ASSIGNMENT

ON

NEW PRODUCT

DEVELOPMENT
SUBMITTED TO: SUBMITTED BY:

MRS. JASMINE ANKUR HARJAI

MBA-C

ROLL NO: 1799

Introduction To Tata Motors:
o Tata Motors was established in 1945, when the company began
making trains.
o It has its manufacturing base in Jamshedpur, Lucknow, Pune
and soon one more plant is going to established at Singur, West Bengal.
o Product Manufactured - Passenger Cars and commercial
vehicle
o Installed Capacity - 350,000-400,000 vehicles a year
o Investment - Rs 2,500 crore (Rs 25 billion)
o Turnover - $21.9 billion (Rs 967,229 million)
o Employees - 2,46,000/22001
o Tata Motors had created the wealth Rs. 320 billion during 2001-
2006 and stood among top 10 wealth creators in India.

Tata Nano - ONE LAKH CAR PROJECT “People’s Car”

“A promise is a promise,” said Rattan Tata, Chairman, Tata Motors, on 10th January, 2008,
when the Nano was first displayed at the Auto Show in Delhi. The Nano project didn’t grab
the attention of only Indians; the entire world had their eyes glued to the world’s cheapest car.
A truly People’s Car, this time is from India. Though the dealer price is Rs. 1 lakh, the price
on road, when it will be launched, will reach around Rs. 1,25,00 but it will be still more
affordable and will be more eco-friendly than most other cars giving a mileage of around
23km/liters. The price of the car is such that a lot of rich and HNIs, if interested, can buy the
car just by a single swipe of their credit cards.
Providing a car worth rupees one lakh car was the dream of the chairman of Tata motors Mr.
Rattan Tata. And with high qualified IT skills people he has shown the Indian talents to whole
the world.

 Idea conceived by - Rattan Tata

 Cost of development - 1700 crores
 Manufacturing cost(excluding dealer margin and taxes)- Rs 65,000 per unit
 Development of Design - India
 Time for designing the car - 4 years
 Team -A team of 150 engineers , everyone below age 28
 Biggest hurdle - To make a car cheap car without Compromising design
May western countries as well as many foreign countries have accepted Indian IT skills.

Details Of Nano
Specs:
Engine: 624 cc /
33 bhp
4 door,
5 seater (and yes 4 Wheeled too)
Rear Engine
Weight: 600 kgs
Mileage - 22-23 km/liter

Variants:
Standard
Deluxe (with AC)

Future:
Diesel Variant Exports outside India or assembly plants outside

Comparison
8% less in length (bumper to bumper) with respect to Maruti 800 21% more in inner
space with respect to Maruti 800
Looks:
Front side looks more like Matiz (or Spark as we now call it)Back side looks more like
India with those long tail lights.

Insight:
People often criticize something that is making waves everywhere. This has also been
the case with Tata Nano. Competitors, safety regulators, environmentalists and most
others conceived the problems that India will face, when such a car is available, much
before the actual launch of the car.
This will result into:
OLD GENERATION NEW GENERATION
SWOT Analysis
 STRENGTH
 Brand name TATA
 Cost price low
 Fuel efficient
 Safe
 WEAKNESS
 Low power
 Not a status symbol
 Delay in manufacturing
 Limited features
 OPPORTUNITIES
 Large market for selling
 Awareness in the market
 First car in low range
 Can hit in global market
 THREATS
 Company rival
 Not sure to hit in rural and semi-urban areas

New Product Development And Nano

As seen before, A product can be considered new under the following situations:-
 New-to-the-world products
 New product lines
 Additions to existing product lines
 Improvements and revisions of existing products
 Repositioning
 Cost reductions
As far as Nano is concerned, it falls into new to the world products in the context that it has made
a history for the cheapest car ever made without compromising on quality. I.e. best way value
analysis.

It can also be considered as new product in the since of cost reduction as it’s the first time in the
history that such a cheap car is produced.
The story of the Nano is not confined to its impact on the auto industry. It's a tale that illuminates
the India of today—an eager, ambitious nation with a combination of engineering talent, a desire
for low costs and value, and the hunger of young managers looking to break from a hidebound
corporate environment. Indeed, the team that worked on the Nano—on average aged between 25
and 30—has helped to flatten Tata Motors' stodgy, multilayered management structure, which
has resulted in an unexpected side-benefit called "organizational innovation".

