Management Development Institute, Gurgaon

Submitted By :

Aabid Bains (15P001)

Arti Jain (15P011)

Gautam Bindlish (15P021)

Mayank Rajput (15P031)

Rohit Gupta (15P041)

Siddharth Gupta (15P051)

MARKETING PLANNING Study on TATA NANO

2

INDEX

Chapter No. Chapter Name Page Number

Section-1 1 Preface 3 2 The Curious Case of Tata Nano 4 3 SWOT and PEST Analysis 6

Section-2 4 Porters Five Forces Analysis 11 5 Analysis of Consumer Behavior 14

Section-3

6 Positioning Strategies 20

3

CHAPTER : 1

PREFACE

The project aims at building a comprehensive understanding of how a company decides

its marketing strategy and answer associated questions such as pricing, promotion and

positioning of the product. Post launch, the effectiveness of the marketing strategy and

performance of the product is also to be analyzed.

The project also aims to analyze the decision-making process, purchase behavior and

buying patterns from the perspective of the consumer. We will consider the dynamic

market environment and changes at the micro and macro levels in the economy which

affect the automobile sector

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CHAPTER : 2

The Curious Case Of TATA Nano

Introduced in January 2008 and launched in March 2009, TATA Nano was the most

awaited launch of the year or perhaps the decade for the automobile industry. TATA

MOTORS invested heavily in the project, not only financially but also as a brand. They

were going to build an affordable Rs 1 Lakh car that would catapult even the low-

income groups into the car-owner category. They were going to empower the not-so-

rich, the aspirational young guns and eventually revolutionize the automobile market.

The launch was covered by the national and international media alike and people around

the world supposedly watched in awe at yet another example of cost-effective Indian

engineering. The Economist ran a story The new Peoples Car, Forbes said Delivering

On A Promise: Tata Rolls Out The Nano, Knowledge@Wharton (University of Penn) ran

a story No Small Wonder: The Tatas Launch the Nano, ToI wrote Tata Nano: What

Women Want... elaborating how Indian women are going to go crazy behind Nano.

There were a few who were suggested caution like FT which had a story Tata Nano

goes for a song where author was concerned about the engineering details of the car

and how it might not cut ice with the modern customer which was increasingly becoming

aware of technicalities. All of them, however, believed that Nano had the potential of

turning around the fortune of TML.

Fast forward six years, sales of Nano are all set to hit six-year low [1] ,managing to sell

only 10% of its nearest market-price competitor [2]. The costliest version is well above Rs

2 lakh, that of cheapest is around Rs 1.6 lakh and there were few takers for either. Nano

proved to be a big financial drain and is no longer the center of Tatas business strategy

or turnaround plans, as it used to be till a few years ago.

[1] http://indianexpress.com/article/business/business-others/sales-of-tata-nano-worlds-cheapest-car-set-to-hit-six-year-lows/ [2] http://autoportal.com/newcars/tata/nano/sales-statistics/

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An important aspect of the entire case is that Tata Nano was indeed a low cost, high

mileage, affordable 4-seater family car. Tata delivered exactly what they promised. As a

matter of fact, they have improved upon the technical specifications, design and interiors

in their successive models over the past 6 years. So what exactly went wrong?

Several theories were suggested for the failure of Tata Nano putting blame on

engineering, marketing, supply chain and operations and even the PR Cell. At the end, it

took Ratan Tata to finally come out and state the obvious. In this interview to CNBC in

Nov13, he said It (Nano) became to termed as the cheapest car by the public and, I am

sorry to say, by ourselves, not by me, but the company when it was marketing it, I think

that is unfortunate. A multi-billion project from an automobile behemoth fell flat on its

face due to one simple flaw in the marketing strategy. Rather than making it the

peoples car, they marketed it as a car which comes cheap. This small mistake made

the difference.

Through the course of this project, we will attempt to find answers to certain questions.

Exactly why did the strategy of selling a cheap car failed and why a peoples car

would have succeeded. Was there a difference between the target segment and the

segment to which the marketing team was pitching? How the customer behavior was

influenced by the marketing strategy?

Indian automobile industry is perhaps one of the largest in the world with an annual

production of 21.48 million units in FY 2013-14. It alone accounts for 22% of countrys

total manufacturing GDP and the output is expected to reach $145 billion by 2016.

Considering that the sales and market competition is largely driven by marketing, it is

imperative that we understand the implications of marketing failure and ways to revive

the product in the aftermath or establish the criteria to kill it, if required.

