Marketing Mix

Repositioning the Tata Nano

Marketing Mix – Repositioning the Tata Nano

TABLE OF CONTENTS

Table of figures................................................................................................. 2

1. How did the idea for the new product, Tata Nano, evolve within Tata
Motors? ....................................................................................................... 3

2. Was the Tata Nano's initial positioning as an upgrade for two-wheeler

owners a good choice? ............................................................................. 4

3. Should Carl-Peter Forster have changed the marketing strategy for

Tata Nano in December 2010? .................................................................. 6

4. Should Carl-Peter Forster change the marketing programs (marketing-

mix) for Tata Nano in December 2010? .................................................... 8

5. The launch of TATA Nano for Europe in 2020. ........................................ 9

5.1 Positioning ................................................................................................... 9

5.2 Product adaptation ..................................................................................... 11

5.3 Pricing strategy .......................................................................................... 12

5.4 Channel strategy ........................................................................................ 13

5.5 Promotion strategy and brief advertising campaign (Message and media) 14

5.6 Brief Schedule of Year 1 Marketing Plan ................................................... 15

6. Conclusion ............................................................................................... 17

Bibliography ................................................................................................... 18

Appendix ......................................................................................................... 19

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Marketing Mix – Repositioning the Tata Nano

TABLE OF FIGURES
Figure 1: Evolution of the houshold-income profle in India ................................. 7
Figure 2: SWOT analysis of Tata Nano .............................................................. 9
Figure 3: Positioning of Tata Nano according to Porter's Generic Strategies ... 10
Figure 4: Possible new design of the Tata Nano launch in Europe Source ...... 12
Figure 5: Advertising campaign ........................................................................ 15
Figure 6: Media Plan for Tata Nano in the European market ........................... 16

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Marketing Mix – Repositioning the Tata Nano

1. HOW DID THE IDEA FOR THE NEW PRODUCT, TATA NANO,
EVOLVE WITHIN TATA MOTORS?
Tata Motors has managed to gain market share in the automotive sector over
the last 20 years, as the initial business focused on the sale of locomotives and
trucks. At the beginning of 2008, the Indian car manufacturer Tata Motors
presented a vehicle at the New Delhi Auto Expo that seemed to have the
potential to become a world revolutionary – the Tata Nano. Ratan Tata,
chairman of the Tata Group, had personally championed the Tata Nano’s
development in the belief that it would revolutionize the mobility of the middle
class in India. It was not just a business opportunity, but also a tool to improve
the quality of life of millions of Indian, who were facing the dangers of fast paced
roads and everyday being exposed to accidents due to non-affordable four-
wheelers. Tata Motors Chairman noticed that Indian families with three and four
family members often commuted on a two-wheel bike. Not the safest way,
especially at night or in bad weather conditions. His vision was to build a safe
family transport for the majority of the Indian population. In other words, the car
was to be their entry into the world of cars and at the same time mark their
social advancement. Therefore, its value proposition was a safe, attractive and
affordable car, which covers the needs of the customers. After five years
designing it according to the vision of the CEO, in 2008, Tata Motors
announced the Nano at the Auto Expo in New Delhi at a price of $2,500 as the
world’s cheapest car.

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Marketing Mix – Repositioning the Tata Nano

2. WAS THE TATA NANO'S INITIAL POSITIONING AS AN

UPGRADE FOR TWO-WHEELER OWNERS A GOOD
CHOICE?
When the Tata Nano was launched, it was not just a business opportunity, but
also a chance to improve quality of Indian masses who were facing the dangers
of everyday road traffic. The idea of a safe and affordable transport competing
with two-wheelers led them to a simple development but failed to understand
the reasons, why this target group would embrace the adoption of a four-
wheeler. Tata Nano's biggest problem was that the company completely
underestimated its target market. Motorcycles are hugely popular in India and
most of them cost half of the Tata Nano while giving a better performance than
the Tata Nano's two-cylinder, 35 horsepower engine.

