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Marketing Plan TATA Nano

TABLE OF CONTENTS
Contents

1. EXECUTIVE SUMMARY
The launch of Tata Nano has been one of the biggest news in auto mobile sector in the last few years. It has created a sensation in the market not just because it is the cheapest car in the world but also because it has not compromised on its safety and pollution issues.

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Marketing Plan TATA Nano Priced at Rs.1,12,735 (Ex-showroom Pant Nagar) Tata Nano Basic Model is the cheapest car in the world. Projected as People’s Car it aims to be affordable by almost everybody. The small car segment in India is vastly untapped and market penetration is limited to urban and semi rural areas. An increase in disposable income of the Indian middle class coupled with their bourgeoning aspirations makes them a vast target segment. In order to project the demand for TATA Nano, we conducted two kinds of survey: one online and another live survey. The two surveys threw up interesting results, not exactly identical, and shed light on the fact that the Nano needs to be positioned differently in cities vis-à-vis smaller towns and villages. There will be two versions of the Nano launched, each catering to a different market segment. The Nano has advantages not only in terms of its cost but also in terms of its quality and product characteristics such as fuel efficiency and compliance to environmental standards. The Nano has a large market to tap into and is expected to become one of the greatest innovations that the country has witnessed in the past decade or so. With this price, the target market is very wide which includes those with income RM 2000 per month, students, female workers and scooters’ riders.

2. OVERVIEW: 2.1. TATA Group:
The beginnings of the Tata Group can be traced back to 1868 when Jamsetji Nusserwanji Tata established a trading company in Bombay. In 1905, the group ventured into steel production and in 1905 into hydroelectric power generation. Later on, the group expanded significantly with the establishment of Tata Chemicals (1939), Tata Motors and Tata Industries (both 1945), Voltas (1954),

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Marketing Plan TATA Nano Tata Tea (1962), Tata Consultancy Services (1968) and Titan Industries (1984). It is one among the top 100 brands across the globe. About 80% of Tata’s brand value actually stems from steel, motors and consulting.

2.2.

TATA Motors:

Tata Motors was established as a locomotive manufacturing unit and later expanded its operations to commercial vehicle sector in 1954. Despite the success of its commercial vehicles, Tata realized his company had to diversify and he began to look at other products. It entered the passenger vehicle market in 1991 by launching the Tata Sierra, a multi utility vehicle. After the launch of three more vehicles, Tata Estate (1992, a stationwagon design based on the earlier 'TataMobile' (1989), a light commercial vehicle), Tata Sumo (LCV, 1994) and Tata Safari (1998, India's first sports utility vehicle) and in 1998 it launched Tata Indica, India's first fully indigenous passenger car. Designed to be inexpensive and simple to build and maintain, the Indica became an instant hit in the Indian market. A newer version of the car, named Indica V2, was a major improvement over the previous version and quickly became a mass-favourite. The company's key products and services include the following:

2.2.1. Products:
• • • • • • • • • • •

Passenger cars Utility vehicles Medium and heavy commercial vehicles Intermediate commercial vehicles Light commercial vehicles Small commercial vehicles Buses Defense vehicles Engines, spare parts and other products Construction equipment Auto components

2.2.2. Services:

Information technology services

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115361 ex-showroom price(Delhi). South Asia and South America. Bangladesh. Since launching. It can comfortably seat four persons. It has also acquired operations of Daewoo Heavy Vehicles Division in South Korea and Jaguar-Land Rover in Britain. which India and the world were looking forward to. South East Asia. Africa. in India in March 2009. Its mono-volume design will set a new benchmark IIM Kozhikode 4 . Pantnagar (Uttarakhand). Dharwad (Karnataka). Pune (Maharashtra). The company's manufacturing base in India is spread across Jamshedpur (Jharkhand). Ukraine. Over 4 million Tata vehicles ply on Indian roads. established through exports since 1961. Designed with a family in mind. It is also expanding its international footprint. then safety can be assured. lighter.Marketing Plan TATA Nano • • Sale and distribution of vehicles Financial services Tata Motors' presence indeed cuts across the length and breadth of India. as planned. Within the first two days of lunching. the Middle East. which signifies a first for the global automobile industry. the Tata Nano. What makes Tata Nano so cheap? Basically. It is said that Tata Nano has better mileage than Toyota Prius and same gas emission as a scooter. The company's commercial and passenger vehicles are already being marketed in several countries in Europe. 2. It is Mr. Tata Motors unveiled its People's Car. So if a car can be made slightly affordable to a middle class man. TATA Nano In January 2008.3. it has created a huge buzz all over India. It has franchisee/joint venture assembly operations in Kenya. Russia and Senegal. scooter is a dangerous form of transport. Ranjangaon (Maharashtra) and it is establishing a new plant at Sanand (Gujarat). which is affordable by almost everybody. since the first rolled out in 1954. do away with superficial parts and change the materials wherever possible without compromising the safety and environmental compliance. it has received 5500 bookings. the Nano brings the comfort and safety of a car within the reach of thousands of families. The base model carries a price tag of Rs. it has a roomy passenger compartment with generous leg space and head room. The Tata Nano has been subsequently launched. Lucknow (Uttar Pradesh). In an interview Ratan Tata explained the motive behind the creation of Nano and that is Safety. Tata Motors) vision for Tata Nano to become a “people’s car”. Tata Nano is the cheapest car in the world. Ratan Tata’s (Chairman. For a family of 3 or more. by making things smaller. A development.

