Customer Satisfaction of TATA NANO Customers

Project on advanced marketing research

Submitted by:

Kushan kumar (08dm018)

Rahul vatsyayan (08dm031)

Vibhakar jha (08dm059)

 Executive Summary
Tata Nano is the cheapest car in the world. It is sold in home country India
around Rs 1 lakh i.e. approximately USD 2000. It is manufactured by Tata
Motor Limited, the largest to automobile company in India. It’s Chairman, Mr
Ratan Tata envisions that Tata Nano become a “People’s car” which is
affordable by almost everybody. Tata Nano was first launched in India on 1
st April 2009 and expected to be in Indian market by July 2009. Since
launching, it has created a huge buzz all over India. Within the first two days
of lunching, it has received 5500 booking. The figures keep increasing every
day since the launching.What makes Tata Nano so cheap? Basically, by
making things smaller, lighter, do away with superficial parts and change
the materials wherever possible without compromising the safety and
environmental compliance. It is said that Tata Nano has better mileage than
Toyota Prius and same gas emission as a scooterTata Nano will be imported
to Malaysia by Tata Industries in parts. It will be assembled in its two
factories i.e in Shah Alam, Selangor and Pasir Gudang, Johor Bahru. There
are four distribution centres in Peninsular Malaysia i.e. in Kuala Lumpur,
Penang, Johor Bahru and Kuantan. All Tata Nano cars will be distributed
through these distribution centres only. Order can. be made vide these
distribution centres or its web site.There are three types of Tata Nano car
available i.e. Tata Nano, Tata Nano CX and Tata Nano LX. However, due to
hot weather in Malaysia, only Nano CX will be brought to Malaysia and will
be sold here. The selling price of Nano CX in Malaysia is RM 13,704 per unit.
It is estimated that gross profit for the first year would yield xxx, second
year xxx and third year xxx Estimated monthly instalment payment is xxx
for seven years period. With this price, the target market is very wide which
includes those with income RM 2000 per month, students female workers
and scooters’ riders.
 Introduction:
India is an emerging country with huge potential. The domestic economy is
now growing at around 9-10% per annum and India’s importance in global
terms is being reinforced by rapidly rising exports and domestic
consumption. At a time when numbers of a slowdown and overheating in the
Indian economy have started gaining momentum, the Indian rupee sprang a
surprise by pushing the GDP figure past the trillion-dollar (42,00,000 crore)
mark.The automotive industry is at the center of India’s new global dynamic.
The domestic market expanding rapidly as incomes rise and consumer credit
becomes more widely available. Manufacturer’s product lines are being
continually expanded, as is the local automotive manufacturing base.
Expectation are high that India can develop as a global hub for vehicle
manufacturers and as an outsourcing center that offers the global
automotive industry solution high up the automotive value chain.India eyes
25 million automotive jobs.India's GDP is set to doubleover the next
decadeIn percentage terms, the automotive industry's contribution should
also double.In dollar terms, the sector's contribution is set to quadruple to
some $145bn.The automobile industry in India accounts for a business
volume of $45 billion and has the potential to grow much faster both
through Indian as well as international manufacturers who have established
huge facilities in the country With the world’s second largest and fastest-
growing population, there is no denying India’s potential in both economic
and population terms and the effect it will have on the auto industry in the
years to come. The country is already off to a good start, with a well-
developed components industry and a production level of 1 million four-
wheeled vehicles a year, plus a further 5 million two- and three-wheelers.
The implications, market drivers and scope of a future massive Indian
vehicle market are covered in the India Strategic Market Profile, a brand-new
forecast of Indian automotive and related activity to 2020. Based on Max
Pemberton's unique relational long-term forecasting model, it forecasts car
and CV sales, demographics, materials usage, auto industry employment,
and explains their inter- year of healthy growth in auto industry.
 Market overview:
The passenger vehicle market, which constitutes around 80% of automobile
sales, has immense growth potential as passenger car stock stood at around
11 per 1,000 people in 2008. Anticipating the future market potential, the
production of passenger vehicle is forecasted to grow at a CAGR of around
11% from 2009-10 to 2012-13.
The recent launch of Tata Nano has brought about a new revolution in the
country’s small car segment. Seeing the good initial response from
consumers, many other players in the industry are chalking out their plans
to launch cars in this segment in the next few years. Our research foresees a
CAGR growth of around 12% in domestic volume sales of passenger vehicles
during the forecast period. Other segments, such as two-wheelers, multi-
purpose vehicle and light commercial vehicle, are also expected to witness
fast growth in coming years.
The report covers various aspects of the Indian automobile market and gives
detailed analysis of its various segments such as passenger vehicle,
commercial vehicle, utility vehicles, multi-purpose, two wheelers and three
wheelers. Each section succinctly explains the current and future market
trends, and developments in the Indian automobile market. There are
immense opportunities for various industry players including automobile
manufacturers and players of automobile components.
Besides, we have also comprehensively analyzed the auto component
industry and its future outlook. The study has evaluated growth avenues
available for the automobile market, which include automotive design
market, non-conventional vehicle market, domestic tyre industry, India as
global manufacturing hub, green car market etc.
 Literature review

