Research Project ReportOn
THE STUDY INTO THE PROCESS OF PRODUCT PLANNING AND DEVELOPMENT
IN MARKETING
For the partial fulfillment of the requirement ofMASTER OF
BUSINESS ADMINISTRATIONAffiliated to Uttar Pradesh Technical
University, Lucknow, (U.P.)(2013-2015)
Under The Guidance of: Submitted by:Dr. Avijit Dey Mr. Ankit
Kumar
Roll No.1327270012
GNIT MBA Institute6-C, Knowledge Park-II, Greater Noida ( G. B.
Nagar)
TOPICS Institutes Certificate Acknowledgement Preface /
Executive Summary 1. INTRODUCTION (1-16)2. INDUSTRY PROFILE
(17-24)3. COMPANY PROFILE (25-57)4. FINANCIAL ANALYSIS OF THE
COMPANY (58)5. DATA ANALYSIS & INTERPRETATION OF DATA (59-70)6.
FINDINGS (71)7. CONCLUSIONS (72-73)8. SUGGESTIONS (74)9.
LIMITATIONS OF THE STUDY (75)10. APPENDICES (76-83)11. BIBLIOGRAPHY
(84)
ACKNOWLEDGEMENT
I feel an immense pleasure in taking this opportunity to express
my sincere thanks and deep gratitude towards my honourable guide
Dr. Avijit Dey, for designing of the project and being a constant
source of inspiration and guidance. It has been a great privilege
for me to his constant encouragement, meticulous guidance and
invaluable counsel throughout the conduct of the project. I shall
be failing in my duty if I do not acknowledge my thanks to DR.
SAVITA MOHAN, DIRECTOR, GNIOT MBA INSTITUTE, without whose guidance
and cooperation would havent been successfully accomplished.
DATE: ANKIT KUMAR
EXECUTIVE SUMMARY
This is the specialization project on a study on new product
development for Tata Nano along with a comparative study between
Tata Nano and Maruti 800. The objective of this study is to gain
knowledge about how Tata brought this new product.During the
project I researched on how Tata developed Nano costing Rs 1 lakh
and what will be its effects. This study also includes comparison
between Tata Nano and Maruti800. A survey was also done for
understanding consumer buying pattern and preferences.Thus, this
study is based on new product development in marketing for Tata
Nano.
1. INTRODUCTION
History of Product Planning:
Modern production planning methods and tools have been developed
since late 19th century. UnderScientific Management, the work for
each man or each machine is mapped out in advance (see image). The
origin of production planning back goes another
century.Kaplan(1986) summarized that "the demand for information
for internal planning and control apparently arose in the first
half of the 19th century when firms, such as textile mills and
railroads, had to devise internal administrative procedures to
coordinate the multiple processes involved in the performance of
the basic activity (the conversion of raw materials into finished
goods by textile mills, the transportation of passengers and
freight by the railroads. Herrmann (1996) further describes the
circumstances in which new methods for internal planning and
control evolved: "The first factories were quite simple and
relatively small. They produced a small number of products in large
batches. Productivity gains came from usinginterchangeable partsto
eliminate time-consuming fitting operations. Through the late
1800s, manufacturing firms were concerned with maximizing the
productivity of the expensive equipment in the factory. Keeping
utilization high was an important objective. Foremen ruled their
shops, coordinating all of the activities needed for the limited
number of products for which they were responsible. They hired
operators, purchased materials, managed production, and delivered
the product. They were experts with superior technical skills, and
they (not a separate staff of clerks) planned production. Even as
factories grew, they were just bigger, not more complex."About
production planning Herrmann (1996) recounts that "production
scheduling started simply also. Schedules, when used at all, listed
only when work on an order should begin or when the order is due.
They didn't provide any information about how long the total order
should take or about the time required for individual operations.
In 1923Industrial Managementcited a Mr. Owens who had observed:
"Production planning is rapidly becoming one of the most vital
necessities of management. It is true that every establishment, no
matter how large or how small has production planning in some form;
but a large percentage of these do not have planning that makes for
an even flow of material, and a minimum amount of money tied up in
inventories.
Meaning Of Product:E.g.:- milk, computer, shoes, service after
sales, railway services etc. a product can be divided into two
categories Tangible goods Intangible goodsTangible products are
known as goods that can be touched, felt and seen. E.g.:- computer,
mobile phone etcIntangible products are known as services that
cannot be touched and seen as the customer can feel and experience
only after utilizing it. E.g.:- service after sales New Product
Development:
A product can be considered new under the following situations:-
New-to-the-world products New product lines Additions to existing
product lines Improvements and revisions of existing products
Repositioning Cost reductions
Stages Of New Product Development
Before the introduction of a product into the market, it goes
through several stages of development. These stages are known as
stages of new product development. It includes the following:Idea
Generation:Companies seek new ideas to enhance the performance of
the existing products and to innovate new ideas. This stage is
called idea generation stage. There are many sources for idea
generation. It may be from customers, dealers etc.Employees
throughout the company can also be a source of idea. Toyota claims
that its employees submit two million ideas annually over 85% of
which are implemented.Companies also find good ideas by researching
competitors products and services. They can find out what the
customers like or dislike about their competitors products. Ideas
can also come from investors. External research, surveys industrial
publications research and development etc.But the main source of
idea generation is the customers by their grievances and complains
and feedback. However, although ideas can flow from many sources,
it is not feasible to implement all the ideas generated due to lack
of time and capital.Idea ScreeningThe main purpose of idea
generation is to collect a larger number of ideas. However, not all
ideas can be commercially viable. Therefore, the companies filter
the less viable ideas with the help of systematic process.
Companies can use various parameters to screen the ideas such as
market size, technical capabilities, potential competition etc.
Addressing the following issues will also help the companies to
analysis the attractiveness of ideas. Whether the product idea
match the existing products of the company. The degree to which the
new product can cannibalize the sale of the existing product.
Companys ability to produce and market the product. Buying behavior
and the probable changes in the environment.While screening the
ideas, an organization may commit two types or errors.Drop error
where the firm rejects a very good idea.Cro error where a company
selects a poor idea.
Concept Testing And Development:All ideas that survive in the
process of screening will be studied in details. They will be
developed into mature products. At this stage, the idea is
submitted for the external evaluation to get a feedback from the
market. It helps a firm are organization to collect important
information like customers initial reactions towards the product
development. During this stage, new product idea is described in
the form of one or more benefit that is then presented to a sample
of potential customers for their reactions.Marketing
Strategy:Following a successful concept test, the new product
manager will develop a preliminary strategy plan for introducing
new product in the market. The plan consists of three parts. The
first part describes the target market size, structure and behavior
for the first few years. The second part outlines the planned price
distribution strategy and marketing budget for the 1st year. The
third part of marketing strategy plan describes the long run sales
and profit goals and the marketing mix strategy over time.
Business Analyses.After management develops the product concept
and market strategy, it can evaluate the business attractiveness.
Business analyses are the first in-depth financial evaluation of
new product to be developed. Here management needs to prepare sales
cost and profit projections to determine whether they satisfy
company objectives. If they do, then concept can move to the
development stage. SOWT analysis will be conducted at this stage by
the organization. It also includes the following:
Total sales estimation:-These are the sum of estimated first-
time sales, replacement sales and repeat sales. Its method depends
upon whether the product is one time purchase(an engagement ring),
an infrequently purchased products like toaster, auto mobile etc.
or a frequently purchased products like consumer and industrial non
durables.Estimation costs and profits.The R&D, manufacturing,
marketing and financial departments estimates the costs. The
profitability of the new product is estimated through various
financial tools. The simplest technique is the breakeven analysis
in which the management estimates how many units of the product the
company would have to sell to break even with the given price and
cost structure. If the management believes that sales could easily
reach the break even number, it is likely to move the project into
development stage.
Product DevelopmentIn this stage, detailed technical analysis is
conducted to know whether the product produced at costs is low
enough to make the final price attractive to the customer.Here a
working model or a prototype is developed to disclose all tangible
and intangible attributes of the product. A product protocol is
prepared which is a detailed downiest containing the important
attributes that are expected in the product. Once the protocol has
been developed, it is handed over to the research the development
department to develop the prototype of the product.
Test Marketing:The test marketing is the stage where the product
is introduced in a few selected cities. During this stage, the
company has to fate the following expense: High advertisement High
manufacturing cost. High distribution cost etc.For testing the
product, marketer needs to make the decision on the following
issues. The no. of cities in which the product is to be tested.
Geographic location of the cities. Time to carry ort test
marketingThrough this exercise, company can know the customers
response, feedback, suggestions, complaints and any other changes
required to be done for product modification.After successfully
laughing the product in selected cities the company launches the
new product in all other cities.There are certain methods of
product testing.
Alpha TestingIn this method, a group of target audience is
selected from the employees of the company.Beta Testing:It is
carried out at the customers site. Generally, it is applicable for
industrial products where the customization takes place.Gamma
Testing:It is carried out on a long term basis where the customers
uses the product extensively and gives response after a long period
of time. Say six months.
Commercialization:The results of the test marketing help
marketers to decide the changes that are needed in the marketing
mix before entering into the market. It also helps the marketer to
decide the amount of production distribution strategy, selling
efforts and other issue like providing guarantees, service after
sales etc. the product enters the market during the
commercialization stage.
Research objectives
To study about how a new product- Tata Nano was developed based
on marketing theory of new product development. To study about what
made possible for Tata to develop and produce a car for just Rs.