Another objective would be to develop a model to identify and eliminate any inherent flaw

in the marketing strategy at the initial stages itself. Nano is just one product but it

represents a big prospective customer segment of the 4-wheeler category.

Understanding what went wrong and what went right would help us to identify and

establish some general principles of marketing.

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CHAPTER : 3

SWOT & PEST ANALYSIS

Parent Company : Tata Motors

Category : Hatchback

Sector : Automobiles

Tagline/ Slogan : Khushiyon ki chabi

SWOT Analysis: It will give us a clear picture of the car as it is and how it compares

with its competitors. It will give us the strengths on which Nano can build on, the

weaknesses it need to work on, the opportunities it needs to capitalize and the threats it

need to be aware of.

Strengths

First innovator set a benchmark Peoples car

31 design and 37 technology patents filed - Innovative engineering which provides

superior facilities

Affordable price (Rs 1.65 Lakh - Rs 2.99 Lakh)

Good fuel efficiency (21.9kmpl to 25kmpl) translates to lower running costs and

better economy.

NANO eMAX (CNG driven) has the lowest carbon footprint of 75.269 gm/km

(most fuel efficient) and gives a mileage of 36 km/kg

Easy to drive in traffic conditions (smallest turning radius - 4m). Easy

manoeuvring of the nano is a major strength.

Low maintenance and handling cost which is very important for the target

segmented base.

First-in-segment digital information display with digital clock, dual trip meter,

instantaneous fuel consumption, distance-to-empty, average fuel consumption

and gear shift indicator

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Weaknesses

Just meets the Bharat Stage 4 standards, therefore, difficult to introduce in

developed markets like Europe

Absence of modern facilities and high safety standards

Only useful for specific terrain like city and plains, difficult to drive in mountains

Less boot and trunk space

Perceived as a cheap product which repels the aspirational customers

Limited international presence

No foothold in the luxury car segment as its domestic market has isolated it from

lucrative segments

Opportunities

Capitalize on the fact that it is the most affordable car and acquire new customers

Increasing per capita income and purchasing capability of lower middle class

which are its main customers

Promote CNG model as more people are moving towards green energy

Increase international market presence especially Europe and South East Asia

where there is more demand in this segment

Improve emission standards which will provide it access to European market

Associate it with Land Rover and Jaguar dealership which will increase the

footprint in developed markets

Threats

Other competing car manufacturers have been in the passenger car business for

40 to 50 or more years. Therefore, Tata has to catch up in terms of quality and

lean production.

Product innovations and frugal engineering by competitors

Strict safety standards in place in most of the countries.

Sustainability and environmentalism could mean extra costs for this low-cost

producer. This could impact its underpinning competitive advantage.

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The branding was done as the cheapest car and not as peoples car as it is

being done now. There is still a perception of it being a cheap car associated

with it which is perhaps the biggest threat.

Many new competitors are entering the market like Bajaj, Honda, etc.

PEST Analysis: It is a standard way of analysing macro-economical forces which

impact a company or a corporation.

Political

Need to co-operate and be contribute to the policy formulation process of Ministry

of Shipping, Road Transport & Highways (MoSRT&H)

Uncertain taxation levels are an important consideration. General excise duty rate

increased to 12.5% from 12%, thereby increasing excise duty on small cars, CVs,

2Ws, etc. and service tax rate increased to 14% (Source : Union Budget)

Regions of India offer incentives such as tax/excise duty benefits through special

zones and tax holiday schemes

Labour regulations should be closely monitored while paying attention to regional

governing bodies

Developments in international political scenario such as South Asian free trade

agreement, getting MFN (Most favoured Nation Status) from neighbours and

changes in the WTO agreements affect the automobile sector

Collaboration with Jaguar and Land Rover - Full comprehension to governing

bodies and laws regulating commerce in UK

Political controversies The Singur controversy TML acquired a land of 997

acres for manufacturing Nano but this resulted in displacement of farmers and

attracted heavy criticism. However, plant was closed subsequently and reopened

in Gujarat.

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Economical

Consistent growth in the automobile sector in India which saw 8.68% YoY growth

in 2014-15

Automotive export has also shown considerable growth of 14.89% last year

including 4.42% growth in the passenger vehicle segment. South and south-east

Asia is a potential market.