1.CONSUMER RESEARCH IN DIFFERENT DISCIPLINES:

A considerable body of literature in a range of different discip lines exists on
consumption,
consumer behaviour, and consumer decision-making process. Research in
economics,
business, marketing, psychology and sociology domains studies consumer
behaviour from
different theoretical premises: “for economists, consumption is used to
produce utility; for
sociologists, it is a means of stratification; for anthropologists – a matter of
ritual and symbol; for psychologists – the means to satisfy or express
physiological and emotional needs; and for
business, it is a way of making money”(Fine 1997).

For more than a decade now, a range of studies that address

environmentally sound consumer
behaviour, e.g. car use, waste sorting, minimisation and recycling practices,
have been
conducted. However, few studies evaluated consumer acceptance of the PSS
concept – a
consumption based on non-ownership of physical products, see, for
example, studies on car
sharing schemes (Schrader 1999; Meijkamp 2000), ski rental and washing
services (Hirschl,
Konrad et al. 2001).

One reason explaining the lack of studies in the area could be that, there are
still not many
PSS schemes in place to serve as test grounds. Another reason could be
uniformity of
research focus. Most of consumer research focused on adopter categories,
habits, attitudes
and intentions, rather than on actually measuring the satisfaction level with
the service. The
reason is probably that PSS ideas have been promoted by researchers from
the environmental
management, marketing, design, and engineering fields, and to a lesser
extent by sociologists, who hold the banner of research in customer
satisfaction.

2. CONSUMER SATISFACTION PROCESS :

The paramount goal of marketing is to understand the consumer and to

influence buying
behaviour. One of the main perspectives of the consume r behaviour
research analyses buying
behaviour from the so-called “information processing perspective" (Holbrook
and Hirschman
1982). According to the model, customer decision-making process comprises
a needsatisfying
behaviour and a wide range of motivating and influencing factors. The
process can
be depicted in the following steps (Engel, Blackwell et al. 1995):

✔ Need recognition – realisation of the difference between desired

situation and the current situation that serves as a trigger for the
entire consumption process.
✔ Search for information - search for data relevant for the purchasing
decision, both from
internal sources (one's memory) and/or external sources.
✔ Pre-purchase alternative evaluation - assessment of available choices
that can fulfil the
realised need by evaluating benefits they may deliver and reduction of
the number of options to the one (or several) preferred.
✔ Purchase - acquirement of the chosen option of product or service.
✔ Consumption - utilisation of the procured option.

✔ Post-purchase alternative re-evaluation - assessment of whether or not

and to what degree the consumption of the alternative produced
satisfaction.
✔ Divestment - disposal of the unconsumed product or its remnants.
Besides the information processing perspective, marketing analyses
consumer behaviour by employing a psychologically grounded concept
of attitudes (Balderjahn 1988; Ronis, Yates et al. 1989; Luzar and
Cosse 1998). It is consumer attitudes that are usually named as the
 major factor in shaping consumer behaviour and a wealth of studies is
available on the topic of how attitudes can predict behaviour.

