Tata Nano Marketing Strategies
Financial Objective c. Target Market d. Competitive Advantage e. Positioning and Branding V. Marketing Strategy a.
Product b. Price c. Place d. Promotion VI. Control and Evaluation a.
Sales Forecast Appendix References I. Company Overview – Tata Motors Company Tata Motors is a part of Tata Group. Tata group includes companies that operate in other sectors such as Tata Steel, Tata Hotels, Tata Chemicals, and Tata Communication. Tata Motors, established in 1945, is the biggest auto manufacturer in India, and has 25% of total market share.
Tata Motors produces commercial vehicles with a range of light to heavy trucks, buses, and tractors.
In addition, Tata Motors produces passenger vehicles, and luxury cars from their subsidiaries, such as Jaguar and Land Rover. Tata Motors is the biggest subsidiary of Tata Group founded as a trading company dealing opium in 1868 in Bombay, India by Jamshetji Nusserwanji and Tata Motors, is currently operated by his grandson Ratan Tata. According to the Tata Motors web site (2009), the company was listed in the New York Stock Exchange as the first automobile firm from India in 2004.
Tata Motor’s is headquartered in Mumbai, India and Tata Motors has 23,000 employees. According to Standard and Poor’s Net Advantage – Tata Motors, the company has approximately 13% increase in sale from last year.
In addition, the overall market share of the company is about 74 in Fiscal Year 2009. In the same year, the Tata Motors has launched Nano car which is the world’s smallest and cheapest car. The company business is expanding internationally to the U. K, South Korea, Thailand, and Spain.
Ratan Tata calls that car as “People’s Car”. Ratan Tata got success in making his company the world’s rank number 3 by believing in his vision, “best in the manner in which we operate, best in the products we deliver and best in our value system and ethics.
” In 2004, Tata Motors purchased Daewoo Commercial Vehicles Company which was the second largest truck manufacturer in South Korea, making Tata Motors the fourth largest truck manufacturer and the second largest bus manufacturer in the world.
In 2008, Tata Motors purchased Jaguar and Land Rover which are traditional car makers in the U. K. Also, the company announced the launch of the cheapest car in the world, the Nano, to car markets such as Europe, and the US. Plus, they already started to sell the car in India this summer, 2009.
Tata Nano is the first national family car developed for the Indian market. These affairs led the world to know of Tata Motors. According to Tata Motors’s annual report (2009), their business is growing.
This is the strength of Tata Nano which no one can imitate its product recently. Low production cost • According to the Economic Times (2009), Tata Steel is the exclusive steel supplier of Tata Motors to supply its steel to produce the world’s smallest and cheapest cars. The Tata Motor is able to take advantages of low cost and high qualities of raw material to produce cars because the company has their own steel company.
One main reason is that Tata Motors can make the cheapest car in the world because of the cheapest cost, which is roughly US$ 600 per car. (The Environment, 2008).
Both Tata Motor and Tata Steel are also working together and design cars to ensure the finest quality with customers. Approximately 97% of Tata Nano’s raw materials come from Tata Steel. As a result, Tata Motors can control and maintain cost of raw materials such as steel and iron plate to be stable which is one of the parts of car production.
Weaknesses Weak financial performance • According to the annual report (2009), the company’s gross debt increased to $3. 06 billion in March 31, 2009. The cost of acquiring Jaguar and Land Rover was $2. 3 billion, and the sales of these subsidiary decreased by 51% in the identical year.
In the same year, domestic sales declined by 15.
2% and 4. 8% in the passenger and commercial segment, respectively. Raw material costs increased to $5. 25 billion in comparison to last year. The employee level increased 36% to 49,473 people.
Therefore, the employee cost increased by 161. 5%. (Financial report FI, k-20, 2009. ) Recent damage to reputation • Since the explosion the Tata Nano news, customers are terrified to use the car. According to “A Fire scare for Tata Motor’s low-cost Nano” (2009), the whole situation has been treated differently by Indians.
The owners of Nano are scared of driving the car. The customers are now demanding their money back from Tata Motor. The company is ready to replace the car, but people do not want replace it; instead, customers want their money back, so they can buy another car. As a result, the reputation of Tata motors is in danger. (www. EconomicTimes.
com) Opportunities Customers’ concentration on new technologies • Nowadays, customers are more interested in high technologies cars. They will consider the car that use eco-friendly engines, such us hybrid, bio-ethanol, electric engines, etc.
