Finaltata Nano Mm Proj

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Marketing PlanTATA 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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Priced at Rs.1,12,735 (Ex-showroom Pant Nagar) Tata Nano Basic Model is the cheapest car in the

world. Projected as Peoples 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--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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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 Tatas 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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Sale and distribution of vehicles

Financial services

Tata Motors' presence indeed cuts across the length and breadth of India. Over 4 million Tata vehicles

ply on Indian roads, since the first rolled out in 1954. The company's manufacturing base in India isspread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar

(Uttarakhand), Dharwad (Karnataka), Ranjangaon (Maharashtra) and it is establishing a new plant at

Sanand (Gujarat). It is also expanding its international footprint, established through exports since 1961.

The company's commercial and passenger vehicles are already being marketed in several countries in

Europe, Africa, the Middle East, South East Asia, South Asia and South America. It has franchisee/joint

venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and Senegal. It has also acquired

operations of Daewoo Heavy Vehicles Division in South Korea and Jaguar-Land Rover in Britain.

2.3. TATA Nano

In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India and the world were

looking forward to. Tata Nano is the cheapest car in the world. The base model carries a price tag of Rs.

115361 ex-showroom price(Delhi). A development, which signifies a first for the global automobile

industry, the Nano brings the comfort and safety of a car within the reach of thousands of families. It is

Mr. Ratan Tatas (Chairman, Tata Motors) vision for Tata Nano to become a peoples car, which is

affordable by almost everybody. The Tata Nano has been subsequently launched, as planned, in India in

March 2009. Since launching, it has created a huge buzz all over India. Within the first two days of

lunching, it has received 5500 bookings.

In an interview Ratan Tata explained the motive behind the creation of Nano and that is Safety. For a

family of 3 or more, scooter is a dangerous form of transport. So if a car can be made slightly affordable

to a middle class man, then safety can be assured. What makes Tata Nano so cheap? Basically, by

making things smaller, lighter, do away with superficial parts and change the materials whereverpossible without compromising the safety and environmental compliance. It is said that Tata Nano has

better mileage than Toyota Prius and same gas emission as a scooter.

Designed with a family in mind, it has a roomy passenger compartment with generous leg space and

head room. It can comfortably seat four persons. Its mono-volume design will set a new benchmark

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among small cars. Its safety performance exceeds regulatory requirements in India. Its tailpipe emission

performance too exceeds regulatory requirements. In terms of overall pollutants, it has a lower pollution

level than two-wheelers being manufactured in India today. The lean design strategy has helped

minimize weight, which helps maximize performance per unit of energy consumed and delivers high

fuel efficiency. The high fuel efficiency also ensures that the car has low carbon dioxide emissions,

thereby providing the twin benefits of an affordable transportation solution with a low carbon footprint.

2.3.1. Models of Tata Nano: Tata Nano is available in three different models Tata Nano Standard,

Tata Nano CX and Tata Nano LX. 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

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2.3.2 Tata Nano Technical Specifications:

Technical Specifications of Tata Nano Car

Length 3.1 metres

Width 1.5 metresHeight 1.6 metersEngine All-aluminium, Rear Mounted, Rear Wheel Drive

Capacity 623 ccPower 33 PSFuel Injection Multi Point Fuel Injection (MPFI)Fuel Type Petrol, Diesel Version will be laterBody Type Sheet MetalSeating Capacity 04 (Four)Mileage 20-22 Kmpl (City drive)

26 Kmpl (Highways)Top Speed 75 K.MEmission Norms Euro-IV, Bharat Stage-III compliantSafety Norms Frontal Crash Tested

Versions One Standard and Two DeluxeSource: www.surfindia.com/automobile/tata-nano.htm

2.3.3 Rationale for choosing the brand:

The TATA Nano is not just a car but it is a symbol of Indian pride. It has proved Indian capability in

manufacturing sector by creating the worlds cheapest car without compromising the safety norms.

On being revealed at the Auto Expo in March 2008, it has become the baby of every news paper and news

channels. It seems to have set a benchmark for innovation in cost reduction and possesses huge mass

marketing potential. Given the fact that the Nano is in its first stage of life cycle, the thought of designing

a marketing strategy and implementation plan seemed exciting to say the least. 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. With practically no reference point, the entire process of

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conceptualization and subsequent execution appealed to the team as a whole and served as reason enough

to choose it as our product.

