Tata Nano Brand

Positioning Group 4

Section A

Team Members:1)Kulwant Singh 2)Ravi Yadav 3)Kunal Abhilashbhai Delwadia4)Arnabkanti Dey 5)Deepak Kumar 6)Vizhiarasan N K B

Tata Group: Company History

Founded by Jamshetji Tata in 1868 as trading company

India’s first steel mill, power utility luxury hotel and international airline

By 2011- 98 companies in Tata Group Portfolio in vast seven sectors- IT & Communication, engineering, materials, services, energy, consumer products and chemicals.

Strong trust and commitment to ethics

Code of conduct: improve the quality of life guided its product development, of which the Nano was a prime example.

Tata Motors Ltd Established in 1945 as Tata Engineering and Locomotive Company

(TELCO).

1991: entered in Passenger car segment in released Tata Sierra under a joint venture with Meceded Benz.

1998: Launched Indica, compact car and India’s first sports utility vehicle, Tata Safari.

2003: TELCO renamed Tata Motors Ltd. Following year company was listed in New York Stock Exchange and and began a series of acquisitions and venture to broaden its global presence.

In span of three years Acquired Daewoo Commercial vehicles company(Korean). Marcopolo Brazil. Thonburi Automotive assembly plant company (Thailand) and Fiat Auto (Italy)

21% stack in Hispano Carrocera (Spain),

2005: introduced the company’s first mini Truck, Tata Ace.

2008: Purchased Brand Jaguar and Land rover from Ford, packaged deal at price $2.3 billion

International expansion: manufacturing facility at UK, South Korea, Spain, Morocoplo, Thailand and Banladesh.

Export: Europe, Africa, Middle East, Australia, Southeast Asia, and South America.

Automotive Industry In India

1991: Liberalization era flourished automobile industry to average growth of 19% annually.

India: Per-capita ownership growth is low as compared to developed countries. 12 car owners per 1000 people.

USA: 765 per 1000 people, UK: 426 per 1000 people.

Two wheelers: Mopeds, motor cycles and scooter dominated Indian road scene, 76% of vehicle sales in Indian are Two-Wheelers.

Cause: Fuel efficiency, low purchase and maintenance cost, small size, nation’s crowded city streets.

The Nano

The Nano Inspiration: Indian family of four travelling on the motorbike.

2007: Geneva Auto show, Tata outlined his plan to build world’s smallest and fuel efficient car at 1 Lakh Indian Rupee.

TML partnered with wide range of suppliers to reduce the cost with out compromising quality.

GKN Driveline India spend a year to develop low cost drive shaft.

Final design: 100 different suppliers, who provided gasoline injection systems to mirrors and windshield-wiping systems.

The development of Nano’s engine: Tata Motors.

Initial stage: Two wheeler engine design, but ultimately a design a entire new design.(624 cc 2 cyclinder,placed in rear to reduce the overall size of the car, heightened somewhat the noise level)

Three models: The Nano, Nano CX, Nano LX ( 1 lakh, omitting ac ,power steering, windows,a nit-lock brakes, air bags and dual shield wipers)

Planned production : 350000 Nanos in the first year at a plant being built at Singur, West Bengal. Cost of plant: 1500 crs.

Farmer protest and shift of plant in Gujarat.

Temporary production at Pantnagar Uttarakhand with 50,000 capacity.

Distribution Capacity limitation led to the use of booking process.

Lottery system

Online service fee: Rs 200 or Booking at Tata dealership : Rs 300.

Offline bookings: 1000 cities and 30,000 locations.

State bank of India Branches, Tata Motor dealerships, croma outlets, World of Titan showrooms, Tata Indicome Exclusive service stores.

In addition to booking fee: deposit that represent the majority of final cost.

Nano: 95,0000, Nano Cx: 120,000, Nano LX: 140,000

Once sanaad plant commissioned Nano would be available through 214 Tata Motor dealership spread across India’s 28 states.

Dealer Margines: 2 to 3 % , 1% discount off the full dealer paid cash upfront.

Rural Market: Entrepreneurial Engineers trained to assemble Nanos from car kits, and served as local retailers.

