TATA MOTORS TATA NANO

In January 2008, Tata Motors unveiled its People's Car, the Tata NANO, which India and the world have been looking forward to. Tatas NANO is a new product with a new technology which promises the market of an efficient car with a very low cost. The Tata NANO has been subsequently launched, as planned, in India in March 2009. A development, which signifies a first for the global automobile industry, the NANO brings the comfort and safety of a car within the reach of thousands of families. The standard version has been priced at USD $2500.00 (TataNANO, 2010).

PEST ANALYSIS
Political: Strong tax incentives for inbound investors Strong political motivation for globalization Strong reputation and trust Adaptive legislative framework Negative effect on the IT industry after 2009 as the governments initiative of Tax holiday under STPI expires (Thinking Street 2007). Economic: Strong technical skills Strong export base Strong infrastructure links Competitive labour cost model Adaptive investment authority to technological investments Highly mobile work force

Social: Strong science and educational culture

 Strong management culture Adaptive English speaking population

Technological: Strong R & D culture and facilities Strong tie-ups with western technology companies Adaptive to new technologies

SWOT ANALYSIS
NANO which is a brain child of Ratan Tata raised hope for a lot of Middle class families by giving them the status of owning a car. Expectations were increasing amongst the customers regarding the product features and its efficiency. Competitors were eagerly waiting for its arrival to find whats inside NANO?. The only factor the customer knew in advance was its price tag of 1 lac as conveyed by Ratan Tata. But why was it not a big hit and why is it still lagging to grab the market in spite of its good and convincing features? We probed into the health of Tata Nano as a brand and as a product and carried out a SWOT analysis on NANO. Strengths Price itself was a major strength factor for the mini magical vehicle which created a sensation all over the world. Even Us president obama was all praises for the Nano during his Indian visit,an appreciation which soon spread across the world. The five seater car Nano from tata finally arrived in the market. The strengths of the product included its small size, ease in handling and good mileage efficiency. It directly took on the motorcycle market and tried to attach a status symbol to itself such that customers prefer the Nano above buying a motorcycle. Thus they get a four wheeler instead of a two wheeler. However, sales did not happen as expected and Tata Nano lagged behind. Weakness The launch price came in two variants ranging between 1.2 lakhs to 1.5 lakhs.It was 20-50% higher than the proposed rates which was a major setback to customers.Within a few months of initial sales technical problems were found in the product and there were a few reports of Nano catching fire which further weakened the trust for the brandNanoas a whole.Tata also faced political problems and had to shift the plant location which led to production delays.And now due to inflation Nanos prices have further increased due to increase in the prices of raw material such as steel,rubber and others.

THREATS After the launch of Nano there were many manufacturers who wanted to take advantage of the hype of Tata Nano and started working on manufacturers an alternative for Nano.Upcoming cars like H800 from Hyundai priced around 1.6 Lakh , Maruti Cervo 600cc priced around 1.7 lakhs to 2 lakhs were imposing threats to further growth of Nanos market share.Vehicles like Alto,Chevy Spark and second hand vehicles were major substitutes of Nano.People were looking for alternative for the main reason that it cannot be much used for driving in highways or long distance as the engine cc is low.The main threats was from an indirect competitor-Motorcycles.Nano was inbetween motorcycle and car and it was proving to be unreliable due to technical glitches.Thus some people were going for cost effective solution of buying motorcycles thereby affecting Nano sales. OPPERTUNIIES Thogh it is often considered to be a boon for middle class people it is most often owned by the people who already own one car.Nano is considered to be a convenience vehicle to be drived in a metro traffic.Nano 2012 is a new ray of hope in increasing the number of sales and making many satisfied customer. The increasing purchasing power of younger generation is a major factor for Indian automobile growth. Tata Nano Diesel priced at 3.5lakh has already created a hype among its customers as Tata is known for its diesel products with high mileage efficiency like Indica and Indigo CS Even Rata tata has admitted that they were wrong in the positioning of the Nano and that the initial marketing effort was poor. Instead Nano should have been marketed as a utility car rather than a cheap car. Many manufacturers are still striving hard to compete with Nano, even they will have many drawbacks and failures and it should be a better product than Nano. Certainly revolutions arent usually neat and tidy to start with; hence Nano too is a revolution in Indian Automobile history.

