tata nano case study analysis

Tata Nano's Failure To Attract Customers [Tata Nano Case Study]

Devashish Shrivastava

Tata Nano is a compact vehicle that was produced and showcased by Indian automaker Tata Motors , principally in India, as a modest back-engined hatchback expected to speak to current riders of bikes and bikes — with a dispatch cost of Rs 1,00,000  or $2500. Delays during the production line migration from Singur to Sanand, early cases of the Nano bursting into flames, the impression of the vehicle being perilous, and compromise in quality due to cost slicing are some of factors behind Tata's failure to attract Indians.

Here we present the case study of tata motors – nano case and find out why did Tata Nano Failed and never gained traction despite being termed as the 'people's car'.

Tata Motors anticipated creation of 250,000 every year at dispatch. This didn't happen. Only 7591 were sold for the model year 2016-17. In 2017, Tata Motors said assembling would proceed because of Tata's passionate promise to the project. In 2018, Cyrus Mistry, previous Chairman of the Tata Group, called the Tata Nano a venture in progress with China, with a generation overhaul scheduled in May 2018.

Tata Motors' Nano Initiative Initial Effects Of Tata Nano Marketing And Business Strategy Of Tata Nano Why Tata Nano Failed? Tata Nano's Attempted Comeback FAQs

Tata Motors' Nano Initiative

After effectively propelling the ease of Tata Ace truck in 2005, Tata Motors started the advancement of a reasonable vehicle that would speak to the numerous Indians who ride motorcycles . The price tag of this nitty-gritty auto was brought somewhere around getting rid of the most superfluous highlights, diminishing the measure of steel utilized in its development, and depending on ease of Indian labor.

The superfluous highlights include the evacuation of the traveller's side wing mirror, having one wiper sharp edge, having just three fasteners for every wheel, and the expulsion of the fuel filler top from the fuel tank. The presentation of the Nano got much media consideration because of its low cost of Rs. 100,000. The vehicle was promoted as "The People's Car".

Initial Effects Of Tata Nano

A report by the Indian rating office CRISIL figured the Nano would extend the country's vehicle advertising by 65%, in any case, starting late 2012. However, deals in the initial two monetary years after the vehicle's divulging stayed unfaltering at around 70,000 units. Tata still proposed the ability ability to deliver the vehicle in a lot bigger amounts, somewhere in the range of 250,000 every year, if the need arise.

It was foreseen that its 2009 presentation would significantly influence the trade-in vehicle market, and costs dropped 25–30% before the launch. Sales of the Nano's closest rival, the Maruti 800, fell by 20% promptly following the disclosing of the Nano.

It is obscure if the Nano has lastingly affected the costs of and interests for close substitutes. In July 2012, Tata's Group administrator- Ratan Tata , who resigned in January 2014, said that the vehicle had huge potential while conceding that the early open doors were squandered because of starting problems. Due to the business drops, just a solitary unit was delivered in June 2018.

Marketing And Business Strategy Of Tata Nano

India is an organization with a larger part of its populace dwelling as a low pay gathering. Purchasing a vehicle is still a fantasy for many families in India. In the year 2008, Ratan Tata reported the dispatch of its new vehicle, which would be a progressive item in the car division. He called it a 1 Lakh rupee vehicle and the same title was used for promotions .

The fantasy of a middle and even lower white collar class family unit to have their very own vehicle woke up with this declaration from Tata Motors. It was hailed to be cutting edge innovation and was commended by international media. An entirely unexpected story unfurled when the vehicle appeared on the streets.

India Customer's Needs

Ratan Tata's flash for the Nano came when he saw groups of 3-4 individuals utilizing a motorbike for transportation . There are a great many bicycles in India and it has constantly presented well-being worries for the general population. In blend with the poor street conditions in India and conveying a full family on a bike, bikers are subjected to numerous mishaps.

His strategical view drove the concept of a low cost vehicle and chose that the 1 Lakh Rupee sticker price will be appealing to the objective market.

