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Question:
Nano as India's first "People's car" started its sales in 2010. Tata Motors in May 2006 announced that Nano would be manufactured in Singur, West Bengal, India (Nano.tatamotors.com 2016). Later, their dispute with a political party led them shifting their production finally in Sanand in 2010. Tata Motors purchased more than 600 acres of land costing around $350 million in Singur. The problem occurred when Tata came to know that the property which was acquired from the government didn't own them. The land was purchased from the farmers by imposing the force of renowned territory. Tata soon had to struggle from a political party. Later Tata Motors decided to begin its production in 2009 in its existing factory in Pantnagar, Uttarakhand and later switched to Sanand in summer 2010 (Palepu et al. 2011).
In late 2010, Tata Motors announced the sales figure of Tata Nano (Tata.com 2016).. Only 509 cars were sold which is disappointing. Mercedes sell around 500 cars every month in India. After selling 10,000 vehicles a month the entire summer, the sales dropped after hearing stories about the quality and service of the car (Nano.tatamotors.com 2016). In 2008, Tata Motors acquired Jaguar Land Rover. After the acquisition, Tata Motors thought that the sales of Tata Nano would increase worldwide. But in 2015, the sales of Tata Nano declined to 16,903.
The sales fell of Nano cars because of rumors that some cars had caught fire and the performance of the car was poor providing poor service to its customers. Due to rising interest rates and increase in the fuel price had an adverse effect on the demand for the cars (Akhtar 2013).
To increase the sales, the head of the Tata Motors Carl-Peter Forster decided to improve the distribution scheme, marketing advertising, and consumer finance system. Nano used traditional media in an unconventional way. Nano was not big on advertising. There was no TV campaign; only radio, print, and other media were used (Anderson, Brossard and Scheufele 2012). Tata Motors only targeted 2 wheeler users to increase their sales of Tata Nano.
It was estimated that the demand for Tata Nano would be twice the demand of Maruti 800 car. The cost of Tata Nano was Rs.1,00,000 Lakh INR despite of increase in steel price. Initial projection was 5,00,000 car per year. Encouraging pre-launch expectations limit the ability to set the business model post-launch. First, the company should know what the customer wants, which customers want it and when they will use the product. The product should be manufactured reliably and at a profit, the customers are willing to pay. The product should be differentiated from competing offerings and communicate a clear targeted value proposal (Wells 2010). Tata Motors is trying to capture the global market like China and India. Tata had troubles with each and every step.
After its sales in 2010, Tata Motors were disappointed with its sales because of rumors that some cars had caught fire and the performance of the car was poor providing poor service to its customers. After 2012, the sales of Tata Nano have declined to 16903 in 2015(Schuster, Tassilo and Holtbrügge 2011). Various companies are manufacturing battery and electric operated small cars. Light weighted car like Alto and Second-hand car users has turned out be a threat to the sales of Tata Nano. The issue which took place in Singur also led to a decline in the sales of Tata Nano.
Analysis on Quality IssueTata Nano's design received various comments from the public, some calling it egg shaped and others calling it handsome. The Nano car is fuel-efficient and it is 21 percent more spacious than Maruti 800. From Ratan Tata's perspective, the car addressed various features for Indian families like low price, adequate comfort, fuel- efficiency and safety. Nano's primary targets were two-wheeler users and surprised the world by launching it as the world's cheapest car in 2008 for Rs.1, 00,000 Lakh INR which has now increased with time (Rahman 2008).
After the launch of Nano, the sales, in the beginning, were high, but it started declining every month. There were various issues related to the car like it was suitable to drive the vehicle in rough areas, many incidents took the place of the Nano car catching fire and the car quickly gets heated. The car engine made a lot of noise and people started comparing the Tata Nano car with an auto (Kumar 2015). The customers were doubtful about the car’s safety. The body of the car is made up of Fibre and the vehicle is light weighted compared to the other cars. It has been found that the car is not suitable for hilly areas.
Tata Nano has been rated as zero safety star by the global Ncap after it performed badly in the German crash test. A Nano user drove 10,000km in India. She was unsure about the car is meant to be used on the highways and how people can handle the car on the rural road. Many Indian car manufacturers like Ford, Maruti Suzuki and Hyundai with low end vehicles also performed badly in the German crash test by global Ncap and have to rethink about the car’s safety after the test.
Tata is one the trusted brand worldwide (Ahmad, Md Suhail and Kumar 2013). Tata Nano is being sold through its retail and electronics store and their auto dealership stores. The company has adopted cost efficient and innovative use of media (Singh and Joshi 2015). The company will sell Nano through the Tata car dealerships to make the vehicle readily available to everyone and also through the conventional retail outlets like Westside and Croma. Various Nano merchandise is also available like baseball caps, T-shirts, and key chains.
