Introduction

This report provides and analysis and evaluation of how to launch the Tata Nano car in Australia by
formulating an appropriate marketing strategy with the recommended positioning strategy based on
the target market.

The Tata Nano was launched in Mumbai on March23, 2009 for a price of Indian Rupees 130,000
approximately. It has been identified that the Tata Nano is an engineering marvel to come out of India
in terms of cost efficiency, fuel efficiency and space efficiency.

Tata Motors created a new product segment called the ultra-low cost segment by Tata Nano cars as
the next cheapest car from the Maruti Suzuki 800 in India. The Tata Group chairman had a vision of
making a “People’s car” – a safe, affordable car which was within everyone’s reach was successfully
achieved by launching the Tata Nano car in India.

Tata Motors believed that there is a potential for the Nano beyond the Indian Market, as a low-cost
car in developed markets. Tata Motors has already considered to develop a new product of Nano and
create a “Nano Universe” with a large engine and additional modifications but expect to increase the
price by 60% to 90%.

Macro Environment analysis – PEST Analysis

 Political Forces

The political factors are the laws and regulations implemented by Government that affect to the
company’s ability to be profitable and successful. The factors that affect the automobile industry in
Australia are:

 Motor Vehicle Standard Act 1989 – The Australian legislation that provides the regulatory
framework to control the importation and first supply of road vehicles in Australia. The Act
provides a national system of vehicle design and performance standards relating to safety,
environment (Pollution emissions) and anti – theft technologies – the Australian Design Rules.
http://www.fcai.com.au/safety/australian-design-rules) Tata Motors must take in to
consideration all the standards that required in this Act and make sure its Nano car model is
comply with the all the requirements required as per this Act.

 The reduction of motor vehicle tariff from 10% to 5% in 2010 by the Federal Government also
resulted the price reduction of import cars.

 Economic Forces

Economic factors are relating to the exchange rates, Interest Rates, economic growth, and certain
business settings predominating in the industry.

Australia hold lowest steady cash rate of 1.5% in 2016 support the domestic demand and policy
makers judge the economy is continuing to grow at a moderate pace. The low Reserve Bank cash
rate support the low interest rate for the vehicle loan and hence the increase in the demand for the
new vehicles in Australia..

The unemployment rate has fallen further, although there is considerable variation in employment
growth across the country, The strong growth of part time employment in Australia will increase the
demand for low cost – fuel efficient mini cars.

As per the industry research conducted by “IBISWorld”, The Motor Vehicle wholesaling industry has
been grown strongly over the last five years. The industry revenue growth has been supported by the
increase of individual income and strength of Australian Dollar. It has also revealed that the most of
the renewed demand for the new cars is for imported vehicles. The demand for the imported vehicles
by consumers is predicted to be grow and this further increase with the announcement of closing
down the Australian motor vehicle production facilities. The increase of fuel price over the past years
has resulted consumers to shift to the smaller fuel – efficient cars. As most local motor vehicle
manufacturers produce large cars, the demand for imported cars is predicted to be increased. The
price of imported cars has recognised as cheap by the Australian domestic consumers due to a
strong Australian dollar. ("Marketresearch.Com: "Motor Vehicle Manufacturing in Australia - Industry
Market Research Report" by Ibisworld February 2008" 2008)

The Motor Vehicle Industry Structure in Australia is:

Life Cycle Stage - Growth

Regulation Level – Light

Barriers to Entry – Medium

Capital Intensity – Medium

Technology change – Medium

Competition Level – Medium

Social Forces

The main social forces that impact in the automobile industry are the Brand of the vehicle, lifestyle
and preferences of people and social norms.

Technological

At present, the impact from the technology in automobile industry is high in Australia. Every
automobile company is moving forward with new innovations of technology. For example Toyota has
petrol-electric hybrid cars, Volkswagen has fuel cell, and hybrid Tourans, added with a synthetic-
fuelled Skoda Fabia, and BMW has 7 series capability with running on hydrogen and petrol.

