Positioning of TATA Nano
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Positioning the TATA Nano
SECTION BGROUP 4:
NARENDRASINGH ANURAG B SETHU AKSHAY ANURAJANAVADHESHJAYESH
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Case Overview
• In 2009, launch of Nano from TML• Problem in front of Ratan Tata - How best to
position his new brand – ultra low cost cars
• Option One – Family transport
• Option Two – Usage situation
• Which option to choose ?
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The TATA Group : Company History
• Founded by Jamsetji Tata in 1868 as trading company
• First steel mill, power utility, luxury hotel and international airline
• By 2011, 98 companies over 7 sectors.• Company seen as Inspired trust & a strong
commitment to ethics • By TATA Code of Conduct, TATA promised to
improve the quality of life and Nano is a prime example.
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The automotive industry in india• Automobile industry flourished with an average growth rate
of 17 percent annually post liberaliszation• In 2009 industry produced more than 11 million vehichles
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• Despite growth, per capita ownership of automobile is low compared to developed countries
• Estimated 12 car owners per 1000 people, versus 765 per 1000 in US and 426 per 1000 in UK
• Two wheelers dominate Indian market due to fuel efficiency , low purchase, and low maintenance cost
• About 76 % of all vehicle sales in India are of 2 wheelers and remaining are passenger vehicle
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Segmentation of passenger vehicle
Segment Description Price range
A Entry level hatchback(ex- Alto , maruti 800)
Under 3.5 lakhs
B1 Hatchback(ex - Tata indica)
3.5 to 6 lakhs
B2 Hatchback 6 to 7.5 lakhs
C1 Sedan Under 8 lakhs
C2 Sedan 8 to 9.5 lakhs
D1 Premium sedan Under 15 lakhs
D2 Luxuty sedan Under 25 lakhs
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THE NANO• 2007 Geneva auto show - “world’s smallest
and cheapest car” and most fuel-efficient which would be known as “ people’s car” at Rs. 1 lakh price.
• To reduce the costs associated with parts and manufacturing without compromising quality, Tata partnered with different suppliers including GKN Driveline India (driveshaft)
• The development of the NANO’s engine i.e. two cylinder 624 cc ,was left to Tata motors
• 3 models : The Nano, The Nano CX and The Nano LX
• The Nano met Rest. 1 lakh goal by omitting many features like power steering, power window, ac etc. Whereas The Nano CX and The Nano LX offered more luxurious car at higher price
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• First year, TML planned to produce 3,50,000 Nanos at a plant being built at Singur, WB.
• Conflict at Singur
• In September 2008, shift to Sanand, Gujarat – with delay in production of 18 to 24 months.
• By not postponing the much anticipated launch, TML started to produce 50,000 Nanos temporarily at Pantnagar plant, Uttarakhand.
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Competition
• Maruti 800 : most affordable car in India until the release of Nano
• Current major competitor : Maruti Alto• Future competition : ULC cars from Hyundai, Maruti, Habib
Motors, Renault Nissan, Toyota and Ford• Two wheeler segment – low price, fuel efficiency, easy
maneuverability, low maintenance cost compared to Nano• Consumer behavior – more value for money
slightly more cost, but better engine, safety features and more space – Wagon R, Santro Xing, Chevrolet Beat,
Alto etc
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Distribution Channels
• A 17-day booking window, of which customers would be selected via lottery
• Booking options :Online bookingTata DealershipOffline booking at SBI branches and various
Tata stores• Deposit payment must
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• Dealerships214 dealerships across 28 statesDealer margins cut down from 4-10 % to 2-3%1% discount if dealer paid cash upfront
• Toyed with the idea of using entrepreneurial engineers as local retailers
• Idea scrapped due to potential warranty and liability issues.
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Positioning of Nano
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2009
• In April 2009, out of the initial bookings of 2,03,000 Nanos, 1,00,000 were selected using lottery system
• Half bookings were for Nano LX, 30% for Nano CX and 20% for the basic Nano
• The new Sanand plant provided a capacity of 2,50,000 units per year
• Open Sales through Tata Dealerships began from a single state in 2009
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2010 onwards..
• Monthly sales grew peaking at 9,000 units per month in July 2010
• In November 2010, when the car sales grew 22%, sales of Nano plummeted to a mere 509 units
• This was due to two causes:– Rising safety issues– Rising raw material costs
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Fire fighting
• Tata motors conducted an investigation. TML issued a statement that the fires were a result of “foreign electrical equipment” and not due to any safety issues in car
• TML took measures and improved the electrical system of the car
• TML also increased the 18 months warranty to 4 years or 60,000 Kms
• By December, the sales rebounded to 5,784 units
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