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Tata Nano – The People’s Car Essay

1) Why was this product a special one for market?

With the concept of NANO, Ratan Tata Chairman of the TATA Group, had a vision of making “a common man’s car” which would be safe, affordable and made personal transportation available to anyone and everyone who could not afford to own a four-wheeler. It was meant to bring a new Dimension to the automobile industry with its low cost manufacturing. A new segment, Ultra Low Cost (ULC) was created, where Nano was priced between two-wheelers (bikes) and Maruti Suzuki 800, which was the next cheapest alternative in India until now. It had the lowest CO2 emissions levels amongst all Indian cars, owing to its compact size and problem of traffic congestion was also reduced to some extent. The initial bookings for Nano, as pre-orders, were very positive with 206,000 orders by May 2009.

2) What went wrong with the STP of this product?

Tata Nano or the “Lakh-takia car” as it was called was segmented for the economic class targeting the lower-income groups followed by the middle income groups. It was meant to be a replacement for scooters and motorcycles in rural India. So Nano was positioned in the market as “the world’s cheapest car”. A lot went wrong with Nano.

It started from the positioning of the car where it was hailed as the “world’s cheapest car” which was more of a headline creator and did not exactly appeal to the masses as no one wants to be associated with anything that is tagged as “the cheapest”, this caused a great harm to the brand name. Innovation(which was an important concept) went for a toss and Nano was seen only as the a low budget car. Also their target market was primarily rural India which was more or less unaware about all the qualities of the product. They were happy with their 2 wheelers and did not know much about Nano and this problem was further aggravated by the fact that most of their dealership was urban and hence they didn’t reach their target market efficiently. Because of the price cap of Rs. 1 lakh a lot of cost cutting was done by vendors leading to many safety issues with instances where cars caught fire, which again negatively impacted the brand. The Singur issue also contributed heavily to the decline of Nano because of the extended delay between announcement and product release lead to loss of momentum.

3) What lies ahead for this product with some visible changes in segmentation?

Tata Motors is now revamping Nano’s brand image from a cheap car to a more youth oriented car and properly marketing its features with the advertisements like the LAL TIPPA Campaign. They need to actively look for new markets for the car such as other Asian countries as well as Africa. They have also opened up dealerships in rural and semi-rural areas to reach their target audience. They are planning of introducing the hybrid model of Nano by the name of “PIXIE” in the European markets and Indonesia

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