1.
TATA
NANO
The
Past,
The
Present,
The
“Probable”
Future
Submitted
by:
Anuja
Magar
Swati
Mohta
Yu
Zang
Zihui
Huang
MKT
9750
Towards
Submission
of
Final
Paper

2. 2
Table
of
Contents
INTRODUCTION
3
COMPANY
&
PRODUCT
OVERVIEW
3
TATA
MOTORS
LTD.
3
TATA
NANO
3
THE
CHALLENGE
4
THE
ISSUES
&
WHY
THEY
OCCURRED
4
CRITICALITY
OF
PROBLEM
RESOLUTION
5
SITUATION
ANALYSIS
6
CUSTOMER
ANALYSIS
7
RELEVANT
SEGMENT
7
CRITICAL
INSIGHTS
TOWARDS
RECOMMENDATION
7
MARKET
RESEARCH
PLAN
8
SECONDARY
MARKET
RESEARCH
8
PRIMARY
MARKET
RESEARCH
9
RECOMMENDATIONS
10
APPENDIX
11
TABLE
1:
CRITERIA
11
TABLE
2:
STRATEGIC
OPTIONS
12
REFERENCES
13

3. 3
Introduction
Tata
Motors,
a
company
wholly
Indian
at
its
heart,
launched
the
Tata
Nano
–
the
low
cost
Indian
car
to
provide
an
affordable
transportation
solution
for
the
Indian
masses.
The
car
was
much
anticipated
and
speculated
and
eventually
launched.
However,
the
response
received
by
the
car
was
rather
lukewarm
and
the
sales
were
dismal.
The
brand
suffered
a
huge
setback
because
of
its
positioning
failure.
It
became
the
poor
man’s
car
and
no
one
wanted
to
own
the
car
primarily
because
they
didn’t
want
to
be
seen
as
poor
or
someone
belonging
to
the
low
income
group.
We
are
focusing
on
this
primary
challenge
and
attempting
to
change
the
brand
perception
of
the
car
by
suggesting
several
tactics
which
aid
the
car
to
be
known
as
a
“cool”
car.
Company
&
Product
Overview
Tata
Motors
Ltd.
Tata
Motors
Limited,
a
USD
42
billion
organization,
was
established
in
1945.
It
is
India’s
largest
automobile
manufacturer
with
sales
and
operations
in
over
50
countries.
Its
product
portfolio
covers
a
wide
range
of
cars,
sports
vehicles,
buses,
trucks
and
defense
vehicles.
It
belongs
to
the
Tata
Group
which
stands
for
trust,
humility
and
a
truly
Indian
company,
the
values
which
are
reflected
in
their
leadership
as
well.
The
company
mission
is
“To
be
passionate
in
anticipating
and
providing
the
best
vehicles
and
experiences
that
excite
our
customers
globally.”
1
Tata
Nano
The
Tata
Nano
is
a
city
car
manufactured
by
Tata
Motors.
Made
and
sold
in
India,
the
Nano
was
initially
launched
with
a
price
of
one
lakh
rupees
or
₹100,000
(US$1,500),
which
has
increased
with
time.
Designed
to
lure
India's
burgeoning
middle
classes
away
from
two-­‐‑wheelers,
it
received
much
publicity.
When
Tata
launched
Nano;
it
was
not
just
a
business
opportunity,
but
also
a
tool
to
improve
quality
of
lived
of
millions
of
Indian
who
were
facing
the
dangers
of
fast
paced
roads
and
everyday
were
being
exposed
to
accidents
due
to
non-­‐‑affordable
four
wheelers. At
that
time
and
still
true
to
some
extent
the
average
Indian
customer
could
not
afford
a
two
wheeler
because
most
of
the
two
wheelers
are
out
of
the
budget.