According to a survey conducted in India, approximately 80 per cent of the

households earn less than 5,000 Rupees and about 16 per cent of the
households earn up to 10,000 Rupees. Only around five per cent have an
income above 10,000 Rupees. 5,000 Rupees are about $83 per month
(Worstall, 2015). This implicates, that purchasing the Tata Nano would mean a
strong financial effort regardless its low price. For that reason, their price
positioning strategy was not that effective. There was still a huge difference in
switching from a two-wheeler to a car. Furthermore, since the Indian customer
is very price-sensitive, they cannot afford to misplace their saves in non-reliable
products. Although Ratan Tata had envisioned the Tata Nano as “people’s car”,
it got positioned as the “poor people’s car”. The idea of Tata Nano fulfilled
customers’ needs but it didn’t satisfy customers’ wishes. Understanding of
consumer behavior is a key point for a long-term strategy. Tata Motors
understood the functional need of the cost-sensitive customers and tried to
satisfy it but failed to understand their emotional needs. Although everyone
wants cheap products nobody wants them to seem cheap. Accordingly, one
could say that the psychographic factors were responsible for its failure. These
factors are the ones driving the consumer behavior, especially in a car, which is

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Marketing Mix – Repositioning the Tata Nano

related to social prestige. Especially in emerging markets, a car is always a

status symbol. But as a proud object of prestige with which to impress friends
and neighbors, the Tata Nano is hardly suitable. So, the lower middle class,
which Tata aimed at as a target group, prefers to have one size bigger. The
reputation suffered further when several Tata Nano cars caught fire in the heat
of India in 2010. This raised doubts about safety.

All in all, the Tata Nano was a cheap car that is not cheap for its target. A safe
car whose safety has been questioned. A poor people’s car that poor people
are not going to buy.

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Marketing Mix – Repositioning the Tata Nano

3. SHOULD CARL-PETER FORSTER HAVE CHANGED THE

MARKETING STRATEGY FOR TATA NANO IN DECEMBER
2010?
At the time of the deliveries in June 2009, the the first reactions of the industry
and costumers were positive. In 2010, Carl-Peter Forster was selected as CEO
of Tata Motors. Monthly sales kept increasing until 9,000 units in July 2010,
then it started to decline until 509 units in November. Times were not bright for
Tata Nano even when the overall vehicle sales in India’s were booming. The
reason for this could be the production delays, the fire issues, and for sure the
embarrassment of buying the cheapest car. Nevertheless, the main reason was
with the marketing strategy used. Their mistake was not understanding
consumer behaviour in the design and execution of their marketing strategy.

The big aim of the marketing strategy was to make the car a mainstream
product. Obviously, the marketing strategy led the car to be less valued by
consumers than when it was first introduced, and expectations other than price
were not met. Although Foster made some changes, the main strategy focused
on being the price leader. Therefore, it is essential to understand how a
marketing strategy is designed and executed after first understanding consumer
behavior and needs. While deciding for a car, factors that drive the purchase
decision are price, fuel efficiency, driving comfort, maintenance cost, attractive
design, status symbol, resale value, latest technology and brand image. Thus,
when developing a positioning strategy, this should be kept in mind to correctly
appeal to the desired target group.

When selecting the new target, the huge emerging middle class of Indian
consumers with rising incomes (see Figure 1) must be considered and some
other trends that could help to redefine the strategy, as the rapid urbanization
and the growth participation of the Millennials and Generation Z in the job
market reshaping the consumption (World Economic Forum, 2019).

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Marketing Mix – Repositioning the Tata Nano

Figure 1: Evolution of the houshold-income profle in India

Source: (World Economic Forum, 2019)

In conclusion, Tata should target a higher socioeconomic level by leveraging

the quality and not the price. By replacing the initial values of safety and
affordability with new values, that the new target group aspires, to be a city car,
by highlighting its smartness, trendiness and modernity. Therefore, instead of
emphasizing the core benefit of the product, the focus should be on the factors
that make it an augmented product.

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Marketing Mix – Repositioning the Tata Nano

4. SHOULD CARL-PETER FORSTER CHANGE THE

MARKETING PROGRAMS (MARKETING-MIX) FOR TATA
NANO IN DECEMBER 2010?
This case highlights the importance of making promotion and distribution
decisions that are consistent with the positioning. Foster tried to correct its
Marketing-Mix by, first fixing the issues related to the fire and offering free
safety upgrades and a new warranty policy. Secondly, he tried to reach its
target segment through electronic media channels but the advertisements
again, were highlighting wrongly the theme of affordability, safety and comfort,
instead of targeting the aspirational desire of climbing the social ladder.
Moreover, Tata Motor launched a special Tata Nano financial plan, where the
customers, especially two-wheeler owners, were able to get a loan in 48 hours.
Although Foster’s changes in promotion, distribution and financing significantly
helped to increase sales, improvements could be implemented such as in Tata
Nano’s performance engine, exterior and interior design and new upgraded
models like hybrid or electric cars with better features like USB connections or
GPS could be introduced to redefine its value and to keep Tata Nano’s appeal
while getting away from the image of inferior quality and “poor people’s car”. A
redesign in promotion could be made by sponsorships with Indian celebrities
who are related with the image of achievers. They should move away from the
promotion as a replacement of motorbikes and promoting it as the new “smart
city car”. Leveraging characteristics like its trendy design and new technology.
Additionally, regarding finances they should get government incentives and
match them with customers as a discount.
In conclusion, customer values of the new target should be taken into
consideration leading to new perspectives of product differentiation.

