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Chapter 1.

INTRODUCTION TO TATA NANO


Dream-dream and dream, because dream gives vision, vision gives thoughts and finally thoughts lead to the action". Each letter of these motivational words said by India's former President Dr. A.P.J. Abdul Kalam goes exactly with Mr. Ratan Tata, Chairman of Tata group, who in the year 2003, dreamt of producing a safe, affordable Car for the common man. Finally after the wait of five years, crossing all financial and technological barriers, Ratan Tata kept his promise and unveiled Tata 'Nano' on 10th January 2007, at the 9th Auto Expo 2008 in New Delhi. Tata Nano, cool & smart, launched by Tata Motors is world's cheapest Car with a price tag of $ 2500. 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 peoples 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, and 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, and founders of the Tata Group.
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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 Auto Expo. 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 many 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 year as of August, 2008 material costs have risen from 13% to 23% over the cars development, 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.

TECHNICAL OVERVIEW DESIGN

The Peoples Car, designed with a family in mind, has a roomy passenger compartment with generous leg space and head room. It can comfortably seat four persons. Four doors with high seating position make ingress and egress easy. Yet with a length of 3.1 meters, width of 1.5 meters and height of 1.6 meters, with adequate ground clearance, it can effortlessly maneuver on busy roads in cities as well as in rural areas. Its mono-volume design, with wheels at the corners and the power train at the rear, enables it to uniquely combine both space and maneuverability, which will set a new benchmark among small. ENGINE Unlike other low cost Indian cars, this one is going to have a variomatic gear system. Instead of manual gear box in conventional cars it is coming up as gear less or rather with an automatic gear transmission. This helps to improve the efficiency & mileage by magnifying the torque output. As in international markets, the compact car from Tata will have back mounted engine, pushing the luggage space to the front. Making the engine closer to the fuel tank has another advantage of increased fuel efficiency. Rear mounted engine also help in reducing the power loss during transmission. The car will have front disk and rear drum brakes. The comp claims mileage of 22 kmpl in city and 26 kmpl on highway.

Fuel Efficiency The Peoples Car has a rear-wheel drive, all-aluminum, two-cylinder, 623 cc, 33 PS, Multi point fuel injection petrol engine. This is the first time that a two-cylinder

gasoline engine is being used in a car with single balancer shaft. The lean design strategy has helped minimize weight, which helps maximize performance per unit of energy consumed and delivers high fuel efficiency. Performance is controlled by a specially designed electronic engine management system.

SAFETY & COMFORT

By adhering to the fact that less weight requires less power, the 1 lakh car is made of light weighing steel. This has made the Tatas come up with a cheap alternative with out compromising on safety and performance. The base model will feature glass windows that can be cranked up. The tail lights are expected to appear like as in Tata Indica. Higher versions will have the comforts of power steering, power windows, air-conditioning and much more. With an all sheet-metal body, it has a strong passenger compartment, with safety features such as crumple zones, intrusion-resistant doors, seat belts, strong seats and anchorages, and the rear tailgate glass bonded to the body. Tubeless tyres further enhance safety. It exceeds current regulatory requirements with a strong passenger compartment, crumple zones, intrusion resistant doors, seat belts, strong seats. Cost cutting features

The Nano's dickey (boot/trunk) does not open. Instead, the rear seats can be folded down to access the dickey.

It has a single windscreen wiper instead of the usual pair. It has no power steering. In Base model it has three lug nuts on the wheels instead of four. It has only one side view mirror.

CONTROVERSIES INVOLVED

Controversies also arose about Tata's planned manufacturing unit for the car in Singur, West Bengal, where the state government of West Bengal has allocated 997 acres (4.03km) to Tata Motors. The car factory on

construction of the that tract of land will agricultural land and and eviction of ca. and agricultural

require

fertile

the expropriation 15,000 workers. peasants The

affected farmers fear they will receive inadequate or no compensation and therefore lose their livelihoods. Activists near Kolkata, where Tata's manufacturing unit is located, started burning the car in effigy. In New Delhi, a group of six women protested wearing T-shirts bearing slogans that said, "The Rs 1 lakh car has Singur people's blood on it." The Trinamool Congress alleged that Tata motors usurped the agrarian land for the construction site and has threatened to stall the manufacture of the car. The 11 cases were dismissed. The Nano is alleged to have severely affected the used car market in India, as many Indians opt to wait for the Nano's release rather than buying used cars, such as the Maruti 800 (a rebadged Suzuki Alto), which is considered as the Nano's nearest competitor. Sales of new Maruti 800s have dropped by 20%, and used ones by 30% following the unveiling of the Nano.

