A Dream Shattered or Still a Big Potential Essay

A DREAM SHATTERED OR STILL A BIG POTENTIAL A CASE STUDY OF TATA NANO Abstract simple machinee the latent of Indian Automobile Industry in mind, a a few(prenominal) years back, round 2006 Ratan Tata conceived the idea of a exact railroad gondola with even a tinier legal injury tag for rapidly development put house particle. Tata Nano was consumen as a triumph of position grown plan as making a product which encapsulates the dreams of millions of Indians with all in all the elements of mix i.e. preventative, engineering, design, efficiency, style at a price tag of one and only(a) lakh was in itself a challenge. The extreme media test al or so the few cases of Nano catching depose brought a remarkable lettuce in Nano gross revenue and shattered the customers assumption in political machine. Since then Nano is assay hard to regain its strong build in the eyes of its customers as s cashbox the huge potential of set segment is unexplored.The discussion arise s ab divulge the turnaround strategies of Nano keeping in fancy its initial effectuate success, a few quality failures and distorted scholarships in the minds of its customers. This discussion will further add to the design of strategies for emergent work upd products which are easily strategized for success with constitute and defined conceivable about the costs, and foodstuff segments only fail referable to a few gloomy but significant mistakes.Keywords Product Development,, USP (unique selling preposition), Buzz merchandiseing, Communication Complacency, strategical Re position, Resurrection.*This case study is true during the resurrection phase of Tata Nano in action 2012 for classroom discussion as a spotless illustration for analyzing various aspects in the launch of an innovative product,,its market acceptance , Changing people perceptions and so on discipline collection on Emerging Challenges for sustainable problem 2012 1087A intake bust or Still A f orged say-so A trip show of Tata NanoIntroductionJust a few months back, India all overtook Brazil as the sixth largest passenger vehicle manufacturer in the world (Wikipedia Automobile industry). This proves the fact that the Indian Automobile Industry is piteous at a fast pace. India is a developing market for Hatchbacks, Sedans, SUVs MUVs, Crossovers and MPVs. Among these subatomic autos pick out emerged as a clear winner. In fact the hoidenish has become a leading centre in producing small cars. charge this potential of Indian Automobile Industry in mind , a few years back, around 2006 Ratan Tata conceived the idea of a tiny car with even a tinier price tag for rapidly maturation middle class segment. Tata Nano achieved instant success when it was introduced as worlds cheapest car in the year 2009.Tata Nano was seen as a triumph of home grown engineering as making a product which encapsulates the dreams of millions of Indians with all the elements of mix i.e. safety , engineering, design, efficiency, style at a price tag of one lakh was in itself a challenge. And Tatas seemed to fulfill all the promises to its customers by offering Nano. Majority of Indian population belong to middle class, when it comes to buy cars they look for the affordable vehicles. Few studies related to consumer buying behavior register that if an individual belonging to middle class wants to own a car then he can easily shell out 1 lac to 1.5 lakh. Thus, while buying a car, price tag becomes a efflorescence factor. Though pricing is the prime factor, performance, style and durability also matter.So, Nano basically cosmos a dream project for Tatas, satisfied very capably all the criterias of a successful launch ,that is, tiny price tag, performance, design, style, brand, welcoming customers, mileage, space, interiors, looks, elegance and so on. But the irony started when the safest acclaimed car of Tatas caught in flames while its way back from showroom to home. T he intense media scrutiny about the few cases of Nano catching fire brought a remarkable dent in Nano sales and shattered the customers confidence in car. Since then Nano is struggling hard to regain its strong image in the eyes of its customers as still the huge potential of middle segment is unexplored.National congregation on Emerging Challenges for Sustainable Business 2012 1088A Dream tattered or Still A Big Potential A causal agent Study of Tata NanoThe discussion arises about the turnaround strategies of Nano keeping in suasion its initial launch success, a few quality failures and distorted perceptions in the minds of its customers. This discussion will further add to the design of