Positioning

the
TATA NANO
P R E S E N T E D B Y:
S A K S H I A G R AWA L - 2 1 1 0 0 5 2
K A RT I K G A R G - 2 11 0 0 2 9
A N K I T M A U RYA - 2 1 1 0 0 0 6
YA S H S A H U - 2 1 1 0 0 6 5
S A M A R S IN G H - 2 11 0 0 5 4
D H R U V G A N DH I - 2 11 0 0 1 6
INTRODUCTION
The TATA Group
• FOUNDED BY JAMSETJI TATA IN 1868 AS A
TRADING COMPANY.
• EXPANDED OVER YEARS WHICH INCLUDES
COUNTRY’S FIRST STEEL MILL, POWER UTILITY,
LUXURY HOTEL AND INTERNATIONAL AIRLINE.
• COMPRISED OF 98 COMPANIES IN 7 SECTORS BY
2011.
• TATA PROMISED TO IMPROVE QUALITY OF LIFE IN
TATA CODE OF CONDUCT AND NANO WAS A
PRIME EXAMPLE.
• TATA SEEN AS INSPIRED TRUST AND HAS A
STRONG COMMITMENT TO ETHICS.
Tata Motors Ltd.
• ESTABLISHED IN 1945 AS TELCO.
• IN 1991 RELEASED TATA SIERRA WITH
MERCEDES BENZ.
• IN 1998, INDICA(MOST SUCCESSFUL CAR)
WAS LAUNCHED FOLLOWED BY TATA
SAFARI AND TATA ACE IN 2005.
• TELCO RENAMED AS TATA MOTORS LTD. IN
2003 AND LISTED ON NEW YORK STOCK
EXCHANGE.
• ACQUIRED JAGUAR AND LAND ROVER
WHICH FUELED INTERNATIONAL
EXPANSION.
 Growth of
Automotive Industry
• I N 1 9 9 1 , I T F L O U R I S H ED W I T H A VE R A G E
G R O W T H R A T E OF 1 7 % A N NU A L LY .
• I N 2 0 0 9 , I ND US T R Y P R O D U CE D M O R E
T H A N 1 1 M I L LI O N VE HI C L ES .
• T W O W HEE L E R S D O M I NA T ED T H E I N D I A N
R OA D S C E NE B E CA U S E O F F U E L
EF F I CI E NC Y .
• 7 6 % O F A L L V EHI C L ES I N I N D I A W ER E O F
T W O W HEE L E R S .
• P A S S E N G E R VE HI C LE S M A K E UP ON L Y
16% OF TOTAL.
 D E V E LO P E D O N T A T A ’S INS P IR A T I O N F O R
WO R L D ’ S SM A L L E ST A ND MO ST F UE L -
E FF IC I E NT C A R .
BUI L D A S L O W C O ST “ P E O P L E ’ S C A R ”
FO R IND IA ’ S M I D D L E -C L A SS C O NSUM E R S
WI T H A P R IC ING A T R S 1 L A K H

NANO FINA L D E S IG N I NC L UD E P A R T S FR O M 100

D IF FE R E NT SU P P L I E R S I N W H I C H E NG I NE
IS D E V E LO P E D B Y T A T A M O T O R S.
NA NO , NA NO C X , NA NO L X W E R E T H E
TH R E E MO D E L S
INI T IA L P R O D UC T IO N C A P A C IT Y W A S
LI M IT E D T O 50000 NA NO S .
 DUE TO LIMITATIONS, BOOKING
PROCESS WAS FOLLOWED.
IF BOOKINGS EXCEEDED THE
CAPACITY, LOTTERY WAS USED.
CUSTOMERS BOOK ONLINE FOR A

Distribution RS200 FEE OR OFFLINE FOR RS300 FEE.

TATA DEALERS MARGINS WAS
RANGED BETWEEN 4 TO 10%.
ENGINEERS WERE TRAINED TO
ASSEMBLE NANO FROM CAR KITS
WHICH SERVE AS LOCAL RETAILERS IN
ORDER TO REACH RURAL AREAS
 LAUNCH OF MARUTI 800 IN MINI PASSENGER
CAR CATEGORY SERVED AS MAJOR
COMPETITOR.
MARUTI 800 WAS SMALLEST, MOST
AFFORDABLE CAR UNTIL RELEASE OF NANO.
MARUTI’S ALTO LAUNCHED IN 2000

Competition
SURPASSED THE INDICA IN SALES IN FEW
YEARS.
NANO PRICED ABOUT ROUGHLY HALF THE
COST OF MARUTI 800.
TWO WHEELERS SEGMENT FROM LEADING
COMPANIES SUCH AS HERO HONDA, BAJAJ
POSED TOUGHER COMPETITON TO NANO.
DUE TO HIGH FUEL EFFICIENCY AND LESS
EXPENSIVE, TWO WHEELERS MADE THE
FAVOURITE WITH COLLEGE STUDENTS.
Sales Goal
for Tata
Nano
Things To Look At
Was to be sold at 1 Very difficult for TATA
TATA had very high
lakh which was to predict the sales for
expectations from
valued at around $1500. NANO as they
NANO. Initial thoughts
Owing to this price decided to cater to a
were that NANO
tag, NANO was being relatively different
would instantly
hyped up in the global market than any
dominate the market.
market. hatchback.