3. Situational Analysis:

3.1 Market Analysis

Domestic Sales

The cumulative growth of the Passenger Vehicles segment during April 2007 March 2008 was 12.17

percent. Passenger Cars grew by 11.79 percent, Utility Vehicles by 10.57 percent and Multi Purpose

Vehicles by 21.39 percent in this period. The Commercial Vehicles segment grew marginally at 4.07

percent. While Medium & Heavy Commercial Vehicles declined by 1.66 percent, Light Commercial

Vehicles recorded a growth of 12.29 percent.

Two Wheelers registered a negative growth rate of 7.92 percent during this period, with motorcycles and

electric two wheelers segments declining by 11.90 percent and 44.93 percent respectively. However,

Scooters and Mopeds segment grew by 11.64 percent and 16.63 percent respectively.

Exports

Automobile Exports registered a growth of 22.30 percent during the current financial year. The growth

was led by two wheelers segment which grew at 32.31 percent. Commercial vehicles and Passenger

Vehicles exports grew by 19.10 percent and 9.37 percent respectively. Export of Three Wheelers segment

declined by 1.85 percent.

Category2002-

032004-

052006-

072008-

09

PassengerVehicles 72,005

1,66,402

1,98,452 335739

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CommercialVehicles 12,255 29,940 49,537 42673

Three Wheelers 43,366 66,7951,43,89

6 148074

Two Wheelers

1,79,68

2

3,66,40

7

6,19,64

4

100417

4

Grand Total3,07,30

86,29,54

410,11,5

2915,30,6

60

3.2 Small car segment in India

The small car segment dominates the Indian car market. It has great potential compare to other class that

contributes nearly two third of the overall sales of cars in India. Some of the car brands who have their

presence in the segment are Toyota, Ford, Renault-Nissan, and General Motors. Currently Maruti Suzuki

is ruling the compact car segment in India with a market share of 50 percent followed by the Hyundai

Motors, the second largest and exporter of small cars.

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According to studies the fast-

growing small car segment will

be the largest contribution to

growth of auto market in India.

Tata Motors has a good name in

the small car segment due to the

continued success of Indica Vista

and Tatas Nano has already been

a show stealer. With the stage set,

India is expected to witness more

than dozen small or compact cars

in the auto market. In just a

couple of years, we might have half-a-dozen such vehicles to choose from. Nissan Renault recently joined

the bandwagon, unveiling plans for a $3,000 (around Rs 1.25 lakh) car for Indian roads.

3.3 PEST analysis:

3.3.1 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.

There was widespread violence in the clashes between the police and the farmers on

December 2, 2006

Delay in the production process

Support from the ruling party eased things for Tata Motors

3.3.2 Social impact

Social life upgradation

Symbol of empowerment

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Increase in safety

Traffic congestion

Pollution problem

3.3.3 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

3.3.4 Technological Impact

Automobile revolution

Mass production

Competitive advantage as the industry doesnt have same technology

R&D for low cost edition

3.4 SWOT Analysis:

Tata Motors:

SWOT Analysis Overview

Strengths

Strong domestic player

Steady revenue growth Research and development activities

Weakness

Decline in vehicle sales

Employee productivity

Passenger car products are based upon

3rd and 4th generation platforms

Opportunities

Product launches

Growing passenger car market in India Acquisition of Jaguar and Land Rover

Threats

Increasing competition

Environmental regulations Rising prices in the global economy

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brands

Sustainability and environmentalismcould mean extra costs

Tata Nano:

SWOT Analysis OverviewStrengths

Low Cost

Brand name Stylish & Eco-friendly

Fuel efficiency

First Innovation

Weakness

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

Low maintenance World wide appeal

Cost control

Parking space

Growing small car market

Threats

Increasing competition Price raise in the global economy Security not sure

Traffic congestion

3.5 Porters 5 forces:

As Porter's 5 Forces analysis deals with factors outside an industry that influence the nature of

competition within it, the forces inside the industry (microenvironment) that influence the way in

which firms compete, and so the industrys likely profitability is conducted in Porters five

forces model.

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3.5.1 Threat of new entrants:

Time and cost of entry Time is most essential thing while launching a product in any market.

The launch of the NANO is quite viable as the demand of the small car is on the rise in the

market. By the cost of the entry we mean the initial capital required to set up a new firm. If this

is very high, it makes entry difficult for a new player. In our case, there are a number of

Automobile firms that have sufficient capital to build this type of car. Hence, there is low

barriers in terms of cost of entry.

Knowledge and Technology - TATA motors have great knowledge/ experience in the automobile

industry and have renowned technological advantage because of the recent acquisition and

mergers. Other players though have not yet been able to develop the technology to produce a car,

as cost-efficient as Tata Nano.

