Tata Nano the affordable market

Tata Nano, one of the cheapest cars in the world become a people's car which is affordable by almost everybody because it makes things smaller, lighter with superficial parts. I think this tata nano was entered the market with the pricing strategy of market penetration. This strategy was chosen because of these following several reasons. They make the market penetration by using 4Ps to be in the world market place. And because of the 4Ps and its costs- based pricing we can say that the tata use the market penetration.

Costs- based pricing

They use this method by approaching the target profit pricing. Tata nano tries to determine the price at which it will make the target profit it is seeking.

- Product

The car is having only one component that can perform the same task just as good as two components can do[1] i.e. one windscreen wiper and one side mirror. see picture…

- Besides the car doesn't have clutch, power steering or gearbox and neither radio nor air conditioner.

- Price

- Tata only aimed that to target an average Indian with the price tag of US$ 2500 who got the average salary about 150,000 rupees a year.

- This price was targeted as it opened the door to car vehicle ownership for many Indian people.

- Place

- Promotion

Advantages and disadvantages for current tata nano product.

According to the research there is people who were over 4 on the same motorbike. For that case, tata made a nano cars who could be in 4 on the cars with the low price for people who can afford a little. So this is the one of the advantages. But on the other hand, there may be

Because of the above reasons,

- The positive point of views

- Internal factors (SWOT analysis)

The benefit is that Tata has been able to exchange expertise. For example after the Daewoo acquisition the Indian company leaned work discipline and how to get the final product ''right first time''.[2]

Weaknesses

Tata nano has one weakness which is not often recognized is that in English the word 'tat' means rubbish. But the brand is not sensitive for the British consumer.[3]

Opportunities

Being the cheapest cars in the world and the one of the affordable vehicles for everyone especially for middle class people is the top opportunities of all.

Threats

Rising prices in the global economy could pose a threat to Tata Motors Limited on couple of fronts. The price of steel and aluminium is increasing putting pressure on the costs of production. Many of Tata's products run on Diesel fuel which is becoming expensive globally and within its traditional home market.[4]

Costs…. According to the tata nano, the company charges a price that could cover both all its costs for producing, distributing and selling the tata and delivers a fair return.[5]

External factors.

Marketers must understand the relationship between price and demand for its products. If Tata produce the nano cars with the high price and low quality, there will be no consumers and the lost can be gained. In that case, the tata should think first for their fix price and to which they would target. We all known that tata didn't set the price like that because they consider with the price-demand relationship. On the other hand, if tata targeted for the rich people with the high price and the same quality there will also be no demand as we all known that the rich people prefer more luxurious things. But there is one thing that the high quality and the high price could be aimed for the rich ones.

Disadvantages of being a lowest price in the world wide.

If tata nano were sold in Europe and the USA, we must know their cultures drawbacks not to affect consumer reactions in each of its world markets rather than the prices. According to the impact of culture on marketing strategy, the seller must examine the ways that consumers in different countries think about and use certain before planning a marketing program.[6] As for the examples, the average French men use almost twice as many beauty aids and many cosmetics as the women. Companies that ignore such differences all over the world might be faced with difficulties and embarrassing mistakes as for the examples I might show for the Nike's Air Logo. The logo means that'' Allah'' in Muslims so Nike stopped distribution. See picture 2. As "globalization" means "Americanization" the people from around the world are exposed to the American culture and lifestyle in the food they eat and the stores they shop.[7] So I think there may not be any difficulties if we distribute tata nano cars in America. But for the one thing is that I will target only for the students who are living in rural of America because of these several reasons. First I started to indicate of market potential with the demographic characteristics of education and the population size and growth that I compared America, Europe and India. See appendix 1. ////// According to the launch of Tata Nano at the Geneva Motor Show, generated much interest among the automobile industry players and media as well though the company has not yet entered in the European Automobile Market. Suppose that we are now distributing in those two big countries, we must export our product through direct exporting whereby we can handle our own exports. Moreover, we can conduct direct exporting by setting up an overseas sales branch that handles sales, distribution, and promotion. The tata can also send home - based salespeople abroad at certain times in order to find business. Finally, the company can do its exporting either through foreign-based distributers who buy and own the goods or through foreign-based agents who sell the goods on behalf of the company[8]. For my opinion, I would like to sell the same price as the current tata nano with the aim for the rural people. In this new tata nano, the new ones can be produced by reducing a little size than the original ones from India. The reason that I decide to reduce size is that it is not for the family and especially for the university students who could go and come back from university easily. What's more, they can effort such a price US$3000 per one. I will use the Dell system which could be choosed easily from the online. If the customer do choose exactly then we will send it to them directly. The service and transportation fees and the costs of repair are all charged in this fixed price. Furthermore, I will pay service that every tata nano cars can be changed with the 50% discount with the new ones every 4years. Those are new advantages of tata nano based on the price especially for the people in America. But for the disadvantages may be like traffic jams and much air pollution. The roads may be crowded with mostly by tata nano because of the demand of new tata nano.

