Individual Report

Understanding Markets and Buyer Behavior

Module Number P58214

‘TATA NANO EUROPA’

Market Analysis and Strategies for 2011

BUNNY MENRA

10016309

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INDEX

OVERVIEW OF COMPANY AND PRODUCT…………………………………………3

CURRENT MARKET SCENARIO……………………………………………………….4

MARKETING FOR NANO EUROPA……………………………………………………6

IMPORTANT MARKETING ANALYSIS FOR EUROPA………………………………7

SWOT ANALYSIS.......................................................................................................7

PEST ANALYSIS…………………………………………………………………………..8

CONSUMER BUYER PERFORMA………………………………………………………8

COMPETITIVE ANALYSIS……………………………………………………………….9

CONCLUSION………………………………………………………………………………9

APPENDICES………………………………………………………………………………10

REFERENCES……………………………………………………………………………...15

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OVERVIEW OF THE COMPANY AND PRODUCT

Tata Motors is India’s largest automobile company, with consolidated revenues of USD

20 billion in 2009-10. It is the leader in commercial vehicles and among the top three in

passenger vehicles. Tata Motors has products in the compact, midsize car and utility

vehicle segments. The company is the world's fourth largest truck manufacturer, the

world's second largest bus manufacturer and employs 24,000 workers. Since first rolled

out in 1954, Tata Motors has produced and sold over 4 million vehicles in India

(www.imaginmor.com, 2008).

In January, 2008 Tata Motors launched Tata Nano in India, the least expensive

production car in the world. Tata Nano is a small, 4 passengers, low cost car built by the

Indian company Tata Motors. It is aimed primarily at Indian Domestic market. It is an

exemplary example of Gandhian Engineering, a concept involving deep frugality and a

willingness to challenge conventional wisdom (Mashelkar, R.A, 2009).

In 2008 the Financial Times reported: "If ever there were a symbol of India’s ambitions

to become a modern nation, it would surely be the Nano, the tiny car with the even tinier

price-tag. A triumph of homegrown engineering, the $2,200 (€1,490, £1,186) Nano

encapsulates the dream of millions of Indians groping for a shot at urban prosperity."

(Source: www.ft.com). There were great expectations from Tata Nano. An Indian rating

agency CRISIL, thought Nano would expand nation’s car market by 65%

(www.economictimes.indiatimes.com,2008).

Tata Motors now aims to launch a new model of Nano for developed markets. This new

model is called Tata Nano Europa. This export version of Nano was first displayed at

Geneva Motor Show in 2009 (Alborz Fallah, 2009). The model will be highly upgraded to

meet EU safety and emission standards and is likely to cost 4000-5000 GBP in UK. It

will be powered by a 1.0-litre three-cylinder engine, which will produce around 60bhp.

The Europa will get a five-speed manual box (the Indian version is four-speed) to allow

for longer gearing, improved fuel economy and reduced CO2 emissions.

It features an all-steel body with an overall length of 3300mm. This makes it around eight

inches longer than the original Mini, but far shorter than any contemporary European

supermini. The car rides on 14-inch alloys and has traction control, electric power

steering and twin airbags (www.autocar.co.uk, 2009).

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CURRENT SCENARIO FOR TATA NANO

In India Tata Nano was launched in 2008. The car was highly publicized and promoted

even before the actual launch in market. It sold over 200K units in 2009.