Product Differentiation and Cost Advantage The price of the NANO car is the main thing that

attracts customers. And above all this the image, trust the name TATA carries with it makes

Nano different and attractive to be accepted by the customers.

Access to Distribution Channels TATA motors have an advantage of well established

distribution channel across the world. However, companies like Maruti Suzuki, Hyundai etc. too

have an enviable distribution channel. So, these companies are in a good position to take

advantage of these channels if they would come out with a product like Nano.

3.5.2 Threat of substitute products:

Price band If the price for Nano will increase then the main target segment i.e. the bike owners

would not upgrade from a two-wheeler to a four-wheeler, Nano. Also the middle class segment,

which Tata is targeting, would not be willing to go for Nano as there are already successful cars

in that category i.e. Maruti Suzukis 800, Alto and Chevrolets Spark.

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Substitutes performance A price rise or decrease in the two-wheeler segment would have an

impact on the quantity demanded of Nano. A price increase in the substitute product would

increase the value that a consumer would derive from Nano and vice-versa. Moreover, Tata

Nano even faces threat from players like Reva. 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. Thus, Nano would have to differentiate itself from these substitutes to ensure that it

creates demand for itself.

3.5.3 Power of Buyers:

Switching Costs The bargaining power of the buyer in this case would be moderate. The cost

of switching from a motor-bike to a Nano and from a Nano to the next cheapest car is

substantially high, considering a middle-class segment. However, considering the other aspects

of switching the company does not have an advantage. This is due to the fact that all the major

players have an equally efficient after-sales service.

Number of customers/ Volume of sales As the number of customers in the market is large,

hence the buyers do not enjoy bargaining power. However, the company cannot afford to

increase its price, given the fact that they are hinging the success of the product on its high-value

proposition.

Brand Image Nano enjoys the brand image of TATA, which has been built on a very strong

foundation of years of high quality products. It enjoys the legacy of more than five decades of

Tata Motors. Hence, the buyers would be confident about Nano even before its official launch.

3.5.4 Bargaining power of suppliers:

Number and Size of Suppliers When suppliers are limited then they can squeeze the buyers

profit to a great extent. In Nanos case there are more than 128 companies supplying parts to the

company. Hence, they do not enjoy significant power as it is not possible for these many

companies to collude together and drive home a good bargain.

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Unique Service / Product There are some components in the manufacturing of Nano, for which

there are a handful of suppliers. In this case, the bargaining power of suppliers would be more as

the company would be dependent on them for smooth production

3.5.5 Competitive rivalry among existing players:

Number and Diversity of Competitor In the current scenario, the small car market in India is

very competitive with players like Maruti Suzuki, Tata Motors, Hyundai etc. which was pretty

much dominated by Maruti. However, Tata Motorss products like Indica and now Nano have

changed the rules of the game and there is surely no absolute winner in the market. In order to be

competitive, companies either slash rates of existing products or develop new cars with advanced

technologies.

Product Quality & Price Competition - Nano enjoys the monopoly right now as there are no

competitors in this segment. However, companies like Bajaj Auto, Renault are planning to enter

the market with a similar price band. Hence, Nano in order to remain competitive has to keep its

costs under control and provide good quality at minimum prices i.e. provide value to the

customer.

Exit Barriers Investment on Nano has run into a couple of thousand crores for Tata Motors.

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. Hence, the

exit barriers for the company is very high.

4. Marketing Strategies

4.1. Segmentation Scheme and Profile

The two-wheeler segment has been in existence for a long time, i.e. even before four-wheelers

had hit the market. It is not possible for Nano to completely substitute two-wheelers. The main

inspiration of Ratan Tata was providing a safer and affordable alternative to two-wheeler for a

family of 4. A middle class family going on two-wheeler will definitely aspire for Nano, but still

everyone would not be able to afford it. So Nano would compete with two-wheelers and small

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car segment in the 4-wheeler category. It will eat out a part of the market share of two-wheelers

as well as four-wheelers rather than completely cleaning their grounds.

The 100-125 cc two-wheeler market constitutes 89% of the market share by volume. 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.

In the four-wheeler segment there are two basic divisions: Below Rs. 2.5 lakhs category and

above Rs. 3 lakhs category. The buyers of above Rs. 3 lakhs category are unlikely to switch to

Nano as their preferences would be more comfort and features. However, the other segment

would face serious competition from Nano with the expectations from the car being different i.e.

value for money.

So considering all these issues we have few options in for segmentation of market for Nano.

