Tata Nano Case Memo

October 25

2012
TEAM KELLER:
Venkatasubramanian MR Natarajan P Partheeban G Sitanshu Bindra Rakeshreddy Chintham

Introduction
Tata Motors Limited is Indias largest automobile company, with revenue of USD 8.8 billion in 2007-08. It is one of the leaders in commercial vehicles, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the worlds fourth largest truck manufacturer, and the worlds second largest bus manufacturer. According to Ratan Naval Tata (Chairman of Tata Group), the need for an innovation like Nano has got to do something for the people of India and transport. Unavailability and poor quality of mass transport is a common problem in India. The common sight of an Indian family of four travelling in the streets precariously perched atop a motorbike was Tatas inspiration for developing the Nano. Now the branding strategy of Nano has been broken. Various options like positioning it as a safe family transport or as sufficing the aspirations of car ownership or focusing on specific customer groups are being analyzed.

Automotive Industry in India

The automobile industry in India flourished with an average growth rate of 17 % annually. The per-capita ownership of automobile is low in India when compared to other countries. 76% of the total vehicle sales in India are of two wheelers. The two wheelers dominate the transportation market due to their fuel efficiency, low purchase and maintenance costs and small size that is useful in congested and crowded cities. Automobile production - No. of Vehicles Type of vehicle Passenger vehicle Commercial vehicle Three- wheelers 2008 -2009 1838593 416870 497200

Two-wheelers 8419792 Total 11172275

Passenger vehicles were categorized by size ranging from A1-Mini to A6-Luxury.

Tata Nano

Tata Motors Ltd planned to deliver the worlds cheapest car. TML partnered with various suppliers who spent a year designing a lightweight and low- cost drive shaft. Initially the car had a huge demand .Pre-bookings were enabled through automobile dealers. And due to the delay in transferring equipment from Singur to Sanand there was delay in production and hence they couldnt meet the demand immediately. Only 100000 customers out of 203000 , who were chosen by lottery were to be the first on line to receive the Nano. But slowly this huge demand dropped.

Product Review
There are three variants in the Nano range: Nano, Nano CX and Nano LX The car has achieved its low price by minimizing costs on unnecessary luxuries, the basic Nano comes without front and rear fog lights, without a heater or air conditioning, without antilock brakes, only one single windscreen wiper, manually operated windows, manual steering with no air bags, tiny 12 wheels, plastic body parts joined with adhesive instead of more conventional metal and welding and a two cylinder 623 cc engine that provides a massive maximum speed of 65 mph (around 105 km/h).

The features of the car are:

a) Stylish and comfortable The Peoples Car, designed with a family in mind, has a roomy passenger compartment with generous leg space and head room. It can comfortably sit four persons. Four doors with high seating position make ingress and egress easy. b) Fuel-efficient engine This is the first time that a two-cylinder gasoline engine is being used in a car with a single balancer shaft. The lean design strategy has helped in minimizing weight, which helps in maximizing performance per unit of energy consumed and delivers high fuel efficiency. Performance is controlled by a specially designed electronic engine management system. c) Meets all safety requirements The Peoples Cars safety performance exceeds current regulatory requirements. With an all sheet-metal body, it has a strong passenger compartment, with safety features such as crumple zones, intrusion-resistant doors, seats belts, strong seats and anchorages, and the rear tailgate glass bonded to the body. Tubeless tyres further enhance safety. d) Environment-friendly

The Peoples Cars tailpipe emission performance exceeds regulatory requirements. The high efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the twin benefits of an affordable transportation solution with a low carbon footprint.

