Analysis of Marketing Strategy for Tata Nano

TATA NANO & CAR INDUSTRY

India is a company with majority of its population residing as low income group. Buying a car
is still a dream for many people in India. Cars are restricted strictly to people belonging to
upper middle class and above them. However, in the year 2008, Ratan Tata under the banner
of Tata Motors limited announced the launch of its new car, which would be a revolutionary
product in the automobile sector. He called it as 1 lakh Rupee car and so was publicized in all
the mass media across the nation. The dream of a Middle and even lower middle class
household to have their own car came alive with this announcement from Tata Motors. It was
hailed to be the next generation technology and was also lauded by International media as
well. However, it was a totally different story that unfolded when the car actually rolled on the
roads.
In this report keeping in mind the subject Consumer behavior, I would make my efforts to
analyze the case from the Consumer behavior prospective with the key events being:

The announcement of the car

The expectation of the Nano car & its positioning
The issues faced when the car came to the market
The failure with respect to positioning
The re-launch
The road ahead

Indian Customer perspective

Using the Consumer or the Customer brand equity
model, lets try to look at the car from an Indian
consumers perspective, what are the expectations:

As shown in the diagram beside the basic attributes that

a customer looks in while buying the car are highlighted
above. The primary question was that whether Nano was
able to live up to the expectations of that the basic
Indian customer had? We now analyse the journey of the
car from the announcement to the sales.

TATA NANO- MILESTONES

In this section of the report the various milestones in the
establishment of TATA Nano are highlighted and studied.
A brief explanation about the marketing strategy as
understood from the various sources available on the
web is also summarized.
Announcement
When Tato Nano was announced in the month of January,
2008 it was over hyped to be the car of every Indian. The price of Nano was said as Rs. 1 lakh
or $2500, as said by Ratan Tata, the Chairman of the Tata Group at that point of time. It
became a dream car for every person belonging to the lower middle class and even the lower
class. However the ministry of transport also raised concerns about the congestion on roads
that the car would bring in as people may start to use it regularly for their day to day
transportation.
Marketing Plan
Tata Motors basically Segmented and targeted the following groups of Indian population:
1. The Middle class
Mainly the lower middle class
Upper lower class
2. Usually the two-wheeler users
3. Family with 3-4 members who have troubles while travelling on a 2-wheeler.
Tata Motors positioned the car as per the following catch lines and slogans:
1 lakh car to fulfill all your dreams!
Cars are not just for the rich
Tata Nano was launched in the segment of being a cost leader in the broad market to attract
maximum number of the population. We can place it in the quadrant as shown in the picture
below at the point of time of its launch.

With Tata Nano being launched in the Indian market it now gave the power to the common
man of India to dream to own his own car. The advertisements and media publications
highlighted the emotional quotient showing the happiness of children when they see a car
coming their home and the delight on the face of the family members who depicted a middle
class group.
The struggling India class who had a monthly salary of less than Rs.6000 per month and
constituted more than 110 million households also got the encouragement to dream of buying
a car.
Mr. Ramesh Mangaleswaran, the partner of McKinsey and co predicted that in Mumbai alone
the 2 million people who rode a motorcycle everyday would now try to lift themselves up to
buy a Tata Nano.
It was also expected that Tata Nano would create a revolutionary change in the lifestyle,
specially with respect to commutation of the common man and would become a face of the
Indian lower class just like Bajaj Scooter once became for the middle class.
The after launch issues
Ratan Tata kept his promise and the Indian market saw Nano ready to roll on the roads in the
month of July, 2009. At the beginning the sales for the car was very high but gradually it
started to decline on a per month basis. There are several reasons that have been figured out
for a downfall like that.
Problems with the car:
Not suited at all to be used in hilly terrains
There were incidents of car engine catching fire and excess of heating
Engine used to make a lot of noise and people even started comparing it with an auto
Interiors were dull with insufficient leg space
The entire body of Nano was very light and would get spoilt even if slightly bumped
Pricing related issues:
It was promised and also publicized as to be the 1lakh rupee car of the Indian market.
However when it came for selling it costed around Rs, 25 thousand more. This was a hefty
sum for their target customers who were belonged to the lower section of the middle class.
Issues with Promotion:
As there was an excess of hype in the market for the Tata Nano, instead of becoming the
Smart car of the Indian Market, it became the The Cheapest Car.
Also while promoting the entire product from Tata Motors the marketers as well as the
designers of the car missed out on the most important behavior of the Indian Consumer.
When an Indian consumer buys a car, or even anything that is seen to the public, the
consumers think
What his/her neighbors are going to think about him and his car.
How will the car represent him in the society?
What will the public think when the consumer will take out his entire family in the car?
And many more
Car is regarded as a status symbol for the customer.
Hence the USP of the Tata Nano The car for every Indian ideally worked against it and
despite having heavy bookings initially the sales went down gradually.

