INSTITUTE OF MANAGEMENT TECHNOLOGY HYDERABAD
CASE STUDY ON
“POSITIONING THE TATA NANO(A)”
1. VIJETH S 18A3HP603
2. YASH SHRIVASTAVA 18A1HP095
3. SIDDHARTH K 18A3HP638
4. SAI BHARDWAJ 18A3HP645
5. VIPAL VORA 18A3HP615
6. SAKSHI MUNDHRA 18A3HP611
7. SOWMYA ALUR 18A3HP626
Submitted to – Dr. Rambalak Yadav
Date – 9th September 2018
TATA the well know trusted brand in India known for ethics and affordability. It spread across various sectors like steel mill, luxury hotel, airlines, automobiles. Similarly, Ratan TATA dream of ultra-low-cost car become to reality with NANO. NANO small car with segment category of A is affordable family transport, has potential to revolutionize the market of small cars. TATA NANO will provide competition to Maruti which was dominating in A category sector i.e. Entry level- hatchback. The main advantage of NANO was its affordable price of just Rs. 1 Lakh and providing almost all features of Maruti Suzuki. Hence NANO not only provide competition to entry level hatchback but also to two-wheeler industry which constitutes major automobile industry. The TATA Nano was meant to target various segment of people – (1) City Movers (2) Two-Wheeler Segment (3) Students (4) Public Transport Commuters. Since India per capita ownership of automobiles is very low i.e. 12 per 1,000. TATA NANO can dictate market term given its affordable price and safe features.
What will the sales goal for the Nano you recommend?
Ratan Tata wanted every household to have a car which was affordable and at the same time safe and comfortable. Nano was the perfect solution implemented by Tata Motors Ltd, but their projection of sales during the initial release of the car to the public was a bit off.
Initially, they projected to sell only 50000 which would be produced in their Pantnagar facility and later planned to sell about a million (10 lakhs) annually with the help of the three plants built in Singur. But as shown in exhibit 2 of the case, this projection was not met because as on June 2011, TML procured only 16.45% of the market share in passenger vehicle segment with Maruti Suzuki leading the list with 46.07%.
It is clearly given in the case that the automobile industry had a growth rate of 17% annually. In light of this information, by 2011 the total demand for passenger vehicles should’ve been approximately 2944714 (29 lakhs) from the 1838593 (18 lakhs) in the year 2008-2009. And according to exhibit 2, TML had a share of 16.45% of 2944714 which amounts to 484405(4.8Lakhs) and Maruti’s share was 46.07% of 2944714 which is 1356630(13.5Lakhs).
Company Sales 2010 Sales 2011
Tata Motors 1159512.8 1356630
Maruti Suzuki 414021.83 484405.54
Total sales in Passenger Car Segment 2516850 2944714.5
TML’s projection of sales was indeed the right one to pursue but according to the above calculations, it seems they were unable to achieve it due to various other reasons which maybe competition from two-wheelers or the general public preferring cars of Maruti Suzuki or maybe they were unable to build the 3 manufacturing facilities in Singur on time to enable them to achieve their targets.
Position of TATA Nano
The Tata motors goal is ultra-low-cost car family and safer transport and it sets with inspiration of Ratan TATA. The best positing for Nano as
affordable family transport.
Nano is fulfilling all the POP (Point of Parity) for A segment for the market and POD (POD of Difference) provides over other competitors of the market.
The main challenges that NANO is facing from two-wheeler industry. It can also provide POD to two-wheeler industry by providing safety and luxury component at almost same affordable price.
Similarly, A segment category Its nearest competitor is Maruti Suzuki. Nano is cheaper as compared to Maruti Suzuki and with almost same features in different versions of Nano. The POD is cheap price, more length and height with fuel efficiency.
Hence it can dictate market terms. The car owner per 1000 is just 12 and with increasing aspiring middle class Nano is even substitute of public transport.
Nano can secure good window of opportunity to capture market share.
Recommended positioning strategy was superior to the other one:
The TATAs strongly believed in trust and commitment to ethics, they wanted to position Nano as a means of family transport replacing the motorbike.
This strategy is superior to the other; which is positioning Nano on usage situation. There are various reasons and the most important one being it could appeal the consumers as the most affordable option available in passenger car segment.
It also created a perception among the masses that this could improve the quality of life and owning a car was not a luxury anymore.
The target market was huge, from the statistics only 12/1000 own cars in India whereas in the US 765/1000 people owned cars.
The rapidly growing middle class could afford a low-cost car without compromising the quality and this is exactly what they aimed for.
The size of the Nano was less when compared to its competitors which increased its maneuverability.
By 2025, 41 percent of the population will be middle class. The household income rises which eventually increase the purchasing power. Having said that the middle-class customer is a tough one and it will be a challenge for the companies to meet the high aspirations coupled with low prices.