Tata Nano – India’s Frugal Car for the People

The Tata Nano is a rear-engined, four-passenger city car built by Tata Motors, aimed primarily at the Indian
market. The car was commercially launched by Tata in March 23, 2009. The car was expected to boost the
Indian economy, create entrepreneurial-opportunities across India, as well as expand the Indian car market
by 65%. The car was envisioned by Ratan Tata, Chairman of the Tata Group and Tata Motors, who has
described it as an eco-friendly "people's car". Tata Group was expected to mass-manufacture the Nano,
particularly the electric-version, and, besides selling them in India, to also export them worldwide. The
Nano has been nicknamed “The People’s Car” because its starting price will make it accessible to more
Indians than any other new car in the market. The price tag of Rs 1 lakh car (US $2,000 in 2009), which
broke new ground in design, engineering and production processes, cost-effective and innovative use of
media, made a sound marketing strategy for Tata Nano.

Ratan Tata observed that the 4 person family who cannot afford a car is relying heavily on motorcycles and
scooters. Even now India’s vast majorities of population takes the public transport or ride two or three
wheeled transportation. With Nano Tata’s goal was to export to developing countries to lure the low income
people.

Critics of the car have questioned its safety in India and have also criticized the pollution that it would
cause. India’s already congested roads and streets did not have the capacity to absorb extra traffic that could
be introduced by the Nano.

In Bangladesh Nano is now being marketed by Nitol Motors, the importer of Tata vehicles in Bangladesh
and the sole distributor of all automotive products from the house of Tata. The latest model is slightly more
expensive than the introductory model and is called Nano Twist. Tata has agreed to reduce the price
considerably if the Bangladesh market proves promising. Nitol Motors chairman Mr. Matlub Ahmed says
that the reliable Nano Twist will be” marketed to the consumers more efficiently” if sufficient sales are
generated in the coming two years.
Questions

1) How was the marketing mix for Tata Nano developed? Explain it with a figure. (8 Marks)

2) What are the target markets for Nano? (5 Marks)

3) Briefly comment on two of the factors existing in the ‘Marketing Environment’ that affected
the Nano. (5 Marks)

4) Watch the Natgeo documentary on the manufacturing of Tata Nano by clicking the link below:
https://www.youtube.com/watch?v=QByrZnT-cCM. Upon watching the program make a
commentary on Nano’s production highlighting how it is ‘mass produced’, what is its production
process, and what roles robots play in the assembly line. (7 Marks)

Marking:

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 Answers of the case Tata Nano – India’s Frugal Car for the People

Q.1- How was the marketing mix for Tata Nano developed? Explain it with a figure?

Ans -

Marketing environment
Figure –

Marketing mix

Product
Cost cutting
strategy and
safety of the
product

Place/Distribution
Price Target Market of
nano Effective supply
Affordable by the chain system and
lower class people Lower middle class dealership with
Penetration price and upper lower extensive showroom.
policy class

Promotion
Advertising (
TVC ads, web-
based,radio,ne
wspaper and
verbal publicity)
and after sales
services.
The marketing mix for Tata Nano was developed through 4 ways they are:

 Product in the marketing mix:

The innovation of Ratan Tata nano has been particularly designed with a small family in mind.
The car is designed in such a way that it is spacious with headroom and enough leg space. Four
doors on either side to make the movement at ease. It has an automatic transmission system for
gear that helps in improving the mileage and efficiency. It followed the cost-cutting strategy that
the car is made with light steel and it doesn’t compromise with the safety of the product.

 Price in the marketing mix:

Tata always have something for the lower class people which are affordable and acceptable by the
general public largely with Nano key resource. Tata nano is using a penetration price policy and
was designed to create an alternative for two wheelers at a pricing range of being an affordable car
at a projection with an initially price tag of 100,000 INR. However, by the time, the cars came into
market a lot of time and expired by that time and there is a gradual rise in the price of raw materials
and other costs. According to the commitment being given to consumers of the purchases at INR
100,000, the company decided to bear the loss and the first few cars were delivered at the decided
price of INR 100,000. Which results in the credibility of the company in market and through that
later the company decided to increase the prices. And stated the present price at INR 2.1 lakhs as
tata has maintained a reasonable pricing policy for its product to middle class people as stated in
the policy. And as a result, the prices have been cut off on the costs and eliminating unnecessary
luxuries that leads to a minimum margin of profit thus the economic affordability of the product
has led to the rise of its growth in the Indian market and to penetrate the rural and urban market of
automobile industry in India.

 Place in the marketing mix:

In order to draw the attention of the middle-class section of Indian society. Tata decided to
design this four-wheeler at the nearby same and affordable price range and announced that a
manufacturing plant would be set up at Singur in West Bengal but due to local rival they
couldn’t make it happen. At first Tata went on procrastinating the Nano launch so that a solution
could be reached but later it decided to shift to Pantnagar. Tata Motors the parent company has
huge and extensive distribution network that covers every border of the country. Tata generally
follows age-old method of distribution network which have a very organized system and the
process of distribution is systematic and structured. The channel consists of manufacturing plants
to dealers and then to consumers a supply chain process. The channel of distribution, physical
location, and dealership method of distribution and sales is generally adopted. The distribution of
vehicle must be in a very systematic way, from the plant to dealership and to end user. The
company has been using its exclusive showrooms for the sale of this product. One can easily find
a service and sales dealership for Tata Nano because of its parent company, not only that Tata
Motors has a broad dealer network covering Indian and International markets. This is not only in
India itself but also to the world-wide dealership.