Micro Environment Analysis

Products

The different product segments in Austrian car market are:

(IBISWorld 2016)
Market

The Best popular car models in Australian Car Market has been identified as:

1. Toyota Corolla – 42,073

2. Mazda3 – 38,644
3. Toyota Hilux – 35,161
4. Hyundai i30 – 32,306
5. Ford Ranger – 29,185
6. Holden Commodore – 27,770
7. Toyota Camry – 27,654
8. Mitsubishi Triton – 25,238
9. Mazda CX-5 – 25,136
10. Volkswagen Golf – 22,092

The best popular car Brands in Australia are:

1. Toyota
2. Mazda
3. Holden
4. Hyundai
5. Mitsubishi
6. Ford
7. Nissan
8. VW
9. Subaru
10. Honda

(Carsalesguide 2016)

Key External Drivers

 Demand from consumers

 Motor vehicle price index
 Real household discretionary income
 Motor vehicle tariff
 Fuel price

Customers

Nayeem (2013) has identified the consumer decision-making for automobile purchase is high-
involvement decision as it involves a choice from variable options. The consumers consider the motor
vehicle reflect an image or social status. However, the brand selection varies with the cultural
background of the buyer. It has been identified the importance of brand familiarity as well as other
elements such as “ Investigation process, dealers enjoyment, value within budget, innovation
consciousness” are affect the motor vehicle buying decision in Australia. (Nayeem 2014)

The Australian consumers prefer more innovative features, design, trends and new technologies in
the motor vehicle

Distributors

The business of selling cars is changing. The traditional method old franchised-dealer distribution
channel is changing to build the strong and lasting relationship with customers. Some studies has
shown that the most important motor vehicle industry innovators today are developing web-based
services, leading some to predict that the survival of automotive company in the future will depend on
the software based marketing. Now days, the customers gather most information from the Internet.

(Evan Hirsh 1999)Suppliers

Competitors

Peter’s five forces model is used to analyse the level of competition within the Motor vehicle industry
in Australia and business strategy development.

The competition in the industry is medium and the trend is increasing.

TATA NANO will have to compete on the basis of their vehicle’s quality, features and price to attract
customers. With a particular set of features in a vehicle, consumers aim to find the greatest value
possible.

Company Market Share

Toyota 13%
Mazda 5.8%
Ford 5.3%
Hyundai 5.1

 Barriers to Entry

Australia has a very competitive motor vehicle market hence the new entrants are subject to a
competition from the strong international manufacturers that have already established and built up
local reputation. Also Tata Motors also have to ensure that the Tata Nano comply with all the
Australian stringent safety regulations.

Internet technology has lowered entry barriers for other companies with new ideas of serving
customers find, evaluate and buy new vehicles.

 The Bargaining power of buyers

The bargaining power of buyers in automotive industry is high due to the availability of large variety of
choices.

 The Bargaining power of Suppliers

The bargaining power of suppliers is very low due to the availability of large number of suppliers in the
market. The switching cost between the suppliers are very low due to competitiveness in the industry.

 The Threat of Substitutes

The threat of substitutes is very high due to high and competitiveness and innovation of the
technology on the industry.

 Rivalry among existing firms

Rivalry between the firms in the industry bring the customers advantages of price matching, high
quality from improved differentiation, various distribution channels, and availability of large information
data base to make a choice.

Market Segmentation

Purchasing a new motor vehicle is considered as a major investment and therefore consumers take
careful considerations of all the alternatives before make the final decision. The choice is varying
between mini cars to large SUVs. In Australia, the car market includes variety of brands with a range
of models in different car-type segments. The prices differ among segments and brands in systematic
fashion. As per (George and Charalabos 2009) , the car prices depend mostly on observable
characteristics related to performance, comfort, luxury, and safety, the market segments are
sufficiently heterogeneous to allow discriminatory pricing strategies. It has been also revealed that the
price structure of the cars is determined by the brand name.
The Australian motor vehicle market can be segmented as Passenger motor vehicles, Sports Utility
Vehicles, Light trucks and Heavy Trucks. The Passenger Motor vehicles are classified depend on
size, specification and average retail pricing as Micro, Light, Small, Medium, large, Upper Large,
People Movers and Sports.