One lakh. To study the objectives and target customers of Tatas one
lakh car To study and compare between Tata Nano and Maruti 800To
study on customers buying behavior and preferences and views about
Tata Nano and Maruti 800 by various methods of data collection.
RESEARCH METHODOLOGY
Research methodology is simple framework or plan for the study
that is as guide in collection and analyzing the data. It is the
blue print that is followed in completes the study. Thus, good
research methodology ensures the completion of project efficiency
and affectivity. Since there are many aspect of research
methodology, the line of action has to be chosen from the variety
of alternatives, to choose the suitable method through the
assessment from various alternatives. Research methodology gives
the researcher an opportunity to put forward his argument for
having opted for certain alternatives and also at the same time he
can justify his ruling out some other possibility likes. Why
research study has been undertaken, how the research problem has
been formulated what data has been collected, what particular
technique if analyzing the data has been used and lot of similar
type question are usually answered when we talk of research problem
in study.
Sample Design: 69 responsdentsSample Composition: Youth Service
Class HousewivesThe details of the methodology adopted are
presented below:The QuestionnaireKeeping in view the objective of
the study, questionnaire was designed and tested on few employees.
After getting the proper response and sanction from the concerned
department the questionnaire was finalised.
PRIMARY DATA Market Survey. Personal Interview.
SECONDARY DATA Magazines. Internet. Business Journal.
Data Collection MethodsThe success of any project or market
survey depends heavily on the data collection and analysis. It is
necessary that the data collected is a reliable data in order to
achieve the research objective. For research regarding the views of
people about Tata Nano and its comparison between Tata Nano and
Maruti 800 two types of data collection methods were used Primary
Data Secondary Data
PRIMARY DATA:Primary data is the data, which are fresh and
collected for the first time, and are original in character. There
are various Primary Data Collection techniques, which have helped
in data gathering. This was collected through
questioner.Questionnaires are a popular means of collecting data,
but are difficult to design and often require many rewrites before
an acceptable questionnaire is produced.Advantages: Can be posted,
e-mailed or faxed. Wide geographic coverage. Relatively cheap. No
prior arrangements are needed. Avoids embarrassment on the part of
the respondent. Respondent can consider responses. No interviewer
bias.
Disadvantages: Design problems. Questions have to be relatively
simple. Time delay whilst waiting for responses to be returned.
Several reminders may be required. Assumes no literacy problems. No
control over who completes it. Not possible to give assistance if
required. Problems with incomplete questionnaires.
Points kept in mind while preparing the questioner Liberal
spacing Length of the questioner is kept normal Logical Order
Question are short, simple and to the point; all unnecessary words
are avoided Close ended questions are asked so that its easy for
the respondent to fill the questioner and also easy to analysis
Sample population was selected on the basis of random sampling
method.
SECONDARY DATA:Secondary data are those data, which have been
already collected or published for the purpose other than specific
research need at hand. This data is simply used up by the
researcher for his purpose of collected data and its used for the
same purpose. The secondary data sources here in this project are:
Websites Books
2. INDUSTRY PROFILE
The automobiles sector is compartmentalized in four different
sectors which are as follows: Two-wheelerswhich comprise of mopeds,
scooters, motorcycles and electric two-wheelers Passenger
Vehicleswhich include passenger cars, utility vehicles and
multi-purpose vehicles Commercial Vehiclesthat are light
andmedium-heavy vehicles Three Wheelersthat are passenger carriers
and goods carriers.The automobile industry is one of the key
drivers that boosts the economic growth of the country. Since the
de-licensing of the sector in 1991 and the subsequent opening up of
100 percent FDI through automatic route, Indian automobile sector
has come a long way. Today, almost every global auto major has set
up facilities in the country.Austria based motorcycle manufacturer
KTM, the established makers of Harley Davidson from the US and
Mahindra & Mahindra have set up manufacturing bases in India.
Furthermore, according to internal projections by Mercedes Benz
Cars,India is set to become Mercedes Benzs fastest-growing market
worldwide ahead of China, the US and Europe.As per the data
published by Department of Industrial Policy and Promotion (DIPP),
Ministry of Commerce, Government of India, the cumulative FDI
inflows into the Indian automobile industry during April 2000 to
October 2013 was noted to be US$ 9,079 million, which amounted to
4% of the total FDI inflows in terms of US $. The production of
compact superbikes is also expected to take place in India. The
country has a mass production base of 16 million two-wheelers and
the several global as well as Indian bike makers are looking
forward to use it as an advantage in order to roll out sports bikes
in the 250 cc capacity.The world standing for the Indian automobile
sector, as per the Confederation of the Indian industry is as
follows: Largest three-wheeler market Second largest two-wheeler
market Tenth largest passenger car market Fourth largest tractor
market Fifth largest commercial vehicle market Fifth largest bus
and truck segmentHowever, the year 2013-2014 has seen a decline in
the industrys otherwise smooth-running growth. High inflation,
soaring interest rates, low consumer sentiment and rising fuel
prices along with economic slowdown are the major reason for the
downturn of the industry.Except for the two-wheelers, all other
segments in the industry have been weakening. There is a negative
impact on the automakers and dealers who offered high discounts in
order to push sales.To match the decline in demand, automakers have
resorted to production cuts and lay-offs, due to which capacity
utilization for most automakers remains at a dismal level.Despite
the comprehensive market being under extreme burden, the luxury car
market has observed a robust double-digit hike during the year
2013-2014, as a result of rewarding new launches at compelling
lower price points. Further, with the measured increases in the
price of diesel, the overall market continues to shift towards
petrol-fuelled cars. This has lead to the growth in sales of the
'Mini' segment of the PV market by of 5.5%Factors determining the
growth of the industry Fuel economy and demand for greater fuel
efficiency is a major factor that affects consumer purchase
decision that will bring leading companies across two-wheeler and
four-wheeler segment to focus on delivering performance-oriented
products. Sturdy legal and banking infrastructure Increased
affordability, heightened demand in the small car segment and the
surging income of the Indian population India is the third largest
investor base in the world The Government technology modernization
fund is concentrating on establishing India as an
auto-manufacturing hub. Availability of inexpensive skilled workers
Industry is perusing to elevate sales by knocking on doors of
women, youth, rural and luxury segments Market segmentation and
product innovationEmployment OpportunitiesThere are a wide range of
jobs available in the automobile industry. With the number of
vehicles available on the road today, the need and requirement for
people who can fix these machines is fast increasing. Careers like
automobile technician, car or bike mechanics are a great option.
Becoming a diesel mechanic is also a significant alternative.
Diesel mechanics are responsible for repairing and servicing diesel
engines. As they are also required to repair engines of trucks and
buses, other than cars, they are provided with hefty wages.If
communication with people instead of repairing cars is what
interests you, then you have the opportunity of becoming a
salesperson or sales manager in an automobile company. Career
opportunities in automobile design, paint specialists, job on the
assembly line and insurance of vehicles is also
available.Employment TrendsThe Automotive Mission Plan for the
period of 2006-2016 aims to make India emerge as a global
automative hub. The idea is to make India as the destination choice
for design and manufacture of automobiles and auto components, with
outputs soaring to reach US$ 145 billion which is basically
accounting for more than 10% of the GDP. This would also provide
further employment to over 25 million people by 2016 making the
automobile the sunrise sector of the economy.According to the
Confederation of Indian Industry, the automobile sector currently
employs over 80 lac people. An extension in production in the
automobile industry is forecasted, it is likely to rise to Rs.
600000 crore by 2016.Future Trends in the Automobile IndustryAs the
auto-shows began in January 2014, the industry promised a blend of
technology and automotives. With the recession trend breaking its
leashes form the past two years, 2014 is expected to get back on
track with the sales of automobiles in the country. Almost
Self-governing cars are predicted to be on the streets by 2020 More
than half the cars on the streets are going to be powered by diesel
by 2020 Industry watcher Gartner indicates that 30 percent of
motorists want parking info. The facility is likely to come up
after glitches in the infrastructure catch up. High Performance
Hybrid cars are likely to gain greater popularity among
consumers.The Indian automobile industry has a prominent future in
India. Apart from meeting the advancing domestic demands, it is
penetrating the international market too. Favoured with various
benefits such as globally competitive auto-ancillary industry;
production of steel at lowest cost; inexpensive and high skill
manpower; entrenched testing and R & D centres etc., the
industry provide immense investment and employment
opportunities.
With a scintillating 2.3 million units produced in 2008 the
Indian automobile industry bagged the position of being the ninth
largest in the world. Following economic liberalization, Indian
domestic automobile companies like Tata Motors Maruti Suzuki and
Mahindra and Mahindra expanded their production and export
operations in and across the country and since then the industry
has only shown signs of growth. The automobile industry comprises
of heavy vehicles (trucks, buses, tempos, tractors), passenger
cars, and two-wheelers.
The Indian automobile industry seems to come a long way since
the first car that was manufactured in Mumbai in 1898. The
automobile sector today is one of the key sectors of the country
contributing majorly to the economy of India. It directly and
indirectly provides employment to over 10 million people in the
country. The Indian automobile industry has a well established name
globally being the second largest two wheeler market in the world,
fourth largest commercial vehicle market in the world, and eleventh
largest passenger car market in the world and expected to become
the third largest automobile market in the world only behind USA
and China.
