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29Consumer Behavior Towards Tata Nano: A Perceptual Study 2010
IUP. All Rights Reserved.
Consumer Behavior TowardsTata Nano: A Perceptual Study
* Reader, Department of Commerce and Business Management, GNDU
Amritsar, India.E-mail: [email protected]
**Junior Research Fellow, Department of Commerce and Business
Management, GNDUAmritsar, India. E-mail:
[email protected]
B S Hundal * and Saurabh Grover**
Tata Nano was one of the longest awaited and most talked about
automobiledebuts in India. It is known as peoples car. It is an
engineering marvel to comeout of India in terms of cost efficiency,
fuel efficiency and space efficiency.This paper is an attempt to
study the consumer behavior and also their perceptiontowards car in
the post-launch period. Factors that motivate buyers to
purchasethis car have also been studied.
IntroductionConsumer behavior is the field of study that focuses
on consumer activities. It shouldbe primary focus of every aspect
of the firms marketing program. Consumption isa key to understand
why consumers buy products (Blackwell et al., 2007). In thisstudy,
analysis has been made to judge the perception of individuals
towards TataNano after its launch. The small car market in India is
increasing at a great pace.The main players in the small car market
like Tata Motors and Maruti Udyog arecompeting fiercely. All the
small car manufacturers are trying to out do each otherin terms of
design, innovation, pricing, technology, etc., in order to increase
theirmarket share. There is a healthy competition in the Indian
small car market whichhas intensified since the Indian government
decided to boost the small car sector.Due to this reason, excise
duties have also been reduced. Demand for small carshas increased
due to aspirational lifestyle of people which makes them strive
topurchase a car early in life. Moreover these cars are more
affordable and utilitarian.
Tata Nano was one of the longest awaited and most talked about
automobiledebut in India (Farris et al., 2009). Tata Nano was
launched in Mumbai on March 23,2009. The car was priced of at Rs.
130,000 approximately. Tata Nano is anengineering marvel to come
out of India in terms of cost efficiency, fuel efficiencyand space
efficiency.
To target the specific segment and also to tap bottom of
pyramid, Tata Motorshas entered into agreements with 15 preferred
banks/NBFCs for the Tata Nanobooking loan product. The preferred
financial institutions areState Bank of India,Tata Motor Finance,
State Bank of Patiala, ICICI Bank, State Bank of Travancore,
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The IUP Journal of Management Research, Vol. IX, No. 6,
201030
State Bank of Mysore, State Bank of Hyderabad, State Bank of
Bikaner and Jaipur,State Bank of Indore, Axis Bank, Punjab National
Bank, Federal Bank, CorporationBank, Indian Bank and the Central
Bank of India
(http://www.tata.com/media/releases/inside.aspx?artid=24zoKJrlFVk=).
Review of LiteratureGoyal and Aggarwal (2008) attempted to find
the relative importance of variousfactors that attract the
customers while selecting a particular car in its segment.For the
said purpose, the questionnaire was developed and respondents
wereselected by convenience sampling method. As many as 277
respondents wereselected from Ludhiana city including 67
respondents with luxury cars and 117with small cars. Various
techniques like factor analysis, mean, standard deviationand
bivariate correlation had been used. The study revealed in the case
of purchaseof luxury cars, the factors like horsepower, model,
luggage capacity, accessoriesand loan facility emerged as most
significant; in the case of medium cars; after-sales service,
availability of spare parts, model, shape and engine capacity
wereimportant; and in the case of small cars, the factors like
accessories, engine capacity,after-sales service and price were
main considerations. So, it was recommendedthat the car
manufacturers had to properly understand the relative importance
ofvarious attributes for the different segments of cars.
Kaushik and Kaushik (2008) investigated empirically customers
preferencetowards passenger car brands in South West Haryana
region. They also consideredpre-purchase and post-purchase behavior
and factors influencing the brandpreference of passenger cars.
Judgmental sampling method was followed and studywas carried out in
Bhiwani and Mahendragarh districts of Haryana during June-August
2007. Cross tabulation and multi dimensional scaling techniques
were used.It was observed that Maruti 800, Alto and Wagon-R were
favorite in that regionand customers were more influenced by
friends and relatives rather than dealersand sales persons. Brand
name, fuel, efficiency and price were found to be
primarydeterminants for buying cars in that region.
Objective of the StudyThe study basically aimed at examining the
consumer behavior of individuals towardsTata Nano after its launch.
Specifically, the perception and their experience with thecar was
examined and the factors that motivate them to purchase this small
car.
