Research Problem
To investigate the benefits of Tata’s budget car as a safe and affordable alternative to two wheeler vehicles in countries like India.
Introduction
Life runs on wheels… In last few decades the Mechano-Technichal revolution has completely changed the face of transportation world. Wheels are interwoven in life in forms of cars, bikes, bicycles and more. One of the comfortable and safe modes of transport developed by the technology is – a car. In western counties cars are undetachable part of one’s life where as in Asian countries for example India where cars are still a dream for an ordinary family. Tata Motors Limited (TML) came up with safe and an affordable alternative of two wheeler vehicles in India so even a middle class family can afford it.
After its first unveiled ceremony (TimesofIndia.IndiaTimes.com, 2008) the dream came true on March 23rd , 2009 (Tatanano.com, March 23rd, 2009) when company officially announced the launch of its dream car or a budget car or a peoples’ car named “Tata Nano” - small size with big technology, which will cost around Rs. 1, 00,000 (US $ 2,000 or $ 2,500) in the market. With the taxes the price may goes up but it is more convenient than any other existing small car. According to the company, this is a people’s car.
The Tata Nano is the brainchild of the chairman of the Tata group and Tata Motors Ltd., Mr. R. N. Tata, who observed families riding two wheelers in very uncomfortable and dangerous way on the Indian roads. He thought about to create a safe, affordable and all weather form of transport for such people (Tatanano.com, 2008). And the final result is achieved known today as-Tata Nano.
In the Indian automobile industry, the Nano is the most discussed and remained in the center due to its low price commitment by the company. According to the chairman Mr. R. N. Tata, “this is not the concept cars, but a people’s car – low cost and within everyone’s reach”.
The Nano will be available to run on the Indian roads by second half of the year 2009, definitely the car will leave footprints in the Indian automobile industry and Tata Motors Ltd. will rise as the trendsetter in the small car market.
Social Responsibility
The Tata Motors Ltd. – a division of The Tata group, covered under the social responsibility and codes of conducts defined by The Tata group, applicable for each division. The values and codes of conducts represent company’s brand image, reputation, trust in stakeholders, help in improvement of marketing strategy and to make long term consumer relations. The values and purpose defined by the Tata group are as follows (Tata.com, Governance);
Purpose
“At Tata our purpose is to improve the quality of life of the communities we serve” (Tata.com, Governance).
Core Values
Tata defines five core values in their business (Tata.com, Governance)
1. Integrity: We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny.
2. Understanding: We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve.
3. Excellence: We must constantly strive to achieve the highest possible standards in our day today work and in the quality of the goods and services we provide.
4. Unity: We must work cohesively with our colleagues across the group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.
5. Responsibility: We must continue to be responsible, sensitive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.
Codes of Conduct
Codes of conduct also defined as codes of ethics. Codes of conducts defined by the Tata group include various social responsibilities like economic, legal, ethical and philanthropic. These responsibilities defined as clauses numbered 1 to 25 (Tata.com, Governance).
The codes of conducts list various policies and guidelines which lead the TATA to develop future marketing strategy. For example, economic responsibilities include; Financial reporting and records (clause 2); Cooperation of Tata companies (clause 11). The legal responsibilities include Government agencies (clause 6); Political non-alignment (clause 7), Conflict of interest (clause 20); Shareholders (clause 16). From ethical point of view, Ethical conduct (clause 17); Equal opportunities employer (clause 4); and finally philanthropic responsibilities can be listed are National interest (clause 1); Health, safety and environment (clause8); Quality of products and service (clause 9) and Corporate citizenship (clause 10).
The most valuable clauses included in the philanthropic purpose which shows the company’s loyalty towards the nation where they operates and the culture they respect. These codes of conducts improve the brand image of the company and increase trust in customers.
The Nanolution
The term “Nanolution” could be defined in different ways but here the term used in terms of a car – Tata Nano. Various users / sources used the term “Nanolution” (Motoring.asiaone.com, April 10th, 2009 and Tatanano.com, April 1st, 2008) but no one has given a clear definition of Nanolution in terms of a car – Tata Nano.
