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PRODUCT DEVELOPMENT

PROCESS OF TATA MOTORS

(Tata Nano)



Submitted To: Mr. Ozer Khalid

Submitted By: Aneela SaleemAnnam ManzoorRozina Younus



Subject: New Product Development

ContentsContents ................................................................................................ 4



COMPANY PROFILE ................................................................................. 8

TATA GROUP AND ITS SUBSIDIARIES .................................................................... 14

PRODUCT DESCRIPTION (NANO) ............................................................ 15

MARKET SEGMENTATION ...................................................................... 18

SEGMENTING CONSUMER MARKET ........................................................................ 18

STUDY RESULTS ..................................................................................................... 33



INTRODUCTION TO THE NEW PRODUCT DEVELOPMENT ........................... 35

IDEA GENERATION ................................................................................................. 37

IDEA SCREENING .................................................................................................. 39

CONCEPT TESTING AND DEVELOPMENT ................................................................ 40

BUSINESS ANALYSIS .............................................................................................. 43

DISRUPTIVE TECHNOLOGY .................................................................................... 44



FINAL PROTOTYPE .................................................................................................. 47

COST REDUCTION PARADIGM ................................................................................ 50

TOTAL SALES ESTIMATION ..................................................................................... 52

MARKET STRATEGIES ............................................................................................. 54

PROCESS: ............................................................................................ 57



COMPANY PROFILE

Tata Motors Limited is India's largest automobile company, with consolidated revenues of USD 14

billion in 2008-09. It is the leader in commercial vehicles in each segment, and among the top three in

passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The



company is the world's fourth largest truck manufacturer, and the world's second largest bus

manufacturer. The company's 24,000 employees are guided by the vision to be "best in the manner in

which we operate best in the products we deliver and best in our value system and ethics." Established

in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. Following a strategic

alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at

Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat power trains. The company's

dealership, sales, services and spare parts network comprises over 3500 touch points. Tata Motors also

distributes and markets Fiat branded cars in India. Tata Motors, the first company from India's

engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged



as an international automobile company. Through subsidiaries and associate companies, Tata Motors

has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a

business comprising the two iconic British brands that was acquired in 2008. In 2004, it acquired the

Daewoo Commercial Vehicles Company, South Korea's second largest truck maker. In 2005, Tata

Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer,

and subsequently the remaining stake in 2009. In 2006, Tata Motors formed a joint venture with the

Brazil-based Marco polo, a global leader in body-building for buses and coaches to manufacture fully-

built buses and coaches for India and select international markets. In 2006, Tata Motors entered into

joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and



market the company's pickup vehicles in Thailand. The foundation of the company's growth over the

last 50 years is a deep understanding of economic stimuli and customer needs, and the ability to

translate them into customer-desired offerings through leading edge R&D. With over 3,000 engineers

and scientists, the company's Engineering Research Centre, established in 1966, has enabled pioneering

technologies and products. It was Tata Motors, which developed the first indigenously developed Light

Commercial Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata Indica, India's first fully

indigenous passenger car. Within two years of launch, Tata Indica became India's largest selling car in

its segment. In 2005, Tata Motors created a new segment by launching the Tata Ace, India's first

indigenously developed mini-truck. In January 2008, Tata Motors unveiled its People's Car, the Tata



Nano, which India and the world have been looking forward to. The standard version has been priced

at USD 2500 (excluding VAT and transportation cost). Tata Motors is equally focused on

environment-friendly technologies in emissions and alternative fuels. . It has developed electric and

hybrid vehicles both for personal and public transportation. It has also been implementing several

environment-friendly technologies in manufacturing processes, significantly enhancing resource

conservation Through its subsidiaries, the company is engaged in engineering and automotive

solutions, construction equipment manufacturing, automotive vehicle components manufacturing and

supply chain activities, machine tools and factory automation solutions, high-precision tooling and

plastic and electronic components for automotive and computer applications, and automotive retailing



and service operations. Tata Motors is committed to improving the quality of life of communities by

working on four thrust areas – employability, education, health and environment. The activities touch

the lives of more than a million citizens. The company's support on education and employability is

focused on youth and women. They range from schools to technical education institutes to actual

facilitation of income generation. In health, our intervention is in both preventive and curative health

care. The goal of environment protection is achieved through tree plantation, conserving water and

creating new water bodies and, last but not the least, by introducing appropriate technologies in our

vehicles and operations for constantly enhancing environment care.