Research MethodologyThe present study is mainly based on primary
data collected from around 100respondents from Amritsar. These
respondents were interviewed through apre-tested, well structured
questionnaire which was administered personally.Convenient and
judgmental sampling method has been used keeping in view
thesocioeconomic characteristics. Five-point scale has been used
for the said purposeranging from strongly agree to strongly
disagree. The families residing in the posh
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31Consumer Behavior Towards Tata Nano: A Perceptual Study
and planned colonies were selected for the survey. To find out
the perception ofrespondents towards Nano, factor analysis was
used. Factor analysis is a set oftechniques which, by analyzing
correlations between variables, reduces theirnumber into fewer
factors which explains much of the original data, moreeconomically
(Nargundkar, 2010). The survey was conducted during the periodfrom
January 2010 to March 2010. The demographic characteristics of
therespondents depict that the majority of users of Tata Nano were
in the age groupof 20-30 years and 64% of them were females and
most of them were graduates.
Factor AnalysisExplanatory factor analysis is used to identify
the underlying constructs andinvestigate relationships among the
key survey interval-scaled questions regardingperception towards
Tata Nano in the post-launch period. To test the suitability
ofdata, reliability test has been conducted and value of Cronbachs
alpha comes outto be 0.7678 which is significant. This significant
value is derived by deleting threevariables that were lowering the
value of alpha. So, factor analysis is applied to 24statements
(after deleting three statements). The following steps have
beenconducted to analyze the data (Hair et al., 1995):
1. The correlation matrix is computed and examined. It reveals
that thereare enough correlations to go ahead with factor
analysis.
2. Kaiser-Meyer-Olkin measure of sampling adequacy is computed
which isfound to be 0.577. It indicated that the sample is good
enough for survey.
3. The overall significance of correlation matrices is tested
with Bartlett Test ofSphericity (approximately chi square = 669.097
and significant at 0) providedas well as support for validity of
the factor analysis of the data set (Table 1).
Hence, all these three standards indicate that the data is
suitable for factoranalysis. Principal components analysis is
employed for extracting factors.
Rotation MethodOrthogonal rotation with varimax was applied
(Table 2). The latent root criterion isused for extraction of
factors. As per it, only the factors having latent roots
oreigenvalues greater than one are considered significant, and all
the factors with latentroots less than one are considered
insignificant and disregarded (Hair et al., 1995).
There are only eight factors having eigenvalues exceeding one in
our study.The percentage of total variance is used as an index to
determine how well the
Kaiser-Meyer-Olkin measure 0.577
of sampling adequacy
Bartletts test of sphericity Approx. Chi-Square 669.097
df 276.000
Sig. 0
Table 1: KMO and Bartletts Test
Tests Corresponding Values
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The IUP Journal of Management Research, Vol. IX, No. 6,
201032
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33Consumer Behavior Towards Tata Nano: A Perceptual Study
total factor solution accounts for what the variables together
represent. The indexfor present solution accounts for 63.956% of
the total variation. It is pretty goodfigure and we lost only 36%
of the information content in our study.
Criteria for the Significance of Factor LoadingsIn interpreting
factors, a decision must be made regarding which factor loadingsare
worth considering. A factor loading represents the correlation
between anoriginal variable and its factor. The criterion given by
Hair et al. (1995), wherefactor loading based on sample size is
taken as the basis for decision aboutsignificant factor loading,
was adopted. For our sample of 100 respondents, afactor loading of
0.5 and above has been considered significant. All the eightfactors
have been given appropriate names on the basis of variables
represented
in each case (Table 3).
Table 3: Factors Extraction and Factor Loadings
Factor Name ofStatement
FactorNumber Dimension Loading
Status symbol Shifting from bike to Nano enhances social status.
0.737
F1and reference Friends suggested me to buy this car. 0.692
group Nano is a family car. 0.664
Maintenance cost is low. 0.511
Nano is more accident prone. 0.703
Its an uncomfortable car. 0.674
F2Risk and Rear engine may cause accidents. 0.627
discomfort Test drives are important for me but Tata dealers
0.511dont provide it.
I cannot wait for a long time to purchase it. 0.402
Product Pick up is not effective. 0.802
F3 performance Engine is less powerful. 0.734
It is not suitable to drive on highways. 0.619
Congestion and Nano leads to more congestion on Indian roads.
0.848
F4 environmental Problem of parking is aggravated due to this
car. 0.662
issues Nano is having adverse effect on environment. 0.447
Product High profile brand ambassador tempted me to 0.717F5
promotion purchase it.