Proclamation

At the point when Tato Nano was declared in the long stretch of January 2008, it was over-advertised to be the vehicle of each Indian. The cost of Nano was pegged at Rs. 1 lakh or $2500 by Ratan Tata, the Chairman of the Tata Group by then of time.

It turned into a fantasy vehicle for each individual having a place with the lower working class and even the lower class. Anyway, the service of the vehicle additionally raised worries about the blockage on streets that the vehicle would acquire as individuals began to utilize it for everyday transportation.

Strategic Plans

TATA Motors fundamentally segmented and focused on the following sections of the Indian population:

• The middle class- Fundamentally the lower white-collar class.
• Upper lower class- Normally the bike clients .
• Family with 3-4 individuals who have inconveniences while going on a 2-wheeler.

Affordability And Family Friendly Usage

Tata Nano being propelled in the Indian market was an opportunity for the normal man of India to fulfill his dream of owning a vehicle. The promotions and media productions featured the passionate remainder that demonstrated the joy of youngsters when they see a vehicle coming to their home, and the joy on the substance of the relatives who delineated a white-collar class gathering.

The battling Indian classes who had a month to month pay of under Rs.6000 every month and comprised more than 110 million families got the chance to dream of purchasing a vehicle. Mr. Ramesh Mangaleswaran, an accomplice of McKinsey and co., anticipated that in Mumbai alone the 2 million individuals who rode a cruiser ordinary would now attempt to lift themselves to purchase a Tata Nano.

It was expected that Tata Nano would make a progressive change in the way of life, uncommonly concerning the substitution of the regular man. It would turn into a face of the Indian lower class, just like the Bajaj Scooter at one time represented the white-collar class.

Why Tata Nano Failed?

Ratan Tata stayed faithful to his obligation and the Indian market saw Nano set on the streets in the long stretch of July 2009. At the start, the deals for the vehicle were high. It then began to decay on every month. There are a few reasons of failure which justify Tata Nano's downfall,

• Failure in marketing the vehicle was the main reason behind Tata Nano's Failure to attract customers .
• TATA nano promotes itself as the least expensive vehicle.
• No one needs to drive the least expensive vehicle.
• Purchasing a vehicle is identified with economic well-being and distinction in the public arena.
• "Cheap" and "lakhtakia" used in Tata Nano's advertising for advancement and showcasing all over India disturbed its image.
• The engine was an issue.
• There was a buzz in the universal media, "What if Nano becomes successful? It would mean an end to the second-hand car market ."

Problems With The Car

• Awful picture of the shoddy vehicle.
• Several cars caught fire. Thus, in spite of its low cost, people refrained from buying it .
• Media channels covering the news related to Tata Nano underestimated the vehicle. In any case, they were correct.
• The car was not fit for sloping territories.
• The motor used to make a great deal of clamor, and individuals even compared it with an auto.
• Insides were dull with inadequate leg space.
• The whole assemblage of Nano was light and prone to damage on even the slightest of knocks.

Other Reasons

• Tata Nano got around 200,000 appointments at first. This made Tata Motors complacent and it didn't bother about new advertising strategies . New publicity procedures were essential to keep the enthusiasm of the individuals unblemished. But it wasn't done. When the main flame episode was accounted for, the ad system then just looked responsive and upgraded rather then focusing on negative attention.
• Nano was viewed as an attraction for individuals who never thought of purchasing a vehicle. It was focused on engine cycle riders, recycled vehicle proprietors, and different families in the lower white collar class gathering. This prompted some degree of opposition. According to the intended interest group, the media and the general public acknowledged Tata Nano as a poor man's vehicle.
• Ratan Tata in his previous question and answer sessions referenced that he wanted to position Tata Nano as a 'reasonable, all climate family vehicle".
• At the point when Nano later raised its cost to conquer the negatives of the principal model, the cost turned out to be a lot higher. The top-end Model of Tata Nano (2014) was cited at an on-street cost of around Rs.2.6 lakhs in Bangalore . This sort of evaluation with the equivalent Nano model which the poor man likewise claimed, confounded the clients..

