Tata Nano

PREFACE This is a research proposal on a study on launch of new cheapest car in the world by TATA Company name â€Å"TATA NANO†. The objective of this research proposal is to find out an opportunity or a problem in the launch of the smallest /cheapest car targeting masses through secondary information / data. Also to gain knowledge about how TATA brought this new product i. e. , â€Å"NANO† up to the development stage and finally going to launch it on 23rd March, 2008 (already launched till now). During this project I researched on how TATA developed NANO costing Rupees1 lakh ($ 2500 U. S) and what will be its effects. A survey was also done for understanding consumer buying pattern and preferences (which is a part of secondary data). Thus, this study is based on new product development in marketing for TATA NANO. â€Å"Marketing Research is the systematic and objective identification, collection, analysis, dissemination, and use of information for the purpose of improving decision making related to identification and solution of problems and opportunity†. â€Å"Perception is the process, by which an individual selects, organizes and interprets information inputs to create a meaningful picture of the world around as†. I conducted to gain an understanding of what goes in to mind of the customer about â€Å"NANO†. I have learned lot during my research proposal on TATA NANO and I hope this will be helpful to find out the proposal information. TABLE OF CONTENTS ACKNOWLEDGEMENT2 PREFACE3 INTRODUCTION OF TATA MOTORS5 PROBLEM & RESEARCH OBJECTIVES6 SCOPE OF STUDY7 OBJECTIVE OF STUDY7 LIMITATIONS7 QUALITATIVE RESEARCH7 ENVIRONMENTAL CONTEXT OF THE PROBLEM8 MANAGEMENT DECISION AND MARKETING RESEARCH PROBLEM8 MANAGEMENT DECISION PROBLEM8 MARKETING RESEARCH PROBLEM9 HYPOTHESIS9 SECONDARY DATA9 TATA NANO – FEATURES10 TARGET MARKET10 SWOT ANALYSIS11 COMPETENCIES OF TATA NANO11 COMPETITION11 CAR OWNERSHIP PER 1000 PEOPLE12 RESEARCH METHODOLOGY12 TOTAL NUMBER OF VEHICLES (INDIA)12 GROWTH OF MOTOR VEHICLES (INDIA)13 % OF PEOPLE WHO ARE AWARE OF TATA NANO13 PREFERENCES OF DIFFERENT AGE GROUP REGARDING BUYING OF NANO13 TATA NANO – A PEOPLE’S CAR13 DOMESTIC MARKET SHARE13 BOMBAY STOCK EXCHANGE – TATA MOTORS14 AUTOMOBILE PRODUCTION14 AUTOMOBILE EXPORT14 IDENTIFICATION OF KEY ISSUES14 SUGGESTIONS14 ANALYSIS OF TATA NANO15 IMPACT OF TATA NANO ON LIFE OF COMMON MAN15 PORTER’S 5 FORCES MODEL OF NANO CAR15 BARRIERS TO ENTRY15 BUYERS16 SUPPLIERS16 SUBSTITUTES16 COMPETITVE RIVALRY16 CONCLUSION – FUTURE OF TATA NANO16 TABLES – CHARTS & FIGURES17 INTRODUCTION OF TATA NANO18 SECONDARY DATA18 RESEARCH METHODOLOGY20 ANNEXURE23 INTERNET WEBSITES23 TEXT BOOKS / MAGAZINES/ NEWSPAPERS24 INTRODUCTION OF TATA MOTORS â€Å"DREAM – DREAM AND DREAM, because dream gives vision, vision gives thoughts and finally thoughts lead to the action† Each letter of these motivational words said by India’s former President DR. A. P. J. ABDUL KALAM, goes exactly with MR. RATAN TATA, Chairman of TATA GROUP, who in the year 2003, dreamt of producing a safe, affordable car for the common man. Mr. RATAN TATA launched TATA NANO on 10th January, 2008, at the 9th Auto Expo 2008 in New Delhi. Established in 1945. First Vehicle rolled out in 1954. India’s largest business group. Diverse Business in 7 sectors. International income – 61 % of group revenue. Operations in over 80 countries. Products & Services – exported to 85 countries. Largest employer in private sector – over 3, 00,000 employees. World cheapest car with a price tag of $ U. S 2,500. First company from India’s engineering sector to be listed in NYSE (September, 2004). Developed India’s first fully indigenous passenger car. Operations in U. K, South Korea, Thailand & Spain. Over 4 millions TATA vehicles fly on Indian roads. Nation wide dealership – 3500. * (TABLES – CHARTS & FIGURES) PROBLEM & RESEARCH OBJECTIVES To study about how a new product – TATA NANO was developed based on marketing theory of â€Å"new product development†. To study about what made possible for TATA to develop and produce a car for just Rupees ONE LAKH ($ U. S 2,500). To study the objectives and target customers of TATA’S ONE LAKH CAR. To study on consumers buying behavior and preferences and views about TATA NANO by various methods of data collection. To find out the consumer perception on NANO car in INDIA. SCOPE OF STUDY This study would be useful for companies to know what people perceive and thinking about â€Å"Small Fight† that is NANO. This study would