Huge market to tap in Tier II and Tier III cities 8% growth in the auto sector

Large potential target segment for Nano

TMLs economic scenario is quite promising with GDP growth around 7%

Pricing and currency would affect the vehicles in terms that it would define worth

of exporting

Banks have been grappling with huge NPAs mostly coming out of corporate

loans. This has led them to focus on retail loans. All consumer segments of the

market are expected to benefit out of this.

Socio-cultural

The manufacturing site of Nano eventually attracted a lot of investors and

automobile companies to set up their respective manufacturing bases. The city,

Sanand, is now being called the Detroit of India.

Need a cautious approach with regards to land acquisition to avoid another singur

like stand off

Tata Motors should be the source of large scale employment in the auto sector

specifically

Positive brand building to be done through CSR initiatives as Tatas have been

involved in philanthropic works due to which they enjoy a lot of public support and

appreciation

Nano has connect with the Indian populace and is seen as the peoples car. It is

an aspirational product for Indias large 4 wheeler segment. .

By 2020, disposable income will grow significantly allowing stronger purchasing

power (change in demographics)

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Technological

Must adhere to the rules listed in the Technological Motor Vehicles Act 1988

(MVA) and the Central Motor Vehicles rules 1989 (CMVR).

Challenges to meet the international standards related to emission, safety etc. as

detailed by the auto fuel policy (GoI) while maintaining the low cost advantage

over its competitors

Maintain required standards in the main areas such as environmental imperative,

safety requirements, competitive pressures and customer expectations

Integration of latest technological developments of associated companies such as

Tata Technologies Ltd into Tata motors. After the acquisition of Jaguar and Land

Rover, TATAs have been successfully introducing certain features of these cars in

their own models like Safari and Manza. It is expected that eventually certain cost

effective features may be adopted in Nano as well.

Conclusion

Tata Nano is a product that has not only found strength and expansion through its parent

company but also through its numerous acquisitions and mergers. Tata Nano still

remains the world's most affordable car. Tata Nano is somehow holding in the market,

however, it needs to focus on globalization and innovation in order to survive and grow.

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CHAPTER : 4

PORTERS FIVE FORCES ANALYSIS

Porters Five Forces Model : The model of the five competitive forces was developed

by Michael E. Poter (Harvard University) and it is a framework to analyse the intensity of

competition within an industry and therefore, its business strategy development.

Industrial organization economics is used to derive the forces that determine the

competitive intensity and attractiveness of an industry. Attractiveness refers to the overall

profitability.

Analysis of Tata Nano basis Porters Five Forces Model

1. Threat of New entrants

It is very high for the small car sector in the automobile industry. The growth in economy

and the increasing purchasing power of customers has given every automobile player

the option to compete. To name a few cars, we have Renaults XBA 800cc, Datsun Redi-

GO, Maruti Celerio, etc. International players like Volkswagen, Nissan, Toyota, etc. can

also be expected to come up with a few launches threatening Nano via competitive

pricing and product differentiation. A number of non-automobile players may also direct

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their focus in the electric car segment. Barriers for entry include economies of scale,

brand loyalty of customers, scarcity of expertise, competition from existing players,

customer switching costs and the investment decisions. Considering that the threat of

new entrants is high, the industry attractiveness for Nano seems low. Tata needs to

leverage its knowledge and experience in the automobile industry and focus on its

technological advantage and availability of a well-established global distribution channel

in order to sustain its market.

2. Threat of Substitutes

Substitutes for Nano already exist in the market. Some examples are Maruti Alto, GM

Spark, Wagon R and Reva electric car etc. Most of the car manufacturers have a product

in the small car segment to defend the market share in terms of sales. Going via

customer perspective, the alternative for a Nano will be either a new car in small car

segment or a second hand vehicle at lowered prices comparable to Nanos cost. Other

substitutes include auto rickshaws (LPG, Diesel & Petrol variants) which can be used for

commercial purposes as well. For example, Bajajs TVS King in auto rickshaw segment

enjoyed a good response not only for commercial use, but also for personal use as an

alternative with good fuel efficiency. The customer rationale in term of cost varies across

three verticals: Initial cost of buying the car, maintenance cost and re-sale value of the

vehicle (depreciation should be less). Further, status symbol and buyers willingness to

opt for Nano also impact Tata. Threat of substitutes seems high, thereby; industry

attractiveness for Nano seems low.