Tata Nano's Attempted Comeback

In the year 2013 Tata engines re-propelled Tata Nano with new components and publicity efforts. The re-dispatch concentrated on the following:

Focusing on the young people of the nation, the new Nano had extravagant settings like settings and shading blends, for example, ranch side or experience sports . The ads and crusades this time concentrated on the adroitness factor. The emphasis was, "Why not purchase a Nano when it gives everything at a deep discounted?" It additionally featured the rational advantage of Fuel productivity in another manner.

This time, Tata Nano pursued another sort of crusade altogether. They began to support programs on MTV that energized experience sports and stretched out the crusade on National TV.

Like the arrangement Roadies circulated on MTV where the members need to go on a Hero Karizma, they attempted to execute a comparable technique where the members were approached to traverse India in a Tata Nano. This validated the intense with which the vehicle was fabricated.

It concentrated on the passionate parts of a parent, and the car was promoted such that guardians can give their children a Tata Nano as opposed to giving them bicycles; a vehicle is more secure than a bicycle. This would likewise make them brilliant guardians.

Why did Tata Nano failed?

There are a few reasons of failure which justify Tata Nano's downfall,

• Failure in marketing the vehicle was the main reason behind Tata Nano Failure to attract customers.
• Tata Nano promotes itself as the least expensive vehicle.
• There was a buzz in the universal media, "What if Nano becomes successful? It would mean an end to the second-hand car market."

Why did Tata Nano fail to attract customers?

Delays during the production line migration from Singur to Sanand, early cases of the Nano bursting into flames, the impression of the vehicle being perilous, and compromise in quality due to cost slicing are some of factors behind Tata's failure to attract Indians. Also Tata nano promotes itself as the least expensive vehicle. No one needs to drive the least expensive vehicle.

Is Tata Nano still available?

Tata Nano is no longer available in the new car market.

Is Nano car still in production?

No Tata Nano is no longer manufactured.

What went wrong with Tata Nano?

Tata Nano got around 200,000 appointments at first. This made Tata Motors complacent and it didn't bother about new advertising strategies. New publicity procedures were essential to keep the enthusiasm of the individuals unblemished. But it wasn't done. When the main flame episode was accounted for, the ad system then just looked responsive and upgraded rather then focusing on negative attention.

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Marketing Case Study: The Story Behind Tata Nano’s Failure as a Brand

Table of Contents

The tata nano story, tata nano’s marketing strategy, customer response to tata nano, 5 reasons behind tata nano’s marketing failure.

Ratan Tata and his companies need no introduction. Despite being a successful brand across different sectors, its potentially revolutionary product, Tata Nano, was a failure. This blog will discuss the Tata Nano story and understand the reasons for Tata Nano’s failure as a brand.

We’ll also shed light on Tata Nano’s marketing strategy and why it backfired and led to shutting down the production within a decade.

Ratan Tata is well known as a social entrepreneur as most of his ventures are for society. His businesses have strengthened the country’s economy and have provided employment opportunities to many across various sectors. Ratan Tata is a philanthropist and, along with the Tata Group, committed to donating ₹1500 crore to fight COVID-19.

Tata Motors is the automotive entity of the brand and made a splash back in 2008 with the revolutionary Tata Nano. The vision was to make cars available to the lower-middle-class masses. The brand realized that there was a huge gap in the automobile industry, and Tata Nano was born as a result. The car came with the vision of bringing comfortable and safe mobility to the masses and was introduced as “The People’s Car” at the 2008 Auto Expo in India.

Tata Nano was presented as a 1 Lakh rupee car—small but spacious with a capacity of 4 and no power steering, no airbags, and no A/C in the base model. It stood firmly with quality, mileage, and environmental standards for the price.

Now, let’s look at how Tata marketed its new product and what led to Tata Nano’s failure as a brand?

The target market was the middle-class and lower-middle-class sector, and hence the car was positioned and marketed as a “One Lakh Rupees Car.” Its price was its biggest USP.