4.1.1. Segmentation on base of Purchasing Power:

In this segmentation scheme we can have 5 segmentation profiles

Low income Group : Earning Rs. 1 lac- 2 lac per annum

Low-Middle Income Group: Earning Rs. 2lac 3 lac per annum

Middle Income Group: Earning Rs.3 lac- 6 lac per annum

Middle- High Income Group: Earning Rs.6 lac- 8lac per annum

High Income Group: Above Rs. 8 lac

4.1.2.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. Hence, they would be

concerned about the total cost of ownership i.e. initial as well as annual. They usually look for a

low-priced fuel-efficient car with basic features.

Features conscious: The primary concern for these buyers are rich and new features that would

differentiate their cars from the other existing ones. They typically look for value add-ons such as

Airbags, Parking sensors, ABS, Power windows and steering etc.

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4.1.3. Demographic based segmentation:

People across different geographic locations exhibit different preferences and perceptions for the

value of a product. The perceived value proposition of a product also varies with the economic

class to which a person belongs, within the same geographical area. For example, two person

belonging to the same income group residing in different tier cities will have different perceived

value from Nano, and both will have to be addressed differently. Because of its high aspirations

and upward mobility, it is the middle class segment which is the maximum interest segment for

the marketing of Nano.

4.1.4. No Segmentation:

Marketing Nano without any segmentation, i.e., targeting all the possible segments as potential

buyers of Nano will provide a broader market for the product. But at the same time this can

prove counter-productive due to lack of focus in the plan.

4.2. 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. Initially among all the different

segments Middle Class forms the most promising target segment for Nano. The rationale behind

choosing this segment is that firstly this is the single most largest target market by number of

potential buyers. 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. Thirdly this target market is very aspirational and in this

developing economy they are having increasing disposable incomes. Finally why would anybodystick 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. So

there goes your economics as well.

But sticking to this segment only will not achieve sustained growth of sales in the long

run. There are other target segments also which although comparatively small in size as

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compared to middle class but will augment to sustained growth in sales. But to cater to these

segment same product line will not be that appealing and diversification will be required. The

alternate segments are:

1. Youth Segment: This segment is very prominent in young country like India where mean age is

28 years. Moreover this segment also holds promising in terms of the compatibility of their

incomes with price. In developing economy like India the youth are forerunners in GDP

contribution especially due to outsourcing in India because of cheap skilled labour. But to ignite

their aspiration for Nano it requires more than just offering 4 wheeler. It should be matched

according to their tastes of having exuberant , vibrant product specification. So TATA can extend

production of Nano by offering exciting graphics, trendy interiors etc which will require slight

modification in existing model but will reap substantial returns in the future.

2. High Income Segment: This segment will already be having 4 wheeler and that too most of them

will be in higher price segment. To make Nano appeal to them product line extention will be

required so that a luxurious product can be offered. This is because this segment had high

purchasing power, so then can shell out much more on luxury products which appeal to them. So

idea of offering luxurious models along with basic model is a good choice.This will make Nano

to be an ideal choice for being 2nd or 3rd car of a family if not the 1st one. But one more thing that

need to be handled carefully is regarding perception of Nano as being common man car. So

the promotion of luxurious model along with basic model should not create problem in the

intended message of being affordable transportation medium.

4.3. Positioning

Proper positioning strategies to be adopted considering the competitors, price, quality and thetarget people.

"Nano"--the name, its image...any stimuli relating to Nano will generate a common response in

the minds of most people...1 Lakh Car..

An ideal positioning would be to do what Bajaj Chetak did to personal mobility, and what Airtel

and Reliance did to personal communication. We should position it as a second freedom

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movement, as it would change the way family mobility is seen in India. The reason Ratan Tata

thought of launch of a small car it is the fact that entire families, sometimes four people would

ride on a bike together. Suddenly from that state, we are now going to one where people can

afford a car and spend time together. It virtually frees them from a world of overcrowded trains,

precarious rickshaws, from taxis they cant afford, and the absence of buses. In addition to that

Nano must be projected as the FIRST CAR to the potential customer in fact, the BEST FIRST

CARan average Indian can have... In ads and promotion campaigns the message that "Nano is

the best option for a first car, and you can upgrade to a bigger car when you are in a financially

better position." should be effectively communicated to the potential customers... 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. We should focus on the price comparison of Nano with the same car

segment cars. The value for money must be a focus as well.Inspite of any celebrity doing the ad ,

a common man should be taken in ad to intend the message of Nano being a Peoples Car.

5. Marketing Action Program:

5.1. Product:

There are three variants in the Nano range: Nano, Nano CX and Nano LX. The feature

comparison chart of the three models is shown below.