3. Bargaining power of suppliers

The suppliers for the automobile industry include supply of raw materials and

components involved in the value chain processes. Steel is a major raw material for the

industry and its price is constantly increasing owing to excessive demand and

availability. For Tata, the bargaining power of suppliers is less as it has its own steel

subsidiary Tata Steel to obtain regular supply of steel and ancillary parts. For other

players, this bargaining power is moderate, thereby, Tata has an advantage. However,

the number of suppliers is increasing owing to varied opportunities in automobile

industry. Further, switching costs of suppliers products is another factor which

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determines the bargaining power. Given all factors, bargaining power of suppliers is

moderate; hence, industry attractiveness for Nano is also moderate.

4. Bargaining power of buyers

Nano is still termed as the worlds cheapest car. However, presence of substitutes

coupled with the increasing purchasing parity might allow customers to purchase a

higher value product considering product differentiation and technological

advancements. Customers have, therefore, and option to impose pressure on margins

and sales. Therefore, bargaining power of buyers is high basis the choices available to

the buyer making the industry attractiveness of Nano as moderate. Nano is to leverage

on the brand image and improve the quality of its services in order to reduce the risk of

losing out on customers.

5. Industry Rivalry

Automobile industry is growing at a very healthy rate with all players having their

manufacturing bases/sales in India. This is a major threat to Nano. Coupled with the fact

that there is now 100% FDI allowed in Indian automobile sector, it is further expected

that there will be an elevated response in export sales. The industry rivalry is very

intense from both international and domestic competitors like Ford, Nissan, Toyota,

Renault, Maruti, Hyundai, etc. who also enjoy dominance in their car segments.

Advertising battles are also increasing leading to increase in expenditure. Further, since

products with similar functions are available in the market, it limits Nano to chalk out new

and higher prices. Thus, threat from rivals is high, hence making the industry

attractiveness of Nano low.

Conclusion

Tata Nano is a competitor that has found strength and expansion through its parent

company and also through its numerous acquisitions and mergers. Tata Nano still

remains the world's cheapest car but considering the increasing rate of innovations

coupled with availability of various options to the customer, it is becoming increasing

difficult for Tata Nano to hold the market. Therefore, Tata needs to focus on globalization

and innovation in order to survive this fast pacing industry segment.

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CHAPTER: 5

ANALYSIS OF CONSUMER BEHAVIOR

The aim of market research is to gain insight into the customers attitudes and buying

behaviour. As already discussed, TATA Nano is looking at the lowest sales volume of six

years and hardly proving to be any competition to its nearest competitor (cost wise) in

terms of sales volume.

Car Jan15 Feb15 Mar15 Apr15 May15 Jun15 Jul15

TATA

Nano

2,000 1,296 2,272 1,486 1,365 1,700 2,120

Maruti

Alto 800

22,889 25,673 24,961 21,531 22,595 21,115 22,212

[Source: http://autoportal.com/newcars/tata/nano/sales-statistics/ ]

The monthly sales of TATA Nano are not even 10% of its nearest competitor (in terms of

price).

Lets have a look at the yearly sales of TATA Nano for the past 5 years.

[Source:http://www.business-standard.com/article/companies/lost-decade-for-tata-motors-114050600957_1.html

]

The sales reached a peak in 2012 and have been declining since. In order to chart out a

plan for brand revival and indentify a positioning strategy, we conducted a market survey

0 20000 40000 60000 80000

2009-10

2010-11

2011-12

2012-13

2013-14

Nano Sales

Nano Sales

Year Nano Sales

Share in Total (%)

2009-10

30,350 12.9

2010-11

70,432 23.6

2011-12

74,527 23.8

2012-13

53,848 24.2

2013-14

21,129 15.3

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to understand and analyse the perception of the potential customers regarding TATA

Nano and their buying behaviour and decision making process.

In the course of this analysis, we aim to indentify exactly what is wrong with the current

positioning strategy of the car and exactly what needs to be done for rebranding.

For the purpose of our market research, we are concentrating on three important

aspects:

1. Buying Role

2. Decision making process

3. Purchase behaviour

Research Methodology

We floated an online form and asked people to fill it. The form was floated on mails,

social networking websites and other online forums to get as diverse a sample as

possible.

The questions of the questionnaire were designed considering the three aspects of our

study as mentioned above.

Google analytics were used for analytics of the data.