The high fuel efficiency also ensures that the car has low carbon dioxide emissions.Marketing Plan TATA Nano among small cars. Tata Nano CX and Tata Nano LX. Its safety performance exceeds regulatory requirements in India. Models of Tata Nano: Tata Nano is available in three different models Tata Nano Standard.3. 2. The lean design strategy has helped minimize weight.1. thereby providing the twin benefits of an affordable transportation solution with a low carbon footprint. Its tailpipe emission performance too exceeds regulatory requirements. In terms of overall pollutants. which helps maximize performance per unit of energy consumed and delivers high fuel efficiency. The brief description of these models are as follows: Tata Nano Standard: • • • Three colour options Single-tone seats Fold-down rear seat Tata Nano CX: • • • • • • Five colour options Heating and air-conditioning (HVAC) Two-tone seats Parcel shelf Booster-assisted brakes Fold-down rear seat with nap rest Tata Nano LX: • • • • • • • • • • • • • • • •• • Five colour options Heating and air-conditioning (HVAC) Two-tone seats Parcel shelf Booster-assisted brakes Fold-down rear seat with nap rest Complete fabric seats Central locking Front power windows Body coloured exteriors Fog lamps Electronic trip meter Cup holder in front console Mobile charger point Rear spoiler IIM Kozhikode 5 . it has a lower pollution level than two-wheelers being manufactured in India today.

M Emission Norms Euro-IV. the thought of designing a marketing strategy and implementation plan seemed exciting to say the least.3.5 metres Height 1. Rear Mounted. The challenge to work with limited available data and large marketing expectations motivated us to choose this product and devise a strategy for it from scratch.com/automobile/tata-nano. the entire process of IIM Kozhikode 6 .3 Rationale for choosing the brand: The TATA Nano is not just a car but it is a symbol of Indian pride. On being revealed at the Auto Expo in March 2008.3. It has proved Indian capability in manufacturing sector by creating the world’s cheapest car without compromising the safety norms.2 Tata Nano Technical Specifications: Technical Specifications of Tata Nano Car Length 3.surfindia.1 metres Width 1. Rear Wheel Drive Capacity 623 cc Power 33 PS Fuel Injection Multi Point Fuel Injection (MPFI) Fuel Type Petrol. With practically no reference point.Marketing Plan TATA Nano 2. Bharat Stage-III compliant Safety Norms Frontal Crash Tested Versions One Standard and Two Deluxe Source: www.htm 2. Diesel Version will be later Body Type Sheet Metal Seating Capacity 04 (Four) Mileage 20-22 Kmpl (City drive) 26 Kmpl (Highways) Top Speed 75 K. Given the fact that the Nano is in its first stage of life cycle. It seems to have set a benchmark for innovation in cost reduction and possesses huge mass marketing potential. it has become the baby of every news paper and news channels.6 meters Engine All-aluminium.

Utility Vehicles by 10.Marketing Plan TATA Nano conceptualization and subsequent execution appealed to the team as a whole and served as reason enough to choose it as our product.57 percent and Multi Purpose Vehicles by 21. Scooters and Mopeds segment grew by 11.10 percent and 9. Commercial vehicles and Passenger Vehicles exports grew by 19.92 percent during this period. Category Passenger Vehicles 200203 72. Exports Automobile Exports registered a growth of 22.31 percent. with motorcycles and electric two wheelers segments declining by 11. Export of Three Wheelers segment declined by 1.17 percent.37 percent respectively. The growth was led by two wheelers segment which grew at 32.07 percent. The Commercial Vehicles segment grew marginally at 4.40 2 200607 1.64 percent and 16.63 percent respectively.90 percent and 44. Passenger Cars grew by 11.29 percent.005 200405 1. Situational Analysis: 3. While Medium & Heavy Commercial Vehicles declined by 1. However.30 percent during the current financial year. 3.39 percent in this period. Light Commercial Vehicles recorded a growth of 12.66 percent.98.1 Market Analysis Domestic Sales The cumulative growth of the Passenger Vehicles segment during April 2007 – March 2008 was 12.93 percent respectively.79 percent.85 percent. Two Wheelers registered a negative growth rate of 7.66.45 2 200809 335739 IIM Kozhikode 7 .

the second largest and exporter of small cars. IIM Kozhikode 8 .6 60 3.66.07.Marketing Plan TATA Nano Commercial Vehicles Three Wheelers Two Wheelers Grand Total 12.54 4 49. Renault-Nissan.2 Small car segment in India The small car segment dominates the Indian car market.29. and General Motors.5 29 42673 148074 100417 4 15.19.940 66.537 1.30 8 29.795 3. It has great potential compare to other class that contributes nearly two third of the overall sales of cars in India.11.89 6 6.68 2 3.40 7 6.366 1.43.79.30. Ford.64 4 10. Some of the car brands who have their presence in the segment are Toyota.255 43. Currently Maruti Suzuki is ruling the compact car segment in India with a market share of 50 percent followed by the Hyundai Motors.

India is expected to witness more than dozen small or compact cars in the auto market. 2006 • • Delay in the production process Support from the ruling party eased things for Tata Motors • • 3.3 PEST analysis: 3. Nissan Renault recently joined the bandwagon. There was widespread violence in the clashes between the police and the farmers on December 2. With the stage set. unveiling plans for a $3. we might have half-a-dozen such vehicles to choose from. In just a couple of years.3.Marketing Plan TATA Nano According to studies the fastgrowing small car segment will be the largest contribution to growth of auto market in India.25 lakh) car for Indian roads.3. Tata Motors has a good name in the small car segment due to the continued success of Indica Vista and Tata’s Nano has already been a show stealer. 3.2 Social impact • • Social life upgradation Symbol of empowerment IIM Kozhikode 9 .000 (around Rs 1.1 Political Impact • Acquisition of land in West Bengal to set up the factory was done unfairly This lead to a social turmoil and activists like Medha Patkar raised their opinions against it.

