Consumer Behaviour -TATA NANO

Title:

Subject: BMPS

Level/Semester: MBA-III SEM

Programme PGDBL

Subject tutor: MS. ANUPAMA GHOSHAL

Name of Student: Mandeep Singh

Student’s Registration Number: PGD-B/JUNE-10/14

Date of Submission: April 11, 2011

Word count: 2005 WORDS

Word Limit: 2000 WORDS

Student Name Mandeep Singh
Date for Submission of the Assignment 11th April, 2011
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Have I done a complete spell-check of the Assignment? Yes

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indicated in the “Guidelines to Writing Assignments”

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Declaration:

All material written in this assignment is my own and I have not used any material, content or
information of others claiming them to be mine. Wherever materials have been used, proper
citation has been done in the text. I am fully aware of the rules and regulations governing
plagiarism. Should at any point of time my work be suspected/investigated and established to
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Mandeep Singh
Signature of the Student Date: _11/4/2011

TATA NANO: THE PEOPLES’ CAR

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Introduction:

One of the greatest strengths of NANO is its tiny price tag. The starting price is
Rs.1,00,000 which is cheaper than Maruti 800, the next cheapest car in Indian market
priced at Rs.1,84,641. Even after the road tax, service tax and the other registration fees,
NANO base model will work out to be just Rs. 1,30,000. Even its advanced versions
like NANO LX will at most cost around 1,79,000.
Segmentation for NANO market is done based on geography, rural and urban, and on
demography, family size and income. NANO is targeted at two-wheeler segments,
second-hand car segments, auto rickshaw segments, middle and lower income segments.
TATA positioned NANO in peoples’ mind as “THE PEOPLES’ CAR”, “ONE LAKH
CAR that drives ONE BILLION DREAMS” and “The World’s cheapest car” without
compromising on quality, safety and eco-friendliness.

Consumer Decision making process in buying TATA Nano.

Even though Tata Nano is the least price 4 seater car in India, it falls in the category of complex
buying behaviour.

HIGH involvement

SIGNIFICANT DIFFERENCE

FEW DIFFERANCES

FIG 1: Buying behaviour

LOW involvement
To substantiate the above statement, in survey 70% people have respondent that buying TATA
NANO is as difficult as buying other cars.

Analysis of stages in complex buying behaviour.

 Need Recognition
 Information search
 Evolution of alternative
 Purchase decision
 Post purchase evaluation.

 Need Recognition.

Need for Tata Nano can be driven either by internal stimuli (Desire/attitude/perception) or
external stimuli advertising etc.
An attempt is made to understand the need recognition process based on Maslow’s theory.

safety
Need
Esteem

Fig2: Classification of consumer need.

Thus it is clear from the Fig 1- 68% people buy the car driven by safety need. 24% buy a car
driven by esteem need. 8% people buy a car driven by basic need.

To arouse the need for Tata Nano Company should look to aim at 76% people who look for car
for safety and basic need knowing the fact that company will not be able to drag the people who
want to satisfy esteem need.

 Information Search
In this stage customer wants to find out the information about the Product, Place, Price and point
of purchase. While buying a product like car people seek information from different sources like.

A) Personal Sources- Family, friend and neighbours.

B) Commercial sources: Advertising, sales people, dealers, display.
C) Public Sources: Mass media and consumer rating agencies
D) Experiential sources: Demonstration, examining the product.

The research shows that majority of people depend on reference group for information while
buying TATA NANO.

Fig 3: Preference of channel of information

Since buying Tata Nano is complex buying behaviour people seek lots of information and
clarification. Company should aim on minimizing the customer cost while seeking these
information. The company should focus more on customer testimonials and word of mouth
communication.

 Evaluation of alternative:

After collecting the information, consumers arrive at some conclusion about the product. In this
stage consumers are comparing different brands based on set parameters which he or she thinks
required in the product. This process differs from consumer to consumer and with respect to Tata
Nano some have given importance to the price and for few durability and safety is important.

Since it is clear from the above data that majority of the people are buying the car driven by
safety need. People are considering Chevrolet spark and Maruti Alto as the alternative car.
Even though the price of both the cars is high compare to the NANO people are considering
SPARK and ALTO as alternative of TATA Nano.
An attempt is made to understand the evaluation of alternative “Chevrolet spark and Maruti
Alto”.
Since people are motivated by safety need and Chevrolet safety positioning and 3 years free
servicing warranty is able to draw the customer attention.

 Point of difference between Maruti Alto, Chevrolet Spark and Tata Nano.

TATA NANO SPARK ALTO

Price
Rs. 1,23,361 Rs. 3,23,458 Rs. 2,29,148
(Ex-Showroom)
Rs. 3,184 (for 36 Rs. 8,350 (for 36 Rs. 5,915 (for 36
month loan) month loan) month loan)
Immobilizer
Overall Length 3099 mm 3495 mm 3495 mm
Mileage (Highway) 24 km/litre 16 km/litre 18.3 km/litre
Seating Capacity 4 Person 5 Person 5 Person
Maximum Speed 105 Km/Hour 161Km/Hour 137 Km/Hour
Front Brakes 180 mm dia. drum b
Ventilated discs Disc
Rear Brakes 180 mm dia. drum
Self-Adjusting Drum Drum
brake

We can see that Tata Nano does not have immobiliser. “An immobiliser or immobilizer is an
electronic device fitted to an automobile which prevents the engine from running unless the
correct key (or other token) is present. This prevents the car from being "hot wired" after entry
has been achieved”.
The above table shows that there is a difference in the features and consumer has to pay
2915/month extra to get additional features offered by Maruti Alto, which he considers as value
for money.