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Marketing Mix – Repositioning the Tata Nano

5. THE LAUNCH OF TATA NANO FOR EUROPE IN 2020.

In the first step a SWOT analysis is carried out in order to have an overview of
the Tata Nano as a car and to be able to give precise strategies for the launch
in Europe.

Figure 2: SWOT analysis of Tata Nano

Source: Own figure

5.1 POSITIONING
The European automotive market consists of many well-known and established
brands like Volkswagen, Renault, Toyota, Ford etc. Therefore, Tata Motors will
face many competitors, which launch well-reviewed new car models. The
following analysis will be especially about the Small Cars segment in Europe as
the Tata Nano would be part of these category in the market.

In comparison to the United States and China, Europe has the biggest market
share in the segment of small cars with 10,8 percent (see Appendix 1). The
European countries with the highest proportion of small cars are Greece,
Romania, France, Portugal and Italy (see Appendix 2). Therefore, it would make
sense to focus on these countries in a first step before thinking about the rollout
in further countries within Europe. The strategy used here is the so-called
waterfall strategy, which refers to a specific form of timing strategy for opening
up foreign sales markets. After an intensive analysis of the foreign markets, the

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Marketing Mix – Repositioning the Tata Nano

market entry takes place one after the other (Rodríguez‐Pinto, 2007).
Furthermore, the average growth rate in Europe is expected to rise 2,0 percent
in the period from 2013 to 2023 (see Appendix 3) and in 2019 a total amount of
3,3 million smalls cars were sold in Europe (see Appendix 4).

For the positioning of the Tata Nano, the company continues to strive for the
position of cost leader and to address the broadest possible range of potential
customers (see Figure 3). The Tata Nano will be positioned as the car that can
do what other big cars can do, but it will be offered at a lower price. Therefore, it
is a perfect city car, which is modern, comfortable and convenient and is
particularly suitable for small families as well as (young) people, who cannot or
do not want to afford the luxury of a larger or more expensive car due to high
purchase and maintaining costs. The Tata Nano will be positioned as an
alternative to other small cars on the market, which are quite expensive but
offer similar features as the Tata Nano.

Competitive Advantage
Lower Cost Differentiation
Broad Target

Cost
Leadership Differentiation
(Tata Nano)
Competitive Scope

Narrow Target

Differentiation
Cost Focus
Focus

Figure 3: Positioning of Tata Nano according to Porter's Generic Strategies

Source: Own figure based on (IfM, n.d.)

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Marketing Mix – Repositioning the Tata Nano

As most of the established car makers such as Toyota, Ford and Peugeot are
available in the rich countries like Germany it is best for the Tata Company to
target the Tata Nano to the poorer countries in Europe with its positioning as the
cheapest car. As already mentioned, Greece, Romania, Italy, Portugal and
France are the countries with the highest percentage of small cars and
therefore are considered to be the most attractive ones for launching the Tata
Nano in a first step.

5.2 PRODUCT ADAPTATION

For the car to be successfully launched on the European market, the basic
model of the Tata Nano should be upgraded to meet safety standards and
emission regulations in the European Union. Therefore, several changes on
some functional features and on the performance have to be considered.

The Tata Nano will be offered with a three-cylinder gasoline engine and two
different power levels: 60 and 70 horsepower. Combined with a fuel-saving
automatic start-stop system and a five-speed transmission, the unit accelerates
the Tata Nano to a top speed of 150 km/h. The fuel consumption amounts to
approximately 5 liters per 100 km. A diesel won’t be available. Apart from the
technical data, the external and internal design will be slightly changed.
The European version of the Tata Nano will be longer and drive on 15” wheels
and come with a better styling and more comfort like climate control and an
infotainment system. Further, it will have power steering and antilock brakes to
meet the safety standards. Figure 4 shows an example of the future Tata Nano
for the launch in Europe.