3.Marketing Plan TATA Nano • • • Increase in safety Traffic congestion Pollution problem 3.3.4 Technological Impact • • • • Automobile revolution Mass production Competitive advantage as the industry doesn’t have same technology R&D for low cost edition 3.3 Economical Impact • • • • • Boom in the financial and banking sector (Increased car loans) Huge investments made in Singur plants Mass selling and production Employment increase Increased usage of petrol leading to hike in fuel and prices 3.4 SWOT Analysis: Tata Motors: Strengths • • • SWOT Analysis Overview Weakness • • • Strong domestic player Steady revenue growth Research and development activities Decline in vehicle sales Employee productivity Passenger car products are based upon 3rd and 4th generation platforms Opportunities • • • Threats • • • Product launches Growing passenger car market in India Acquisition of Jaguar and Land Rover Increasing competition Environmental regulations Rising prices in the global economy IIM Kozhikode 10 .

Marketing Plan TATA Nano brands • Sustainability and environmentalism could mean extra costs Tata Nano: Strengths • • • • • SWOT Analysis Overview Weakness • • • • Low Cost Brand name Stylish & Eco-friendly Fuel efficiency First Innovation Plastic and adhesives replace welding Manual steering & no air bag No air conditioning in base versions Bodywork made of sheet metal & plastic Low engine capacity & light weight • Opportunities • • • • • Threats • • • • Low maintenance World wide appeal Cost control Parking space Growing small car market Increasing competition Price raise in the global economy Security not sure Traffic congestion 3. the forces inside the industry (microenvironment) that influence the way in which firms compete. IIM Kozhikode 11 .5 Porters 5 forces: As Porter's 5 Forces analysis deals with factors outside an industry that influence the nature of competition within it. and so the industry’s likely profitability is conducted in Porter’s five forces model.

The launch of the NANO is quite viable as the demand of the small car is on the rise in the market.Marketing Plan TATA Nano 3. Access to Distribution Channels – TATA motors have an advantage of well established distribution channel across the world. which Tata is targeting. too have an enviable distribution channel. Hyundai etc.5. Product Differentiation and Cost Advantage – The price of the NANO car is the main thing that attracts customers. trust the name TATA carries with it makes Nano different and attractive to be accepted by the customers. IIM Kozhikode 12 . However. Hence. If this is very high. Other players though have not yet been able to develop the technology to produce a car. would not be willing to go for Nano as there are already successful cars in that category i.e. So.e. In our case. By the cost of the entry we mean the initial capital required to set up a new firm. Maruti Suzuki’s 800. these companies are in a good position to take advantage of these channels if they would come out with a product like Nano. 3. And above all this the image. Nano. companies like Maruti Suzuki. as cost-efficient as Tata Nano. Also the middle class segment. it makes entry difficult for a new player.5. Knowledge and Technology .2 Threat of substitute products: Price band – If the price for Nano will increase then the main target segment i. there is low barriers in terms of cost of entry. Alto and Chevrolet’s Spark.1 Threat of new entrants: Time and cost of entry – Time is most essential thing while launching a product in any market. there are a number of Automobile firms that have sufficient capital to build this type of car.TATA motors have great knowledge/ experience in the automobile industry and have renowned technological advantage because of the recent acquisition and mergers. the bike owners would not upgrade from a two-wheeler to a four-wheeler.

4 Bargaining power of suppliers: Number and Size of Suppliers – When suppliers are limited then they can squeeze the buyer’s profit to a great extent. IIM Kozhikode 13 . Tata Nano even faces threat from players like Reva. considering the other aspects of switching the company does not have an advantage. The cost of switching from a motor-bike to a Nano and from a Nano to the next cheapest car is substantially high. 3. they do not enjoy significant power as it is not possible for these many companies to collude together and drive home a good bargain. Nano would have to differentiate itself from these substitutes to ensure that it creates demand for itself. Not only is Reva cost-efficient but it is also an eco-friendly car which makes it a better buy in case it manages to give same performance as the Nano. 3.5. This is due to the fact that all the major players have an equally efficient after-sales service. It enjoys the legacy of more than five decades of Tata Motors. the buyers would be confident about Nano even before its official launch.5.Marketing Plan TATA Nano Substitute’s performance – A price rise or decrease in the two-wheeler segment would have an impact on the quantity demanded of Nano. considering a middle-class segment. However. Brand Image – Nano enjoys the brand image of TATA. Number of customers/ Volume of sales – As the number of customers in the market is large. which has been built on a very strong foundation of years of high quality products. Moreover. Hence. hence the buyers do not enjoy bargaining power. In Nano’s case there are more than 128 companies supplying parts to the company. However. given the fact that they are hinging the success of the product on its high-value proposition. Thus. the company cannot afford to increase its price. A price increase in the substitute product would increase the value that a consumer would derive from Nano and vice-versa.3 Power of Buyers: Switching Costs – The bargaining power of the buyer in this case would be moderate. Hence.