SWOT ANALYSIS IN CURRENT SCENARIO

Strengths:

Cheapest car

Stylish look

Eco friendly

Fuel efficiency

Weaknesses:

No AC in standard model

Window wind down by hand

Manual steering

No air bag

Body made of sheet metal and plastic

Plastic and adhesives replace welding

624cc 2 cylinder engine gives speed of

only 43mph

Opportunities:

Low maintenance

World wide appeal

Cost control

Parking space

Threats:

Traffic congestion

Security not very high

Prices may rise in future

Competitors may arise

(Tata Motors Group, 2008)

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Marketing mix used by Nano in its current scenario:

PRICE:

1. Non AC standard version costs 123000 rupees which is around 1700 pounds.

2. AC version costs 148000 rupees which equals 2000 pounds.

3. The deluxe version costs 172000 rupees equaling 2300 only 2500 pounds.

4. Can be booked starting with 2500 rupees only which is just 34 pounds.

5. Finances are easily available from number of banks for buying Nano.

6. Booking forms costs only around 3-4 pounds.

Pricing strategies were so efficient that before actually bringing the car to market total

bookings of 203000 were recorded.

PLACE:

1. Nationwide launch.

2. Product available through agents as well as can be booked online.

3. Nano Europa is set to launch in U.K and Europe in 2011.

PROMOTION:

1. The product was showcased for first time in Auto Expo (Delhi) in 2007 and later in 78th

Geneva Motor Show in March, 2008.

2. The car website recorded exceptionally high number of hits which were 300 million hits,

on the day of its launch.

3. Promotional campaigns like advertising competition, blessings for Nano, Nano Capsule

were all received by people wholeheartedly.

(Tata Motors Group, 2008).

As far as Europa is concerned it is a new product it was showcased in Geneva Motor

show but that is its only public contact till now. The product is new and is to enter its

market in coming year. Company current strategies in India can provide a base for

ideas, but company will have to keep in mind the differences in terms of geography,

psychographics, cultures and regulatory factors.

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MARKETING FOR NANO EUROPA

Tata Nano Europa is set to hit UK roads in 2011. Since this is a clear case of a new

product entering a new market there is requirement of stringent market analysis and

proper strategy. Strategic models available in literature offer different methodologies for

positioning in a new market (Azzone et al, 2003).Company needs to have a proper

marketing plan before it enters a new market. Market plan is a systematic process

involving assessing of resources, objectives, opportunities and then developing a plan

for implementation and control. The marketing planning process consists of

organization’s overall strategy, fundamental analyses of trends in market environment,

company SWOT analysis, competitive strategies and identification of target market

segments.

(Simkin et al, 1994, pp: 565).

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2. Assessment of marketing resources and opportunities.

1. Development of marketing objectives relative to performance.

5. Implementation of marketing plan.

3. Formulation of marketing strategy.

4. Development of plan for implementation and control.

A good marketing plan should be dynamic and companies should continuously revise

and update their marketing plan to keep a competitive edge in market. (Wood, 2007).

IMPORTANT MARKETING ANALYSIS FOR NANO EUROPA

Market analysis is the heart of marketing planning exercise. It includes analysis of

marketing environment, market trends, customers, competitors, competitor positions and

competitor strategies.

SWOT ANALSIS

The most basic analyses and indeed the most important is SWOT analysis. SWOT

analysis is a tool for a company to identify its strengths, weaknesses, opportunities and

threats. The assessment of the firm's strengths and weaknesses involves looking

beyond the firm's current products. The successful achievement of the firm's goals and

objectives depends on its ability to transform key strengths into capabilities by matching

them with opportunities in the marketing environment. Firms can convert weaknesses

into strengths, and even capabilities, by investing strategically in key areas. For a

company introducing a new product in new market SWOT analyses is crucial because it

provides us with mixture of qualitative and quantitative information, of familiar and

unfamiliar facts, of known and half known understandings that characterizes strategic

marketing planning. (Piercy and Giles, 1989).

This is true for case of Tata nano Europa which is about to enter a new unknown market

with a completely new offering. It would be useful if they identify their strengths,

weaknesses, opportunities and threats with respect to the market they are entering and

plan their strategy further accordingly.

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PEST ANALYSIS

Next important analysis required by Tata Nano Europa is PEST analysis. It is another

basic analysis model in strategic marketing. It is a tool for presenting information about

macro- environment and is a method of capturing details of the factors that require

consideration when formulating a marketing plan. (Mackay, 2008).