Many technologies are being installed in cars in order to attract customers, and thereby demand for these cars is increasing. In the Indian automobile industry, fuel efficient and environmentally friendly vehicles are also becoming more popular. Considering the fact that the Indian automotive industry is the second fastest growing industry in the world, and it produced about 2 million vehicles annually, (Indian Industry, 2009. ) Tata Motor also plans to produce Nano-E, which is an electric-drive version of the car (The Economic Times, 2008).
Expand the business to the rest of the world Acquisition of Jaguar and Land rover was completed with their value around US$2. 3 billion. Tata Motors can capture the high-end market and have a chance to expand to the global market (Bangladesh News, 2008). Tata Motors has an opportunity to generate more profits from customers outside the country since the total unit sales of the world’s luxury cars in 2008 were around 1. 24 million cars except in India which unit sales were only about 7,100 cars.
Top-rated car manufacturers include Jaguar, Land Rover, May Bach, Roll Royce, Audi, Bentley, Benz, and BMW. Wall Street Journal, 2008; Business Week, 2008). This acquisition can increase Tata Motors’ profits not only from high-end customers through Jaguar and Land Rovers, but also from non-luxury market by selling Tata Nano to the rest of the world. The overall number growth of autos in the world is growing from 3. 6 percent in the year 2005 to 8% in the year 2009 (Global auto industry, 2009).
Threats Sharpening Competition • In the Business week article, Nissan Company is ready to compete with Tata Motors by entering in the partnership with Bajaj Co.
Nissan Renault is planning to launch a small car by 2012, and the price of the car is nearly the same as Tata Nano. Another challenge is that Nissan Renault is producing fuel efficient cars, with more safety features as compared to Tata Nano. If Renault Baja is launched in India, then Tata Motors would probably lose about 50% of the market. (Proquest, 2009).
Environmental regulation • The company is subjected to extensive governmental regulations regarding vehicle emission levels, noise, safety and levels of pollutants generated by its production facilities.
These regulations are likely to become more stringent in the near future. For instance, India’s major cities plan to adopt the Euro IV emissions standards in April 2010, requiring a 35% reduction in sulfur emissions over the current Euro III standard. After this regulation it would be very costly for Tata motors to sell the world’s smallest and cheapest car, because the car is not CO2 free. If the company makes the car CO2 free then the cost of Nano car will go up from $2,500 to $ 4,000 and in this way, it would not be the cheapest car in the world.
(Data monitor, 2008; Business week, 2009). Product Analysis – Tata Nano Model pic] As has been mentioned, the Tata Nano is the smallest and cheapest in the world. According to Tata Motors (2009), Tata Nano was launched by Ratan Tata during the Auto Expo 2008 at a price of 100,000 Rupee (Rs. ) or $2,500 USD. According to Judkis (2009), if the Tata Nano is going to sales in the United State by 2011-2012, the cost would be up to $4,000.
The author goes on states that Tata Nano has margin about 15 – 20 percent of total sales. This means Tata Nano has higher percentage of profit than the competitors. The Tata Nano also known as “people’s car”, which is produced for eco-friendly product.
Additionally, the company is planning to develop electric-version for Nano or E-Nano in 2010. • Design: The Tata Nano was designed by Italy’s Institute of Development in Automotive Engineering, which has 21% and 8% more in interior and exterior than competitors. • Saving: The Tata Nano has performance of the engine is very comfortable and it’s pretty green.
In addition, the car can save fuel efficiency by using only 56 miles per gallon. • Performance: The Tata Nano has 624 cc engine, maximum speed at 65 mph, fuel efficiency, four-speed Nano has a 2-cylinder and the gasoline engine can push to top speed at 105 Kilometers/hours Model: 3 basics model for Tata Nano, which are the Basic (STD) – 123,000 Rupees, the Deluxe (CX) – 151,000 Rupees and the Luxury (LX) – 172,000 Rupees. • Safety: Recently, the Tata Nano had passed the regulation requirement of the roll-over test and offset impact and it will develop to pass European regulations • Limited production: the company expected to produce the Tata Nano only 350,000 cars in the first year. Competitor Analysis 1. Toyota Company Toyota has become the largest foreign-based automobile company in Unites States during the past few years (Toyota annual report, 2009).
And US market is seen as the major growth for the Toyota group. It has manufactured variant of cars such as compact car, luxury car, or sport-utility vehicles. In addition, Toyota is seen as an efficient car. For example, one of the most famous cars of Toyota: Prius, which is a hybrid car, and people will think save energy equals Toyota. Furthermore, Toyota’s market share in United States market in 2009 is 16.
