Research Proposal: Analyzing the Launch of TATA NANO – The World’s Cheapest Car

Preface

This is a research proposal on a study on launch of new cheapest car in the world by TATA Company name “TATA NANO”. The objective of this research proposal is to find out an opportunity or a problem in the launch of the smallest /cheapest car targeting masses through secondary information / data. Also to gain knowledge about how TATA brought this new product i. e. , “NANO” up to the development stage and finally going to launch it on 23rd March, 2008 (already launched till now). During this project I researched on how TATA developed NANO costing Rupees1 lakh ($ 2500 U. S) and what will be its effects.

A survey was also done for understanding consumer buying pattern and preferences (which is a part of secondary data). Thus, this study is based on new product development in marketing for TATA NANO. “Marketing Research is the systematic and objective identification, collection, analysis, dissemination, and use of information for the purpose of improving decision making related to identification and solution of problems and opportunity”. “Perception is the process, by which an individual selects, organizes and interprets information inputs to create a meaningful picture of the world around as”.

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I conducted to gain an understanding of what goes in to mind of the customer about “NANO”. I have learned lot during my research proposal on TATA NANO and I hope this will be helpful to find out the proposal information.

RATAN TATA, Chairman of TATA GROUP, who in the year 2003, dreamt of producing a safe, affordable car for the common man. Mr. RATAN TATA launched TATA NANO on 10th January, 2008, at the 9th Auto Expo 2008 in New Delhi. Established in 1945. First Vehicle rolled out in 1954. India’s largest business group. Diverse Business in 7 sectors. International income – 61 % of group revenue. Operations in over 80 countries. Products & Services – exported to 85 countries. Largest employer in private sector – over 3, 00,000 employees. World cheapest car with a price tag of $ U.S 2,500. First company from India’s engineering sector to be listed in NYSE (September, 2004). Developed India’s first fully indigenous passenger car. Operations in U. K, South Korea, Thailand & Spain. Over 4 millions TATA vehicles fly on Indian roads. Nation wide dealership – 3500.

To study about how a new product – TATA NANO was developed based on marketing theory of “new product development”. To study about what made possible for TATA to develop and produce a car for just Rupees ONE LAKH ($ U. S 2,500).

To study the objectives and target customers of TATA’S ONE LAKH CAR. To study on consumers buying behavior and preferences and views about TATA NANO by various methods of data collection. To find out the consumer perception on NANO car in INDIA. SCOPE OF STUDY This study would be useful for companies to know what people perceive and thinking about “Small Fight” that is NANO. This study would be useful to other students as a secondary data. This study would be useful to form strategies according to perception of people about NANO. OBJECTIVE OF STUDY To know the consumer perception on “NANO” car.

To find out the acceptance level of people. To find out the awareness level about “NANO” car. To know about factors affecting purchase decision of “NANO”. To know how purchase decision of “NANO” varies from different income group. LIMITATIONS I will have to rely upon the information given by respondents, which may not be fully true. This study will be limited to only Indian Population. It is only for short period of time. Lack of professional approach since researcher is a student. Subjectivity is the main limitations of such studies. These sorts of projects take generally longer period than other ones.

Situations may undergo a change. Hence, time gap may effects the successful implementations of research results.

Characteristics of respondents

All have driving experience. Time Duration: 1 hour. All have a good knowledge of TATA NANO. Sample Size – 500. Sample group location. Data collection involves a field force and electronically. Age Group – 20 – 25; 26 – 35; 36 – 45; 45+ (both males & females)

Qualitative research

Taken 100 respondents, collected on the basis of secondary data. Respondents based on previous driving experience, driving license & knowledge about TATA NANO.

Based on different cultures, regions & age-group between 20 – 25 years. This project of TATA NANO is based on based on basic research because it is not aimed at solving a particular pragmatic problem. Also generally cannot be immediately implemented by marketing executive. Verify the acceptability of a given theory, or to learn more about a certain concept. My research is based on Descriptive Research. Survey – most common method of descriptive research. Research technique gathering information from a sample of people using questionnaires (which will be utilized later for primary data).

Different survey methods to contact respondents: telephone/mail; internet & in person.