strategies for future freshly products which are well strategized for success with clear and defined conceival about the costs, and market segments but fail due to a few small but significant mistakes.This discussion can further continue for strategic displace and turnaround of products acce pted well in their initial stages of PLC but grow very shortly due to certain significant marketing mistakes. Conceiving of the motif The idea conceived about Nano was a dare dream of Tatas not because of its unbelievably affordable price but also because of the promise it held for providing safe personalised mobility to a huge section of the Indian two wheeler sit population. It was an entirely saucy product root system Statistics by Society of Indian Autommobile Manufacturers segment with a whole different dimension of its need to master costs within a preset target of 1 lakh. The Nano price was the only certainty at the time idea was conceived . And then commencement from a clean sheet of paper , the car was designed and developed keeping manufacturing costs, material costs and yield costs at final possible level on with maintaining its character, style, adorable looks and finished quality.National assembly on Emerging Challenges for Sustainable Business 2012 1089A Dre am tatterdemalion or Still A Big Potential A effort Study of Tata NanoProblems in the Product Development Phase Ride for Tatas in the production of Nano had been anything but smooth. Tata construct a Nano plant in westside Bengal but was forced out in Oct., 2008 due to violent quetch from farmers .This event resulted in the temporary delay in the production along with causing a huge loss of infrastructure costs of a plant almost ready for car production. Another plant was built at Sanand in Gujrat where the production finally started. These initial bottlenecks in the production almostwhere affected the enthusiasm about the project and resulted in exceptional early availability which caused pre-bookings and lottery deliveries. This priced out many buyers negatively snatching out the momentum from the market. Almost from the start the project was plagued by problems and were magnified by intense media involvement.Most Awaited launch When Indias Tata Motors launched Nano in 2009 , the notion of the worlds cheapest car in one of the fast growing vehicles markets seems pre-destined for success. At its launch , car buying dynamics seemed to be undergoing a subtle change. Tata dealers were flooded with queries from prospective buyers. People mainly middle class were anxiously waiting for it. Being the worlds cheapest car, Tata Nano had an edge over its competitors in terms of its pricing , which helped Tata to register decent sales figures initially. charm choosing between Maruti Suzuki 800 and Tata Nano, people gave letter more weightage in terms of price and design. Its biggest USP (unique selling preposition ) was its attractive looks at lowest price. In expose 2009, when Tata was launched it got advance bookings upto 2,00,000 cars but it went through lottery route to give the first 1,00,000 nanos to its gold customers. Nano became the most coveted thing for two wheeler riders and Tata was so positive(p) about its product that it didnt go into any market ing plan for Nano. Its intense air was itself doing its buzz marketing1. So, Tata got busy in producing Nanos to fulfill its intense penury but at the said(prenominal) time organism very contented about the market and customers perceptions of the car.1.Buzz marketing is word of mouth recommendations by its existing usersNational collection on Emerging Challenges for Sustainable Business 2012 1090A Dream Shattered or Still A Big Potential A Case Study of Tata NanoSudden No-No for Nano Among all this hype when the new emerged middle segment of car owners were enjoying their ride in their coruscate stylish Nanos , first case of Nano catching fire was reported in March, 2010 while its trip from showroom to customers house. Another resultant quoted the car went on flames soon after the driver reported a spark from the rear side of the car. The assurance of Tatas cheapest car being safest proved ironical and the media which was giving intense scrutiny to the project did its moving in well during the bad times also.The security failure of the car whole broke the trust of the customers in Nano. A drastic decrease in sales was noticed in November 2010 (from 9000 units to 509 units per month) when company called its existing customers to install the safety devices in the car. So with in a year the brainchild of Tatas started likely like a failure as its sales went nearly half(prenominal) within