Tata Nano

INDEX

CHAPTER : 1

PREFACE

The project aims at building a comprehensive understanding of how a company decides its marketing strategy and answer associated questions such as pricing, promotion and positioning of the product. Post launch, the effectiveness of the marketing strategy and performance of the product is also to be analyzed.

The project also aims to analyze the decision-making process, purchase behavior and buying patterns from the perspective of the consumer. We will consider the dynamic market environment and changes at the micro and macro levels in the economy which affect the automobile sector

CHAPTER : 2

The Curious Case Of TATA Nano

Introduced in January 2008 and launched in March 2009, TATA Nano was the most awaited launch of the year or perhaps the decade for the automobile industry. TATA MOTORS invested heavily in the project, not only financially but also as a brand. They were going to build an affordable “Rs 1 Lakh car” that would catapult even the low-income groups into the “car-owner” category. They were going to empower the not-so-rich, the aspirational young guns and eventually revolutionize the automobile market. The launch was covered by the national and international media alike and people around the world supposedly watched in awe at yet another example of cost-effective Indian engineering. The Economist ran a story “The new People’s Car”, Forbes said “Delivering On A Promise: Tata Rolls Out The Nano”, Knowledge@Wharton (University of Penn) ran a story “No Small Wonder: The Tatas Launch the Nano”, ToI wrote “Tata Nano: What Women Want...” elaborating how Indian women are going to go crazy behind Nano. There were a few who were suggested caution like FT which had a story “Tata Nano goes for a song” where author was concerned about the engineering details of the car and how it might not cut ice with the modern customer which was increasingly becoming aware of technicalities. All of them, however, believed that Nano had the potential of turning around the fortune of TML.

Fast forward six years, sales of Nano are all set to hit six-year low [1] ,managing to sell only 10% of its nearest market-price competitor [2].  The costliest version is well above Rs 2 lakh, that of cheapest is around Rs 1.6 lakh and there were few takers for either. Nano proved to be a big financial drain and is no longer the center of Tata’s business strategy or turnaround plans, as it used to be till a few years ago.

[1] http://indianexpress.com/article/business/business-others/sales-of-tata-nano-worlds-cheapest-car-set-to-hit-six-year-lows/

[2] http://autoportal.com/newcars/tata/nano/sales-statistics/

An important aspect of the entire case is that Tata Nano was indeed a low cost, high mileage, affordable 4-seater family car. Tata delivered exactly what they promised. As a matter of fact, they have improved upon the technical specifications, design and interiors in their successive models over the past 6 years. So what exactly went wrong?

Several theories were suggested for the failure of Tata Nano putting blame on engineering, marketing, supply chain and operations and even the PR Cell. At the end, it took Ratan Tata to finally come out and state the obvious. In this interview to CNBC in Nov’13, he said “It (Nano) became to termed as the cheapest car by the public and, I am sorry to say, by ourselves, not by me, but the company when it was marketing it, I think that is unfortunate”. A multi-billion project from an automobile behemoth fell flat on its face due to one simple flaw in the marketing strategy. Rather than making it the “people’s car”, they marketed it as a “car which comes cheap”. This small mistake made the difference.  

Through the course of this project, we will attempt to find answers to certain questions. Exactly why did the strategy of selling a “cheap car” failed and why a “people’s car” would have succeeded. Was there a difference between the target segment and the segment to which the marketing team was pitching? How the customer behavior was influenced by the marketing strategy?

Indian automobile industry is perhaps one of the largest in the world with an annual production of 21.48 million units in FY 2013-14. It alone accounts for 22% of country’s total manufacturing GDP and the output is expected to reach $145 billion by 2016. Considering that the sales and market competition is largely driven by marketing, it is imperative that we understand the implications of marketing failure and ways to revive the product in the aftermath or establish the criteria to kill it, if required.  

Another objective would be to develop a model to identify and eliminate any inherent flaw in the marketing strategy at the initial stages itself. Nano is just one product but it represents a big prospective customer segment of the 4-wheeler category. Understanding what went wrong and what went right would help us to identify and establish some general principles of marketing.

CHAPTER : 3

SWOT & PEST ANALYSIS

Parent Company         : Tata Motors

Category                 : Hatchback

Sector                 : Automobiles