Positioning the Tata Nano (A) and (B)
This case deals with the positioning of the Tata Nano - for its launch and after its launch - , a new version of ultra-low-cost cars produced by Tata Motors Ltd. for the India’s market.
The Tata Nano aimed to revolutionize the India’s market. First, the goal of the Tata Nano was to be the smallest in order to be maneuverable, as the streets in India were extremely small and unsafe. At the same time, the Tata Nano had to be the most affordable car in India, at a price of Rs. 1 lakh, in order to allow everyone to afford this car and more particularly those who could not afford a car before. To finish, as Tata Motors Ltd aimed to improve the quality of life of Indian people and so, Tata Motors Ltd. also paid attention to the quality of its new car. In other words, the Tata Nano was going to be the smallest and most affordable car in India, without compromising quality.
Before the launch of the Tata Nano, Tata Motors Ltd tried to determine the best positioning for its new cars but there were too many choices. The first main choice was to position the Tata Nano as a means of family transport safer and more comfortable alternative to motorbikes. Besides, Tata Motors Ltd thought that positioning the Tata Nano as the “world’s cheapest car” could also appeal consumers to car ownership. Another option was to focus on a specific segment or usage situation, attracting thanks to the Tata Nano’s styling and maneuverability. In other words, the first question to answer is: How the Tata Nano should be positioned for its launch?
In the second part of the case, we can see that the Tata Nano finally didn’t really achieve its objectives. Indeed, 80% of the bookings were car owners and only 20% were two-wheelers owners. Besides, the Tata Nano finally was used by the wife or a college student in the household. Moreover, some consumers stayed skeptical and declared that they preferred to pay a bit more to have a larger car, such as competitors’ ones. At the same time, sales declined dramatically due to car’s safety issues and the rising of raw materials costs forced Tata Motors Ltd to increase the prices of its cars. As a result, the significant key factor of success (price) of the Tata Nano lost power. In other words, the second question to answer is: What is the positioning of the Tata Nano after its launch and what Tata Motors Ltd. should have done to best position the Tata Nano during the launch period?
Tata Motors Ltd is part of the well-known Tata Group, established in India in 1868 by Jamsetji Tata, as a trading company. The Tata Group has a good image of “trust” and a “strong commitment to ethics” and aims to improve the quality of life in India. Tata Motors Ltd. was established in India in 1945 as the “Tata Engineering and Locomotive Company”. From 2003 and 2008, the group well evolved thanks to acquisitions and ventures of numerous car companies and cars (Jaguar and Land Rover). In 2004, the group was listed on the New York Stock Exchange. At the same time, the group expanded its market worldwide through manufacturing factories (UK, South Korea, etc.) and exportations to Europe, South America, etc. These actions allowed Tata Motors Ltd. to develop its notoriety but also its knowledge. In 2009, Tata Motors Ltd. was involved in two main segments, the passenger-car segment (entered in 1991 with 16.45% of market share) and the commercial-vehicle segment (63.94% of the market share), where it is clearly the leader.
Concerning now the automobile industry in India, the case shows us that the main competitor of Tata Motors Ltd. is Maruti Suzuki, which has 46.07% of market share in the passenger-car segment. Maruti Suzuki is also the pioneer in the “mini passenger car category”, with the Maruti 800, positioned as the smallest and the most affordable car and the “car of the India masses”. Moreover and due to the publicity surrounding the Nano...