3. WHY CUSTOMER SATISFACTION IS SO IMPORTANT : It seems self

evident that companies should try to satisfy their customers. Satisfied
customers usually return and buy more, they tell other people about their
experiences, and they may well pay a premium for the privilege of doing
business with a supplier they trust. Statistics are bandied around that
suggest that the cost of keeping a customer is only one tenth of winning a
new one. Therefore, when we win a customer, we should hang on to them.
Why is it that we can think of more examples of companies failing to satisfy
us rather than when we have been satisfied? There could be a number of
reasons for this. When we buy a product or service, we expect it to be right.
We don’t jump up and down with glee saying “isn’t it wonderful, it actually
worked”. That is what we paid our money for. Add to this our world of ever
exacting standards. We now have products available to us that would
astound our great grandparents and yet we quickly become used to them.
The bar is getting higher and higher. At the same time our lives are ever
more complicated with higher stress levels. Delighting customers and
achieving high customer satisfaction scores in this environment is ever more
difficult. And even if your customers are completely satisfied with your
product or service, significant chunks of them could leave you and start
doing business with your competition.
A market trader has a continuous finger on the pulse of customer
satisfaction. Direct contact with customers indicates what he is doing right
or where he is going wrong. Such informal feedback is valuable in any
company but hard to formalise and control in anything much larger than a
corner shop. For this reason surveys are necessary to measure and track
customer satisfaction.
Developing a customer satisfaction programme is not just about carrying out
a survey. Surveys provide the reading that shows where attention is
required but in many respects, this is the easy part. Very often, major long
lasting improvements need a fundamental transformation in the company,
probably involving training of the staff, possibly involving cultural change.
The result should be financially beneficial with less customer churn, higher
market shares, premium prices, stronger brands and reputation, and happier
staff. However, there is a price to pay for these improvements. Costs will be
incurred in the market research survey. Time will be spent working out an
action plan. Training may well be required to improve the customer service.
The implications of customer satisfaction surveys go far beyond the survey
itself and will only be successful if fully supported by the echelons of senior
management.

Introduction to the tata nano

The Tata Nano is a proposed city car debuted by India's Tata Motors at the
9th annual Auto Expo on January 10, 2008 at Pragati Maidan in New Delhi,
India. Called the people’s car in Tata's promotional material, it was projected
to be the least expensive production car in the world. The standard version
of the Nano is projected to sell for Rs. 100,000 (approximately US $2500,
GBP 1277, or € 1700) , not including fees or delivery. Newsweek identifies
the Nano as a part of a "new breed of 21st-century cars" that embody "a
contrarian philosophy of smaller, lighter, cheaper" and portend a new era in
inexpensive personal transportation —and potentially, "global gridlock". The
Wall Street Journal confirms a global trend toward small cars, led by the
Nano.The prefix "Nano" derives from the Greek root 'nanos', meaning dwarf
— as with nanometer. "Nano" also means "small" in Gujarati, the native
language of the Tata family, founders of the Tata Group.
History and conception
The project to create a 1 lakh (1 lakh = 100000 rupees) car began in 2003,
under the Chairman of Tata Motors, Ratan Tata. The strategy behind the
project was the awareness of the number of Indian families who had two
wheeled transport, but couldn't afford a four wheel car, and was based on
the company's success in producing the low cost 4 wheeled Ace truck in May
2005. The Nano was unveiled at the 2008 New Delhi AutoExpo. Industry
convention was that a reliable car couldn't be made at such a low price, so
initial media speculation was that the car would be a simple four-wheeled
auto rickshaw. However, The Times of India reported that the vehicle is "a
properly designed and built car". The Chairman is reported to have said, "It
is not a car with plastic curtains or no roof — it's a real car." During
development the company reinvented and minimized the manufacturing
process, brought in innovative product design, and asked component
manufacturers to look at current work and design approaches in a different
perspective to produce logical and simple solutions.
The car was designed at Italy's Institute of Development in Automotive
Engineering, with Ratan Tata ordering certain changes during the process,
such as reducing the number of windscreen wipers from two to one.

