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Is there a future for Tata Nano – A case Study

Case Facts :

While the then largest selling car company was planning all its strategies to discontinue their lowest price car Maruti 800 and make Alto the lowest in their portfolio, there was another company, stretching its engineering proves to produce the cheapest car in the world. Termed as an engineering marvel by many, the project almost became a showcase project for Tata. That was the time more foreign brands were entering the Indian market with much higher priced cars. The market was also showing a favourable shift towards mid segment sedans. The Nano project made many companies like Bajaj quickly work strategies on low priced car, as they felt they should have been the one to launch this product in India as a natural transition from being one of the larger two wheeler manufacturer.

The passenger car market in India:The production of passenger vehicles in India was recorded at 3.23 million in 2012-13 and is expected to grow at a compound annual growth rate (CAGR) of 13 per cent during 2012-2021, as per

data published by Automotive Component Manufacturers Association of India (ACMA). Passenger car sales stood at 1.89 million units in 2012-13. A basic classification of the market would be 1. Hatchbacks 2. Sedan 3. SUVs. Recently the classification has become a lot more fluid as newly launched models are starting to incorporate aspects of two or more segments; these are called crossovers. This trend is in line with more advanced markets where crossovers are extremely popular.The Indian market continues to be dominated by hatch-backs. Though within this, the mini-car segment (800cc or lower) has receded in importance. Currently, the mini car segment (800cc or lower) makes up for 21% of the market. Maruti’s brands continue to be the leaders with the top three slots being held by Alto, Swift and Dzire in the year 2012-13. The table below will give idea of the current market shares of various companies.

CompanyMarket Share2011-2012

Market share2012-13

Maruti Suzuki 38.43 39.12

Hyundai 14.84 14.27

Tata Motors 14.16 11.70

Mahindra 9.38 11.56

Toyota Kirloskar 6.11 6.16

General Motors 4.20 3.28

Ford India 3.53 2.87

Honda Cars India 2.07 2.73

Volkswagen India 2.99 2.43

Renault India 0.15 1.95

Nissan India 1.27 1.37

The Launch and Journey of Tata Nano:After a long wait the much awaited Nano hit the market in April 2009. The Rupee one lakh car finally was made available to the customer at little above a lakh on road. The launch was marked by high profile communication and waiting period, as was expected. Heads turned as soon as people saw a Nano on the road and many would want to touch and feel the car and look inside the engineering marvel. Auto magazines got down to analysing the vehicle and why it could be priced at Rs 1.0 lakh. One such analysis would throw some light on the issue and also give idea of what the customer finally got.

A series of events in the life of the new baby would chronicle its journey for the next few years.

Apr 2009 – Limited launchSep-Oct 2009 – 3 Nanos catch fire in Delhi, Ahmedabad and Lucknow. Tata Motors orders checks on 7500 NanosJuly 2010 – Tata Motors raises Nano price by 4%Oct 2010 – Price further increases by Rs 9000Nov 2010 – Sixth Nanos catch fire prompting the company to offer free protection. In the same month the monthly sales plummet to only 509 vehicles.Jan 2011 – Nano sales become off the shelf across IndiaNov 2011 – Nano gets a facelift, with more powerful and better fuel economy engine.March 2012 – Nano sales hit the peak of 10475 units for the monthJune 2012 – Sales dip to 5025 units again

Tata Nano sales over the years

2009-10 2010-11 2011-12 2012-13July 2009- 2475 March 2010- 4710 April 2011- 10,012 June 2012- 5605

July 2010- 9000 Aug 2011- 1202 Nov 2012- 3503Nov 2010- 509 Nov 2011- 6401 Feb 2013- 1505

March 2011- 8707 March 2012- 10,475

Positioning and communication:During the same period, Tata Motors tried various positioning and communication strategies. Initially positioned as a replacement for two wheelers as their next dream, moved towards safety platform for the two wheeler families. It was also positioned as the easy car for the wife and so on. Some of the ads over the years would give an idea of their communication.

Situation Today:With all the changes to the car, improved features and fuel economy, the car is now priced at above Rs 1.5 lakh and the sales numbers as low as 1505 in the month of Feb 2013. The company changes its positioning to appeal to the youth with a fresh new campaign “awesomeness unveiled”

The Problem:The strategy team for Tata Nano has various questions on their mind :

Will the new strategy succeed ? Is there future for the product ? or will the company have to burn more fuel before they

figure out either way Are there any other strategies which they are missing ?

You are the new head of marketing at Tata Motors responsible for the future of Tata Nano, and you have been asked to either endorse the current strategy and fine tune if necessary, or give a completely new strategy with solid basis.

Write to :…………………………… in not more than 500 words the marketing strategy that Tata Motors should follow

Note: This is a case prepared by the author and not an industry review article. The figures used are from secondary research sources and used only as inputs for the respondents to device strategy. The author does not claim to have any first hand information from any of the companies mentioned here.

Vishwadeep KuilaBrand Vectors