TATA 

Nano: What went wrong?

Q1. If you were Ratan Tata in 2015, Would you continue to offer Nano? Why or Why
not?
Keeping alive Nano as brand:-
 I would keep Nano as a brand but will discontinue all existing car under this
brand and launch a new car under this brand.
 Rationale for doing this:-
 Nano is a multi-million dollar brand, it is very popular brand.
 Nano as a product failed due to quality issues and other regions but as a brand
it is very known and successful.
 I would keep Nano as a brand but will launch an entirely different car under
this brand.
 In Auto industry, a brand lives for decades, we have many popular legacy
being relaunched again successfully
 Offering a slightly more priced product with better features according to
industry standard and relaunching as it as an innovative car can work as it has
worked for some other legacy brands.

Alternate answer (discontinuing Nano car and the Nano brand):-

 If I were Ratan Tata, I would discontinue the Nano Car and also the brand
nano.
 Rationale for doing this:-
 Nano is positioned in a wrong segment. There is no demand of car in that price
segment.
 Nano doesn’t meet basic industry standards for a car in that segment. Adding
more feature to meet industry standards will result in price hike in nano which
will ultimately fail the goal of an affordable car created to replace two-
wheelers.
 Excess production capacity for this car was resulting in heavy operational cost
which will not be recovered until Nano become a mass-segment car brand.
 Nano clearly failed in its main aim which to target low income consumers like
two wheelers consumers
 Launching a better version with more industry standards features under Nano
brand will not work since people associate Nano with cheap car and are
unlikely to consider Nano as reliable brand.

Q2. Why Couldn’t Nano have succeeded in any Consumer Segments?

Answer:
 Failure in the identification of the targeted sector. Primarily the product was designed
as an alternative to motorcycles for consumers having a family and low income in tier
2 and 3 cities. Later, the president of the car division said that car is for everyone
irrespective of age and income. Although the advertising agency hired by Tata Motors
 targeted an entirely different segment, tier 1 high-income families whose 3rd/4th car is
Nano.
 There was no product need; Tata tried to enter a market gap that they thought existed.
It can be easily proven. Tata tried to create a cheap car. Indian market is very open
and normalized to second hands cars. Maruti Suzuki provides pre-owned cars, and
later on, players like ‘cardekho’ entered the market, further facilitating it. To make
Nano cheaper several basic features like AC and stereo were not absent, wherein the
customer can get those in pre-owned cars. 5-year-old versions of Ford Ikon, Maruti
Esteem, Opel Corsa, and Fiat Sienna are priced around 1 lakh to match the Nano
price. This 1 lakh price is for the base version of Nano. As per the reports, an AC
version will cost around 1.4 lakh. [1]
 Product Features were below par. To lower cost, the body was made of biodegradable
plastic. Thereby it was light weighted and lacked stability. Technical specifications
did not meet minimum industry standards. The highest speed was deficient to other
cars in an almost similar range. Engine and fuel capacity were low.
 Unable to cater to customers’ desires. Tata made the mistake of thinking of cars as
just a transport medium.  It is an aspirational symbol. Prospective buyers felt that to
be seen as owning the “cheapest” was to acquire a lowly social status. Instead of
being a people’s car, it had a niche appeal among the trendy for being cute and
almost funky. [2]
 Promotional strategies were wrong. Tata approached tier 1 customers with different
designs from tier 2 and 3. Also, they relied more on newer unconventional marketing
methods, but traditional TVCs and print media could best reach their target audience.
 Tata Nano was subjected to much negative PR. The fire incident happened with many
cars, but Nano’s was highlighted owing to the “cheapest car” tag. Tata Nano was one
of the ’50 ugliest cars’ as per Bloomberg.
Q3. Explain the Performance of Nano in 4A’s of Marketing? Use sales figures/ Price
factors and other data to reflect.
 Acceptability – The only functional need that Nano satisfied was to act as a mode of
transportation and as safer and more comfortable than bikes. Other than that, they
couldn’t meet any of the consumer’s needs.
- Functional Acceptability – The car did have certain features that stood out from
the rest, such as mileage and environment friendliness, but these couldn’t leverage
much. The design was not appealing; safety features were missing. Nano lacked
reliability. Although they branded themselves as a safer alternative for bikes, poor
braking systems and fire incidents told another story.
- Psychological Acceptability – In a country like India, people are very image
conscious. Societal image is a significant influence in our country. Car is seen as a
symbol of status and monetary wellness in India. A straightforward example to
establish this is the tradition of gifting a car to the groom in marriages. Nobody
wanted to be called the owner of a cheap car. What Tata assumed would be the
strength of Nano was one of the primary reasons behind its failure.
 Affordability – Customers in the target market should be economically able and
psychologically willing to pay for the product. As Nano could never identify its target
market, this A differs for each section.
- Psychological Affordability – the customer who was able to pay was not willing
to pay as it added nothing but rather deteriorated his societal status as Nano was
 the ‘poor man’s car. Cars are aspirational more than utilitarian in India. Nano did
not have any feature that made its owner feel good.
- Economical Affordability – Nano was claimed to be priced at a lakh and thereby
an alternative to bikes, but it wasn’t. The fuel efficiency and maintenance cost
made it pricier for the customers. For the segment who purchased this as their
3rd/4th car, this was a mere amount; thus, economic affordability is assumed.
 Accessibility - This dimension discusses the extent and ease to which products and
services are accessible to customers. 
- Customer Convenience: Tata Motors did not establish distribution channels in tier
2 and 3 markets. They had not invested in creating a dealer network, especially in
semi-urban and rural India. Although their strategy of collaborating with Big
Bazaar did facilitate customers’ convenience.
- Customer Availability –Tata took full advance from customers, and delivery was
promised for a year after. Due to the Singur plant issue, Tata had to move its
production facility to Gujarat, reducing its production capacity. The inventory was
available later, but the hype had gone down, and demand was deficient.
 Awareness - It keeps in mind that all customers are informed enough about the
benefits and features a product offers, persuading potential customers. It is a crucial
factor for brands since creating a positive perception in the customers’ minds is
necessary for them to buy their products. The brand Tata needed no awareness, but
Nano did. The only thing people knew about Nano was that it was the cheapest car in
the world. Also, no significant efforts were made by Tata to educate customers about
the same.
- Product Knowledge: The customers weren’t aware of Nano's various features,
such as environment-friendly features. Nano won multiple accolades, such as
Indian Car of the Year 2009 and the Edison award for the best new product in the
automobile segment in 2010, but Tata never capitalized on them. Nano Twist did
have features like AC, power steering and window, and remote boot, which its
prime competitor Maruti Alto 800, did not have. Tata only played on the hype and
media buzz created pre-release but never really tried to educate the customers
about the products.
- Brand Awareness – The only thing which Tata did not have to worry about was
brand awareness. Tata needs no introduction.
Q4. Explain how the Nano performed as a Product at the different levels of the generic
product.
Nano performed poorly at different levels of generic products. The only aspect it covered was
that it served as a four-wheeled mode of transport. Nano was a no-frills car that offered an
alternative to two-wheelers.