It will be a tragedy if such a mega investment and employee generating project by one of Indias most respected company is lost to West Bengal on account of a failure of communication among its stakeholders. Its time that we as a nation begin to think of such projects as national projects and not become captive to immediate impulses. There cannot be and must never be any contradiction between industrialization and welfare of farmers. In a democracy, the sensitivity of all stakeholders has to be addressed and in the context of land acquisition controversies, the new law of land acquisition and rehabilitation, proposed by the UPA government, is the way forward. If the Tata withdraws from the Nano project in West Bengal, investors sentiments will be hurt, and the only way for the company to move forward is for all concerned to ensure a political atmosphere conducive for investment. The Nano has 34 patents on the cars design itself, which is a cause for national celebration as it represents a major technological and manufacturing feat in the automotive sector. All projects of technological excellence and originality that give India a special place in innovation and unique competitive advantage, should be treated as national projects. The state government should ensure the farmers are justly compensated in terms of price for their land and employee opportunities in the car project through suitable policy initiative. Democratic government is all about dialogue and moderation, and we hope that the West Bengal government will initiate purposive dialogue with all concerned. After all, his unfortunate controversy must be resolved to the satisfaction of all stakeholders through dialogue alone.

ENVIRONMENTAL IMPACT In India, a car like this can crowd the streets, forcing the government to improve infrastructure - and as the evolution of the Western industrial society demonstrates, affordable cars can be a major force for change. But till that happens, this is a car that can seriously crowd the streets - and make life a bit tougher in the short-term. The car will have a two-cylinder 624-cc petrol engine with 33 bhp of power. It will also have a 30-litre fuel tank and four-speed manual gearshift. The car will come with air conditioning in the deluxe version, but will have no power steering. I know, that's pathetic power by American and Western standards. But Indian maximum legal speeds are way lower than them - and Tata Motors anyway claims that the car is as fast as the Maruti 800, India's original People's Car that changed things a couple decades back. And there are a million or more of them on the streets of India already. The car will have front disk and rear drum brakes. The company claims mileage of 22 kmpl in city and 26 kmpl on highway. The $ 2500 is the dealer price - the actual price on the road might be approx Rs. $3000. The car would be commercially launched in the second half of 2008 and would be produced at the Singur plant in West Bengal. The car launched is being avidly watched by the auto industry around the world.As attractive as the Nano is on the outside, the same cannot be said for the interior. The plastics feel cheap and it is here that you begin to feel the concern towards the price that Tata was aiming at. The rudimentary knobs and switches point towards the use of materials, which would be better off in tractors twenty years old! Dreary and uninspiring by any measure, thats what one can say about the interior quality and looks.
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What impressed me though was the layout. Spacious and functional, the dashboard has a curved look, which can prove beneficial when it comes to storing items. The Chevy Spark started it for the small cars and the Nano continues on what seems to be the current trend. The instrument binnacle is mid-mounted and the center console has a swooping form which houses all the important knobs and air con vents. Speakers for the audio system have been incorporated on the rear bench just under the seat area. The speed is calibrated to a top whack of 120kmph though we shall reserve our statements on that till we test the car thoroughly. Cash saving activity has gone a bit too far with the sun visor, theres only one! Please Tata, please, have mercy on the people who will sit on the passenger seat, only to find no sun visor to protect their skin from sun or no vanity mirror for women (men too, going by the current fashion!) to put the make-up on. The center console, forming a crest in the middle of the dash, can be worrisome if you happen to be as tall as Rajpal Yadav. The seats have integrated head restraints, like in the hugely popular, Hyundai i10. Yes the Nano will be deprived of a lot of creature comforts but to satisfy your salivating mouth, Tata will offer the top end version with air con, power windows and power steering. This car is destined to be exported too, so provision for ABS and airbags will also be there for sure. The floor mounted four-speed gearbox wasnt smooth as silk but would give the 800 something to take inspiration from. Roominess is what this compact car from Tata is all about. Four average sized Indians will find themselves enjoying their ride.

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Chapter 2.