The Nanolution can be defined in a simple way; Nano + Revolution = Nanolution. It means a car which supposes to bring revolution in small car market and Indian automobile industry, created the effect known as “Nanolution”.
The specifications and features of a revolutionary car – Nano is given below as published by TML (TataNano).
Types of Tata’s Nano
According to sources (Tatanano.com) a car will available in 3 variants, including two basic and one deluxe model; known as Nano (Standard), Nano CX and Nano LX.
Specification and Features of Tata Nano
Table 1 (Tatanano.com, Why Nano)
Specifications/ Features | Nano (Standard) | Nano CX | Nano LX |
Engine | 624 cc, 2 cylinder, MPFI | ||
Max. Speed | 105 km/hr or 65.24 miles/hr | ||
Fuel Capacity | 15 Liters or 3.96 Gallons | ||
No. of Gears | 4 Forward + 1 Reverse | ||
Weight | 600 kg or 1322.7 lb | 615 kg or 1355.8 lb | 635 kg or 1399.9 lb |
Seating Capacity | 4 to 5 persons | ||
Types of Tyres | Radial & Tubeless | ||
AC with Heater | ---* | Yes | Yes |
Front & Rear Fog Lamps | --- | --- | Yes |
Front Power windows | --- | --- | Yes |
Central Locking | --- | --- | Yes |
Door Lock on Driver Side | Yes | Yes | Yes |
Door Lock on Passenger Side | --- | --- | Yes |
Tinted Glass | --- | --- | Yes |
Roof Beading | --- | --- | Yes |
Spoiler | --- | --- | Yes |
Booster Assisted Brakes | --- | Yes | Yes |
* --- indicates absent of the particular feature in respected Nano model.
Specifications and features provided by the company help to build situation analysis and further SWOT matrix. The marketing strategy implemented by the company is also discussed here in terms of Tata Nano.
Situation Analysis
Conducting a proper situation analysis is the pre-requisite to develop a successful marketing plan. To conduct and analysis of situation analysis involves study of internal, customer and external environment which are interdependent i.e each factor affects another. Here the situation analysis described for Nano, which covers the internal, customer and external environment aspects which lead to develop further marketing planning.
1. Internal Environment
Internal environment includes company’s sources, technological advance and political issues.
1(a) Resources
A car – Nano is developed by Tata Motors Ltd. with having more than 8.8 billion US $ revenue (2007-2008) and availability of international resources including R&D departments overseas. As company has international locations for manufacturing of transportation vehicles, the revolutionary product- Nano gets direct advantages of advance technology and skilled workers. Furthermore an additional benefit for Nano is that; Tata owns its own Steel industry in India and overseas which supports the manufacturing of Tata’s own products. Thus the support of world’s 6th largest steel industry makes Nano cost effective. This may be one reason behind the low price of Tata Nano.
1(b) Culture and environment
A successful launch of Tata Nano became possible due to company’s strong cultural and ethical environment. Tata gets benefit of skilled workers and knowledge sharing process. Under the roof of Tata group, company gets technical expertise across the world and gets great technological advance. Thus sound technological and multicultural environment put Tata Motors Ltd. and Nano on the world map.
1(c) Political issue
Tata Nano always remained in a highlight due to its political issues. The issue raised at Nano’s early home- Singur, West Bangal, eastern part of India where farmers misguided by few political leaders about land issue. The issue involved violence and Nano’s future covered under armed security. But due to high violation and political pressure, Tata evacuated the land and plant at the cost of INR 1500 crores (US$ 300 million). This resulted in late arrival of Nano in the market. The plant shifted to Sanand at Gujarat State, western India. The capacity of new plant is believed to be 250,000 unites of Nano per year and company is about to expand it double in future. The political issue may raise the overall cost of Tata Nano.