From the perspective of the Consumer based brand equity model (CBBE), the attributes
mentioned in the report earlier had the following perceptions:
Convenience: True
Comfort: Doubtful as Boot space etc were less
Pride: Strong No
Status Symbol: Doubtful
Display of smartness: Doubtful
Economic/ Easy on pocket: True
Mileage/Fuel efficiency: True
Power: Doubtful
Car personality: Very weak
Other key issues
Complacency: Tata Nano received around 200000 bookings initially. This made them probably
feel complacent and they didnt bother for improvising of implementing any new advertising
strategy to keep the interest of the people intact. In fact, when the first fire incident was
reported, the advertisement strategy followed henceforth only looked reactive and enhanced
instead negative publicity.
Unclear target audience: Tata Nano was actually considered to be targeted at the people who
had never thought of buying a car. It was targeted at motor cycle riders, second hand car
owners and other families in the lower middle class group. Now this led to a somewhat
contradictory situation. As per the target audience the media and the society accepted this as
a Poor mans car. However Ratan Tata in his earlier press conferences had mentioned that he
wanted to position Tata Nano as an affordable, all weather family car. So it was a clear
mismatch in the concept that Ratan Tata had it in his mind and how the marketers actually
positioned it in the market.
Confused customers: When Nano later raised its price to overcome the negatives of the first
model, the price became much higher. In fact the top end Model of Tata Nano is presently
(2014) quoted at an on road price of around Rs.2.6 lakhs in Bangalore and so is the price in
other places as well. This type of pricing with the same Nano model which the poor man also
owned, confused the customers. As mentioned earlier people in India while buying the car
also think about the social status they would get associated with if they drive the car. So the
customers thought of instead adding a few more thousands and buying another car in the
market which was repeatedly and consistently doing good, i.e. Maruti.
Comparison with Maruti
In this section a very brief comparison of Maruti and Tata Nano is done to understand where
could have Nano improvised and what can be recommended to stay in the market in the
future.
When Tata Nano was launched the nearest competitor in the low price segment car industry
was Maruti and the brand Maruti Alto was the most accepted brand amongst the low price
models. Let us look at the 4 Ps of marketing for Maruti Alto and compare the same with Nano:
Product: Maruti had already developed a brand name for being the most accepted car brand
of the middle class family. It was known for its excellent service and almost every household
in India bought Maruti as its first car. When compared to Tata Nano Maruti Alto was far
superior in terms of space, body and even Mileage. Though Nano claimed the fuel efficiency
to be high but even for Alto the fuel efficiency was comparable.
Price: The on road price for a Maruti 800 which was the most successful model earlier in the
low price segment was around 2.2 lakhs. Even when Alto was launched the price went upto
only Rs. 3.1 lakh. When compare to the Tata Nano the price of the lowest end model was
around Rs. 1.3lakh on road.
Place: This aspect of marketing holds good for both the automobile companies. Primarily
because both Maruti and Tata have a very wide network for sales and services. So both the
companies are pretty much equal in this aspect.
Promotion: When we talk about Maruti here, it relied heavily on emotional appeal. This was
very well seen when they used the tag line India comes home in a Maruti in their
advertisements. Maruti was already having a very bright market but this aspect added more
to the Hedonic advantages and the ad was very successful.
Talking about Tata Nano, though it highlighted in its advertisement that the families are seen
proud of having their first car Nano, but the advertisement also highlighted the fact that it
was the cheapest car in the market. This aspect that it was the cheapest car in the market,
probably overlooked the hedonic benefits of the advertisement.
Year 2013- The re-launch
In the year 2013 Tata motors re-launched Tata Nano with all new features and advertising
campaigns. The re-launch focused primarily on:
--Youth: Targeting the youth of the country the new Nano had fancy settings like settings and
color combinations such as farm side or adventure sports.