Tata Nano Europa can make great use of this analysis since they are entering a new

market understanding what all factors can affect their operations and all the important

issues that require consideration. PEST analysis give information for four macro

environment areas; political, economical, social and technological. If a company

understands these areas well and also identifies their changing patterns it can position

its product well and target the consumers effectively.

A PEST analysis is a useful tool for understanding the ‘big picture’ of the environment in

which an organization is operating or going to operate. PEST analysis is a useful tool for

understanding risks associated with market, and Nano Europa can make use of this tool

to reduce any risks involved with entering new market (cipd.co.uk, 2010).

CONSUMER BUYER PERFORMA

Another market analysis which is important for Nano Europa is to have proper buying

performas for their identified segments. Buying performa identifies the segments based

on their characteristics, the KCVs, Buying Process and Influencing Factors (Dibb and

Simkin, 1996). It gives company a deeper insight into the profiles of segments and helps

in utilizing correct measures to reach them. When operating in Indian market the buying

performa for Nano included people in lower middle class.

As mentioned on Tata Nano website, Nano was designed for those Indian populations

that travel on two wheelers with their whole family because they cannot afford a car. But

this segment does not exist in U.K market; in U.K people do not use two wheelers when

travelling with their families. Also, there is huge market of used cars in U.K that all the

people can afford and buy a car for themselves. This asks for Tata group to define the

segments for Europa in U.K and create the buying performas for them, so that they

could be effectively targeted.

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COMPETITIVE ANALYSES

Lastly, the analyzing tool that Nano Europa should use is Competitive Analysis. The five

steps of competition analysis involve identifying company’s competitors, determining

competitor’s objectives and strategies, assessing competitor’s strengths and

weaknesses, estimating their reaction patterns and finally choosing which competitors to

attack and avoid. (Dibb and Simkin,1996).

Though, in the present scenario Nano occupies a niche market segment and is

operating in area where there are no competitors. But many companies have already

made their announcements for low cars in competition to Nano. Nano Europa has more

factors to consider. This product is going to be launched in a foreign country where Tata

brand is not a known brand. In this situation, price cannot be the only factor Nano can

expect to gain market shares on, it will have to compete with other known, well settled

car brands in U.K in terms of perceived brand value for customers. Thus, it is important

for Nano Europa to consider the competition it is going to get from existing car brands in

U.K especially small car brands like Mini.

CONCLUSION

Nano is a very innovative product and has changed the Indian automobile industry.

World is now eagerly waiting to see how global version of Nano, Nano Europa is

accepted by people across the globe. Nano, though innovative have some drawbacks

also. To successfully market it in U.K in the coming year the strategic analysis should be

carefully done and marketing plan should be developed keeping in mind all the findings

of analyses. To support the report and explain the concepts better, the examples of

SWOT analyses and PEST analyses are done. The buyer behavior and competitive data

analyses are more focused and require the statistics. So, they are not done in this

report, although format tables for both is attached along to understand the important of

analysis and what key finding they can provide. Nano Europa is a new product for U.K

market and they need a very strong marketing plan to create their position in this

competent car market in U.K and hence have enormous benefits from the strategically

analyzing this market.

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APPENDICES

EXAMPLE PEST ANALYSIS

Political/ Legal/ Regulatory Opportunities: Upgraded version meets

all the regulations of EU safety and

emission standards. This shows that

product is high quality and ready to

compete existing brands in the market.

Threats: Higher quality demand led to

tradeoffs between quality and price.

Europa model is costlier than Indian

model and price is the base they are

marketing the product on.

Economic Opportunities: Recession has caused a

huge demand for low cost products in

U.K market. Launching Nano at this

time could produce huge benefits.

Threats: Nano is basically a low cost

product; there are chances that in a

developed economy like U.K such

product may not be able to get enough

sales or acceptance.

