Tata Nano Pricing Strategy

Topics: Cost, Tata Nano, Innovation Pages: 2 (581 words) Published: September 24, 2011
Objectives- increase in sales

Tata initially targeted the vehicle as "the least expensive production car in the world" aiming for a starting price of 100,000 rupees or approximately $2050 US despite rapidly rising material prices. As of August 2008, material costs have risen from 13% to 23% over the car’s development,and Tata now faces the choice of: •introducing the car with an artificially low price through govt-subsidies and tax-breaks, or •foregoing profit on the car, or

using vertical-integration, or
partially using inexpensive polymers or biodegradable plastics instead of a full metal-body, or raising the price of the car An increased price on the Nano will likely decrease demand.

TATA unveils the world’s cheapest car:
The Nano is also much lighter than comparable models as a result of efforts to reduce the amount of steel in the car (including the use of an aluminum engine) and the use of lightweight steel where possible. The car currently meets all Indian emission, pollution, and safety standards, though it only attains a maximum speed of about 65 mph. The fuel efficiency is attractive - 50 miles to the gallon. Hearing all this, many Western executives doubt that this new car represents real innovation. Too often, when they think of innovation, they focus on product innovation using breakthrough technologies; often, specifically, on patents. Tata Motors has filed for 34 patents associated with the design of the Nano, which contrasts with the roughly 280 patents awarded to General Motors [ Images ] every year. Admittedly that figure tallies all of GM's research efforts, but if innovation is measured only in terms of patents, no wonder the Nano is not of much interest to Western executives. Measuring progress solely by patent creation misses a key dimension of innovation: Some of the most valuable innovations take existing, patented components and remix them in ways that more effectively serve...
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