Dealers image encourages me to buy it. 0.538
Market It can be gifted to children instead of two wheelers.
0.744
F6 penetration Low price motivates me to buy it. 0.545
Company reputation effects my choice. 0.545
F7Customer After sales service not easily available. 0.698
dissatisfaction Noisy engine. 0.601
Running and Fuel efficient car so less running cost. 0.734
F8 maintenance Spare parts availability should be there.
0.725
cost
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The IUP Journal of Management Research, Vol. IX, No. 6,
201034
Factor 1: Status Symbol and Reference Group
It is most important factor as it explains 16.725% of the
variations. Statements
like Shifting from bike to Nano enhances social status (0.737),
Friends suggested
me to buy this car (0.692), Nano is a family car (0.664), and
Maintenance cost is
low (0.511). So all these statements tempted a buyer to purchase
this car.
Factor 2: Risk and Discomfort
Five variables are loaded on this factor. Nano is more accident
prone (0.703), Its
an uncomfortable car (0.674), Rear engine may cause accidents
(0.627), Test
drives are important for me but Tata dealers dont provide it
(0.511) and I cannot
wait for a long time to purchase it (0.402) which signifies that
people are less
satisfied with this car. This factor accounts for 11.467% of the
variations.
Factor 3: Product Performance
This factor accounts for 8.081% of the variance. It includes
pick up is not effective
(0.802), Engine is less powerful (0.734) and it is not suitable
to drive on highways
(0.619). So all these statements state that there is some
problem in the
performance of car.
Factor 4: Congestion and Environmental Issues
This factor includes Nano leads to more congestion on Indian
roads (0.848);
Problem of parking is aggravated due to this car (0.662), Nano
is having adverse
effect on environment (0.447). This factor accounts for 7.187%
of the total variance.
Factor 5: Product Promotion
This is another crucial factor which accounts for 5.714% of the
variations. This
includes High profile brand ambassador tempted me to purchase it
(0.717) and
Dealers image encourages me to buy it (0.538). So, these are
some of the
promotional tools which effects sales of Tata Nano.
Factor 6: Market Penetration
This factor accounts for 5.142% of the variations. The variables
included in this
factor includes It can be gifted to children instead of two
wheelers (0.744),
low price motivates me to buy it (0.545) and company reputation
effects my
choice (0.545). So these strategies can be used to penetrate
each segment of
the target market.
Factor 7: Customer Dissatisfaction
This factor results in 4.953% of the total variance. This factor
exhibits the following
variablesafter sales service not easily available (0.698), noisy
engine (0.601).
So due to all these variables, customers are dissatisfied with
Nano.
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35Consumer Behavior Towards Tata Nano: A Perceptual Study
Factor 8: Running and Maintenance Cost
This factor results in 4.686% of the total variance. Statements
under this factor
are Fuel efficient car so less running cost (0.734) and Spare
parts availability
should be there (0.725). Thus we can say that it is an efficient
car.
ConclusionThe perception of people towards Tata Nano after its
launch has been worked out
with the help of questionnaire. The results of factor analysis
revealed that
motivational variables like enhancement of social status, low
maintenance cost,
etc., motivates a potential customer to purchase this car.
Some persons were disappointed with the working of this car as
they considered
it risky. They think that Tata Nano is more accident prone as
its a very small car
and moreover there were some reports regarding bursting of its
rear engine in
case of rear collision. There is a huge waiting list for the
purchase of this car and
more over it is uncomfortable due to less boot space.
There is a performance problem as its pick up is very low and
engine is less
powerful. It is not suitable to drive on highways as its highest
speed limit is only
80 km/h adding to dissatisfaction in customers.
It is a less expensive car when compared to other cars.
Therefore even low
income group can buy it leading to high congestion on roads and
adding to parking
problems.
Promotional strategies also tempted potential customers to buy
it. Its brand
ambassador being Ratan Tata himself really helped it in
increasing its sales. Dealers
image also affects customers decisions adding to high sales of
Tata Nano.
The price of car is low, and so it can be gifted to children
instead of two wheelers.
Its low price complemented with the Tatas market penetration
strategy as with
this low price figure, it can even reach rural areas and capture
this untapped market.
Some of the customers of Tata Nano were dissatisfied with the
car due to bad
after-sales service and moreover its noisy engine disturbs the
customer. At last, it
is recommended that Tata Nano is really a peoples car but
company needs to
work more on its features and safety and enhance its production
so that people
dont have to wait to purchase it. @
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37Consumer Behavior Towards Tata Nano: A Perceptual Study
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Reference # 02J-2010-10-03-01
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