MARKETING MIX STRATEGIES 1. Product Strategies

The product strategy, which will be adapted, would be the straight product extension, which is marketing the car in another foreign market without any change. This is because there would be no additional product development cost, manufacturing changes, or new promotion. 1.1 Product Reviews There are three variants in the Nano range: Nano, Nano CX and Nano LX. The features of the car are as follows: a) Stylish and comfortableThe 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. Its mono-volume design, with wheels at the corners and the power train at the rear, enables it to uniquely combine both space and maneuverability, which will set a benchmark among small cars. b) Fuel-efficient engineThe Peoples Car has a rear-wheel drive, all aluminum, two-cylinder, 523 cc, 33 PS, multi point fuel injection petrol engine. This is the first time that a twocylinder gasoline engine is being used in a car with a single balancer shaft. The lean design strategy has helped minimize weight, which helps maximize

performance per unit of energy consumed and delivers high fuel efficiency.

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c) Meets all safety requirementsThe Peoples Car s safety performance exceeds current regulatory requirements. With an all sheet-metal body, it has a strong passenger compartment, with safety features such a s all sheet-metal body, it has a strong passenger compartment, with safety features such a s 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. In terms of overall pollutants, it has a lower pollution level than two-wheelers being manufactured in Malaysia today. 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.

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1.2 Branding Brands identify the source or maker of a product and allow consumers either individuals or organizations to assign responsibility for its performance to a particular manufacturer or distributor. Branding is endowing products and

services with the power of a brand. Its all about creating differences between products. For branding strategies to be successful and brand value to be created,

consumers must be convinced there are meaningful differences among brands in the product or service category. In Tata Nanos case, the branding strategy used is corporate name combined with individual product names. This companys name legitimizes and the individual name individualizes the new product

1.3 Product Strategy The Tata Nano CX, including all the features described in the earlier Product Review section, will be sold with a three-year warranty or 100,000km warranty, whichever comes first. We will introduce the Tata Nano LX during the following year, after we have established our Tata brand. The brand and logo will be displayed on the car as well as in all marketing campaigns.

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2. PRICING STRATEGIES

The Cost price is an estimated USD2, 420, which includes import tax, duties excise, sales tax, shipment costs and assembly cost. The selling price for the Malaysian market is RM 13,704.00, which is inclusive of standard

accessories, but exclude road tax(RM 70.00), registration fees (RM 150.00), number plate (RM 50.00) and ownership endorsement fee (RM 50.00), sales tax (RM 1370.40) which amounted to RM 320.00. The On-The-Road price will be RM 15797.40.These prices reflect a strategy of taking a share from established competitors, such as Perodua s model of Kancil and Viva.

2.1 Setting the price selecting price objectives

Tata Nano Malaysia (TNM) has set major three objectives in its effort to position itself in the Malaysia Automotive market. The objectives are: Survival,

maximum current profit and maximum market share. a. Survival Intense competition from Malaysias second car manufacturer, Perodua for a share of the automotive market segment for the below 1,000 cc category will spur TNM to ensure that the car price covers variable costs and some fixed costs. In this case, survival is a short term objective as in the long run, TNM will add value such as added safety features to the Nano range.

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b. Maximum current profit

TNM has set a price that will maximize current profits, cash flow and return on investment, after taking into consideration the demand and costs involved. As this category of small foreign cars segment has not been really

tested by other manufacturers, therefore the demand is rather difficult to estimate but TNM is confident of a good response towards its entry into the Malaysian market.

c. Maximum Market Share

TNM will implement the market-penetration pricing, which is to set a low price for a new car in order to attract a large number of buyers and a large market share. This will be done by achieving high sales volume, which will results in falling costs, allowing the company to cut its price even further. We are positive enough that the Malaysia car market is highly price sensitive, as a low price produces

more market growth. TNM is also confident that production and distribution costs will fall as sales volume increases and the low price of Nano cars will help to keep out competition and maintain its low-price position. The low-price entry will provide People consumers with a viable alternative to Perdue Malaysia is expected as Malaysia

second National car. Further liberalization

implements the ASEAN Free Trade Area agreement, which commits the Malaysia Government to scrap foreign car taxes.
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3. PROMOTION STRATEGIES

3.1 Objectives of Promotion Strategies Before determine the promotion strategies, we need to very clear about what are the objectives we need to achieve. We know as above, our missions are to promote Tata Nano in Malaysia and increase the sales quarterly. Tata Nano is very new for Malaysian; they feel fresh with this new brand and concept of this car. Tata Nano will get into Malaysia market in July2009. So first brand awareness of the objective for promotion strategies are aims to create

and concept/knowledge of this new car Tata Nano. This is the

cheapest car in the world and burst into the worldwide market in the short time. But still is the new brand for the People, so we do the advertisement and organize the event or campaign in sufficient detail to establish the good brand attitudes. Brand awareness is important to provide a foundation for brand equity. After that, our second

objective is knowledge and persuasive. We aim to create liking, preference, conviction, and purchase of a Tata Nano car. We can do the comparison with other cars that have higher purchase price and this price is not every people will be affordable especially lower income families and students. Beside that we will convince current purchasers that we will give the potential customer to enjoying the good experience with Tata Nano by give try to drive the Tata Nano before buying the car. And also will provide them warranty to the Tata Nano. We will organize all the promotion strategies with lower cost to maintain the lower purchase price for the Tata Nano in Malaysia.