With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.

TATA GROUP AND ITS SUBSIDIARIES

TATA group‘s portfolio includes wide range of businesses which are leading in their fields. Its total

revenue in 2006-07 is $ 28.8 billion which is 3.2 % of India‘s GDP. TATA‘s business empire extends

to over 80 countries across 6 continents. TATA group has ninety eight companies that are basically

operating in seven sectors.



PRODUCT DESCRIPTION (NANO)

Nano is a car which has breathed into life due to one man. Give credit to Mr. Ratan Tata for his

determination to build a low cost family car that has come true, finally. Designed with a family in

mind, it has a roomy passenger compartment with generous leg space and head room. It can

comfortably seat four persons. Its mono-volume design will set a new benchmark among small cars. Its

safety performance exceeds regulatory requirements in India. Its tailpipe emission performance too

exceeds regulatory requirements. In terms of overall pollutants, it has a lower pollution level than two-

wheelers being manufactured in India today. The lean design strategy has helped minimize weight,



which helps maximize performance per unit of energy consumed and delivers high fuel efficiency. The

high fuel efficiency also ensures that the car has low carbon dioxide emissions, thereby providing the

twin benefits of an affordable transportation solution with a low carbon footprint. In pursuit of

excellence and to keep up to the initial promise made to people that Tata will come out with a compact,

quality car within a price tag of Rs. 1 lakhs(3000 SGD), Tata Motors came up with a design, marketing

and operational strategy keeping in mind the constraints of:



Price

Market Scalability

Customer Aspiration

Resource Efficiency



MARKET SEGMENTATION

SEGMENTING CONSUMER MARKET



“Tata-Motors” undertake research to get the answer of following questions before they take decision to

launch a new small car or not.

1. Who are my customer and potential customer?

2. What kind of people they are?

3. Where do they live?

4. Can and will they buy?



Research helps us to get the answer of above mentioned questions. Thus, research helps producer to

collect the information which reduces business risk. It helps producer to identify sales opportunities

and to develop action plans.

Following are the objectives of this Study:

Research is undertaken for following reasons.

1. To know awareness of potential customers about “NANO”



2. To Know the Perception of people toward pre-launched Tata Nano Car.



They asked questions from the people and the results of these questions are as under:



STUDY RESULTS

From this study, it is found that from the total of 150 Respondents interviewed 111respondentswould

like to purchase car and out of that 111 respondents 96 respondents want to purchase Tata Nano Car

means 86.48% are interested in purchase Nano Car from the criteria of those Responded who want to

purchase car. From this result, we can conclude that generally people whose income is more than Rs.

45,000 they do not prefer to purchase Nano Car and the people whose income is below Rs.10, 000

generally they already possess vehicle and they don’t want to replace it because as a financial condition

Car is not preferred and neither they want to purchase Nano Car. Generally, Law of Demand says that



as price of product or goods increases demand of that particular goods decrease and vice versa. But

there are some exceptions which do not obey this law of demand which are as under:

(I) Luxurious Goods (II) Giffen Goods

The people whose income is higher they don’t want to purchase it because they think that Nano

produced only for Middle class People and if they will purchase, it will decrease their prestige in

society but in some cases High profile people also purchase Tata Nano the perception is different for



that.50 responded are strongly agree to purchase Tata Nano instead of Bike & 45 Responded are

strongly agree to purchase Tata Nano instead of secondhand car

INTRODUCTION TO THE NEW PRODUCT

DEVELOPMENT

Before the introduction of a product into the market, it goes through several stages of development.

The stages of the product development include the following:



Idea Generation

Idea Screening

Concept Testing and Development

Market Strategy

Business Analysis

Total Sales Estimation



As far as Nano is concerned, it falls new to the world products in the context that it has made a history

for the cheapest car ever made without compromising on quality. i.e. best way value analysis.