Demographics of the sample group

Age Group Percentage (%)

18-25 70

25-35 30

35-45 0

>45 0

The rationale for keeping the age group limited to this age group is that we needed to

take the opinion of the younger generation who might not have enough cash to buy a

sedan or a hatchback but are aspirational enough to have a car. Those with enough

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disposable income in hand would rather go for more expensive cars, as evident from the

result of this survey as well.

Gender Percentage (%)

Male 80

Female 20

Income Group Percentage (%)

Rs 9,00,000 46.7

A majority of people who participated in the survey are in the high income group.

Buying Role & Decision Making Process

The first thing we needed to know was the preference of the people for buying Nano.

Only those willing to go for hatchbacks and small cars would consider it as an option. So

when given a choice:

Car Percentage (%)

Alto 52.2

Eon 30.5

Nano 6.8

Other 10.2

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Nano figures way down in the preference list of the customers. The car is anything but

popular. So the next step was to determine the reasons for this low preference.

Nano: The Cheap car of the Peoples Car?

The marketing strategy of TATA Motors for Nano is a classic case study in itself. The low

price car which was supposed to be revolution of sorts ended up being a big liability for

the company. The failure could largely be attributed to the marketing strategy which did

not do much to handle the perception among the people of Nano being a cheap car.

Lately, TATA motors have been trying to change the perception among the people for

Nano. But how successful has this been? When asked about how they look at Nano, a

large section of people still dont look at it as a peoples car.

Is Nano a peoples

Car?

Percentage (%)

Yes 56.7

No 43.3

While the peoples car strategy has been successful in changing the perception among

the people for Nano, a significantly large number of people still see it as a cheap car

So the next question was asked to ascertain exactly what people associate Nano with.

We asked What is the first thing that comes to your mind when you think of 'Nano'?

The response was an eye-opener

Attribute Percentage (%)

Cost 93.3

Convenience 3.3

Fuel

Efficiency

1.7

Easy

Maintenance

1.7

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For an overwhelming 93.3 % people, the first thing which comes to mind on thinking of

Nano is cost. So, people associate Nano with cost. Given the fact that this is a popular

perception, rather than fighting it, we might mould it to resemble to cost-effectiveness

and hence use it to our advantage.

Purchase Behaviour

Now that we have an idea of how people look that Nano, the next step was to

understand that what influences their purchase behaviour so that we may align the

features of Nano with what people desire in their car

The following table list down the most compelling factors that could lead people to buy

Nano.

Factor Percentage

(%)

Low Price 84.7

Looks 5.1

Convenience 0

Tata Brand 39

Other 15.3

As evident during the course of the survey, cost is the most compelling reason for a

majority of people to buy Nano. Surprisingly, no one went with convenience which

means that people dont look at Nano as a car which would offer convenience.

This leads us to think that why someone would spend Rs. 1, 50,000 over something

which isnt a brand and isnt convenient as well.

This gives a very big lead to us. Any rebranding exercise must strongly focus on

convenience and quality of Nano.

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There isnt very strong perception among the people regarding quality as well.

Attribute Percentage (%)

Should Launch new

models

44.8

Improve Quality 43.1

Reduce Prices 1.7

Provide more financing

options

3.4

Others 6.9

Conclusion

The study on perception of customers on Tata Nano car paves way to understand the

acceptance level of the respondents towards the product. The main factor that attracted

and influenced the purchase decision of Nano is its Price. The study has helped to gain

knowledge that because of low price people overlook the convenience and other

features of Nano. It is understood that Tatas initiative to come up with such a car is

appreciated by people but doesnt attract many buyers. Based on the inferences draw

certain suggestions have been recommended.

Suggestions

More than half of the respondents still believe that Nano is the peoples car.

Company should market the product around this theme.

Most of the respondents were young people and Nano is not popular among

them. Style and looks should be changed to target younger generation.

Quality of Nano needs to be improved to make it more competitive among its

peers

New models should be launched backed by innovative marketing strategy to

increase the consumer base

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CHAPTER: 6

Positioning Strategies

Introduction

Globalization and technological advancements have made the market place highly

competitive and complex. The customer's needs, wants and desires are changing with

each passing moment and this poses a great threat to the companies who are to keep

pace with the changing scenarios. To sustain, effective brand positioning strategies are

required. Positioning allow customers for product differentiation so that they can

choose the appropriate product for themselves. This case study of Tata Nano identifies

the pitfalls and shortcomings of their prevalent positioning strategy of Peoples Car and

suggests ways in which Tata Motors could reposition its product for glorifying its image

once again in-spite of changing industry dynamics.