Also most of the investment in the factory has been done specifically for Nano and hence the company would not be able to utilize the investment for producing other vehicles.1. Renault are planning to enter the market with a similar price band. In order to be competitive. However. but still everyone would not be able to afford it. Hence.5 Competitive rivalry among existing players: Number and Diversity of Competitor – In the current scenario.e.Marketing Plan TATA Nano Unique Service / Product – There are some components in the manufacturing of Nano. 4. Tata Motors. The main inspiration of Ratan Tata was providing a safer and affordable alternative to two-wheeler for a family of 4. the exit barriers for the company is very high. the bargaining power of suppliers would be more as the company would be dependent on them for smooth production 3. for which there are a handful of suppliers. Marketing Strategies 4. which was pretty much dominated by Maruti. the small car market in India is very competitive with players like Maruti Suzuki. So Nano would compete with two-wheelers and small IIM Kozhikode 14 .Nano enjoys the monopoly right now as there are no competitors in this segment. even before four-wheelers had hit the market. Product Quality & Price Competition . Tata Motors’s products like Indica and now Nano have changed the rules of the game and there is surely no absolute winner in the market. A middle class family going on two-wheeler will definitely aspire for Nano. provide value to the customer. It is not possible for Nano to completely substitute two-wheelers. In this case. Exit Barriers – Investment on Nano has run into a couple of thousand crores for Tata Motors.e.5. Nano in order to remain competitive has to keep its costs under control and provide good quality at minimum prices i. Hence. Segmentation Scheme and Profile The two-wheeler segment has been in existence for a long time. companies either slash rates of existing products or develop new cars with advanced technologies. companies like Bajaj Auto. However. Hyundai etc. i.

8 lac 4. The 100-125 cc two-wheeler market constitutes 89% of the market share by volume. 1 lac. In the four-wheeler segment there are two basic divisions: Below Rs. 4. So considering all these issues we have few options in for segmentation of market for Nano.3 lac. the other segment would face serious competition from Nano with the expectations from the car being different i. 3 lakhs category are unlikely to switch to Nano as their preferences would be more comfort and features.1. It will eat out a part of the market share of two-wheelers as well as four-wheelers rather than completely cleaning their grounds. 3 lakhs category. ABS. They usually look for a low-priced fuel-efficient car with basic features.2 lac per annum Low-Middle Income Group: Earning Rs. Value based segmentation: This segmentation is based on the preference of the buyer which could be classified as • Price Conscious: These buyers typically look for Value for their money. Segmentation on base of Purchasing Power: In this segmentation scheme we can have 5 segmentation profiles • • • • • Low income Group : Earning Rs.High Income Group: Earning Rs. Parking sensors.2.Marketing Plan TATA Nano car segment in the 4-wheeler category. Hence.8lac per annum High Income Group: Above Rs. They typically look for value add-ons such as Airbags. 2.e. initial as well as annual. Power windows and steering etc. • Features conscious: The primary concern for these buyers are rich and new features that would differentiate their cars from the other existing ones.1.6 lac per annum Middle. This segment would face most serious competition from Tata Nano as most of these people would be willing to move to Nano rather than the more expensive four-wheelers in the market.1.6 lac. 2lac – 3 lac per annum Middle Income Group: Earning Rs. IIM Kozhikode 15 . value for money.5 lakhs category and above Rs.e. However. The buyers of above Rs. they would be concerned about the total cost of ownership i.

4.Marketing Plan TATA Nano 4. Secondly this will be the target market suited best for buying Nano because most of these families who are owning 2 wheeler will be in a kind of transition stage of moving from 2 wheeler to 4 wheeler. two person belonging to the same income group residing in different tier cities will have different perceived value from Nano.3. targeting all the possible segments as potential buyers of Nano will provide a broader market for the product. and both will have to be addressed differently.1. Because of its high aspirations and upward mobility. No Segmentation: Marketing Nano without any segmentation. But at the same time this can prove counter-productive due to lack of focus in the plan. it is the middle class segment which is the maximum interest segment for the marketing of Nano. The perceived value proposition of a product also varies with the economic class to which a person belongs. 4. The rationale behind choosing this segment is that firstly this is the single most largest target market by number of potential buyers. Thirdly this target market is very aspirational and in this developing economy they are having increasing disposable incomes. Target Segmentation Now rolling this innovative product in the market company should define the target market for Nano so that branding and marketing can be done accordingly. So there goes your economics as well. Finally why would anybody stick with a motorcycle when you can transport 4 people at 26kmpl? For an equivalent payload you would need to invest in 2 bikes and need 2 drivers and still would not be as safe as a car. For example. i. Demographic based segmentation: People across different geographic locations exhibit different preferences and perceptions for the value of a product.e. within the same geographical area. Initially among all the different segments Middle Class forms the most promising target segment for Nano.. There are other target segments also which although comparatively small in size as IIM Kozhikode 16 .1. But sticking to this segment only will not achieve sustained growth of sales in the long run.4.2.