8% which is the second place of the total carmaker in United States (Sale and share of total market, 2009). And Toyota’s market share in United States market is the first place of the foreign-based auto manufacturer in 2009.
Strengths • Toyota is one of the leaders of carmaker in the world. In fact, it is the second largest auto manufacturer in the world. Toyota has made 4 million cars in the world in 2009 (Tucker, n.
d. ). So it has a good image to consumers. • Toyota has the capacity of new technology in the car industry. For instance, Toyota’s hybrid car has provided to the customers recent years.
Also the newest technology which is using in one of Toyota’s famous hybrid car: Prius is the solar system. It can generate the electric for the car using such as air condition or power windows. Datamonitor, 2009) • Follow “Just-in-Time” and “Jidoka” methods to operate its productive lines. These manners can make Toyota’s production more efficient and maintain high quality of its products. (Datamonitor, 2009) Weaknesses • It is hard for a Japanese-based company to operate in the world largest market: China.
• The large burden of Toyota’s employees’ retirement benefits and health care for Toyota. (Datamonitor, 2009) 2. Honda Company The United States market is the largest market for Honda Motor Company. The sales of Honda Car from United States were even more than in its home “Japan” market.
The Honda sold almost $1.
5 million in US market; but it just $0. 6 million in Japan market (Honda annual report, 2009). In addition, Honda has operated in US market over 50 years, and has manufactured its products over 30 years. Honda was the first Japanese auto firm which operates its production line in US. Additionally, Honda Motor’s market share in United States market is 11.
1% in 2009 (Sale and share of total market, 2009). Honda is the second place in the United States auto industry market share of the Japan-based carmaker. Strengths • Honda well-organize its divisional operation.
In fact, Honda bases on two factors to operate itself. First is will sundry its market by geographic and another is the customers and market that Honda has served in the world.
(Datamonitor, 2009) • Over 50% of Honda’s revenue came from North America in fiscal year 2008 (Honda annual report, 2009). So North America is the major market for Honda Motor Company. • High technology supports Honda to launch great model to the auto market. Honda’s specialized engine: i-vtec, which is one of the selling points for Honda cars. (Honda website).
Weaknesses • Honda relied too much on North American market.
Where half revenue came to Honda in fiscal year 2008. (Honda annual report, 2009). III. Market Segmentation Market Segmentation A primary for segmentation is the main factors among group within a market that can identify customer market which are demographic: income or family size, behavior: benefit or user status and geographic: rural or urban.
These processes divide a whole market into submarket in order to knowing the achievable and efficient market. d. Demographics One of the most popular approaches of segmentation is demographic variables. The variables are including gender, income, age, family.
Most car consumers would change their purchasing behaviors from these factors.
Furthermore, the US floating economy has changed the dynamics at the entire market, and then Tata Nano is produced for the middle class families and the second hand car owner who cannot afford to buy new cars. In the other hands, wealthy people group who want to have a small fashionable car is also one of Tata consumers. The fact is that rich families which might have own cars more than 3 different types of cars to serve different purposes (Automobile Market segmentation, 2008).
Thus, launching of Tata Nano will also see some changes of advantages to Indian car in US market segment. e. Behavioral From benefit and user status of consumers, safety in driving is the most important criteria, good looking design both internal and external, save fuel engine and prices of the car, ranking by order.
The segment is also looking for good service of after sale services which including more attention from staffs, fast maintenance time, follow up the service at the same standard in every service center.
Furthermore, the benefits that most of the target markets are looking for is to use car as a vehicles, which they will use for their daily life. The second benefit is to use car in travel. And another benefit after vehicle and travel is to use car as a mean to live up to their lifestyle. f.
Geographic Another straightforward approach to segmentation is via geographic method. To point out, the primary segment is US urban people. According to The World Fact Book: The United States (2009), urban population in the United States has more than 250 million people which the number is over 80% of total US population.
Therefore, this is going to be the cities in the US in particularly largest cities such as New York, Los Angeles and Chicago. This statistic shows that the US market segment is potential for launching Tata Nano. Furthermore, typical American families would have small cars and office cars which can park easily in cities and commute in short distance or around factories with low cost of fuel.
Thus, Tata Nano market has high possibility to grow in this point of small car segment. IV. Strategic Planning Marketing Objective Tata Motors would try to set the professional goal of Tata Nano performance in order to crate the most benefits to company.