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    Branding of Tata Nano 

                                                                                                                                                                     

‘BRANDING OF TATA NANO’


(MRP INTERIM REPORT)

Submitted to: Submitted by:


Prof. Malini Reddy Name: Rahul Nag

Enrollment No: 09BSHYD0632

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AN INTERIM REPORT ON:

BRANDING OF TATA NANO

By

RAHUL NAG

09BSHYD0632

A Report Submitted In Partial Fulfillment Of The Requirements Of MBA Program


Of IBS-Hyderabad

Distribution list:

PROF. MALINI REDDY

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ACKNOWLEDGEMENT 
 

This MRP interim report on ‘BRANDING OF TATA NANO’ is a


result of coordinated effort between us and our esteemed faculty Prof.
Malini Reddy under whose guidance I have put forward this work of
endeavor. This work would not have come into the shape; it is now
without his constant inspiration and motivation to guide us through this
project work. It gives me immense pleasure to be able to work under her.
I would also like to thank our colleagues who have been pillars of
support to us and provided us necessary inputs to make this work an
enjoyable experience.

Thank You.
Rahul Nag
09BSHYD0632
 

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CONTENTS PAGE NO.

• Introduction 5
o Indian Automobile Industry
• The Market Analysis 7
o Porters Five Forces 7
o SWOT Analysis 9
• The Launch 10
o Segmentation 10
o Targeting 11
o Positioning 11
• Role of Integrated Marketing Communication 12
in Launch
• Tata Nano and Marketing Mix 13
• Online promotion 15
• Market feedback using Website 15
• References 16

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INTRODUCTION

INDIAN AUTOMOBILE INDUSTRY

In the post globalized era where India is looking at growth rates of more than 8%, one of the
main beneficiaries of India’s growth story is Automobile Industry. Termed as “Industry of
Industries” by management guru Peter Drucker, Automobile industry has been one of the
indicators of a country’s economic prosperity. Prior to the 1991 liberalization, auto industry in
India was controlled and licensed by the government. Post 1991, the industry has grown at an
average rate of 17%. Currently contributing to around 5% of the GDP, this is expected to rise to
10% of GDP.

MACRO-ENVIRONMENT (PESTEL)

An organization’s success depends on its ability to manage its marketing system in relation to the
external environment. External Forces are mostly uncontrollable and can pose threat or may
create opportunity for the company. One of the known methods is to do PESTEL (Social, Legal,
Economical, Environmental, Political and Technological) analysis. These forces can also be
divided as discussed below.

Demographic Forces

India’s growing population creates a huge and growing market segment more population is
moving to cities and recently there have been urbanization of many of the small towns creating a
new set of tier 2 and 3 cities. This creates a new target segment for auto car industry. Most of the
population is young and they will like to buy car in near future. Increasing literacy and income
further favors the auto car industry.

Economic Forces

India’s average income is increasing from last few decades. More and more people are moving to
the higher levels as far as economic condition is concerned. This allows people relying on two-
wheelers to go for small and cheap cars.

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Environmental Forces

There is concern of decreasing raw materials for auto car industry. People are also worried about
decreasing sources of bio-fuel and want to go greener, cleaner and renewable sources of energy.
Thus higher mileage is extremely important.

Technological Forces

Technological innovation is becoming more and more important for auto car industry. They need
to go for alternative source of energy; they need to make fuel efficient and environment friendly
cars, etc. They also need to improve the safety technology. Generally, auto makers invest around
8% of their revenue on the R&D. This is expected to go up as the time passes creating more
crunch for fuel and more awareness for environment.

Political And Legal Forces

Government is still having very high import duty on cars. This creates a healthy environment for
the Indian car makers who face less competition from their foreign competitors. However, many
foreign companies have started their own manufacturing center in India to capture Indian market.

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THE MARKET ANALYSIS


The penetration level of passenger cars in the country remains abysmally low at about seven cars
per 1,000 people. This is in spite of double-digit growth in passenger car sales in recent years.
However, the passenger vehicle has really seen a significant increase over the last five years,
only even though the percentage numbers are still quite low. India has a population of nearly
1.1bn people, growing at a rate of about 1.5-2.0% per year, and it will take a few years of
significant passenger vehicle sales growth to improve penetration levels. Hence even with
passenger car sales surpassing 1m vehicles last year, this is just the tip of the iceberg and there is
a lot of untapped potential.