Items/Variants Nano Nano CX Nano LX

AC with Heater Yes YesFront PowerWindow Yes

Cup Holders inFront Yes

IRVM Plain Plain Antiglare

Gear ShiftConsole Basic Basic

High End ConsolewithProvision for Mobile

Charger/CigaretteLighter

Magazine andCoin Holder Moulder Door TrimMap PocketIntegral withDriver &Codriver Seat Fabric Pocket Fabric Pocket Separate Plastic Trim

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Front SeatHeadrests Integrated Integrated Integrated

Rear SeatHeadrests

Integrated (withNapRests)

Integrated (with NapRests)

Sunvisor on

Driver &passenger side Yes Yes Yes

Driver Seat withslider Yes

Yes (WithRecliner) Yes (With Recliner)

Passenger SideSeat with Slider

Yes (WithRecliner) Yes (With Recliner)

Front AssistGrips Yes Yes YesRear AssistGrips Yes Yes Yes

Head LampLevelling

Integral feature

throughinnovativesuspensiondesign

Integral feature

throughinnovativesuspensiondesign

Integral feature

throughinnovative

suspensiondesign

Low FuelWarning Lamp Yes Yes Yes

Rear SeatFolding Yes Yes Yes

Intrusion Beam

Integral featurethroughinnovative doorsystem design

Integral featurethrough

innovative doorsystemdesign

Integral featurethrough

innovative doorsystemdesign

Radial TubelessTyres Yes Yes Yes

The car has achieved its low price by minimizing costs on unnecessary luxuries, the basic

Nano comes without front and rear fog lights, without a heater or air conditioning, without anti-

lock brakes, only one single windscreen wiper, manually operated windows, manual steering

with no air bags, tiny 12 wheels, 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. Among the features of the car are:

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a) Stylish and comfortable

The Peoples Car, designed with a family in mind, has a roomy passenger compartment with

generous leg space and head room. It can comfortably sit four persons. Four doors with high

seating position make ingress and egress easy.

Yet with a length of 3.1 metres, width of 1.5 metres and a height of 1.6 metres, with

adequate ground clearance, it can effortlessly manoeuvre on busy roads in cities as well as in

rural areas. Its mono-volume design, with wheels at the corners and the power train at the rear,

enables it to uniquely combine both space and manoeuvrability, which will set a benchmark

among small cars.

b) Fuel-efficient engine

The Peoples Car has a rear-wheel drive, all aluminium, two-cylinder, 523 cc, 33 PS,

multi point fuel injection petrol engine. This is the first time that a two-cylinder gasoline engine

is being used in a car with a single balancer shaft. The lean design strategy has helped minimise

weight, which helps maximise performance per unit of energy consumed and delivers high fuel

efficiency. Performance is controlled by a specially designed electronic engine management

system.

c) Meets all safety requirements

The Peoples Cars safety performance exceeds current regulatory requirements. With an all

sheet-metal body, it has a strong passenger compartment, with safety features such as crumple

zones, intrusion-resistant doors, seats belts, strong seats and anchorages, and the rear tailgate

glass bonded to the body. Tubeless tyres further enhance safety.

d) Environment-friendly

The Peoples Cars tailpipe emission performance exceeds regulatory requirements. In terms of

overall pollutants, it has a lower pollution level than two-wheelers being manufactured in India

today. The high efficiency also ensures that the car has low carbon dioxide emissions, thereby

providing the twin benefits of an affordable transportation solution with a low carbon footprint.

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5.2. Pricing Strategies

The Cost price is an estimated INR 95,000, which includes material, manufacturing and

assembly cost.

Part

Body-Shell (steel, frame, welding) 25,000

Engine and Transmission (aluminium engine block, gearbox,

drive-train, steering)

30,000

Electrical items (lights, battery, starter motor) 10,000

Interior Trim (floor mats, seats, plastics, roof trim) 20,000

Tyres and suspension 10,000

Source: Business Today, How the Rs 1 lakh price tag breaks up, 22 January 2008 Cost in

Indian Rs (US$ = ~ Rs 40)

The selling price for the Indian market is INR 115,361 (ex-showroom) for Tata Nano Std (BS2),

which is inclusive of standard accessories, but exclude road tax (INR 3,815) and registration fees

(INR 6,764). The On-The-Road price will be approximately INR 125,000. These prices reflect a

strategy of taking a share from established competitors, such as Maruti Suzuki 800 and Suzuki

Alto.

