Case study on TATA Nano

CASE STUDY – 01

Answer to the question no – 1

Cost Leadership Strategy is the strategy that Tata Motors following regarding Nano in this case study. This Cost Leadership Strategy is describes a way to establish the competitive advantage. Cost leadership, in basic words, means the lowest cost of operation in the industry. Here Tata motors also use this strategy for Tata Nano. We think this strategy gives a competitive advantage to the Tata Motor’s company because by this product they shows that they have better technology, better supplier of raw materials and increasing Brand image.

Justification of achieving competitive advantage As per our opinion, This Cost Leadership Strategy is very helpful for achieving competitive advantage. Because:

Price of the Nano was lowest which causes the biggest competitive advantage in the emerging competitive market. They had managed to grow interest in peoples mind by announcing that “Buy a brand new car with a cost of only $2000”. As a result, they got so many response from customers and customers started to make booking before even launching the car.

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Green environment concept by producing a car having less Carbon-Di-Oxide emission which was environmental friendly.

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This car also having the technology of less fuel consumption with a greater mileage. Tata Nano required only one gallon to travel 55.5 miles (23.6 kilometers per liter). This makes Tata Nano a fuel efficient vehicle, which will save money in the long-term. This mileage comes with a powerful engine of 623 cc with a maximum speed of 105 Kilometers per hour.

Answer to the question no 2:-

The problems Tata Motors face in Producing and Marketing Nano are given below:-

Problem during production – 1) Land Acquisition Controversy: - Tata forcefully acquired agricultural land of Gujarat to set up Nano’s manufacturing unit. As because of that, violent protests by farmers and opposition political party leaders forced Tata to change plans which not only resulted 18 months delay to first buyer and also huge cost. 2) Safety issue: - Five of the thirty thousand cars had engine fires cause’s customers to back out on the verge of buying. 3) Lack of features: - Lack of basic features made it just as usual car but not a complete car. Below features were not included for making the Nano cost efficient.  The trunk only accessible from inside the car as the rear hatch doesn’t open.  No power steering, Radio or Music can be fitted as accessories.  No air bags.  No air conditioning.  To ease the assembly, body panels are glued instead of welded. 4) Price hike: - Rising prices in the global economy pose a threat to Tata Motors on a couple of fronts. The price of steel and aluminum along with fuel price is increasing putting pressure on the cost of production. Problem during Marketing – 1) Tata Nano did not carry enough prestige to be a passenger car. This is a result of lack of positioning taken by marketing managers. 2) The brand managers positioned the car as the next upgrade for a family of four with a two wheeler. But every such household had an aspiration to move to something better and not necessarily cheaper. Even if the consumer was in that income bracket, he aspired for something smarter. 3) Marketing was done only by showing price benefit instead of maneuverability, Mileage or Performance. Due to the above reasons Tata Motors faces slow sales which will result less than projected cash flow. The competitors become overly aggressive which can lead to their weak actions.

Answer to the question no – 3 Future Strategies:-

Future strategies should be taken by Nano in the face of upcoming competition from the new entrants are given below:1) Clean up the Brand Image: - Nano first of all needs to re-establish itself as a credible brand. This might be the hardest thing to do given the beating the brand image has taken because of the fires. Nano would need to aggressively work on its PR and show how the accidents are not because of flaws in Nano’s design but because of some unfortunate external factors. 2) Define a clear Marketing Strategy: - Nano needs to have marketing strategies to target its real consumer segment which is the masses of India and showcase the Nano as an aspirational product for them instead of coming across as an accessory for the rich. 3) Rework on Pricing: - when Nano started, a major challenge was to prove whether it was possible to manufacture a car which can be sold at the price of Rs. 1 lakh. That point has been proven. The real challenge now is creating profitable car business. If Tata starts pricing its Nano in a range where it is more cost-effective, it would first, reduce the losses Tata incurs per car, as well as give the brand a facelift. 4) Innovate new segments and ideas: - Tata’s Nano can be powered with MDI’s compressed-air engine which will potentially bring about sweeping changes in the automobile industry. 5) Focus on Other Countries: - Export Nano to Indonesia, Eastern Europe and also Brazil as well as Southeast Asia where it can be sold without the bad name it has earned in India. 6) Exchange offer for getting more customers: - Tata should give exchange offer against a two/four wheeler so that those consumers can be easily converted to Nano users. 7) Enhancing safety measures: - Safety measures can be enhanced, because people consider it as their prime concern while purchasing. Including some basic safety features like: - Air bag, Antilock, Double brake and better quality that don’t burn’s out. 8) Option for Customization: - An option for customization should be available. Creating a functionality advantage is at the core of product development. The development of the NANO shows that it is possible to build cars for the poor without compromising on safety and comfort.