Environmental context of the problem

Past Information & Forecast Resources & Constraints Objective Buyer Behavior Legal Environment Economic Environment

Management decision and marketing research problem management decision problem

Will the conversion of “TATA NANO” to a taxi affect brand image and consequently sales?

Will initial demand may lead to stock out? Whether the prices of “TATA NANO” will be sustained over a period of time with the economic changes in raw material price rise?

With the hike in sales of “TATA NANO”, whether the infrastructure of the country will be able to sustain the volume of traffic? Will the protest of farmers against “TATA NANO” plant in SINGUR will affect the sales?

Will general perception of brand “TATA” in small car segment affect the sales?

Marketing research problem

As price of “TATA NANO” is very cheap in INDIA, possibility of car being used as taxi cannot be avoided. Time to convert raw material into TATA NANO. Determining the trends in steel, rubber and other raw material prices. The focus of INDIA in building infrastructure and spending trends.

They (TATA) thought that they are cheated by the government. TATA Company is known for heavy commercial vehicle. This common perception can affect the sale of NANO.

Hypothesis

Conversion of “TATA NANO” to a taxi do not affect the brand image and consequently sales. TATA NANO is safe for driving. Hike in price of TATA NANO will not affect the sale. People prefer to purchase TATA NANO instead of two wheeler. People can wait for TATA NANO for few months.

Secondary data

The success of any project or market survey depends upon heavily on the data collection and analysis.

It is necessary that the data collected is a reliable data in order to achieve the research objective. Secondary Data are those data, which have been already collected or published for the purpose other than specific research need at hand. This data is simply used by the researcher for his purpose of collected data and it’s used for the same purpose. The secondary data sources here in this project are: websites, books. It is also often called desk research because, as the name implies, it can often be completed from the desk of the researcher using printed information, the Internet, the phone and so on.

The information might be internal, i. e. , available within the researcher’s own organization, or external where the information comes from elsewhere. Internal sources includes: Organization’s sales records; Customer Database; Complaints and other comments received from customers; market research previously carried out from the organization; Inquiries received from prospective customers; Organization’s annual report & Brochures, newsletters & house magazines produced by the organization.

External sources includes: libraries; company data; directories & almanacs; books of statistical data; Internet; academic research; media articles in the general & trade press; reports by data agencies; commercial sources; international sources; government databases; industry experts; industry data; market research reports & unpublished sources.

For the first – time car buyer in INDIA – a huge market despite the increasing number of cars in the urban and semi – urban areas. It also attracts the small cars buyers like Maruti 800. TATA NANO uses plastics and adhesives rather than welding. Introducing the car with an artificially low price through government – subsidies and tax – breaks, or using vertical – integration or partially using inexpensive polymers or biodegradable plastics instead of a full metal – body. It has no AC, no power steering, no power windows, and no power bells and whistles Executive two wheeler people: People that are working rofessionals but cannot afford to buy a three lakh car which is average cost of small car in INDIA. Second hand car user: Those people that cannot afford to buy a new car. Now they will be able to buy a new car cheaper then they buy a used car for. Auto rickshaw market: Most of the auto rickshaws also cost same as the price of NANO. This may help the NANO to replace them as well. Middle and lower income group people: These are the people that are growing and are becoming a little richer which is making them afford a car.

Swot analysis strength

Cheapest car in the World. 21% more space than Maruti 800.

Brand Name (TATA). Cost Price Low. Fuel Efficient. Safe. Strong Market Position. Research and Development. WEAKNESSES Low power Not a status symbol. Delay in manufacturing. No regular size luggage room. It may create more traffic problems. Dependent on vendors. Overdependence on Indian Market.

Opportunities

It can capture the large market in the society i. e. Middle Class. Large Market for Selling. Awareness in the market. First car in low range. Can hit in global market. THREATS Its nearer competitors BAJAJ AUTO & TARA are ready to introduce “cars” less than the price of NANO.

Company Rival Not sure to hit in rural & semi-urban areas.

COMPETENCIES OF TATA NANO Expectations. Modular Design. Pricing Strategy. Export Expectation. Pricing & Acceptance of TATA after launch. Enthusiastic Support.

