above the dealer Sales Executive) is one which needs to be
improved. The team leads are more interested in their individual sales performance than the
teams function. His Responsibilities as the team leader are more or less ignored.

No policy for Lemon Pieces

A reason for conflict between the channel partners that is between the dealer and Tata Motors
is that there is no policy for recall of Lemon pieces. The local sales team is not empowered to take
a decision on this and thus a secondary deal once executed cant be reversed and thus leads to
conflict.

Dealer sales force not Up to the mark

There is a need to improve the skill level of the dealer sales force. This can be seen in the large
number of customer complaint cases which are escalated to the TSM Level.

Workload of TSM is high

Due to the lack of initiative or activity on the part of the dealer principle regarding
implementation and execution of consumer promotion schemes or other standard Tata motor
promotions or policies, the TSM has to get involved in handling these activities at the dealer level.
This adds to the work load of the TSM and affects his ability to fulfill his direct responsibility.

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 ROI Problems

Due to low volumes there is always a demand from the dealers to increase the margins so as to
improve their revenues and ROI.
Associated Issues: Sales Planning:
There is a huge waiting time for the recently launched vehicles. This shows a problem in the sales
forecasting and thus this is another area which needs improvement.

5.2. PROBLEM STATEMENT

The primary need at this point of time for Tata Motors is to streamline the sales and distribution network
in order to leverage the sales team better and increase its primary sales over the long run.

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7. RECOMMENDATIONS
Multiple Point of contacts with the dealership creates problems

Develop a simplified structure, with issues of emerging markets taken care of at the national level and
single point of contact at the lowest level. Further develop a Comprehensive and exhaustive sales strategy
(discussed beforehand). And any discrepancy should be settled by consensus or higher authority (Regional
head).

Dealer Sales structure

The incentive component of the salary should be a percentage of individual sales effort and leadership
skills. This can be quantified in terms of clarity of sales goals and procedure his team is following. The
performance of his team members can also give an estimate to his direction.

No Policy for lemon Pieces

Main problem is that there is no central policy on how to handle additional inventory. Restructuring of
the inventory into a Lean form. With disposal rate proportional to the rate of replenishment. By
introduction of a demand prediction framework with the help of previous year sales data (Big Data can be
utilized). Further, additional discounts to offer on lemon pieces or one-day special discount campaigns
etc. to exhaust inventory.

Dealer Sales Force not up to the mark

Develop a central performance index for each dealer sales force via. a central accreditation for each
employee. The benchmarking for which will be via a predefined standard. Further a proper training regime
can be setup to fill in gaps in execution for each resource.

TSM Workload Problem

The main reason for this problem is that the General Manager is not performing as per his KRA and thus
added work falls under the work load of the TSM as well. Thus there should be a relook into the Roles and
Responsibilities for each individual.
To solve this what can be done is that a portion of the dealer general manager incentive should be linked
to the workload. The TSM should be remunerated for the additional work

ROI Problem

Focus should be on volumes, this will increase revenues for each channel member and ultimately increase
productivity. Augment reach to Tier 2 and Tier 3 areas to facilitate increase in volumes, primarily via low
cost dealership development

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6.1. Implementation Challenges

Multiple Point of contacts with the dealership creates problems

Structural reform implementation with incur time and capital issues

Dealer Sales structure

Time investment activity to optimize the employee remuneration structure for the dealers

No Policy for lemon Pieces

Optimizing supply chain structure with take time and generation of appropriate marketing campaign
which will facilitate inventory disposal will be critical.

Dealer Sales Force not up to the mark

Introduction of a new central policy will require approval from stakeholders and consensus from
majority management

TSM Workload Problem

Higher management needs to clearly demarcate the roles and responsibilities of each employee, which
will require additional resource investment to identify/relook KRAs for each

ROI Problem

Additional capital investment will be required, approval from investors is required. Development of
relations with low tier dealers will be a long process

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8. REFERENCES

http://www.tatamotors.com/

http://www.blog.sanasecurities.com/tata-motors-stock-analysis/

http://www.indianotes.com

http://www.autonews.com/

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