But to ignite their aspiration for Nano it requires more than just offering 4 wheeler. We should position it as a second freedom IIM Kozhikode 17 . An ideal positioning would be to do what Bajaj Chetak did to personal mobility. It should be matched according to their tastes of having exuberant ..Marketing Plan TATA Nano compared to middle class but will augment to sustained growth in sales. vibrant product specification. Positioning Proper positioning strategies to be adopted considering the competitors. quality and the target people... But to cater to these segment same product line will not be that appealing and diversification will be required. price. The alternate segments are: 1. Moreover this segment also holds promising in terms of the compatibility of their incomes with price. So the promotion of luxurious model along with basic model should not create problem in the intended message of being affordable transportation medium. To make Nano appeal to them product line extention will be required so that a luxurious product can be offered. and what Airtel and Reliance did to personal communication. 4. Youth Segment: This segment is very prominent in young country like India where mean age is 28 years. trendy interiors etc which will require slight modification in existing model but will reap substantial returns in the future.This will make Nano to be an ideal choice for being 2nd or 3rd car of a family if not the 1st one.any stimuli relating to Nano will generate a common response in the minds of most people. But one more thing that need to be handled carefully is regarding perception of Nano as being “common man car”.1 Lakh Car. its image..3. So TATA can extend production of Nano by offering exciting graphics. This is because this segment had high purchasing power. so then can shell out much more on luxury products which appeal to them. In developing economy like India the youth are forerunners in GDP contribution especially due to outsourcing in India because of cheap skilled labour. "Nano"--the name. 2. High Income Segment: This segment will already be having 4 wheeler and that too most of them will be in higher price segment. So idea of offering luxurious models along with basic model is a good choice..

In addition to that Nano must be projected as the FIRST CAR to the potential customer in fact.1. We should focus on the price comparison of Nano with the same car segment cars. from taxis they can’t afford. the BEST FIRST CAR an average Indian can have. 5. The reason Ratan Tata thought of launch of a small car it is the fact that entire families. The value for money must be a focus as well.. Product: There are three variants in the Nano range: Nano. Marketing Action Program: 5.. a common man should be taken in ad to intend the message of Nano being a “People’s Car”. as it would change the way family mobility is seen in India. precarious rickshaws. and you can upgrade to a bigger car when you are in a financially better position... we are now going to one where people can afford a car and spend time together. this kind of a positioning can help remove the image of Nano being a cheap car from the minds of the Nano buyers and users.For advt.Marketing Plan TATA Nano movement. The feature comparison chart of the three models is shown below. Suddenly from that state. It virtually frees them from a world of overcrowded trains.Inspite of any celebrity doing the ad . and the absence of buses. Nano CX and Nano LX." should be effectively communicated to the potential customers. In ads and promotion campaigns the message that "Nano is the best option for a first car. Items/Variants AC with Heater Front Power Window Cup Holders in Front IRVM Nano Nano CX Yes Nano LX Yes Yes Yes Antiglare High End Console with Provision for Mobile Charger/Cigarette Lighter Moulder Door Trim Plain Plain Gear Shift Console Magazine and Coin Holder Map Pocket Integral with Driver & Codriver Seat Basic Basic Fabric Pocket Fabric Pocket Separate Plastic Trim IIM Kozhikode 18 . sometimes four people would ride on a bike together.

manually operated windows. manual steering with no air bags. tiny 12” wheels. without antilock brakes.Marketing Plan TATA Nano Front Seat Headrests Rear Seat Headrests Sunvisor on Driver & passenger side Driver Seat with slider Passenger Side Seat with Slider Front Assist Grips Rear Assist Grips Head Lamp Levelling Low Fuel Warning Lamp Rear Seat Folding Integrated Integrated Integrated (with Nap Rests) Yes Yes (With Recliner) Yes (With Recliner) Yes Yes Integral feature through innovative suspension design Yes Yes Integral feature through innovative door system design Yes Yes Yes Integral feature through innovative suspension design Yes Yes Integral feature through innovative door systemdesign Integrated Integrated (with Nap Rests) Yes Yes (With Recliner) Yes (With Recliner) Yes Yes Integral feature through innovative suspension design Yes Yes Integral feature through innovative door system design Yes Yes Yes Intrusion Beam Radial Tubeless Tyres Yes The car has achieved its low price by minimizing costs on unnecessary “luxuries”. plastic body parts joined with adhesive instead of more conventional metal and welding and a two cylinder 623 cc engine that provides a massive maximum speed of 105 km/h. without a heater or air conditioning. Among the features of the car are: IIM Kozhikode 19 . only one single windscreen wiper. the basic Nano comes without front and rear fog lights.

d) Environment-friendly The People’s Car’s tailpipe emission performance exceeds regulatory requirements. It can comfortably sit four persons. b) Fuel-efficient engine The People’s Car has a rear-wheel drive. which helps maximise performance per unit of energy consumed and delivers high fuel efficiency. it can effortlessly manoeuvre on busy roads in cities as well as in rural areas. Its mono-volume design. Yet with a length of 3. has a roomy passenger compartment with generous leg space and head room. two-cylinder. which will set a benchmark among small cars. The high efficiency also ensures that the car has low carbon dioxide emissions. multi point fuel injection petrol engine. Four doors with high seating position make ingress and egress easy. IIM Kozhikode 20 .Marketing Plan TATA Nano a) Stylish and comfortable The People’s Car. all aluminium. seats belts. Performance is controlled by a specially designed electronic engine management system. intrusion-resistant doors. This is the first time that a two-cylinder gasoline engine is being used in a car with a single balancer shaft. and the rear tailgate glass bonded to the body. 33 PS. it has a lower pollution level than two-wheelers being manufactured in India today. 523 cc. with safety features such as crumple zones. it has a strong passenger compartment. with wheels at the corners and the power train at the rear. c) Meets all safety requirements The People’s Car’s safety performance exceeds current regulatory requirements.6 metres. with adequate ground clearance. In terms of overall pollutants.5 metres and a height of 1. thereby providing the twin benefits of an affordable transportation solution with a low carbon footprint. strong seats and anchorages.1 metres. The lean design strategy has helped minimise weight. width of 1. enables it to uniquely combine both space and manoeuvrability. designed with a family in mind. With an all sheet-metal body. Tubeless tyres further enhance safety.

