1

Tata Motors

Shamoon Saeed

November 5th, 2010,

Marketing 100

Tidewater Community College

Instructor: James Womick

 2

Tata Motors- Target Customer

Company Background

Tata Motors is India's largest automobile company, with consolidated revenues of Rs. 92,519

crores (USD 20 billion) in 2009-10. It is the leader in commercial vehicles in each segment,

and among the top three in passenger vehicles with winning products in the compact, midsize

car and utility vehicle segments. The company is the world's fourth largest truck manufacturer,

and the world's second largest bus manufacturer.

Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of

India. Over 5.9 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The

company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune

(Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka).

Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with

Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and

Fiat power trains. The company is establishing a new plant at Sanand (Gujarat). The company's

dealership, sales, services and spare parts network comprises over 3500 touch points; Tata

Motors also distributes and markets Fiat branded cars in India.

Tata Motors, the first company from India's engineering sector to be listed in the

New York Stock Exchange (September 2004), has also emerged as an international automobile

company. Through subsidiaries and associate companies, Tata Motors has operations in the

UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business

comprising the two iconic British brands that was acquired in 2008.
 3

Target Market

Tata Motors has operations in the UK, South Korea, Thailand, Spain and now has there

eyes set for the US. According to Consumer Trends in US (2008), the main impact of US

inflation has been to reduce the amount of income available to many US consumers. This has

affected to US consumers to alter their consumption patterns by spending less money such as

postponing purchases new cars; eating out less. Tata Motors has always been targeting to lower

income group. Tata Nano is the low-cost car that clearly intends for the mass market.

Especially, it is attracted to families with four, the first-time car buyers or fresh graduate and

second-hand car owners. Tata Nano will be replacement for their 2 wheeler or a new car at a

price of 2nd hand car.

Tata Motors tries to place Tata Nano as a people’s car in worldwide automobile market.

For expanding to new market, the United States of America is the country that has the largest

economy and biggest products and services market. Tata Nano is going to represent itself to be

green product from the fuel efficiency composition, and it shows itself to be the cheapest car in

the world. Accordingly, it also has the efficiency with safety system and modern model which

could attract American people in no doubt.

The Tata Nano is the cheapest car in the world, which costs only USD$2,500 for 1 unit,

and the price is the most powerful benefit of Tata Nano in the whole market. In addition, the

“cheap price” would be Tata’s best strategy to enter other countries’ market in introduction

stage. Also, it could powerfully compete with existing rivals and penetrate their market without

difficulties.
 4

• As has been mentioned, the Nano’s price in US market could estimate as the original

price in India $2,500 plus the shipment and other expenses as $1,500 per car. In addition, it also

might add the cost of developing cars which has to achieve the standard of US regulation.

Therefore, the price for Tata Nano could be under $6,000. However, if there is a newcomer who

want to fight with Tata Nano’s price, company can use pricing strategies for competing by

decreasing original price in maturity stage because Tata already has got high range of margin.

Thus, it could be highly benefit for Tata Nano to compete with others in United States.

|Model |Price |Margin |

|Basic (STD) |$4,000 |15% |

|Deluxe (CX) |$4,500 |17% |

|Luxury (LU) |$5,000 |20% |

Tata will have online shop for its cars as a direct marketing channel. Tata Nanos will

be available in online channel for booking cars through its website which is Tatanano.com.

Additionally, consumers can also download form from this website. It shows that Tata

consumers would have the convenient procedures for buying Tata Nano but booking fee might

be added from regular price as usual. Also, it could have some special services such as

customize. The car’s opinion can be selected by the customers online, and they just go to dealer

after they choose what they need. It can be not only convenient, but also save expense for Tata

Motors to operate retail stores.

 5

People who interested in Tata product could ask information or be able to book Tata’s

cars through the hotline phone which is called Tata’s Call Center all of USA. Also, consumers

can book and buy Tata’s products from the retail stores and dealership. Customers might

negotiate with salesmen in car dealers because they purchase products from corporation at a

negotiated price. The Tata’s dealerships will be located in the target center of efficient

consumers.

Condition of Auto Market

There is no industry more present in the worldwide community than the automobile industry.

The automobile has changed the lives, culture, and economy of the people and nations that

manufacture and demand them. Ever since the late 1800s when Benz and Daimler in Germany

invented the first "modern" car, the industry has grown into a billion dollar industry affecting so

many aspects of our lives. There are more than 400 million passenger cars alone on the roads

today. During the early part of the twentieth century, the United States was home to more than

90 percent of the world's automotive industry, but has shrunk to about 20 percent in today's

world (Tardiff 394).. This drastic change has occurred by the booming economies in such nations

as Japan, Germany, Canada, France, Italy, and other nations.

The US auto industry "sales totaled $205 billion, or 3.3 percent of the total Gross Domestic

Product" (Tardiff 394). By the end of 19th century, there were about 500 auto manufacturers, but

that number dropped sharply to 23 by 1917, and today the Big Three dominant the market. Ford,

General Motors, and Chrysler make up the Big Three, which account for 23 percent of the

world's motor vehicle production in 1997, with the Japanese industries coming in second,

producing 21 percent. Germany produces 9 percent; Spain, France, South Korea, and Canada

each produce 5 percent of the international market in 1997. In the US alone, the auto-industry,
 6

which includes it's 500,000 car-related businesses, creates 12 million jobs (Broughty 290). The

automobile is clearly an oligopoly, but each company's control of the market has gradually

diminished because of rising foreign competition.

The US has three main auto manufacturers; Japan has five major producers, as does

Germany. Each of these companies produce differentiated versions of the same product, have

control over their products' prices, and rely heavily on non-price competition (Womack 154).

Each company produces a new line of cars for each model annually. There are many different

types of cars, like sedans, station wagons, Sport Utility Vehicles (SUVs), two-doors, and four-

doors, but by comparing models between two competing companies, you can see how great the

similarities are. The auto industry can still thrive even though their products are so similar

because the demand for cars is immense and continuous. People rely on cars for so many things

that life without one seems impossible, especially in the US which registered 141 million cars in

1988, whereas Japan, the second highest, only registered 30 million (Broughty 96).

Conclusion

FINDINGS of the study

• The price of the TATA car is reasonable.

• Fuel mileage of the Tata car is good.

• TATA cars suits middle income group people.

• Spare parts are easily available.

• Easy to maintain.

• Less service stations.

• Need of more attractive merchandize display

 7

References

Consumer Trends-www.trendwatching.com

McBride, Gordon. "Automobile Manufacturing." Career Information Center. 2 vols. New York:
MacMillan Library Reference USA, 1996

Tardiff, Joseph, ed." Motor Vehicles and Motor Vehicle Equipment." US Industry Profiles. New
York: Gale Research, 1998

Broughty, James. Careers in Transport. Chicago: The Institute for Research, 1999

Womack, James P., Jones, Daniel T., and Roos, Daniel. The Machine that Changed the World.
New York: MacMillan Publishing Company, 1990

Farr, Max. "Automobile Industry." Hoover's Online. Online. Internet. November 2001