a year. Sales were far off the target of 25000 cars a month and the Nano plant with an annual capacity of 250000 cars kept producing only 8000 units a month till March 2011.Table 1 Sales Excerpts (From July 2009 to March 2012)Month and year Nano units sold July 2009 2475 Dec 2009 4001 March 2010 4710 April 2010 3525 July 2010 9000 Nov 2010 509 Dec 2010 5784 Source various websites of Tata motors Month and year Jan 2011 April 2011 July 2011 Dec 2011 Jan 2012 Feb 2012 Mar 2012 Nano units sold 6703 10012 3260 7466 7723 9217 10475National Conference on Emerging Challenges for Sustainable Business 2012 1091A Dream Shattered or Still A Big Potential A Case Study of Tata NanoTata Nano Performance vs Automobile Industry Production (Passenger Vehicles)industrial Scanning and analysis showed that the passenger vehicles production in the country was growing tremendously ( Fig. 3), but Nano sales showed a mixed trend till the mid of 2011 (Fig 2). The company took to replace the starter motors in the older models and launched a new model in 2012 but replacing of the parts could also affect the further sales of new model as well said , Indian customers do not forgive easily. So, at that place was a great challenge for Tata to retain its brand image. Inappropriate mart Positioning Cheaper vs Affordable After the several months of disappointing sales of Nano, it became clear by the end of 2011that its cheapest tag has actually shunned its sales . The status conscious(p) customer didnt want to get associated with its cheap tag and sort of opted for slightly p ricier rivals .Nobody wanted to be caught with a tag of worthless mans car. So rather being a in operation(p) step above a motorcycle it became known as a cut-price car. Crucially car has struggled to find a core market. The sweep over interest in the car brought all the mixed segments of the customers in the market. So, a distinctive strategy was missing to give a correct positioning and segmentation to the extremely distinctive product. Communication complacency Tatas relied heavily on the advancement rather than a definitely designed communication strategy. in that location was huge involvement from media, industry and public at large . sort of than leveraging this publicity Tata became complacent about the communication.It became the first car to be launched at zero cost of advertising with a huge success. The publicity generated was far greater than what could be generated through any conventional campaign. Tatas prayer was that problem was not of the complacency. Becaus e the Nano plant had to move from West Bengal to Gujarat, production timelines were tight to maintain. With not enough cars being made, the company felt it didnt have to advertise or even set up efficient diffusion channels. But the hype about the car died down, and the stories about the fires gained prominence. National Conference on Emerging Challenges for Sustainable Business 2012 1093A Dream Shattered or Still A Big Potential A Case Study of Tata NanoOn the hindsight, apart from being delayed, the first ads were not the most appropriate .They showcased couples ensconced in Nanos , While those on two wheelers stared at them balefully. It seemed to be unless for people who have to stretch themselves to buy a car rather it could have been for housewife or a youngster who had just turned 18. But the advertising focused at parity level. Tata seemed to establish the media story about it being a Garibrath rather than a quiet car. Another ad in the early 2011 also projected the sam e image featuring a girl in a decidedly clownish setting awaiting the family Nano.Initial ads of Tata Nano Khushion ki ChabiSuch mistakes by Tatas actually fuelled the perception of a poor mans car. The car is too some(prenominal) of an emotional purchase . Its the second biggest achievement after a house and the cheapest tag proved disastrous for Nano. Resurrection by Tatas Nano is the dream of Tatas and sightedness the market flooded with so many small cars Tatas still see a huge potential in Nano and is seeming to undo its mistakes in the past. As quoted by Ratan Tata on the eve of Auto expo 2012 , Nano is not a flop. We have lost an early opportunity due to mistakes in positioning and marketing the product. The new marketing campaign by Tata is all set to change the perception from a Garib rath to a chill outheaded car as it allows young to be so whimsical with the cool car that they can drive the several kilometers for a cup of perfect teaRoad to Lal TippaNational Confere nce on Emerging Challenges for Sustainable Business 2012 1094A Dream Shattered or Still A Big Potential A Case Study