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3.2 PROMOTION TAG LINE

Have Fun, Pay less and get more with Tata Nano

Why Tata establish this tag line? Because this makes people too easy to remembered Tata Nano and feel happy all the ways with Tata Nano. Tata Nano is safety and you can travel everywhere by Tata Nano with your family or friends with fun, but you just need to pay all of this at lower price Pay Less & Get More. Beside that we can enjoy special fun with Tata Nano; our earth also will feel happy with Tata Nano because Tata Nano also is the environment friendly car.

3.3 ADVERTISING PROGRAM

Tata aims to inform people this is the cheapest car in the world and persuade people to buy Tata Nano due to this car is safety, useful, all in good quality and also environment friendly by developing an advertising program.

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3.3.1 ONLINE ADVERTISEMENT First step we start before lunching Tata Nano, we do the online advertisement. Tata Nano created a Website www.tatanano.com on March 2009 to better communicate with the customers. In the Web site, we posted the photo categories and videos to provide customers the information and special features of Tata Nano and bring them inside the company. In addition to photos and videos, the web site links to recent news about Tata Nano and space for public feedback. Besides that, blogs have become an important outlet for word of mouth that is regularly updated online diaries. Blogs are bringing together people with common interests. They vary wide and can influence a vast audience due to many Internet users have read Blogs. We can establish the blog network and carefully monitoring to find out whats on people's minds especially the potential customers. This is a cheapest and good way to build up brand awareness. 3.3.2 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. By lower

advertising budget, we cannot do the TV advertisement in whole day, so we just choose the prime time (7pm 11pm) to place the advertisement. By properly designed and executed TV advertisement can improve brand equity and affect sales and profits.
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3.3.3 RADIO ADVERTISEMENT

Most of the People listen to the radio daily. Now a day have many facilities such as MP3, hand phone and so on, is convenience for the people to listen the radio anytime at anywhere, This is a cheap and pervasive medium for us to create the brand awareness by repeatedly listen the advertisement and the brand name. Advantages of the radio advertisement are flexibility, quick response and also more effective media for reaching teens.

3.3.4 Newspaper Advertisement Beside that the radio, most of the People also will saw a newspaper everyday. So this is good market coverage. From here, Tata Nano can get the broad acceptance inexpensive. and good reputation from customers. Newspaper advertising is

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3.4 MARKETING CAMPAIGN: THIS MARKETING CAMPAIGN IS BASE ON EVERY FOUR MONTH: 3.4.1 Marketing Campaign for July 2009 to October 2009 Launching program also is one of the promotion strategies to build awareness,

through launching at public center Tata Motor will introduce the Tata Nano to market. In July and August, we focus on marketing campaign which will take place at all the IPTA and IPTS which have organize the convocation, by providing product display and banner; and the peoples can have the experience with Tata Nano by provide the opportunities to drive Tata Nano around the campus. Theme for this campaign is 'Good future with Tata Nano'. Reason for this marketing campaign is one of our targets are students such as fresh graduate who just get the new job and also the international students. Fresh graduate need the transportation in their working life but they can't afford to buy the too expensive car;

international student just need the car which is economy and using it in short period around 2-3years for their student life in Malaysia. This is cheapest cost by event or campaign in the campus. In September and October, People will celebrate two big festivals together, there are Hari Raya Puasa Aidifitri and Deepavali. So we can focus on lower income group with family especially those are come from Indian family. Use the mail, telephone, fax, e- mail to communicate directly with them. Base on historical, more of the Malay or Indian will buy the car before festival. 'Raya with Tata Nano' can be the theme for our campaign at this period, and promote them Tata Nano is cheapest and safety.

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3.4.2 Marketing Campaign for November 2009 to February 2009 In November and December, Malaysia have the Mega Sales due to Merry Christmas and New Year in the end of the year at whole Malaysia so that have many people will go to shopping. We can organize the event at shopping centers in Malaysia such as KLCC, Midvalley, Berjaya Times Square, and Sungai Wang by providing product display and banner. On January and February, most of the employees in Malaysia will get the bonus in this period so the purchasing power will increase. Beside that Chinese New Year is at February. Send the brochures to the small and medium company or office and do the introduction or briefing to them. Follow by mail, telephone, fax or e-mail to developing effective communication.