000 Source: Business Today. which is inclusive of standard accessories. plastics.( BS2 and BS3): Rs.000 Tyres and suspension 10. roof trim) 20. 95000 Tata Nano CX( BS2 & BS3): Rs. seats. Pricing Strategies The Cost price is an estimated INR 95. Part Body-Shell (steel. manufacturing and assembly cost.2.000 Interior Trim (floor mats.000. These prices reflect a strategy of taking a share from established competitors. but exclude road tax (INR 3. steering) Electrical items (lights. frame. battery. 120000 Tata Nano LX( BS3): Rs.815) and registration fees (INR 6. “How the Rs 1 lakh price tag breaks up”. starter motor) 10. such as Maruti Suzuki 800 and Suzuki Alto.764). 22 January 2008 Cost in Indian Rs (US$ = ~ Rs 40) The selling price for the Indian market is INR 115. 25. 140000 Tata Nano Prices Trim level/ Variant Tata Nano Std (BS2 ) Tata Nano Std (BS3 ) Ex Showroom Pant Nagar(Rs) 112735 120960 Ex Showroom Delhi(Rs) NA 123360 Ex Showroom Mumbai(Rs) NA 134250 IIM Kozhikode 21 . The booking amount for all the 3 variants will be same through out India: Tata Nano Std.Marketing Plan TATA Nano 5. welding) Engine and Transmission (aluminium engine block. gearbox.000.000 30.000 drive-train.361 (ex-showroom) for Tata Nano Std (BS2). which includes material. The On-The-Road price will be approximately INR 125.

Setting the price – selecting price objectives Tata Motors has set major three objectives in its effort to position itself in the Indian Automotive market. In this case. therefore the demand is rather difficult to estimate but Tata Motors is confident of a good response towards its entry into the Indian market. Maximum current profit Tata Motors has set a price that will maximize current profits. which is to set a low price for a new car in order to attract a large number of buyers and a large market share. c. after taking into consideration the demand and costs involved. TNM will implement the market-penetration pricing.1. a. cash flow and return on investment. maximum current profit and maximum market share. This IIM Kozhikode 22 .Marketing Plan TATA Nano Tata Nano CX Solid Paint (BS2) Tata Nano CX Metallic Paint (BS2) Tata Nano CX Solid Paint (BS3) Tata Nano CX Metallic Paint (BS3) Tata Nano LX Metallic Paint (BS3) 139780 142780 145725 148725 170335 NA NA 148360 151360 172360 NA NA 160320 163320 185375 5. As this category of small cars segment has not been really tested by other manufacturers. The objectives are: Survival.000 cc category will spur Tata Motors to ensure that the car price covers variable costs and some fixed costs. Survival Intense competition from Maruti 800 for a share of the automotive market segment for the below 1. b. survival is a short term objective as in the long run. Tata Motors will add value such as added safety features to the Nano range. Maximum Market Share For the Indian market.2.

conviction. and there is a fresh feel associated with this new brand and concept of this car. And also will provide them warranty to the Tata Nano. Objectives of Promotion Strategies Before determine the promotion strategies. our missions are to promote Tata Nano in India and increase the sales. Tata Nano is very new for India. We aim to create liking. The low-price entry will provide Indian consumers with a viable alternative to Maruti 800 – which is currently the lowest priced small car in the Indian market. as a low price produces more market growth. Besides that we will convince current purchasers that we will give the potential customer to enjoying the good experience with Tata Nano by give try to drive the Tata Nano before buying the car. we need to very clear about what are the objectives we need to achieve. We know as above.Marketing Plan TATA Nano will be done by achieving high sales volume. allowing the company to cut its price even further. We are positive enough that the Indian small car market is highly price sensitive. preference. resulting in purchase of a Tata Nano car. especially lower income families and students. Brand awareness is important to provide a foundation for brand equity. our second objective is to generate knowledge and awareness about its benefits. We can do the comparison with other cars which have a higher purchase price and this price is something that will not be affordable for all people. PROMOTION STRATEGIES 1. Tata Motors is also confident that production and distribution costs will fall as sales volume increases and the low price of Nano cars will help to keep out competition and maintain its low-price position. So first of the objective for promotion strategies are aims to create brand awareness and concept/knowledge of this new car – Tata Nano. 2. Promotion Tag line ‘Less is More’ Why have we selected this tag line? That is because this line is easy to remember and communicates concisely and precisely the image that we want the prospective customers to IIM Kozhikode 23 . which will results in falling costs. After that. so we do the advertisement and organize the event or campaign in sufficient detail to establish positive brand attitudes. This is the cheapest car in the world and burst into the worldwide market in a short time. But still is the new brand for the Indians. We will organize all the promotion strategies with lower cost to maintain the lower purchase price for the Tata Nano in India.