Idea Generation And Nano

A dream is born – Says, “I observed families riding on two- wheelers -- the father driving the
scooter, his young kid standing in front of him, his wife seated behind him holding a little baby.
Add to that the slippery roads & Night time too. It is downright dangerous. It led me to wonder
whether one could conceive of a safe, affordable, all-weather form of transport for such a
family.”
So when Tata Motors needed someone to take charge of the company's most ambitious plan yet
to build the world's cheapest car ever Ravi Kant, who by then had become the company's
managing director, again turned to Wagh. Wagh remembers what he learned marketing the little
truck. "People want to move from two-wheelers to four-wheelers," he says. "Today they can't
afford it."
More and more can, but Indian car buyers today represent a tiny slice of a potentially giant
market India has just seven cars per 1,000 people. India's auto industry has grown an average of
12% for the past decade, but just 1.3 million passenger vehicles were sold in India in the fiscal
year ending March 2006. That means a billion Indians buy about the same number of cars in a
year as 300 million Americans buy in a month.
If four wheels cost as little as two wheels, that could change fast. About 7 million scooters and
motorcycles were sold in India last year, typically for prices between 30,000 rupees and 70,000
rupees, about $675 to $1,600. Tata is targeting a price of 100,000 rupees one lakh, in Indian
terms of measurement or about $2,500 at current exchange rates, for its small car. That sounds
impossibly cheap in the West but remains three times higher than India's annual per capita
income. The average pay for factory workers at Tata Motors is just $5,500 a year.

Idea screening

The next step was the screening of idea. How is this dream possible? What should they make?
 A scooter with two extra wheels at the back for better stability?
 An Auto-rickshaw with four wheels?
 A three wheeled car like a closed auto- rickshaw??
 A four wheeled car made of Engineering Plastics?
 A Four wheeled rural car?
 Rolled up Plastic curtains in place of windows?
 Openings like Auto rickshaws from the side
 A four wheeled open car with safety side bars?
But the market wanted a car and if they build a people’s car it should be a car and not something
that people would say,“ Ah! That’s just a scooter with four wheels or an auto-rickshaw with four
wheels & not really a Car.”

Concept Testing And Developing

Before starting the project, Wagh did something no one at Tata Motors ever had: He talked to
customers. The three-wheeler men inevitably insisted on a cheap, dependable truck that could go
from village to market carrying, say, a ton of onions or potatoes, one night, as sunset approached,
Wagh stuck with one rickshaw driver. He says, "I kept asking the question. Why? Why? Why do
you want a four-wheeler?" Wagh remembered. Finally, he got the real answer. It turned out it
wasn't really a problem of transportation of vegetables “If I had a four-wheeler, I would have
better marriage prospects in my village," the young man said. Drivers of three-wheelers are
looked down upon in India. Wagh realized that four wheels had emotional, not just practical,
appeal.

Thus the new product was now to be developed. But what type of product? The car to cost Rs. 1
lakh on road.
 The car should be built on a different platform than conventional ones.
 It must be meeting all the safety and regulatory requirements.
 It has to be built on a scale which shall be more than double the earlier launches of
similar products and the ramp up must be smooth.
 The car has to be designed so that it can be exported to other countries as the domestic
demand may not materialize as per projections.
 The car must be a beacon for the Indian Automobile industry and prove to the world that
we are capable to take any challenge and come out worthy winners.
That quest to build the world's cheapest car hasn't ended. The Nano should be available this fall,
but the mission began back in 2003, when Rattan Tata, chairman of Tata Motors and the $50
billion Tata conglomerate, set a challenge to build a "people's car". Tata gave an engineering
team, led by 32-year-old star engineer Garish Wagh, three requirements for the new vehicle: It
should be low-cost, adhere to regulatory requirements, and achieve performance targets such as
fuel efficiency and acceleration capacity.