3.4.3 Marketing Campaign for March 2009 to June 2009 We will do the road show at every state (whole Malaysia). We can have the road show at the center market such as all market at all the state. Have many people will go to market early morning to buy the vegetable, take the breakfast or buy the necessary things. Most of them are women or housewife who may be come from the lower or medium income family. Some of them go to Pasar by motorcycle or by bus. There are our target markets. We can promote Tata Nano to them such as, Tata Nano is the cheapest car in the world, Get the Tata Nano to be second car for their family member especially for their children or elder parent, 'Easy life with Tata Nano'. Housewife or mother can go to Pasar or anywhere by Tata Nano better than motorcycle or by bus for complete their daily matter more effectively. When the women get the news, they will pass this news
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to their friend immediately. This will help us to promote Tata Nano effectively in the local society. At the road show, people also can get the experience with Tata Nano by have the opportunities to drive the Tata Nano car before purchase it.

3.5 Channel of Distribution Strategies

3.5.1 Direct marketing channel (zero-level channel)

Manufacturer Customers We perform the Tata Nano in Malaysia by selling it directly to customers. Customers can deal directly with our dealers and make the booking for Tata Nano by visit our sales office or at any special event/campaign. Besides that, customers also can get the information or make the booking via the telephone (1-800-88-nano) and through the Internet (www.tatanano.com). By this way we can save more cost and maintain the cheapest purchasing price rather than through retailers or resellers.

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3.5.2 Physical Flow

Assembly Workshop Tata Motor at India Transporters, Warehouses At Malaysia Customers Tata Nano will send the paths to the Malaysia after received the order from the sales office. After that, we will assemble a car at the workshop. Finally, send to the customers directly. From here, we can often provide faster delivery to

customers because we are closer to the customers.

3.5.3 Payment Flow Tata Motor at India Sale Office Banks Banks Customers At Malaysia Customers can paying bills by cash or do the financing from bank. Customers pay less by this diagram due to not need to pay extra commission to third party such as wholesalers or retailers. Tata Motor also can collect the payment more efficient.

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3.5.4 Information Flow

Tata Motor at India Sale Office At Malaysia Customers Customers can get the information directly from Tata Motor such as new product, price development and so on. Tata Motor can more understanding customers needs when receiving customers, response calls and mailings or through Internet blog. If customers have any need or complaint, we can satisfy them immediately by deal with customers directly. 3.5.5 Promotion Flow Marketing Campaign/Event Tata Motor at India Sale Office Media Customers At Malaysia Have two ways of promotion flow, directly and indirectly. Directly is well organize the marketing campaign, event and road show. By this way, well promote Tata Nano to target market by face by face and provide the opportunities to them try to drive the Tata Nano. Indirect ways are we will do the advertisement through media such as Internet, TV, radio and also newspaper. By this promotion flow, Tata Motor aims to create brand awareness and increase the sales in the Malaysia.

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4. FINANCIAL PLAN

This section will offer the overview of Tata Nano related marketing activities. It is include, sale forecast, expense forecast, break even analysis and how those relate to the market strategy.

4.1 Break even analysis

Break even analysis indicates that 3369 unit or $ 46,168,776 will be required in monthly sales revenue to reach the break even point.

Table: Break Even Analysis Monthly unit break even Monthly sales break even Monthly unit production Average per unit revenue Average per unit variable cost Average per unit fixed cost Estimated monthly fixed cost 3369 $46,168,776 6083 $13704 $8,954 $2630.28 $16,000,000

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4.2 Sales forecast

Sale was forecasted quarterly basis, with adjustment of seasonal factor. At Malaysia there is 3 main celebrations each year, which AidilFitri, Chinese New Year, and Deepavali, those factors was used as seasonal factor. Since one of our target markets is fresh graduate student, graduation month also was used as seasonal factor to adjust our forecasted sales. The sales were forecasted to increase 10 percent annually, sales forecast can be refer to graph below.

4.3 Marketing Expense Forecast

Marketing expense forecast will be used as tool to keep the marketing department on target and provide indicators when corrections are needed for the proper implementation of the marketing plan. Expenses are tracked in major

marketing categories of advertisement, marketing campaign, direct marketing and other. Marketing are budgeted at approximately of 8 percent of total sales for 3 quarter of 2009, the marketing expense will be high during those quarter to

penetrate market and promoting our product so costumer will realize about existence of our new product. For the next coming years the marketing expense will

budgeted approximately 3-4 percent of total sales.