-- Rational Benefits: The advertisements and campaigns this time focused on the smartness
factor. They educated the prospective customers on Why not buy a Nano when it gives
everything at a half price. It also highlighted once again the Rational benefit of Fuel
efficiency in a new way.
--Tie Ups: This time Tata Nano followed a new type of campaign al together. They started to
sponsor programs on MTV that encouraged adventure sports and extended the campaign to
National television. Like the series Roadies aired on MTV where the participants have to travel
on a Hero Karizma they tried to implement a similar strategy where the participants were
asked to travel across India in a Tata Nano. This also highlighted how tough the car was built.

-- Safety: It focused on the emotional aspects of a parent and advertised in a way that parents
can actually give their kids a Tata Nano instead of giving them bikes as car is compared safer
to a bike. This would also make them smart parents.
When the Re-launch had been planned the experts had predicted that it was actually too late
for Tata Nano to implement such strategies and come up once again in the market expecting
a good response. As they predicted, the same happened. Even with all these new features
embedded in the new Nano the car failed to grab the sales number and instead the sales fell
down more and more.
Recommendations
From the perspective of Consumer behavior Tata Nano is a product with complex buying
behavior. It is a high involvement product and is sensitive to high differences between various
brands.
Recognition
People are concerned about the safety issues so Tata Nano should address the safety needs of
the people. The complex buying behavior people seek a lot of information before they actually
buy any product. Therefore, Nano should make effective communication to such segments
who are its prospective customers. Also, there are a lot of satisfied Nano customers as well.
Nano should use their references and indeed their help to publicize about the brand through
word of mouth publicity in a positive aspect.
Training Schools
During the market survey it was also observed that many people wanted to buy Nano
however, they were skeptical to buy the car as they were not aware on how to Drive a car.
This was also seen earlier when Maruti had entered the market and Maruti opened up driving
schools. Similarly Tata Motors should also open up Driving schools or Training schools to
interact more with the customer and gain trust and loyalty instead.
Post Purchase Feedback
As mentioned in the point above as well, there are many customers of Tata Nano who are
happy of their purchase. This point can be leveraged upon to attract more customers for the
little car. Also it was found during a survey after Nanos failure that people didnt find it safe
and often treated and regarded it as a Toy car. Nano should look up to include additional
safety systems in its car and should also communicate these new additions very aggressively
to change the outlook of the people towards Tata Nano.
Focus on Females
Often it has been seen and observed that females associate themselves to Tata Nano easily.
They find it easy and convenient to drive because of its small size, yet features required to
commute. Tata Motors should think of launching special editions of the car targeting the
Female drivers. This should also be advertised on similar grounds. This can turn risky as the
car then may be perceived only for Women but launching of special edition on occasions such
as Mothers day or Womens day would suffice and can prove to be useful marketing.

Target Audience
Besides Targeting the Females Tata Nano should also look ahead to target other segments of
the society who can be their prospective buyers. Initially they had messed up on segmenting
and targeting with contradictions in their vision and working. Their prospective customers can
be:

College going kids who consider cars to be cool and parents who think cars are
comparatively safer
New people joining the IT and bank sector
Old age people who regard costly car as waste of money or just need a simple and
convenient means of transport
Small cabs. This has been successful in Sri Lanka as well where they have been using
Tata Nano as taxis.

Auto Version
Tata Motors should launch the gearless version of Tata Nano. This can be targeted very easily
towards the target audience defined above. Specially the old age and females.
Launch Nano Plus
Tata Motors can also consider to launch up a new car in the market named as Nano Plus. This
car can be priced in the segment of 3-3.5 lacs and can be an extension of Tata Nano, being
similar in looks. This may also help in raising the sales for the basic Nano model.
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