IDEA GENERATION

The main idea behind TATA NANO was perceived by the chairman of TATA group himself who saw

a family of four going on a scooter in rain he wanted to develop a transport which was affordable, safe

and could face all types of weathers. This turned out to be the most ambitious project of Tata motors

till date when Mr. Ratan Tata told this to one of his managing directors Mr. Ravi Kant he was also



interested about the idea. Mr. Ravi Kant had learned from his experience that ―People want to move

from two-wheelers to four-wheelers but they cannot afford it. More and more can, but Indian car

buyers today represent a tiny slice of a potentially giant market India has just seven cars per 1,000

people. India's auto industry has grown an average of 12% for the past decade, but just 1.3 million

passenger vehicles were sold in India in the fiscal year ending March 2006. That means a billion

Indians buy about the same number of cars in a year as 300 million Americans buy in a month. If four

wheels cost as little as two wheels, that could change fast. About 7 million scooters and motorcycles

were sold in India last year, typically for prices between 30,000 rupees and 70,000 rupees, about $675

to $1,600.



IDEA SCREENING

The next step was screening of ideas. There were many ideas like to make a scooter with two extra

wheels at the back for better stability, a three wheeled car like a closed auto rickshaw but the market

requirement was a car, the car should be such that it doesn‘t convey a message that it‘s just an

extension of a scooter it should be a proper car and likewise should also give the feel of a actual car.

Trying to build a car cheap enough for motorcycle buyers seems to make sense now but seemed

unachievable several years ago when Mr. Ratan Tata, chairman of Tata Motors had first mentioned his

dream of building a one-lakh car in 2003 at that time the whole world thought that this gamble will



never work out but ironically the whole world is now talking of small cars as $5,000 or $7,000 after

TATA NANO was launched in 2009.

CONCEPT TESTING AND DEVELOPMENT

After surveying customers the end result was that people wanted a four wheeler which was cheap,

dependable and strong enough to carry a load of 1 ton additionally four wheelers also increased the

social status of the person who owns it .Four wheels not only practical appeal but also had a emotional



appeal. Thus the new product was now to be developed but the following considerations would have to

keep in mind when developing it:

The car should be built on a different platform than conventional ones.

It must be meeting all the safety and regulatory requirements.

It has to be built on a scale which shall be more than double the earlier launches of

similar products and the ramp up must be smooth.



The car has to be designed so that it can be exported to other countries as the domestic

demand may not materialize as per projections.

There were three main requirement of the new vehicle: it should be low cost, adhere to the regulatory

requirements, and achieve performance targets such as fuel efficiency and acceleration capacity. Nearly

500 engineers were involved in the development of the vehicle and everyday they had meeting so that

the decision taking and the problem solving process could be accelerated. Each engineer represented a

different part of the car: engine and transmission, body, vehicle integration, safety and regulation, and

industrial design. The body of the vehicle had to go under a number of iterations because the Mr.Ratan



Tata wanted that a person whose height is over six feet can also fit into the car without any discomfort

and finally the length of the car had to be increased by 100mm but eventually. The hard work of

designing the car paid off and the designers were successful in their attempt to design an actual car

which did not look shabby and inexpensive but looked sleek and sophisticated.

BUSINESS ANALYSIS

COST:



Since the car had to be built within a cost of Rs. 1 Lac, no conventional design would work as the

costs shall be higher and so the entire car has to be redesigned. The design has to question the need of

each and every component from the point of view of its necessity of existence and also the minimum

requirements of its functionality. Value Engineering concepts have to be deployed to finalize the

minimum requirements.

DISRUPTIVE TECHNOLOGY

It‘s a technology which brings radical change by introducing new ways of doing things.



Technology that is

Significantly cheaper than existing Technology.

Much higher performing?

Has greater functionality and

Is more convenient to Use.



Brings to market a totally different Value proposition than the one available and can

change the Paradigm about a product.

The Guiding factor was that the cost has to be minimized for each component yet maintaining its basic

functionality. The Alternatives are:

Reduce Consumption of Material being used.

Alternate Suppliers to get same material at fewer prices.



Use alternate materials.

Eliminate use of Material.

Eliminate a process Or a Combination of the above.

FINAL PROTOTYPE

This implementation was made possible through series of innovative ideas which led to acquisition

of 37 patents by Tata Motors.