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Marketing Mix – Repositioning the Tata Nano

Figure 4: Possible new design of the Tata Nano launch in Europe

Source: (Nag, 2019)

5.3 PRICING STRATEGY

As the Tata Nano is marketed with the lowest price structure, one can assume
that it will ask the cheapest price in the European market, but the price would be
comparatively higher than in India. In the pricing strategy would be included the
extra costs to incorporate new features to decrease CO2 emissions and
increase the safety measure in the model of Tata Nano. Of course, other factors
such as market competition, production costs, direct margin, purchasing power
of the customers and many other factors have to be considered when setting
the price. Tata Motors has used the penetration pricing strategy for introducing
the Tata Nano to the Indian market. They have imposed a low price on the Tata
Nano in order to sell the product and to gain a larger market share.
For launching the Tata Nano in Europe with a higher quality and more features
of the product, out of the two possible strategies (penetration and skimming
strategy), it will be best for the company to go ahead with the same market
penetration strategy, but with a higher price than in India considering the
specific requirements of the market and the environment. As a result, Tata
Nano will set up the price considering the EU market where the additional
features make the car more expensive. The aim is to sell the car with the best
possible basic equipment meeting all the regulations in Europe at the most

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Marketing Mix – Repositioning the Tata Nano

reasonable price in order to stay competitive in the market. The objective is to

start with a low price that is comparable to the strongest competitors in the small
cars segment. At the same time the launch will surprise the competitors and
they will not find enough time to react by researching the secrets of
manufacturing the Tata Nano at such a low price. This low price will act as a
barrier for the competitors to enter the market. The Tato Nano has to maintain
its price to its minimum in order to avoid competition.
Since the company is initially concentrating on the five countries for the launch
in Europe, a price of 8,000 € is to be set. The price compared, for example, with
the Fiat Panda, which is considered as one of the best-selling cars in Greece
(focus2move, 2020) and is offered in the basic version for 12,700 € (Fiat, 2020).
For a later launch in countries such as Germany or Norway, where the standard
of living is higher, a slightly higher price can also be set. But this should still be
below that of the strongest competitor in the market.

5.4 CHANNEL STRATEGY

Tata Motors should try to have a vast and extensive network by establishing
service and dealerships for the Tata Nano. Therefore, the channel strategy
consists of manufacturing plants in India, where the company has its
headquarters, to dealers and then to the consumers. Another important part of
the channel strategy are showrooms for the sale of the product. The consumers
can visit the showrooms and have a look at the car and already check some
features. For the beginning it is important to build a chain of dealership to easily
enter other European countries as the initial launch is first focused on five
countries. As Tata Motors already owns the brands Land Rover and Jaguar
(Tata Motors, 2020), some relationships in the European market already exist,
which can help to establish the Tata Nano. On the other hand, it is not likely to
sell the Tata Nano beside Land Rover and Jaguar, due to the fact that these are
weigh more expensive. Furthermore, the e-commerce availability with an own
website should be considered as the consumers nowadays tend to inform
themselves first on the internet about the product.

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Marketing Mix – Repositioning the Tata Nano

5.5 PROMOTION STRATEGY AND BRIEF ADVERTISING CAMPAIGN

(MESSAGE AND MEDIA)
Tata Motors is going to undertake several communication strategies in order to
boost the awareness of the people of the prospective market about the features
of the products. However, its advertising strategies are now focusing on
gratifying and impressing the people to create market demand with strong
market position. Therefore, effective media and promotional strategies are
considered to communicate with the customers to develop a loyal customer
base in the small car market in Europe. As the promotional strategy of the Tata
Motors varies in accordance with changing consumer attitudes, demands, and
other external factors, socio-cultural, environmental and economic factors of the
European market should mainly be considered in order to arrange campaigns
and other promotional activities. The promotion strategies will include company
advertising and product promotion on popular media channels. These strategies
will be aimed at differentiating the Tata Nano from its competitors. Pre-launch
strategies will include car fairs, launch events and billboards to meet the main
target group e.g. at bus stops or car parks. A massive launch strategy will
include conferences by Tata Motors, information from Tata Motors website, a
TV spot, and social media. After launch strategy will include communication
from Tata Motors website, advertisement in leading media channels, and
independent automotive website reviews such as magazines.

The slogan to be continuously communicated across all channels is:

Surprising. Convincing. Different. The message should be short and concise
so that it remains in the minds of the target group. The attribute "surprising"
refers to the novelty on the European market, the attribute "convincing" refers to
the features offered at an unbeatable price and the last attribute "different" is
intended to show that this is not just another car on the market, but that it meets
all the needs of the target group.

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Marketing Mix – Repositioning the Tata Nano

THE TATA NANO

SURPRISING. CONVINCING. DIFFERENT.