Since the economic liberalization of the 1990s, development of infrastructure within the

country has progressed at a rapid pace, and today there is a wide variety of modes of

transport by land, water and air. However, India's relatively low GDP has meant that

access to these modes of transport has not been uniform. India's rapidly expanding

economy has provided the basis for a fundamental change -- the emergence of a "new

vanguard" increasingly dictating India's political and economic direction. This group is

India's new middle class - mobile, driven, consumer-oriented, and, to some extent,

forward-looking. It encompasses prosperous farmers, white-collar workers, business

people, military personnel, and myriad others, all actively working toward a prosperous

life. Televisions, and other consumer goods, reasonable earnings and savings, and

educated children typify this diverse group. While Nano tries to target to the needs of this

emerging middle class families which are yet to enjoy the privileges of most of the

modern day requirements with respect to transport and other utilities, the infrastructure is

yet to be developed. Hence it becomes essential to consider and improve the local

transport system along with providing better personalized transport facilities. This strong

middle class demands more houses, more cars, more oil, and more gasoline. So efforts

need to be made to optimize the use of the natural resources.

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What is Positioning?

Kotler defines positioning as: the process of designing the companys product/services

and image based on consumers perceptions relative to that of competitors. Arnott

states that Positioning is the deliberate, proactive, iterative process of defining, modifying

and monitoring consumer perceptions of a marketable object. In other words, positioning

involves actions and decisions at a strategic and operational base which reflect the intent

of the company, and its impact to its competitors and industry sector as a whole. There

is a need to develop specific attributes which are unique to the product and to the

product user.

The product can be a leader in the market, when the product attributes are coupled with

marketing efforts.

Figure 1. Value disciple model (Treacy & Wiersema, 1993)

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Creating Brand value and then Positioning

Customer insight and behavior are essential for any company to effectively positon its

product in the market. The same is true for the TATA NANO. The dice was rolled long

before the so called /affordable small car segment was brought to reality through

manufacturing. The one particular auto expo event where the Tata Group legend Ratan

Tata drove into the glitzy ceremony in a prototype Nano model set the ball rolling in

creating the much talked after hype and buzz on this particular car. However, long before

that event, there were specific consumer indicators which pointed towards a huge

potential of pent-up demand for such a car. Before Nano, consumers choices and

perceptions were being largely driven by the following factors:

The lowest costing small car till then was the Maruti 800 (and its different

variants), which came at a price of about 2.5 Lakh

Therefore, though affordable but still unviable from a price point of view to the

large demographic section of people who wanted to replace their old two wheelers

for better safety and comfort

Till then, car was largely being considered as a luxury purchase which comes at a

high premium. That it could also be driven by the less economically privileged

section of the society was being perceived a myth than a reality

A possible cheap car was thought about with much speculations - safety,

compatibility and comfort being the primary concerns in such a car

Tata acted exactly on these specific perceptions to create the Nano brand values. What

followed were the following:

Car launched at about the price of 1 Lakh, therefore bringing it within the reach of

2-wheelers and the never thought about riding a car consumers

In as much as its competitive price-point, much stress was also laid upon its

safety, compatibility and comfort

Its promotional and positioning strategy attached a lot of aspirational value

towards owning of such a car

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Tata Nanos Positioning Strategy

Every consumer considers a variety of factors such as price, mileage, maintenance cost,

technological innovation, brand etc. before buying a car and these serve as product

differentiation factors in development of positioning strategies. In short, brands can be

success or a failure solely on their positioning. Tata Motors developed a positioning

strategy for Tata Nano which focussed on the price of the product. It tagged Nano as the

Peoples car in order to appeal to the lower and middle class consumers who were

highly price conscious and were getting comfort and convenience at an affordable price

but instead it ended up getting tagged as only a Cheap car.

How strategic branding principles have been applied in positioning the 'Nano' product &

brand?

TATA Nano has been positioned as a pride element for the middle class people who

cannot afford four wheelers but aspire to have one.

The different initiatives in brand management are:

Brand Identity

Identity Implementation

Brand Strategy Over time

Managing the brand portfolio

Leveraging the brand

Brand Equity Strategic

Brand

Analysis

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Brand Identity: The identity of TATA Nano was associated mostly with the product itself

and to a certain extent; it was also associated with the Tata as an organization. Product

was identified as a cheapest car for lower middle class people.

