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Case Analysis

Case: Tata Nano

Product Category: Automobile
Section E
Agam Sachdeva
Roll No: 251
1. What sales goal for the Nano you will recommend?
Answer: As per given data the annual production of passenger vehicles in India stood at ~1.8 million
in FY 2008-09. Given the market size, Nanos initial plan for production of 1 million cars was very
bold. However, due to extraneous reasons the company was required to shift its base from Singur
(WB) to Sanand (Gujarat). In the meantime, it was to suffice with the annual production of 50,000
cars at its Pantnagar plant in Uttrakhand.
Year wise production capacity for Nano has been tabulated below:

Year 1 50,000
Year 2 50,000
Year 3 3,50,000

Given that investment in plants are made at the initial stages, the sales target should be made in line
with the planned production upscale. Hence, in my opinion, the company must target annual sales
figure of 3,50,000 (capacity at end of 3 years) for 100% capacity utilization.
Another method to arrive at the volume sales figure could be to look at some of the other bestselling
cars in the market. Given the large aspirational population in India, Nano can look to achieve 1.5x
sales of the leading car (alto) by the end of 5 years; this is expected to be driven by increased demand
from the entry level car/lower income segments.
2. How will you position NANO to achieve that goal?
3. Why is the recommended positioning strategy superior to other positioning strategies that
might reasonably be considered?
Answer 2,3: Nano should segment its customers into two segments for effective targeting and
positioning - aspirational low income car enthusiasts and people looking manoeuvrability and comfort
in a low priced car (people looking to buy second car, etc.).
Positioning vis a vis Two wheelers Much more for a little more money
Given that the 2 wheeler segment is a competition for Tata Nano, the company must position its
product in a way that 2 wheeler users see greater value for the additional money they pay. Greater
value can be communicated in terms of greater road safety, ability to transport 4 people (compared to
a capacity of 2 for motor bikes), pride of owning a car, etc. Also stress needs to be laid on the fact the
Nanos price at Rs1 lakh is approximately equal to some of the higher end bikes (similarly for the fuel
efficiency). This strategy is expected to attract aspirational car owners to Nano.
Positioning vis a vis cars (Maruti 800, Alto, etc.) Same (or just a bit less) for much less (half price)
The company can compete with other entry level cars by targeting segments that are looking for a new
low end car for their children or want to buy additional car for city use, etc. The message that needs to
be communicated is that for all practical purposes (not going into the integrities of engine, etc) Nano
delivers the same functionality to city dwellers as other competitors (Maruti 800, Alto, etc.) - but at a
much lower price.
In my opinion, the above positioning strategies are superior as they effectively target the potential
customer segments and take into account all possible value that Nano can deliver to its buyers.