 Promotion in the marketing mix:

Tata motors promote their products through Advertising and after sales services. Tata nano has
been able to create a brand image for itself separately from its parent company. It has gone for an
extensive market promotional policy for its product. Tata nano has gone for publicity on the
internet. It has its own official website where all the details are logged in along with the
promotional ads. It has directed some very good TVC ads and radio method’s emphasizing on its
low cost and its ability to provide a comfortable ride for the use of the family and an individual.
The various ads are also placed in the newspaper and magazines creating awareness about the
product. In rural areas, the company has sought the help of various vehicles that display the
product on its road sides. It has also been receiving the benefit of mouth or verbal publicity, as it
is termed to be one of the cheapest cars. These are one of the cost-efficient way to promote the
brand. In a recent campaign Tata nano has offered benefits up to INR 31,000 on the purchase of
a Nano car.

Q.2 - What are the target markets for Nano?

Ans- Tata Motors has truly scored their terms and a profitable thought with the Nano. It has a
consumer segments appeal. Tata Nano will cut across and appeal to a cross section of consumer
segments in India.
Target markets of Nano are :
The Great Indian Middle class being divided into Upper, Middle and the Lower middle class.
For the lower middle class, the Nano will be their first car.
For the middle-middle class, it will their second car, wheels they can take to the local market.
For the Upper-middle class, Nano will possibly be the third in their garage, for their 'baba-log' to
ride around.
Now that's a first, not just in India, but around the world, a first for a product to appeal across
market segments

Tata Motors basically Segmented and targeted the following groups of Indian population:

 The Middle class

 Mainly the lower middle class

 Upper lower class

 Usually the two-wheeler users

 Family with 3-4 members who have troubles while travelling on a 2-wheeler.

Q.3 - Briefly comment on two of the factors existing in the ‘Marketing Environment’ that
affected the Nano?

Ans- The two factors of Marketing environment that affected nano are:

 Economic Factors- The basic economical affect caused to nano is the fluctuations in demand
and economic conditions and the changes in the competitive landscape of major markets like
Japan,Europe,Asia and the fluctuations in the exchange rates of currency in Indian rupees,
any changes in the regulations and functioning of financial markets like increase in
competition etc., company’s distribution system,companys ability to secure capital at lowest
rates possible and achieve economies of scale, fluctuations in the prices of raw material, any
changes in the prices or quality of what supplier provides, the effect of natural disasters and
calamities and economic cycles like recession etc.
 Political Factors- After the settlement of manufacturing plant at singur it faced fierce
opposition from the government as a result it decided to move its operations from singur to
sanand. Since there is no industrial development in the region and people have been left poor
and helpless so the government has promised them industrialization and new jobs but failed
to deliver so.

Q.4 - Nano’s production highlighting how it is ‘mass produced’, what is its production
process, and what roles robots play in the assembly line?

Ans - The tata nano is an economically made economic car which meant to serve a particular
demographic of the country. On the streets of India, it is pretty common to see entire families
riding on motor bikes, due to such circumstances Ratan Tata decided to make a car which is “For
the people “at a very reasonable price. Due to the economic constraint which was put on the
engineers due to its low budget, the tata nano had to be an engineering marvel. It had to make a
car which made sense to the people, was stylish, could withstand the Indian road conditions and
could be purchased at a very low price. The tata nano clearly required a mass market for it to
sustainable to sell. A mass market would need a mass production.

The mass production of Tata nano had 5 major production steps:

1) The press shop: This is the initial phase of the production process, sheets of steel is shaped
into doors and other necessary cars parts. This require the help of high grade press machines
which could rapidly produce the required outcome. Robots come into play later in the process
where it connects the panels between the doors. Using robots and automated mechanism is
crucial to any production process as it helps to keep the cost down.

2) Power Train shop: This is one of the key processes in the assembly lines of the production
process. In this process man woman and machine work together to make the engine. Availability
of skilled workers is crucial as there are a lot manual work involved. The heart of the Tata nano
is produced at this phase of the production.
3) Weld Shop: The weld shop is where it all comes together in terms of the frame of the car. This
process takes in 11 kind of parts and puts the car into the desired shape. Robots are used to put
everything together and the end product is the finished structure of the car.

4) Paint Shop: After the structure of the car is welded into the desired design. Its sent to the paint
shop for the car to painted in different color. The car structure is dipped into paint in a conveyor
belt system and is finished off by robots which do the exterior coating.

5) Putting it Together: The next step involves mounting the engine and fixing the interiors. Tata
boasts about 70% automation rate in its factories. This is a testament to how robots help achieve
lowering costs. Tata employs about 170 robots at different stages of the production to finish of
its dream product, the tata nano.