Since the car had to be built within a cost of Rs. 1 Lac, no conventional design would work as the
costs shall be higher and so the entire car has to be redesigned.
What makes Nano so less expensive can be well understood from the following diagram
The design has to question the need of each and every component from the point of view of its
necessity of existence and also the minimum requirements of its functionality. Value Engineering
concepts have to be deployed to finalize the minimum requirements.
Disruptive Technology:
Is a Technology that brings radical change by introducing new ways of doing things usually at a
Technology that is:
 Significantly cheaper than existing Technology.
 Is much higher performing?
 Has greater functionality and
 Is more convenient to Use.
 Brings to market a totally different Value proposition than the one
available and can change the Paradigm about a product.
The Guiding factor was that the cost has to be minimized for each component yet maintaining its
basic functionality. The Alternatives are:
 Reduce Consumption of Material being used.
 Alternate Suppliers to get same material at fewer prices.
 Use alternate materials.
 Eliminate use of Material.
 Eliminate a process Or a Combination of the above.

The Guiding factor was that the tax structure, on materials and manufacturing, must support the
final cost of Rs. 1 Lac. The Decisions were:
 Establish factory in a tax free zone.
 Get the tax advantages on infrastructure development.
 Get the suppliers to establish base near the factory.
 Get special concessions from State Govt.
 In short select a manufacturing location where all the advantages
could be achieved.

In short select a manufacturing location where all the advantages could be achieved.
Total sales estimation

Now the question was, “how much to produce”

 It was estimated that the demand for the people’s car shall be at
least twice the demand for Maruti 800, the lowest end car. Initial
projections were at about 500 K cars per year.
 The basic reason was the conviction that the target price shall
redefine the 4 - wheeler segment.
 The price decision of Rs 1 lakh is definitely going to make a lot
 many people transit to 4-wheeler fold and that shall explode the
demand.
 F only 10% customers of 9 Million two wheeler market transit to
4-wheelers it shall amount to 50% of the passenger car market
share.
 It was decided to set up plants with 5 lacs cars per annum capacity and ramp the same up in stages, in
line with increase in market demand. The initial response to the Nano has been overwhelming and the
tiny, Noddy-land car is expected to help the company cross several milestones. With revenues at Rs
1,29,994 crore for the financial year 2006-7, and group companies enjoying a market capitalization of Rs
2,51,487 crore as on January 10, 2008, the Tata Group is on a strong footing, contributing more than 3 per
cent to India's GDP. Nano, being the world's cheapest car, has made international players sit up in
amazement and the company has received proposals from some African, Latin American and Southeast
Asian countries to manufacture the car there.

Product Development And finally the product was developed with the following features.
 Engine Capacity Bosch 624 c.c. twin cylinder
 Low capacity, Lighter, sufficient with better Power Rear Engine to reduce the
transmission length using a balancer shaft.
 4 Speed Manual Gear Box
 All Aluminum Engine
 Higher thermal conductivity than cast iron, Lighter and so better mileage
 Engine Management System by Bosch
 Superb control over emission and smooth acceleration.
 Dimensions L: 3.1m, W: 1.5m, H: 1.6m
 Less length but more inner cabin space due to height. Comfortable leg room.
 Independent Front & Rear Suspension McPherson Strut in Front & Coil spring & trailing
arm in rear.
 Better ride than Maruti 800.
 Single piece ribbed steel body with safety features such as crumple zones, intrusion
resistant doors, seat belts, strong seats & anchorages.
 Safety requirements are adequately met.
 Single Wiper in place of two.
 Cost effective yet functionality is met
 Tube less Tires
 Weight reduced by 2 Kg. Cost reductions 200 Rs. And in line with modern vehicles
 Instrument console in the centre
 Elegant to look at and can be used both in Left Hand & Right hand version.
 The list goes on and on.
 The Final verdict

THE CAR COSTS Rs 1 lac

Test Marketing And Commercialization
Nano is soon going to launch by the end of April. It will be commercialized in whole of
India. It is mostly targeted to the middle class and lower middle class people. The effects of
Nano and its commercialization will be soon known after it comes into the market.
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SOME MYTHS ABOUT NANO
When Nano was introduced, it surprised everyone. It had so many features but the cost was as low as Rs. 1
lakh. This was really amazing. Due to this, many competitors, governments and others opposed Nano.
Moreover, it’s not a new thing that whenever a new concept is developed, people oppose. They find more
limitations then seeing the benefits. Following are some myths about Nano. But these are then proved to
be wrong.