The growth of the Indian middleclass along with the growth of
the economy over the last few years has resulted in a host of
global auto giants setting their foot inside the Indian Territory.
Moreover India also provides trained manpower at competitive costs
making the country a manufacturing hub for many foreign automobile
companies. India proves to be a potential market as compared to
most of the other countries which are witnessing stagnation as far
as automobile industry growth is concerned.
A recent research conducted by the global consultancy firm
Deloitte says that at least one Indian automobile company will
feature among the top six automobile companies that will dominate
the car market by 2020.
The Indian automobile industry proved to be in good shape last
year even after the economic downturn. This was majorly due to the
fact of renewed interest shown by global automobile players like
Nissan Motors which consider India to be a potential market.
As far as authorized dealer networks and service stations are
concerned Maruti Suzuki is the most widespread. The other
automobile companies are also showing rapid progression in this
field.
Indian Automobile Export market
India is a very favorable market for small cars be it
production, sales or export. Since the Indian automobile industry
is the largest manufacturer of small cars companies like Hyundai
and Nissan Motors export about 2,40,000 and 2,50,000 annually.
India emerged as Asia's fourth largest exporter of automobiles,
behind Japan, South Korea and Thailand. The Indian automobile
exports registered a 22.30 percent growth in the year 2009. The
growth trend was as follows: Two Wheelers- 32.31 percent,
Commercial Vehicle - 19.10 percent and Passenger Cars grew by -
19.10 percent.
Key automobile manufactures in India
Maruti Udyog General Motors Ford India Limited Eicher Motors
Bajaj Auto Daewoo Motors india Hero Motors Hindustan Motors Hyundai
Motors India Limited Royal Enfield Motors Telco TVS Motors DC
Designs Swaraj Mazda Limited
Indian Automobile Industry Growth 2009
Gaining from Government stimulus packages, more demands and
lower interest rates on automobile loans the Indian automobile
industry witnessed a phenomenal growth of 26.41 per cent in the
year 2009. Segment wise cars posted a growth of 25.10 percent and
two wheelers sales grew by 26 percent. The year 2009 actually
turned out to be one of the best years in the history of the
automobile industry in India. If the trend continues the same way
then Indian will soon become the second fastest growing automobile
market in the world only after China.
Domestic Market Share for 2009 - 2010
AutomobilesMarket Share
Passenger Cars15.86 %
Commercial Vehicles4.32 %
Two Wheelers3.58 %
Two Wheelers76.23 %
Market SizeThe growth story for the Indian automobile industry
in 2014 rode on the two-wheeler segment. The segment has clocked
positive growth at 12.9 percent year-on-year to reach sales of
nearly 13.5 million units by October 2014.India's automobile sector
has also picked up pace, with eight of the country's leading
manufacturers' reporting combined passenger vehicle sales of
198,427 in November 2014, a 10 per cent annual rise. The rise in
sales in November 2014 was led by Maruti Suzuki, whose sales
increased 17 per cent to 100,024 units in the domestic market.The
commercial vehicles (CV) industry in India has registered an
increase of 8.59 per cent in September 2014, as fleet owners have
started to buy trucks in the anticipation of an improved economic
activity.The automobile sector in Andhra Pradesh has a potential
for US$ 1 billion investment and US$ 1.50 billion output, according
to a recent analysis by Automotive Components Manufacturers
Association of India (ACMA) and city-based Andhra Chamber of
Commerce and Industry Federation (ACCIF).
InvestmentsTo match production with demand, many auto makers
have started to invest heavily in various segments in the industry
in the last few months. The industry has attracted FDI worth US$
11,351.26 million during the period April 2000 to November 2014,
according to the data released by Department of Industrial Policy
and Promotion (DIPP).Some of the major investments and developments
in the automobile sector in India are as follows: Snapdeal.com has
entered into a partnership with Hero MotoCorp Ltd to sell
two-wheelers and expect its online automobile sales to generate Rs
1,000 crore (US$ 162.33 million) of business in next six to 10
months. Automotive supplier Uno Minda and Japans Toyoda Gosei Co
Ltd have announced a joint venture (JV) partnership to manufacture
and sell rubber hoses to automobile makers in India. The JV will be
set up with a total investment of Rs 85.3 crore (US$ 13.84 million)
in a phased manner. Tafe Motors and Tractors Ltd (TAFE) has
invested around US$ 140 million by way of equity in the US-based
AGCO Corporation, a worldwide manufacturer and distributor of
agricultural equipment. Flipkart founders Mr Sachin Bansal and Mr
Binny Bansal have led a US$ 1 million investment in Ather, an
electric vehicle start-up focused on designing high-speed electric
two-wheelers. Harley Davidson Motor Co. has expanded their line up
in India as it has launched three new models the Breakout, Street
Glide and CVO limited edition. Hero Electric is looking for merger
and acquisition (M&A) options or technology tie-ups to
encourage its next generation electric vehicle technology.
Government InitiativesThe Government of India encourages foreign
investment in the automobile sector and allows 100 per cent FDI
under the automatic route. To boost manufacturing, the government
had lowered excise duty on small cars, motorcycles, scooters and
commercial vehicles to eight per cent from 12 per cent, on sports
utility vehicles to 24 per cent from 30 per cent, on mid-segment
cars to 20 per cent from 24 per cent and on large-segment cars to
24 per cent from 27 per cent.Some of the major initiatives taken by
the Government of India are: The governments decision to resolve
VAT disputes has resulted in the top Indian auto makers namely,
Volkswagen, Bajaj Auto, Mahindra & Mahindra and Tata Motors
announcing an investment of around Rs 11,500 crore (US$ 1.86
billion) in Maharashtra. The Automobile Mission Plan for the period
20062016, designed by the government is aimed at accelerating and
sustaining growth in this sector. Also, the well-established
Regulatory Framework under the Ministry of Shipping, Road Transport
and Highways, plays a part in providing a boost to this sector. The
Government of India-appointed SIAM and Automotive Components
Manufacturers Association (ACMA) are responsible in working for the
development of the Indian automobile industry. The government plans
to come out with policies to introduce clean fuels such as
biodiesel, bioethanol and electricity for public transport vehicles
and school buses in big cities to tackle air pollution. The Lok
Sabha passed the Motor Vehicles Amendment Bill, 2014, paving the
way for regularisation of e-rickshaws. The government has set up
National Automotive Testing and R&D Infrastructure Project
(NATRiP) at a total cost of US$ 388.5 million to enable the
industry to be on par with global standards.
Road Ahead
India is probably the most competitive country in the world for
the automotive industry. It does not cover 100 per cent of
technology or components required to make a car but it is giving a
good 97 per cent, highlighted Mr Vicent Cobee, Corporate
Vice-President, Nissan Motors Datsun.The vision of AMP 2006-2016
sees India, to emerge as the destination of choice in the world for
design and manufacture of automobiles and auto components with
output reaching a level of US$ 145 billion; accounting for more
than 10 per cent of the GDP and providing additional employment to
25 million people by 2016.Exchange Rate Used: INR 1 = US$ 0.0162 as
on January 21, 2015
3. COMPANY PROFILE
Introduction To Tata Motors: Tata Motors was established in
1945, when the company began making trains. It has its
manufacturing base in Jamshedpur, Lucknow, Pune and soon one more
plant is going to established at Singur, West Bengal. Product
Manufactured - Passenger Cars and commercial vehicle Installed
Capacity - 350,000-400,000 vehicles a year Investment - Rs 2,500
crore (Rs 25 billion) Turnover - $21.9 billion (Rs 967,229 million)
Employees - 2,46,000/22001 Tata Motors had created the wealth Rs.
320 billion during 2001-2006 and stood among top 10 wealth creators
in India.
Tata Nano - ONE LAKH CAR PROJECT Peoples Car
Tata Nano
Overview
ManufacturerTata Motors
Alsocalledone-lakhcar
Production2008present
AssemblySanand Plant,Sanand, Gujarat, India[1]
DesignerGirish Wagh, Justin Norek, Pierre Castinel[2]
Body and chassis
ClassCity car
Bodystyle4-door one-box
LayoutRR layout
Powertrain
Engine2cylinderSOHCpetrolBoschmulti-point fuel
injection(singleinjector) all aluminium 420cc(26cuin)
Transmission4 speedsynchromeshmanualwithoverdrivein 4th
Dimensions
Wheelbase2,230mm (87.8in)[3]
Length3,099mm (122.0in)[3]
Width1,495mm (58.9in)[3]
Height1,652mm (65.0in)[3]
Kerbweight600kg (1,300lb)635kg (1,400lb)[3]
TheTata Nanois acity carmanufactured byTata Motors. Made and
sold in India, the Nano was initially launched with a price tag
of100,000(US$1,600) which was ultimately increased with time.
