Revival of Tata Nano: Can the World's Cheapest Car Maintain the Momentum?

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Case Details:

Case Code : MKTG286
Case Length :13 Pages
Period : 2010-2011
Pub Date : 2012
Teaching Note : Not Available
Organization :Tata Motors
Industry : Automotive
Countries : India

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"If it was out-of-the-box thinking that led to the birth of the Nano in 2003, it is a similar stream of innovative marketing ideas that is now helping resuscitate the Rs1-lakh car after sales crashed to a mere 509 units last November."

-The Economic Times, May 10, 2011

"When we started, around 80 per cent of Nano customers were buying it as a second car and 20 per cent were first-time buyers. Now the ratio is about 50:50 and ultimately, we are looking at 80 per cent first time buyers purchasing the car, which is what we had aimed when we started off."

-R. Ramakrishnan, Vice-President (commercial-passenger cars) of Tata Motors Ltd., in 2011


In April 2011, the Tata Nano crossed the 10,000-mark in terms of unit sales. Its sales figure of 10,012 fetched it the sixth rank among passenger cars in India for the month as well as for the year till then. Analysts felt that this was a remarkable revival for the Nano as its sales figure had touched an all-time low just six months earlier - in November 2010. Achieving this turnaround was not easy. Analysts said that attractive and effective television advertisements, providing of additional protection in the exhaust system of the car to avoid fire incidents, extended free of cost warranty schemes, incremental rise in sales points in smaller towns, and introduction of the 90%-

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

financing plan through its in-house vehicle financing unit Tata Motor Finance, had made the turnaround possible. Since the Nano's launch in January 2008 at the Auto Expo, New Delhi, it had been a talking point in the automobile industry across the globe for its design, cost and fuel efficiency, and innovative ways of distribution.

Though its unique combination of lower cost and innovative features had given it the title of 'wonder car' for the people, its rising prices had been slowly pushing it out of the reach of its real target customers. Experts noted that the Nano had been launched initially for middle class families riding unsafely on two-wheelers on Indian roads, but a continuous price rise was making it difficult for these families to migrate from bikes to the Nano.

A crack team led by R Ramakrishnan, VP (commercial-passenger cars), and Girish Wagh (Wagh), vice-president & head (small car project) was credited with orchestrating the revival of the Tata Nano. The team was keeping a close watch on the Nano's progress and was working to ensure that there was a constant focus on the target customer segment. However, analysts said they had a long and arduous road ahead in maintaining and building upon the sales momentum. In the future, other car manufacturing companies were also planning to launch their low cost variants in India. The challenge before the Nano's marketing team was how to counter those competitors and simultaneously attract the low-income customers.

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