Executive Summary
Tata Nano is a cheap, back-engined, small-sized car with a capacity to carry four passengers built by Indian based automotive company known as Tata Motors. Tata Nano was first introduced in January 2008 during the 9th annual Auto Expo in India (Tata Motors Limited, 2008). The Tata Nano is one of the cheapest, environmental-friendly, and fuel-efficient cars in the world. Initially the car was designed for the Indian market owing to the need to provide small but poor families with an affordable means of Transport. Tata Motors’ market segment for Nano is families although individuals with small cars’ needs are also included in the segment. The first Tata Nano was specifically developed for the Indian Market and as such, it was equipped with less security and safety features in order to cater for the low cost of approximately US$2,100 at the time of production. The Tata Nano lacks features such as radio, CD player, airbags, air conditioner, trunk’s door, and power steering. This features mean that the Tata Nano could not qualify to be sold in the International market (“Selling to the bottom of the pyramid: The case of Tata Nano”).
Due to the need to satisfy the international safety and emission standards, Tata Motors unveiled an export version of Nano branded Tata Nano Europa in the 2009 Geneva Motor show. Nano Europa is more improved as compared to the standard Nano. Its features include power steering, three-cylinder engine, an extended wheelbase, an improved interior and exterior, and an anti-lock braking system. However, the increased costs of production meant that the car would retail at $6000 to cater for production costs. Tata Motors unveiled the Tata Pixel for the international export market. The analysis of environmental factors in the Australian Car Industry shows that the Tata Nano is suited to that market, with slight improvements in its safety features to meet the Australian Standards. The Australian trading and technological infrastructure for motor vehicles is well developed with a number of players that include Toyota Motor Corporation Australia Ltd, which owes a 38.8% market share, GM Holden Ltd with 20.9% market share, and Ford Motors Company of Australia with 16.1% market share (Derby 2011). Holden Barina, Hyundai Getz, Kia Rio, Honda Jazz, Suzuki Alto, Mitsubishi Colt, Suzuki Swift, and Nissan Micra are the potential competitors for the Tata Nano in Australia with Nissan Micra being the strongest competitor (Evelyn, 2010).
Nonetheless, the internal analysis of Tata Motors shows that is one of the strongest and leading Automotive manufacturers in the world with well-respected brands such as the Jaguar and Land Rover models in addition to other utility vehicles, passenger vehicles, and light, medium, and heavy commercial vehicles. Tata Motors can use its resources to enhance competitive advantage in the Australian car industry and obtain success with the Tata Nano. The strength of Tata Nano’s marketing strategy lies in its objectives, marketing mix (well-designed product, excellent promotion strategies, competitively priced, and well positioned to the target market. The ideal mode of entry into the Australian Market would be exporting. Finally, evaluation and control would be based on quarterly evaluation of objective realization, sales analysis (sales targets vs. Actual sales), modification of strategies and promotional schedules, and customer surveys.
International Marketing Program
Positioning Strategy
The Tata Nano will be positioned as the car that is capable of performing what other big cars are capable doing but it will come at a cheaper price. The Tata Nano is therefore intuitive, comfortable, and convenient for small families and private users who cannot afford the luxury afforded by other big cars due to high costs. The Tata Nano will be positioned as an alternative to other small and light cars in the market that are quite expensive but perform similar functionalities as the Tata Nano
Marketing Mix Strategy
Product and branding strategy
The product specifications and product features such as 623cc engine with two cylinders and four doors. The car lacks features such as radio, CD player, airbags, air conditioner, trunk’s door, and power steering will be defined when marketing the product. After sales services, two-year warranty, and free store support will be provided alongside the model. Due to the relatively low price, the product objective would be to sell 50,000 Tata Nano cars in its first year and thereafter, increase the number by 10,000 cars each year. This objective would be realized with the conduction of massive promotional activities and advertisements on leading media channels across the region.
The Tata brand will be influential in gaining popularity for the Tata Nano.
Pricing strategy
The introductory price for the Tata Nano in Australia will be priced averagely at $6000. Since the price of the export model of Tata Nano to be marketed in Australia will range between US$5,500 and 6,000, it is a relative cheap offer for a new car in Australia. Adverts and product promotions would be used to enhance the popularity of Tata Nano. Therefore, many of the urban working class of Australia will have an opportunity to own a new car as opposed to a used car at almost the same price. Limited editions with enhanced entertainment features will be offered at slightly increased prices depending on the needs of clients. Selected car dealers will offer Hire Purchase terms for customers who pay more than $3000 on their first installment.
Distribution strategy and Promotions
The Tata Nano will be sold directly from Tata Motors show rooms and selected dealers across the country. Motor shows and exhibitions around Australia would be other ideal locations for distributing the Tata Nano. Additionally, an online segment will be created whereby clients can order for their vehicles and pick them at selected outlets. However, they might need to part with shipping costs.
Promotional strategies will include the endorsement of popular celebrities in the Rugby, Football, and in music to act as product ambassadors for the Tata Nano. Popular individuals have an impact of influencing buyer decisions because the public adores majority of them. Additionally, as part of its corporate social responsibility, Tata Nano should sponsor different programs within the community such as environmental awareness programs and sporting activities, and use the Tata Nano as the Brand. This would be effective in advertising the Tata Nano across the region.
Marketing Communications strategy
Tata motors will use both push and pull strategies and communication strategies will include company advertising, product promotion on popular media channels, and selection of renowned automotive distributors. These strategies will be aimed at differentiating the Tata Nano from its competitors. Pre-launch strategies will include buzz creation, and holding discussion forums on automotive blogs. A massive launch strategy will include conferences by Tata Motors, information from Tata Motors website (Australian Segment), TV, and Social Media around the country. Post-Launch Strategy will include communication from Tata Motors website, advertisement in leading media channels, and independent automotive website reviews.