Designed to lure India's burgeoning middle classes away from
two-wheelers, it received much publicity.HistoryAfter having
successfully launched the low costTata Acetruck in 2005, Tata
Motors began development of an affordable car that would appeal to
the many Indians who ride motorcycles.The purchase price of thisno
frillsauto was brought down by dispensing with most nonessential
features, reducing the amount of steel used in its construction,
and relying on low cost Indian labour.The introduction of the Nano
received much media attention due to its low price. Expectations
and effectsExpectations created for the car during the run up to
its production may have been out of proportion with its realised
success. A 2008 study, by Indian rating agency CRISIL, thought the
Nano would expand the nation's car market by 65%but, as of late
2012, news reports have detailed the underwhelming response of the
Indian consumer to the offering; sales in the first two fiscal
years after the car's unveiling remained steady at about 70,000
units although Tata appears intent on maintaining a capacity to
produce the car in much larger quantities, some 250,000 per year,
should the need arise. It was anticipated that its 2009 debut would
greatly affect the used car market, and prices did drop 2530% prior
to the launch.Sales of the Nano's nearest competitor, theMaruti
800, fell by 20% immediately following the unveiling of the
Nano.[9]It is unknown if the Nano has had a lasting effect on the
prices of and demand forclose substitutes, however. In July 2012,
Tata's Group chairman Ratan Tata, who retired in January 2014, said
that the car had immense potential in the developing world while
admitting that early on opportunities were wasted due to initial
problems.Singur factory pulloutMain article:Tata Nano Singur
controversyTata Motors announced in 2006 that the Nano would be
manufactured inSingur, West Bengal.]Local farmers soon began
protesting the forced acquisition of their land the new factory
entailed. Tata first delayed the Nano launch and later decided to
build the car in a different state,Gujarat, instead. PriceAnnounced
as the most affordableproduction carin the world, Tata aimed for a
price of onelakhrupees, or100,000, which was approximately $2,000
US at the time.[13]Only the very first customers were able to
purchase the car at that price, however, and, as of 2012, the price
for the basic Nano is around150,000.[14]Increasing material costs
may be to blame for this rapid rise in price.[15]Compared to
theVolkswagen Beetleit has a relatively low price, however. In
1990, a Beetle from Mexican factories was priced at
$5,300,[16]about $9,567 in today's money. TheFord Model T's initial
price was about $850, equivalent to $22,311 today. The
second-generation Nano is expected to be sold in the United States
by 2015.The original Nano is not street legal in the US, and cannot
legally be sold as agrey marketimport until 2034, when the original
2009 models receive a 25-year exemption from theUS Customs and
Border Protection.Despite a readily-available dealership network in
the US through theJaguar Land Roverdivision of Tata, Tata Motors
won't use Jaguar Land Rover to sell the Nano. Cost-cutting
features
Tata Nano engine in trunk that's only accessible from inside as
a cost reduction feature
Tata Nano dashboard is very simple. CD player and radio on this
deluxe model
The car's exterior and interiors were designed at
Italy'sInstitute of Development in Automotive Engineering.[4]The
Nano's design implements many measures to reduce manufacturing
costs.Comparison with the Maruti 800, the Tata Nano's closest
competitor:Tata NanoMaruti 800
* The Nano'strunkis only accessible from inside the car, as the
rear hatch does not open.[21]* Maruti 800 initially had only an
opening rear-windscreen, but later got a full hatchback.
* One windscreen wiper instead of the usual pair (also seen
earlier on certain Citroen and Mercedes models)[5]* Two windscreen
wipers.
* Nopower steeringinitially, unnecessary due to its light
weight.[5]Added in higher variants in later models.* Power Steering
only in higher variants.
* Threelug nutson the wheels instead of the usual four (also
seen on Smart)[22]* Fourlug nutsper wheel.
* Only onewing mirroron base models. Higher variants fitted with
passenger side ORVM from 2012 onwards.[5]* No option for both side
ORVMs in any variant.
* Radio or CD player is optional (the idea picked on some basic
car models in North America and all basic cars in India)[5]*
Radio/CD Player is optional.
* No airbags on any model[23]* no airbag in any variant.
* 624cc rear engine has 2 bigger cylinders (312cc each)[5]*
800cc front engine has 3 smaller cylinders (266cc each).
* No air conditioning in base model (as on most basic car models
in Europe and North America)[5]* No air conditioning in base
model
* Front passenger seat same as the driver seat, and the
headrests are integrated.* Front passenger seat same as the driver
seat, but headrests separate. Later models switched to integrated
headrests.
* Thinner 135/70-R12 space saver spare tyre.* Full size spare
tyre.
* No external fuel filler cap. Fuel inlet is accessed by opening
the front hood.* External fuel filler cap.
* Front door power windows only offered on highest variant. PW
switches placed on central console rather than on door pads.* Front
door power windows only offered on highest variant.
Technical specifications The Nano (2012) is a 38PS (28kW; 37hp)
car with a two-cylinder 624 ccrear engine.The car complies
withBharat Stage 4 Indian Emissions Standards, which are roughly
equivalent to Euro 4 and can meetEuropean emission standards as
well.The development of the Nano had led to 31 design and 37
technology patents being filed.Engine:2cylinderpetrol
withBoschmulti-point fuel injection(singleinjector) all aluminium
38 metric horsepower (28kW) 624cc(38cuin)
ValueMotronicengine management platformfromRobert Bosch GmbH
2valvesper cylinder overheadcamshaft
Compression ratio: 9.5:1
borestroke: 73.5mm (2.9in) 73.5mm (2.9in)
Power: 38PS (28kW; 37hp) @ 5500 +/-500rpm
Torque: 51Nm (38ftlbf) @ 3000 +/-500rpm
Layout and TransmissionRear wheel drive
4-speedmanual transmission
Steeringmechanicalrack and pinionw/o servo
Turning radius: 4 metre
PerformanceAcceleration: 0-60km/h (37mph): 30 seconds
Maximum speed: 105km/h (65mph)
Fuel efficiency(overall): 25.35 kilometres per litre (4.24
litres per 100 kilometres (66.6mpg-imp; 55.5mpg-US))
Body and dimensionsSeat belt: 4
Trunkcapacity: 150L (5.3cuft)
Suspension, Tires & BrakesFront brake: 180mmdrum
Rear brake: 180mmdrum
Front track: 1,325mm (52.2in)
Rear track: 1,315mm (51.8in)
Ground clearance: 180mm (7.1in)
Frontsuspension:MacPherson strutwith lower A arm
Rear suspension: Independentcoil spring
12-inch wheels[26]
Supplier[27]Part/system[27]
TexspinClutch Bearings
BoschOxygen sensor, Gasoline injection system (diesel will
follow), starter, alternator, brake system
Continental AGGasoline fuel supply system, fuel level sensor
CaparoInner structural panels
HSI AUTOStatic sealing systems (Weather Strips)
DelphiInstrument cluster
Rane Madras LimitedSteering Assembly
DensoWindshield wiper system (single motor and arm)
FAG KugelfischerRear-wheel bearing
Federal-MogulPistons, Piston rings, Spark plugs, Gaskets,
Systems protection
FicosaRear-view mirrors, interior mirrors, manual and CVT
shifters, washer system
FreudenbergEngine sealing
GKNDriveshafts
INAShifting elements
ITWDeltarOutside and inside door handles
Johnson ControlsSeating
MahleCamshafts, spin-on oil filters, fuel filters and air
cleaners
Saint-GobainGlass
TRWBrake system
Ceekay Daikin/ValeoClutch sets
VibracousticEngine mounts
VisteonAir induction system
ZF Friedrichshafen AGChassis components, including tie rods
BehrHVAC for the luxury version
DrrLean Paint Shop
The Tata Nano is also considered to be the world's slowest
Petrol Car.Alternative powerplantsWhile the Nano is driven by a
petrol engine, several more-radical powerplants have been proposed
but not put into production. Also, an upscale version was shown at
an autoshow.
Compressed-air engineTata Motorssigned an agreement in 2007 with
a French firm,Motor Development International, to produce
acompressed air car Nano.While the vehicle was supposed to be able
to travel approximately 200 kilometres (120mi) on $3 US of
electricity to compress the air, Tata's Vice-President of
Engineering Systems confirmed in late 2009 that vehicle range
continues to be a problem.
Electric vehicleTata has discussed the possibility of producing
an electric version,and while it showcased anelectric vehicleNano
at the 2010Geneva Motor Show,no such car is currently on the
market.If an EV Nano is sold it is expected to be the highly
affordableelectric car,uselithium-ionbatteries, and have a range of
80 miles (130km).A Norwegian electric car specialist,Miljbil
Grenland AS, has been named as a supposed partner in the
project.
Bi-fuel variantThe Nano CNG emax is launched in October 2013. It
can run on either gasoline or compressed natural gas. Initially, it
will be sold in Delhi and parts of Maharashtra and Lucknow, where
CNG is available at fuel outlets.
Tata Nano AMTTata Motors is planning to launch the Nano AMT
variant to be launched in the second half of 2015. The Tata Nano
AMT variant will get better quality plastic, electric power
assisted steering, front power windows, newly designed instrument
cluster and better upholstery on seats. It also features the
open-able tailgate, which helps in adding to its luggage space.
Under the bonnet is the same 2-cylinder 624cc engine that churns
out a maximum power output of 36PS and a peak torque of 51Nm
European export
A Nano Europaconcept carAnupscaleNanoconcept carcalled the
Europa was shown at the 2009Geneva Motor Show. Car firesThere were
reports of several fire incidents involving the Nano.]The company
denied those were connected to the car's design or its parts and
blamed "foreign electrical equipment" found on top of the exhaust
system.The company offered to retrofit the exhaust and electrical
systems but refused to recall the cars.Tata extended the warranty
on the car, including those already sold, from 18 months to four
years in early December 2010. ReceptionThe Nano has received a
tepid reception from Indian consumers. Reasons given have included
that it is still too expensive compared with a motorcycle.Also it
is identified as the most affordable car,whereas a secondhand car
that was more expensive when new has more social cachet. The fires
and other safety issues have also been nominated. Still, Tata Nano
has managed to fulfill the dream of Ratan Tata due to its economic
affordability. After a cap on Maruti 800 production, Tata Nano has
become as a lone bystander in the range of affordable cars to
common man in India.