be useful to other students as a secondary data. This study would be useful to form strategies according to perception of people about NANO. OBJECTIVE OF STUDY To know the consumer perception on â€Å"NANO† car. To find out the acceptance level of people. To find out the awareness level about â€Å"NANO† car. To know about factors affecting purchase decision of â€Å"NANO†. To know how purchase decision of â€Å"NANO† varies from different income group. LIMITATIONS I will have to rely upon the information given by respondents, which may not be fully true. This study will be limited to only Indian Population. It is only for short period of time. Lack of professional approach since researcher is a student. Subjectivity is the main limitations of such studies. These sorts of projects take generally longer period than other ones. Situations may undergo a change. Hence, time gap may effects the successful implementations of research results. CHARACTERISTICS OF RESPONDENTS All have driving experience. Time Duration: 1 hour. All have a good knowledge of TATA NANO. Sample Size – 500. Sample group location. Data collection involves a field force and electronically. Age Group – 20 – 25; 26 – 35; 36 – 45; 45+ (both males & females) QUALITATIVE RESEARCH Taken 100 respondents, collected on the basis of secondary data. Respondents based on previous driving experience, driving license & knowledge about TATA NANO. Based on different cultures, regions & age-group between 20 – 25 years. This project of TATA NANO is based on based on basic research because it is not aimed at solving a particular pragmatic problem. Also generally cannot be immediately implemented by marketing executive. Verify the acceptability of a given theory, or to learn more about a certain concept. My research is based on Descriptive Research. Survey – most common method of descriptive research. Research technique gathering information from a sample of people using questionnaires (which will be utilized later for primary data). Different survey methods to contact respondents: telephone/mail; internet & in person. ENVIRONMENTAL CONTEXT OF THE PROBLEM Past Information & Forecast Resources & Constraints Objective Buyer Behavior Legal Environment Economic Environment MANAGEMENT DECISION AND MARKETING RESEARCH PROBLEM MANAGEMENT DECISION PROBLEM Will the conversion of â€Å"TATA NANO† to a taxi affect brand image and consequently sales? Will initial demand may lead to stock out? Whether the prices of â€Å"TATA NANO† will be sustained over a period of time with the economic changes in raw material price rise? With the hike in sales of â€Å"TATA NANO†, whether the infrastructure of the country will be able to sustain the volume of traffic? Will the protest of farmers against â€Å"TATA NANO† plant in SINGUR will affect the sales? Will general perception of brand â€Å"TATA† in small car segment affect the sales? MARKETING RESEARCH PROBLEM As price of â€Å"TATA NANO† is very cheap in INDIA, possibility of car being used as taxi cannot be avoided. Time to convert raw material into TATA NANO. Determining the trends in steel, rubber and other raw material prices. The focus of INDIA in building infrastructure and spending trends. They (TATA) thought that they are cheated by the government. TATA Company is known for heavy commercial vehicle. This common perception can affect the sale of NANO. HYPOTHESIS Conversion of â€Å"TATA NANO† to a taxi do not affect the brand image and consequently sales. TATA NANO is safe for driving. Hike in price of TATA NANO will not affect the sale. People prefer to purchase TATA NANO instead of two wheeler. People can wait for TATA NANO for few months. SECONDARY DATA The success of any project or market survey depends upon heavily on the data collection and analysis. It is necessary that the data collected is a reliable data in order to achieve the research objective. Secondary Data are those data, which have been already collected or published for the purpose other than specific research need at hand. This data is simply used by the researcher for his purpose of collected data and it’s used for the same purpose. The secondary data sources here in this project are: websites, books. It is also often called desk research because, as the name implies, it can often be completed from the desk of the researcher using printed information, the Internet, the phone and so on. The information might be internal, i. e. , available within the researcher’s own organization, or external