FIVE FORCES ANALYSIS THE THREAT OF ENTRY Product differentiation and cost advantage- The new product has to be different attractive to be acceptable by the customer.Attractiveness to be measured in terms of features price etc.At this level the price of the Nano car was one thing that is attracting customers.And above all this the image,trust the name TATA carries with it. Time of entry-Time is very essential thing when launching a product in the market.The launch of NANO is quite viable as the demand on the small car is on rise in the market. Cost of entry-The cost of entry is refered to as the inital capital required to set up a new firm is very high,it makes the chance of new entrance very less.Even other car producers can enter into the market later but NANO has the first mover advantage. The way in which NANO is produced such a method will lead to even more innovative manufacturing to offer affordable cars to customers.New entrants at this market have to address various challenges like inflation,low price barriers,substantial increase in raw material prices and government regulations. But going foreward more automakers will make low cost cars.it might take few years and huge investment for a car maker to design and build a low cost car,which itself has a low cost marigins. Therefore, the threat of new entrant to NANO in the long run is exist. This force is still favourable to NANO in short run. BUYERS POWER As the NANO car is made for lower income group people, thus there is less power in the hands of buyer at present as only NANO (the cheapest) is available in market but soon there will be cheaper car in the market and buyers will have power to switch to other cars. However, if switching to another product is simple and cheap the customers do not think much before doing it. In case of NANO car the switching cost from motorcycle to car (NANO) is low. Thus increasing the demand of the NANO may increase.This force is favourable to NANO.

SUPPLIERS Rather than a threat to NANO, suppliers were supporting Tata Motors for launch of NANO and there are overall thousands of suppliers to TATA Motors.Driving down the price of the Tata NANO couldn't have been done without the collective effort of the component suppliers. Some of the biggest and the best in the business were roped in, with scissors and ingenuity to bring out solutions within a specified cost structure Sister compant TATA TACO worked on parts like interior injection mouldings,dash board aggregates and door handles. It also entered with JV with Ficosial International of Spain to supply cables and mirrors of the car that are being produced in the company Hinjiwadi Pune facility.TATA TACO will supply over 20 percent of all the parts being built for the NANO. Some of the other suppliers include sona koyo for the steering assembly,lumax for the lights and coparo for the body panels.A rack and pinal steering development by sona uses a two spoke for the base version and three spoke variants for the CX and Lx versions. A whole host of other suppliers was also involved in the project that despite suppling the smaller number of components played their part.At the end despite steel price fluctuations a tanking economy and component supplier from immense revenue pressure the combined operation helps TATA MOTORS to achieve the magical 100000 .Rs.This favours TATA NANO. SUBSTITUTES Substitutes performance - The performance of the substitute sector will also play an important role in the success of the NANO car. If the prices of the motorcycle segment decrease, it will have affected the demand of NANO on the quantity required in the market. The success of the electric car segment with player like REVA can also affect the demand of the NANO. At present, in the electric car segment only Reva car is available in India. The threat of substitute for NANO car is that of electric car, the new entrant in the small car sector is the Morbi-based world famous clockmaker Ajanta group. The company is already manufacturing electric scooters and motorcycle under Oreva' brand. Production of electric car is not difficult for them as the technology is almost similar and 70 per cent of its parts can be produced in-house, giving them an edge over the vehicle's pricing. The threat of substitute for NANO car is that of small electric car. This will be an unfavourable situation for NANO.

COMPETITIVE RIVALRY Number and Diversity of Competitor - This describes the competition between the existing firms in an industry. The current scenario, the small car market in India is very competitive with players like Maruti Suzuki, Tata Motors, and Hyundai which was pretty much dominated by Maruti. Exit Barriers - Even if the product fails in the market it is not that easy for the NANO to exit the market just like that because of the heavy investment it has made in the initial stage. If the NANO fails or falls flat the TATA motors will not be in a state to slow done the product even when NANO production line can be used by the other products after few modification as for NANO only the new product line were setup and huge cost were incurred.It shows there is threat of rivalry for NANO MARKETING MIX PRODUCT Nano should be positioned as a low price product without compromising on the safety and comfort.To lower production cost the team developed its own small engine put under the rear seat to save room and the used the same handles on all the doors.To guarantee the comfort of a conventional car the tean opted for four doors and five seats. PRICE The NANO not only has a cost advantage over other cars but also over some threewheelers.The NANO retail price is only USD 2000. PROMOTION Not much is known about how Tata will promote the Nano once it is for sale, but the Nano has certainly gained a lot of media attention in international and Indian press since its unveiling in January 2008. Earlier adopters influence potential customers. The closer people live to each other, the more potential customers will find out about the innovation from an earlier adopter. Building social relationships with the people at the bottom of the pyramid (lower income group) and gaining their trust are important for NANO to have loyal customers. One advantage of the NANO is that it is produced by a conglomerate (TATA) whose products range from tea to chemicals and communication services. People will judge the NANO based on Tatas reputation in other markets. Potential customers also know Tata from its socio-economic projects to improve local education and health facilities in the neighbourhood of Tatas plants. PLACE

In low and middle-income countries, the company needs to reach a large, dispersed, mainly rural population. Therefore, NANO requires a more extended distribution network than reaching the small, concentrated, mostly urban population in high-income countries.