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Table: Marketing Expenses Forecast Particulars 3rd Quarter 09 Advertisement o Newspaper magazines and 2000000 bill boards o TV Advertisement o Online Advertisement o Radio Advertisement 200000 200000 150000 150000 100000 100000 75000 75000 5000000 4000000 3500000 3500000 1500000 1200000 1200000 4th Quarter 09 1st Quarter 10 2nd Quarter 10

Marketing campaign o Grand Launching Event o Graduation Campaign o Depawali campaign o Christmas 2000000 2000000 7000000

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Campaign o Chinese year o Roadshow Direct Marketing o 1800 toll free o Website new

2000000

2000000 3000000

150000 500000

100000 100000

100000 75000

100000 75000

Other o Printed Material (Broachers banners) Total 20950000 6000000 7100000 8100000 & 100000 800000 600000 600000

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MARKET STRUCTURE FACED BY TATA

Key points to be discussed:1. Various market structures in brief 2. The kind of market structure Tata Nano is facing 3. Prevailing competition to Tata Nano There are four basic types of market structures under traditional economic analysis which are: A Perfect competition is a market where there are many small firms producing homogeneous goods. A Monopolistic competition prevails where there are a large number of independent firms which have a very small proportion of the market share. An Oligopoly is a market dominated by a few large suppliers. The degree of market concentration is very high A Monopoly is a market structure is which a single supplier produces and sells the product.

The elements of Market Structure include the number and size distribution of firms, entry conditions, and the extent of differentiation. The main criteria by which one can distinguish between different market structures are: the number and size of producers and consumers in the market, the type of goods and services being traded, and the degree to which information can flow freely.

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Automobile industry in itself is a differentiated oligopoly market. In differentiated oligopolies companies attempt to differentiate their products from those of their competitors. Essentially, Oligopolies have a few key players in an industry that can cooperate to effectively form a monopoly or at least approach the level of a monopoly. Automobile industry typically has barriers to entry, which deter newcomers from starting up businesses, keeping the market small. In the case of an automotive company, costs are a large barrier. Who exactly has the money to throw around on a factory, national advertising, labor pool with benefits; repair structures and mechanical warranties etc will jump in an automobile industry.

But the case of Tata Nano is different in terms of its price. Currently it clearly enjoys clear monopoly in the world market. Let us see how.

If there is a single seller in a certain industry and there are no close substitutes for the goods being produced, then the market structure is that of a "pure monopoly". A monopoly should be distinguished from a cartel in which several providers act together to coordinate services, prices or sale of goods. Although there are innumerable small car manufacturers, currently Tata Motors Ltd. long-awaited Nano the peoples car stands out as the only car manufactured around the globe with the cheapest price. Tata says it has filed 34 global patents for the vehicles platform. A monopoly is said to be coercive when the monopoly firm actively prohibits competitors from entering the field. Economic barriers include economies of scale, capital requirements, cost advantages and technological superiority.

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Monopoly is the result of access to key resources, which may be either natural resources or some patented process or special knowledge. New firms cannot enter the industry without access to those resources. The Nio technology which includes the above factors will make it difficult for new entrants. A monopoly is a price maker as it holds a large amount of power over the price it charges. Tata Nano is the only car in the world, which has been priced with a starting rate of Rs.134000.00 for the Base model, and Rs.160000.00 & Rs.185000.00 for the CX & LX model respectively. An existing competitor is the Maruti 800, which is trusted and consumed by a big share of Indian market. Although Nano is cheaper than the Maruti 800, its main competitor which is next cheapest Indian car priced at 1,84,600.00 Rupees, Marti 800 is the car which is around for many years and is still going strong. Maruti Suzuki will most probably bring down the price further to attract the customers. There are also rumors of Marti Suzuki introducing a lower priced version of Alto to counter Tata Nano. Customer votes say this car is much more reliable than Nano as it is the best one can say for the city rides and easy to maintain in traffic. But still Nano proves to be better. Nano is 8 percent smaller in exterior size and has 23 percent larger interior space in comparison to Maruti 800. Now news is spread about the RENAULT YENI. RENAULT YENI will be launching in India in collaboration with Mahindra. This Car is launching in India only for Rs 1, 30,000. Now how far this car proves to be a truth or a myth depends. But if it is a truth than the competition for Nano from RENAULT YENI will be much more than the Maruti 800. Besides rival car makers including Bajaj Auto, Fiat, General Motors, Ford Motor, Hyundai and Toyota Motor have all expressed interest in building a small car that is affordable to more middle-class consumers in emerging markets.
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CHAPTER 3.

