TATA NANO 11-OCT-2012 A Case Study Analysis BY SADAT FARUQUE
Tata Nano - People‘s CarFollowing Indias growing openness, the arrival of new andexisting models, easy availability of finance at relatively low rateof interest and price discounts offered by the dealers andmanufacturers all have stirred the demand for vehicles and astrong 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.• Doesn’t 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) It’s not about technology innovation,ii) It doesn’t 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 OPPORTUNITIESBrand name TATA Large market for sellingCost price low Awareness in the marketFuel efficient First car in low rangeSafe (European Safety Standards) Can hit in global marketWEAKNESS THREATSLow power Company rivalNot a status symbol Not sure to hit in rural andLimited features semi-urban areas
TATA has come up with a one lakh rupee car that may create a unique marketposition for the “Nano” brand and operate in a Blue Ocean market. The Value aNano will bring to its customers will be totally different from a high end car say aMercedes S Class. But, because the value is as perceived by the buyer, it will beunique. Value flows from the customer to the supplier. This is contrary to asupply chain where the flow is from the supplier to the customer. Value can becategorized in various layered levels. At the core is the ― “Product Value” or thetechnical value derived from a source of supply. For e. g. let us again consider theTATA Nano. The product value for the buyer may be access to an economic modeof four wheel transportation. The second layer consists of the ― “Service Value”or the value provided by the services surrounding the product. The service valuefor the Nano may be the warranty the car will carry which in turn will provide anownership experience free of maintenance costs. The third and the penultimatering 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 morethan theMaruti-800, its nearest competitor) and ergonomics of the car, given theprice point it will operate in. The interesting thing here is to note that these factorswill be completely different for a Mercedes customer. The “Wow Value” i.e. spacein the TATA Nano won‘t excite such a customer. May be a beer cooler as astandard accessory w ill !! Toyota launched its luxury sedan “Lexus” as adifferent brand (not as another Toyota car) because they felt that to compete withthe BMW and Mercedes brands, they need a brand which will provide a greater“Snob Value” which the “Value for Money” image of Toyota brand couldn‘tafford.