of Tata NanoTata is going to launch Tata Nano CNG by the end of 2012. The company has given the car a new makeover by additional features like new interiors, a powerful gun engine, better fuel efficiency and attractive colors like champagne gold and papaya orange. Another initiative is offering Tata Nano happiness indorsement which more than doubles the cars warranty from 18 months to quad years insisting on its reliability. Offering fast track funding for buyers with loan approvals in 48 hours and reducing down payments to just 15000 is some other measure. Tata is formulation to enter new global market such as Thailand, Myanmar, Indonesia and Bangladesh with Nano. The 2012 version of Nano was unveiled by the Tata in the end of 2011 and now as the fiscal year ended in March, the new efforts to promote the 2012 Nano in the Indian market have started paying off. A fter July 2011 till March 2012 Tata Nano has registered an increase in sales and crossed the 10000 mark at the end of the fiscal year 2011-12 (March 2012, 10475 units, Table1).The lovely Nano is a big sound car in small package and its value is being accepted gradually by the customers. Hence, with the conviction in mind that the potential of Nano market remains as capacious as it was originally predicted Tata is moving with some strong steps in the market as it is also planning to launch a diesel variant of Nano in near future which will prove a value preposition for its customers.Long way forth Nano has to go a long way in realizing its dream of 20,000 electropositive units per month that would get its plant in the western state of Gujarat data track full throttle which is presently moving at the level of around 10000 units per month. Hailed as a showpiece of innovation spawned from and targeted at the emerging upper middle class Nano is working hard to undo its mistakes in the past. As small car segment is having very strong potential, there is a flood of small car brands in the Indian market. It has to fountain strong competition from its near rivals such as Bajajs RE 60 , Maruti Suzuki Cervo ( approx. 1.5 lakh) , Maruti Alto and slightly pricier options Hyundai Santro, newly launched Hyundai Eon etc. Nano faces ascension competition from used car segmentNational Conference on Emerging Challenges for Sustainable Business 2012 1095A Dream Shattered or Still A Big Potential A Case Study of Tata Nanoalso. Apart from the strong competitors, high inflation and slow economic yield also put another challenges for Tata Nano. Tata is doing hard to resurrect the product segment by intensive reliability engineering, advertising innovations for repositioning and strong statistical distribution and service facilities to recollect the trust of its customers. Lets see how Nano makes its makers proud amidst conflicting perceptions of customers, the immense com petition and cost increase inflation by maintaining pass judgment performance at its tiniest tag Questions 1. What do you think were the reasons due to which Nano was such a welcome launch more than any other car launch in the industry previously? 2. As Cheapest car being its USP (Unique selling Preposition), how it went against the sales performance of Nano subsequently.Give key reasons. 3. Intense Media care about the product went for and against it also. Elaborate . 4. How the changed perceptions about the car impacted its sales? Also give other key reasons for such a vast variation in its sales performance. 5. Despite the various resurrection efforts by Tata what potential do you see of Nano in rapidly growing small car segment in coming years in the view of rising competition in the segment?ReferencesAuto Expo 2012 Tata Nano is not a flop, just an opportunity wasted Ratan Tata, Economic Times, Jan 6, 2012. No Takers Is the Tata Nano discharge Out of Gas?, India KnowledgeWhar ton, January 27, 2011 Buddiraja S. , Case Analysis in merchandise focus, Tata Mcgraw hills, New Delhi. Dhingra Mayank, Marketing Case Study Tata Nano Document likeness,( Aug 2009), Slideshare. India Today/ Business/Story New Delhi ,Jan 6 2012. Kotlar Phillip , Marketing Management a South Asian Perspective 13th Edition , Pearson Education,New Delhi. Statistics by Society of Indian Mobile Manufacturers ,http//www.siamindia.com/scripts/market-share.aspx Economic Times ,Worlds cheapest car tag backfires, ,24 Jan, 2012 Web Sources www.tatamotors.com/media/press-releases.php?id=732 www.zigwheels.com/tata-nano/ www.iol.co.za/business/business-news/home-sales-of-world-s-cheapest-car-backfire-1.1219524 Various websites of Tata MotorsNational Conference on Emerging Challenges for Sustainable Business 2012 1096