OTHER STRATEGIES

Changes in manufacturing strategy that the TATAs are working on which will help in decreasing cost Key points to be discussed: 1. 2. 3. What is a manufacturing strategy? Defining various strategies Tata is working on to manufacture Nano How these strategies influence the cost of the car.

A manufacturing strategy is defined by a pattern of decisions, both structural and infrastructural, which determine the capability of a manufacturing system and specify how it will operate to meet a set of manufacturing objectives which are consistent with overall business objectives. Manufacturing has now become a necessity for maintaining competitive pricing and appropriate times to market. The company must decide what its manufacturing strategy will be throughout the product life cycle. A product that will be sold into an already established market, with an accepted technology will have different manufacturing needs than a new product with a new technology in the market. Tatas Nano is a new product with a new technology, which promises the market of an efficient car with a very low cost. Let us see the Manufacturing stunts it has used to cut down cost.

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NEW MARKET SEGMENT


What Tata is doing is creating a whole new segment and getting the first mover advantage. They are making the maximum profits by penetrating in the mass market. They found standardization is best way to make cars cheaper and assembled cheap units in their final product which could therefore be afforded by middle class families. BRAND IMAGE Tata is taking the advantage of their brand image and has cut down on all gizmos in the car. Take an example of cars made in 50's and 60's when cars were like bicycles... a means of transportation and not a living room. They may also want to introduce version that has only one bench seat instead of trying to create vehicle for six people. Purchasing also plays a big role in cost control. They plan to introduce open and transparent bidding process to avoid corruption in purchasing.

Usage of Composite material There is more usage of plastic and composite materials, which will cut down manufacturing cost. Increased use of plastic components can reduce the overall weight of a car by as much as 40 percent, which can go a long way in improving fuel efficiency. In addition, the cost of tooling plastic is half that of a conventional metalbased tooling system.

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DISTRIBUTED MANUFACTURING A distributed manufacturing system refers to a control system, in which the controller elements are not central in location but are distributed throughout the system with each component sub-system controlled by one or more controllers. Networks for communication and monitoring connect the entire system of manufacturing. Tata Motors is studying the possibility of letting local assemblers produce its low-cost small car, the Nano, and selling it under their own brand. Tata is changing Indias manufacturing practices. Thats because the automaker is asking engineers and mechanics to join together to set up their own assembly operations to build the Nano.

Tata not only will supply complete-knocked-down kits but also provide the entire assembly plant, at what it says to be the most economical price. The auto maker will monitor the quality and reliability of the assembly operation, taking full responsibility for product liability. Using this strategy, Tata expects to make and sell 250,000 cars in the first year and up to 1 million annually in the next three to four years. Tata Motors is going all out to strengthen its distribution channels so that the peoples car would be a success. It is being said that Tata Motors is going ahead with its distribution and financing plans for the Nano car. Tata Motors is implementing a hub-and-spoke model for Nanos distribution, which would mean that it would involve increasing dealership points as well as adding sales and customer touch points. As per the plan, the Tata Nano dealers in the cities would play the role of hubs. They in turn will undertake the effectiveness of other sales and customer touch points, which would play the spokes. In terms of manufacturing strategy - the possibility of the 1-lakh cars final assembly being done at the dealer point is truly path breaking.

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ECONOMIES OF SCALE

Economies of scale are the cost advantages that a business obtains due to expansion. They are factors that cause a producers average cost per unit to fall as scale is increased. Any size firm expanding its scale of operation may utilize economies of scale. The common ones are purchasing (bulk buying of materials through long-term contracts), financial (obtaining lower-interest charges when borrowing from banks and having access to a greater range of financial instruments), and marketing (spreading the cost of advertising over a greater range of output in media markets). Each of these factors reduces the long run average costs (LRAC) of production by shifting the short-run average total cost (SRATC) curve down and to the right. Tata is counting on this economies of scale and "careful sourcing of materials" to keep prices down.

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Modifying the Traditional Pricing System Tata is also working on the strategy of reducing costs and waste to improve profits by implementing a new style of pricing than the traditional way of pricing of automobiles. Traditional way: - (cost plus, cost price + a markup over cost price = SP and the markup is their profit). Tata Nano strategy is cost minus (SP-cost = Profit). More cost reduction means more profit. This means Tatas will continue to squeeze suppliers.