PORTER’S 5 FORCES MODEL

• Threat Of New Entrants

In most markets, the capital and expertise needed to setup an auto or parts manufacturing
facility, would be a great enough barrier to entry to prevent many new entrants from setting
up. However, given India’s incredible growth forecasts, infrastructure progress (especially
new and better roads), and ever-expanding financing options to rural residents, the market is
attractive. Thus the threat of new entrants is high.

• Bargaining Power Of Buyers

Buyers in India have a wide variety of choice. There are more than 20 foreign manufacturers
selling in India (including ultra high-end such as Rolls-Royce and Lamborghini). Of course
there are also a plethora of incredibly cheap choices available. Along with that there are a lot
of favoring factors to increase bargaining power of customers:

- Easily available finance options

- Growing middle class

- Urbanization

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• Degree Of Rivalry

The Indian market is in the hands of nine automakers, which command 98% of the total
market. But a lot of multinationals players are entering in this sector to increase pressure and
competition on Indian industries. The Big Three Indian carmakers (Maruti, Tata and
Mahindra) are losing market share. But their strengths primarily lie in the A and B segments
whereas currently C-segment is experiencing considerable growth. But this segment is also
observing a lot of new entries to intensify the rivalry in the industry in near future.

• Threat Of Substitutes

This factor is very high in Indian Auto-industry as numerous modes of transport are available
ranging from muscle driven bicycle to public busses. Also established car companies like
Maruti still hold largest market share which offer a big threat to entry of Nano.

• Bargaining Power Of Suppliers

The automobile industry is comprised of powerful buyers who can dictate their terms to
suppliers. But still it is likely that the suppliers have considerable high bargaining power.
They are not held ransom by one single manufacturer as they can market their products to
any of the other manufacturer in India as well as export their products. But in case of
materials like steel, the price is the dominating factor as when prices of steel rose even Tata
motor had to increase the price of Nano.

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SWOT ANALYSIS
Strengths

• Tata Motors is the largest truck manufacturer and the second largest passenger vehicle
manufacturer of India.
• The company holds the second position in the domestic passenger car market.
• The company is the fifth largest truck manufacturer in the world.
• Tata Motors produces a diversified range of vehicles catering to a wide range of
customers and also has the great heritage of Tata Group behind it.
• Excellent supply chain management using the SAP framework
• Financially also the company is in a very strong position with the company posting a net
revenue of around $20 billion in the year 2009-10 and decreasing its debt by $977
million.

Weaknesses

• Tata Motors was slow in its expansion into overseas markets, in spite of exporting its first
truck within six years of commencing truck operations.
• They have never done well in US, UK and European car markets.

Opportunities

• Car penetration in India is about seven units per 1,000 persons, which is very low
compared to other countries.
• The company expects the demand for passenger cars to grow as a result of urbanization
and expansion of cities.

Threats

• Decreasing market share in light vehicles is a concern for the company.


• Factors like rising fuel and raw material costs, especially that of non-ferrous metals and
that of steel, engineering plastics and rubber; and stringent emissions norms, can affect
the company’s performance in going forward with NANO.

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THE LAUNCH

Tata Nano: Launch & Positioning –The People’s Car

Tata Group introduced the ‘revolutionary’ Tata Nano in January ‘08. This created a immediate
stir among Indian Consumers. Even before its Launch, it was dubbed as “Car for the Masses –
The People’s Car”, However, low Price of the car is one of the crucial factors, which is going to
deciding the future of Tata Nano. Deriving sales from ‘Bottom of the Pyramid’, launch was
successful and was overbooked by almost 200%. Globally car is positioned as ‘The World’s
Cheapest Car’, which does not compromise quality, safety and environment. Given the low
Profit margin, critiques initially questioned the Price Target of INR 1 lakh. They questioned the
overall strategy of the launch. Questions were raised over the safety of the car. However, the
unprecedented hype of Tata Nano within the Indian Masses ensured the smooth launch of Tata
Nano. Tata Group’s formidable ‘Marketing & Distribution Muscle’, will ensure that small cars
are going to flood the Indian Roads. Core strength of the group – the appeal within the Indian
Masses, decided the initial launch of Tata Nano, whereas product performance and review of the
customers is going to decide the future sales of Tata Nano.