SEGMENTING ,TARGETING, POSITIONING SEGMENTATION

Segmentation is based upon considerable evidence that a single marketing approach or formula will not work for all members of the community to be served. Geographic: The region of Tata motors is whole India with special focus on Type A and fast growing Type B cities across India. Demographic: Age-Between 18-50 years Income-over 4 lakh per annum Ocuupation-professional,managers and those who want their first car. Psychographic: Personality-dreamers,those who want to achieve big,ambitious price conscious. Behavioural: Benefits-quality,style. User Status Potential users and first time users. Readiness Stage those who are aware, informed, interested and intend to bye. TARGETING Tata Motors has full market coverage in vehicle market as they covers market through Differentiated Marketing. So Tata Motors typically creates more total sales. However it also increases the cost of doing business. Thats why they lead to both higher sales and higher costs. Full Market Coverage After introducing Tata Nano and acquiring Jaguar & Land Rover they have full market coverage from Common men to Luxuries loving people. So, Tata Motors attempt to serve all customer groups with all the products. POSITIONING

Tata Motors has many products for various sectors. Company has a product like Tata ACE which is used as mini-truck. This product is mostly used at agriculture level. This product can carry below 1 tone. So, in agriculture sector this mini-truck makes good image. Like that Tata Motors introduced Tata Nano car for lower level people who cannot afford car but now they can buy a car in Rs.1 lakh. It also makes a brand image on customers mind that Tata Motors is companies where Customer gets car at a low cost. CUSTOMER RELATIONSHIP MANAGEMENT Given that the customer is king (or queen), it would be logical to presume that establishing and nurturing a relationship with such royalty is a priority for enterprises looking to sell a product or service. Fact is, it may be a priority but organisations rarely pay more than lip service to what goes by the grandiose nomenclature of customer relationship management. For Tata Motors, though, this has always been an imperative.

It made eminent sense for premier automobile company-over 1 million customers and 22000 employees geographically fragmented business that operates out of 1600 locations in a notoriously cyclic business environment to put many eggs in the relationship management basket. But this was an idea cooked in the cauldron of adversity.Tata Motors got started on what it has tagged the customer relationship management-dealer management system (CRMDMS) at the turn of the millennium, when it was battling to regain relevance at a difficult time in its history. Thats when it realised that survival in the auto business depended on managing its relationships with its customers, dealers and anyone else who had a deep connection with the mother company. This was no mean task, considering the scale and complexity of the issues involved. Two parameters customers, and their interface with the company, the dealers were the critical links in a complex chain that Tata Motors had to deal with. The solution led to the emergence of Tata Motors integrated CRM-DMS, which is today the largest such application in the automobile industry worldwide, linking to more than 1,200 dealers across India and tracking the needs of some 25,000 customers. Tata Motors had no standard or benchmark to model its solution on when the relationship concept was first considered, back in 2002. The company realised that it had to look at the business in a fundamentally different way. Instead of selling to the customer DISTRIBUTION CHANNEL Unconventional distribution channel for Tata Nano Tata Nano is trying to ramp up its sales by exploring unconventional channels like the Big Bazzar outlets. This is the first of its kind in India where a retail chain is selling a car. The key here is to identify your target customer groups and then find ways of interacting with them through multiple touch points. Tata Nano has not been doing really very well in sales. Partly, the reason could be attributed to a lack of proper interaction with the prospective customer groups. Tata Nano customers are typically middle class people who currently use

motor-cycles and they aspire to own a car. Such customers are not used to visiting showrooms and exploring options for their purchases. Potential customers for Tata Nano would actually flock the value-for-money retail outlets like Big Bazaars. They are price conscious and have to be approached in an atmosphere where they are comfortable. This is a masterstroke innovation in their distribution. Figures say that 450 Tata Nano cars got sold through this outlet in February, which is close to 5% of their total sales in that month. Proper push and pull mechanism can only help Tata Nano in increasing its sales. There is very intresting business model innovation in the production and sale of the tato nano.Just like a bicycle TATA NANO will be sold in a kits that are distributed and serviced. by people who will assemble it for the consumer. The could remove layers in distribution and service and make the Nano available throughout India without a large dealership network. That means the Nano was designed for easy assembly by non-professionals. Fascinating. SOCIAL RESPONSIBILITY

Tata Motors concern is manifested by a dual approach 1. Reduction of environmental pollution and regular pollution control drives 2. Restoration of ecological balance.