Crash safetyIn 2014 a Nano was crashed forNCAPbyADACin Germany.
Despite Tata's claim that it was expecting 4 stars, the Nano
actually achieved zero stars. SalesNominal factory output is
250,000 paFY 20092010 30,000 approxFY 20102011 70,432FY 20112012
74,527FY 20122013 53,848FY 20132014 first half (April to Sept.)
10,202Awards 2010 Business Standard Motoring Indian car of the year
2010 Bloomberg UTV-Autocar car of the year 2010 Edison Awards,
first place in the transportation category 2010Good Design
Awards,in the category of transportation 2014 India's Most Trusted
hatchback car according to theThe Brand Trust Report2014
edition.
A promise is a promise, said Rattan Tata, Chairman, Tata Motors,
on 10th January, 2008, when the Nano was first displayed at the
Auto Show in Delhi. The Nano project didnt grab the attention of
only Indians; the entire world had their eyes glued to the worlds
cheapest car. A truly Peoples Car, this time is from India. Though
the dealer price is Rs. 1 lakh, the price on road, when it will be
launched, will reach around Rs. 1,25,00 but it will be still more
affordable and will be more eco-friendly than most other cars
giving a mileage of around 23km/liters. The price of the car is
such that a lot of rich and HNIs, if interested, can buy the car
just by a single swipe of their credit cards.Providing a car worth
rupees one lakh car was the dream of the chairman of Tata motors
Mr. Rattan Tata. And with high qualified IT skills people he has
shown the Indian talents to whole the world.
Idea conceived by - Rattan Tata Cost of development - 1700
crores Manufacturing cost(excluding dealer margin and taxes)- Rs
65,000 per unit Development of Design - India Time for designing
the car - 4 years Team -A team of 150 engineers , everyone below
age 28 Biggest hurdle - To make a car cheap car without
Compromising design May western countries as well as many foreign
countries have accepted Indian IT skills.
This will result into: OLD GENERATION NEW GENERATION
SWOT Analysis
STRENGTH Brand name TATA Cost price low Fuel efficient Safe
WEAKNES Low power Not a status symbol Delay in manufacturing
Limited features
OPPORTUNITIES Large market for selling Awareness in the market
First car in low range Can hit in global market THREATS Company
rival Not sure to hit in rural and semi-urban areasNew Product
Development And NanoAs seen before, A product can be considered new
under the following situations:- New-to-the-world products New
product lines Additions to existing product lines Improvements and
revisions of existing products Repositioning Cost reductionsAs far
as Nano is concerned, it falls into new to the world products in
the context that it has made a history for the cheapest car ever
made without compromising on quality. I.e. best way value analysis.
It can also be considered as new product in the since of cost
reduction as its the first time in the history that such a cheap
car is produced.The story of the Nano is not confined to its impact
on the auto industry. It's a tale that illuminates the India of
todayan eager, ambitious nation with a combination of engineering
talent, a desire for low costs and value, and the hunger of young
managers looking to break from a hidebound corporate environment.
Indeed, the team that worked on the Nanoon average aged between 25
and 30has helped to flatten Tata Motors' stodgy, multilayered
management structure, which has resulted in an unexpected
side-benefit called "organizational innovation".
Idea Generation And NanoA dream is born Says, I observed
families riding on two- wheelers -- the father driving the scooter,
his young kid standing in front of him, his wife seated behind him
holding a little baby. Add to that the slippery roads & Night
time too. It is downright dangerous. It led me to wonder whether
one could conceive of a safe, affordable, all-weather form of
transport for such a family. So when Tata Motors needed someone to
take charge of the company's most ambitious plan yet to build the
world's cheapest car ever Ravi Kant, who by then had become the
company's managing director, again turned to Wagh. Wagh remembers
what he learned marketing the little truck. "People want to move
from two-wheelers to four-wheelers," he says. "Today they can't
afford it."More and more can, but Indian car buyers today represent
a tiny slice of a potentially giant market India has just seven
cars per 1,000 people. India's auto industry has grown an average
of 12% for the past decade, but just 1.3 million passenger vehicles
were sold in India in the fiscal year ending March 2006. That means
a billion Indians buy about the same number of cars in a year as
300 million Americans buy in a month.If four wheels cost as little
as two wheels, that could change fast. About 7 million scooters and
motorcycles were sold in India last year, typically for prices
between 30,000 rupees and 70,000 rupees, about $675 to $1,600. Tata
is targeting a price of 100,000 rupees one lakh, in Indian terms of
measurement or about $2,500 at current exchange rates, for its
small car. That sounds impossibly cheap in the West but remains
three times higher than India's annual per capita income. The
average pay for factory workers at Tata Motors is just $5,500 a
year.
Idea screeningThe next step was the screening of idea. How is
this dream possible? What should they make? A scooter with two
extra wheels at the back for better stability? An Auto-rickshaw
with four wheels? A three wheeled car like a closed auto-
rickshaw?? A four wheeled car made of Engineering Plastics? A Four
wheeled rural car? Rolled up Plastic curtains in place of windows?
Openings like Auto rickshaws from the side A four wheeled open car
with safety side bars?But the market wanted a car and if they build
a peoples car it should be a car and not something that people
would say, Ah! Thats just a scooter with four wheels or an
auto-rickshaw with four wheels & not really a Car. Trying to
build a car cheap enough for motorcycle buyers seems to make sense
now but seemed crazy several years ago when Rattan Tata, longtime
chairman of Tata Motors and scion of the nation's giant Tata Group
conglomerate, first mentioned his dream of building a one-lakh car
in 2003. "They are still saying it can't be done," he says,
insisting that it can and will. "Everybody is talking of small cars
as $5,000 or $7,000. After we get done with it, there will
hopefully be a new definition of low-cost."
Concept Testing And DevelopingBefore starting the project, Wagh
did something no one at Tata Motors ever had: He talked to
customers. The three-wheeler men inevitably insisted on a cheap,
dependable truck that could go from village to market carrying,
say, a ton of onions or potatoes, one night, as sunset approached,
Wagh stuck with one rickshaw driver. He says, "I kept asking the
question. Why? Why? Why do you want a four-wheeler?" Wagh
remembered. Finally, he got the real answer. It turned out it
wasn't really a problem of transportation of vegetables If I had a
four-wheeler, I would have better marriage prospects in my
village," the young man said. Drivers of three-wheelers are looked
down upon in India. Wagh realized that four wheels had emotional,
not just practical, appeal.Thus the new product was now to be
developed. But what type of product? The car to cost Rs. 1 lakh on
road. The car should be built on a different platform than
conventional ones. It must be meeting all the safety and regulatory
requirements. It has to be built on a scale which shall be more
than double the earlier launches of similar products and the ramp
up must be smooth. The car has to be designed so that it can be
exported to other countries as the domestic demand may not
materialize as per projections. The car must be a beacon for the
Indian Automobile industry and prove to the world that we are
capable to take any challenge and come out worthy winners.That
quest to build the world's cheapest car hasn't ended. The Nano
should be available this fall, but the mission began back in 2003,
when Rattan Tata, chairman of Tata Motors and the $50 billion Tata
conglomerate, set a challenge to build a "people's car". Tata gave
an engineering team, led by 32-year-old star engineer Garish Wagh,
three requirements for the new vehicle: It should be low-cost,
adhere to regulatory requirements, and achieve performance targets
such as fuel efficiency and acceleration capacity.The design team
initially came up with a vehicle which had bars instead of doors
and plastic flaps to keep out the monsoon rains. It was closer to a
quadricycle than a car, and the first prototype, even a bigger
engine, which boosted the power by nearly 20 per cent, was still
dismal. "It was an embarrassment," says Wagh.But failure didnt stop
them they quickly realized it was necessary to bring everyone on
board, "else it leads to last-minute heartache and delays". Every
morning, he would spend an hour or two on the floor of the Pune
factory, insisting that everyone involveddesigners, manufacturing
teams, and vendor development peoplebe there to accelerate
decision-making and problem-solving. Over time, Wagh's team grew to
comprise some 500 engineers, an impractically large group to gather
on a daily basis. So instead, a core team of five engineers
gathered every day at three pm to discuss the latest developments.
Each engineer represented a different part of the car: engine and
transmission, body, vehicle integration, safety and regulation, and
industrial design. The body had to be changed because Rattan Tata,
over six feet tall himself, wanted it to be easy for tall people to
get in and out of the car. "Imagine the plight of the body
designerhe went through hundreds of iterations, then at the last
minute the car length was increased by 100 millimeters!" Wagh says.
The attention to detail paid off: When the car rolled onto the dais
at the Auto Show in New Delhi in January, and Rattan Tata stepped
out of the driver's seat with ease, it made an immediate impact.
What shook the automobile world most was the fact that the
designers seem to have done the impossible: The sleek,
sophisticated Nano doesn't look flimsy or inexpensive. If it had
been an upgraded scooter on four wheels, Tata still would have been
applauded for making a family of four safer on Indian roads. The
Nano, however, affords both safety and status. "The innovation
wasn't in technology; it was in a mindset change".
