POSITIONING THE TATA NANO
SUBMITTED TO: DR. JOFFI THOMAS
JAY PATEL | PGP24/089
BRIEF FACTS
Tata Motors Limited (TML) planned to launch Tata Nano world’s cheapest car with base model
at INR 1,00,000. TML was focused on revolutionizing the Indian automotive industry by
launching most affordable car.
1 WHAT SALES GOAL FOR THE NANO YOU WILL RECOMMEND?
In the initial production plan of Tata Nano to produce 350,000 Nanos had to be changed due to
the protests in Singur Plant Area forcing the company to shift production base to TML Pantnagar
which had a limited plant capacity of producing 50,000 Tata Nano’s a year. Hence the initial sales
will be restricted to 50000 units until Sanand plant of the company is functional (18 to 24 Months
from September 2008), it is expected that there will be more than enough demand for initial
50000 units considering the buzz around its price and most affordable car tag.
However, upon easing of production constraints TML will have to push Nano to gain market
share. The nearest competitor product Nano currently has is Maruti 800 priced substantially
higher (almost double) hence Nano can grab market share from other players and can add
Further Nano is also positioned as safer alternative to two wheelers especially as a family car the
two-wheeler segment comprises of the major chunk of automotive industry in India. However,
considering the cost, mileage, ease of use the users willing to switch or buy Nano would be
limited. However even after considering above facts we can assume that approx. 2% of buyers
may find Nano attractive and make a switch which it leads to addition of 160K new customers.
Further considering the low penetration in four wheeler market (Estimated 12 car owners per
1,000 people, versus 765 per 1,000 in the United States, and 426 per 1,000 in the United
Kingdom) and rise in middle class population (McKinsey Global Institute expected a growth in
the middleclass in India, which at the time accounted for only 5% of the population) it is expected
there will be surge in the first time car buyers, considering the value prospect that Nano offers
Nano can attract good chunk of these first time customers (approx. 70K new customer’s)
In
Million’s
Potential
Middle YoY Customer's Nano Share
Year Population Class Increase (2%) (20%)
2005 1100 55 - NA
2006 1111 63 8 0.170 NA
2007 1122 73 10 0.196 NA
2008 1133 85 11 0.226 NA
2009 1145 98 13 0.261 NA
2010 1156 113 15 0.301 NA
2011 1168 130 17 0.348 0.070
2012 1179 150 20 0.401 0.080
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2013 1191 173 23 0.463 0.093
2014 1203 200 27 0.535 0.107
2015 1215 231 31 0.617 0.123
Considering the above factor’s I would recommend a short term sales target(2-3 years) of 300-
350K units per year of Tata Nano.
HOW WILL YOU POSITION NANO TO ACHIEVE THAT GOAL?
In order to achieve the proposed sales goal in TML needs to carve a strategy which will be able to
communicate the intention of the company behind creating this car rather simply positioning it as
cheapest car.
The key features to of Tata Nano which should form the base to built an effective positioning
strategy would be Affordability and higher safety as compared to two wheelers.
TML should position Tata Nano as preferred car for first time car buyer’s this will provide a
broad category of audience Tata Nano can be a car for everybody students, families, housewives,
etc. - that wants affordable and compact car.
The company should highlight the company the current problem of more than 2 members of
families and students travelling on two wheeler’s and risk associated and how Tata Nano can be a
safer and affordable option for them.
Further company should position to alternative to two wheelers for safe and comfortable local
travel the people who use two-wheel vehicles but would like to have more vulnerability towards
weather conditions and further in hot tropical country Nano would provide an alternative to travel
in comfort throughout the day.
WHY IS THE RECOMMENDED POSITIONING STRATEGY SUPERIOR TO OTHER
POSITIONING STRATEGIES THAT MIGHT REASONABLY BE CONSIDERED?
The other strategy which could have been used is positioning the car as cheapest four-wheeler. A
point to be highlighted here is that in India Car is simply not a utility in India but also a status of
prosperity and well-being. Positioning the car as a cheapest car in market would diminish the
social value of the car which might drive customer’s away from the car.
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