Identity Implementation: This determines which part of the initiative will be communicated

to the target audience i.e. positioning. Nano was positioned using the information that

many people aspires to roam with family but could not do so because a car would be too

costly for them. The identity of Nano which was implemented in the eyes of targeted

customer was Feeling proud to own a car while spending very less.

Brand Strategy Over time: Over time, Nano has changed from Rs. 1 lakh car to

affordable car with comfortable driving. Here, the positioning has been modified as

making the car in 1 lakh was hampering the quality of the car. The target audiences

remain the same.

Managing the brand portfolio: This initiative consists of coordinating the organizations

portfolio or system of brands with the objective of achieving optimal performances. In

case of Nano, it can be coordinated with the small vehicles (passenger cars) to improve

its performance.

Leveraging the brand: Leveraging involves extending the core identity to a new addition

to the product line or new product category. In case of Nano, its core identity as

cheapest car has yet to be leveraged for other product category.

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Why Nanos Positioning Strategy failed?

While Tata Motors focussed on the affordability of the product, it forgot to take into

consideration that the buyers of the product could be tagged as a cheap buy social

group and instead, people would recommend to buy a used higher-end automobile than

Nano. The psychological need of the customer was ignored by Nano.

Figure 2 Theory of Hierarchy of Needs

[Source: A. H. Maslow, Motivation and Personality, 3rd ed. (Upper Saddle River, NJ: Prentice Hall, 1987), cited from Kotler, P and

Keller, K. L. (2006), Marketing Management, Pearson Prentice Hall, 2006]

According to the A. H. Maslow (1943), as per need hierarchy theory, person will exhibit

the behaviour according to the need he wants to satisfy. As per Kotler, implication of this

theory in marketing says that the kind of need, a product is to satisfy will determine the

factors affecting the buying decision process. Here, Tata placed Nano as a replacement

of 2-wheelers to enhance the safety and security at a really affordable price. But buying

a car is also supposed to be a part of social need.

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As per Product Levels recommended by Philip Kotler (2006), for creating Customer-

Value Hierarchy, the marketer needs to address five product levels out of which each

level adds more customer value.

Figure 3: Five Product Levels

[Source: from Kotler, P and Keller, K. L. (2006), Marketing Management, Pearson Prentice Hall.]

The fundamental level (the core benefit): the service/benefit the customer is really

buying

At the second level, turn the core benefit into a basic product

At the third level, prepare an expected product, a set of attributes and buyers

expectancy of the product

At the fourth level, prepare a product that exceeds customer expectations

At the fifth level stands the potential product, which encompasses all the possible

augmentations

In Nanos case, Tata paid emphasis on only the first level i.e. price and security but it

couldnt model itself into the next levels of the aforementioned model. Gone are the days

when price used to be a potential indicator. Today, consumer perception says that higher

the price, higher the quality of the product. Further, in a short span of its launch,

technical problems arose and there were citations of Nano catching fire, which further

hampered the brand Nano and its prestige.

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Positioning, as earlier stated, has to be on a strategic and an operational base. However,

Nano clearly lacked this. Tata Motors promotional strategies via social-media, blogs and

online advertising failed to create a hype of the product since all information was

available to the end user at the click of the button. People kept Nano as a secondary

option.

Tata Nanos ineffective distribution network was an add-on to its failure. A large dealer

network was specifically required in the rural India where the price positioning held most

importance. Inefficiency in the same affected the market capitalization of Nano in its

prime population segment. Further, this segment of consumers was not completely

aware of what Tata Nano had to offer, the result of which was that this customer was

hesitant to walk in showrooms basis their lower income grade.

Tatas Revival Strategies

Tata Motors tried to correct its strategy. Tata Nano was re-engineered at once to

counter all issues raised by customers and further, were offered safety upgrades.

However, Nano still aimed at price differentiation, not giving customers anything else for

association or to aspire for. Tata failed to focus on the fact that they could term Nano as

the City car basis the fact that what mattered in the high traffic cities was the first 5

seconds and the ease of commuting in small spaces. There was no finish line to cross

and obviously, other cars were faster, but Nano offered a safe mobile commute. Tata

Motors focus on tier-II cities was a correct move since these markets were highly

untapped and had great potential for Nano. Further, Nano indulged in tie-ups retailers

like Big Bazaar to gain visibility and so it did, as it was reflected in their marginal increase

in sales. Tata Motors, further, launched a finance scheme bridging the gap between

consumer and Tata Nano. Customer could get a loan in 48 hours, and could get up to

90% financing at discounted interest rates. Though Tata Motors tried to correct mistakes

like promotion and distribution, Nano failed to grow as a selling product and thus the

need of repositioning Nano.