Nano uses traditional media in an unconventional way. Nano won't be big on advertising. There will be no TV campaign. Print, radio, the web and other media will be used innovatively. According to the people in the advertising agency, the campaign is innovative and cost effective so as to make similar with anything "small, cute and brief." It is a word-of-mouth campaign. The media publications and advertisements have focused on the emotional quotient showing happiness among children when a car is coming home depicting the middle-class group (Alagappan et al. 2013).
The dealer network of Tata Motors is urban and could not reach the villages and small towns. Most of the real target lived in the villages and small towns. Due to the deep perception of class position many people would prefer to buy a high end used car. From a consumer perspective, the alternate for Nano can be the purchase of a new car from a small segment or procurement of a second-hand car in the same price like Nano. Customer's purchase perception will be based on three costs, i.e., the cost of buying the car, the maintenance cost of the car and the resale value. Innovation was an important concept for Tata Motors but it was only seen as the cheapest car of the world. People in rural area were not much aware about the qualities and specifications of Tata Nano and they were happy with their 2 wheelers.
Tata Motors has segmented and targeted the middle-class people comprising of upper lower class and lower middle class, two wheeler users, a family with 3-4 members having trouble to travel in a two-wheeler to use Tata Nano cars. The target market of Tata Nano cars is two-wheeler users, Maruti 800 users and second-hand car users. Tata Nano car has positioned itself by using catchy slogans for example- 1,00,000 Lakh car to fulfill your dreams, Cars are not just for rich. The mass never wants to get associated with anything which is tagged as the world’s cheapest car. This has caused a great harm to the brand name Nano. Tata Nano is launched in the segment of becoming cost leader in the market to attract a maximum number of population (Alagappan et al. 2013).
The threat of new entrants is high for the small car industry and attractiveness in the industry is low. The buying power of the consumer is increasing which led automobile companies to grab the opportunity in the small car segment. The threat of substitutes is high in the automobile sector. Substitutes for Tata Nano exist like Alto and Maruti 800. The bargaining power of suppliers is medium in the automobile industry. Due to increase in the demand of steel, the price is also increasing. The bargaining power of buyers is medium. It does not have much effect in the current situation as Nano does not have a direct alternative. The threat from rivalry is high. The automobile sector is growing with the major players in the market having their manufacturing base and sales (Chakravarti, Amitav, and Thomas 2015).
One alternative can be to reduce the consumption of materials used. Alternate suppliers should be chosen to get same material at fewer prices. Alternate materials can be used for consumption purpose.
It was observed that females associate with Tata Nano easily since they find it convenient to drive because of its small size. Hence, Tata Motors should launch special edition cars which target the female audience and advertise it. This can be risky as Tata Nano can be perceived as the car only for females. But the car can be launched on special occasions like Women's day and Mother's Day which can be a useful marketing.
Tata Motors can launch a gearless version of Tata Nano which can target easily towards Female drivers, senior citizens, and youngsters.
The "Wow Value" of Tata Nano, i.e., space will not excite the customers so much. Maybe adding an accessory to the Tata Nano car can create a "Wow Value." Tata Nano needs to be a brand which can provide a higher "snob value" (Pandey, Kumar and Shrivastav 2013).
Tata Motors can manufacture battery operated Tata Nano as battery operated vehicles are the future of the world.
Besides targeting two wheeler and second-hand car users, Tata can target youngsters who think cars to be fresh and parents who comparatively find cars safer. People who join service sector as a young employee can be targeted to purchase Tata Nano. Few senior citizens who prefer small and cheap cars can be targeted to buy Nano.
The focus of Tata Nano should be of quality service to meet the service needs post purchase. The new variant E-Nano cars can provide better alternatives like increased mileage and low emission. Customers seek a lot of information before buying any product. Hence, communication should be effectively made by Nano to its prospective clients.
Various satisfied clients can be utilized by taking references from them and seek help to promote the Nano brand through word of mouth in a positive manner. According to a survey, many people wanted to buy Tata Nano car but they could not because they were not aware how to drive. Thus, Tata can open driving schools just like Maruti opened it to interact with the consumers.
During a survey, it was found that people treated Tata Nano as a toy car and did not find it safe. There were various issues related to the car like it was suitable to drive the vehicle in rough areas, many incidents took the place of the Nano car catching fire and the car quickly gets heated. The car engine made a lot of noise and people started comparing the Tata Nano car with an auto. Thus, the company should include safety systems and communicate these additions effectively to change the outlook of the people towards Nano.
Tata Motors should target female consumers, senior citizens, and youngsters to generate sales of Tata Nano and launch special edition cars for female customers. Adding a special accessory to the car can add the "Wow Factor" to the car. This will help in generating sales for the previous version of Nano’s. With increasing demand for battery and electric vehicles in the automobile industry, Tata Motors should also design Tata Nano running on battery or electricity. The company should maintain the after-service and quality of the car after hearing the rumors about the cars which suddenly caught fire. Unlike their marketing campaigns, Nano should be more advertised on every media, especially television.
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