Financial projection:Tata initially targeted the vehicle as "the least expensive

production car in the world" — aiming for a starting price of 100,000 rupees
or approximately $2300 US despite rapidly rising material prices. Tata
Motors has been able to cut down the cost of the car by making things
smaller and lighter, doing away with superficial parts and changing material
wherever possible. Tata Motors company had received lakhs of enquiries
through the internet for the Nano.Tata Motors intends to open bookings for
the car three months from now. Tata Motors plans to produce 2,50,000 Tata
Nano Cars in the first phase and add 1,00,000 in the second phase, taking
the total production capacity to 3,50,000 cars probably by the end the next
financial yearAs of August, 2008 material costs have risen from 13% to 23%
over the car’sdevelopment, and Tata now faces the choice of introducing the
car with an artificially low introductory price, raising the price of the car, or
foregoing profit on the car — the latter an unlikely proposition., while an
increased price on the Nano will likely decrease demand.
 Research methodology
1. Problem statement: objectives and the purpose of the study:
✔ To understand the customer satisfaction levels of tata
nano
✔ Features and the benefits of the car adda to high customer
satisfaction
✔ Features and the benefits of the car that is not considered
as important factor for customer satisfaction
Significance of the study:
✔ To gain insights wheather the product delivers what
it promises

1. Variables under study:

✔ Dependent variable: customer satisfaction
✔ Independent variables: Price ,After Sales Service,
Availability of Service Stations, Maintenance Cost,
Comfort, Design and Dimensions, Fuel Options,
Safety Features, Luggage Space, Mileage, Engine
Performance, Leg Space, Warranty, Engine Sound ,
Resale Value, Accessories Quality,Individual
Satisfaction Level

1. Research hypothesis:
Customer Satisfaction of Tata Nano Customers:
H1: Customers satisfied with Tata Nano
Factors Influencing Customer Satisfaction:
H1: Price plays an important role in customer satisfaction (CS)
 H2: There is a strong relationship between CS and after sales
service
H3: There is a strong relationship between CS and availability of
service stations
H4: There is a strong relationship between CS and maintenance
cost
H5: There is a strong relationship between CS and comfort
H6: There is a strong relationship between CS and Fuel Options
H7: There is a strong relationship between CS and Safety
Features
H8: There is a strong relationship between CS and Luggage
Space
H9: There is a strong relationship between CS and mileageq
H10: There is a strong relationship between CS and Engine
Performance
H11: There is a strong relationship between CS and warranty
H12 : There is a strong relationship between CS and leg space
H13: There is a strong relationship between CS and Engine
Sound
H14: There is a strong relationship between CS and Re-sale
Value
H15: There is a strong relationship between CS and Accessory
Quality

2. Research design:
Research Classification: Descriptive
Data Collection Technique: Primary Research
Population: All Tata Nano Users in Bhubaneswar
Sample Size: 20
Sampling Method: Random Convenient
Sampling
Data Collection Tool: Structured Questionnaire (17)
Data Analysis Tool: SPSS ver 11.2
3. Data analyisis:
✔ Univariate hypothesis test:(for H1-H15)

✔ regression analysis: for analyzing H16 Design = 1.382 + 0.915C

- 0.340L + 0.127 S – 0.35 EP

✔ Factor Analysis
Components: Design, Service Station, Luggage Space, Engine
Performance, Warranty of Spare Parts, Maintenance Cost, Engine
Sound contributes 80.06% of total variance in customer
satisfaction

1. Findings:
Attributes which has a Strong Relationship with Customer satisfaction
of Nano Cars :
• Price
• Service Station
• Design
• Safety
• Engine Performance
• Engine Sound
• Resale value