2. Customer environment
Study of customer environment is one of the prime key to understand and develop future marketing plan for Tata Nano. Tata Nano gets mouth to mouth publicity due to its early Singur violation and media publicity. Also the low price announcement of a car by the chairman of Tata group, Mr. R. N. Tata boosts the publicity of Nano in Indian automobile industry. These all factors played a key role in understanding customer environment. Customer environment point outs the potential customers, reasons to buy Nano, where and when customers purchase Nano and why should they not buy Nano.
2(a) Potential customers
According to the company and some financial analysts, the customer market for Nano is middle class segment who can not afford high end cars. This analysis is not reliable because Nano has attracted those customers whose purchasing power exceeds Nano but due to economic downturn they might prefer Nano due to its unique price.
2(b) Reasons to buy Nano
The company introduced online manuals “Why Nano” (Tata nano.com) which describes its specifications and questionnaires that customers have about a car. But from customer perspective, they prefer Nano mainly due to its cost effectiveness and their trust in the country’s own brand name “Tata”. Some customers gave review like; “Ratan made Ratan” (TV Today, April 11th 2009) i.e “A gem made gem”. Where the name Ratan is used for the chairman of the Tata group, Mr. Ratan N. Tata. Not only the middle class customers but few wealthy customers also preferred Nano and appreciated the innovation brought by the home company Tata and congratulate the visionary person, R. N. Tata. Thus social and economical culture made Nano first choice for small car market among customers regardless of customer’s economic status.
2(c) Reasons not to buy Nano
A budget car- Nano is still under production so its complete review from market is not available. Due to its high popularity among middle class customers, negative reviews or reasons not to buy a Nano is not available. But lack of some basic features in the basic models and the exceed cost of a car may be hurdles in buying a Nano.
3. External environment
Study of external environment involves study factors like competitors, economic growth and stability, political trends, technological gain and sociocultural trends (Marketing strategy, 4th e).
3(a) Competitors
Competition is always in benefits of customers. A competition provides a wide range of product selection and price negotiation to customers. For Nano, completion at home will be little hard. The brand competitors like Maruti-Suzuki and Hyundai India may become a major competitor for Nano to run on Indian roads. Still in India, many people buy Maruti 800 as their first car and it also remains favorite for many driving schools as learning a car model. Maruti 800 holds Indian small car market since last 25 years and due to its reputation and trust among customers for Nano it will be a little bit tuff to bite Maruti 800. Furthermore, Hyundai India’s car Santro may be a strong competitor as it has also gained good reputation in Indian automarket. Both the product competitors provide more features than Tata Nano but Nano can bite them mainly due to its low price strategy. Both Maruti 800 and Santro start at the cost of US $ 4000 to $ 6000 where as Nano starts from $ 2500 or $ 2000 (depends on currency rate). Thus for Nano the journey is not smooth to run.
3(b) Economic growth and stability
Economy pays a major role in developing marketing strategy. Right now the global economy is on oxygen since last two years, but during this hard time, the time is in favor of Tata Motors Ltd. The company reported revenue of US $ 8.8 billion during 2007-2008 (Tatamotors.com, profile). Also company spent around US $ 2.3 billion to acquire foreign motor brands. Also the Singur violation cost company about loss of $ 300 million. Due to all these hurdles, Tata successfully implanted new plant at Gujarat state and also launched the Nano successfully within wrinkle of eye after relocation of pant. The benefits gained by the company for Nano’s production is not small. The Gujarat state government offered same facilities provided by West Bangal state government. The geographical region is also crucial for establishment of business because Gujarat has the longest sea coast and Asia’s largest shipment yard – Alang which makes easy transportation communication for Tata with its overseas branches. Also Gujarat is known for its industrialization and business friendly environment, it is now new home for Nano.
Also the political parties in Gujarat favors business development, Gujarat is leading industrialized state, this makes a good business sense for Tata Motors Ltd. as selecting it for Nano’s home. Thus the state economy and company’s will to spend for Nano is very appreciable and the location played a very crucial role in launching of Nano.