I. Engine was packaged on the rear side.

II. 2 cylinder engine (conventionally there are 3-4 cylinder engines)

III. Identical handles and mechanisms for left and right side doors

IV. Instrument cluster in the middle of the dashboard

V. Interior space was maximized by pushing wheels to the corners and power train below the

rear seat. Product created was very contemporary and



VI. It has sufficient Space inside to accommodate 4 persons comfortably.

VII. Highly fuel efficient

VIII. Exceeds the current Safety requirements

IX. Complies with the current emission requirements.



COST REDUCTION PARADIGM

Value Engineering Alternatives

The target was very clearly defined that, within the given cost structure all the components have to be

allocated and the same had to be achieved using the available alternatives. The Guiding factor was that

the tax structure on materials and manufacturing must support the final cost. Decisions were

Establish factory in a tax free zone.



Get the tax advantages on infrastructure development.

Get the suppliers to establish base near the factory.

Get special concessions from State Govt.

In short select a manufacturing location where all the advantages could be achieved.



TOTAL SALES ESTIMATION

The total sales had been estimated based on the following decisions

It was estimated that the demand for the people‘s car shall be at least twice the demand

for Maruti 800, the lowest end car.

Initial projections were at about 500,000 cars per year.



The basic reason was the conviction that the target price shall redefine the 4 - wheeler

segment.

The price decision of Rs 1 lakh is definitely going to make a lot many people transit to 4-

wheeler fold and that shall explode the demand.

Only 10% customers of 9 Million two wheeler market transit to 4-wheelers it shall

amount to 50% of the passenger car market share.



It was decided to set up plants with 5 lakhs cars per annum capacity and ramp the same

up in stages, in line with increase in market demand.

MARKET STRATEGIES

Price:



Tata Motors set their retail price target before they designed the car. Doing so let them establish their

demographic. Setting the price and working backwards also required a fundamental shift in the way the

car was designed, since many costs are fixed once the design is set.

The prices of Tata motors are generally affordable acceptable by the general public at large. Tata

always have something for the lower class people with Nano being their trump card. Giving discount

every month and special promotion for certain type of vehicle also one of the strong strategy use by

Tata Motors. Discount can be made from Company‘s profit or from dealer‘s profit at certain range.



Pricing strategies:

Penetration pricing

Low pricing policy with minimum profit margin.

Though the one lakh price tag is not fixed by TATA group, it was the word of mouth of

people which fixed that range. This expectation of people creates a big challenge for the

company.



PROCESS:

Sustainability of innovation in products needed to be complemented with innovative changes in the

organizational processes too. Some examples are:

1) Adoption of the Tata Business Excellence Model (TBEM)



It is based on Malcolm Baldridge Award for business excellence and Balance Score Card. This has

created a culture of exploring various innovative ways to achieve excellence in all the organizational

processes.

2) Use of IT systems:

It has been a benchmark and highly leveraged in the organization throughout VALUE CHAIN.

3) Supply Side



Free-Markets for e-Sourcing, Supplier Relationship Management (SRM).

4) Product Development Process

Institutionalized Stage Gate process in the organization is a benchmark in itself and ensures

development of right product for the market and also an effective and efficient program management.

Transition from in-house product development to a collaborative product development, utilizing the

capabilities of suppliers, design houses, subsidiaries and associate companies specializing in different

verticals. Internalization philosophy of Tata Motors made some major global acquisitions like TDCV,



JLR, Hispano, etc. Unlike many other Japanese / US players, they followed an innovative approach to

be seen as a local company in the country of operation, i.e., as a South Korean player in South Korea

and as a Spanish Player in Spain. This has helped them to appreciate the need and importance of all the

stakeholders and they achieved this in four stages. This involves –Initiating, by understanding the

language and basic facts of the country, Familiarization with their culture, Harmonization and finally

synergizing by sharing the best practices and work ethics.



CONCLUSIONTata Nano car development process is fully integrated with the process described. It is the perfect

example of how the company recognized the need of this product and the final output is according to

the requirements of the target segment. The quality was not compromised and the best solution is

provided at the economical rate.



REFERENCES:

http://www.slideshare.net/hemanthcrpatna/a-project-report-on-tata-nano-pre-launch-survey

www.tatamotors.com/

www. tatanano.com/


http://www.tatamotors.com/




http://www.tatanano.com/










http://en.wikipedia.org/wiki/Tata_Motors

http://en.wikipedia.org/wiki/Tata_Nano





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