These unusual manufacturing strategies will enable Tata to meet increasing demand. Thus all these strategies contribute to the lowest possible price showcasing Nano - Small Car Big Dreams!

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Tata Nano V/s Maruti 800

Price :

Tata Nano is going to be the cheapest car in the world. Expected to be around Rs. 1 Lakh ($2500), however after road-tax, registration, sales tax etc etc. For the base variants, the on road price of Tata Nano is about Rs. 1.3 Lakh ($3300).

Maruti 800 costs about Rs 1.95 ($ 4900), which is the cheapest available new car until Tata Nano is launched. Maruti Suzuki will most probably bring down the price further to attract the customers after the Tata Nano is launched.

Looks:

In Looks, Tata Nano clearly beats the Maruti 800, I have seen Tata Nano at Auto Expo 2008 in Delhi, and it looks stunning considering that its the cheapest car in the world. I hope the production models will have the same finish as was there on the display models at Auto Expo.

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Maruti 800 has old style looks, Maruti will really need to give it a facelift to beat Tata Nanos looks. Also Maruti 800 is about 10% longer in exterior dimensions, which means Tata Nano will be easy to drive in congested traffic as its small in size from outside.

Power:

Now we are talking about something real, the power, Tata Nano churn out a Maximum power of 33 BHP as compared to Maruti 800 churns 37 BHP. But the catch is Tata Nano weighs only 580 Kg compared to Maruti 800s weight which is 660 Kg. So if we compare the power to weight ratio Tata Nano is at 0.057 BHP / Kg and Maruti 800 at 0.056 BHP / Kg. It means, the feel of power of Tata Nano will be almost equal to Maruti 800s feel, which is not bad at all for almost half the price.

Noise and Harshness:

This is an area where Maruti 800 beats Tata Nano, according to auto experts and reviewers, Tata Nano becomes quite Noisy at speeds above 60 Km/hr. Reason is that the engine is rear mounted and noise insulation is not that high end. Second reason being the low capacity engine in Tata Nano (625 CC) compared to Maruti 800 (800 CC), the engine of Nano has to put in more effort for extracting out more power in lesser engine displacement.

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Safety:

Safety is something on which I cant comment much, but Maruti 800 being a tried and tested car for long time, has a better good-will in its robustness and sturdiness. Maruti has front mounted engine and a safe and strong structure. Tata Nano has rear mounted Engine and is yet to hit the market, so cant comment much right now on safety, but I hope that Tatas have designed it well keeping in mind all the crash Norms which cars have to fulfill.

Mileage or Fuel Efficiency:

Tata Nano beats Maruti 800 in Fuel efficiency, two reasons for this, it has less capacity engine which means that it runs at close to its higher engine speeds mostly ( which improves fuel efficiency) and second that it has been designed taking into consideration of Euro 5 norms, which means a really fuel efficient engine.

Comparing Maruti 800 Mileage of approx. 15 to 18 KM / litre and Tata Nano Mileage of approx. 20 Km/Litre, its a 20% saving in the fuel cost, which is considerable if you drive a lot.

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Interior Space:

The interior space of Tata Nano and Maruti 800 is nearly same, Nano has about 20 % greater inner space compared to Maruti 800 as claimed by Tata.

Miscellaneous:

There may be some miscellaneous features which vary between Maruti 800 and Tata Nano, for example, adjustable seats, headrests, comfort feel, drive-ability etc. All in all, I would say Tata Nano is really a common mans car who needs to commute without any luxury features.

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CONCLUSION

Tata Nano really proved cheapest car of the industry. Nano definitely helps to come true for middle mans dream, the strategy used by Tata to developed the world cheapest car is Properly adopted by Tata group .

With the foundation of its rich heritage, Tata Motors today is etching a refulgent future. Today the standard of living of Indian urban as well as rural area people is rapidly changing with the 1 lakh rupee car the person who always wanted to have a 4 wheeler his dream has accomplished by the tata motors

The Promotion and Marketing Tactics for a Tata Nano is very important aspect of the project. And Tata nano is finally have win over the competition of Maruti 800. To achived the success tata nano have been not only planned strategy well but also implemented properly.

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BIBLIOGRAPHY

Books:1. Philip Kotler & Hiller (2008) marketing management 8 th edition: Pearson 2. Marketing as strategy (2004) nirmalya kumar. 3. OUTLOOK BUSINESS (9TH FEB, 2008) 4. BUSINESS STANDART (18TH FEB, 2008) 5. 4PS OF BUSINESS AND MARKETING (28TH MARCH, 2008)

Websites:http://www.tatamotors.com

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