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TATA NANO - Brief History and Case Study Analysis

S
Sadat Faruque

Tata Nano aims to create an uncontested market space by offering an affordable car at Rs. 1 lakh that provides value to customers not found in other vehicles. As a potential "Blue Ocean" strategy, the Nano focuses on people with 2-wheelers, concerned parents, and retired people by offering low maintenance and fuel efficiency at an affordable rate. However, there are some drawbacks like limited power and features as well as uncertainty if it will appeal in rural areas. A SWOT analysis finds strengths in Tata's brand name and the Nano's low cost and fuel efficiency, but weaknesses in limited power and not being seen as a status symbol.

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TATA NANO 11-OCT-2012 A Case Study Analysis BY SADAT FARUQUE
TATA NANO - Brief History and Case Study Analysis
TATA NANO - Brief History and Case Study Analysis
TATA NANO - Brief History and Case Study Analysis
TATA NANO - Brief History and Case Study Analysis
TATA NANO - Brief History and Case Study Analysis
TATA NANO - Brief History and Case Study Analysis
TATA NANO - Brief History and Case Study Analysis
TATA NANO - Brief History and Case Study Analysis
TATA NANO - Brief History and Case Study Analysis
TATA NANO - Brief History and Case Study Analysis
TATA NANO - Brief History and Case Study Analysis
TATA NANO - Brief History and Case Study Analysis
Tata Nano - Peoples Car Following India's growing openness, the arrival of new and existing models, easy availability of finance at relatively low rate of interest and price discounts offered by the dealers and manufacturers all have stirred the demand for vehicles and a strong growth of the Indian automobile industry.
TATA NANO The Blue Ocean ? Affordable rate and Prestige at Rs.1 lakh. Safer option with not very high speed. Main focus on people with 2 wheelers, concerned parents and retired people. Low maintenance. Fuel efficient.
Drawbacks Auto Rickshaw and cab drivers are looking at the Nano as an alternative. Cant take rough roads. Doesnt have enough space.
Is Tata Nano a Blue Ocean Strategy (BOS) ? According to Kim and Mauborgne, in a Blue Ocean Strategy, one creates uncontested markets space where the competition is irrelevant, invents and captures new demand, and offers customers a leap in value while also streamlining the cost. Features of BOS that the authors claim are : i) Its not about technology innovation, ii) It doesnt have to a venture into a new arena, iii) It never use the competition as benchmark, iv) Its reduces the cost while also offering customers more value.
SWOT Analysis - Tata Nano: STRENGTH OPPORTUNITIES Brand name TATA Large market for selling Cost price low Awareness in the market Fuel efficient First car in low range Safe (European Safety Standards) Can hit in global market WEAKNESS THREATS Low power Company rival Not a status symbol Not sure to hit in rural and Limited features semi-urban areas
TATA has come up with a one lakh rupee car that may create a unique market position for the Nano brand and operate in a Blue Ocean market. The Value a Nano will bring to its customers will be totally different from a high end car say a Mercedes S Class. But, because the value is as perceived by the buyer, it will be unique. Value flows from the customer to the supplier. This is contrary to a supply chain where the flow is from the supplier to the customer. Value can be categorized in various layered levels. At the core is the Product Value or the technical value derived from a source of supply. For e. g. let us again consider the TATA Nano. The product value for the buyer may be access to an economic mode of four wheel transportation. The second layer consists of the Service Value or the value provided by the services surrounding the product. The service value for the Nano may be the warranty the car will carry which in turn will provide an ownership experience free of maintenance costs. The third and the penultimate ring will be the Wow Value or the factors leading to customer delight.
These may consist of factors such as space (which is said to be considerably more than theMaruti-800, its nearest competitor) and ergonomics of the car, given the price point it will operate in. The interesting thing here is to note that these factors will be completely different for a Mercedes customer. The Wow Value i.e. space in the TATA Nano wont excite such a customer. May be a beer cooler as a standard accessory w ill !! Toyota launched its luxury sedan Lexus as a different brand (not as another Toyota car) because they felt that to compete with the BMW and Mercedes brands, they need a brand which will provide a greater Snob Value which the Value for Money image of Toyota brand couldnt afford.
IS TATA NANO REALLY CREATING a BLUE OCEAN ??
TATA NANO - Brief History and Case Study Analysis

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TATA NANO - Brief History and Case Study Analysis

  • 1. TATA NANO 11-OCT-2012 A Case Study Analysis BY SADAT FARUQUE
  • 14. Tata Nano - Peoples Car Following India's growing openness, the arrival of new and existing models, easy availability of finance at relatively low rate of interest and price discounts offered by the dealers and manufacturers all have stirred the demand for vehicles and a strong growth of the Indian automobile industry.
  • 15. TATA NANO The Blue Ocean ? Affordable rate and Prestige at Rs.1 lakh. Safer option with not very high speed. Main focus on people with 2 wheelers, concerned parents and retired people. Low maintenance. Fuel efficient.
  • 16. Drawbacks Auto Rickshaw and cab drivers are looking at the Nano as an alternative. Cant take rough roads. Doesnt have enough space.
  • 17. Is Tata Nano a Blue Ocean Strategy (BOS) ? According to Kim and Mauborgne, in a Blue Ocean Strategy, one creates uncontested markets space where the competition is irrelevant, invents and captures new demand, and offers customers a leap in value while also streamlining the cost. Features of BOS that the authors claim are : i) Its not about technology innovation, ii) It doesnt have to a venture into a new arena, iii) It never use the competition as benchmark, iv) Its reduces the cost while also offering customers more value.
  • 18. SWOT Analysis - Tata Nano: STRENGTH OPPORTUNITIES Brand name TATA Large market for selling Cost price low Awareness in the market Fuel efficient First car in low range Safe (European Safety Standards) Can hit in global market WEAKNESS THREATS Low power Company rival Not a status symbol Not sure to hit in rural and Limited features semi-urban areas
  • 19. TATA has come up with a one lakh rupee car that may create a unique market position for the Nano brand and operate in a Blue Ocean market. The Value a Nano will bring to its customers will be totally different from a high end car say a Mercedes S Class. But, because the value is as perceived by the buyer, it will be unique. Value flows from the customer to the supplier. This is contrary to a supply chain where the flow is from the supplier to the customer. Value can be categorized in various layered levels. At the core is the Product Value or the technical value derived from a source of supply. For e. g. let us again consider the TATA Nano. The product value for the buyer may be access to an economic mode of four wheel transportation. The second layer consists of the Service Value or the value provided by the services surrounding the product. The service value for the Nano may be the warranty the car will carry which in turn will provide an ownership experience free of maintenance costs. The third and the penultimate ring will be the Wow Value or the factors leading to customer delight.
  • 20. These may consist of factors such as space (which is said to be considerably more than theMaruti-800, its nearest competitor) and ergonomics of the car, given the price point it will operate in. The interesting thing here is to note that these factors will be completely different for a Mercedes customer. The Wow Value i.e. space in the TATA Nano wont excite such a customer. May be a beer cooler as a standard accessory w ill !! Toyota launched its luxury sedan Lexus as a different brand (not as another Toyota car) because they felt that to compete with the BMW and Mercedes brands, they need a brand which will provide a greater Snob Value which the Value for Money image of Toyota brand couldnt afford.
  • 21. IS TATA NANO REALLY CREATING a BLUE OCEAN ??