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CASE
ON
Submitted to:
Prof. Prashant Mishra
Submitted By:
Anirban Chandra(122011)
Lokesh Kumar Dhaker(122047)
On
August 31st , 2013
CONTENTS
Abstract ...................................................................................................................................................... 2
Nano-History of Engineering Marvel-The utilitarian and functional appeal: ................................................. 2
Automotive industry In India and Nanos Strategy: ...................................................................................... 2
Nanos Appeal for the customers................................................................................................................. 3
Consumer behaviour for NANOs Buying decision ........................................................................................ 3
Framework .......................................................................................................................................................... 3
Tata Nano First Advertisement (2010)-consumer perception ........................................................................ 4
Factors affecting Tata Nanos Buying decision-Perecption/Performance ....................................................... 4
Nano as a status symbol and effect of reference group: ................................................................................... 4
Price point and its proximity towards the competitors:..................................................................................... 4
Risk, discomfort and performance: .................................................................................................................... 4
Product promotion, service, dealers: ................................................................................................................. 4
Why it could be a missed opportunity? ...................................................................................................... 5
Misfired strategy of pay first-drive later and Marketing misadventure: ............................................................ 5
Austerity-trumped by emotion and status symbol ............................................................................................ 5
International effect and Absence in small cities:................................................................................................ 6
Negative image on safety: .................................................................................................................................. 6
Used car market:................................................................................................................................................. 6
Indian Middle class customer: ............................................................................................................................ 6
Action plan after decline in sales: ................................................................................................................ 7
Marketing campaign through television & Financing arrangements: ................................................................ 7
Extended warranty with scheme on low cost service and sales network: ......................................................... 7
Effect of these Action Plan implications: ............................................................................................................ 7
TATA Nano-Repositioning as Smart City Car ................................................................................................. 7
TATA Nano-positioning and repositioning effect ............................................................................................... 8
Tata Nano-Repositioning advertisement and its IMPLICATIONS ....................................................................... 8
Salient features of the repositioning .................................................................................................................. 8
Future ........................................................................................................................................................ 9
References................................................................................................................................................ 10
Exhibits..................................................................................................................................................... 11
Page 1
ABSTRACT
With its launch on 23rd March 2009, the 6 years episode came to an end of much fanfare and hype
from Media due its image of peoples car and the political disturbances around its production. The
image of cheapest car, the vision of two wheelers consumers migrating to Nano, people speculating
about the traffic congestion and increased pollution were the main concerns. But after few years, with
declining sales figure of Nano, Mr Ratan Tata, during his last year as TATA group chairman, defined it
as a missed opportunity. In August 2013, TATA Groups new chairman, Mr Cyrus Mistry, outlined the
plan to reposition Nano as a smart city car. All these raise the question, what went wrong with Tata
Nano. The Case examines the situation and companys different marketing communication
(advertisement, positioning and repositioning) from consumer behaviour perspective.
NANO-HISTORY OF ENGINEERING MARVEL-THE UTILITARIAN AND FUNCTIONAL APPEAL:
Ratan Tatas vision of a low cost car for affluent but cost sensitive Indian middle class was the main
inspirations behind Nano. To meet the challenges of making the production cost within the rupees
one lakh limit, manufacturing cost was reduced without compromising quality. The nickname Nano
shows the extreme engineering behind it. Starting from scratch, all the unnecessary curves and all
unnecessary components were removed to simplify production process. A low cost and lightweight
driveshaft was designed by GKN Driveline India and a new two cylinder 624 cc engine was designed by
TATA motors. The engine was placed in the rear of the car to decrease the overall size. One piece
plastic dashboard, only one windshield wiper, and tyres with 12 inch steel rim were among the cost
cutting approaches. The engineering excellence is shown in the several patents in Nanos design (34
patents in the power train design) .Along with that, Nano had the single alternative single injector
system, all alumina body (improving mileage), and electronic engine management system (stabilizing
and performance enhancing feature during acceleration and cruising). The Rs 1 lakh model did not
have the features like air bag, power steering, anti-lock brakes etc. Hence, the features of other
commonly available compact cars were compromised to meet the price point of basic model in Nano
(Though models like CX and LX, which were priced higher, had those features).
AUTOMOTIVE INDUSTRY IN INDIA AND NANOS STRATEGY:
Automotive industry in India has recorded a growth rate of 17% though the per capita ownership is
low in comparison to the developed nation. Indian road condition, congestion and fuel efficiency
made the two wheelers as the dominating market for Indian automobile industry. Hence only 16% of
the total vehicle sales are accounted by the passenger vehicles. Hence Nano with proposed price
point between the two wheelers and nearest four wheelers was supposed to create a new market for
its own. Its competition was supposed to be a substitute, which are two wheelers. Though in terms of
fuel efficiency and manoeuvrability two wheelers would score more, Nano was pitched on the safety
and aspirational values attached to a car.
