Updating the Tata Nano marketing plan

The Tata Nano was launched in India in 2009 under the marketing theme of 'world's cheapest car' with a target market of people (particularly families) who had never owned a car. Its positioning was supported by basic auto features and a low, low base price. Tata's CEO told the Guardian, 'Here in India we see four people travelling by motorbike ... I thought they could travel more safely by car'. Tata was so overwhelmed by orders that it instituted a lottery to select the first buyers.

Now the Nano's marketing plan is being revamped - again - after lower-than-expected sales and reports that the car failed to meet minimum UN auto safety standards. Apparently, many consumers don't want to drive a car with such a low-price image.

The Nano wasn't the only tiny car to fail crash tests, by the way. The other four made-for-India cars that rated zero on a safety scale of 1 to 5 were: Maruti Suzuki Alto 800, Hyundai i10, Ford Figo and Volkswagen Polo. Without air bags, these no-frills autos couldn't pass the crash tests, even though they all meet India's safety guidelines.

Scientist Raghunath Mashelkar, who is on Tata's board of directors, blames poor marketing for the Nano's poor results (and Tata's former CEO agrees). Mashelkar says: 'The Nano is such a great product, it has 86 patents. So, excellence should have been put at the front, and affordability at the back'. In other words, the Nano should have been positioned on the basis of innovation rather than low price.

For the new marketing plan, Tata is positioning its Nano Twist as a car with style and excellent fuel efficiency. The marketing reflects a target market of young couples and features fashion colours and extras such as power steering. Low price is not the primary message. Will the new marketing plan reignite Nano's sales in 2014?

Jaguar Land Rover speeds ahead

Jaguar Land Rover, owned by Tata Motors of India, continues its UK manufacturing success with ever-higher global sales of luxury autos and rovers. 

During the first quarter of 2013, the company sold more vehicles than it has ever sold in any three-month period. It did especially well in Brazil, increasing sales by more than 135% as newly-affluent consumers trade up to the status and quality of Jaguar and Land Rover vehicles. With sales in Asia continuing to increase year by year, the company is also opening a fourth regional office in Singapore to support marketing and distribution initiatives throughout the area.

In addition to the three UK factories, Jaguar Land Rover is working on a factory in China (with local auto company Chery) and plans a new plant in Brazil once all regulatory issues are resolved. It is also analysing the possibility of manufacturing in India. Where the vehicles are manufactured makes a difference in how Jaguar Land Rover prices them and how much it costs to transport them to dealerships in targeted countries--in other words, these decisions affect the profit margin it earns on each vehicle and product range.

This year Jaguar Land Rover is investing £3 billion in new product development. The firm has done extremely well with its new Range Rover Evoque, and is examining opportunities for developing new SUVs (although no details are being released at this early stage). However, the SUV market is mature and highly competitive, with established firms already enjoying customer loyalty. What does this mean for Jaguar Land Rover's marketing plans and the new models it is developing for introduction in 2015 and beyond?

Tata's Nano steers toward higher sales

Tata Motors made headlines in the auto world when it introduced its ultra-cheap, ultra-small Nano car in its home market of India. As discussed in Chapter 6 of my Essential Guide to Marketing Planning, the car serves as basic transportation, replacing two-wheeled transport for many buyers. Initial response was highly positive, and the entire first-year production run was sold out in advance.

Sales have slowed since then, partly because of global recession, partly because of safety concerns, and partly due to increased competition. To boost buying, Tata has focused on safety, introduced a longer warranty to reassure buyers, and begun offering financing to help buyers afford the Nano.

As the world recovers from recession, these measures have definitely helped to drive higher demand for the Nano.

Tata is also learning from its experience with the Ace mini-truck, which has become quite popular in India. Now Tata is considering doing for the Nano what it did for the Ace: Opening dedicated dealerships in smaller towns just for the Nano.

Despite the many challenges, can Tata use its Nano to significantly accelerate sales and profits in the future?

Sales of Tata's Nano slow down

The Tata Nano was one of the most eagerly-anticipated cars ever introduced in India--not to mention being the lowest-priced car in the world--when it made its debut in 2009. This update to the example on p. 122 of Essential Guide to Marketing Planning 2d edition explores what's happened since then.

After a strong launch period and high initial demand, the Nano has faced a number of challenges and is now selling much more slowly than it was last year. Last month, Tata sold only 509 units. Why?

• Reports of a few Nanos catching fire may have made consumers wary of the model, even though Tata offers free safety upgrades to owners.
• The ongoing global recession is hurting demand.
• Tata says that buyers are having difficulty obtaining loans to buy the Nano.

To stimulate purchasing, Tata has announced a new four-year warranty (see image above). The warranty will cover previously-purchased Nanos as well as new purchases. Tata has also arranged for its financing division to offer low-interest loans to Nano buyers. Will these marketing steps accelerate Nano sales in 2011?

Tata's Nano gains from petrol dereg

Tata's tiny Nano, the world's cheapest car, was planned as basic transportation with high fuel efficiency (as discussed on p. 122 of the new edition of Essential Guide to Marketing Planning).

Now the Nano looks likely to become even more popular as India deregulates the fuel market and drivers feel the effects in the form of higher petrol prices.

Some observers see Tata gaining more broadly in India because it also markets several diesel cars, and diesel fuel is cheaper than petrol at this point (but possibly not in the future).

Tata's sales are already strong, and with the dereg, the marketing environment is more favourable than ever. In fact, Tata has just decided to go into the financial markets to raise more cash for expansion (having cut debt over the last year).

Meanwhile, Tata has been promoting its Nano with a cross-India drive that attracted media attention and showed the car's capabilities. The Nano appeals to buyers trading up from motorcycles as well as first-time vehicle buyers who might otherwise not be able to afford any type of motorised vehicle.