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Repositioning Strategy

Tata Nano demands a new identity. It demands repositioning. Repositioning which

means changing consumer perceptions in regard to the brand, product and its

differentiation to the competition. The journey for Tata Motors seems to be tough basis

the analysis done in the earlier chapters, however, full of opportunities. Tata Motors

requires better understanding of customers needs since customer is after all, the heart

of the business and further, imbibe these attributes in the products to open up exciting

ventures for it and the end user. The market increases as the perceived value"

increases.

The re-positioning model Nano could follow has been represented below with the help of

a diagram.

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After its launch in 2009, Nano finally has decided to move away from worlds cheapest

car tag and move onto the "smart city car" by focusing on development of electric cars

and moving its target audience to youth of this nation. These developments are of direct

relevance in the automobile industry since the world is today focussed on green

initiatives and youth is focussed on stylish and trendy ready-to-options which demand

less maintenance. TMs seems to have followed/can follow the below mentioned

strategies to reposition Nano.

1. Features positioning strategy: Inclusion of intelligent features like power

steering, AMT, improved interiors/exteriors (headlights, bumpers, boot space,

etc.), increased fuel capacity and additional features like music system with

Bluetooth and auxiliary connectivity make Nano an attractive option or the tech-

savvy customer of todays world. Further, there is always an option of

personalization which varies from customer to customer. With these upgrades,

Tata Motors is increasing the value for money proposition.

Figure 4: GenX Nano Easy shift with creep feature

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2. Promotion positioning strategy: Tata Nanos campaigns such as celebrate

awesomeness became very popular among the youths. In-fact, it crossed 6

million views on YouTube. Inclusion of celebrities further gaged the consumer

interests as we are turning out to be an entertainment-driven nation. Nano needs

to come up with more such campaigns in order to associate itself to the customer.

Color, features, pride, etc. While focus on youth is important, the rural segment

cant be neglected as a whole. The company needs to communicate end-to-end

usage values of the brand Nano so as to make them believe that aspirations do

come true.

3. Green energy strategies: Tata, with the intention of protecting the environment,

has upgraded the performance of its entire range of four and six cylinder engines

to meet international emission standards. This has been accomplished with the

help of world-renowned engine consultants like Ricardo and AVL. These engines

are used in Tata Motors vehicles in the Indian market, as well as in over 70 export

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markets. Tata Motors is constantly working towards developing alternative fuel

engine technologies. CNG and LPG variants are two fuel options that are lucrative

and quite popular in certain markets in India. For example, it has manufactured

NANO eMAX (CNG driven) which has the lowest carbon footprint of 75.269

gm/km (most fuel efficient) and gives a mileage of 36 km/kg. Such green

initiatives help to move the customer basis the importance company lays on the

protection of the environment, and therefore, protection of the community as a

whole. Apart from this, Tata displayed an electric Nano Prototype at Geneva and

Madrid last year and the company will analyze the feasibility of commercializing it

in the coming years

4. Nano Diesel with a fuel economy of 40 km/l is the upcoming innovation by Tatas

towards providing more economical solution. This version is expected to

accomplish the original idea of replacing the family 2-wheeler with Nano. The

diesel version might finally attract these customers who opt for two-wheelers,

which was the original inspiration behind the Rs. 1 lakh car endeavor.

5. South East Asian markets: The developing world is a potential market for TATA

Nano and TATA need to explore this potential. It is important that TATA looks for

opportunities outside India as they are a potential market.

6. The premium version of Nano has been developed for the European markets.

This version has all requisite safety and pollution control feature to confirm with

the European standards. This is quite affordable when compared to European

counterparts and hence may be targeted at a large number of customers.

7. A demographically potential target segment for Nano is the age group of 22-25

who are the first time earners and aspirational enough to buy a car immediately

after starting a job.

8. Tata Nano can also be targeted as a second car for middle class families who

might otherwise go for a two wheeler. Most of the middle class families can now

afford a second car specially a car as affordable as Nano.

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Although Tata Motors is developing repositioning strategies to make sure that Nano can

target a large customer segment, changing perceptions of customers is a huge task in

itself and demands time entwined with complex market factors. So the future of the

product still remains a prospect and what will happen, we can only see in the future.