Page 2
Nano was targeted at the two wheelers segment by providing a family vehicle for the two wheelers
consumers at affordable price level. For two wheelers consumers the main factors Nano tried to
address were more comfort and safety than the two wheelers with some status symbol and aspiration
of upgrading from two wheelers to the four wheelers status with some minimal changes in the price.
NANOS APPEAL FOR THE CUSTOMERS
For the target customers (Middle-class with two wheelers) Nano gave them a chance to afford a car
who until then could only afford a two wheeler. The common observation with families travelling
precariously on a two wheeler with huge luggage probably makes a business case for Nano as a safe,
all-weather, affordable, and convenient family transport. Nano gave the usual services and warranty
prevalent in the market (18 months).while comparing with Maruti800; it has 21% larger interior space
with 80L luggage space. With emission standards of Euro 4,Bharat stage-3 compliant with tested
frontal clash and only 4m turning radius, Nano scores well on the functional consumer surplus(while
comparing with models by other manufacturers)(Exhibit1 and Exhibit2)
CONSUMER BEHAVIOUR FOR NANOS BUYING DECISION
FRAMEWORK
Demography
Social
status
Values
Emotion
Culture
Personality
Motives
Marketing
activities
Reference
groups
Perception
Nano
Buying
Decision
learning
memory
We can judge the consumer buying decision of NANO based on the several parameters which can
affect the decision parameters. Based on this, we can see how NANO fared on these different aspects
and how its positioning affects the decision parameters.
Page 3
Page 4
Page 5
Page 6
Page 7
Utility,
price
Missed
opportunity
Nano Repositioned as
smart city car (2013)
?????????
Nano
Buying
Decision
Emotional
connect
1. Targeted at young population with friends(high aspiration, low income comfortable drive with
friends group)
2. Urban youth for specifically the female (the vibrant colours and fashionable colourful clothes)with this, the product appeal will go towards the female population putting it against the two
wheelers market of Scooty.
3. This approach is more of convenience type with style for the female population. The message
in the advertisement is for the young and high on self-esteem urban female population for
whom it would be the first cars.
4. The positioning of Nano is now as the second car for the family keeping in mind the
convenience factor for the new adults in the family for high middle class people. The safety of
four wheelers will give some added advantage in comparisons to scooty.
5. The social appeal of Nano might play a crucial role here. India is typically still marked as a male
dominated society. So the poor mans car image would carry a more negative perception
toward a man but in case of an urban young female population, the stigma of poor image
wont be attached with the car. Hence the consumer buying decision can be freely influenced
by the safety, maintenance, vibrancy of the product.
Page 8
6. With a New CNG version in the horizon, the rising petrol price risk will also be mitigated and
hence the product will have a nice appeal for the urban youth from economic point of view.
FUTURE
With new repositioning strategy of TATA motors for NANO as a smart city car, it is evident that the
company is not trying to sell the price point and low cost family vehicle image but also on features and
appeal to the new young urban customer. There is no doubt about the growth story of Indias middle
class but will they accept the new avatar of NANO? Or will the modified new model TATA pixel will
replace NANO altogether?
Page 9
REFERENCES
Positioning the TATA nano(A), KEL602 (2011).
Tata Motors Case Study, ML00001-033 (December 2011).
newapaper article. (2013). Retrieved from India today: http://businesstoday.intoday.in/story/tata-motors-to-repositionnano-as-smart-city-car/1/197973.html
Chiranjeevi, C. (2009). Nano, Tatas Peoples Car: Who is Marketing. IBSCDC.
Gambhiraopet, K. (2010). Tata Nano: Consumers Post-purchase Behaviour. IBS-CDC.
Hundal, B. S. (2010). Consumer behaviour towards TATA nano-Perceptual study. IUP journal of Management Research.
Jena, A. K. (2009). Tatas Nano:A Small Car with Large Consumer Surplus? IBSCDC.
Manas Ranjan Tripathy, S. P. (2012). The Turnaround of Tata Nano: Reinventing the Wheel. MDI-Vision SAGE.
Marphatia, R. (2008). Surveying the scene. Paintindia.
rAMSinGhAni, M. (2012). Disruptive innovation-Technology review(MIT). The Trouble with Indias Peoples Car.
Swati Singh, P. S. (2012). The Turnaround of Tata Nano: . MDI-SAGE.
Thottam, J. A. (2011, October 24). Little car that could not. Time International (Atlantic Edition)., pp. p39-41.
Page 10
EXHIBITS
Exhibit-1
Exhibit2
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