Tata Nano was the most ambitious venture of the brand. To make it cost-effective, it was made of steel, was small, light-weight, and without luxury features. The marketing strategy was to stage it as an affordable car for the Indian masses.

  It was presented as a safer alternative to a bike or a scooter for an Indian middle-class family of 4 members. Nano never intended to compete with other car companies. The funky colors appealed to modern families and the spacious interiors offered comfort.

Tata Nano’s marketing strategy seemed to be perfect so far, then what went wrong?

Kunal Shah, the founder of Freecharge and Cred, often repeats this well-understood fact of how obsessed humans are with their social status. A car is a status symbol that everyone wants to own. The bigger and more luxurious the car, the higher they perceive themselves to be in society.

The major reason for Tata Nano’s failure is the perception it creates in the minds of its target audience. A car, back then, was a luxury to own, and not a commodity to use. Branding Nano as a “cheap car” killed the entitlement that was supposed to come with it, and hence people did not find it worth buying.

The pre-launch buzz around Tata Nano was huge. All the media houses, national and international, were extensively covering the Tata Nano story. The buzz publicized the product, but as a “cheap car.” But, Ratan Tata, in an interview, said that he always called it a “people’s car.” It was the media and unfortunately the company, that termed it as a “cheap car.”

Tata Motors aimed to produce 2,50,000 Nano cars annually whereas the opening sales were 30,000 (approx.) only. The highest ever sales of 74,527 were achieved in 2011-12, which went down to 7,591 in 2016-17. The plant assembled only 1 Nano in June 2018 and closed production.

Harvard Business School covers a case study on Tata Nano’s failure and inculpates the company’s marketing strategy for the failure. Let’s see the 5 reasons behind Tata Nano’s failure.

1. Invalid market analysis

It seems like the company had assumed what their market desired. They were so ambitious about the product launch that they forgot to empathize with their target market before positioning their product.

Their emotional attachment to the product didn’t let them skeptically analyze their strategy. Tata possibly thought that the car was a necessity, but it was actually a luxury.

If they had given it more thought, they’d have realized that their customer did not want “the cheapest car.” They were more comfortable living as they were than going for a cheap car. Thus, a comfortable, fully-functional car that came with a tag of “cheap” was not appreciated by the market.

2. The Lakhtakiya positioning

Tata Nano was often called “Lakhtakiya,” translated as “worth a lakh.” Tata Motors used the penetration pricing strategy. The company marketed it as the cheapest car in the world to make it accessible to the masses irrespective of their socio-economic background. The media hyped the positioning and it backfired.

A noble idea went kaput because it could not sell entitlement. People did not want to own an item known for its cheap cost. Also, with the tag of cheap, quality stereotypes are bound to arise. People assumed that cost-effectiveness comes with quality compromises, and hence Tata Nano could not find its footing.

3. Logic over emotion

Tata Nano’s marketing strategy was unable to touch the hearts of Indians. Buying decisions are mostly emotional rather than rational. The marketing campaigns lacked that emotional touch and focussed more on the features.

Vouching on features in the marketing was also necessary, as the company wanted to tell people that they are providing almost everything that cars usually have. But, somewhere, they could not bridge the emotional connection, and thus lost their grip on the market.

4. The hype

The Tata Nano launch was hugely hyped in 2008. And as people were waiting for the launch, Tata announced the shift of the brand’s production plant from Singur, West Bengal to Sanand, Gujarat on October 7, 2008.

The West Bengal government, led by Mamta Banerjee accused Tata Motors of land acquisition and initiated the “Save Farmland” movement with local farmers and environmental activists. Tata Motors had to leave the state and was welcomed by Gujarat to set up their plant at Sanand. But the delay dulled public enthusiasm.

The hype was a problem as it mainly revolved around the price of the Tata Nano and not around the value proposition.

5. Negative PR

The leftover image was destroyed by the negative PR it had attracted. Many times, the initial models of Tata Nano caught fire and burst into flames on the road. Some said it was because of the faulty wiring. Others said a foreign object had entered the exhaust system.