low advertising costs and also more effective media for reaching youth market. Semi-urban and rural audience. is to communicate through the internet channel. The website will also provide links to Tata Nano communities on various online social networking websites like Orkut. Myspace. and to emphasis on the fact that low price of the product does not mean any compromise with the safety. Advantages of the radio advertisement are flexibility. We can establish the blog network and by careful monitoring can find out what is the opinion of the prospective customers regarding the product. Hi5. to highlight positive utility features of the product.2 Television Advertisement Television advertising is relatively expensive but this is the most powerful medium to reach the maximum number of audience. Online Advertisement First step to start with advertising of Tata Nano. a car that uses the minimum amount of resources to deliver the maximum utility. Also the website will have information regarding the technical specifications of the different variants. which are regularly updated online diaries.3 Radio Advertisement Radio audience in India can be divided into two broad categories: 1. comparisons with other competitive models of other companies. a web site will be created to provide the consumers with a reliable source of information about the product. The website will have rich graphic content to capitalize on the attractive exterior design of the car. Blogs are bringing together people with common interests and provide a more interactive and personal source of information than regular websites. and FaceBook. Blogs have become an important outlet for word of mouth publicity.. For this. Metro audience. with the primary channel medium being FM radio. This is a cheap and pervasive medium for creating brand awareness by airing radio commercials to build brand awareness. with All India Radio being the primary channel medium Most of the radio listeners use the radio daily. section relating to news articles about Tata Nano and a section where visitors can provide feedback and enter discussions regarding the car. Besides that. The TV advertisement will be built around the tagline of Tata Nano and will focus on its attributes and will persuasively explain their corresponding consumer benefits. Advertising Program The aim of the advertising program will be to create awareness about the brand. This is a cheapest and most information rich way to build up brand awareness.1. i. 2.Marketing Plan TATA Nano associate with Tata Nano.4 Print Media Advertisement IIM Kozhikode 24 . but rather focuses on the utility aspect to communicate the value associated with the product. 3. 3. a blog will be floated which will be regularly updated.To address information needs of more information hungry customers. quick response. 3. The tagline has to be such that it doesn’t create any notion about the car being cheap. 3. quality and environment friendliness of the product. Properly designed and executed TV advertising campaign can ensure a widespread awareness of the product and improve brand equity and can positively affect sales and profits. 3.e.

Only 6% of the respondents were not aware of the brand and could not relate it to the Tata car. Print media advertising gives the benefit of delivering a more detailed and rich information content for the target customers. Advertising in local dailies and magazines can be comparatively costeffective due to lower cost of advertising space. The results are summarised by the following graphs: Brand Recognition: The brand recognition of Tata Nano is very high as 94% of respondents were able to identify the brand Nano with the Tata’s small car. Tata Motors can leverage its strong presence in urban and semi-urban markets through its wide distribution network for existing Tata Motors automotive product portfolio in Tier-I and Tier-II cities. which will cater to the demand from these cities as well as from the semi-urban areas in proximity of these cities. This calls for extension of distribution network of authorised dealers to these cities. IIM Kozhikode 25 . The high affordability of Tata Nano is expected to generate demand in smaller Tier-III cities as well.Marketing Plan TATA Nano All the regional and national daily newspapers and magazines have a huge subscriber base. Market Research: An online market research survey having a sample size of 254 respondents was carried out. This high recognition can be attributed to the media buzz that development and launch of the car has produced in India. Usually these dealers also provide service support by managing service centres along with retail facilities. Place The primary mode of distribution for automobiles in India is through authorised dealers who have exclusive rights to retail the company’s products in their respective regions.

indicating low awareness about safety features of the Nano. 65% of the respondents were ready to change their purchase decision in the eventuality of prices of Nano going up. Price Sensitivity: A majority of the respondents showed a high sensitivity to change in price of Nano. this perception is explicable. IIM Kozhikode 26 . Safety Perception: Though 37% of respondents consider Nano to be of high safety standards. On the other hand. a majority of the respondents perceived the brand as cheap. Considering that Nano is 44% less in cost to the cheapest available small car in India. Changing this perception to that of a economically efficient quality product is a challenge for marketing of this product. there are still 28% who consider it to be low on safety.Marketing Plan TATA Nano Brand Perception: When asked the question ‘What is the first thing that comes into your mind when you think about NANO?’. 35% did not comment on their safety perception of Nano. Only 17% of the respondents were ready to purchase Nano even if the prices went high.

81 747 16233.92 175 11618.3 783 Rs.361 34932.5 32595 10865 21730 10865 103217.40 873 32466.22 62 16233.07 833 13973. 1.13 047 13219.15 27162.46 087 23236. 18.02 611 27946.144 Rs.144 Rs. In the table given below we perform a cost analysis whereby we determine the variable cost incurred and the contribution earned by TATA MOTORS on NANO: COST ANALYSIS Selling Price( exDelhi showroom price) Cost: Body Shell Engine and Transmission Electrical items Interior time Tyres and suspension Total Cost Contribution Average Contribution Rs.144 NANO BS II NANO CX BS II NANO LX BS III BS III IIM Kozhikode 27 .196 Rs.15.3 83 Rs. 15. 12.Marketing Plan TATA Nano Total expenditure on the Singur Plant in West Bengal was Rs. 2000 crores out of which Rs.986 Rs. 14. 12.52 184 48700. a substantial part of the investment was transferred to Sanand.56 523 26439.40 873 154217. 1000 crores. 18. 1. 1. 1000 crores is the investment that was transferred from the Singur plant.56 527 41919.02 611 132743.48.361 29046.565 219 34855. 12.72.40.361 40583.361 Rs.23. 1.8 697 Rs. The total estimated loss for Tata Motors at the Singur plant is estimated to be Rs.7 48 Rs.775 Rs.38 262 11618. 2000 crores.5 Rs. 15.46 087 110375.617 Rs.361 33048.05 222 13973.69 57 13219.56 523 125585. Gujarat.91 309 39658. Total estimated expenditure on the Sanand plant in Gujarat is Rs. 1. However.

