PRICING STRATEGIES for “ the people’s car ”
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Transcript of PRICING STRATEGIES for “ the people’s car ”
PRICING STRATEGIES for “the people’s car”
Presented by:Dr. Amrita Singh
Alok KumarAjay Singh
Anushree PanditGaganbir Kaur
Jatin SaxenaJyoti
Ishrat Batool
Team - Brazen
Development of a One lakh Car
WHAT MAKES IT SO CHEAP!
• The TATA Nano uses plastics and adhesives rather than welding.
• Partially using inexpensive polymers or biodegradable plastics instead of a full metal body.
• It has no AC, no power steering, no power windows.
Target Market
Why should People Buy Nano..
• Low price and covers basic needs of a car.
• Its look cute and attractive• Better facilities for servicing and
maintenance• Easy finance
But was It REALLY a 1 LAKH Rupees Car?
Why the price hike? Tata said that
“ expensive lending rates, higher fuel costs, and inflation hit margins during the last year is forcing us to pass on the costs to its customers.”
Increasing input costs, especially that of steel and other commodities like rubber, had put pressure on margins.
TATA PRICING OBJECTIVES
• Survival• Maximizing market share• Keeping the price range near 1 lakh• Discouraging potential competition
TATA’S PRICING STRATEGY
Though the one lack tag was not fixed by TATA group, it was the word of mouth of people which fixed the range. This expectation of people creates a big challenge for the company. To accept this challenge the following strategies are followed:
• Increasing market share
• Penetration pricing
• Low pricing policy with minimum profit margin
PRICE OF VARIOUS CARS
NANO 1.3-1.9 LACK MARUTI 800 1.9-2.3 LACK
ALTO 2.3 LACK SANTRO 2.77 LACK
AVAILABLE FINANCING SCHEMES • Tata Motors Finance (TMF) will provide finance up to
90% for the Nano at easy rates.
• the company has announced a four-year or 60,000 kilometer manufacturing warranty at no extra cost.
• Loan within 48 hours
• comprehensive maintenance contract at Rs. 99 per month for all new customers.
Proposed pricing objectives• Survival
• New market penetration
• Increase the perceived value of Nano
• Increase market share
PROPOSED PRICING STRATEGIES
• Penetration pricing
• Target costing
• Low pricing policy with minimum profit margin which is only 2%
• Perceived value pricing
• Increased market growth
• Discouraged potential competition
Selecting the final pricing
• Influence of other marketing mix
• Cash discount
Price Listex showroom prices
ModelNano BS IV
Nano CX BS IV
Nano LX BS IV
PriceRs 145,000
Rs 170,078
Rs 196,956
Banks
PROJECTED NEW COST% allocated 2010 2011
145,000 153,000Manufacturing
cost 40 58000 61200
place 20 29000 30600
promotion 30 43500 45900
tax 5 7250 7650
misc. 3 4350 4590
profit 20 2900 3060
sales 60,000 69000
RECOMMENDATIONS
• Through government subsidies and tax
• Collaboration for loans with Gramin banks and post offices
• Cost effectiveness – Spare parts packages
• Nano Special Outlets(NSO) discount
• Decreasing down payment in rural areas
Thank You