3(c) Political relations
Tata describes its political trends in its codes of conduct (Tata.com, Tata code of conduct, clause 7) - known as clause. The company cleared that “it will not support or give donation to any particular political party but will only support the constitution and support the government system in which it operates” (clause 7).
3(d) Technological advancement
Technological advancement involves invention of new product design, new concept product, patents filled for new products and how profound the impact the new technology has. A well known magazine unmasks the patent and technological advance interwoven with Nano (rdmag.com, April 2nd , 2009). Furthermore Nano got benefits of researched and developed under world class skilled technicians. A small car contains about 21% more space than its product competitors. Tata filed about 37 patents for Nano’s protection which is a milestone in Indian automobile industry.
3(e) Sociocultural trends
Sociocultural trends reflect people’s demographic trend and lifestyle. The major age group targeted for Nano is the average family person- about age group 30 to 40; also those youth who ready to spend for high end bikes may prefer Nano within the same cost. Thus demographic trend focuses more on youth and average adults than old age group. Talking about lifestyle, within last few years lifestyle of a common man is changed in developing countries. If said about India, since last few years people’s purchasing power has been increased dramatically which resulted in thrust to Indian economy. A middle class person also dreams to have his own car. This changing trend favors Nano’s future market where number of drams waiting for their dream car. Thus Nano gives wings to their dreams to run on Indian roads.
Thus external environment focuses on wide and crucial factors. The external environment is the main factor to understand marketing plan and customers’ needs. Many companies develop special marketing research division to analyze and develop marketing strategy for the company. Hence it is outermost environment but remains in the core of any marketing strategy.
SWOT Analysis
After analyzing situation analysis, it is necessary to organized and evaluates information to develop marketing plan. SWOT analysis is such a powerful tool to analyze marketing information. SWOT analysis is widely accepted due to its benefits. From above situation analysis and former part, the SWOT analysis for Nano could be prepared and analyzed. The SWOT analysis includes internal factors (strength and weakness) and external factors (opportunities and threats).
The skeleton of SWOT is also known as SWOT Matrix. In terms of Nano, the SWOT Matrix would be as follows.
SWOT Matrix – The Nanolution
Table 2
Strengths | Opportunities |
· World’s cheapest car (INR 100,00 or US $ 2000 or $ 2500) · Get publicity as a people’s car, better known in India as Rs. 1 lakh car · International brand name – Tata · More space than convenience small cars · Great mileage · Small and convenient to park · Global publicity through international auto shows · Passed euro standards and Indian standards in terms of pollution control. · Easy booking (online booking) · Booked 2.03 lakh unites within 17 days of booking with full paid booking amount of INR 2500 cores or US $ 500 million · Vast market for local middle class segment · Finance available through about 20 firms nationwide | · Global overseas market opened for world’s cheapest car · Nano Europa model already launched to enter European market · Production and R&D centers available overseas · Overseas production plants to reduce cost of transportation and manufacture · Bikers and used car purchasing customers are of great interest |
Weaknesses | Threats |
· Exceeded cost of INR 100,000 due to taxes · Low capacity of engine · Basic features like power steering, lack of air bag, no power windows · Not suitable for highways · No AC and Heating system in basic models · No central locking in basic models | · Local market competitors like Bajaj, Maruti Udyog and other small car manufacturers · Traffic problem · Pollution increase · Overseas market cost may increase · Global economy declining may not in favor of Nano |
The SWOT matrix of Tata Nano is the blueprint to make marketing plan. For successful marketing plan, weaknesses should be converted in to strengths and threats in to opportunities, if not; firms may not be successful to implement its marketing plan. Finally strengths and opportunities should be balanced to create firms goals and objectives. Hence balanced SWOT matrix for Nano can be represented as follows (includes conversion of weaknesses and threats in to strengths and opportunities respectively);
Balanced SWOT Matrix
Table 3
Strengths | Opportunities |
· Control price through mass production in nationwide plants · Include basic features like power steering and air bags for minimizing accident hazards · Include AC and Heating facility for all models so even a low price buyer can enjoy it · Implanting central locking and passenger side locking system to make Nano more secure | · To avoid local market competition, early mass production and improvement in current models is the best time to capture the market · Launch LPG and CNG version to minimize pollution · Production of Nano in overseas plant to reduce cost of export and transportation for selling in foreign countries |
Thus Table 3 shows how weaknesses and threats could be resolved and represented in a balanced way. By analyzing table 2 & 3, the blue print is ready to define Nano’s marketing strategy and goals and objectives.