Due to protests, Speculations and the

production was hype around NANO
limited at 50,000 cars. would initially help it
Could not produce as to reach the desired
planned in the Singur objective of the
plant. company.
Ways to garner market share!
Substitution
Direct
effect (Two
competitor
wheeler
(Maruti 800)
segment)

Nano was superior Nano’s indirect

than Maruti 800 in competitors were
many aspects two wheelers

A limited number of
The price tag
customers would
coupled with the
upgrade from two
features could
wheelers to Nano
ensure Nano to eat
because of the
800’s market share
price
 Nano was better than Maruti 800 in various aspects.

It provided better mileage because of the smaller engine.

Also, it was compact with better turning radius and easy to
manoeuvre.
What sales
Nano also offered better space, height and width than
goals to Maruti 800 which offered a very dated design.
recommend? Nano provided people a fresh, new alternative to Maruti
800.

So, even in a pessimistic scenario, this would equal to an

increase of 15% to 20% of the Nano’s expected sales,
Secondly, the two-wheeler market could see a minor drop in sales owing to the price that
Nano was being offered at.

A car any day provided much better utility than a two-wheeler and customers could switch
from motorbikes to a cost-friendly Nano.

If only a minor chunk of people decide to upgrade to Nano, still a decrease of two or three
percent in motorcycle segment, would mean an increase of more or less 2,00,000 units in
Nano’s demand (total number of motorcycles produced in 2008 – More than 84,00,000)
McKinsey Global Institute expected a growth in the middle class in India, which meant only 5% of
the population in 2005 (55M people).

This growth in the middle class is projected to translate into increased spending by families on
transportation and education.

This would ensure more people would be inclined towards upgrading to a safer means of
transportation.

More students would be involved, and more people would be interested in purchasing vehicles.
If according to McKinsey, the middle class would grow 14 percent in 10 years, this means it
would grow at an average of 1.4 percent per year.

If even 10% of those 1.4 percent (7,70,000 people) would buy a Nano, TATA would receive
around 77,000 new orders for the Nano.

Finally, TATA managed to sell an average of more than 1,14,780 Indicas from 2003-2009.
Given the market that Nano was targeting, and the amount of hype created by the media
around the product, it would be safe to say that TATA could comfortably manage to sell
around 5,00,000 Nanos if the production capacity is increased.
Positioning
Target
market TML SHOULD TARGET
BUYERS BELOW THE
AGE OF 30 YEARS FOR
IN 2008, WHEN NANO
WAS SUPPOSED TO BE
LAUNCHED, THE
WITH INCREASE IN
HOUSEHOLD INCOME,
THERE WILL BE
NANO. MEDIAN AGE OF THE INCREASED SPENDING
POPULATION OF 1.1 ON EDUCATION AS
BILLION WAS 25 YEARS. WELL, LEADING TO
RISE IN COLLEGE
STUDENTS WHO MIGHT
BE INTERESTED IN
BUYING AN
ECONOMICAL CAR.
Product Promotion
Positioned as the car for Youth
Revolving the ad
Compact size of nano can Building young and
campaign to give the
be positioned as a aspiring value around the
brand a more emotive
convenience for buyers. brand.
personality.

Ad campaigns featuring
young celebrities to create
an emotional and
aspirational connect with
the target buyer.
Models of
Tata Nano
Source: Positioning the TATA
Nano Case Study by Kellogg
School of Management
MODELS TO GO AHEAD WITH

TML should move forward with only Nano CX and

Nano LX and restructure their prices.

Since the target group is the youth, giving features

such as AC, power steering, power windows, tinted
windshields etc. becomes a necessity and these are
only available in CX and LX models.
Distribution

Revamping Developing better Dealership’s

distribution and customer workforce to be
reach in accordance communication and trained to reinforce
with the target experience through the image of the
market. new dealers. brand.
Possible positioning strategies of
Nano
Positioning it as the cheapest car in the world

• To target population with two-wheelers or using public transportation

Positioning nano as a middle-class family car

• To target the middle-class small family of 4 members

Positioning is as a car for the youth

• To target the college going students

 •If categorized as the cheapest car, it
may be seen as a poor people’s car
• The target market would not want to
be associated with a cheap car
Shortcomings •Wouldn’t add social value to the
of other customers
Strategies • People might prefer to buy second-
hand cars
•2-wheeler more convenient with city
traffic
•Expensive to maintain the car (Fuel
efficiency, Servicing, etc.)
 Maruti 800 was the lowest priced car before
Nano entered the market

Comparison Positioning Strategy of Maruti 800

• Positioned as a compact middle-class family car

with the Maruti 800 had better features

Rival’s • Better Engine

Positioning
• Better Quality
• AC and power steering across models

Strategy Due to the above factors Maruti 800 could

not be classified as a cheap car

Adds social value due to better looks and

features