Tata Nano

Brand
Positioning
Group 4
Section A

Team Members:
1)Kulwant Singh 2)Ravi Yadav 3)Kunal Abhilashbhai Delwadia
4)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.

Customers
Bookings
20%
Nano LX
20% Car Owners
80%
50% Nano
30% Two-wheeler
CX
owners
Basic

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

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
Open sales through Tata Dealership

30

20
States
10

0
Aug'09 Dec'09 Jan'11
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 You
Group 4
Section A