Figure 5: Advertising campaign

Source: Own figure based on (Nag, 2019)

5.6 BRIEF SCHEDULE OF YEAR 1 MARKETING PLAN

The communication program for the Tata Nano launch in Europe will be
structured as followed:
Media Plan Activities
Phase 1: 2-3 months • Car fairs like Geneva Motor Show, Mondial
before launch Paris Motor Show
• Out of home campaigns on frequent spots
with billboards promoting the sales start
• Different launch events with potential
customers
Phase 2: 2-3 weeks • TV spot promoting the start of the sale of the
before launch car
• Out of home campaigns on frequent spots
with billboards
• Social media (Instagram, Facebook, Twitter,
LinkedIn) to show pictures and promote the
launch day
• Auto magazines with information about the
car

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Marketing Mix – Repositioning the Tata Nano

Phase 3: Launch day • Press conference to launch the new models

• Open day for potential customers
• TV Spot to demonstrate the advantages of
the car and promotion offerings
• Tata Motors website: detailed information of
all two models with their features and
configurator
• Social media (Instagram, Facebook, Twitter,
LinkedIn) to promote the launch of the car
Phase 4: After launch • Tata Motors website: detailed information of
all two models with their features and
configurator
• Social media: especially on Instagram
sharing stories and experiences with the car
• TV spot with promotions for the potential
customers
• Auto magazines with technical data and
comparison to competitors
Figure 6: Media Plan for Tata Nano in the European market
Source: Own figure

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Marketing Mix – Repositioning the Tata Nano

6. CONCLUSION
From the above discussion, Tata Motors should enter the European market with
Tata Nano brand as the car has been designed and manufactured in a way
which assures the low budget customers to purchase a better quality, small size
and fashionable car. With the help of the marketing strategy for the introduction
of the Tata Nano into the European market, it should be possible to attract
potential customers and the attention of other people. The positioning as a
“Surprising. Convincing. Different" car is especially emphasized in order to not
repeat the mistakes of the past when introducing the Tata Nano in India.
Furthermore, as the initial analysis about the small cars segment showed, the
European market is the most interesting and attractive one. Therefore, after a
successful initial test phase in the five countries mentioned above using the
waterfall strategy, the rollout of the Tata Nano in other European countries
should be considered.

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Marketing Mix – Repositioning the Tata Nano

BIBLIOGRAPHY
Fiat, 2020. Fiat Configurator. [online] Fiat España.
Available at: https://www.fiat.es/configurator/panda/#/version [Accessed: 10 March
2020].
focus2move, 2020. Greece best selling cars. The top in 2019. [online]
Available at: https://focus2move.com/greece-best-selling-cars/ [Accessed: 3 March
2020].
IfM, n.d. Porter's Generic Competitive Strategies. [online] Available at:
https://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-strategies/
[Accessed: 28 February 2020].
Nag, S., 2019. What the Tata Nano would look like, if it were designed today!. [online]
CarToq. Available at: https://www.cartoq.com/modern-2020-tata-nano-render/
[Accessed: 2 March 2020].
Rodríguez‐Pinto, J. G. J. a. R. A., 2007. Order and scale of market entry, firm resources,
and performance. European Journal of Marketing, Vol. 41(No. 5/6), p. 592.
Statista, 2020. Small Cars Report 2020. [online] Available at:
https://www.statista.com/study/49985/passenger-cars-report-small-cars/
[Accessed: 2 March 2020].
Tata Motors, 2020. Company Profile. [online] Available at:
https://www.tatamotors.com/about-us/company-profile/ [Accessed: 5 March 2020].
World Economic Forum, 2019. Future of Consumption in Fast-Growth Consumer
Markets: INDIA. [online] Available at:
http://www3.weforum.org/docs/WEF_Future_of_Consumption_Fast-
Growth_Consumers_markets_India_report_2019.pdf [Accessed: 2 March 2020].
Worstall, T., 2015. India's Real Poverty Wages: At $1.66 An Hour There's No Such
Poverty In America. [online] Forbes. Available at:
https://www.forbes.com/sites/timworstall/2015/07/04/indias-real-poverty-wages-at-1-
66-an-hour-theres-no-such-poverty-in-america/#75a1414233ab
[Accessed: 28 February 2020].

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APPENDIX
Appendix 1: Passenger Cars revenue share in 2019

Source: (Statista, 2020)

Appendix 2: Small Cars achieved the highest revenue and sales

market share in Greece

Source: (Statista, 2020)

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Marketing Mix – Repositioning the Tata Nano

Appendix 3: Small Cars revenue in Europe in billion US$

Source: (Statista, 2020)

Appendix 4: Small Cars unit sales in million

Source: (Statista, 2020)

20