Volume of cars out in cost conservative method.

Competition

Maruti Suzuki: Pioneered the mini Passenger car category.

Maruti 800 remained uncontested as the smallest and most affordable car in India until the release of Nano

Compact Car category: Alto, Swift, Zen and Wagon-R, constitute 58.8 % of sales during 2005-08

Tata’s sole compact car- Indica, held 17% share of the segment.

Maruti Alto best selling Car.

Continue…

Rs 1 lakh, approximately half of the cost of Maruti 800.

In the wake of publicity surroundings: Hyndai, Maruti, Habib Motors, Renault Nissan, Toyata and Ford all issued statements about new ULC cars with planned release dates in 2008, 2009, and 2010.

Product differentiation: price and luxury features.

Two wheeler segment toughest competitors.

Hero Honda, Bajaj Auto, TVS motors, and Honda Motor cycle and scooters.

80% of two wheeler cost from 35,000- 75000

Mopeds smaller part of two wheelers segment.

Fuel efficiency in two wheeler (70 Km/liter Vs 23.6 Km/liter)

Lower maintenance cost.

Maneuverability of two wheeler made them favorite with college students.

Nano: Alternate to Public transport rather than improving life’s for the masses that conflicts with the Tata’s Vision.

The Evolving Market Place. 2008: population 1.1 billion, with median age 25

years.

2001 census : Estimated average household size to be slightly greater than Five persons and somewhat larger in Rural India.

Economic growth- created sizable middle class.

Annual disposable income: 200,000 to Rs 1 million.

Mckinsey Global institute report 2005: 5% population middle class Transportation Proportion: 17% expected to

increase 19% in 2015 and 20% in 2025. Forecasted to grow to 19% in 2015 and 41% in

2025.

Increase in Purchasing Power.

Initial Response

April 2009: Two week period witnessed 203000 bookings;

100000 bookings were selected on lottery basis.

First Nano(top-end Nano LX model) hit the road in July 2009

50%

30%

20%

Bookings

Nano LXNano CXBasic

80%

20%

Customers

Car OwnersTwo-wheeler owners

Expanding Network and Sales

Capacity expanded to 250000 units/year at the end of the 2009 at Sanand plant.

Monthly sales peaked to 9000 units/month in July’10

By Dec’10, 71000 Nanos were on the Road

Aug'09 Dec'09 Jan'110

10

20

30

Open sales through Tata Dealership

States

Plummeting sales and Resolution

Nov’10: Car sales grew 22%, to 203,000

Alto sales 30000 units whereas Nano sales mere 509 units

85% decline over the prior year

Major concerns were safety and rising raw material cost resulted in average cost of all models to 1.5 lakhs

Measures taken by extending warranty period from 18 months to 4 years or 60000 km

By Dec’10, sales rebounded to 5784 units

Why positioning failed !

Initial sales were high as many hoped to sell their right to purchase at a premium

Tata had a vision of providing car to those who had not been able to afford a car, whereas Nano was bought as a second car

Tata dealerships offered limited coverage of smaller cities and were non-existent in rural areas

Concerns of Nano withstanding the hazards of India’s streets and its rural roads

Customers willing to pay a bit more for a car having a bigger engine and a longer track record

Where Failed in Positioning…. TATA-NANO was positioned as logical upgrade for

a family of four with a two wheeler. This concept did not gel as every such household had an aspiration to move to something better and not necessarily cheaper, thus NANO was brought as a second car and not as a first car.2001 census : Estimated average household size to be slightly greater than Five persons and somewhat larger in Rural India.

TATA-NANO was supposed to be available for Rupees One Hundred Thousand only, which was increased due to the increase in the input cost, yet it was called as a One-lakh car. The company did come out to explain the reason for price increase but it did not go well with the buyers.

Instead of using right marketing channels, NANO was promoted using non-conventional marketing concepts like social-media which was simply a case of lack of communication to the appropriate customer.

The saying that “A Man buys a car for what he wants to be and not for what he is”, is enough to describe the story of NANO.

Thank YouGroup 4Section A