Why TATA NANO Flops in the market

Presented By: Shabid AshrafAbhishek Sharma

Shikha MathurNeha Dagur

Ankita Singh

History of TATA Motors• Was established in 1945. Appeals primarily to the Asian, UK and some of the U.S.

market. In the past exported trucks and jeeps to Israel.

• In 2010 ranked number 39 on the list of world's leading companies.

• In 2011-2012 was estimated to be worth 34.7 billion.

• Ranked fourth in the world in the production of trucks and fifth in production of buses.

• Owns more than 4500 engineers and 60,000 workers, in India alone.

• To date produced more than 8 million private vehicles.

• More than 6600 points of sale and service worldwide.

• Since 2004, being traded in the New York Stock Exchange.

What is TATA NANO?

• Tata Nano is a micro car model designed to transport four passengers. Produced by the Cars and Engines division of Indian conglomerate Tata. Tata Nano originally developed and produced for the local urban market in India and is considered the world's cheapest car manufactured in serial production.

History of NANO

• In 2003 the Tata company began development of car with four wheels designed to replace two-wheeled vehicles.

• Commercial launch of the Nano model for the Indian market took place in early 2011 , and received high exposure by the international media.

• Preliminary market researches conducted before launching the new international model anticipated a great commercial success and one of the research institutes in India predicted that the Nano will control about 65% of the Indian market.

Why the Nano was meant to succeed?

• Very cheap vehicle (about 2000$).

• Marketed as "car for the people".

• The name Tata. The Tata Corporation is a huge corporation in India (controls the cellular market, energy, telecommunications, textiles and beverages).

• The vehicle is designed to replace the motorcycle and the rickshaw. Currently being sold in India about 1.2 million motorcycles annually. Also, India is known as a country with high precipitation and therefore a transition from the bike to a closed vehicle is logical

So why the Tata has failed?

Raw materials:

There were many cases of car fires as well as many technical and mechanical problems.The best incident that demonstrates the failure of the Tata Nano occurred at a vehicle exhibition in New – Delhi, when one of the presenters tried to open the car door and was left with the handle of the door in her hands.

Non-compliance with European standards

On the one hand, the company's engineers were required to reduce costs for mass production of

the vehicle. To meet the requirements are waived compliance with standards and thereby lowered the cost of production. On the other hand, non-compliance with European standards meant that they could not sell the car for an external market

and thereby reduced market share range.

Use of diesel

India gasoline subsidized by the state, there are subsidies of 50% of its value in the market.

The engineers designed two models of Nano: gasoline and diesel. The vehicle that designed for the larger segment of the Indian market, designed to operate on diesel and therefore

the cost of using it rise above of what the target costumers could afford.

Indian roads infrastructure

Tata was intended to replace the motorcycle and rickshaw in India.

The road infrastructure in India is poor, there are numerous of off-roads.

Motorcycle and rickshaw can stand along the difficult road of India, however Tata's low-slung chassis combined with substandard raw materials that make up the vehicle did not meet the required

life-long and fell apart when traveling on these roads.

Problems with marketing

• Business Model: their dealer network is almost entirely urban and they didn’t really have a way to reach out to small towns and villages, where much of the real target market lived.”

Customer Model

• Tata made two miss-steps here. First, the company designed for what it thought its customers should have, instead of figuring out what they really wanted.

• And second, it didn’t understand the cultural drivers of customers’ brand perceptions.

Marketing Lesson

• They don’t call car a luxury item for nothing.• People check long term benefits rather than

short term affordability.• Facts need to spread faster than rumours.• Tall claims need to be backed with taller

expectations.

Conclusion

• Tata's business model fits to push type model, mass production. According to this model the sequence is: design-make-sell. Tata failed at the design stage.

• Selling poorly at home and with exports drying up, the Nano has become a cautionary tale of misplaced ambitions and a drag on sales and profit at Tata Motors.

• It turns out that those climbing into India's middle class want cheap cars, but they don't want cars that seem cheap—and are willing to pay more than Tata reckoned for a vehicle that has a more upmarket image

References

• http://www.pcmrd.org/Documents/Journals/PMRVol10Issue2/PMRVol10Issue2-5.pdf

• http://online.wsj.com (wall street journal)• www.studymode.com• www.tatanano.com• http://daindunston.com• http://deniseleeyohn.com/bites/2013/05/22/what-went-

wrong-with-tata-motors-nano

Thank You