SUGGESTIONS TATA should increase the production of NANO so that customers don’t have to wait much for their car, as they feel urgency for NANO. As people believes that NANO is people’s car and will be affordable by common man which was a dream earlier for them. So the price should be kept stable in future with the increase in price of raw material. Otherwise it will be out of their reach and people believe in MR. RATAN TATA’S statement of – “PROMISE IS A PROMISE”. TATA should give exchange offer against a two or four wheeler so that those consumers can be easily converted to NANO users.

Safety measures can be enhanced because people consider it as their prime concern while purchasing. An option for customization should be available.

ANALYSIS OF TATA NANO

This project on marketing research was a learning experience and brought me close to NANO and provided us depth knowledge through focus group and survey. Focus group ended up with innovative findings, which helped us in going further on the research. But time in between the focus group was leading to group discussion.

IMPACT OF TATA NANO ON LIFE OF COMMON MAN

In INDIA every one can afford a NANO, just as we buy any electronic appliances for a home uses.

Decrease in price of second hand car. High traffic on roads due to sale of exceeds car on roads. Increase in loan on car installments. And finally TATA NANO is definitely better than Maruti 800. TATA has succeeded in value engineering of the product and its great success for TATA’S. It’s something on which INDIA can feel proud of. NANO has been developed effectively. PORTER’S 5 FORCES MODEL OF NANO CAR There is continuing interest in the study of the forces that impact on an organization, particularly those that can be harnessed to provide competitive advantage.

The ideas and models which emerged during the period from 1979 to the mid – 1980s were based on the idea that competitive advantage came from the ability to earn a return on investment that was better than the average for the industry sector. As Porter’s 5 Forces analysis deals with factors outside an industry that influence the nature of competition within it, the forces inside the industry (microenvironment) that influence the way in which firms compete, and so the industry’s likely profitability is conducted in Porter’s five forces model.

BARRIERS TO ENTRY

Time and cost of entry. Knowledge and Technology.

Product Differentiation and Cost Advantage. Government Policy and Expected Retaliation. Access to Distribution Channels. Economies of scale. Barriers. BUYERS Number of customers or Volume of Sales. Buying Volume. Differentiation. Price Elasticity. Incentives. Brand Identity or Brand Image. Switching Costs. SUPPLIERS Number of Suppliers. Size of Suppliers. Switching Costs. Unique service or product. Ability to Substitute. SUBSTITUTES Substitute Performance Cost of Switching Buyer willingness Price Brand COMPETITVE RIVALRY Number of Competitors. Exit Barriers. Niche; Product Quality. Differentiation.

Switching Costs. Industry Concentration. Diversity of Competitors. Price Competition.

CONCLUSION – FUTURE OF TATA NANO

Emerging markets are a fertile ground for innovation. The challenge of reaching dispersed, low – income consumers in emerging markets often spurs significant innovation. As customers gain more power, they will demand more tailoring and value – added service to meet their needs. Companies that innovate on this dimension are likely to be richly rewarded. World is getting tougher day by day being unique is a competitive advantage. An expectation to TATA NANO has proved this.

After 100 years to Henry Ford, TATA has proved him again not only he came out of the expectations but also came out with a platform for INDIAN Auto Sector. My opinion after the study of various aspects I found that – TATA NANO is definitely not for:

• a)Someone looking for better performance
• b)Someone who is looking to impress
• c)Someone who want to speed trial on Sunday
• d)Someone who is looking for long drives TATA NANO is definitely for:
• a)Someone who is looking to buy a car but cannot afford much price.
• b)A student who want to go to college, tuition instead of bike.
• c)Someone who depends on second hand car. For a house wife who can buy a car with her own savings.
• e)Someone who depends on scooter. So NANO is not a basically a luxury cars but it can fulfilled the all capacity for middle class people. In this report, I would like to conclude that TATA NANO report was a challenging project for me. I have tried my level best to provide secondary data before the due date of my project. I also believe that more information could be collected and if collected more, it can be useful for the next assignment. I believe that the information or data collected are relevant and correct and could be useful for someone else also.

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