4. 4
With
the
launch
of
this
car
only
Indian
market
was
hoping
big.
Tata
Nano's
launch
could
expand
the
Indian
car
market
by
65%,
according
to
rating
agency
CRISIL
(TNN,
2008).
The
predictions
were
also
made
about
how
Tata
Nano
can
destroy
the
second
hand
car
market
of
the
country.
A
record
decline
in
the
price
of
second
hand
Maruti
800
(Nano‘s
Closet
Competitor)
was
also
expected.
The
desire
and
anxiety
at
the
launch
of
Tata
Nano
was
even
given
a
term
called
“Nanomania”.
Nano
was
always
more
than
just
a
car,
it
was
Tata
group
supremo
Ratan
Tata‘s
dream
project
to
bring
an
affordable
transportation
solution
within
reach
of
the
masses.
But
Nano
could
not
live
up
to
the
expectations
of
the
market
and
the
sales
graph
for
Nano
was
not
so
promising.
In
the
first
two
years
Tata
Motors
just
managed
to
sell
175,000
Nanos
since
the
celebrated
commercial
launch
in
March
2009,
which
was
far
lower
than
the
acclaimed
figures
predicted
about
the
booking
numbers.
The
cumulative
sales
of
Tata
Nano
during
2011-­‐‑12
stood
at
74,527,
which
was
a
6%
increase
compared
to
70,432
cars
recorded
during
2010-­‐‑11.
According
to
Indian
Express,
a
leading
newspaper,
in
spite
of
the
growth
in
the
last
one
year,
the
sales
figures
for
the
2011-­‐‑12
fiscal
or
the
cumulative
number
of
175,000
cars
for
the
three
years
between
July
2009
and
March
2012
remained
well
below
the
plant's
annual
production
capacity
of
250,000
cars.
Moreover,
these
sales
figures
failed
to
impress
considering
the
fact
that
Nano
received
206,000
bookings
after
its
commercial
launch
on
March
23,
2009
2
The
Challenge
The
Issues
&
Why
they
occurred
• Consumer
perception:
The
Tata
Nano
has
a
brand
image
as
being
a
low
cost
car
–
something
which
the
company
aggressively
promoted.
However,
in
the
Indian
market,
where
a
car
is
a
status
of
your
standing
in
society,
no
one
wanted
to
be
seen
driving
the
“low
cost
car”
since
it
directly
reflected
on
what
their
income
and
social
standing
was.
• Product
quality:
The
company
promoted
the
car
aggressively
as
the
“Cheap
Indian
Car”
in
order
to
impress
upon
the
affordability
of
the
car.
However,
the
term
cheap
was
taken
as
a
connotation

5. 5
on
the
quality
of
the
car.
Also,
features
which
aided
the
car
to
be
manufactured
at
a
lower
cost,
gave
the
impression
of
the
car
not
being
a
durable
product.
Incidents
of
the
car
catching
fire
also
raised
safety
concerns
which
deterred
the
consumers
from
investing
their
life’s
savings
in
the
Nano.
• Pricing
issue:
Tata
Motors
failed
to
deliver
on
their
biggest
promise
–
the
price
of
the
car.
Firstly,
only
the
base
model
of
the
car
was
available
at
the
said
price
of
INR
100,000
which
lacked
several
basic
features
like
the
air-­‐‑conditioning
&
sound
system.
With
the
addition
of
these
features
the
price
nearly
doubles.
Secondly
the
price
of
the
car
on
road
with
added
taxes
was
an
increase
of
25%
which
was
a
large
amount
for
the
intended
target
segment
• Lack
of
education:
The
target
customer
had
never
owned
a
car
in
his
house.
In
fact,
no
one
in
their
family
had
ever
owned
a
car.
This
boiled
down
to
them
not
knowing
how
to
drive
a
car.
They
were
unwilling
to
invest
in
the
costs
of
learning
how
to
drive
and
thereby
also
not
wanting
risk
their
first
ever
car
with
a
novice
and
in
experienced
driver.
• Intense
competition:
With
increasing
time,
since
the
launch
and
the
company
not
acting
fast,
it
increases
the
risk
of
competition
catching
up
Criticality
of
Problem
Resolution
Firstly,
the
company
Tata
stands
for
trust
with
the
mission
that
providing
best
vehicles
and
experiences
to
customers
globally.
The
failure
and
poor
performance
of
Tata
Nano
is
not
consistent
with
the
company
vision
and
mission
and
has
made
a
mockery
on
the
company
image
in
the
mind
of
the
consumer
affecting
Tata’s
brand
equity
as
a
whole.
Secondly,
the
ultimate
goal
of
a
business
is
to
gain
profit,
the
failure
of
resolving
the
problems
may
affect
Tata
Motor’s
profitability
and
revenue
in
long
term.
The
timeline
to
solve
the
problem:
Tata
Nano’s
first
launch
is
on
2011.
From
2011
to
2013
is
the
expected
time
to
solve
this
problem
and
see
an
increase
in
sales
of
the
Nano