where the information comes from elsewhere. Internal sources includes: Organization’s sales records; Customer Database; Complaints and other comments received from customers; market research previously carried out from the organization; Inquiries received from prospective customers; Organization’s annual report & Brochures, newsletters & house magazines produced by the organization. External sources includes: libraries; company data; directories & almanacs; books of statistical data; Internet; academic research; media articles in the general & trade press; reports by data agencies; commercial sources; international sources; government databases; industry experts; industry data; market research reports & unpublished sources. TATA NANO – FEATURES LENGTH 3. 1 METERS WIDTH 1. 5 METERS WEIGHT 600 KGS HEIGHT 1. 6 METERS ENGINE ALL ALUMINIUM, REAR MOUNTED, REAR WHEEL DRIVE CAPACITY 623 CC POWER 33PS FUEL INJECTION MULTI POINT FUEL INJECTION (MPFI) FUEL TYPE PETROL, DIESEL VERIONS WILL BE LATER BODY TYPE SHEET METAL SEATING CAPACITY 04 (FOUR) MILEAGE 26 KMPL (HIGHWAYS); 20 – 22 KMPL (CITY DRIVE) TOP SPEED 75 K. M EMISSION NORMS EURO – 1V, BHARAT STAGE – III COMPLIANT SAFETY NORMS FRONTAL CRASH TESTED VERSIONS ONE STANDARD & TWO DELUXE COMPARISON 8% LESS IN LENGTH (BUMPER TO BUMPER) WITH RESPECT TO MARUTI 800. 21% MORE INNER SPACE WITH RESPECT TO MARUTI 800. TARGET MARKET The low – cost care is clearly intended for the masses. For the family of four that would otherwise ride on a scooter, precariously balancing a tiny tot on the front and a baby on the wife’s lap. For the first – time car buyer in INDIA – a huge market despite the increasing number of cars in the urban and semi – urban areas. It also attracts the small cars buyers like Maruti 800. TATA NANO uses plastics and adhesives rather than welding. Introducing the car with an artificially low price through government – subsidies and tax – breaks, or using vertical – integration or partially using inexpensive polymers or biodegradable plastics instead of a full metal – body. It has no AC, no power steering, no power windows, and no power bells and whistles Executive two wheeler people: People that are working rofessionals but cannot afford to buy a three lakh car which is average cost of small car in INDIA. Second hand car user: Those people that cannot afford to buy a new car. Now they will be able to buy a new car cheaper then they buy a used car for. Auto rickshaw market: Most of the auto rickshaws also cost same as the price of NANO. T his may help the NANO to replace them as well. Middle and lower income group people: These are the people that are growing and are becoming a little richer which is making them afford a car. SWOT ANALYSIS STRENGTH Cheapest car in the World. 21% more space than Maruti 800. Brand Name (TATA). Cost Price Low. Fuel Efficient. Safe. Strong Market Position. Research and Development. WEAKNESSES Low power Not a status symbol. Delay in manufacturing. No regular size luggage room. It may create more traffic problems. Dependent on vendors. Overdependence on Indian Market. OPPORTUNITIES It can capture the large market in the society i. e. Middle Class. Large Market for Selling. Awareness in the market. First car in low range. Can hit in global market. THREATS Its nearer competitors BAJAJ AUTO & TARA are ready to introduce â€Å"cars† less than the price of NANO. Company Rival Not sure to hit in rural & semi-urban areas. COMPETENCIES OF TATA NANO Expectations. Modular Design. Pricing Strategy. Export Expectation. Pricing & Acceptance of TATA after launch. Enthusiastic Support. COMPETITION AUTOMOTIVE CAR CAR TATA NANO MARUTI 800 HINDUS AMBY ANDY NANO WEIGHT KG 600 800 2,000 600 SPEED 110 60 100 110 HP 33 37 100 30 VOLUME CC 630 800 1,800 200 FUEL L/HR 5. 5 3. 75 8. 0 1. 0 FUEL/HR/1000/CC 8. 73 4. 69 4. 44 5. 0 SPH 6. 0 9. 87 12. 5 30 HP/1000 CC 52. 40 9. 87 12. 5 30 CO2 E G/KM 116 145 186 21 KMPL 20 16 12. 5 11 T. KMPL 12 12. 8 25 66 MPG 47. 3 37. 8 29. 6 26. 0 FARE $/HR 11 6 10 11 FUEL $/HR 5. 5 3. 75 8 1. 0 NET $/HR 5. 5 2. 25 2. 0 1. 