TATA NANO CASE ANALYSIS

Presented By: Group 11

Anuraja
Namchoom(012)
Pushp Mitra(039)
Manoj Bhoye(087)
Soumodeep Das(110)
Vivek Yadav(116)
Mridul Katiyar(125)

Creating a strategy...

Blue ocean VS red ocean

BLUE OCEAN strategy:

It is all about creating an uncontested market space that
makes competitors irrelevant and that creates new consumer
value, here in the case of TATA NANO is was done by
decreasing costs.
RED OCEAN strategy:
Here companies try to outperform their rivals to grab a
greater share of product or service demand. As the market
space gets crowded, prospects for profits and growth are
reduced.

Capacity commitment Strategic?

Degree

of commitment

Long time commitment

Large investment

Irreversible

Scope

of the firm

Adding a new product line

Entering into new market segment - ULC

Alignment barrier
Value proposition (high)
Profit (initially low)
People (highly motivated)

Cognitive and
organizational barrier
Revisions in routing plans
Retraining staf
Change in marketing and
pricing

Barriers to
Imitation
.
Brand barrier

Economic barrier

If leap in value is ofered it

earns brand buzz and loyal
following

Economics of scale is to be
attained if profitability is
targeted

Brief overview of TATA Motors

1945
TELECO
Establishment
1991
Passenger car
segment:
Tata Sierra

1954
Collaboration with Daimler
Benz
1994
JV with Mercedes
Benz
1998

Launch of Tata Indica

2005
Launch of Tata Ace

2007
JLR acquisition

The Jaguar Land Rover Acquisition

Attractiveness Test
JLR saw 22% improvement in premium car sales in 2009
Cost of entry test
Due to recession in 2008-09, cost cutting led to profit in next
2 quarters
Better off test
Alignment with strategy

The Nano Project

Safe, afordable, all-weather form of transport

Design and Development Process

3 Requirements

Cost, Rs. 1 Lakh

Regulatory and safety requirement
Performance targets

The Nano Project

Symbiotic nature of relationship with suppliers

The great degree of collaboration between
suppliers, the design team and the sourcing team
Post purchase expenses control for consumer ex.
Fuel efficiency, maintenance cost, repair cost etc.
Aggressive cost targets
Tatas direct involvement leads to motivate the
Nano team
Promise has been kept : Price @ Rs.100000 + (Extra
VAT & Transportation cost)

MANUFACTURING

In choosing a manufacturing site for Tata Nano, Tata

confronted many sites

Finally, TATA Motors decided to set up the main manufacturing

plant in Singur in West Bengal
Soon after the construction started at the Singur plant, TATA
Motors confronted land acquisition challenges there
In Sep. 2008 Tata Motors suspended work on Singur plant and
relocate the plant at Sanand in Gujarat meanwhile continuing
the production at Pantnagar plant in Uttarkhand.

DISTRIBUTION

Tata Motors distributed Nano through its traditional

Passengers cars channel partners

They also leveraged nontraditional channels like: Croma and

Westside

MARKETING AND SALES

Marketing team played a critical role by helping the

development team understand which features are
considered necessary versus desirable

The phrase Now you can embodied the positioning of the

Nano

They used print advertisement at the time of the launch

Used Nano as a generic word for anything that was small,

cute or happening

Use of Nano Breaks, Nano news and Nano pop-ups

Nano-The Capacity Commitment

Decision
Capacity Constraint in the face of demand:

Limited initial capacity manufacturing from

interim facility at Patnagar (50000 cars annually)

Trial Production of Nano at new facility (Sanand) in

January 2010

Capacity of plant 250000 cars/annum

Production on a 2 shift basis

Aim to increase to 500000 cars per annum

May, 2009 206000 fully paid orders company

generated random allocation to 100000 customers

50 % bookings for
LX Version

20 % for Base
model

30 % for CX
Model

Nano-The Capacity Commitment

Decision

75 % bookings were from outside the big 5 cities Mumbai,

Kolkata, Delhi, Chennai, Bangalore

30% of demand was from existing 2 wheeler owners

People drawn by the pride associated with owning a Nano

Nano people happy with style, large interior space,

efective air-conditioner

Nano-The Capacity Commitment

Decision
Domestic market Potential:

Positioning replacement for scooters/ motorcycles in rural India

2009 annual demand : 7.4m units

Minicar segment CAGR : 50.4%

Increasing disposable income

Introduction of low-priced cars

Global Market Potential:

Potential market present in developed countries as well

Key Markets for ULC Segments: India, Southeast Asian countries,

Africa, Latin America safety and emission standards similar to
India

Developed nations cost would be higher by 60% to 90%

Competition:

Toyota

Competition

internat
ional

Renaul
t
Ford
Hyund
ai

domestic

Maruti

Bajaj

The domestic players are threat because they are very well
aware of the local markets and customer demands.

Moreover, the established player to enter ULC segment for its

high growth rate of 24%

TOYOTA:

having the share of 3% (2009) of the global sales

from INDIA

Having a good dealer and vendor network in INDIA

FORD:

having the share of 0.6% (2008) of the global sales from INDIA

Invested heavily in developing the infrastructure and vendor

base in INDIA

But finally they dropped the idea because of non viability of the
safety and emission regulations standards of the company.

RENAULT NISSAN- BAJAJ:

Renault Nissan was working with Bajaj

Auto to develop a $300 car to be launched
in India in 2012

Bajaj to look into design, manufacturing, sourcing

Renault to look into the marketing

Finally they declared about the new model @ 1.1 lakhs

GENERAL MOTORS:

General Motors India President and Managing

Director Karl Slym had earlier said: t (small car)
was under discussion when the Rs1 lakh car (Nano)
came in. We have reached a decision point that it is not right for us.

OTHERS: Chrysler and HYUNDAI

NEXT STEPS:

Conservative
approach
Let supply lag demand

Aggressive approach
Increase the production
capacity and meet the
demand

Drawback: if product is
successful they will leave
competitors to cede the
market

Drawbacks: will increase

the financial crunch as
TATA motors had huge
debts due to JLR
acquisition.
Huge investment risk in a
low margin segment

Benefit: in case of
product failure, huge
investment could be
saved.

Benefits: Take first

mover advantage and
pre-empt competition.

When renewal is demanded

Avoid any renewal if still there is huge profit

available in the current oferings

Instead of renewal go for lengthening, widening

and deepening of market as well as operational
improvements.

TATAs did the same.

Instead of leaving ULC segment of cars and NANO

project they went for deepening the NANO
product line with the launch of Gen X in 2015 and
PIXEL (EU version)