Tata Nano Case Study | Understanding How and Why It Missed Customer Expectations
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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 the factors behind Tata's failure to attract Indians.
Here we present the case study of the Tata Nano and find out why Tata Nano Failed and never gained traction despite being termed as the 'people's car'.
Tata Motors anticipated the 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
Tata Nano Failed Marketing and Business Strategy
Why Tata Nano Failed?
Tata Nano's Attempted Comeback
FAQs
Tata Motors' Nano Initiative
After effectively propelling the ease of the 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 the ease of Indian labor.
The superfluous highlights include the evacuation of the traveler'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".
Kanimozhi Sivakumar
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 to deliver the vehicle in a lot bigger amounts, somewhere in the range of 250,000 every year, if the need arises.
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.
Tata Nano Failed Marketing and Business Strategy
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 as 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 strategic view drove the concept of a low-cost vehicle and chose that the 1 Lakh Rupee sticker price would be appealing to the objective market.
Ashwini
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 INR 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 of 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 the face of the Indian lower class, just like the Bajaj Scooter at one time represented the white-collar class.
Devashish Shrivastava
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 every month. There are a few reasons for Tata Nano failure which are as below:
- Failure in marketing the vehicle was the main reason behind Tata Nano's Failure. Tata Nano's marketing strategy failed to resonate emotionally with Indian consumers, who often make buying decisions based on feelings rather than logic. While highlighting the car's features was important to showcase its value, the campaigns lacked the emotional connection needed to engage customers, leading to a loss of market appeal.
- TATA Nano promotes itself as the least expensive vehicle. The company assumed what the market wanted without truly understanding it. Their emotional attachment to the product led them to believe it was a necessity, while customers saw it as a luxury. Many buyers preferred their current lifestyle over choosing a "cheap" car, which made the Nano’s low-cost label unappealing.
- 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.
- Competition from the used car market reduced the Nano's market share, as consumers favored well-known brands that were seen as more reliable.
- Challenges with political and land acquisition issues forced the relocation of Nano's production plant, delaying production timelines and adding to the project's difficulties.
Problems With The Car
- Awful picture of the shoddy vehicle.
- Several cars caught fire. Thus, despite 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.
- The 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 than 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 INR 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 discount?" 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 needed 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 intensity 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.
End Note
Tata Nano started with high hopes but failed within a decade due to marketing mistakes and product issues.
The story of Tata Nano highlights the complex relationship between innovation, perception, and market trends. By understanding the challenges it faced through this case study, businesses can learn important lessons about what to avoid in product development. This case emphasizes the need for thorough market research, effective marketing strategies, and adaptability to changing consumer needs. The Tata Nano serves as a cautionary tale, reminding us that success requires a careful balance and understanding of market dynamics.
FAQs
Why did Tata Nano fail?
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."
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 the 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 than focusing on negative attention.
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