Business AnalysisCost Since the car had to be built within a
cost of Rs. 1 Lac, no conventional design would work as the costs
shall be higher and so the entire car has to be redesigned. What
makes Nano so less expensive can be well understood from the
following diagram
The design has to question the need of each and every component
from the point of view of its necessity of existence and also the
minimum requirements of its functionality. Value Engineering
concepts have to be deployed to finalize the minimum
requirements.
Disruptive Technology:Is a Technology that brings radical change
by introducing new ways of doing things usually at a Technology
that is: Significantly cheaper than existing Technology. Is much
higher performing? Has greater functionality and Is more convenient
to Use. Brings to market a totally different Value proposition than
the one available and can change the Paradigm about a product.The
Guiding factor was that the cost has to be minimized for each
component yet maintaining its basic functionality. The Alternatives
are: Reduce Consumption of Material being used. Alternate Suppliers
to get same material at fewer prices. Use alternate materials.
Eliminate use of Material. Eliminate a process Or a Combination of
the above. The design was outsourced to Italy's Institute of
Development in Automotive Engineering, but Tata himself ordered
changes along the way. Most recently he vetoed the design of the
windshield wipers. His solution: a single wiper instead of two,
giving the car a cleaner look.
THE COST REDUCTION PARADIGM Value Engineering Alternatives:The
target was very clearly defined that within the given cost
structure of 1 Lac all the components have to be allocated a
maximum price and the same had to be achieved using the available
alternatives. The Guiding factor was that the tax structure, on
materials and manufacturing, must support the final cost of Rs. 1
Lac. The Decisions were: Establish factory in a tax free zone. Get
the tax advantages on infrastructure development. Get the suppliers
to establish base near the factory. Get special concessions from
State Govt. In short select a manufacturing location where all the
advantages could be achieved. In short select a manufacturing
location where all the advantages could be achieved.
Total sales estimationNow the question was, how much to produce
It was estimated that the demand for the peoples car shall be at
least twice the demand for Maruti 800, the lowest end car. Initial
projections were at about 500 K cars per year. The basic reason was
the conviction that the target price shall redefine the 4 - wheeler
segment. The price decision of Rs 1 lakh is definitely going to
make a lot many people transit to 4-wheeler fold and that shall
explode the demand. F only 10% customers of 9 Million two wheeler
market transit to 4-wheelers it shall amount to 50% of the
passenger car market share. It was decided to set up plants with 5
lacs cars per annum capacity and ramp the same up in stages, in
line with increase in market demand. The initial response to the
Nano has been overwhelming and the tiny, Noddy-land car is expected
to help the company cross several milestones. With revenues at Rs
1,29,994 crore for the financial year 2006-7, and group companies
enjoying a market capitalization of Rs 2,51,487 crore as on January
10, 2008, the Tata Group is on a strong footing, contributing more
than 3 per cent to India's GDP. Nano, being the world's cheapest
car, has made international players sit up in amazement and the
company has received proposals from some African, Latin American
and Southeast Asian countries to manufacture the car there.
Product DevelopmentAnd finally the product was developed with
the following features. Engine CapacityBosch 624 c.c. twin cylinder
Low capacity, Lighter, sufficient with better Power Rear Engine to
reduce the transmission length using a balancer shaft. 4 Speed
Manual Gear Box All Aluminum Engine Higher thermal conductivity
than cast iron, Lighter and so better mileage Engine Management
System by Bosch Superb control over emission and smooth
acceleration. Dimensions L: 3.1m, W: 1.5m, H: 1.6m Less length but
more inner cabin space due to height. Comfortable leg room.
Independent Front & Rear Suspension McPherson Strut in Front
& Coil spring & trailing arm in rear. Better ride than
Maruti 800. Single piece ribbed steel body with safety features
such as crumple zones, intrusion resistant doors, seat belts,
strong seats & anchorages. Safety requirements are adequately
met. Single Wiper in place of two. Cost effective yet functionality
is met Tube less Tires Weight reduced by 2 Kg. Cost reductions 200
Rs. And in line with modern vehicles Instrument console in the
centre Elegant to look at and can be used both in Left Hand &
Right hand version. The list goes on and on. The Final verdictTHE
CAR COSTS Rs 1 lac Test Marketing And Commercialization Nano was
launched in the month of April. It has been commercialized in whole
of India. It is mostly targeted to the middle class and lower
middle class people. The effect of Nano has seen over the period of
time.
SOME MYTHS ABOUT NANOWhen Nano was introduced, it surprised
everyone. It had so many features but the cost was as low as Rs. 1
lakh. This was really amazing. Due to this, many competitors,
governments and others opposed Nano. Moreover, its not a new thing
that whenever a new concept is developed, people oppose. They find
more limitations then seeing the benefits. Following are some myths
about Nano. But these are then proved to be wrong.Myth no #1
Nano is an unsafe car
The car has an all steel body. It meets the mandatory Frontal
Impact requirements. It also meets the Side Impact requirements
although they are not mandatory in India. Myth no #2
Nano will greatly increase the Pollution Level
The car is Bharat IV and Euro IV compliant although these norms,
which are stricter than the present Bharat III norms, are yet to be
introduced. It has lower carbon footprint, 20 mg / Km of Carbon
Dioxide emission as compared to 45mg / Km, emitted by most of the
two wheelers. Its Multi Port Fuel Injection system is controlled by
an intelligent Bosch Engine Management system which controls the
combustion cycle precisely to ensure compliance to all emission
norms.
Myth no #3
Nano will struggle to perform
Although the car has 33 bops as the maximum horsepower it has a
low kerb weight of 550 Kg and so has a higher power-to weight ratio
when compared to many existing cars running on Indian roads. The
car has a matching acceleration to Maruti 800 and also a good top
speed. Although the manufacturers have estimated 90 Kms as the
maximum speed the car can go up to 105 Kms per hour top speed.
Myth no #4
Nano has very little leg room
Although the car is 8% smaller than Maruti 800 it has lot of
extra leg room at front as there is no engine compartment. This
also leaves sufficient knee room at the rear. The car has a tall
boy type design so there is lot of head space and also enough
Shoulder room. The mono volume design and the wheels having been
put at the corners have freed up lot of in- cabin space and
although the car may be registered as a four-setter, three slim
adults can sit comfortably at the rear.
Myth no #5
Cheap means Uncomfortable
More comfortable than some of the cars selling at even twice the
price. Leaves sufficient knee room at the rear. Easy to get in
& out of the car because of perfect seat height from the
ground. Suspension systems are good and the trailing arms with coil
springs are not found in cheap cars. Rear.
Myth no #6
Its very difficult for a rear - engine car to work.
Rear engines work in many cheap as well as expensive cars.
Auto-rickshaws at one end and Formula One cars on the other extreme
all use rear engines. Maruti Omni too has a rear engine, under the
seat and no one has been burnt due to that. Cooling is easier in
Nano as compared to some vans and there are the air ducts on either
side behind the edge of the doors, which allow air to seep in for
both cooling & for intake.
Myth no #7
There is a shortage of storage space.
There is some storage space although not much. The rear seat
with parcel shelf folds to allow accommodating a large suitcase.
Small articles can be placed under the bonnet also.
Myth no #8
Cutting Corners is evident everywhere
Cost cutting is done by smart designing rather than taking out
the essentials. One wiper has been taken out but the functionality
is intact. Wind shield washer fluid jets are mounted on the wiper
itself rather than the body. Wheels are held by three bolts instead
of four. On the contrary, MRF tubeless tyres and all Alumininium
engine, have been used, which are more expensive than conventional
ones.
TATA NANO V/S MARUTI 800CompetitorAs we know the price of Nano
car is much affordable for middle class people. This car can be
easily affordable by middle class people. In the Indian market it
will face only by one competitor that is Maruti 800, which produced
by Maruti udyog.The real question arise who will have the last
laugh Tata or Maruti 800?The answer is neither Tata nor Maruti 800
but they are the buyers who will have the last laughCan Nano beat
the popularity of Maruti 800. All the things depend on their
marketing strategy that how they will attract to Indian middle
class customers.Never mind the fact that what was touted as a
Rs.100,000 car will cost at least a fifth more and that's for the
standard non-air conditioned version. Jagdish Khattar, a former
head of Maruti 800 manufacturer Maruti Udyog Ltd, says it's too
early to say whether the Nano will overtake the original. "It's a
good product but it's still too early to say whether it will
overtake the 800 because it caters to a totally new market
segment," he said while watching a live telecast of Tata's press
conference after unveiling of the Nano. But clearly, at least one
other manufacturer was worried. Whether or not the Nano will
overtake the Maruti 800, one thing is for sure: the current Auto
Expo will be remembered for Tata's people's car and for that
product alone. It is the Nano that has captured the hearts and
minds of a majority of the spectators.Price of Maruti in major city
of India 800 (a/c LPG) (Figures in rupees)Mumbai245648
Delhi228858
Bangalore231407
Kolkata236826
Lucknow 232542
TATA NANO V/S MARUTI 800
FEATURES OF TATA NANO COMPRAED TO MARUTI 800
COST:
The dealer price of Maruti 800 varies from city to city. The
dealer price in Delhi is 1.97 laths and the road price is
approximately 2.28 laky Indian rupees. The dealer price of Nano is
just 1.00 lakhs rupees and the road price is only 1.26 lakhs
rupees. So here we can put the equation 2 * Nano = 1* Maruti
800
ENGINE:
Maruti 800: 800 cc Tata Nano :623 cc (better fuel than Maruti
800)
ENGINE TYPE:
Maruti 800 petrol/LPG Nano : petrol (diesel version will be
later)SEATING CAPACITY:
Maruti 800: 4+1 person Nano: 4+1 personFUEL TANK CAPACITY:
Maruti800 : 28 Lt (petrol), 19.2 (LPG) Nano: 30 Lt.WEIGHT
Maruti 800 more than 690 kg (gross weight is 1000 kg) Nano more
than 600 kgTOP SPEED:
Maruti 800 : 120 km/hr Nano : 90 km /hrSEGMENT:
Maruti 800 middle class peopleNano: lower and middle class
people.