000 Source: Business Today. frame.000 20.5 32595 10865 21730 10865 103217. welding) Engine and Transmission (aluminium engine block. starter motor) Interior Trim (floor mats. 22 January 2008 Considering the inflation rate of 6% for 2008 and 5% for 2009 cost is: Body Shell Engine and Transmission Electrical items Interior time Tyres and suspension Total Cost 27162. drive-train. “How the Rs 1 lakh price tag breaks up”. plastics. steering) 25. gearbox. seats.000 10.5 IIM Kozhikode 28 . battery.000 30.000 Electrical items (lights.Marketing Plan TATA Nano The actual cost for the model for NANO BSII in Jan 2008 was: Part Body-Shell (steel. roof trim) Tyres and suspension 10.

84.608. Rs.30. 2.73. Rs.57. 3.76.38.067.72. 1.73. Rs.553. Rs.7 45.e.35.17.Marketing Plan TATA Nano For the calculation of the cost of higher models.65.650.979. Sales Value 75.42.32.71.44 6 0 0 2009-10 Sales Quantity=300000 60000 90000 150000 Rs. 5.95.866. Rs.79.6 80.78.45. Cost of Nano BS III = Cost of Nano BS II*SP of Nano BSIII/SP of Nano BS II Cost escalation on higher models 1. 22.59. 1.51. Sales Value 87. 4.404.19. we take the ratio of the respective selling prices as the factor to determine their cost prices i.8 Sales Value 12.56. Rs.0693475 NANO BSIII/BSII NANO CX BS II/NANO BS II NANO CX BS III/NANO BS II NANO LX/NANO BS II 26 1. Rs.2860585 47 1.63 57 59 79 2010-11 Sales Quantity=350000 70000 105000 175000 Rs.259.4941011 26 Calculation of Contribution Particulars NANO(20%) NANO CX(30%) NANO LX(50%) Contribution 2008-09 Sales Quantity=50000 10000 15000 25000 Rs.00.15.07 33 19 59 2011-12 Sales 80000 120000 200000 IIM Kozhikode 29 . Rs.36.02.900.425.2167110 2 1.305. Rs.90.200.56.52.42.

867.87.45.21.01.64.98.830.23.87.9 4 135000 Rs.206. 09 Rs.25.534. 4. 8. A further analysis of the net profit after deducting the depreciation is shown below: Taking Rs. considering the fact that around 50-60% of the assets in automobile companies are Fixed Assets.94.67. 19 100000 Rs.404.667.26. 8.084. 78 From the above table we can see that the company would break even in the year 2012-13. 2.85.59. 86 225000 Rs. 3.681.17.13.692.107. 59 Rs.64. 2.74.Marketing Plan TATA Nano Quantity=400000 Sales Value 2012-13 Sales Quantity=450000 Sales Value 2013-14 Sales Quantity=500000 Sales Value 2014-15 Sales Quantity=550000 Sales Value Rs.934. Depreciation: 1100@5%=Rs.04.23.51. 1.73. 39 Rs.94.05. 2. 98 110000 Rs.27.10. 99 Rs.07.38.71.28. 62 250000 Rs. 2000 crores as the Total Cost of the plant.14.10. 38 275000 Rs.08. 1.94.13.255.31. 7.007.53.89.00.42. 4. we have deducted the variable cost from the selling price in order to get the contribution.5 0 Rs.08.46.89. 1. 79 Rs. 4.800.82. 1.475.8 2 165000 Rs. we assume the Fixed Assets to the tune of Rs. In the calculation of the above figures.908. 1.56. 1100 crores. 39 90000 Rs. 55 crores IIM Kozhikode 30 .35. 6.62.3 8 150000 Rs.50.

Depreciation.8 55000000 0 25717890 1 60000 75387365 0.6 80717890 0.1 105000 15956000 67 175000 31751329 79 56502523 06 55000000 0 51002523 06 80000 10051648 68 120000 18235429 34 200000 36287234 05 64574312 06 55000000 0 59074312 06 90000 11308104 76 135000 20514858 01 225000 40823138 30 72646101 07 55000000 0 67146101 07 100000 12564560 84 150000 22794286 68 250000 45359042 56 80717890 08 55000000 0 75217890 08 110000 13821016 93 165000 25073715 34 275000 49894946 82 88789679 09 55000000 0 83289679 09 We see from the above statement that even after deducting non-cash expenditure i. the company is earning profits.6 90000 13676572 01 150000 27215425 54 48430734 05 55000000 0 42930734 05 70000 87951925 9.8 25000 45359042 5.4 15000 22794286 6.Marketing Plan TATA Nano Particulars 2008-09 Sales Quantity=500 00 Sales Value 2009-10 Sales Quantity=300 000 Sales Value 2010-11 Sales Quantity=350 000 Sales Value 2011-12 Sales Quantity=400 000 Sales Value 2012-13 Sales Quantity=450 000 Sales Value 2013-14 Sales Quantity=500 000 Sales Value 2014-15 Sales Quantity=550 000 Sales Value NANO(20 %) NANO CX(30%) NANO LX(50%) Contributi on Depreciati on Net Profit 10000 12564560 8. IIM Kozhikode 31 .e.

Marketing Plan TATA Nano IIM Kozhikode 32 .