0 NET $/YR 19,800 13,500 7,200 36,000 COST $ 2500 5500 10,000 2,400 CAR OWNERSHIP PER 1000 PEOPLE COUNTRY PASSENGERS CARS/ 1000 POPULATION TOTAL VEHICLES/ 1000 POPULATION GNI / CAPITA (GROSS NATIONAL INCOME) INDIA 8 12 620 CHINA 10 15 1,500 SRI LANKA 13 42 1,010 THAILAND 35 276 2,490 KOREA 218 302 14,000 MALAYSIA 225 272 4,520 JAPAN 441 586 37,050 UNITED KINGDOM 451 510 33,630 UNITES STATES 465 808 41,440 RESEARCH METHODOLOGY Research Methodology deals with the various methods of research. The purpose of the research methodology is to describe the research procedure used in the research. Research Methodology helps in carrying out the project report in by analyzing the various research findings collected through the data collection methods. TOTAL NUMBER OF VEHICLES (INDIA) TABLE 1 shows the progress report of number of vehicles from 1951 – 2008, shown on x-axis, where as number of vehicles shown on y-axis. Number of vehicles in car increased due to demand and supply of cars with potential scope in INDIA. GROWTH OF MOTOR VEHICLES (INDIA) TABLE 2 – Two Wheelers: Two wheel vehicles are the dominant mode of private road transport in INDIA. They account for more than three – quarters of the total registered vehicle population and have exhibited the highest average annual growth rate – 14. 5% between 1980 and 2007. Car, Jeeps and Taxis taken together have grown at an average annual growth rate of 9. 5% during this period, whereas the population of registered buses has increased at an average annual growth rate of 7. 5% over the same period. % OF PEOPLE WHO ARE AWARE OF TATA NANO TABLE 3 – The % of people who are aware of the TATA’S new product – NANO car is shown with the help of pie chart. Here, blue color indicates that people are aware of TATA NANO and red color indicates the % of people who are not aware of TATA NANO. While analyzing this chart, we can know that only 3% of the total sample population is not aware about TATA NANO. This shows the great effect of media, newspaper and launching of this product. PREFERENCES OF DIFFERENT AGE GROUP REGARDING BUYING OF NANO TABLE 4 – This chart shows the preference of different age group to buy TATA NANO when it is launched. On X-axis, number of respondents is given where as on Y-axis the age group is given. Blue bar indicates willingness to purchase TATA NANO. Red bar indicates that the respondent is not willing to purchase it and green indicates that the respondent is not sure. While analyzing this chart, we can see that the young generation is eager to buy the product. While due to some misunderstanding about TATA NANO, the older generation doesn’t desire to buy it or are not sure about it. TATA NANO – A PEOPLE’S CAR TABLE 5 – In this chart, number of respondents is given on the y-axis and some features are given on x-axis. By analyzing the chart, we can say that people consider the cost factor the most for TATA NANO followed by the innovation. Even looks has got quite positive reply. TATA NANO is a product that is developed perfectly at minimum cost without sacrificing the quality. DOMESTIC MARKET SHARE TABLE 6 – In this pie chart diagram, it shows that INDIA has a big potential in auto industry. 77% shows two – wheeler, 14% passenger vehicles, commercial vehicles & 4% three wheelers. TATA NANO decided to capture two-wheeler market. BOMBAY STOCK EXCHANGE – TATA MOTORS TABLE 7 – This chart represents how the stock market fluctuate with the ups & down’s of TATA NANO Company. The chart is from 2007-08 which shows how BSE increase with an increase in TATA NANO. AUTOMOBILE PRODUCTION TABLE 8 – This chart shows that how automobile production is increasing every year. According to this chart, it shows from 2001 to 2007, where every year automobile production is increasing in all sectors such as Passenger Cars; Multi-utility vehicles; Commercial Vehicles; Two Vehicles & Three Vehicles. AUTOMOBILE EXPORT TABLE 9 – This chart shows that how automobile exports is increasing every year. According to this chart, it shows from 2001 to 2007, where every year automobile export is increasing in all sectors such as Passenger Cars; Multi-utility vehicles; Commercial Vehicles; Two Vehicles & Three Vehicles. SEGMENTATION VARIABLE USED GEOGRAPHIC RURAL & URBAN DEMOGRAPHIC FAMILY SIZE & INCOME BEHAVIRAL BENEFIR & USER STATUS TARGET MARKET EXECUTIVE TWO WHEELER SEGMENT, SECOND HAND CAR USER, AUTO RICKSHAW MARKET, MIDDLE & LOWER INCOME GROUP PEOPLE POSITIONING TATA INTENDING TO PLACE IN THE MIND OF THE CONSUMERS AS A PEOPLE’S CAR STARTEGIC OPTIONS UNDIFFERENTIATED MARKETING IDENTIFICATION OF KEY ISSUES SUGGESTIONS TATA should increase the production of NANO so that customers don’t have to wait much for their car, as they feel urgency for NANO. As people believes that NANO is people’s car and will be affordable by common man which was a dream earlier for them. So the price should be kept stable in future with the increase in price of