The booking amount for all the 3 variants will be same through out India:

Tata Nano Std.( BS2 and BS3): Rs. 95000

Tata Nano CX( BS2 & BS3): Rs. 120000

Tata Nano LX( BS3): Rs. 140000

Tata Nano Prices

Trim level/ Variant

Ex Showroom

Pant Nagar(Rs)

Ex Showroom

Delhi(Rs)

Ex Showroom

Mumbai(Rs)

Tata Nano Std (BS2 ) 112735 NA NA

Tata Nano Std (BS3 ) 120960 123360 134250

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Tata Nano CX SolidPaint (BS2) 139780 NA NA

Tata Nano CXMetallic Paint (BS2) 142780 NA NA

Tata Nano CX SolidPaint (BS3) 145725 148360 160320

Tata Nano CXMetallic Paint (BS3) 148725 151360 163320

Tata Nano LXMetallic Paint (BS3) 170335 172360 185375

5.2.1. Setting the price selecting price objectives

Tata Motors has set major three objectives in its effort to position itself in the Indian Automotive

market. The objectives are: Survival, maximum current profit and maximum market share.

a. Survival

Intense competition from Maruti 800 for a share of the automotive market segment for the below

1,000 cc category will spur Tata Motors to ensure that the car price covers variable costs and

some fixed costs. In this case, 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.

b. Maximum current profit

Tata Motors has set a price that will maximize current profits, cash flow and return on

investment, after taking into consideration the demand and costs involved. As this category of

small cars segment has not been really tested by other manufacturers, therefore the demand is

rather difficult to estimate but Tata Motors is confident of a good response towards its entry into

the Indian market.

c. Maximum Market Share

For the Indian market, TNM will implement the market-penetration pricing, 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. This

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will be done by achieving high sales volume, which will results in falling costs, allowing the

company to cut its price even further. We are positive enough that the Indian small car market is

highly price sensitive, as a low price produces more market growth. 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. 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.

PROMOTION STRATEGIES

1. Objectives of Promotion Strategies

Before determine the promotion strategies, we need to very clear about what are the objectiveswe need to achieve. We know as above, our missions are to promote Tata Nano in India andincrease the sales. Tata Nano is very new for India, and there is a fresh feel associated with thisnew brand and concept of this car.

So first of the objective for promotion strategies are aims to create brand awareness andconcept/knowledge of this new car Tata Nano. This is the cheapest car in the world and burstinto the worldwide market in a short time. But still is the new brand for the Indians, so we do theadvertisement and organize the event or campaign in sufficient detail to establish positive brandattitudes. Brand awareness is important to provide a foundation for brand equity.After that, our second objective is to generate knowledge and awareness about its benefits. Weaim to create liking, preference, conviction, resulting in purchase of a Tata Nano car. We can dothe comparison with other cars which have a higher purchase price and this price is somethingthat will not be affordable for all people, especially lower income families and students. Besidesthat we will convince current purchasers that we will give the potential customer to enjoying thegood experience with Tata Nano by give try to drive the Tata Nano before buying the car. Andalso will provide them warranty to the Tata Nano.We will organize all the promotion strategies with lower cost to maintain the lower purchaseprice for the Tata Nano in India.

2. Promotion Tag line

Less is More

Why have we selected this tag line? That is because this line is easy to remember andcommunicates concisely and precisely the image that we want the prospective customers to

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associate with Tata Nano, i.e., a car that uses the minimum amount of resources to deliver themaximum utility. The tagline has to be such that it doesnt create any notion about the car beingcheap, but rather focuses on the utility aspect to communicate the value associated with theproduct.

3. Advertising ProgramThe aim of the advertising program will be to create awareness about the brand, to highlightpositive utility features of the product, and to emphasis on the fact that low price of the productdoes not mean any compromise with the safety, quality and environment friendliness of theproduct.

3.1. Online Advertisement

First step to start with advertising of Tata Nano, is to communicate through the internet channel.For this, a web site will be created to provide the consumers with a reliable source of informationabout the product. The website will have rich graphic content to capitalize on the attractiveexterior design of the car. Also the website will have information regarding the technical

specifications of the different variants, comparisons with other competitive models of othercompanies, section relating to news articles about Tata Nano and a section where visitors canprovide feedback and enter discussions regarding the car.

The website will also provide links to Tata Nano communities on various online socialnetworking websites like Orkut, Hi5, Myspace, and FaceBook.Besides that, Blogs have become an important outlet for word of mouth publicity, which areregularly updated online diaries. Blogs are bringing together people with common interests andprovide a more interactive and personal source of information than regular websites.To addressinformation needs of more information hungry customers, a blog will be floated which will beregularly updated. We can establish the blog network and by careful monitoring can find outwhat is the opinion of the prospective customers regarding the product. This is a cheapest andmost information rich way to build up brand awareness.