Our endeavours towards environment protection are soil and water conservation programmes and extensive tree plantation drives. Tata Motors is committed to restoring and preserving environmental balance, by reducing waste and pollutants, conserving resources and recycling materials.

REDUCING POLLUTION Tata Motors has been at the forefront of the Indian automobile industry's anti-pollution efforts by introducing cleaner engines. It is the first Indian Company to introduce vehicles with Euro norms well ahead of the mandated dates. Tata Motors' joint venture with Cummins Engine Company, USA, in 1992, was a pioneering effort to introduce emission control technology for India. Over the years, Tata Motors has also made investments in setting up of an advanced emission-testing laboratory.

With the intention of protecting the environment, Tata Motors has upgraded the performance of its entire range of four and six cylinder engines to meet international emission standards. This has been accomplished with the help of world-renowned engine consultants like Ricardo and AVL. These engines are used in Tata Motors vehicles in the Indian market, as well as in over 70 export markets. Tata Motors is constantly working towards developing alternative fuel engine technologies. It has manufactured CNG version of buses and followed it up with a CNG version of its passenger car, the Indica. RESTORING ECOLOGICAL BALANCE: Tata Motors has set up effluent treatment facilities in its plants, to avoid release of polluted water into the ecosystem. In Pune, the treated water is conserved in lakes attracting various species of birds from around the world thus turning the space into a green belt. Tree plantation programmes involving villagers and Tata Motors employees, have turned acres of barren village green. Tata Motors has planted as many as 80,000 trees in the works and the township and more than 2.4 million trees have been planted in Jamshedpur region. Over half a million trees have been planted in the Pune region. Tata Motors has directed all its suppliers to package their products in alternate material instead of wood.

PURCHASE DECISION MAKING PROCESS-Questionnaires 1)Name and address: 2)Sex :a)Male b)Female 3)Age Group :a)less than 20 b)20-30 c)30-40 d)40-50

4)occupation status:a)Agriculture b)Business

c)Employed d)Proffesional 5)Monthly income: a)30000-50000 b)50000-80000 c)80000-100000 d)100000above 6) Instead of purchasing a Bike, will you prefer to go for the NANO? a) Yes b) No c) Cant say 7) Which feature of NANO attracts you most, that inspires you to go for NANO? a) Price b) Design c) Mileage d) Interior space e) All the above f) Cant say

8) Which colour of NANO would you prefer? a) Red b) Blue c) White d) Yellow e) Silver

9) Do you think NANO is people's car a) Yes b) No c) Cant say

10) Which small car would you prefer to buy? a) Maruti 800 b) Tata NANO c) Other..

11).Will there be traffic problem with the introduction of nano on Indian roads? a) Yes b) No c) Cant say 12)Can you trust NANO for safety? a) Yes b) No c) Cant say

2)
MALE FEMALE 21 9

Male Female

3)

Less than 20 20-30 30-40 40-50

5 15 8 2

16 14 12 10 8 6 4 2 0 less than 20 20-30 30-40 Series1

40-50

age

4) Agriculture Business Employed Professional 3 15 10 2

16 14 12 10 8 6 4 2 0 agriculture Business Employed professional Series1

occupation

5)

30000-50000 50000-80000 80000-100000 100000 above

5 7 10 8

10 9 8 7 6 5 4 3 2 1 0

Series1

Income

6)

Yes No Cant say

22 5 3

25 20 15 Series1 10 5 0 yes no cont say

7)

Price Design Mileage Interior space All the above Cant say

10 5 3 0 2

10 9 8 7 6 5 4 3 2 1 0 Series1

features

8)

Red Blue White

1 5

6 Yellow 17 Silver 11

20 15 10 5 0 Red blue white Series1 yellow silver Series1

colour

9)

Yes No Cant say

14 9 7

15 10 5 0 Yes Series1 no cont say Series1

10) Maruthi 800 Tata nano other 23 5 2

25 20 15 Series1 10 5 0 Maruti 800 tata nano other

11)

Yes No Cant say

20 3 7

20 15 10 Series1 5 0 Yes Series1 no cant say

12) Yes No Cant say 2 22 6

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Yes no cant say Series1

REFERENCE: http://www.oppapers.com/essays/Stp-Analysis-Of-Tata-Moters/642835 http://www.oppapers.com/essays/Scm-In-Tata-Motors/498462 http://www.oppapers.com/essays/Tata-Buys-Jaguar-Pest-Analysis/156638 http://www.businessweek.com/innovate/NussbaumOnDesign/archives/2008/01/new_distribut io.html hthttp://www.timecompression.com/columns/developing-the-tata-nano-product-developmentlessons-from-an-innovative-product http://www.marketing91.com/swot-tata-nano-failed-deliver/ http://www.tatamotors.com/sustainability/sustainability.php