Understanding Buyers
Understanding buyers and focusing on target market segments is essential Nanos growth. In rural areas, there could be small scale entrepreneurs who could use Nano for taxi services. People opting for second hand cars may want to buy Nano. Given a space for four, Middle income groups would prefer a Nano at a price of a two wheeler. Some customers preferred for paying a bit more to buy a somewhat larger car such as Alto which had bigger engine and a longer track record. Normally people do not want to own a brand that is likened to a taxi. No matter how tight the budget in life is, people will prefer to own a personal brand which they can show off to people. Nano has those cool looks but falls dead close to a brand image that a typical consumer might not feel comfortable with. Tatas need to understand the family ownership feeling from the feeling of owning a commercial car. Indian laws say that if there is a taxi it must be painted black and yellow. And therefore, people might not feel cool to own or even see a yellow Nano. Now, if it is peoples car then Tata has to make steps to gain brand equity and reputation.

4Ps of Marketing
Product The product design included many parts from different suppliers who provided everything from gasoline injection systems to mirrors and windshield-wiping systems. However, Tata motors designed the Nano engine. They created an innovative 2 cylinder 624cc engine for Nano. So such innovations in the product may gain popularity. Additional safety features and extension of warranty periods could help in gaining popularity. Pricing Though the pricing of Nano (Rs.1 lakh) was only a rough estimate from Tata, the press coverage as worlds cheapest car has forced Tata to take up such a challenge. The expectation of people will still remain the same. Hence price strategies like penetration pricing and pricing policies with minimum profit margins need to be adopted. Distribution Customers could book online for a Nano or they could use Tata dealerships. Offline booking applications could be submitted at various popular outlets. They can also think of selling directly to customers. Customers can deal directly with dealers and make the booking for Tata Nano by

visiting the sales office. Besides that, customers also can get the information or make the bookings via the telephone and through the Internet By this way we can save more cost and maintain the cheapest purchasing price rather than through retailers or resellers.

Promotion Strategies
The first objective for promotion strategies are aims to create brand awareness and knowledge of this new car Tata Nano. Brand awareness is important to provide a foundation for brand equity. Tatas must aim to create liking, preference, conviction, and purchase of a Tata Nano car. There are two ways of promotion flow, directly and indirectly. Directly is to organize a marketing campaign, event or a road show. By this way, Tata can promote Nano to target market face to face and provide the opportunity for them try to drive the Tata Nano. Indirect ways are advertisement through media such as internet, TV, radio and also newspaper. Promotion Tag lines like Pay Less & Get More could be used in those ways of promotion. Online Advertisement Tata Nano has created a website www.tatanano.com to better communicate with customers . Photos and videos provide customers with information about Nano. Social media communities like orkut, facebook and youtube have been of great use in promotions. Tatas blog network helps in monitoring to find out what's on people's minds especially the potential customers. This is a cheapest and good way to build up brand awareness. Television Advertisement Television advertisement is very expensive but this is the most powerful to perform the Tata Nano to the public by demonstrating Tata Nano attributes and persuasively explaining their corresponding consumer benefits. Radio Advertisement Nowadays having many facilities such as MP3, hand phone and so on, is a convenience for people to listen the radio anytime anywhere. This is a cheap and pervasive medium for Tata to create the brand name. Newspaper Advertisement Besides the radio, most of the Indians would see a newspaper every day. So this is good market coverage. From here, Tata Nano can get the broad acceptance and good reputation from Indians. Newspaper advertising is inexpensive when compared to television.

SWOT ANALYSIS
STRENGTH Affordable price of the product Brand name (Tata) New Innovation

WEAKNESS Not a car showing social status. Low engine capacity, fiber body & light vehicle Less fuel efficient and high maintenance costs when compared to Bikes Less expenditure on brand creation

OPPORTUNITIES Huge market of two wheeler buyers can opt for Nano Highly congested cities have a greater potential

THREATS College students preferring bikes than a car Slow sales resulting less than projected cash flow Increase in production cost Overly aggressive and debilitating actions by competitors Significant economic downturns

Conclusion
With the increasing economic growth, more percentage of the Indian population will fall under the middle class groups who have an urge to buy a car for themselves. If Tata Nano can market them in an efficient way, this potential could be tapped. This growth can also help them in widening their markets globally.