6. 6
Situation
Analysis
• General
automobile
market
situation
and
trends
in
India
in
2011
According
to
a
forecast
by
the
Society
of
Indian
Automobile
Manufacturers,
India’s
passenger
car
segment
is
expected
to
see
16%
to18%
growth
in
2011-­‐‑2012
over
the
previous
year3.
With
growth
either
stagnant
or
in
the
low
single
digits
in
many
of
the
global
markets,
India
is
clearly
an
important
destination.
Nearly
75%
of
total
passenger
car
sales
in
India
are
in
the
small
car
segment.
• India
small
car
segment
and
competition
If
we
look
at
the
demographics
of
India
and
the
per
capita
income
distribution,
it
is
apparent
that
the
automotive
demand
in
the
country
is
going
to
be
very
high.
At
the
same
time,
the
majority
of
the
population
cannot
afford
a
sedan.
So
the
huge
opportunity
is
in
the
small
car
segment.
The
main
overseas
player
in
the
small
car
market
is
Toyota,
who
first
entered
into
India’s
small
car
market
by
launching
Liva.
Toyota
is
not
alone
in
looking
at
India
to
drive
its
growth;
particularly
every
major
auto
company
was
moving
in
the
same
direction-­‐‑and
their
sweet
spot
is
the
small
car
segment.
The
leader
in
this
market
was
Maruti
Suzuki,
which
accounted
for
around
50%
market
share.
Figo
by
Ford,
Polo
by
Volkswagen,
were
two
biggest
gainers
in
terms
of
increased
market
share,
with
big
increases
from
2.97%
to
4.81%
and
0.27
to
2.60
respectively4.
Other
players
in
the
market
are
i10
from
Hyundai,
the
Beat
from
Chevrolet
and
the
Spark
from
General
Motors.
When
foreign
companies
were
taking
initiatives,
Indian
companies
were
not
lagging
behind
either.
TATA
Motor
had
TATA
Nano
in
the
market
and
a
diesel
variant
of
Nano
was
also
being
planned.
Meanwhile,
Bajaj
Auto
had
developed
a
prototype
for
a
four-­‐‑wheeler
for
the
India
market.