FUEL CONSUMPTION:Maruti 800: city 13.6 and highway 17.6 km Nano:
city 22 km and highway 26 kmDIMENSIONS:Maruti 800Tata Nano
Length3.335 meters (131.3 inch3.1 meters
Width1.440 meters (56.7 inch)1.5 meters
Height(55.3 inches)1.6 meters
BREAKS: Maruti800: Front Disk, Rear Drum Nano: Front Disk, Rear
Drum
COLOURSMaruti 800 Tata Nano:
The Nano are not much taller and broader as compared to Maruti
800 but it has 21 percent larger spaces in side but 8 percent short
than Maruti.
Disadvantages of NANO vs. Maruti 800
1. LPG/CNG version is doubtful.2. Top Speed will be laser than
800.3. Space for Language is less.
4. FINANCIAL ANALYSIS OF THE COMPANY
Tata Motors was established in 1945, when the company began
making trains. It has its manufacturing base in Jamshedpur,
Lucknow, Pune and soon one more plant is going to established at
Singur, West Bengal. Product Manufactured - Passenger Cars and
commercial vehicle Installed Capacity - 350,000-400,000 vehicles a
year Investment - Rs 2,500 crore (Rs 25 billion) Turnover - $21.9
billion (Rs 967,229 million) Employees - 2,46,000/22001 Tata Motors
had created the wealth Rs. 320 billion during 2001-2006 and stood
among top 10 wealth creators in India.
5. DATA ANALYSIS
We planned to start the analysis part by flow of question in the
questionnaire 1. What do you own presently?Car|_| Bike |_| Other
|_|
From the 69 respondents 26 of them owned only car which is
37.7%, 17 respondents owned only bikes, contributed to 24.6% and
there were 19 such respondents who owned car as well as bikes,
contributes to 27.9%, 7 respondents were there who didnt had a car
or a bike, who traveled in bus or in autorikshaw or owned
autorikshaw.
2. If car then, what type of car do you own?Small |_| Sedan |_|
SUVs |_| Premium |_|
Type of car
FrequencyPercentValid PercentCumulative Percent
ValidSmall2130.446.746.7
Sedan1217.426.773.3
SUVs913.020.093.3
Premium11.42.295.6
small and SUVs11.42.297.8
Small and sedan11.42.2100.0
Total4565.2100.0
MissingSystem2434.8
Total69100.0
The car owners were asked to specify there car, i.e. class wise.
This showed that maximum were the small car owners and contributed
to 46.7% of the total.
3. If bike then, what type of bike do you own?Economic |_|
Premium |_|
Type of bike
FrequencyPercentValid PercentCumulative Percent
Valideconomic1724.644.744.7
premium2130.455.3100.0
Total3855.1100.0
MissingSystem3144.9
Total69100.0
The bike owners were asked to categorize their bikes in two
categories namely economic and premium.
4. In car which brand do you own? (Please specify brand model)
Maruti Suzuki: ____19%_______________________ Hyundai:
________10%___________________ Tata: ____6%_______________________
Ford: __________3%_________________Other Brand:
_______10%_____________
Interpretation
When the car owners were asked to specify the brand, as known
Maruti holds the major market share, 19 respondents owned Maruti,
10 respondents owned Hyundi, 6 owned Tata, 3 owned Ford and 10
owned different brand cars.
\5. Do you intend to buy a car in next 1 year?Definitely will
buy |_| probably will buy |_| May or may not buy |_|Probably will
not buy |_| definitely will not |_|
Intend to buy a car in next 1yr
FrequencyPercentValid PercentCumulative Percent
Validdefinitely will buy913.013.013.0
probably will buy2231.931.944.9
may or may not buy1318.818.863.8
probably will not buy1014.514.578.3
def will not buy1521.721.7100.0
Total69100.0100.0
When we asked the respondents weather they will be buying a car
in coming one year, we got a very mixed up response, where 13% of
the respondents said thy will definitely buy a car, and 21.7% said
they will not be buying a car. The rest were not sure with yhere
decision.
6. Will you be interested in buying TATA NANO car? (If yes go to
Q.no:7,if not go to Q.no:8)Yes |_| No |_|
Interested in buying TATA NANO
FrequencyPercentValid PercentCumulative Percent
Validyes3550.750.750.7
no3449.349.3100.0
Total69100.0100.0
A straight question, will you be buying TATA NANO, we thought
that we would receive a good positive response, but to our
astonishment, the response was almost 50/50.
7. What intended you to think to buy NANO in future?Price |_|
mileage|_| maintenance |_| safety|_| service|_|
What intended you to buy TATA NANO
FrequencyPercentValid PercentCumulative Percent
ValidPrice1826.151.451.4
price and service57.214.365.7
price,milage,service11.42.968.6
price,milage,maintenance11.42.971.4
price,maintanance11.42.974.3
price,milage68.717.191.4
price,milage,maint,service,safety11.42.994.3
price,safety22.95.7100.0
Total3550.7100.0
MissingSystem3449.3
Total69100.0
35 respondents were willing to buy TATA NANO, and the major
factor was PRICE, which inspired them to think for TATA NANO.
8. What intended you not to buy NANO?
_________________________________________________________________________________________________________________________________________________________________________________________________________
Most common answers given for this question are:1) Size, Safety,
and Performance- 32%2) Price and Status- 40%3) Traffic and Not
need- 28%
Interpretation
The people who were not aware about TATA NANOs specifications
they were saying about size, safety and performance. Persons who
were from high income group were saying about price and status. The
middle income group people who are qite satisfied with the public
transport said I would increase traffic problem or its not needed
at this point in their lif
9. What do you feel about TATA NANO will perform in the
market?Highly successful|_| Successful |_| neither successful nor
unsuccessful|_| Unsuccessful |_| highly unsuccessful|_|
What do you feel about TATANANO will perform in the market
FrequencyPercentValid PercentCumulative Percent
Validhighly successful1115.915.915.9
successful3347.847.863.8
neither successful nor unsuccessful2029.029.092.8
unsuccessful34.34.397.1
highly unsuccessful22.92.9100.0
Total69100.0100.0
On the success matter when we asked them 63.8% of the respondent
said that TATA NANO will be a success and 7.2% said it will be
unsuccessful, where as 29% of the respondent were clue less.
10. What do you perceive TATA NANO in terms of safety?Definitely
will be good |_| probably will be good |_| May or may be good |_|
Probably will not be good |_| definitely will not be good|_|What do
fell in terms of safety
FrequencyPercentValid PercentCumulative Percent
Validdef will be good1014.514.514.5
probably will be good1927.527.542.0
may or may be good1521.721.763.8
probably will not be good1724.624.688.4
def will not be good811.611.6100.0
Total69100.0100.0
42% of the respondents had faith in Tata and said the car will
be good at the safety parameters, where as 37.2% of respondents
felt that it will not be good at safety parameters.
11. Do you think TATANANO will increase traffic problem?Yes |_|
No |_|
Will increase traffic problem
FrequencyPercentValid PercentCumulative Percent
Validyes4768.168.168.1
no2231.931.9100.0
Total69100.0100.0
There were only 31.9% of the respondents who said it will not
increase the traffic but rest of them felt that it will increase
the traffic problem.
6. FINDINGS
After the study of various aspects we found that Nano Car Is
Definitely Not For:- Someone looking for better performance.
Someone who is looking to impress somebody. Someone who wants to
speed trial on Sunday Someone who is looking for long drives.But
Nano Car Is Defiantly For Someone who is looking to buy a car but
cannot afford much price. A students who want to go college,
tuition instead of bike etc. Someone who depends on second hand
car. For a house wife who can buy a car with her own savings.
Someone who depends on scooter. So Nano is not a basically a luxury
cars but it can fulfilled the all capacity for middle class
people.Impact Of Tata Nano On Life Of Common Man In India every one
can afford a Nano, just as we buy any electronic appliances for a
home uses. Decrease in price of second hand car. High traffic on
roads due to sale of exceeds car on roads. Increase in loan on car
installments.
7. CONCLUSION
After the study of various aspects I found that Nano Car Is
Definitely Not For:-
Someone looking for better performance Someone who is looking to
impress Someone who want to speed trial on Sunday Someone who is
looking for long drives.But Nano Car Is Defiantly For
Someone who is looking to buy a car but cannot afford much
price. A students who want to go college, tuition instead of bike
etc. Someone who depends on second hand car. For a house wife who
can buy a car with her own savings. Someone who depends on scooter.
So Nano is not a basically a luxury cars but it can fulfilled the
all capacity for middle class people.Impact Of Tata Nano On Life Of
Common Man
In India every one can afford a Nano, just as we buy any
electronic appliances for a home uses. Decrease in price of second
hand car. High traffic on roads due to sale of exceeds car on
roads. Increase in loan on car installments.