. In European also, I would like to distribute tata nano with the aim for students with the same price of tata nano current ones. As tata is not a luxury thing, Tata Nano can never be the luxury also until tata uses the middle men. So, in that case I will also distribute to the people who are in physiological and safety needed i.e the basic needs such as food, shelther and clothing and safety needs such as protecting and the security. According to the latest news of tata nano, it would be launched in the European with some modifications with the specifications to the small car segment in Europe but the external features would continue to remain the same.[9] In my opinion, I would like to analyze the market both the internal and external factors, micro and macro- environment. Microenvironment means actors close to the company that affect its ability to serve its customers. Macroenvironment is the larger societal forces that affect the external factors that could considered to be beyond the control of the organization.[10] For the macro- environment, I would like to analyze the many different factors with the PESTEL.

Political factors.

-We must consider not to impact in many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system.[11]

Economical factors.

In this factor, we must care for the taxation changes, economic growth, inflation and exchange rates. Because , a strong currency can be difficult when exporting as it may raise the price in terms of foreign currency.

Social factors.

In this step, changes can impact on the demand for a firm's products and availability of individuals to work.[12] So social factors is also important for the company's internal environment as for the examples, demand for accommodation and medicines has increased although demand for toys is falling.

Technological factors.

The company should decide on the technological factors as it creates new products and new processes. Besides, it must know that technology factors can lead to innovation as it could improve the product's quality and reduce costs and lead to innovation.

Environmental factors.

I think the environmental factor can be assumed as negative factors although it can't be immediately harm to the weather and climate change. But having the good advantage, people will buy a lot of tata nano because a little more to spend, they can now have the glore and pride of owing a car.[13] So it would lead to greater number of cars ,more traffic jams or more congestion on roads and the more carbon dioxide emissions.

Legal factors.

In this legal factors, we must decide on the consumer laws and the health and safety legislation. For the consumer laws, we must design the tata nano to protect customers from the unfair practices such as misleading descriptions of the product. But for the health and safety legislation laws are aimed at ensuring the workplace is as safe as is reasonably practical.

Tata should modify the Tata Nano, to meet the vehicle standards and regulations of Europe and the USA.

Tata Nano has a rear mounted , all-aluminium, two-cylinder, 624 cc, multi point fuel injection petrol engine which develops maximum power of 34.5 Bhp at 5250 rpm with maxiumum torque of 48 Nm at 3000 rpm. This is the first time that a two-cylinder petrol engine is being used in a car with single balancer shaft. The lean design strategy of Tata Nano has helped minimise weight, which helps maximise performance per unit of energy consumed and delivers high fuel efficiency. Performance is controlled by a specially designed electronic engine management system.Due to rear mounted engine the luggage space in Tata Nano has been pushed to the front. Making the engine closer to the fuel tank has another advantage of increased fuel efficiency. Rear mounted engine also help in reducing the power loss during transmission. Tata Nano has front disk and rear drum brakes. The company claims mileage of 17 plus kmpl in city and 20 plus kmpl on highway.The steering has a little vagueness around the centre position, dial in more lock; it feels direct and provides good feedback as well. Grip levels are decent but are limited by the narrow tyres. Straightline stability is also good, you can cruise comfortably at 80-90kph.

Ever since Tata first showed off its diminutive Nano, heavily hyped as the Cheapest Car in the World, the Indian automaker has continually said that it intends to sell the machine in somewhat modified form in both Europe and the United States. The blokes over at Autocar were given a sneak peek at the Nano europa, which is currently slated for a 2011 introduction, and they've seen fit to share a couple of new details with the rest of us.

Yes,TATA and Nano car is suitable for export markets.[14] I think Ta Ta Co should modify the Ta Ta Nano to meet their standards and regulations of the European and United States' cars. The thing is that customers from their countries can use their cars like the ones in Europe and US. But they should reduce their price less than those cars so that even if they doesn't meet the standards of those cars the customers will buy the Ta Ta Nano car because it is cheaper. As everyone knows, Ta Ta Nano is the world cheapest car today. But what if they make their quality of their cars better with the price lower than other cars? I am sure that everyone will buy their cars than others because nowadays money is important to everyone because the business from all over of the world is going down. So that not only they can get good market shares in their country, they can also export to other countries. Among those countries they can be on the top of the list mostly in developing countries. So that not only they can survive in the world of the business nowadays, they also can get the highest demand in the market.

[http://www.tatamotors.com/our_world/profile.php]

[1] http://www.autofocuasia.com/management/tata-nano.htm

[2] http://www.marketingteacher.com/SWOT/tata-motors-swot.htm

[3] Marketing Teacher Ltd 2000- 2010

[4] http://www.marketingteacher.com/SWOT/tata-motors.swot.htm

[5] marketing an introduction/ch.9/pricing strategy.

[6] marketing the introduction /ch.15/ the global marketplace

[7] Extending Marketing part four

[8] Kotler's7th edition, Exporting.

[9] www.mapsofindia.com, Tata to be launched in Europe.

[10] copyright 2002-2009 authorsSTREAM.

[11] PESTEL analysis of the macro- environment.

[12] Oxford University Press, Gillespie: Foundations of Economics- Additional chapter on Business Strategy.

[13] http://theviewspaper.net/the-green-global-and-the-indian-nano, green issues of tata nano

[14] http://autos.maxabout.com/cvid0000548/tata-jeh-1-rupee-car-petrol.aspx

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