Marketing goals and objectives
Goal
The goal for Tata Nano is not presented by or analyzed by any sources but according to the view point of the chairman of Tata group, Mr. R. N. Tata, it could be presented as;
“To make a people’s car under 100,000 Rupees”
Objective
No objective clearly stated but according to the words of the visionary chairman Mr. R. N. Tata, it can be presented as;
“A vehicle that could be affordable and low cost enough to be within everyone’s reach, a people’s car, built to meet all safety standards, designed to meet or exceed emission norms and be low in pollution and high fuel efficiency”.
- R. N. Tata, Chairman, Tata group (January 10th, 2008)
Marketing strategies for Nano
Tata Motors Ltd. came up with unique marketing strategies and started new trend in Indian automobile industry. The marketing strategies for Nano include pricing, product, distribution and promotion factors. The marketing strategy implanted by Tata presented below.
Early marketing strategies
The early marketing strategies implied before the launch of Nano. The prime strategy for Nano is its pricing strategy which generated eagerness in people to see how Rs. 1 lakh car look like! Also online marketing and kite distribution remained a part of early marketing strategy.
Pricing Strategy
Though Tata never officially announced that a car will cost at Rs. 100,000 (US $ 2000 or $2500), the media announced that Tata will make a car for Rs. 100,000 (Ft.com, n.d.). Due to people’s expectation and media publicity, Tata put its all efforts to build a car at expected price. And due to this, a car got mouth to mouth publicity before it unveiled in 2008. Thus Nano created mass hysteria before it arrived and awarded as the world’s cheapest car. This is the only and most strong strategy that acted like a magnate to attract a common man and give the stron reason to buy it.
To enhance sales, Tata made collaboration with about 20 national financial firms to lend money to customers and Tata promised to provide interest rate on behalf of its customers if the waiting period for Nano exceeds more than a year. This creates a sound strategy to attract customers from the market and maintain trust among customers.
The price exceeded the cost of INR 100,000 with taxes, so the price announce by Tata motors Ltd. varies from state to state. Here the price list for the city Anand in Gujarat state is given for example.
Table 4 (Tatanano.com, price list)
Model | Price INR | Price US $ |
Nano BS II | 123,544 | 2470.88 |
Nano BS III | 129,664 | 2593.28 |
Nano CX BS II | 149,098 and / or 152,164* | 2981.96 and / or 3043.28 |
Nano CX BS III | 155,219 and / or 158,286 | 3104.38 and / or 3165.72 |
Nano LX BS III | 181,630 | 3632.60 |
* The dual price indicates for different colour variants.
* The BS expresses the standards equivalent to euro standards.
Online marketing
Tata used online game play strategy with collaboration with the website zapak.com to make Nano popular in youth. The strategy warmly welcomed by people, an online game play where gamers can customize their cars and have a fun.
Online marketing also includes selling of Nano USB storage drive, Nano phones, Nano mouse pads, Nano T-shirts and Nano Key- chains and more (Nanogear.tatanano.com)
Kite distribution
Kite festival in India is extremely popular and Tata promoted the marketing through local kite manufacturers and started the era of innovative marketing in Indian automobile industry (BusinessWeek.com, January 11th, 2008).
Product offering
Currently Tata offers three different types Nano variants and including sub-type of variants in various color combination namely Nano (Standard), Nano CX and Nano LX. The LX variant is fully featured and more costly than other two. Tata has also unveiled its Tata Nano Europa model at 79th Geneva International Motor Show but currently focusing on production of Nano in India with annual capacity of 250,000 units and later on 500,000 units per annum.