7. 7
Customer
Analysis
Relevant
Segment
The
original:
Tata
Nano
targeted
the
families
of
three
or
more,
whose
annual
household
income
is
from
INR150,000
to
INR600,000
(1USD
=
approx.
667
INR)
hailing
from
rural
areas
to
small
cities.
They
are
a
very
hard
working
group
of
people,
who
aspire
better
things
in
life,
but
they
still
cannot
afford
an
expensive
car.
These
people
never
had
a
car
in
their
lives
so
they
aspire
to
own
a
car
themselves
to
improve
the
life
quality
of
their
families.
The
family
currently
travels
by
two
wheelers
or
public
transport5
Recommended:
Tata
Nano
should
target
young
generation
aged
from
18
to
28
who
live
in
urban
cities
of
India
(Mumbai,
New
Delhi,
Bangalore).
They
might
be
first
year
college
kids
or
young
professionals
who
are
either
buying
their
“personal”
car
or
being
gifted
one
by
their
parents.
This
group
of
people
hail
from
affluent
families
and
are
trend
followers.
A
large
portion
of
this
group
still
live
with
their
parents
who
have
sufficient
disposable
income.
They
have
moved
out
of
their
homes
either
for
college
or
work
related
purposes
but
are
still
largely
dependent
on
their
families
and
hold
strong
ties
with
them.
Critical
Insights
towards
Recommendation
Cars
are
the
people’s
status
on
the
road.
The
brand
marking
is
clear.
There
is
no
hiding
a
brand
while
driving
a
car.
Especially
in
India,
people
care
about
the
social
status
a
lot.
Consumers
are
not
willing
to
be
seen
as
low-­‐‑income
group
because
they
are
driving
a
cheap
car.
Therefore,
even
though
they
can
afford
a
car
but
they
won’t
buy
it
because
of
the
brand
image.
As
a
matter
of
fact,
in
India,
all
family
members
live
together
and
parents
take
care
of
their
kids.
Therefore,
younger
generation
from
small
cities
to
big
cities
have
more
disposable
income
to
spend
on
cars.
Maybe
the
majority
of
the
young
generation
are
not
earning
as
much
as
their
parents,
but
they
are
more
open
to
the
idea
of
spending
their
income
or
future
income
in
something
of
value
to
their
lifestyle.
In
addition,
parents
also
usually
bribe
(purchase
new
car)
their
kids
into
performing
well
academically
in
higher
education.
Millennials
in
India
age
between
the
ages
of
18
to
28
are
avid

8. 8
social
media
users.
This
segment
is
more
exposed
to
more
information
and
resources,
which
makes
them
more
open-­‐‑minded
and
willing
to
try
new
things.
And
they
also
have
a
need
to
be
socially
accepted
amongst
friends
or
stand
out
amongst
friends
in
the
same
age
group.
According
to
Nielsen,
in
India,
48%
of
consumers
say
they
search
for
information
online
before
visiting
or
consulting
any
offline
medium;
87%
of
the
consumers
reconsider
one
purchase
decision
factor
(brand,
model,
fuel
type,
budget,
color
etc.)
at
the
time
they
buy;
Sales
staff
at
showrooms
can
heavily
influence
(73%)
last
minute
changes
in
decisions
and
guide
car
buyers’
choices.6
Therefore,
internet
is
one
of
the
most
important
promotion
channel
that
people
gain
information
from.
And
the
brand
image,
model
and
budget
are
the
key
factors
that
will
affect
consumer’s
decision.
Besides,
the
sales
people
are
very
crucial
to
consumer’s
final
decision.
Market
Research
Plan
Secondary
Market
Research
Objectives:
• Learn
more
information
about
the
performance
of
Tata
Nano’s
competitors
and
analyze
the
reason
behind
this
performance
in
order
to
see
the
automobile
market
trend
in
India.
• Gain
the
Indian
demographic
information
such
as
the
population
in
every
area,
the
age
stratification,
sex
ratio,
household
income.
Analyzing
the
information
to
figure
out
which
is
the
best
potential
market
to
tap
in.
• Seek
existing
information
of
the
Tata
Nano
Methods:
• Use
existing
academic
studies,
government
reports,
and
industry
reports.
• Trade
publications,
magazines,
and
newspapers.

9. 9
Primary
Market
Research
Objectives:
• Understand
customer’s
preference
over
different
attributes
of
a
micro-­‐‑size
car
in
order
to
further
redesign
and
develop
the
product.
• Understand
what
the
consumer
decision
process
over
purchasing
a
car
in
order
to
improve
the
promotion
and
communication
channel.
• Understand
how
the
price,
product,
brand
image
and
other
factors
affect
people’s
final
decision
making
in
order
to
find
a
new
target
segment.
Methods:
• Conduct
a
marketing
survey
to
the
potential
customers
both
online
and
offline.
Using
the
Fischbein
Model
to
find
out
the
importance
of
different
attribution
of
a
micro-­‐‑sized
car.
Also
included
the
questions
that
how
different
factors
that
affect
consumer’s
decision
in
the
survey
and
analyze
the
data
to
figure
out
how
consumers
value
different
factors.
• Undertake
focus
groups
to
let
target
customer
to
discuss
about
how
consumer
make
a
decision
over
which
car
to
buy,
their
perception
over
Tata
Nano,
the
reason
behind
this
perception,
if
they
are
willing
to
buy
Tata
Nano.