Nano is an unsafe car

 The car has an all steel body.
 It meets the mandatory Frontal Impact requirements.
 It also meets the Side Impact requirements although they are not mandatory in India.

Nano will greatly increase the Pollution Level

 The car is Bharat IV and Euro IV compliant although these norms, which are stricter than the present
Bharat III norms, are yet to be introduced.
 It has lower carbon footprint, 20 mg / Km of Carbon Dioxide emission as compared to
45mg / Km, emitted by most of the two wheelers.
 Its Multi Port Fuel Injection system is controlled by an intelligent Bosch Engine
Management system which controls the combustion cycle precisely to ensure compliance to all
emission norms.

Nano will struggle to perform

 Although the car has 33 bops as the maximum horsepower it has a low kerb weight of 550 Kg and so
has a higher power-to – weight ratio when compared to many existing cars running on Indian roads.
 The car has a matching acceleration to Maruti 800 and also a good top speed. Although the
manufacturers have estimated 90 Kms as the maximum speed the car can go up to 105 Kms per hour
top speed.

Nano has very little leg room

 Although the car is 8% smaller than Maruti 800 it has lot of extra leg room at front as
there is no engine compartment. This also leaves sufficient knee room at the rear.
 The car has a tall boy type design so there is lot of head space and also enough Shoulder room.
 The mono volume design and the wheels having been put at the corners have freed up lot of in- cabin
space and although the car may be registered as a four-setter, three slim adults can sit comfortably at the
rear.

Cheap means Uncomfortable

 More comfortable than some of the cars selling at even twice the price. Leaves sufficient
knee room at the rear.
 Easy to get in & out of the car because of perfect seat height from the ground.
 Suspension systems are good and the trailing arms with coil springs are not found in
cheap cars. Rear.

It’s very difficult for a rear - engine car to work.

 Rear engines work in many cheap as well as expensive cars.
 Auto-rickshaws at one end and Formula One cars on the other extreme all use rear
engines.
 Maruti Omni too has a rear engine, under the seat and no one has been burnt due to that.
 Cooling is easier in Nano as compared to some vans and there are the air ducts on either
side behind the edge of the doors, which allow air to seep in for both cooling & for
intake.

There is a shortage of storage space.

 There is some storage space although not much.
 The rear seat with parcel shelf folds to allow accommodating a large suitcase.
 Small articles can be placed under the bonnet also.

Cutting Corners is evident everywhere

 Cost cutting is done by smart designing rather than taking out the essentials.
 One wiper has been taken out but the functionality is intact. Wind shield washer fluid jets
are mounted on the wiper itself rather than the body.
 Wheels are held by three bolts instead of four.
 On the contrary, MRF tubeless tyres and all Alumininium engine, have been used, which
are more expensive than conventional ones.

Findings
After the study of various aspects we found that –

Nano Car Is Definitely Not For:-

 Someone looking for better performance.
 Someone who is looking to impress somebody.
 Someone who wants to speed trial on Sunday
 Someone who is looking for long drives.
But Nano Car Is Defiantly For –
 Someone who is looking to buy a car but cannot afford much price.
 A students who want to go college, tuition instead of bike etc.
 Someone who depends on second hand car.
 For a house wife who can buy a car with her own savings.
 Someone who depends on scooter.
So Nano is not a basically a luxury cars but it can fulfilled the all capacity for middle class
people.
Impact Of Tata Nano On Life Of Common Man
 In India every one can afford a Nano, just as we buy any electronic appliances for a home
uses.
 Decrease in price of second hand car.
 High traffic on roads due to sale of exceeds car on roads.
 Increase in loan on car installments.
Limitations
As every research have its own limitations, so as we had and they are as follows:
1) Survey conducted in a small geographical area, in Bangalore.
2) Research conducted on the response of the 69 respondents, which cannot correctly
represent the population.

REFERENCES
1. Kapil Lamba lamba.kapil@gmail.com
2. Marketing Research done in second term at IFIM B School.
3. www.wikipedia.com.
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