Promotion and Distribution
For people’s convenience, Tata announced booking of Nano online and tracking of their order online. Tata also announced support of financial firms that lend money to willing customers. The interest for over waiting period will be paid by TML. In interest of dealers, Tata strongly prefers availability of Nano through authorized distributors only.
Tata opened Nano’s booking from April 9th to April 25th 2009, and within 17 days of booking Tata earned INR 2500 crores (US $ 500 million) with full payment.
Pros and Cons of Nano
Pros and cons are two sides of a single coin, from above study of Nano, some pros and cons may arise on the way of Nano and can be expressed as;
Pros (Advantages) of Nano
· Nano would be beneficial to customers, company and nation (India) in following ways.
· Customers will get a dream car within their low cost budget. Hence Nano become alternative of high end cars in current poor economy.
· Nano also boost to TML, while company got US $ 500 million (cash) within 17 days of booking. This amount covered the loss of Nano plant at Singur which cost US $ 300 million. Thus Nano has macro impact on company’s economic condition.
· As the code of conduct, Tata’s first clause shows its loyalty and trust towards its nation in which it operates, thus it is in benefit of India as the country honored as the homeland of world’s cheapest car.
Cons (Disadvantages) of Nano
Several cons are associated with Nano like;
· Traffic is always a big issue for Indian roads, two wheelers, three wheelers (rickshaws) and four wheelers operates in a single lane in India. If a four wheeler become easily available, then it will be a big issue for the traffic management.
· Also pollution will increase because Nano is not a green car, CNG and LPG variants many remove this threat.
· In India, traffic rules are not strict, where under age (teen agers) ride bikes and results in accidents and road rages. If such an age group enters in Nano, the chances of accidents and road rages will increase and will become a social issue.
· Also parking would become a headache where many metro areas don’t have enough four wheelers parking zones.
Thus Nanolution is about to change the frame of automobile industry but it will raise some issues which may be hurdles in the success of Nano.
Conclusion
Innovation brings revolution… A common man’s dream came true when Nano came to public few months ago. After years of waiting, people felt that they can also buy their dreams, a safe and secure journey for a complete family – Nano is the answer from TML. For countries like India, still many people prefers two wheeler as best alternative of high end four wheeler, Nano would replace the trend and Tata rise as Trendsetter for world automobile industry. After its revolutionary product, Tata listed on 6th rank of World’s most Innovative companies by BusinessWeek (BusinessWeek, April 28th, 2008) and world’s most reputed company, ranked 11th by US based Reputation Institute (Timesofindia.indiatimes.com, May 9th, 2009). Thus Tata emerging as the strong business sector with its innovation and due to its code of conducts. A common man in India says thank you to the visionary chairman and visionary company to make their dreams true. Finally all these credits go to the Nanolution – the arrival of Nano.
Recommendations
Finally, it can be said from study of Nano, a new era for low cost car has begun and more innovations are to come. According to my point of view, TML should consider some of these aspects to make Nano more customer and environmental friendly.
· Tata should launch a model of Nano compatible with LPG and CNG (compressed natural gas) as government of India as already permitted to use natural resources to minimize the pollution. Many people are nowadays replacing patrol kit and implanting CNG kit to save money and to reduce pollution.
· Tata should equally include the safety and security features in all variants of Nano, rather than only in high end variant. This will give customer a complete satisfaction of buying the dream car.
· The mass production may decreases overall cost of Tata Nano, thus reducing in price will be a major benefit in achieving target market.
· TML should include the features of export or overseas model to Indian variant; this will uplift the reputation and standard of Nano.
· Thus by adjusting a little bit, Nano would be more customer and eco-friendly, which will boost the trust in customers, and overall in company as well as customer and environment’s benefit.
Thus Nano is the journey of not a world’s cheapest car but also a journey of dreams to reality achieved by TML with its visionary chairman and visionary staff who extracted their best to bring the revolution, better to say a Nanolution.
References
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