And finally Nano is definitely better than Maruti 800.tata has
succeeded in value engineering of the product and its great success
for tatas. Its something on which India can feel proud of. Nano has
been developed effectively.
8. SUGGESTIONS
As per our findings we have some recommendations, which will be
useful when TATA NANO will be introduced in the market.
Advertisement and Publicity should be done very strongly, not
only by price tag but also by showing the technical specification,
this will help in,
1) NANO will be visible in the market.
2) Help in converting the potential car customers to brand
customers.
3) Will give strong position in the market to stand against the
stronge competitor Maruti 800.
Tata has succeeded in value engineering of the product and its
great success for tatas. Its something on which India can feel
proud of. Nano has been developed effectively.
9. LIMITATIONS
As every research have its own limitations, so as we had and
they are as follows:
1) Survey conducted in a small geographical area, in
Bangalore.
2) Research conducted on the response of the 69 respondents,
which cannot correctly represent the population.
10. APPENDICESQUESTIONAIREDate ___________
Dear sir/madam,We are doing a brief survey to find out more
about consumers perception about TATAs new people car TATA NANO. We
would be grateful if you could spare a few minutes to participate
in it and we assure that this information taken will be purely used
for academics purpose only. Thank you for your cooperation.
1. What do you own presently?
Car|_| Bike |_| Other|_|
2. If car then, what type of car do you own?
Small |_| Sedan |_| SUVs |_| Premium|_|
3. If bike then, what type of bike do you own?
Economic |_| Premium |_|
4. In car which brand do you own? (Please specify brand
model)
Maruti Suzuki: ___________________________ Hyundai:
___________________________ Tata: ___________________________ Ford:
___________________________ Mitsubishi:
___________________________If not any of these please specify:
____________________
5. Do you intend to buy a car in next 1 year?
Definitely will buy |_| probably will buy |_| May or may not buy
|_| probably will not buy |_| definitely will not |_|
6. Will you be interested in buying TATA NANO car? (If yes go to
Q.no:7,if not go to Q.no:8)Yes |_| No |_| 7. What intended you to
think to buy NANO in future?
Price |_| mileage|_| maintenance |_| safety|_| service|_|If
others please specify
_______________________________________________
8. What intended you not to buy NANO?
_________________________________________________________________________________________________________________________________________________________________________________________________________
9. What do you feel about TATA NANO will perform in the
market?
Highly successful|_| Successful |_| neither successful nor
unsuccessful|_| Unsuccessful |_| highly unsuccessful|_|
10. What do you perceive TATA NANO in terms of safety?
Definitely will be good |_| probably will be good |_| May or may
be good |_| probably will not be good |_| definitely will not be
good|_|
11. Do you think TATANANO will increase traffic problem?
Yes |_| No |_|
Personal details
Name: __________________
Age: 21 - 25 |_| 26 30 |_| 31 35 |_| 36 40 |_| 41 45 |_| 46 50
|_| 51 55 |_| 56 60 |_|
Sex: Male |_| Female |_|
Occupation:
Self employed |_| Service |_| Student |_| Housewife|_|
Monthly Income: Less than 15000|_| 15000-20000 |_| 20000-25000
|_| above 25000 |_|
QUALITY MODEL
Organizational Structure
The Organization and Management Team (TATA NANO)
The management team for Tata Nano is a diverse group with strong
skills in technology,marketing and sales, finance and operations.
Our primary criteria when filling these executivepositions was
extraordinary past achievement.
Key Players
John Smith CEOMr. Smith brings more than 25 years of marketing
and executive management expertise ingrowing businesses at leading
companies. Immediately prior to Tata Nano Mr. Smith was CEOof New
One Corporation. While there he led the worldwide widget marketing
group, a multibilliondollar enterprise that is currently ranked
first in its industry. Mr. Smith also successfullyreorganized the
company, streamlining operations and improving profitability.Mr.
Smith had previously spent seven years at Future, Inc. as COO. He
was responsible for thedevelopment and launch of numerous
successful products in growing markets and newbusiness categories
for Future. He helped drive revenues from more than $3 billion to
morethan $12 billion. Under his guidance, the company was named the
most-respected brandnames in America in 1996 and 1997. He holds
both a Bachelor of Science in IndustrialEngineering and a Bachelor
of Science in Management from Northwestern.
Fred Stone COOFred Stone was brought in a COO in January 2008.
As COO, Mr. Stones mission is to establishTata Nanos leadership in
the worldwide market. Mr. Stone was most recently senior
vicepresident of the global customer service organization at
Gravel, Inc. His responsibilities includedcustomer service for all
of Gravels Large Boulder Operations. Prior to his worldwide
servicerole, Mr. Stone was responsible for Gravels worldwide
Enterprise Sales and Serviceorganization.Mr. Stone has held a
variety of sales and marketing management positions at including
vicepresident of Gravels North America System Sales, vice president
and general manager forGravels boulder networking product group,
and a director of marketing with responsibility forkey gravel
product lines.TATA Nano 4Mr. Stone holds an MBA from the University
of North Carolina at Chapel Hill and a degree inBusiness, with
honors, from Michigan State University.Bob White VP of Product
DevelopmentBob White was named to the Tata Nano, Inc. executive
team in August 2007, as VP of BusinessDevelopment. A 13-year
veteran of SIMs Corporation, Mr. White was most recently
chiefsoftware engineer with SIMs' global development team. Prior to
his worldwide developmentrole, Mr. White was responsible for SIMs
worldwide business development group.He has held a variety of
engineering management positions other Fortune 500
companies,including vice president of development at North America
Car Sales with responsibility for keynetwork communication product
lines.Mr. White do holds an MBA from the University of California
at Berkeley and a degree inBusiness, with honors, from San Jose
State University.Kate Brown VP of MarketingKate Brown is Tata Nanos
VP of Marketing. She joined after nine years at OFFON, Inc.,
whereshe served most recently as Senior Marketing Director. At
OFFON, she was responsible forcreating new strategic partnerships
and also for creating a brand awareness for a $500 millionjoint
venture between Act, 1business, and others.Previously, she served
as Vice President at JKL, managing regional business
development,marketing and sales teams. Brown also did marketing and
consulting for BBB and DDEconsulting.Brown holds an MBA degree from
the Duke University.Johan Bill VP of FinanceJohan Bill joined Tata
Nano, Inc. as Vice President of Finance in September 2008. He
managesthe company's finances and has established the financial
systems. He worked with his formeremployer, Wings, for over 12
years, holding numerous executive finance management positionsas
Wings grew from a $200 million to a $2 billion company. Most
recently working as Controllerof Wings, he was an integral player
in executing and integrating numerous acquisitions. He
alsospearheaded the development of the cash management and capital
infrastructure, andstreamlined the financial planning process which
led to significant improvements in the internalsystems
architecture.5 TATA NanoMr. Bill has a diverse financial
background, with experience at both start-up and largecorporations.
He graduated Summa Cum Laude from Berkley with a degree in
Accounting. Healso holds an MBA from Santa Clara University.The
relationship between the Board, the Committees and the senior
management functions isillustrated below:TATA Nano 6Staffing
CostsTitle Salary Benefits*CEO 228,000 273,600COO 180,000 216,000VP
of Product Development 100,000 120,000VP Marketing 80,000 96,000VP
Finance 100,000 120,000Management Committee 40,200 - 51,200 48,240
- 61,440Engineering Committee 40,200 - 51,200 48,240 -
61,440Finance Committee 40,200 - 51,200 48,240 - 61,440Sales
Committee 46,000 - 56,000 55,200 - 67,200Operation Committee 19,400
- 22,400 23,280 - 26,880Total 874,000 - 920,000 1,048,800 -
1,104,000(* 20% added for employee benefits)(These are salary
levels where we will be at the end of year one.)7 TATA NanoThe
Revenue ModelThe way Tata Nano raise funds include several aspects.
Those aspects are detailed in the asfollows.Selling the cars to
clientsThis activity is the first revenue flow of the project. The
first targeted market is the Indian one.The cars deliveries have
started in July 2009. There are also project to extend the market
toMalaysia, the rest of Asia, Europe, Africa and south America,
starting in 2011.Bank ServicesTata Nano have sign contract with
Indian Banks in order to allow low income people to getloans at low
interests. Therefore, they could afford booking for their Tata
Nano. In thatcontract, Tata Nano and the bank all take
advantages.Maintenance ServicesThe Tata Nano project include a
maintenance department. In fact, the customers will be
offeredmaintenance services at a fix price per month. Those
services will be extremely competitiveand cheap as the car
itself.AdvertisingTata nano have been making a lot of advertisement
in a lot of countries. As Tata Nano havebecome a famous trade, some
channel will allow Tata Nano advertisement to be
displayed,increasing the channel audience. In addition, Tata Motors
will take advantage of sweepstakesorganized in order to promote the
car. Those events always bring to the company bothpublicity and
money.MarchandisingThere are a lot of product that have been
manufactured in order to promote the Tata Nano,namely hats and
cups. The company will therefore sell those product and make
moneybenefits from them.Making franchisesThe development of Tata
Nano started 6 years ago and have lead to the production of
anextremely efficient car as far as pollution and gas consumption
are concerned . The technologyused could be sold to other companies
as Licenses, leading to funds raise.TATA Nano 8Distributors In
addition, Tata Nano have planned to use Distributors to make its
product easilyavailable to the Indian population. Therefore those
distributors will pay royalties