Tata Nano’s Segment

Nano aims to carve out a niche segment for itself in the Indian automobile industry. India’s
burgeoning small car market holds huge potential. The booming economy and the accelerated
growth of lower middle class is expected to generate very high demand for small cars in the near
future. The closest competitor in the 4-wheeler segment is Maruti 800. Maruti 800 is slowly
moving out of the market after ruling the small car segment for more than two decades. Its price
is higher (>2.3 Lakhs) compared to Nano. Also the Maruti 800 has flooded the Indian roads for a
long period and people are weary of its looks and functionalities. More recent cars such as
Maruti Alto and Chevrolet Spark are also wooing customers in the small car segment. But their
pricing and positioning is totally different than that of Nano, preventing any direct competition.
Real threat comes from the upcoming small cars from Bajaj and Renault-Nissan etc. They will
directly compete with Nano in the same segment. But the first mover advantage of Nano will
prove decisive in the long run.

The other major competitor for Nano is the 2-wheelers. Most of the young people, students and
lower and middle income families currently depend on 2-wheelers for their day to day activities.
Primary reason for this is the lower initial cost and lower maintenance cost. Motorcycles such as
Bajaj Pulsar have snatched the attention of the youth market, while Hero Hondo motorcycles
have been the favorite for family users.

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Targeting

The target customers for Tata Nano are lower and middle income families, who aspire to upgrade
to 4- wheelers from being 2-wheeler users. Many of such families stay away from purchasing 4-
wheelers primarily due to the affordability factor. Affordable purchase price, low maintenance
cost, increased safety, usefulness as a family vehicle are the factors that influence such buying
decisions.

The second set of customers Nano is targeting is the youth, especially students who prefer
young, trendy and innovative vehicles. 4-wheelers with their inherent safety characteristics
would appeal more to them over 2-wheelers. Again cost would be the differentiating factor for
Nano over other 4-wheelers.

Similarly, Nano also targets the families who want a second car, mostly for women and children.
Nano has been positioned as an innovative and trendy car, as opposed to a cheap product.
Emphasis has been done on the quality standards, safety features, environment friendliness and
innovative design. It leverages the TATA’s trust and care for the people throughout its
positioning and publicity.

Positioning

Tata Nano will position itself as the world cheapest car and yet does not compromise the quality,
safety and environment. This positioning will be achieved by leveraging Tata Nano’s
competitive edge: industries experience from the parent company Tata Motor who has been in
vehicles industries (commercial, passengers & utilities) since 1945. Tata motor has good supplier
manufacturer relationship with more than 100 components.

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THE ROLE OF MARKETING COMMUNICATION IN LAUNCH OF


TATA NANO
Marketing communication are the means by which firms attempt to inform, persuade and remind
consumers directly or indirectly about their products or services they sell. Marketing
communications represent the voice of the company and its brands and are a means by which it
ca establish a dialogue and build relationship with consumers.

Marketing Communication Mix

The marketing communication mix consists of eight major modes of communication:

• Advertising: Any paid form of non personal presentation and promotion ideas, goods or
services by an identified sponsor.
• Sales Promotion: A variety of short term incentives to encourage trial or purchase of a
product or service.
• Events and Experiences: Company sponsored activities and programs designed to create
daily or special brand related interaction.
• Public Relations and Publicity: Publicity is the non personal communication regarding
the organization, product pr service not directly paid for or run under identified
sponsorship. It usually comes in the form of news story, editorial or announcement about
an organization. Public relations has generally broader objective than publicity as its
purpose is to establish and maintain a positive image of the company among its various
public.
• Direct marketing: Use of mail, telephone, fax, e-mail or internet to communicate directly
with or solicit response from customers.
• Interactive Marketing: Online activities and program designed to engage customers to
raise awareness and improve image.
• Word of mouth Marketing: people to people oral communications that relate to the merits
or experiences of purchase or use of products or services.
• Personal selling: Face to face interaction with one or more prospective purchasers for the
purpose of making presentations, procuring orders, etc.

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TATA NANO AND MARKETING MIX

Advertising
The consumer craze for Tata Nano was built on an interesting publicity platform.
After the car was launched, it was advertised with a media mix unheard of in India’s
recent media history — zero ads on television, a judicious use of print ads and an
active Web interface. The print ads were placed in daily newspapers like Times of
India, DNA,etc. since the product is targeted for common man, the ads are not placed
in business magazines or business papers.

Sales Promotion
Tata Motors dealerships, branches of SBI (State Bank of India) and 15 other banks
which are the preferred financiers as well as various Tata Group outlets such as
Croma, Westside, World of Titan and Tata Indicom sold the booking forms of Tata
Nano. In addition, there were special incentives for Tata Sky subscribers keen on
buying a Nano.