3.2 Television Advertisement

Television advertising is relatively expensive but this is the most powerful medium to reach themaximum number of audience. The TV advertisement will be built around the tagline of TataNano and will focus on its attributes and will persuasively explain their corresponding consumerbenefits. Properly designed and executed TV advertising campaign can ensure a widespreadawareness of the product and improve brand equity and can positively affect sales and profits.3.3 Radio Advertisement

Radio audience in India can be divided into two broad categories:1. Metro audience, with the primary channel medium being FM radio.2. Semi-urban and rural audience, with All India Radio being the primary channel medium

Most of the radio listeners use the radio daily. This is a cheap and pervasive medium for creatingbrand awareness by airing radio commercials to build brand awareness. Advantages of the radioadvertisement are flexibility, quick response, low advertising costs and also more effective mediafor reaching youth market.

3.4 Print Media Advertisement

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All the regional and national daily newspapers and magazines have a huge subscriber base. Printmedia advertising gives the benefit of delivering a more detailed and rich information content forthe target customers. Advertising in local dailies and magazines can be comparatively cost-effective due to lower cost of advertising space.

Place

The primary mode of distribution for automobiles in India is through authorised dealers whohave exclusive rights to retail the companys products in their respective regions. Usually thesedealers also provide service support by managing service centres along with retail facilities. TataMotors can leverage its strong presence in urban and semi-urban markets through its widedistribution network for existing Tata Motors automotive product portfolio in Tier-I and Tier-IIcities. The high affordability of Tata Nano is expected to generate demand in smaller Tier-IIIcities as well. This calls for extension of distribution network of authorised dealers to thesecities, which will cater to the demand from these cities as well as from the semi-urban areas in

proximity of these cities.

Market Research:

An online market research survey having a sample size of 254 respondents was carried out. Theresults are summarised by the following graphs:

Brand Recognition: The brand recognition of Tata Nano is very high as 94% of respondentswere able to identify thebrand Nano with the Tatassmall car. This highrecognition can beattributed to the media buzzthat development andlaunch of the car hasproduced in India. Only 6%of the respondents were notaware of the brand andcould not relate it to theTata car.

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Brand Perception: When asked the question What is the first thing that comes into your mindwhen you think about NANO?, a majority of the respondents perceived the brand as cheap.Considering that Nano is44% less in cost to thecheapest available small

car in India, this perceptionis explicable. Changingthis perception to that of aeconomically efficientquality product is achallenge for marketing ofthis product.

Price Sensitivity: A majority of the respondents showed a high sensitivity to change in price of Nano. Only 17% of therespondents were ready topurchase Nano even if the priceswent high. On the other hand,65% of the respondents wereready to change their purchasedecision in the eventuality ofprices of Nano going up.

Safety Perception: Though37% of respondents considerNano to be of high safetystandards, there are still 28%who consider it to be low on

safety. 35% did not comment on their safety perception of Nano, indicating low awareness aboutsafety features of the Nano.

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Total expenditure on the Singur Plant in West Bengal was Rs. 2000 crores.

However, a substantial part of the investment was transferred to Sanand, Gujarat. The total

estimated loss for Tata Motors at the Singur plant is estimated to be Rs. 1000 crores.

Total estimated expenditure on the Sanand plant in Gujarat is Rs. 2000 crores out of which

Rs. 1000 crores is the investment that was transferred from the Singur plant.

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:

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COST ANALYSIS NANO NANO CX NANO LX

BS II BS III BS II BS III

Selling Price( ex-

Delhi showroom

price) Rs. 1,15,361 Rs. 1,23,361 Rs. 1,40,361 Rs. 1,48,361 Rs. 1,72,361Cost:

Body Shell 27162.5

29046.15

219

33048.91

309

34932.56

527

40583.52

184

Engine and

Transmission 32595

34855.38

262

39658.69

57

41919.07

833

48700.22

62

Electrical items 10865

11618.46

087

13219.56

523

13973.02

611

16233.40

873

Interior time 2173023236.92

17526439.13

04727946.05

22232466.81

747

Tyres and

suspension 10865

11618.46

087

13219.56

523

13973.02

611

16233.40

873

Total Cost 103217.5

110375.3

783

125585.8

697

132743.7

48

154217.3

83

Contribution

Rs.

12,144

Rs.

12,986

Rs.

14,775

Rs.

15,617

Rs.

18,144

Average

Contribution

Rs.

12,565

Rs.

15,196

Rs.