10. 10
Recommendations
Tata
Nano
was
actually
targeted
at
the
people
who
had
never
thought
of
buying
a
car.
It
was
targeted
at
motorcycle
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
man’s
car.
However,
Ratan
Tata
(CEO,
Tata
Group)
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.
Hence,
to
rectify
that
error,
Tata
Nano
must
be
targeted
towards
a
different
audience,
the
“Millennials”
and
“Youth”
of
India
with
a
different
positioning
statement.
It
should
be
targeted
towards
College
going
kids
who
consider
cars
to
be
cool
and
parents
who
think
cars
are
comparatively
safer
than
motorcycles.
Hence,
instead
of
being
the
“Cheapest
Car”,
make
it
the
“Smart
Car”,
“Fun”
or
“Cool
Car”
of
India
that
appeals
to
younger
consumers.
This
strategy
helps
reinforce
brand
equity.
It
is
another
huge
investment
but
there
is
no
other
way
around
it
for
Tata
Nano
because,
it
has
failed
tremendously
positioned
as
a
“Cheap
Car”.
To
reposition
Tata
Nano
and
target
a
different
segment,
Tata
must
also
improve
the
quality
of
the
car.
Based
on
our
analysis,
we
believe
that
with
an
improved
quality
of
the
vehicle,
the
price
point
can
definitely
go
up.
The
repositioning
and
retargeting
strategies
will
work
best
if
backed
up
by
Pricing
strategy
as
well
as
the
Product
strategy.
Tata
Nano
has
had
a
lot
of
reasons
for
failure
and
to
amend
those
mistakes,
all
the
strategies
mentioned
must
be
implemented
one
after
another
or
simultaneously.
These
strategies
are
high
cost
and
time
consuming
but
Tata
Group’s
brand
equity
is
important
enough
to
justify
the
expense.

11. 11
Appendix
Table
1:
Criteria
Criteria
Rationale
Relative
Importance
Financial
benefits:
ROI,
profits
and
Sales
Revenue
Provide
the
reasons
each
specific
criterion
is
appropriate
for
this
company
and
for
this
specific
issue
Medium
Low
barriers
to
entry
(industry
regulation,
legislative
limitations
political
issues
and
so
on)
One
of
the
major
setbacks
faced
by
Tata
Nano
during
its
inception
was
legal
and
political
hindrance.
Therefore,
any
new
strategy
must
be
coherent
and
law
abiding.
High
Time
to
implement
Time
is
of
an
essence
when
it
comes
to
implementing
strategies.
The
competition
is
high
in
the
consumer
vehicle
market
and
Tata
cannot
afford
to
lose
market
share
because
the
strategy
in
place
took
too
long
to
implement.
In
addition,
a
Tata
Motors
has
already
invested
7
years
into
Tata
Nano.
Hence,
time
to
implement
must
be
reasonable.
7
Medium
Brand
equity:
Trust
and
Dependability
Tata
Group
is
a
quintessential
Indian
Company
that
values
trust
and
dependability.
Any
strategy
must
embody
the
trust
that
people
have
towards
the
brand
High

