ACKNOWLEDGEMENT We are thankful to IFIM Business School who provided us with the opportunity for carrying out the study. We would also like to acknowledge my sincere thanks to our faculty Prof. Monica Gupta Under her valuable guidance, constant interest and encouragement, who devoted her ever-precious time from her busy schedule and helped us in completing the project. Her co-operation was not only useful for this project but will be a constant source of inspiration for us in the future. We express gratitude to various faculty members for their valuable guidance which was a good learning experience in order to make my efforts successful. Special, continual assistance while collecting the data was provided by the respondents. We wish to acknowledge our special thanks to them for 1
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Transcript
ACKNOWLEDGEMENT
We are thankful to IFIM Business School who provided us with
the opportunity for carrying out the study.
We would also like to acknowledge my sincere thanks to our
faculty Prof. Monica Gupta Under her valuable guidance, constant interest and
encouragement, who devoted her ever-precious time from her busy schedule and
helped us in completing the project. Her co-operation was not only useful for this
project but will be a constant source of inspiration for us in the future.
We express gratitude to various faculty members for their
valuable guidance which was a good learning experience in order to make my
efforts successful.
Special, continual assistance while collecting the data was
provided by the respondents. We wish to acknowledge our special thanks to them
for their help and cooperation in order to complete this project.
We are also thankful to those who have helped us intellectually
in preparation of this project directly or indirectly.
We are deeply indebted to the various sources of information
from relevant sites from internet and books which helped us a lot in our study and
helped us to learn a lot.
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Contents:
Sr. No. Subject Pg. No 1 Executive Summary 3
2 Objective of research 4
3 Methodology of research 5
4Introduction to the subject –new product development 6
5 Introduction to Tata Nano 12
6 Tata Nano and new product development 17 7 Some myths about Nano 26 8 Analysis of data collection 31 9 Findings 42 10 Limitations 42
11 Recommendations 43
2
Executive Summary
The introduction of the Nano received media attention due to its targeted low price. The car is
expected to boost the Indian Economy, create entrepreneurial-opportunities across India, as well
as expand the Indian car market by 65%. The car was envisioned by, Ratan Tata, Chairman of
the Tata Group and Tata Motors, who has described it as an eco-friendly "people's car". Nano
has been greatly appreciated by many sources and the media for its low-cost and eco-friendly
initiatives. Tata Group is expected to mass-manufacture the Nano in large quantities, besides
selling them in India, to also export them world-wide.
The project to create the world's cheapest production car began in 2003, under the Chairman of
Tata Motors, Ratan Tata, inspired by the number of Indian families with two-wheeled rather than
four-wheeled transport. The Nano's development has been tempered by the company's success in
producing the low cost 4 wheeled Ace truck in May 2005.
According to Tata Group's Chairman Ratan Tata, the Nano is a 33 PS (33 hp/24 kW) car with a
623 cc rear engine and rear wheel drive, and has a fuel economy of 4.55 L/100 km (21.97 km/L,
51.7 mpg (US), 62 mpg (UK)) under city road conditions, and 3.85 L/100 km on highways
(25.97 km/L, 61.1 mpg (US), 73.3 mpg (UK)). It is the first time a two-cylinder non-opposed
petrol engine will be used in a car with a single balancer shaft. Tata Motors has reportedly filed
34 patents related to the innovations in the design of Nano, with powertrain accounting for over
half of them. The project head, Girish Wagh has been credited with being one of the brains
behind Nano's design.
The objective of our research was to know about the Potential Customers for TATA NANO.
TATA is coming up with its new ‘peoples car’, which will be the ‘cheapest car’ till date.
The survey was conducted in Bangalore, with the help of 69 respondents. The findings showed
potential customers and the competitors in the market.
There were few limitations with our survey and the recommendations are given for a better
o To study about how a new product- Tata Nano was developed based on marketing
theory of “new product development.”
o To study about what made possible for Tata to develop and produce a car for just
Rs. One lakh.
o To study the objectives and target customers of Tata’s one lakh car
o To study on customers buying behavior and preferences and views about Tata
Nano by various methods of data collection.
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RESEARCH METHODOLOGY
Sample Design:69 respondents
Sample Composition: Youth Service Class Housewives
Field work plans and dates: Geographical Area: Bangalore
We took Bangalore as our geographical area for research and we started collecting primary data from 24th of November 2008, we visited few of the malls in the city and few industrial areas like KIADP industrial area, Marathalli. We went with the primary data collection till 10th of December 2008.
Analysis/ expected outcome plan: We expect that the outcome of our research will show how the market perceive about the TATA NANO
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Introduction To New Product Development
Meaning Of Product:
E.g.:- milk, computer, shoes, service after sales, railway services etc. a product can be divided
into two categories
o Tangible goods
o Intangible goods
Tangible products are known as goods that can be touched, felt and seen. E.g.:- computer, mobile
phone etc
Intangible 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
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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 competitor’s products and services. They can
find out what the customers like or dislike about their competitor’s 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 Screening
The 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.
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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.
Company’s 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.
1. Drop error where the firm rejects a very good idea.
2. Crop 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.
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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.
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Product Development
In 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 marketing
Through 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 Testing
In this method, a group of target audience is selected from the employees of the company.
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Beta Testing:
It is carried out at the customer’s 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.