- The basic model of the Nano did not have a stereo, an air conditioner, power windows,
or a glove compartment.
- there were no airbags, antilock brakes, power steering, or remote locking.
- Some of the technical specifications did not meet minimum industry standards. For
example, the Nano engine had only two cylinders with a 624 cubic centimeter capacity,
the lowest engine volume in the low-cost car segment.
- Nano made a strange sound similar to three-wheel motorized vehicles.
 - The wheel bearings were only strong enough to handle speeds up to 45 miles31 (72
kilometers) per hour, beyond which they started to deteriorate
- The overall build of the car was perceived to be flimsy.
- The highway performance was also poor. The Nano’s fuel tank capacity of only 15 liters
and its sluggish acceleration further emphasized that the Nano was a city car that was
not appropriate for highways or intercity travel.
- There were safety and quality issues, as quoted by many buyers.

E.g., there was only a $700 price difference between the Nano twist and the Maruti alto 800,
and the primary product features like engine capacity, power, top speed, boot/trunk space,
and fuel tank capacity were significantly very high for later. Only the mileage was
comparable. However, Nano provided AC and power steering, and window.
Q5. Why do New Products fail? Explain with an example of Nano. Explain how the
Product’s positioning should be framed and the common pitfalls the company should
avoid. Explain in the context of Tata Nano.
- New products are often someone’s over-ambitious brainchild and, often, are far from
ground reality. A product is created only if there is a need and wants for it. Also, markets
often do not convert into demand, as in the case of Nano. In the Indian context, there would
rarely be anyone who’d say they don’t want a car, but they might not need it. Tata tried
tapping into the economic 4-wheeler section, but the ambition to bring the cheapest car
backfired. The product failed here.
- Detailed and in-depth study for the competition is needed. Tata failed to oversee the
potential competition Nano faced from pre-owned cars.
- STP should be very efficient. Nano failed in there. Not only could they never identify the
correct segment, but Tata tried to capture multiple markets and thereby captured none. The
product needs to be positioned appropriately to target maximum market share.
- lack of product development and crisis management. New products before launching, don’t
plan on what if things go wrong. When issues were raised on Nano’s safety, nobody from
Tata addressed and accepted the same, leading to their losses.

Positioning is one of the main differentiators which can make or break the product. The first
step to positioning is segmentation. The ideal segment could have been a middle and lower
middle class, nuclear family feeding, earning individual. The target population should have
been tier 2 cities. “A Car for ALL” could have been a position. Tata positioned Nano as the
cheapest wrong and couldn’t recover from that. Nano could have been set as the car which
provides the most excellent value for money. A 4-wheeler can never really be a replacement
for a 2-wheeler.
The most common pitfall a company can lead themselves into is to capture all the market in a
go. Nano tried to capture the higher-income, middle-income, and lower-income groups
simultaneously. India has a very different social fabric. Indians tend to go for eliteness and
often rank higher prices as more elite and better irrespective of product features. Societal
status is a critical consideration for Indian consumers.
Q6. Explain the attributes related to the car’s pre-announcements. Did they influence
the sales of Tata Nano? What is the Marketing strategy Tata Nano failed to understand
before launching the Product?
Their two primary pre-attributes are related to the car’s pre-announcement.
1. Market Buzz – Nano’s announcement created a lot of marketing buzz. It garnered a
lot of media attention. It gave Tata free publicity but backfired when issues cropped
up with Nano.
2. Stereotyped – Nano was stereotyped for being ‘cheap,’ and consumers could never
look at the product beyond that.
The Nano Effect: Used Car Prices Down By 35%;
[1]

https://trak.in/tags/business/2009/02/24/the-nano-effect-used-car-prices-down-by-35/

[2]
Tata Nano – Why Did The People Not Want The People’s Car?;

https://thewire.in/business/tata-nano-why-did-the-people-not-want-the-peoples-car