Partnering with SBI: Tata Motors have partnered with the largest bank of India to
provide finance and to make arrangement for booking of Tata Nano. This not only
facilitated the booking process but also took the name of Nano to the remotest
villages where SBI is present.

Events and Experiences


Tata Nano did not sponsor any events on a national scale, however certain regional
programs are known to be sponsored by Tata Nano with a sole purpose of creating
awareness about their brand during the period of its introduction or launch. Tata Nano
was highly publicized through trade fair/Motor expo – an exhibition in which
company shows their latest products.

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Public Relations and publicity

Mr Ratan Tata has launched the one lakh rupee car in India called the NANO at the
9th Auto Expo in New Delhi,ie, 23rd March 2009. All the major media associated
covered the launch and there were various analysts from automotive sector to
critically examine the car and present their views. Publicity is not essential to be
followed by favorable circumstances, the Singur issue brought Tata Nano in news
again for various social and political reasons, but still it did had an impact on the
minds of the customers with respect to brand recognition and brand recall.

Direct marketing
Tata Nano did SMS marketing. They used the existing database of customers to send
text messages through SMS about the launch of Nano.

Interactive marketing
Tata has launched an online community based marketing effort to generate pre launch
buzz about Tata Nano and build a community around its brand. Tata NANO is touted
as the people’s car and building upon the platform Tata has launched a website to
direct social media websites for the Tata Nano hosted on the Tata Motors sub domain.
The website features a blog and a forum and a dream car configurator which allows
one to play with Tata Nano design and create ones own design. The website also
presents option of driving Tata Nano virtually and gives an opportunity to have a look
of its interiors. Tata seems to actively engage the people by discussing the ideas
generated in its forum.

Word of mouth
Being the world’s cheapest car, gave Tata Nano the driving factor for word of mouth
with its prospective customers. The current users were delighted with the experience
and shared their experiences and views on the same on the official websites, in
various blogs and forums.

Personal selling
Tata Nano was sold through the same distribution channel used by Tata Motors for its
other brands. However during its introduction the sales personnel acknowledged
various prospect customers with the queries and doubts related to Nano.

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ONLINE PROMOTION

Tata motors went beyond the traditional methods of advertising and promotion online.

The Nano’s overall marketing strategy used conventional media in an unconventional manner.
Unlike most small cars, Nano was not big on advertising. There were no TV campaign, only
innovative use of print, radio and other media, particularly the web. The Tata team worked on
Nano news in papers, Nano breaks on radio, Nano appearing in the form of messages or ticker
news on TV, online Nano games, Nano chat rooms on the Net, Nano pop-ups on major websites
and Nano conversation on Facebook, Orkut and blog spaces Tatanano.com

The NANO website featured a

• Blog
• A forum which already had 12000 members
• A dream car configurator which allows you to play with Tata Nano’s design and create
your own design.
• Booking Nano online,
• Build your Nano online, which means that you can select the color, decals, wheels, fog
lamps, seat covers, and dashboard.
• Along with this, there were features like free downloads, contests, and so on.

MARKET FEEDBACK USING WEBSITE

Marketing Head of Tata Motors monitored the comments posted on the Tata Nano website, and
found the interesting concept of ‘online selling of cars’ put forth by one of the viewers.
Conventional automobile wisdom says that if a car dealer is any way required to complete the
transaction, a web based option is a mere information window. It can never really be an
alternative to a ‘brick-and-mortar’ dealer. So how to judge depends upon the customer’s
response to the idea. The marketing head took forth this point on the Tata Nano website, and
asked others to comment on it. Result of this was:

• People from all walks of life ranging from businessmen to farmers, and from city
dwellers to rural villagers came forth with their views.
• The comments posted by the customers ranged from enthusiastic acceptance of this idea
to a complete denial of the same.
• Some customers even mentioned the areas where Tata would need to exercise caution
before undertaking such an initiative.

All in all it was a wonderful demonstration of using customers as a sounding base for new
ideas.

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REFRENCES:

Websites:

www.wikipedia.com

http://www.telegraph.co.uk/news/worldnews/asia/india/5039397/Tata-Nano-worlds-cheapest-
car-launched-in-India.html)

http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4365)

http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4318)

Books:

Marketing Management by Kotler and Kelly, 13th edition

Strategic Brand Management by Kevin Lane Keller, 3rd edition

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