(http://www.fcai.com.au 2016)

As per the above market classification the Tata Nano car represent the “Micro passenger car “.

Target Market

The target market for Tata Nano car in Australia is the customers with low budget. The low budget
customers do not more conscious on the brand image and social status. The majority of the low
budget customers are looking for small cars with fuel efficiency, easy to maintain with low purchase
price. For example Tata Nano can be introduced to the families as a second car to use for daily
shopping, school drop off ,etc. The another market segment that Tata Motors can focus on is the Taxi
service and car rental market. The main decision making factor for a use of taxi service is the taxi
fare. Therefore, the fuel efficiency of Tata Nana Cars for a Taxi service can be used as a low rate taxi
fare and can be attracted to the passengers. And also, Tata Motors can enter into a partnership
agreement with a car rental company in Australia to use the Tata Nano cars as a rental car. The
rental company can set a low rent price to the customers due to a low purchase price. Hence this can
be very attractive to customers due to low rent as well as fuel efficiency. For example, Bayswater car
Rental Company uses Toyota Corolla Hatch Back for its small car rental segment.

Positioning of marketing strategy

The positioning is identified as the most important piece of the marketing exercise and it places the
company’s offering in the target customer’s mind can be defined as “the act of designing the
company’s offering so that it occupies a meaningful and distinct position in the target customer’s
mind.” (Fahy 2015)

The target market of Tata City is customers who are seeking to purchase small passenger car.

The unique resource Tata Motors has is the experience and knowledge acquired from the launch of
Tata Nano car in India. Tata Motors should build a position based on its unique attribute of low cost
profile and this increases the sustainability of its new product in Australia, which cannot be easily
imitated by the competitors. The economies of scale achieved from mass production, long-term
partnerships with low cost suppliers will bring a competitive advantage to Tata Motors to position its
low cost Tata City on Australia.

Positioning statement

Launching of Marketing Strategy (Marketing Mix)

Product

A strong brand name can reduce the uncertainty bout the new product much more effectively than a
weaker one (Sappington and Wernerfelt 1985) . Therefore, a possible strategy is to use a new Brand
name. For example, Merdedez sells its Micro car under the Smart Marque. Nissan sells its small
passenger car as “March” in Japan and “Micra” in Europe, Australia and South Africa. BMW used its
Mini Brand as the opportunity to enter into a different market segment and reduced its risk of damage
to the existing image. Therefore, Tata Motors must use a different brand “Nano City” for its Tata Nano
car in Australia to differentiate the car from its Indian product and build a strong brand image to
position its brand in the mind of the customers.

Price

Tata City must price in Australia between AUD5000 and AUD7500 to attract new customers to
position as low cost car in the identified focus niche market.
Placement / Distribution

The Internet offers new and better ways to perform marketing functions easily and makes it possible
for manufacturers to have more and richer two-way communications directly with consumers and
identify the customer’s needs and requirements. Tata City can be distributed via multiple cannels and
formats like factory-direct Internet sales, service offerings. Further, Tata Motors can bundle the six
separate businesses of new car sales, used vehicle sales, finance and insurance, service and parts
under the roof of the one dealership.

Promotion

The Australian consumers are highly brand conscious and hence look for several social approvals
from others for a motor vehicle purchase. (Nayeem 2014). Therefore Tata Motors must use marketing
strategies to promote Nano City that highlight the importance of the social status and prestige.
Further, a research revealed that the Australian consumers use Internet as their preferred information
source. Therefore, Tata Motors must use Internet comprehensively as a promotion or communication
technique. Tata Motors can use the Video advertisements, Print advertisements, Outdoor advertising
(billboards) , advertising with celebrities and models, use of music advertising, Mobile marketing and
E- marketing as marketing medias to promote Nano City in Australia. Further the Social media like
Face Book, Pinterest, Instagram, Twitter, and You Tube as a promotion tools due to popularity of
these media in Australia.

Conclusion

The winning of Motor vehicle industry need a better understanding of the life-cycle value equations of
both cars and buyers, and the development of innovative strategies to capture that value.

Total Word Count = 2,285

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