raw material. Otherwise it will be out of their reach and people believe in MR. RATAN TATA’S statement of – â€Å"PROMISE IS A PROMISE†. TATA should give exchange offer against a two or four wheeler so that those consumers can be easily converted to NANO users. Safety measures can be enhanced because people consider it as their prime concern while purchasing. An option for customization should be available. ANALYSIS OF TATA NANO This project on marketing research was a learning experience and brought me close to NANO and provided us depth knowledge through focus group and survey. Focus group ended up with innovative findings, which helped us in going further on the research. But time in between the focus group was leading to group discussion. IMPACT OF TATA NANO ON LIFE OF COMMON MAN In INDIA every one can afford a NANO, just as we buy any electronic appliances for a home uses. Decrease in price of second hand car. High traffic on roads due to sale of exceeds car on roads. Increase in loan on car installments. And finally TATA NANO is definitely better than Maruti 800. TATA has succeeded in value engineering of the product and its great success for TATA’S. It’s something on which INDIA can feel proud of. NANO has been developed effectively. PORTER’S 5 FORCES MODEL OF NANO CAR There is continuing interest in the study of the forces that impact on an organization, particularly those that can be harnessed to provide competitive advantage. The ideas and models which emerged during the period from 1979 to the mid – 1980s were based on the idea that competitive advantage came from the ability to earn a return on investment that was better than the average for the industry sector. As Porter’s 5 Forces analysis deals with factors outside an industry that influence the nature of competition within it, the forces inside the industry (microenvironment) that influence the way in which firms compete, and so the industry’s likely profitability is conducted in Porter’s five forces model. BARRIERS TO ENTRY Time and cost of entry. Knowledge and Technology. Product Differentiation and Cost Advantage. Government Policy and Expected Retaliation. Access to Distribution Channels. Economies of scale. Barriers. BUYERS Number of customers or Volume of Sales. Buying Volume. Differentiation. Price Elasticity. Incentives. Brand Identity or Brand Image. Switching Costs. SUPPLIERS Number of Suppliers. Size of Suppliers. Switching Costs. Unique service or product. Ability to Substitute. SUBSTITUTES Substitute Performance Cost of Switching Buyer willingness Price Brand COMPETITVE RIVALRY Number of Competitors. Exit Barriers. Niche; Product Quality. Differentiation. Switching Costs. Industry Concentration. Diversity of Competitors. Price Competition. CONCLUSION – FUTURE OF TATA NANO Emerging markets are a fertile ground for innovation. The challenge of reaching dispersed, low – income consumers in emerging markets often spurs significant innovation. As customers gain more power, they will demand more tailoring and value – added service to meet their needs. Companies that innovate on this dimension are likely to be richly rewarded. World is getting tougher day by day being unique is a competitive advantage. An expectation to TATA NANO has proved this. After 100 years to Henry Ford, TATA has proved him again not only he came out of the expectations but also came out with a platform for INDIAN Auto Sector. My opinion after the study of various aspects I found that – TATA NANO is definitely not for: a)Someone looking for better performance b)Someone who is looking to impress c)Someone who want to speed trial on Sunday d)Someone who is looking for long drives TATA NANO is definitely for: a)Someone who is looking to buy a car but cannot afford much price. b)A student who want to go to college, tuition instead of bike. c)Someone who depends on second hand car. )For a house wife who can buy a car with her own savings. e)Someone who depends on scooter. So NANO is not a basically a luxury cars but it can fulfilled the all capacity for middle class people. In this report, I would like to conclude that TATA NANO report was a challenging project for me. I have tried my level best to provide secondary data before the due date of my proj ect. I also believe that more information could be collected and if collected more, it can be useful for the next assignment. I believe that the information or data collected are relevant and correct and could be useful for someone else also.