12. 12
Table
2:
Strategic
Options
Options
Positives
Negatives
Pricing
Strategy:
Increase
the
price.
Might
help
reinforce
the
idea
of
an
affordable
car
and
erase
the
concept
of
a
“cheap
car”.
Higher
prices
for
the
same
product
might
dissuade
the
consumers
because
they
might
assume
that
the
quality
of
the
car
is
the
same.
In
order
for
this
strategy
to
work,
Tata
Motors
must
really
work
hard
on
enhancing
the
quality
of
the
car
itself.
Repositioning
Strategy:
to
change
the
brand
image
from
a
“cheap”
car
to
a
fun/cool
car
to
drive.
This
will
move
away
consumer
perceptions
towards
the
Tata
Nano
as
a
cheap
car.
Reposition
a
product
in
a
market
that
has
already
rejected
the
product
is
extremely
difficult
and
will
require
a
lot
of
resources.
Hence,
the
risk
is
high
and
failure
to
reinvent
Tata
Nano’s
image
is
not
going
to
come
cheap.
Product
Strategy:
some
necessary
features
are
needed
to
add
on
to
make
the
engine
more
durable
and
reliable.
And
the
company
should
also
redesign
the
car
to
improve
the
look
of
the
car.
Lastly,
in
order
to
make
the
car
cooler,
Tata
should
release
cars
in
different
color
and
different
painting.
Providing
a
better
quality
car
to
consumer
to
get
rid
of
the
safety
concerns.
This
will
increase
the
cost
and
affect
the
product
profit
margin.
Retargeting
Strategy:
originally
targeted
people
with
limited
money,
the
new
target
segment
is
young
people
(18-­‐‑25),
who
want
to
have
a
car
New
customer
acquisition:
Customer
with
more
disposable
income.
People
who
owned
cars
before
and
know
how
to
drive.
Cannot
stand
on
its
own,
it
has
to
be
tied
with
other
strategies
such
as
re-­‐‑
branding,
PR,
as
well
as
improved
product.

13. 13
References
1:
http://tatamotors.com
2:
Avinash
Nair:
Two
years
on,
Tata
Nano
sales
yet
to
hit
top
gear
Ahmedabad,
Thu
Apr
26,
2012,
http://archive.indianexpress.com/news/two-­‐‑years-­‐‑on-­‐‑tata-­‐‑nano-­‐‑sales-­‐‑yet-­‐‑to-­‐‑hit-­‐‑top-­‐‑
gear/941736/
on
28/09/2014
3:
“The
Race
is
On
for
India’s
Small
Car
Market”:
http://knowledge.wharton.upenn.edu/article/the-­‐‑
race-­‐‑is-­‐‑on-­‐‑for-­‐‑indias-­‐‑small-­‐‑car-­‐‑market/
4:
“Maruti,
Hyundai,
Tata
Motors
lose
market
share
to
smaller
firms
in
2010-­‐‑11”:
http://articles.economictimes.indiatimes.com/2011-­‐‑04-­‐‑10/news/29403269_1_market-­‐‑share-­‐‑car-­‐‑
segment-­‐‑passenger-­‐‑car
5:
"The
Tata
Nano."
Capper's
Feb.
2008:
2.
General
OneFile.
Web.
24
May
2016.
http://remote.baruch.cuny.edu/login?url=http://go.galegroup.com/ps/i.do?id=GALE%7CA174971
187&v=2.1&u=cuny_baruch&it=r&p=ITOF&sw=w&asid=ce7ea1f97fc9b957ac3a1a1a30da7c23
6:
http://www.nielsen.com/in/en/insights/reports/2014/how-­‐‑indian-­‐‑consumers-­‐‑navigate-­‐‑the-­‐‑
car-­‐‑buying-­‐‑journey.html
7:
"Stuck
in
low
gear;
Tata's
Nano."
The
Economist
20
Aug.
2011:
60(US).
Academic
OneFile.
Web.
24
May
2016.
http://remote.baruch.cuny.edu/login?url=http://go.galegroup.com/ps/i.do?id=GALE%7CA264606
197&v=2.1&u=cuny_baruch&it=r&p=AONE&sw=w&asid=c8fc76de8097f4da8d91e4774a8ee3d7