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The actual cost for the model for NANO BSII in Jan 2008 was:

Part

Body-Shell (steel, frame, welding) 25,000

Engine and Transmission (aluminium engine block, gearbox,

drive-train, steering)

30,000

Electrical items (lights, battery, starter motor) 10,000

Interior Trim (floor mats, seats, plastics, roof trim) 20,000

Tyres and suspension 10,000

Source: Business Today, How the Rs 1 lakh price tag breaks up, 22 January 2008

Considering the inflation rate of 6% for 2008 and 5% for 2009 cost is:

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Body Shell 27162.5

Engine and Transmission 32595Electrical items 10865

Interior time 21730Tyres and suspension 10865

Total Cost 103217.5


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For the calculation of the cost of higher models, we take the ratio of the respective selling

prices as the factor to determine their cost prices i.e.

Cost of Nano BS III = Cost of Nano BS II*SP of Nano BSIII/SP of Nano BS II

Cost escalation on higher models

NANO BSIII/BSII

1.0693475

26NANO CX BS II/NANO BS

II

1.2167110

2NANO CX BS III/NANO BS

II

1.2860585

47

NANO LX/NANO BS II

1.4941011

26

Calculation of Contribution

Particulars NANO(20%) NANO CX(30%) NANO LX(50%) Contribution

2008-09SalesQuantity=50000 10000 15000 25000

Sales ValueRs.

12,56,45,608.44

Rs.22,79,42,866.7

6

Rs.45,35,90,425.6

0

Rs.80,71,78,900.8

0

2009-10SalesQuantity=300000 60000 90000 150000

Sales ValueRs.

75,38,73,650.63

Rs.1,36,76,57,200.

57

Rs.2,72,15,42,553.

59

Rs.4,84,30,73,404.

79

2010-11SalesQuantity=350000 70000 105000 175000

Sales ValueRs.

87,95,19,259.07

Rs.1,59,56,00,067.

33

Rs.3,17,51,32,979.

19

Rs.5,65,02,52,305.

59

2011-12Sales 80000 120000 200000

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Quantity=400000

Sales Value

Rs.1,00,51,64,867.5

0

Rs.1,82,35,42,934.

09

Rs.3,62,87,23,404.

79

Rs.6,45,74,31,206.

39

2012-13

SalesQuantity=450000 90000 135000 225000

Sales Value

Rs.1,13,08,10,475.9

4

Rs.2,05,14,85,800.

86

Rs.4,08,23,13,830.

39

Rs.7,26,46,10,107.

19

2013-14SalesQuantity=500000 100000 150000 250000

Sales Value

Rs.1,25,64,56,084.3

8

Rs.2,27,94,28,667.

62

Rs.4,53,59,04,255.

99

Rs.8,07,17,89,007.

98

2014-15

SalesQuantity=550000 110000 165000 275000

Sales Value

Rs.1,38,21,01,692.8

2

Rs.2,50,73,71,534.

38

Rs.4,98,94,94,681.

59

Rs.8,87,89,67,908.

78

From the above table we can see that the company would break even in the year 2012-13.

In the calculation of the above figures, we have deducted the variable cost from the selling

price in order to get the contribution. A further analysis of the net profit after deducting the

depreciation is shown below:

Taking Rs. 2000 crores as the Total Cost of the plant, we assume the Fixed Assets to the

tune of Rs. 1100 crores, considering the fact that around 50-60% of the assets in automobile

companies are Fixed Assets.

Depreciation:

1100@5%=Rs. 55 crores

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ParticularsNANO(20%)

NANOCX(30%)

NANOLX(50%)

Contribution

Depreciation Net Profit

2008-09SalesQuantity=50000 10000 15000 25000

Sales Value12564560

8.422794286

6.845359042

5.680717890

0.855000000

025717890

12009-10SalesQuantity=300000 60000 90000 150000

Sales Value75387365

0.613676572

0127215425

5448430734

0555000000

042930734

052010-11SalesQuantity=350

000 70000 105000 175000

Sales Value87951925

9.115956000

6731751329

7956502523

0655000000

051002523

062011-12SalesQuantity=400000 80000 120000 200000

Sales Value10051648

6818235429

3436287234

0564574312

0655000000

059074312


000 90000 135000 225000

Sales Value11308104

7620514858

0140823138

3072646101

0755000000

067146101

072013-14SalesQuantity=500000 100000 150000 250000

Sales Value12564560

8422794286

6845359042

5680717890

0855000000

075217890


000 110000 165000 275000

Sales Value13821016

9325073715

3449894946

8288789679

0955000000

083289679

09

We see from the above statement that even after deducting non-cash expenditure i.e.

Depreciation, the company is earning profits.

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Finaltata Nano Mm Proj

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