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Societal Opportunities: Tata Motors has

knowledge of U.K market and trends in

car industry due to presence of its own

brand Jaguar Land Rover in U.K. It is

easier to launch a new product in

market about which a company has

some previous knowledge.

Threats: A small car like Nano will be

first of its kind in U.K. It is difficult to

estimate the reaction of market to such

low cost product offered by a foreign

brand.

Technological Opportunities: In terms of technology

and innovation, Nano is an example of

brilliance. It is first of its kind in market

and is expected to create a new market

trend in car industry.

Threats: Due to its low cost, there are

cuts on quality. So, it cannot compete

with high quality cars and brands

already existing in U.K.

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EXAMPLE SWOT ANALYSIS

STRENGHTS

1. Extremely cost effective.

2. A real example of innovation.

3. Most suitable for early adapters and

technology savvies.

4. All safety and emission tests

cleared.

5. Long history and experience of Tata

Motors.

6. Market knowledge due to existing

own brand Jaguar Land Rover.

WEAKNESSES

1. Quality little lower than most other

cars existing in U.K market.

2. Not much demand for low cost car

in developed nations as compared

to developing nations.

3. Upgrading required to meet the EU

requirements increases the overall

price of car.

4. Need to establish brand in a foreign

market.

OPPORTUNITIES

1. A chance to get product recognition

on a global level.

2. Huge sales potential.

3. Can become a trend setter or even

market leaders in small, low cost car

market.

THREATS

1. High regulations and standards in

EU market can lead to more

tradeoffs between price and quality.

2. Huge competition from better and

high quality established car

manufacturers.

3. Copy cats and similar innovation

products are already been proposed

by many companies.

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FORMAT FOR BUYER BEHAVIOUR PERFORMA

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FORMAT FOR COMPETITIVE ANALYSES PERFORMA

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REFERENCES

1. Alborz Fallah, 2009, Tata Nano Europa & Australian Car Advice [weblog] online,

2009-03-04, Available from: http://www.caradvice.com.au/24821/tata-nano-

europa [ accessed on 9-12-2010].

2. Auto car (2009), Available from http://www.autocar.co.uk/News/NewsArticle/Tata-

Nano/245712/ [Accessed on 9-12-2010].

3. Automobile Industry India (2010), Available from:

http://imaginmor.com/automobileindustryindia.html [accessed on 9-12-2010].

4. AZZONE, G. AND POZZA, I.D. (2003), An Integrated strategy for launching new

product in biotech industry. Management decision, 41/9, PP: 832-843.

5. CATRIONA, M. (2008), The Greatest Marketing Tips in World, Warwickshire: The

Greatest In The World Ltd.

6. CIPD (2010), PESTLE Analysis [WWW], Available from:

http://www.cipd.co.uk/subjects/corpstrtgy/general/pestle-analysis.htm [accessed

14-12-2010].

7. DIBB, S. AND SIMKIN, L. (1999), Marketing planning: a workbook for marketing

managers, London: Cengage Learning EMEA.

8. DIBB, SIMKIN, PRIDE AND FERELL (1994), Marketing planning and sales

potential [diagram]. In: Marketing: concepts and strategies. 2ND European edition.

London: Houghton Hill Company.

9. The Economic Times (2008), Available from:

http://economictimes.indiatimes.com/articleshow/2694186.cms. Retrieved 2009-

06-08 [accessed 9-12-2010].

10. LEAHY, J. (2009), Tata sets Nano launch date [www], Available from:

http://www.ft.com/cms/s/0/ac0298a0-0434-11de-845b-

000077b07658.html#axzz18L4IcG1D [accessed 9-12-2010].

11. PIERCY, N. AND GILES, W. (1989), Making SWOT analysis work, MIP 7, 5/6.

12. WOOD, M.B. (2007), Essential guide to marketing planning, Essex: Pearson

Education Limited.

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