Also, its lightweight affected the stability of the car on highways. The engine was not powerful and no A/C was installed in the base model. All these things contributed to a poor-quality ride.

The on-road price of Tata Nano was 2.59 lakh rupees instead of 1 lakh, as promised. Its close competitor, Maruti 800 was priced at 2.88 lakh rupees.

Lastly, Tata Nano received a Zero-star adult protection rating in a crash test. It failed to meet the basic UN safety requirements, and thus the very purpose—the safety of the car was crushed.

All these incidents decided the fate of the car and soon enough the car faded away from the market.

Parting Words

Tata Nano, which started off with great aspirations, failed within a decade. It was clearly a marketing strategy mistake along with various shortcomings in the product. The company itself was responsible for Tata Nano’s failure, and they have accepted it.

The Sanand plant is now being used to create Tata Tigor and Tata Tiago. But Tata is very ambitious about its product Nano and is likely to relaunch it as an affordable electric vehicle in the coming future. Let’s see how will they brand it in the future.

Key Takeaways

• No matter how benevolent your product is, if it is not marketed well, it will fail miserably.
• Seeking market validation by empathizing with your audience is a must.
• Brand positioning creates the strongest perception about the brand. Make sure you do it correctly.
• Mostly, buying decisions are emotional and not practical.
• Introduce a prototype in the market, take feedback, and improve the product before the final launch.
• No matter how big a company or a personality you are, you can make mistakes.

The company aimed to produce 2,50,000 cars annually, but their early sales were 30,000 for 2009-10, 70,432 for 2010-11, and 74,527 for 2011-12 which, then, kept on decreasing year-on-year to finally get closed in 2018. They have never achieved their target. So, yes, Tata Nano was a flop.

Tata Nano was marketed as the cheapest car, thinking that it was enough to motivate people to buy it. But people did not want to be associated with a cheap car. Also, people thought that cost-effectiveness would come with quality compromises. Thus, bad marketing caused Tata Nano’s failure.

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Tata Nano’s Execution Failure: How the People’s Car Failed to Reshape the Auto Industry and Create New Growth

Author(s):  KIM, W. Chan, MAUBORGNE, Renée, BONG, Robert, JI, Mi

Case study trailer

This case and the accompanying three-part theory-based movie describe Tata Motors’ strategic move to create and launch the Tata Nano and the successes and setbacks of the Tata Nano team in actualizing this strategic move. The case and part-one of theory-based video first review how the Tata Nano was conceived based on noncustomer insights from an alternative industry – the two-wheeler market and how a strategic price was set against alternatives to capture the mass of target buyers. The case and part-two of the theory-based movie then show how the Tata Nano team complemented its compelling value proposition with a viable profit proposition by pursuing target costing to deliver exceptional   buyer utility   at the strategic price set. Finally, the case and part-three of theory-based movie examine different components of the Tata Nano’s people proposition to identify the major causes of the setback it experienced in executing the strategic move, illustrating the importance of matching strong value and profit propositions with an equally compelling people proposition to ensure the successful execution of a blue ocean strategy. The accompanying three-part theory-based movie, available in the Educators’ Space , which longitudinally tracks the Tata Nano strategic move from conception to execution, is based on first-hand research and face-to-face interviews. A comprehensive teaching note also accompanies the case.

Pedagogical objectives:

• To demonstrate how Tata Nano reconstructed market boundaries across alternative industries and created a commercially viable blue ocean opportunity by following the right strategic sequence.
• To highlight the importance of matching value and profit propositions with an equally strong people proposition in ensuring the successful execution of a blue ocean strategy.
• To review major blue ocean strategy concepts, frameworks and tools   in the course of analyzing the Tata Nano strategic move.