Evaluation and Control
Virtually, no marketing process has yielded perfect results due to the presence of conceptual market volatilities and shifts, and Tata Nano international marketing is not an exception. The car industry is Australia is ever changing and therefore, marketing strategies will need to be updated from time to time to ensure that our marketing initiatives keep up with the needs of the Australia Motor Industry. Equally important is the need to have constant evaluation of our marketing strategies to ascertain the ratio with which we have managed to realize the set objectives. For this reason, our marketing plan has identified key areas that for evaluation and control to ensure that we attain our marketing goals and objectives, and as well, keep our marketing program in the right direction.
First, our marketing plan has an annual control plan that will be broken down into quarterly sections for measuring actual performance against the planned outcomes. We will be meeting every three months to conduct a sales analysis whereby our sales targets will be compared to the actual sales. Any discrepancies will be adjusted accordingly by modifying our marketing strategies to address unique set of factors in particular areas. During these meetings, every group member will be assigned key performance indicators to watch over the next phase.
Second, our promotional schedules will also undergo review every 3 months to measure the level of efficiency of the methods employed in the marketing process. The performance analysis will also be used to ascertain the manner with which customers responded to the advertising and distribution methods. The most responsive promotional strategies will be accorded more emphasis. Third, we will conduct strategic controls and efficiency controls to obtain an overview of the success or failure of each marketing aspect. Strategic control will entail the assessment of the overall strengths and weaknesses of available opportunities within the Australian automotive market. Similarly, efficiency control will assess the rate of success or failure all our sales and marketing efforts. Lastly, customer satisfaction will also account to our performance assessment. We will conduct frequent customer surveys to obtain their opinions, both negative and positive, and their opinions will be taken seriously in improving our marketing objectives and milestones.
Market Choice
Selected Country
The selected country for our Tata Nano is Australia. The Australian Car Industry is growing at an increasing rate after the recover from the global financial crises. According to IBISWorld, the car industry in Australia is set to grow owing to favorable interest rates, growing demand from the growth sector, and increasing need for cheap and fuel efficient small cars (IBISWorld Industry Report C2811, 2011). Tata Nano fits well to the demand of environmentally conscious customers. Another factor that makes the Tata Nano ideal for the Australian market is the existence of big business for small cars in the region. According to statistics from (Derby, 2011), virtually one in every two buyers of passenger cars chose light or small cars. Car rental companies also prefer to use small cars in conducting their businesses owing to their cheap prices and fuel efficiencies. Therefore, we aim to position the Tata Nano as the ‘most admired small car company producing vehicles that people love to buy, and to build an business that employees enjoy working for, conducting business with and invest in. A summary of market wholesale statistics and major markets is presented below.
Segmentation of the Car Industry in Australia by car wholesale revenue ($40.9bn)-2011-2012
Mode of Market Entry
Given the competitive nature of the Australian Automotive industry, determining the best market entry criteria should be dependent on the assessment of key market factors. These include the required investment and resources, legal regulations for international manufacturing activities, and the advantages of all possible entry market strategies. In turn, this determines the rate of return, associated risks, and level of control for each mode. Tata Motors should choose Exporting as the primary mode of entry into the Australian market because it requires less investment to be made in Australia (Nicolas, Zhenya, and David 2011). The Tata Nano is in its early stages in Australia and hence, it can collaborate with car importers, exporters, transport companies, and as well the Australian government, to minimize risks of failure.
The suitability of this entry mode is suitable in the International Marketing of Tata Nano because it would offer Tata Motors an opportunity to study the Australian market before investing resources into manufacturing plants. Second, the existing legal regulations and policies in Australia favor the export market thereby making it a form of a speedy entry. Transportation costs and export tariffs have reduced significant over the past five years. Such factors position exporting strategy as the most suitable mode of entry into the Australian market. Third, this mode of entry can enable the company to reduce the price of the Tata Nano due to utilization of the already existing economies of scale in terms of manufacturing. Finally yet import, the break-even analysis will be shortened and as such, the Company will be able to register profits in the shortest period after it starts commences its trading activities in the Australian market.
Decisions for Market Entry Strategy
Environment Specific
Firm Specific
Market Size and Growth Potential
Less stringent government regulations
High level of competitiveness
The available infrastructure is ideal for the export market
Excellent distribution channels
Low tariffs and free movement of goods
High percentage of imported cars
Need of control and hence, the need to export first before setting up a manufacturing plant
Company objectives of supplying quality and innovative products and hence, the need to market the Tata Nano brand
Internal resources, capabilities, and assets of Tata Motors company
Reference List
“Selling to the bottom of the pyramid: The case of Tata Nano” Strategic Direction, Emerald
Group Publishing Limited, Vol. 25 Iss: 6pp:10 - 12
Derby, S., 2011, Motor Vehicle Manufacturing in Australia. IBISWorld .
Evelyn A., 2010, Toyota's competitive advantage: path dependency, dynamic capabilities, and
sources of inimitability – a contrastive study with Nissan, in Ron Sanchez, Aimé Heene
(ed.) Enhancing Competences for Competitive Advantage (Advances in Applied Business
Strategy, Volume 12), Emerald Group Publishing Limited, pp.87-120
IBISWorld Industry Report C2811, 2011. Motor Vehicle Manufacturing in Australia. Sara-Jane Derby
Nicolas K., Zhenya L., and David M. 2011. "Innovating low-cost business
models", Strategy &
Leadership, Vol. 39 Iss: 2, pp.43 – 48
Tata Motors Limited, 2008, Corporate Sustainability Report. Mumbai, India: Tata Motors Limited.