 Purchase decision.

In this stage consumer buy the most preferred brand. The decision of making the particular brand
is made after consumer conviction over the alternative product.

Since research has revealed that people do not postpone the purchase of Tata Nano because it is
difficult to make the payment. Price is not the factor which is postponing the purchase decision
of the consumers. There are two factors which are making people to postpone the purchase of
Tata Nano.

 Lack of information:
People have complete awareness about the price and 100% people have claimed that they are
aware of the price of Tata Nano. When it comes to the features like engine capacity, mileage,
safety people have mixed response and it reveals that company has not paid attention in
communicating the features.

Company is promoting the price tagline and that is not enough to motivate the consumers who
are derived by complex buying behaviour.

 Diffusion Process:

Majority of people (70% people) adopt the innovative product when it is 1 to 2 year old in the
market. People are still waiting to watch out this car and they are postponing the decision of
buying this car.

Company should have patience in launching the marketing programme because it is just 19
months since Tata Nano is launched.

 Post purchase evaluation:

After purchasing the product consumer will experience some level of satisfaction and
dissatisfaction.

An attempt is made to measure the satisfaction level of TATA NANO users after the purchase
and the security concerns which is raised by many prospective users of TATA Nano.

Satisfaction: 8o% Satisfied 20% Dissatisfied

80% of the users are satisfied with the car and they feel that they have got what was promised by
the company and they are happy to refer this car to others. Company should make use of these
happy users in word of mouth advertisement.

20% people are dissatisfied and they are dissatisfied due to interior of the car, finishing of the
car, delivery time and front view.

Safety: Safety is still the concern with the existing users and 80% of the people feel that they feel
Average safe while driving Tata Nano as big cars.20% of people feel that it is equally safe as big
cars.

8o% Average Safe 20% Equally

The above data shows that company has to clearly work on safety point of view and has to come
up with the innovative safety measures to increase the satisfaction level.
  Role of impulse purchase in decision making process.

An impulse purchase or impulse buy is an unplanned decision to buy a product or service,

made just before a purchase .One who tends to make such purchases is referred to as an impulse
purchaser or impulse buyer. Research findings suggest that emotions and feelings play a
decisive role in purchasing, triggered by seeing the product or upon exposure to a well crafted
promotional message.

The research has shown that buying a Tata Nano falls under complex buying behaviour despite
the low price. The research has also shown that people wait for 1 to 2 year before buying the
product like Tata Nano. Consumers do not take the decision of buying a car immediately and
follows the pattern of decision making process very religiously thus impulse purchase is not
relevant in buying Tata Nano, however it can play an Important role in choosing the accessories
of the car. Marketer can influence the consumer in choosing the colour and accessories.
.

 Target Audience.

Who will buy the Tata Nano? If online polls are an indication, target audience of TATA Nano
"hum-do-hamare-do families," who were the main inspiration behind the Nano. If online polls at
social networking sites are some indication, a bulk of the potential buyers for the Nano is
predominantly male. And, they will be less than 25 years. In one online poll, 39% of the
respondents felt that the average Nano buyer will be under 25 years of age while 81% agreed that
the Nano buyer will be less than 40 years.

The research has shown that company should craft and execute different strategy towards target
audience and the positioning of the car should be changed.

 Research has shown that people prefer Tata Nano as the second car, despite of their
ability to pay for the costly cars. People are postponing the purchase of Tata Nano
waiting for the first car. The target audience of the company are the people who belong to
lower middle class and lower class. Lower middle class and lower class people still
purchase the car based on esteem need to improve their social status.
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90
80
70
60
50
40
30
20
10
0
First Car Second Car

Fig 4.consumer preference of Tata Nano

 80% of the lower middle class and lower class people do not know driving and thus they
are comfortable riding the bike. Company should launch a marketing programme to teach
driving to the target audience. Once the target audience know the driving it will be easier
for the company to identifies anticipates and satisfies customer requirements profitably.

 Research has shown that most of the Target audience has bike and it is not easy for them
to abandon the bike which costs half of the price of Tata nano. Company should give
them the exchange offer and offer them good resell price of bike.

 Research has shown that company has not communicated the features, safety and the
benefit to target audience and focused hugely on the price. Company should keep in the
mind the fact that apart from price consumers are looking for many other aspects while
buying a car.

 Research has shown that most of the Target audience likes the advertisement which is
informative followed by which shows the safety. Currently the company has the
advertisement which brings pride which is chosen least by the consumers. Company
should design the advertisement which combines the information and safety
.
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30

25

20

15

10

0
Informative Interesting Pride appeal Safety

Fig5: Advertisement preference by consumers.

 The company should look beyond the current target audience and should focus on
including females in their target audience, since most of the female feel that it is
compatible and easy to drive.

 Research also revealed that there is difference in attitude between the prospects and the
current users. Current users are satisfied with the car while prospect users have many
uncertainties in mind. Company should try to minimize this gap by including the
marketing programme which focuses on the word of mouth.

 Conclusion:

The strategy should not be to sell maximum cars to target audience, however to sell maximum
car to maximum people.
Even though Nano comes with the tiny price tags it follows a complex buying behaviour process.
Company has to work on the positioning of the car and provide more features which eliminates
the doubt of safety from the prospects, thus making decision making process much simpler for
the consumers. Company has to offer test drives to shorten the decision making process of the
consumers. Company has to provide the enough information to the consumers, which is the key
of decision making process.