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Introduction To Tata Motors:
o Tata Motors was established in 1945, when the company began
making trains.
o It has its manufacturing base in Jamshedpur, Lucknow, Pune
and soon one more plant is going to established at Singur, West Bengal.
o Product Manufactured - Passenger Cars and commercial
vehicle
o Installed Capacity - 350,000-400,000 vehicles a year
o Investment - Rs 2,500 crore (Rs 25 billion)
o Turnover - $21.9 billion (Rs 967,229 million)
o Employees - 2,46,000/22001
o 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 “People’s Car”
“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 didn’t grab
the attention of only Indians; the entire world had their eyes glued to the world’s cheapest car.
A truly People’s 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
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 verdict
THE CAR COSTS Rs 1 lac
Test Marketing And Commercialization
Nano is soon going to launch by the end of April. It will be commercialized in whole of
India. It is mostly targeted to the middle class and lower middle class people. The effects of
Nano and its commercialization will be soon known after it comes into the market.
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SOME MYTHS ABOUT NANO
When 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, it’s not a new thing that whenever a new concept is developed,
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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
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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
It’s 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.
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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.
QUESTIONAIREDate ___________ Q. No._______
Dear sir/madam,We are doing a brief survey to find out more about consumers perception about TATA’s new people car “TATA NANO”. We would be grateful if you could spare a few minutes to
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participate in it and we assure that this information taken will be purely used for academics purpose only. Thank you for your cooperation.
Questions1. 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 serviceIf others please specify _______________________________________________8. What intended you not to buy NANO? _________________________________________________________________________________________________________________________________________________________________________________________________________
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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?
Monthly Income: Less than 15000 15000-20000 20000-25000 above 25000
ANALYSISWe planned to start the analysis part by flow of question in the questionnaire 1. What do you own presently?Car Bike Other
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ownpresently
26 37.7 37.7 37.7
17 24.6 24.6 62.3
19 27.5 27.5 89.9
7 10.1 10.1 100.0
69 100.0 100.0
car
bike
car and bike
others
Total
ValidFrequency Percent Valid Percent
CumulativePercent
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 didn’t 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
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Type of car
Frequency Percent Valid PercentCumulative
PercentValid Small 21 30.4 46.7 46.7
Sedan 12 17.4 26.7 73.3
SUVs 9 13.0 20.0 93.3
Premium 1 1.4 2.2 95.6
small and SUVs
1 1.4 2.2 97.8
Small and sedan
1 1.4 2.2 100.0
Total 45 65.2 100.0Missing System 24 34.8Total 69 100.0
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
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Type of bike
Frequency Percent Valid PercentCumulative
PercentValid economic 17 24.6 44.7 44.7
premium 21 30.4 55.3 100.0
Total 38 55.1 100.0Missing System 31 44.9Total 69 100.0
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: ___________________________
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Hyundai: ___________________________ Tata: ___________________________ Ford: ___________________________ Mitsubishi: ___________________________If not any of these please specify: ____________________
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
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Probably will not buy definitely will not
Intend to buy a car in next 1yr
Frequency Percent Valid PercentCumulative
PercentValid definitely will buy 9 13.0 13.0 13.0
probably will buy 22 31.9 31.9 44.9
may or may not buy 13 18.8 18.8 63.8
probably will not buy 10 14.5 14.5 78.3
def will not buy 15 21.7 21.7 100.0
Total 69 100.0 100.0
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
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Interested in buying TATA NANO
Frequency Percent Valid PercentCumulative
PercentValid yes 35 50.7 50.7 50.7
no 34 49.3 49.3 100.0
Total 69 100.0 100.0
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
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What intended you to buy TATA NANO
Frequency Percent Valid PercentCumulative
PercentValid Price 18 26.1 51.4 51.4
price and service 5 7.2 14.3 65.7
price,milage,service 1 1.4 2.9 68.6
price,milage,maintenance 1 1.4 2.9 71.4
price,maintanance 1 1.4 2.9 74.3
price,milage 6 8.7 17.1 91.4
price,milage,maint,service,safety 1 1.4 2.9 94.3
price,safety 2 2.9 5.7 100.0
Total 35 50.7 100.0Missing System 34 49.3Total 69 100.0
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?
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_________________________________________________________________________________________________________________________________________________________________________________________________________ Most common answers given for this question are:
1) Size, Safety, and Performance2) Price and Status3) Traffic and Not need
Interpretation
The people who were not aware about TATA NANO’s 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 life.
9. What do you feel about TATA NANO will perform in the market?
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Highly successful Successful neither successful nor unsuccessful Unsuccessful highly unsuccessful
What do you feel about TATANANO will perform in the market
Frequency Percent Valid PercentCumulative
PercentValid highly successful 11 15.9 15.9 15.9
successful 33 47.8 47.8 63.8
neither successful nor unsuccessful 20 29.0 29.0 92.8
unsuccessful 3 4.3 4.3 97.1
highly unsuccessful 2 2.9 2.9 100.0
Total 69 100.0 100.0
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?
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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
Frequency Percent Valid PercentCumulative
PercentValid def will be good 10 14.5 14.5 14.5
probably will be good 19 27.5 27.5 42.0
may or may be good 15 21.7 21.7 63.8
probably will not be good
17 24.6 24.6 88.4
def will not be good 8 11.6 11.6 100.0
Total 69 100.0 100.0
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
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Will increase traffic problem
Frequency Percent Valid PercentCumulative
PercentValid yes 47 68.1 68.1 68.1
no 22 31.9 31.9 100.0
Total 69 100.0 100.0
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.
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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.
LimitationsAs 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.
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Recommendations
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 tata’s. It’s something on which India can feel proud of. Nano has been developed effectively.
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REFERENCES
1. Kapil Lamba [email protected]. Marketing Research done in second term at IFIM B School.3. www.wikipedia.com.