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Teaching Note

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Tata Nano: Case of Repositioning: Case Analysis

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POSITIONING IS INEVITABLE –A CASE STUDY OF TATA NANO

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Tata Nano: Dilemmas in sustainable development

The Tata Nano was launched by Tata Motors, a member of the Tata Group in January 2008. This “one lakh car” ($2,500) was hailed as the people’s car. Ratan Tata, chairman of the Tata Group, which was widely respected for its socially responsible business practices, had personally championed the Nano’s development in the belief that it would revolutionize the mobility of the middle class in India. The first models were due to roll out of the company’s green field factory in Singur, West Bengal in October 2008. While Tata Motors had been offered financial incentives to locate to West Bengal, the company also wished to play an active role in the re-industrialization of the state and contribute to the economic development of the region. But protests severely disrupted work at the Nano plant and it finally ground to a halt on 2 September 2008. In October 2008 the company announced that it was relocating its Nano factory to the western Indian state of Gujarat, walking away from its $328 million investment.

The pursuit of Sustainable Development (SD) is not as straight forward as its proponents advocate. A firm’s financial, social and environmental performance may be at odds with each other. The challenge for top management is to deal with the underlying dilemmas. Nano offered the middle class Indian a safer alternative to carrying his family of four on a two wheeler. The company located its Greenfield factory in West Bengal, again to help develop backward regions of that Indian state. Yet, there were challenges to the Nano project from environmentalists and politicians concerned about the impact of the project on subsistence farmers.

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Publication date: 20 January 2017

Teaching notes

The case focuses on positioning a new brand, the Tata Nano. The car has been widely publicized as the world's cheapest car at Rs.1 lakh. Students must consider the gap between the ultimate target, the huge emerging middle class of Indian consumers, and the limited capacity and distribution available in choosing a target. They also must select between alternative competitive frames and the various points of difference they highlight. The case unfolds in two stages. The first decision point is in 2009, at the launch of the time of the product launch. The second decision point is 18 months later, after production capacity has increased and some product safety issues have arisen.

The primary goal of the case is to illustrate the choices made in developing a strong brand positioning and the interrelationship between these choices. Students select a target and an appropriate competitive frame of reference and point of difference for that target and summarize these elements in a positioning statement. The case also highlights importance of making promotion and distribution decisions that are consistent with the positioning.

• New Product Launch
• Brand Positioning
• Aligning Marketing Mix with Brand Positioning
• Forecasting and Managing Demand

Tybout, A.M. and Fahey, N. (2017), "Positioning the Tata Nano (A)", . https://doi.org/10.1108/case.kellogg.2016.000264

Kellogg School of Management

Copyright © 2014, The Kellogg School of Management at Northwestern University

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Learning from Tata’s Nano Mistakes

• Matt Eyring

It’s been a rough season for Tata Motors’ much-publicized “people’s car,” the Nano. In November, while overall auto sales in India’s booming economy rose more than 22%, Tata sold only 509 Nanos, down precipitously from the 9,000 it sold the previous July, news that’s been trumpeted in disparaging headlines from New York to Sydney. There […]

It’s been a rough season for Tata Motors’ much-publicized “people’s car,” the Nano. In November, while overall auto sales in India’s booming economy rose more than 22%, Tata sold only 509 Nanos, down precipitously from the 9,000 it sold the previous July, news that’s been trumpeted in disparaging headlines from New York to Sydney .

• ME Matthew J. Eyring is the president of Innosight, a strategy innovation consulting and investment firm.

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Positioning the Tata Nano (A) Harvard Case Solution & Analysis

Home >> Accounting Case Solutions >> Positioning the Tata Nano (A)

The case focuses on the positioning of the new brand, Tata Nano. The machine has been widely touted as the world's cheapest car at Rs.1 lakh. Students should take into account the gap between the final goal, a huge emerging middle class Indian consumers and the limited capacity and the allocation of available in the choice of targets. They also need to choose between alternative competitive framework and the different points they emphasize the difference. The case takes place in two stages. The first decision point in 2009, at the opening of the launch of the product . The second point is the decision 18 months later, after the production capacity has increased, and some of the issues of food safety have arisen. "Hide by Alice M. Tybout, Natalie Fahey Source: Kellogg School Management 12 pages. Publication Date: October 24, 2011. Prod. #: KEL602-PDF-ENG

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